UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
July 19, 2004
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(Date of Report)
ITRON, INC.
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(Exact Name of Registrant as Specified in Charter)
Washington 000-22418 91-1011792
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(State or Other Jurisdiction (Commission File No.) (IRS Employer
of Incorporation) Identification No.)
2818 N. Sullivan Road, Spokane, WA 99216-1897
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(Address of Principal Executive Offices, including Zip Code)
(509) 924-9900
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(Registrant's Telephone Number, Including Area Code)
None
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(Former Name or Former Address, if Changed Since Last Report)
ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE.
In January 2004, we began to implement an organizational change that resulted in
a change in our segment reporting from five market facing business units
(Electric, Natural Gas, Water & Public Power, International and End User
Solutions) to two operating groups (Hardware Solutions and Software Solutions).
Management has three primary measures for each of the operating groups: revenue,
gross margin and operating income. Revenues for each operating group are
according to product lines. There are no inter-operating group revenues. Within
each operating group, costs of sales are based on standard costs, which include
materials, direct labor and an overhead allocation based on projected production
for the year. Variances from standard cost are also included in each operating
group. Service related costs of sales are based on actual time and materials
incurred, warranty expense and an allocation of miscellaneous service related
costs. Operating expenses directly associated with each operating group may
include sales, marketing, product development or administrative expenses.
Corporate operating expenses, interest revenue, interest expense, equity in the
income of investees accounted for under the equity method, amortization expense
and income tax expense are not allocated to the operating groups, nor included
in segment profit or loss for management purposes. Assets and liabilities are
not allocated to the operating groups. Approximately 50% of depreciation expense
is allocated to the operating groups.
OPERATING SEGMENT PRODUCTS AND SERVICES
OPERATING SEGMENT MAJOR PRODUCTS AND SERVICES
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Hardware Solutions: Residential and commercial automatic meter
reading (AMR) meter modules, mobile and
network AMR reading technologies, SmartSynch
meter systems, handheld computers for meter
data collection or mobile workforce
applications, residential meter data
collection software, mobile workforce
solutions software and installation and
implementation services for AMR, handheld
meter data collection and mobile workforce
systems.
Software Solutions: Commercial and industrial meter data
collection software, transmission and
distribution systems design and optimization
software, energy management and asset
optimization software, and related
implementation and consulting services.
RECASTED 2004 AND 2003 SEGMENT INFORMATION
As a result of our organizational change, we recasted our 2004 and 2003 segment
information to reflect our new segment reporting structure for each of the
quarters presented below.
2004 2003
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March 31 June 30 March 31 June 30 September 30 December 31
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(in thousands)
REVENUES
Hardware Solutions $ 58,289 $ 70,177 $ 65,796 $ 72,069 $ 72,247 $ 71,234
Software Solutions 7,313 9,465 8,849 8,195 9,832 8,743
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Total Company $ 65,602 $ 79,642 $ 74,645 $ 80,264 $ 82,079 $ 79,977
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GROSS PROFIT
Hardware Solutions $ 28,011 $ 32,484 $ 33,957 $ 37,101 $ 36,158 $ 25,811
Software Solutions 1,861 3,774 2,905 2,253 3,370 1,999
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Total Company $ 29,872 $ 36,258 $ 36,862 $ 39,354 $ 39,528 $ 27,810
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OPERATING INCOME (LOSS)
Hardware Solutions $ 20,277 $ 24,033 $ 26,066 $ 28,344 $ 27,614 $ 17,514
Software Solutions (4,247) (1,737) (5,201) (3,591) (2,279) (3,631)
Corporate unallocated (17,069) (17,595) (15,324) (16,938) (17,077) (13,803)
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Total Company $ (1,039) $ 4,701 $ 5,541 $ 7,815 $ 8,258 $ 80
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RECASTED 2004 AND 2003 OPERATING EXPENSE INFORMATION
Also, as a result of our organizational change, certain historical operating
expenses have been reclassified between sales and marketing, product development
and general and administrative in order to conform to current management
reporting for each of the quarters presented below.
2004 2003
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March 31 June 30 March 31 June 30 September 30 December 31
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(in thousands)
OPERATING EXPENSES
Sales and marketing $ 9,654 $10,272 $ 9,330 $10,959 $10,672 $10,024
Product development 10,222 10,554 9,891 11,042 10,841 9,734
General and administrative 6,626 8,652 7,147 6,730 6,866 5,398
Amortization of intangibles 2,027 2,027 1,888 2,765 2,391 2,574
Restructurings 2,382 52 2,165 43 -- --
In-process research and development -- -- 900 -- -- --
Litigation accrual -- -- -- -- 500 --
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Total operating expenses $30,911 $31,557 $31,321 $31,539 $31,270 $27,730
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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: July 19, 2004 By: /s/ DAVID G. REMINGTON
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David G. Remington
Vice President and
Chief Financial Officer