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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
November 1, 2006
------------------------
Date of Report (Date of Earliest Event Reported)
ITRON, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Washington 000-22418 91-1011792
- ----------------------------- --------------------- -------------------
(State or Other Jurisdiction (Commission File No.) (IRS Employer
of Incorporation) Identification No.)
2111 North Molter Road, Liberty Lake, WA 99019
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices, Zip Code)
(509) 924-9900
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
2818 North Sullivan Road, Spokane, WA 99216
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On November 1, 2006, Itron, Inc. issued a press release announcing the
financial results for the three and nine months ending September 30,
2006. A copy of this press release and accompanying financial
statements are attached as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The following exhibit is filed as part of this report:
Exhibit
Number Description
- --------- -----------------------------------------------------------------
99.1 Press Release dated November 1, 2006.
The information presented in this Current Report on Form 8-K may contain
forward-looking statements and certain assumptions upon which such
forward-looking statements are in part based. Numerous important factors,
including those factors identified in Itron, Inc.'s Annual Report on Form 10-K
and other of the Company's filings with the Securities and Exchange Commission,
and the fact that the assumptions set forth in this Current Report on Form 8-K
could prove incorrect, could cause actual results to differ materially from
those contained in such forward-looking statements.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
ITRON, INC.
Dated: November 1, 2006 By: /s/ Steven M. Helmbrecht
-----------------------------------
Steven M. Helmbrecht
Sr. Vice President and Chief Financial
Officer
EXHIBIT INDEX
Exhibit
Number Description
- --------- -----------------------------------------------------------------
99.1 Press release dated November 1, 2006.
Exhibit 99.1
Itron Announces Strong Third Quarter Results
SPOKANE, Wash.--(BUSINESS WIRE)--Nov. 1, 2006--Itron, Inc. (NASDAQ:ITRI),
today reported financial results for its third quarter ended September 30, 2006.
Highlights of the results include:
-- Record quarterly and year-to-date revenues of $164.7 million and
$484.1 million;
-- Quarterly and year-to-date GAAP diluted EPS of $.35 and $1.01;
-- Record quarterly and year-to-date pro forma diluted EPS of $.63 and
$1.83;
-- Record year-to-date cash flow from operations of $87 million.
Revenues for the third quarter of 2006 were $164.7 million, 17% higher than
third quarter 2005 revenues of $141.1 million. Revenues for the nine months
ended September 30, 2006 were $484.1 million, which reflects a 23% increase over
revenues of $392.7 million in the first nine months of 2005.
"We continue to deliver solid operating results," said LeRoy Nosbaum,
chairman and CEO. "We had our highest quarterly revenue in the company's history
despite the expected decline from the first half of the year in revenue
associated with our Progress Energy contract. The overall level of activity in
the industry continues to be high and our competitive position remains
excellent."
-- Electricity Metering segment revenues were $81.6 million in the third
quarter compared with $58.6 million in the third quarter of 2005. For
the nine months ended September 30, 2006 Electricity Metering revenues
were $250.4 million compared with $173.3 million in the same period in
2005. The 39% and 44% respective increases in revenues were primarily
driven by shipments of electricity meters with embedded AMR and
related installation services to Progress Energy. Without the effect
of Progress Energy, Electricity Metering revenues in the quarter
increased 7% over 2005. The Progress Energy contract accounted for
meter shipments of approximately 300,000 and 1.9 million in the
quarter and year-to-date periods.
-- Meter Data Collection (MDC) segment revenues of $69.4 million in the
third quarter of 2006 were down slightly from $70.6 million in the
third quarter of 2005. Year-to-date 2006 MDC revenues of $191.3
million were 5% higher than the $182.5 million year-to-date in 2005
despite a planned sales shift from stand-alone electric AMR modules to
electric meters with embedded AMR, which are reflected in Electricity
Metering segment revenues. The higher year-to-date MDC revenue is
primarily due to shipments of gas ERT modules associated with several
AMR projects.
-- Software Solutions revenues were $13.7 million during the quarter or
15% higher than $11.9 million in the third quarter of 2005. For the
nine months ended September 30, 2006, software revenues of $42.4
million were 15% higher than revenues of $36.9 million for the same
period in 2005. Software revenues have increased in 2006 primarily due
to increased software license sales for a variety of products.
