Segment Information (Text Block)

9 Months Ended

Sep. 30, 2013

Segment Reporting [Abstract]

Segment Information [Text Block]

Segment Information

We operate under the Itron brand worldwide and manage and report under two operating segments, Energy and Water. The Energy operating segment includes our global electricity and gas businesses, while the Water operating segment includes our global water and heat businesses.

On March 27, 2013, we separated the management of our Energy operating segment into Electricity and Gas to allow each business line to develop its own go-to-market strategy, prioritize its marketing and product development requirements, and focus on its strategic investments. As a result, our sales, marketing, and delivery function are managed under three business lines - Electricity, Gas, and Water. At the same time, product development and manufacturing operations were centralized and are now managed on a global basis. Although most management positions of the new business lines have been identified, the transition to the new organizational structure is ongoing. Therefore, changes to Itron's management reporting and external financial reporting are in process, and we expect to complete the implementation of the new reporting processes in the fourth quarter of 2013.

We have three measures of segment performance: revenue, gross profit (margin), and operating income (margin). Our operating segments have distinct products, and therefore intersegment revenues are minimal. Corporate operating expenses, interest income, interest expense, other income (expense), and income tax provision (benefit) are not allocated to the segments, nor included in the measure of segment profit or loss. In addition, we allocate only certain production assets and intangible assets to our operating segments. We do not manage the performance of the segments on a balance sheet basis.

Segment Products

Energy

Standard electricity (electromechanical and electronic) and gas meters; advanced electricity and gas meters and communication modules; smart electricity meters; smart electricity and gas communication modules; prepayment systems, including smart key, keypad, and smart card communication technologies; advanced systems including handheld, mobile, and fixed network collection technologies; smart network technologies; meter data management software; knowledge application solutions; and professional services including implementation, installation, consulting, and analysis.

Water

Standard water and heat meters; advanced and smart water meters and communication modules; advanced systems including handheld, mobile, and fixed network collection technologies; meter data management software; knowledge application solutions; and professional services including implementation, installation, consulting, analysis, and system management.

Revenues, gross profit, and operating income associated with our segments were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
	(in thousands)
Revenues
Energy	$	359,855		$	377,489		$	1,022,156		$	1,259,834
Water	135,636			126,574			403,046			395,009
Total Company	$	495,491		$	504,063		$	1,425,202		$	1,654,843
Gross profit
Energy	$	102,940		$	125,503		$	311,167		$	409,057
Water	47,144			46,294			138,628			142,590
Total Company	$	150,084		$	171,797		$	449,795		$	551,647
Operating income (loss)
Energy	$	(9,284	)	$	30,978		$	5,960		$	116,211
Water	17,225			22,293			45,189			49,896
Corporate unallocated	(14,429		)	(7,304		)	(37,314		)	(34,456		)
Total Company	(6,488		)	45,967			13,835			131,651
Total other income (expense)	(2,859		)	(3,523		)	(8,837		)	(11,151		)
Income (loss) before income taxes	$	(9,347	)	$	42,444		$	4,998		$	120,500

For the three and nine months ended September 30, 2013, no single customer represented more than 10% of total Company, Energy operating segment, or Water operating segment revenues.

For the nine months ended September 30, 2012, one customer from the Energy operating segment accounted for 10% of the total Company revenues, while no customer represented more than 10% of the total Company revenues during the three months ended September 30, 2012. During the three and nine months ended September 30, 2012, one customer accounted for 11% and 13%, respectively, of the Energy operating segment revenues, and no single customer accounted for more than 10% of the Water operating segment revenues.

Revenues by region were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
	(in thousands)
United States and Canada	$	227,784	$	224,956	$	616,555	$	802,542
Europe, Middle East, and Africa	208,546		211,195		635,691		648,050
Other	59,161		67,912		172,956		204,251
Total revenues	$	495,491	$	504,063	$	1,425,202	$	1,654,843

Depreciation and amortization expense associated with our segments was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
	(in thousands)
Energy	$	18,476	$	20,452	$	55,295	$	61,596
Water	6,201		7,116		18,379		20,211
Corporate Unallocated	41		17		75		49
Total Company	$	24,718	$	27,585	$	73,749	$	81,856