Itron, Inc. (NASDAQ:ITRI) today reported financial results for its
second quarter and six months ended June 30, 2010. Highlights include:
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Record quarterly and six month revenues of $569 million and $1.1
billion;
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Quarterly and six month non-GAAP diluted EPS of 98 cents and $1.99;
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Six month cash flow from operations and free cash flow of $117 million
and $89 million;
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Quarterly and six month adjusted EBITDA of $84 and $150 million;
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Record twelve-month backlog of $1.0 billion and total backlog of $1.7
billion; and
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Quarterly bookings of $806 million.
?We are having a fantastic year with record financial results, strong
bookings and record backlog,? said Malcolm Unsworth, president and CEO.
?This performance underscores the strength of Itron's portfolio of
products and solutions – the broadest in the industry. At the same time,
there were some disappointments with recent contract awards in North
America. As we look forward, we are actively pursuing a variety of
activities to enhance our competitive position in these areas.?
Operations Highlights:
Revenues:
Total Company - Total revenues of $569 million for the
second quarter of 2010 and $1.1 billion for the first six months of 2010
were 38% and 33% higher than respective 2009 revenues of $414 and $802
million.
North America - Revenues of $303 million for the second quarter
and $546 million for the first six months of 2010 were 112% and 94%
higher than respective 2009 revenues of $143 million and $282 million.
The increase in revenues in 2010 was primarily driven by higher
shipments of OpenWay meters and modules. During the second quarter of
2010, we shipped 1.2 million OpenWay units.
International - Revenues of $266 million for the second quarter
of 2010 were $5 million, or 2%, lower than the comparable 2009 period
revenues of $271 million. The decrease in revenues was due to foreign
exchange rates. Revenues of $522 million for the first half of 2010 were
$3 million higher than the same period in 2009 due to favorable foreign
exchange rates modestly offset by a slowdown due to economic conditions
in certain markets.
Gross Margins:
Total Company - Gross margins of 31.0% for the second quarter and
31.4% for the first six months of 2010 were lower than 2009 gross
margins of 32.2% and 32.7%.
North America - Gross margins of 34.0% for the quarter and 33.5%
for the six months of 2010 were lower than the 2009 gross margins of
34.9% and 36.2%. The decline in gross margins was primarily due to
increased shipments of our higher cost first generation OpenWay meters
and increased service revenues, which have lower margin. In addition,
compensation costs were higher due to reinstating annual incentive plans
in 2010.
International - Gross margins of 27.5% for the quarter and 29.1%
for the first six months of 2010 were lower than 2009 gross margins of
30.7% and 30.9%. The decrease in margins was due to increased warranty
expense.
Operating Expenses:
Total Company - Operating expenses of $124 million for the second
quarter and $249 million for the first six months of 2010 were slightly
higher than the 2009 periods of $121 million and $242 million.
North America - Operating expenses were $46 million for the
second quarter and $92 million for the first six months of 2010 compared
with $44 million and $89 million for the same periods of 2009. The
increase in operating expenses was primarily due to expenses in the
current period associated with the reinstatement of annual incentive
compensation plans in 2010 and higher sales and marketing expense. These
increases were somewhat offset by decreased amortization of intangibles
expense.
International - Operating expenses for the second quarter 2010 of
$68 million were $2 million lower than $70 million in the second quarter
2009. The decrease was due to foreign exchange rates and lower
amortization of intangibles, partially offset by higher sales and
marketing and general administrative costs. Operating expenses for the
first six months of 2010 were $137 million compared with $138 million
for the same period of 2009. Decreases in operating expenses were due to
decreased amortization of intangibles expense partially offset by
increases from foreign exchange rates and higher sales and marketing and
general administrative expenses.
Corporate Unallocated - Corporate unallocated expenses were $10
million for the second quarter and $21 million for the first six months
of 2010 compared with $7 million and $16 million in the same periods of
2009. The increase in 2010 was primarily due to higher compensation
expense.
Other Income/Expense:
Net Interest Expense – Net interest expense of $14 million for
the second quarter and $29 million for the first six months of 2010
compared with $16 million and $32 million for the same periods of 2009.
Amortization of debt placement fees, which is included in net interest
expense, was $1.5 million for the second quarter and $2.7 million for
the first six months of 2010 compared with $374,000 and $2.2 million in
the respective 2009 periods. Amortization of debt placement fees varies
depending on the amount of debt repayments made in a given period.
