Press Release

Itron Files 2015 Annual Report on Form 10-K

LIBERTY LAKE, Wash — June 30, 2016 — Itron, Inc. (NASDAQ:ITRI) today announced that it has filed its Annual Report on Form 10-K ("Form 10-K") for the fiscal year ended Dec. 31, 2015 with the Securities and Exchange Commission ("SEC"). The Form 10-K also includes revised financial statements for fiscal years ended Dec. 31, 2014 and 2013.

As previously announced, Itron delayed the filing of its 2015 Form 10-K to review revenue recognition on contracts for which the Company had not been able to demonstrate Vendor Specific Objective Evidence ("VSOE") of fair value for maintenance associated with certain software solutions. The Company has completed its review and has determined that revisions to correct misstatements in its previously issued financial statements were required. Accordingly, the Company's 2015 financial results included in the Company's press release dated Feb. 17, 2016 as well as the financial statements for years 2014 and 2013 have been revised to reflect the deferral of certain revenue and costs that the Company previously recognized in earlier periods. In addition, the revised periods reflect other adjustments for items previously considered immaterial and for changes in estimates subsequent to the Company's preliminary results announcement.

"We are pleased to have concluded the review of our revenue recognition accounting and to have filed our Form 10-K for 2015," said Philip Mezey, Itron's president and chief executive officer. "As we anticipated, the revised accounting treatment impacts primarily the timing of revenues and costs for certain software contracts and does not affect the Company's cash generation or balances. Importantly, our 2016 operating results to date continue to be on track with our plans, our pipeline of business is strong and we are successfully executing against our strategic initiatives for profitability and growth. We look forward to providing an update to our full year 2016 financial guidance with our second quarter earnings announcement."

The Form 10-K for the fiscal year ended Dec. 31, 2015 with a reconciliation of the adjustments to the financial statements for 2014 and 2013 can be found on the SEC's website at and on Itron's investor webpage at

Impact of Revisions to Previously Reported Preliminary 2015 Results
The revisions had the following effect compared with the Company's preliminary 2015 GAAP results previously reported on Feb. 17, 2016:
  • Revenue and gross profit. Total revenues and cost of revenues increased $5.7 million and $8.2 million, respectively. Gross profit decreased $2.4 million, with no material impact on gross margin percentage. The changes are primarily due to the Company's revised revenue recognition for certain contracts that resulted in the deferral of revenues and costs from prior periods into 2015 and adjustments to warranty estimates.
  • Operating expenses and pre-tax income. Operating expenses increased $16.9 million related primarily to revisions in the accounting estimates of provision for legal, bad debts and the restructuring accrual. Total pre-tax income was reduced $19.3 million to $37.1 million.
  • Income tax impact. The income tax provision decreased $7.2 million related primarily to lower pre-tax income.
  • Net income and EPS impact. Net income attributable to Itron decreased $12.1 million to $12.7 million, and GAAP diluted EPS decreased 31 cents to 33 cents. Non-GAAP diluted EPS decreased 28 cents to 73 cents.
  • No impact to cash and cash equivalents. The revisions did not impact the Company's free cash flow or its cash and cash equivalents balances for any of the affected periods.
Update on First Quarter 2016 Form 10-Q and Filing Extensions
On May 23, 2016, Itron received notice from The Nasdaq Stock Market ("NASDAQ") that its plan to regain compliance with NASDAQ Listing Rule 5250(c)(1) and its request for an extension to Sept. 12, 2016 to regain listing compliance has been approved. Itron also obtained waivers from its creditors that extend the due dates to Sept. 12, 2016 for annual audited financial statements and quarterly unaudited financial statements.

The Company continues to finalize adjustments to its revenue recognition accounting for certain software and maintenance contracts and complete its financial statements for the first quarter of 2016. Itron expects to file its first quarter Form 10-Q as soon as practicable.

As previously announced, the Company engaged Deloitte & Touche LLP in March 2016 as its independent audit firm for the year ending Dec. 31, 2016.

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 timing and ability to regain compliance with the reporting obligations of the Securities and Exchange Commission within any exemption period granted by NASDAQ, the rate and timing of customer demand for our products, rescheduling of current customer orders, changes in estimated liabilities for product warranties, adverse impacts of litigation, 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 that are more fully described in our Annual Report on Form 10-K for the year ended Dec. 31, 2015 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.

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 expense, non-GAAP operating income, non-GAAP net income, non-GAAP 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 or non-cash costs, particularly those associated with acquisitions. We exclude certain costs in our non-GAAP financial measures as we believe the net result is a measure of our core business. Non-GAAP performance measures should be considered in addition to, and not as a substitute for, results prepared in accordance with GAAP. 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.

Related Documents:
Comparison of Key 2015 Financial Metrics to Preliminary Results Announced February 17, 2016

About Itron

Itron is a proven global leader in energy, water, smart city, IIoT and intelligent infrastructure services. For utilities, cities and society, we build innovative systems, create new efficiencies, connect communities, encourage conservation and increase resourcefulness. By safeguarding our invaluable natural resources today and tomorrow, we improve the quality of life for people around the world. Join us:

Itron® is a registered trademark 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.


Alison Mallahan

Senior Manager, Corporate Communications

(509) 891-3802