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Press Release

ITRON ANNOUNCES FOURTH QUARTER AND FULL YEAR RESULTS

Record Full Year Revenue of $1.91 Billion

LIBERTY LAKE, Wash. — February 18, 2009 — Itron, Inc. (NASDAQ:ITRI) today reported financial results for its fourth quarter and full year ended December 31, 2008. Financial results for the full year ended December 31, 2008 include Actaris operations for twelve months while results for the same period in 2007 only include Actaris operations from April 18, 2007. Highlights of the quarter and full year ended December 31, 2008 include:

• Quarterly and full year revenues of $432 million and $1.91 billion;
• Quarterly and full year non-GAAP diluted EPS of 71 cents and $3.36;
• Full year cash flow from operations and free cash flow of $193 million and $130 million;
• Quarterly and full year Adjusted EBITDA of $60 million and $281 million; and
• Quarterly and full year bookings of $733 million and $2.5 billion.

"As we communicated in January, our fourth quarter revenues and earnings were not as strong as they were in the first nine months," said LeRoy Nosbaum, chairman and CEO. "Although year-end spending from our customers was lower in the fourth quarter than we had hoped, we still had a very strong 2008 and set records for revenue, non-GAAP EPS and bookings."

Operations Highlights – Fourth Quarter:

Revenues – Total revenues of $432 million for the fourth quarter of 2008 were $48 million, or 10%, lower than 2007 fourth quarter revenues of $481 million. Itron North America (INA) revenues of $153 million for the fourth quarter of 2008 were $14 million, or 8%, lower than the fourth quarter of 2007, primarily due to lower year-end spending in the US. Actaris revenues of $279 million for the fourth quarter of 2008 were $34 million, or 11%, lower than the fourth quarter of 2007. 2008 Actaris revenue was negatively affected by foreign exchange rates which accounted for the entire decrease. Revenues for the electric, gas and water business units were approximately 38%, 35% and 27% of total Actaris revenue.

Gross Margin – Gross margin for the fourth quarter of 2008 was 34%, which is higher than the 33% in the fourth quarter of 2007. Fourth quarter 2008 INA gross margin of 39% was lower than 2007 gross margin of 40% due primarily to product mix. Actaris gross margin of 30% was higher than the fourth quarter 2007 gross margin of 28% due primarily to increased revenue in regions with higher margins.

Operating Expenses – Total operating expenses for the fourth quarter of 2008 were $124 million, which was comparable with the fourth quarter of 2007. INA operating expenses were $41 million, or 27% of revenue, compared with $44 million, or 26% of revenue, in the fourth quarter of 2007. Actaris operating expenses of $76 million were 27% of revenue, compared with $73 million, or 23% of revenue, in 2007. Actaris operating expenses were higher in all areas due to: increased sales expense; higher spending on product development; higher amortization of intangibles assets; increased personnel costs; and expenses related to Sarbanes-Oxley compliance. Corporate unallocated expenses of $7 million for the fourth quarter of 2008 were $1 million lower than the fourth quarter of 2007 due primarily to decreased compensation expenses.

Interest and Other Income (Loss) – Net interest expense of $14 million in the fourth quarter of 2008 was substantially lower than $25 million of net interest expense in the fourth quarter of 2007 due to lower average debt balances and lower average interest rates. Debt fee amortization expense, which is included in net interest expense, of $1.3 million in the fourth quarter of 2008 was lower than the fourth quarter of 2007. Other expense of $1 million in 2008 compares with $5.6 million in 2007. Other expense in 2007 was comprised primarily of unrealized foreign exchange losses on working capital accounts including intercompany interest balances.

Income Taxes – Our GAAP tax rate was 25% for the fourth quarter of 2008. The fourth quarter of 2007 included a $3.2 million GAAP income tax benefit. The benefit in 2007 was primarily driven by a one-time benefit for acquisition-related tax planning for Actaris and a tax benefit related to our investment in Brazilian operations.