During the first half of 2010, we made approximately $74 million in debt
repayments compared with $70 million in the same period of 2009.
Loss on Extinguishment of Debt – The first six months of 2009
included a $10.3 million net loss on the extinguishment of debt related
to a convertible debt for common stock exchange. The difference in the
value of the shares of Itron's common stock issued under the exchange
agreement and the value of the shares used to derive the amount payable
under the original conversion agreement resulted in the net loss on
extinguishment of debt.
Other Income/Expense – Other expense was $425,000 in the second
quarter of 2010 compared with $2.9 million in 2009. Other expense for
the first six months of 2010 was $1.0 million compared with $4.9 million
in the 2009 period. The 2010 periods include a foreign exchange gain,
compared with a loss in the 2009 periods, caused by fluctuations in
exchange rates for material purchases and related product sales
denominated in different currencies. Additionally, the 2009 periods
included consulting and legal fees associated with an amendment to our
senior debt agreement.
GAAP Measures:
GAAP Income Taxes – We had a tax expense of $11.1 million in the
second quarter of 2010 compared with a benefit of $22.4 million in the
second quarter of 2009. For the first six months of 2010, we had a tax
expense of $2.4 million compared with a benefit of $22.4 million in the
same period of 2009. The tax provision reflected in the first six months
of 2010 is derived from our estimated tax rate for the full year.
GAAP Net Income and Diluted EPS – Our GAAP net income and diluted
EPS for the second quarter and first six months of 2010 was $26.9
million, or 65 cents per share, and $53.7 million, or $1.31 per share.
This compares with net income of $15.3 million, or 40 cents per share,
and a net loss of $4.4 million, or 12 cents in the same periods in 2009.
The increase in 2010 net income was primarily due to higher operating
income in our North America segment.
Non-GAAP Measures:
Non-GAAP Operating Income – Non-GAAP operating income, which
excludes amortization expense related to intangible assets, was $69
million, or 12.1% of revenues, in the second quarter and $120 million,
or 11.3% of revenues, for the first six months of 2010. This compares
with $36 million, or 8.7% of revenues, and $68.3 million, or 8.5% of
revenues, in the second quarter and first six months of 2009. The
increased operating income was primarily due to increased contribution
from North America.
Non-GAAP Income Taxes – We had a non-GAAP tax rate of 31.1% in
the second quarter and 16.8% for the first six months of 2010 compared
with 6.3% and 18.7% in the same periods of 2009. The tax provision
reflected in the first six months of 2010 is derived from our estimated
non-GAAP tax rate for the full year.
Non-GAAP Net Income and Diluted EPS – Non-GAAP net income, which
excludes amortization expenses related to intangible assets,
amortization of debt placement fees, the amortization of convertible
debt discount, and the non-cash net loss associated with the convertible
debt for stock exchange, was $40.4 million in the second quarter and
$81.7 million for the first six months of 2010. This compares with $18.6
million and $30.8 million in the 2009 periods. Non-GAAP diluted EPS was
98 cents and $1.99 in the second quarter and first six months of 2010
compared with 49 cents and 82 cents in the same periods of 2009. Fully
diluted shares outstanding were 3.0 million and 3.7 million shares
higher than the same periods in 2009 primarily due to the convertible
debt for stock exchange in the first quarter of 2009 and the equity
offering in the second quarter of 2009.
Other Financial Highlights:
Backlog and New Order Bookings: Total backlog was $1.7
billion at June 30, 2010 compared with $1.6 billion at June 30, 2009.
Twelve month backlog of $1.0 billion at June 30, 2010 was higher than
the $646 million at June 30, 2009 due to the inclusion of a substantial
amount of OpenWay contract shipments in the current twelve month
backlog. New order bookings for the second quarter of 2010 were $806
million, compared with $427 million in the second quarter of 2009. New
order bookings in the second quarter of 2010 included $339 million
related to our OpenWay contract with Detroit Edison while the second
quarter of 2009 did not include any significant OpenWay contract
bookings. Our book-to-bill ratios were 1.4 to 1 and 1.0 to 1 for the
second quarter of 2010 and 2009, respectively.
