UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2003
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 0-22418
ITRON, INC.
(Exact name of registrant as specified in its charter)
| Washington |
91-1011792 | |
| (State of Incorporation) |
(I.R.S. Employer Identification Number) |
2818 North Sullivan Road
Spokane, Washington 99216-1897
(509) 924-9900
(Address and telephone number of registrant’s principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes x No ¨
The number of shares outstanding of the registrant’s common stock as of April 30, 2003 was 20,365,822.
Table of Contents
| Page | ||
| Part 1: FINANCIAL INFORMATION |
||
| Item 1: FINANCIAL STATEMENTS (UNAUDITED) |
||
| 1 | ||
| 2 | ||
| 3 | ||
| 4 | ||
| Item 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
19 | |
| Item 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
31 | |
| 32 | ||
| Part 2: OTHER INFORMATION |
||
| 33 | ||
| 33 | ||
| 33 | ||
| 34 | ||
| Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
35 | |
| Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
36 |
Part 1: FINANCIAL INFORMATION
Item 1: FINANCIAL STATEMENTS (UNAUDITED)
ITRON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, $ in thousands, except per share data)
| Three Months Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| Revenues |
||||||||
| Sales |
$ |
63,917 |
|
$ |
50,186 |
| ||
| Service |
|
10,728 |
|
|
11,889 |
| ||
| Total revenues |
|
74,645 |
|
|
62,075 |
| ||
| Cost of revenues |
||||||||
| Sales |
|
29,861 |
|
|
25,543 |
| ||
| Service |
|
7,922 |
|
|
9,245 |
| ||
| Total cost of revenues |
|
37,783 |
|
|
34,788 |
| ||
| Gross profit |
|
36,862 |
|
|
27,287 |
| ||
| Operating expenses |
||||||||
| Sales and marketing |
|
8,437 |
|
|
6,659 |
| ||
| Product development |
|
10,158 |
|
|
7,507 |
| ||
| General and administrative |
|
7,773 |
|
|
4,859 |
| ||
| Amortization of intangibles |
|
1,888 |
|
|
337 |
| ||
| Restructurings |
|
2,165 |
|
|
– |
| ||
| In-process research and development |
|
900 |
|
|
7,400 |
| ||
| Total operating expenses |
|
31,321 |
|
|
26,762 |
| ||
| Operating income |
|
5,541 |
|
|
525 |
| ||
| Other income (expense) |
||||||||
| Equity in affiliates |
|
22 |
|
|
(4 |
) | ||
| Interest income |
|
169 |
|
|
321 |
| ||
| Interest expense |
|
(456 |
) |
|
(1,292 |
) | ||
| Other income, net |
|
25 |
|
|
138 |
| ||
| Total other income (expense) |
|
(240 |
) |
|
(837 |
) | ||
| Income (loss) before income taxes |
|
5,301 |
|
|
(312 |
) | ||
| Income tax provision |
|
(2,385 |
) |
|
(2,658 |
) | ||
| Net income (loss) |
$ |
2,916 |
|
$ |
(2,970 |
) | ||
| Earnings per share |
||||||||
| Basic net income (loss) per share |
$ |
0.14 |
|
$ |
(0.18 |
) | ||
| Diluted net income (loss) per share |
$ |
0.14 |
|
$ |
(0.18 |
) | ||
| Weighted average number of shares outstanding |
||||||||
| Basic |
|
20,239 |
|
|
16,510 |
| ||
| Diluted |
|
21,428 |
|
|
16,510 |
| ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
ITRON, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, $ in thousands)
| March 31, 2003 |
December 31, 2002 |
|||||||
| ASSETS |
||||||||
| Current assets |
||||||||
| Cash and cash equivalents |
$ |
12,863 |
|
$ |
32,564 |
| ||
| Accounts receivable, net |
|
49,795 |
|
|
57,571 |
| ||
| Inventories |
|
16,015 |
|
|
15,660 |
| ||
| Deferred income taxes |
|
5,248 |
|
|
5,927 |
| ||
| Other |
|
5,741 |
|
|
2,770 |
| ||
| Total current assets |
|
89,662 |
|
|
114,492 |
| ||
| Property, plant and equipment, net |
|
31,824 |
|
|
30,168 |
| ||
| Equipment used in outsourcing, net |
|
11,345 |
|
|
11,589 |
| ||
| Intangible assets, net |
|
32,998 |
|
|
18,305 |
| ||
| Goodwill |
|
85,920 |
|
|
44,187 |
| ||
| Deferred income taxes, net |
|
40,678 |
|
|
24,050 |
| ||
| Other |
|
4,771 |
|
|
4,455 |
| ||
| Total assets |
$ |
297,198 |
|
$ |
247,246 |
| ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current liabilities |
||||||||
| Accounts payable and accrued expenses |
$ |
26,531 |
|
$ |
25,526 |
| ||
| Wages and benefits payable |
|
12,117 |
|
|
18,259 |
| ||
| Accrued litigation |
|
7,400 |
|
|
7,400 |
| ||
| Current portion of debt |
|
17,376 |
|
|
691 |
| ||
| Unearned revenue |
|
12,056 |
|
|
11,580 |
| ||
| Total current liabilities |
|
75,480 |
|
|
63,456 |
| ||
| Long-term debt |
|
33,333 |
|
|
— |
| ||
| Project financing debt |
|
4,583 |
|
|
4,762 |
| ||
| Warranty and other obligations |
|
18,014 |
|
|
17,427 |
| ||
| Total liabilities |
|
131,410 |
|
|
85,645 |
| ||
| Commitments and contingencies (Notes 8 and 12) |
||||||||
| Shareholders’ equity |
||||||||
| Common stock |
|
196,415 |
|
|
195,546 |
| ||
| Preferred stock |
|
— |
|
|
— |
| ||
| Accumulated other comprehensive income (loss) |
|
122 |
|
|
(280 |
) | ||
| Accumulated deficit |
|
(30,749 |
) |
|
(33,665 |
) | ||
| Total shareholders’ equity |
|
165,788 |
|
|
161,601 |
| ||
| Total liabilities and shareholders’ equity |
$ |
297,198 |
|
$ |
247,246 |
| ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
ITRON, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, $ in thousands)
| Three Months Ended March 31, |
||||||||
| 2003 |
2002 |
|||||||
| Operating activities |
||||||||
| Net income (loss) |
$ |
2,916 |
|
$ |
(2,970 |
) | ||
| Noncash charges (credits) to income: |
||||||||
| Depreciation and amortization |
|
4,121 |
|
|
2,356 |
| ||
| Deferred income taxes provision |
|
2,511 |
|
|
1,771 |
| ||
| Acquired in-process research and development |
|
900 |
|
|
7,400 |
| ||
| Stock option income tax benefits |
|
122 |
|
|
885 |
| ||
| Equity in affiliates |
|
(22 |
) |
|
4 |
| ||
| Gain on early extinguishment of debt |
|
— |
|
|
(200 |
) | ||
| Other, net |
|
162 |
|
|
73 |
| ||
| Changes in operating assets and liabilities, net of effects of acquisitions: |
||||||||