New order bookings for the quarter and year-to-date periods in 2006 were
$128 million and $441 million, compared with $212 million and $506 million in
2005. New order bookings in 2005 included $118 million from one contract with
Progress Energy, which was signed in the third quarter of 2005. Twelve-month
backlog, which represents the portion of backlog that will be earned over the
next twelve months, was $194 million at September 30, 2006, compared with $198
million one year ago. At September 30, 2006 and 2005 total backlog was $325
million. Twelve-month and total backlog at September 30, 2005 included $77
million and $118 million respectively, related to our contract with Progress
Energy. At September 30, 2006 there was $14 million remaining in backlog related
to this contract.
"New order bookings and resulting backlog remain strong," said LeRoy
Nosbaum, "both of which mitigate the effect of the large order with Progress
Energy winding down."
Total company gross margins of 41% for the quarter were slightly lower than
the 43% in the third quarter of 2005. Gross margins for the year-to-date periods
in 2006 were 42% which was in line with the 43% in the same period of 2005.
Current quarter and year-to-date gross margins were lower for Electricity
Metering due to a higher portion of lower margin installation revenue in both
periods. Software Solutions gross margins were lower for the quarter due to the
timing of projects. Software margin for the nine months ended September 30, 2006
of 42% was slightly higher than the 41% in the same period of 2005 due to a
higher proportion of revenue from software licenses.
On January 1, 2006, the Company adopted Statement of Financial Accounting
Standard No. 123(R), Share-Based Payment (SFAS 123 (R), which requires the
expensing of share-based compensation. Total stock-based compensation in the
quarter and year-to-date periods was $2.7 million and $6.8 million respectively,
of which $2.3 million and $5.9 million was due to the adoption of SFAS 123(R)
for stock options.
Pro forma operating income, which excludes intangible asset amortization
expenses in both 2006 and 2005, restructuring charges in 2005 and SFAS 123(R)
stock option compensation expense in 2006, was $26.5 million for the quarter, or
16.1% of revenues, compared with $23.9 million or 16.9% of revenues in the third
quarter of 2005. Year-to-date pro forma operating income was $81.7 million, or
16.9% of revenues compared with $59.8 million or 15.2% of revenues for the nine
months ended September 30, 2005, even with increased investments in research and
development in 2006.
GAAP net income was $9.2 million, or 35 cents per diluted share, for the
current quarter, compared with net income of $6.0 million, or 23 cents per
diluted share, for the third quarter of 2005. For the nine months ended
September 30, 2006, GAAP net income was $26.5 million, or $1.01 per diluted
share, compared with $16.1 million, or 66 cents per diluted share for the same
period in 2005. GAAP net income in the nine month 2005 period included a $5.9
million tax benefit for additional research and development (R&D) credits for
the years 1997 through 2004.
Pro forma net income was $16.6 million, or 63 cents per diluted share, for
the quarter and $48.2 million, or $1.83 per diluted share, for the nine months
ended September 30, 2006, compared with $12.6 million, or 49 cents per diluted
share, in the third quarter of 2005 and $30.3 million or $1.24 per diluted share
for the nine months ended September 30, 2005. Pro forma net income excludes
intangible asset and debt fee amortization expense in 2005 and 2006,
restructuring charges and the benefit of R&D tax credits in 2005 and SFAS 123(R)
stock option compensation expense in 2006.
On August 4, 2006, we issued $345 million of 2.50% convertible senior
subordinated notes with a 40% conversion premium at the time of issuance. Upon
conversion we are required to settle the principal amount of the convertible
notes in cash and may elect to settle the remaining conversion obligation (stock
price in excess of conversion price) in cash, shares or a combination. The notes
are due August 2026 and contain put options at five-year intervals at the option
of the holder. We expect to use the proceeds from the issuance for future
investments in or acquisitions of companies or technologies that are
complementary to our business. The net proceeds from the issuance of notes have
been invested in short term securities and were mildly accretive to our results
during the quarter because of the interest spread.
We generated $87.0 million of cash from operations during the first nine
months of 2006 compared with $49.6 million in 2005. Capital expenditures were
$25.9 million in the first nine months of 2006 compared with $10.3 million in
the first nine months of 2005. The increase in 2006 is primarily related to an
enterprise software upgrade and capital improvements associated with our new
headquarters building.