GAAP Net Income/Loss and EPS – Our GAAP net income and fully diluted EPS for the fourth quarter of 2008 was $4.3 million, or 12 cents per share, compared with $4.0 million, or 12 cents per share, in the same period in 2007.

Non-GAAP Operating Income, Net Income and Diluted EPS – Non-GAAP operating income, which excludes amortization expense related to intangible assets, was $48 million, or 11.2% of revenues, in the fourth quarter of 2008, compared with $58 million, or 12.0% of revenues, in the fourth quarter of 2007. Non-GAAP net income, which also excludes amortization of debt fees, was $25 million in 2008, compared with $26 million in the 2007 period. Non-GAAP diluted EPS was 71 cents in the 2008 period compared with 81 cents in 2007. Fully diluted shares outstanding in the fourth quarter of 2008 were 2 million shares higher than the same period in 2007 due primarily to the equity offering of 3.4 million shares in the second quarter of 2008. Our non-GAAP tax rates were 27% and 6% for the fourth quarters of 2008 and 2007. The lower 2007 rate was primarily due to the tax benefit related to our investment in Brazilian operations.

Operations Highlights – Full Year:

Revenues – Total revenues of $1.9 billion for the full year ended December 31, 2008 were $446 million, or 30%, higher than 2007 full year revenues of $1.5 billion. INA revenues of $628 million for full year 2008 were $35 million, or 6%, higher than the comparable period in 2007. Actaris revenues were $1.3 billion for the full year 2008 compared with $871 million in the same period of 2007. Actaris revenues for 2008 benefitted from favorable foreign exchange rates as well as including a full twelve months of revenue. Revenues for the electric, gas and water business units were approximately 38%, 33% and 29% of total Actaris revenue for 2008.

Gross Margin – Gross margin for the full year 2008 was 34%, which was comparable with 33% gross margin in 2007. INA gross margin of 39% for the full year 2008 was less than 2007 gross margin of 42% due to product mix and increased services costs. Actaris gross margin of 31% was higher than the full year 2007 gross margin of 28%. Actaris gross margin in 2007 was negatively affected by acquisition related charges.

Operating Expenses – Total operating expenses for the full year 2008 were $537 million, compared with $441 million, for the full year 2007. INA operating expenses of $171 million in 2008 were somewhat lower than full year 2007 operating expenses of $173 million. As a percentage of revenue, 2008 INA operating expenses were 27% compared with 29% in 2007. Actaris operating expenses of $329 million were 26% of revenue, compared with $236 million, or 27% of revenue, for the full year 2007. The increased Actaris 2008 operating expenses were affected by foreign currency exchange rates and the inclusion of a full year expense as 2007 only included expenses from the date of the acquisition. Corporate unallocated expenses of $38 million for the full year 2008 were $5.6 million higher than 2007 due in part to increased compensation, financial integration and consulting expenses.

Interest and Other Income (Loss) – Net interest expense was $75 million for the full year 2008 compared to $79 million in the same period of 2007. The decrease in net interest expense was due to lower average interest rates. Debt fee amortization expense, which is included in net interest expense, was $8.9 million for the full year 2008 compared with $13.5 million in 2007. 2008 included other losses of $3 million compared with other income of $435,000 in 2007.

Income Taxes – Our GAAP tax rate was 12.5% for the full year 2008. Full year 2007 included a $16.4 million GAAP income tax benefit due to a pre-tax GAAP loss, legislative reductions in tax rates in France, Germany and the United Kingdom and tax benefits for acquisition-related tax planning for Actaris and the investment in our Brazilian operations.

GAAP Net Income/Loss and EPS – Our GAAP net income and fully diluted EPS for the full year 2008 was $28.1 million, or 80 cents per share, compared with a net loss of $16.1 million, or 55 cents per share, in the same period in 2007.