Cash Flows from Operations and Financial Condition: Net
cash provided by operating activities during the first six months of
2010 was $117 million, compared with $67 million in the same period in
2009. Adjusted earnings before interest, taxes, depreciation,
amortization and the non-cash net loss on the extinguishment of debt
(adjusted EBITDA) in the second quarter of 2010 was $84 million compared
with $47 million for the same period in 2009. Adjusted EBITDA for the
first six months of 2010 was $150 million compared with $90 million in
the first six months of 2009. Free cash flow for the first six months of
2010 was $89 million compared with $40 million in the same period in
2009. Cash and equivalents were $137 million at June 30, 2010 compared
with $122 million at December 31, 2009.
Non-GAAP Financial Information:
To supplement our consolidated financial statements presented in
accordance with GAAP, we use certain non-GAAP financial measures,
including non-GAAP operating income, non-GAAP net income and diluted
EPS, adjusted EBITDA, and free cash flow. 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 by excluding infrequent costs, particularly
those associated with acquisitions. We exclude these expenses in our
non-GAAP financial measures as we believe the net result is a measure of
our core business that is not subject to the variations of expenses
associated with these infrequently occurring items. 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. A more detailed discussion of why we use non-GAAP financial
measures, the limitations of using such measures, and reconciliations
between non-GAAP and the nearest 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 2:00 p.m. (PDT) on July 28, 2010. 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
2:00 p.m. (PDT). The webcast replay will begin 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 #6492029. You may also view presentation
materials related to the earnings call on Itron's website at www.itron.com
under Investors / Presentations.
About Itron:
Itron, Inc. is a leading technology provider to the global energy and
water industries. Our company is the world's leading provider of
intelligent metering, data collection and utility software solutions,
with nearly 8,000 utilities worldwide relying on our technology to
optimize the delivery and use of energy and water. Our products include
electricity, gas, water and heat meters, data collection and
communication systems, including automated meter reading (AMR) and
advanced metering infrastructure (AMI); meter data management and
related software applications; as well as project management,
installation and consulting services. To know more, start here: www.itron.com.
Statements of operations, segment information, balance sheets, cash flow
statements and reconciliations of non-GAAP financial measures to the
most directly comparable financial measures follow.
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ITRON, INC.
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CONSOLIDATED STATEMENTS OF OPERATIONS
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(Unaudited, in thousands, except per share data)
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Three Months Ended June 30,
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Six Months Ended June 30,
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2010
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2009
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2010
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2009
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Revenues
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$
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569,460
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$
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413,748
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$
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1,068,740
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$
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802,266
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Cost of revenues
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393,136
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280,639
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733,521
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539,573
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Gross profit
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176,324
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133,109
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335,219
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262,693
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Operating expenses
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Sales and marketing
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40,974
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37,925
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82,511
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74,900
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Product development
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33,022
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30,809
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66,062
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61,967
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General and administrative
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33,285
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28,467
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66,342
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57,491
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Amortization of intangible assets
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16,766
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24,189
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34,577
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47,667
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Total operating expenses
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124,047
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121,390
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249,492
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242,025
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Operating income
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52,277
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11,719
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85,727
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20,668
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Other income (expense)
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Interest income
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111
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481
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278
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1,016
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Interest expense
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(13,965
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(16,399
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(28,888
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(33,244
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Loss on extinguishment of debt, net
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-
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-
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-
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(10,340
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Other income (expense), net
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(425
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(2,877
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(1,017
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(4,911
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Total other income (expense)
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(14,279
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)
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(18,795
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(29,627
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(47,479
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Income (loss) before income taxes
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37,998
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(7,076
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)
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56,100
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(26,811
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Income tax (provision) benefit
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(11,098
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)
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22,365
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(2,413
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22,371
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Net income (loss)
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$
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26,900
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$
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15,289
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$
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53,687
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$
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(4,440
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Earnings (loss) per common share-Basic
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$
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0.67
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$
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0.40
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$
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1.33
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$
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(0.12
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Earnings (loss) per common share-Diluted
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$
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0.65
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$
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0.40
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$
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1.31
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$
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(0.12
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Weighted average common shares outstanding-Basic
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40,329
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37,776
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40,261
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36,968
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Weighted average common shares outstanding-Diluted
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41,161
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38,130
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41,011
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36,968
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ITRON, INC.
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SEGMENT INFORMATION
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(Unaudited, in thousands)
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Three Months Ended June 30,
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Six Months Ended June 30,
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2010
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2009
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2010
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2009
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Revenues
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Itron North America
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$
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303,155
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$
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142,938
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$
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546,272
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$
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282,307
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Itron International
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266,305
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270,810
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522,468
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519,959
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Total Company
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© Business Wire 2010
| Latest news on ITRON INC NPV |
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