Forward Looking Statements:
This release contains forward-looking statements concerning our
expectations about our operations, financial performance, sales, earnings and
cash flow. These statements reflect our current plans and expectations and are
based on information currently available. They rely on a number of assumptions
and estimates, which could be inaccurate, and which are subject to risks and
uncertainties that could cause our actual results to vary materially from those
anticipated. Risks and uncertainties include the rate and timing of customer
demand for our products, rescheduling of current customer orders, changes in
estimated liabilities for product warranties, changes in laws and regulations,
our dependence on new product development and intellectual property, future
acquisitions, changes in estimates for stock based compensation and other
factors which are more fully described in our Annual Report on Form 10-K for the
year ended December 31, 2005 and other reports on file with the Securities and
Exchange Commission. Itron undertakes no obligation to update publicly or revise
any forward-looking statements, including our business outlook.
Business Outlook:
The outlook information provided below and elsewhere in this release is
based on information available today and does not include the effect of any
pending or future acquisitions. Itron assumes no obligation to publicly update
or revise our business outlook. Our future performance involves risks and
uncertainties.
For the full year 2006, we expect:
-- Revenues between $638 and $642 million (previous guidance was $625 to
$635 million).
-- GAAP net income between $32 and $34 million (previous guidance was $31
to $33 million).
-- Pro forma net income between $61 and $63 million (previous guidance
was $59 to $61 million.
-- Pro forma EPS between $2.35 and $2.40 per diluted share (previous
guidance was $2.25 to $2.30).
-- Our 2006 estimated pro forma tax rate as a percentage of pre-tax pro
forma income is expected to be approximately 37%, which is higher than
our previous estimated rate due to the expiration of the federal
research credit which Congress has yet to renew for 2006. If the
research credit is renewed for the entire year, we estimate it will
reduce our pro forma tax rate as a percentage of pre-tax pro forma
income to approximately 35%.
-- Adjusted EBITDA, which excludes $8 million of stock option
compensation expenses, between $117 and $120 million.
Our preliminary expectations for the full year 2007 are:
-- Revenue growth of approximately 8% over 2006 with a range of 3% above
and below that midpoint target.
-- Pro forma diluted EPS growth of almost twice the rate of revenue
growth.
Use of Non-GAAP Financial Information:
To supplement our consolidated financial statements presented in accordance
with GAAP, we use certain non-GAAP financial measures, including pro forma
operating income, pro forma net income and EPS, EBITDA and Adjusted EBITDA.
Management believes these non-GAAP financial measures provide useful information
to both management and investors by excluding certain expenses, gains and losses
that may not be indicative of our core results and provides for consistency and
comparability in our financial reporting. We provide these non-GAAP financial
measures because we believe they provide greater transparency and represent
supplemental information used by management in its financial and operational
decision making. Specifically, these non-GAAP financial measures are provided to
enhance investors' overall understanding of our current financial performance
and our future anticipated performance. Non-GAAP performance measures should be
considered in addition to, and not as a substitute for, results prepared in
accordance with GAAP. Finally, our non-GAAP financial measures may be different
from those reported by other companies. Reconciliations between GAAP and
non-GAAP financial measures are included in this press release.
Earnings Conference Call:
Itron will host a conference call to discuss the financial results
contained in this release at 1:45 p.m. (PST) on November 1, 2006. The call will
be webcast in a listen only mode and can be accessed online at www.itron.com,
"Investors - Investor Events." The live webcast will begin at 1:45 p.m. (PST).
The webcast replay will begin shortly after the conclusion of the live call and
will be available for two weeks. A telephone replay of the call will also be
available approximately one hour after the conclusion of the live call, for 48
hours, and is accessible by dialing (888) 203-1112 (Domestic) or (719) 457-0820
(International), entering passcode # 3314107.
About Itron:
Itron is a leading technology provider and critical source of knowledge to
the global energy and water industries. Nearly 3,000 utilities worldwide rely on
Itron technology to deliver the knowledge they require to optimize the delivery
and use of energy and water. tron delivers value to its clients by providing
industry-leading solutions for electricity metering, meter data collection,
energy information management, demand side management and response, load
forecasting, analysis and consulting services, distribution system design and
optimization, Web-based workforce automation, commercial and industrial customer
care and residential energy management. To know more, start here: www.itron.com.
Statements of operations, reconciliations between GAAP and non-GAAP
results, segment information, balance sheets, cash flow statements and
reconciliations of adjusted EBITDA follow.