Non-GAAP Operating Income, Net Income and Diluted EPS – Non-GAAP operating income, which excludes amortization expense related to intangible assets, was $230 million, or 12.1% of revenues, for the full year 2008, compared with $182 million, or 12.5% of revenues, for the full year 2007. Non-GAAP operating income in 2007 excluded acquisition related charges for In Process Research & Development (IPR&D) and inventory of $52 million in addition to amortization of intangible assets. Non-GAAP net income, which also excludes amortization of debt fees, was $117.6 million in 2008 compared with $87.3 million in the 2007 period. Non-GAAP diluted EPS was $3.36 in the 2008 period compared with $2.81 in 2007. Diluted shares outstanding for the full year 2008 were almost 4 million higher than the same period in 2007 due primarily to the equity offering of 3.4 million shares in the second quarter of 2008. Non-GAAP net income and diluted EPS in 2008 benefitted from results for the entire year for Actaris rather than a partial year in 2007. Our non-GAAP tax rates were 27% and 25% for 2008 and 2007.

Other Financial Highlights:

New Order Bookings and Backlog — New order bookings for the full year 2008 were $2.5 billion, compared with $1.4 billion in 2007, reflecting book-to-bill ratios of 1.3 to 1 and .97 to 1 respectively. New order bookings for 2008 included $480 million related to our Advanced Metering Infrastructure (AMI) contract with Southern California Edison (SCE) and $334 million related to our contract with CenterPoint Energy. The California Public Utility Commission and the Public Utility Commission of Texas approved the respective projects in 2008, which allowed us to book the contract values in our backlog. Total backlog was $1.3 billion at December 31, 2008 compared with $659 million at December 31, 2007. Twelve month backlog of $507 million at December 31, 2008 compares with twelve month backlog at December 31, 2007 of $501 million.

Cash Flows from Operations and Financial Condition – Net cash provided by operating activities during the full year 2008 was $193 million. This compares with $133 million in the same period in 2007. Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) in the fourth quarter of 2008 was $60 million compared with $67 million for the same period in 2007. Adjusted EBITDA for the full year 2008 was $281 million compared with $225 million for the full year 2007. Free cash flow for the full year 2008 was $130 million compared with $93 million for the same period in 2007. Cash and equivalents were $144 million at December 31, 2008 compared with $92 million at December 31, 2007.

Forward Looking Statements:

This release contains forward-looking statements concerning our expectations about operations, financial performance, sales, earnings and cash flows. These statements reflect our current plans and expectations and are based on information currently available. The statements 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 and bonus compensation, increasing volatility in foreign exchange rates, international business risks and other factors which are more fully described in our Annual Report on Form 10-K for the year ended December 31, 2007 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. Itron assumes no obligation to publicly update or revise our business outlook. Our future performance involves risks and uncertainties.
For the full year 2009, we expect:

• Revenues between $1.78 billion and $1.88 billion;
• Diluted non-GAAP EPS of between $3.35 and $3.75;
• Adjusted EBITDA between $270 million and $290 million; and
• First quarter revenue between $385 million and $415 million.

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 associated with acquisitions. We exclude these expenses in our non-GAAP financial measures as we believe that they are 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 February 18, 2009. The call will be webcast in a listen only mode and can be accessed online atwww.itron.com, "Investors — Presentations." 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 #5350842. You may also view presentation materials related to the earnings call on Itron's website,www.itron.com / Investors / Presentations.


About Itron

Itron enables utilities and cities to safely, securely and reliably deliver critical infrastructure services to communities in more than 100 countries. Our portfolio of smart networks, software, services, meters and sensors helps our customers better manage electricity, gas and water resources for the people they serve. By working with our customers to ensure their success, we help improve the quality of life, ensure the safety and promote the well-being of millions of people around the globe. Itron is dedicated to creating a more resourceful world. Join us: www.itron.com.

Itron® and OpenWay® are registered trademarks of Itron, Inc. All third-party trademarks are property of their respective owners and any usage herein does not suggest or imply any relationship between Itron and the third party unless expressly stated.

PR Contact

Alison Mallahan

Senior Public Relations Manager

(509) 891-3802