Goodwill

The following table reflects goodwill allocated to each reporting segment at September 30, 2011 and 2010:



	Itron North America			Itron International			Total Company
	(in thousands)
Goodwill balance at January 1, 2010	$	197,515		$	1,108,084		$	1,305,599
Effect of change in exchange rates	130			(69,146		)	(69,016		)
Goodwill balance at September 30, 2010	$	197,645		$	1,038,938		$	1,236,583

Goodwill balance at January 1, 2011	$	198,048		$	1,011,328		$	1,209,376
Goodwill acquired	—			10,251			10,251
Goodwill impairment	—			(540,400		)	(540,400		)
Effect of change in exchange rates	(317		)	35,696			35,379
Goodwill balance at September 30, 2011	$	197,731		$	516,875		$	714,606

As a result of the considerable decline in the price of our shares of common stock at the end of September 2011, our aggregate market value was significantly lower than the aggregate carrying value of our net assets. Therefore, we performed an interim impairment test of our goodwill as of September 30, 2011, which resulted in an estimated goodwill write-down of $540.4 million in the third quarter of 2011. Pursuant to the procedures required to complete the two step goodwill impairment test, we will finalize the amount of the goodwill impairment charge during the fourth quarter of 2011, which could result in an increase or decrease to the estimated impairment charge recognized in the third quarter. The goodwill impairment charge does not affect the debt covenants under the Company's existing credit facility.

The goodwill impairment was associated with two reporting units from the Itron International operating segment. The goodwill balance before and after the estimated goodwill impairment is as follows:



	September 30, 2011
Reporting Unit	Before Estimated Impairment		Estimated Impairment		After Estimated Impairment
	(in thousands)
Itron International - Electricity	$	363,626	$	216,085	$	147,541
Itron International - Water	389,308		324,315		64,993
			$	540,400

Refer to Note 1: Summary of Significant Accounting Policies for a description of our reporting units and the methods used to determine the fair value of our reporting units and the amount of goodwill impairment.