ITRON, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands,
except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Revenues
Sales $152,023 $128,683 $446,934 $355,696
Service 12,683 12,462 37,135 37,042
--------- --------- --------- ---------
Total revenues 164,706 141,145 484,069 392,738
Cost of revenues
Sales 90,319 73,179 260,279 203,188
Service 6,962 6,936 20,559 20,783
--------- --------- --------- ---------
Total cost of revenues 97,281 80,115 280,838 223,971
--------- --------- --------- ---------
Gross profit 67,425 61,030 203,231 168,767
Operating expenses
Sales and marketing 15,176 13,688 46,978 40,456
Product development 15,626 11,807 43,416 35,135
General and administrative 12,463 11,645 37,104 33,381
Amortization of intangible
assets 8,284 9,712 23,209 29,143
Restructurings - - - 390
--------- --------- --------- ---------
Total operating expenses 51,549 46,852 150,707 138,505
--------- --------- --------- ---------
Operating income 15,876 14,178 52,524 30,262
Other income (expense)
Interest income 3,467 69 4,189 167
Interest expense (4,028) (4,328) (12,359) (15,280)
Other income (expense), net (187) (535) (876) 20
--------- --------- --------- ---------
Total other income
(expense) (748) (4,794) (9,046) (15,093)
--------- --------- --------- ---------
Income before income taxes 15,128 9,384 43,478 15,169
Income tax (provision) benefit (5,913) (3,382) (16,990) 963
--------- --------- --------- ---------
Net income $ 9,215 $ 6,002 $ 26,488 $ 16,132
--------- --------- --------- ---------
Earnings per share
Basic net income per share $ 0.36 $ 0.25 $ 1.05 $ 0.70
--------- --------- --------- ---------
Diluted net income per
share $ 0.35 $ 0.23 $ 1.01 $ 0.66
--------- --------- --------- ---------
Weighted average number of
shares outstanding
Basic 25,552 24,441 25,343 22,912
Diluted 26,336 25,919 26,251 24,471
ITRON, INC.
RECONCILIATIONS BETWEEN GAAP AND PRO FORMA
(Unaudited, in thousands, except per share data)
Three Months Ended
September 30, 2006
------------------------------
Pro
Forma
Reported Entries Pro Forma
--------- --------------------
Revenues $164,706 $ - $164,706
Cost of revenues 97,281 (376)(a) 96,905
--------- -------- ---------
Gross profit 67,425 376 67,801
Operating expenses 51,549 (1,938)(a) 41,327
(8,284)(b)
--------- -------- ---------
Operating income 15,876 10,598 26,474
Other income (expense) (748) 597 (d) (151)
--------- -------- ---------
Income before income taxes 15,128 11,195 26,323
Income tax (provision) benefit (5,913) (3,784)(e) (9,697)
--------- -------- ---------
Net income $ 9,215 $ 7,411 $ 16,626
--------- -------- ---------
Earnings per share
Basic net income per share $ 0.36 $ 0.65
--------- ---------
Diluted net income per share $ 0.35 $ 0.63
--------- ---------
Weighted average number of shares
outstanding
Basic 25,552 25,552
Diluted 26,336 26,336
Three Months Ended
September 30, 2005
-------------------------------
Pro
Forma
Reported Entries Pro Forma
--------- --------------------
Revenues $141,145 $ - $141,145
Cost of revenues 80,115 - 80,115
--------- -------- ---------
Gross profit 61,030 - 61,030
Operating expenses 46,852 (9,712)(b) 37,140
--------- -------- ---------
Operating income 14,178 9,712 23,890
Other income (expense) (4,794) 1,245 (d) (3,549)
--------- -------- ---------
Income before income taxes 9,384 10,957 20,341
Income tax (provision) benefit (3,382) (4,339)(e) (7,721)
--------- -------- ---------
Net income $ 6,002 $ 6,618 $ 12,620
--------- -------- ---------
Earnings per share
Basic net income per share $ 0.25 $ 0.52
--------- ---------
Diluted net income per share $ 0.23 $ 0.49
--------- ---------
Weighted average number of shares
outstanding
Basic 24,441 24,441
Diluted 25,919 25,919
Nine Months Ended
September 30, 2006
-------------------------------
Pro Forma
Reported Entries Pro Forma
--------- ---------------------
Revenues $484,069 $ - $484,069
Cost of revenues 280,838 (902)(a) 279,936
--------- --------- ---------
Gross profit 203,231 902 204,133
Operating expenses 150,707 (5,040)(a) 122,458
(23,209)(b)
--------- --------- ---------
Operating income 52,524 29,151 81,675
Other income (expense) (9,046) 3,633 (d) (5,413)
--------- --------- ---------
Income before income taxes 43,478 32,784 76,262
Income tax (provision) benefit (16,990) (11,105)(e) (28,095)
--------- --------- ---------
Net income $ 26,488 $ 21,679 $ 48,167
--------- --------- ---------
Earnings per share
Basic net income per share $ 1.05 $ 1.90
--------- ---------
Diluted net income per share $ 1.01 $ 1.83
--------- ---------
Weighted average number of shares
outstanding
Basic 25,343 25,343
Diluted 26,251 26,251
Nine Months Ended
September 30, 2005
-------------------------------
Pro Forma
Reported Entries Pro Forma
--------- ---------------------
Revenues $392,738 $ - $392,738
Cost of revenues 223,971 - 223,971
--------- --------- ---------
Gross profit 168,767 - 168,767
Operating expenses 138,505 (29,143)(b) 108,972
(390)(c)
--------- --------- ---------
Operating income 30,262 29,533 59,795
Other income (expense) (15,093) 4,223 (d) (10,870)
--------- --------- ---------
Income before income taxes 15,169 33,756 48,925
Income tax (provision) benefit 963 (19,623)(e) (18,660)
--------- --------- ---------
Net income $ 16,132 $ 14,133 $ 30,265
--------- --------- ---------
Earnings per share
Basic net income per share $ 0.70 $ 1.32
--------- ---------
Diluted net income per share $ 0.66 $ 1.24
--------- ---------
Weighted average number of shares
outstanding
Basic 22,912 22,912
Diluted 24,471 24,471
Pro Forma Adjustments
- ---------------------------------------------------------------
(a) Non-cash stock option compensation expense.
(b) Amortization of intangible assets.
(c) Restructurings.
(d) Debt fee amortization.
(e) Income taxes associated with pro forma entries.
ITRON, INC.
SEGMENT INFORMATION
(Unaudited, in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------------------
2006 2005 2006 2005
---------- --------- --------- ---------
Revenues
Hardware Solutions
Electricity Metering $81,575 $58,598 $250,420 $173,326
Meter Data Collection 69,437 70,638 191,298 182,506
---------- --------- --------- ---------
Total Hardware Solutions 151,012 129,236 441,718 355,832
Software Solutions 13,694 11,909 42,351 36,906
---------- --------- --------- ---------
Total Company $164,706 $141,145 $484,069 $392,738
---------- --------- --------- ---------
Gross profit
Hardware Solutions
Electricity Metering $31,466 $24,236 $100,392 $73,223
Meter Data Collection 30,965 32,080 85,132 80,412
---------- --------- --------- ---------
Total Hardware Solutions 62,431 56,316 185,524 153,635
Software Solutions 4,994 4,714 17,707 15,132
---------- --------- --------- ---------
Total Company $67,425 $61,030 $203,231 $168,767
---------- --------- --------- ---------
Operating income (loss)
Hardware Solutions
Electricity Metering $27,296 $20,178 $89,070 $60,504
Meter Data Collection 24,881 26,656 67,672 64,601
Other unallocated costs (9,736) (5,938) (28,169) (18,143)
---------- --------- --------- ---------
Total Hardware Solutions 42,441 40,896 128,573 106,962
Software Solutions (3,874) (2,996) (9,698) (8,570)
Corporate unallocated (22,691) (23,722) (66,351) (68,130)
---------- --------- --------- ---------
Total Company $15,876 $14,178 $52,524 $30,262
---------- --------- --------- ---------
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------------------
2006 2005 2006 2005
---------- --------- --------- ---------
(Units in thousands)
Unit Shipments by Segment
Electricity Metering
Total meters 1,575 1,175 5,175 3,375
With Itron AMR 850 575 3,325 1,375
With other AMR 325 150 700 575
Meter Data Collection
AMR standalone modules 1,150 1,175 3,225 3,075
Licensed AMR (other
vendors' meters) 125 250 300 550
(1)Total units with Itron
AMR 2,125 2,000 6,850 5,000
Growth in total Itron
AMR shipments 6% 37%
(1) Includes Itron meters with Itron AMR, other vendors' electronic
electricity meters with Itron AMR and Itron AMR standalone modules.
ITRON, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands) September 30, December 31,
2006 2005
------------- ------------
ASSETS
Current assets
Cash and cash equivalents $234,521 $33,638
Short-term investments, held to maturity 171,733 -
Accounts receivable, net 97,033 104,428
Inventories 58,953 49,456
Deferred income taxes, net 22,455 23,194
Other 23,047 10,941
------------- ------------
Total current assets 607,742 221,657
Property, plant and equipment, net 83,819 77,623
Intangible assets, net 109,937 123,293
Goodwill 119,586 116,032
Deferred income taxes, net 46,775 48,955
Other 17,161 11,324
------------- ------------
Total assets $985,020 $598,884
------------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $52,666 $46,215
Wages and benefits payable 24,802 23,732
Current portion of debt - 4,376
Current portion of warranty 9,141 8,497
Unearned revenue 27,605 22,758
------------- ------------
Total current liabilities 114,214 105,578
Long-term debt 469,299 160,186
Project financing debt - 2,367
Warranty 9,463 6,779
Contingent purchase price 5,686 -
Other obligations 8,208 6,440
------------- ------------
Total liabilities 606,870 281,350
Shareholders' equity
Preferred stock - -
Common stock 345,404 312,046
Accumulated other comprehensive income, net 1,641 871
Retained earnings 31,105 4,617
------------- ------------
Total shareholders' equity 378,150 317,534
------------- ------------
Total liabilities and shareholders'
equity $985,020 $598,884
------------- ------------
ITRON, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands) Nine Months Ended
September 30,
-------------------
2006 2005
--------- ---------
Operating activities
Net income $26,488 $16,132
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 34,266 38,785
Employee stock plans income tax benefits 12,686 14,399
Excess tax benefits from stock-based
compensation (9,108) -
Stock-based compensation 6,811 399
Amortization of prepaid debt fees 3,766 4,330
Deferred income taxes, net 2,784 (16,313)
Other, net (1,208) 1,534
Changes in operating assets and liabilities, net
of acquisitions:
Accounts receivable 9,416 (4,738)
Inventories (8,549) (5,199)
Accounts payable and accrued expenses 3,622 360
Wages and benefits payable 1,088 7,412
Unearned revenue 5,758 (3,085)
Warranty 3,328 (194)
Other long-term obligations (237) (436)
Other, net (3,923) (3,832)
--------- ---------
Net cash provided by operating activities 86,988 49,554
Investing activities
Purchases of investments held to maturity (170,434) -
Acquisitions of property, plant and equipment (25,878) (10,264)
Business acquisitions, net of cash and cash
equivalents acquired (7,321) -
Other, net 1,507 1,780
--------- ---------
Net cash used in investing activities (202,126) (8,484)
Financing activities
Proceeds from borrowings 345,000 -
Payments on debt (42,703) (122,704)
Issuance of common stock 13,375 82,269
Excess tax benefits from stock-based
compensation 9,108 -
Prepaid debt fees (8,759) (391)
Other, net - 28
--------- ---------
Net cash provided by (used in) financing
activities 316,021 (40,798)
Increase in cash and cash equivalents 200,883 272
Cash and cash equivalents at beginning of period 33,638 11,624
--------- ---------
Cash and cash equivalents at end of period $234,521 $11,896
--------- ---------
Non-cash transactions:
Fixed assets purchased but not yet paid $3,452 $-
Non-cash affects of acquisitions 637
ITRON, INC.
RECONCILIATIONS BETWEEN GAAP NET INCOME, EBITDA AND ADJUSTED EBITDA
(Unaudited, in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------------
2006 2005 2006 2005
--------- -------- -------- --------
GAAP net income $9,215 $6,002 $26,488 $16,132
Adjustments to GAAP net income
Interest income (3,467) (69) (4,189) (167)
Interest expense 4,028 4,328 12,359 15,280
Income tax provision (benefit) 5,913 3,382 16,990 (963)
Depreciation and amortization 11,975 12,661 34,266 38,785
--------- -------- -------- --------
Total adjustments 18,449 20,302 59,426 52,935
EBITDA $27,664 $26,304 $85,914 $69,067
--------- -------- -------- --------
Non-cash stock option
compensation expense 2,314 - 5,942 -
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Adjusted EBITDA $29,978 $26,304 $91,856 $69,067
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CONTACT: Itron, Inc.
Vice President, Investor Relations
and Corporate Communications
Deloris Duquette, 509-891-3523
deloris.duquette@itron.com