v2.4.0.8
Segment Information (Text Block)
 9 Months Ended
Sep. 30, 2014
Segment Reporting [Abstract]  
Segment Information [Text Block]
Segment Information

We operate under the Itron brand worldwide and manage and report under three operating segments, Electricity, Gas, and Water. Our Water operating segment includes both our global water and heat solutions.

In March 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. Our sales, marketing, and delivery functions are managed under three business lines - Electricity, Gas, and Water. Our product development and manufacturing operations are now managed on a worldwide basis to promote a global perspective in our operations and processes while maintaining alignment with the business lines. The transition to the new organizational structure, including changes to operations and financial reporting systems, was completed in the fourth quarter of 2013. Our historical segment information for the three and nine months ended September 30, 2013 has been recast to reflect our new operating segments.

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. Certain operating expenses are allocated to the operating segments based upon established allocation methodologies. 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
Electricity
Standard electricity (electromechanical and electronic) meters; advanced electricity meters and communication modules; smart electricity meters; smart electricity 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.
 
 
Gas
Standard gas meters; advanced gas meters and communication modules; smart gas meters; smart 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; smart heat meters; 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,
 
2014
 
2013
 
2014
 
2013
 
(in thousands)
Revenues
 
 
 
 
 
 
 
Electricity
$
203,441

 
$
216,615

 
$
567,414

 
$
605,990

Gas
149,276

 
143,240

 
449,707

 
416,166

Water
143,737

 
135,636

 
443,481

 
403,046

Total Company
$
496,454

 
$
495,491

 
$
1,460,602

 
$
1,425,202

 
 
 
 
 
 
 
 
Gross profit
 
 
 
 
 
 
 
Electricity
$
45,959

 
$
47,637

 
$
141,675

 
$
155,094

Gas
53,492

 
55,303

 
168,609

 
156,073

Water
51,311

 
47,144

 
158,054

 
138,628

Total Company
$
150,762

 
$
150,084

 
$
468,338

 
$
449,795

 
 
 
 
 
 
 
 
Operating income (loss)
 
 
 
 
 
 
 
Electricity
$
(11,196
)
 
$
(33,756
)
 
$
(35,412
)
 
$
(56,923
)
Gas
23,836

 
24,472

 
73,889

 
62,883

Water
19,157

 
17,225

 
60,319

 
45,189

Corporate unallocated
(15,339
)
 
(14,429
)
 
(45,872
)
 
(37,314
)
Total Company
16,458

 
(6,488
)
 
52,924

 
13,835

Total other income (expense)
(4,421
)
 
(2,859
)
 
(13,966
)
 
(8,837
)
Income before income taxes
$
12,037

 
$
(9,347
)
 
$
38,958

 
$
4,998



During the third quarter, in our Electricity segment, we revised our estimate of the cost to complete an OpenWay project in North America. This resulted in a decrease to gross profit of $11.4 million, which decreased basic and diluted earnings per share by $0.18 for the three and nine months ended September 30, 2014. We previously recorded additional costs on this contract in the third quarter of 2013, which decreased gross profit by $13.6 million and decreased basic and diluted earnings per share by $0.22 for the three months ended September 30, 2013 and $0.21 for the nine months ended September 30, 2013.

For the three and nine months ended September 30, 2014 and September 30, 2013, no single customer represented more than 10% of total Company or the Electricity, Gas, or Water operating segment revenues.

Revenues by region were as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
 
(in thousands)
United States and Canada
$
237,684

 
$
227,784

 
$
652,390

 
$
616,555

Europe, Middle East, and Africa
201,673

 
208,546

 
641,434

 
635,691

Other
57,097

 
59,161

 
166,778

 
172,956

Total revenues
$
496,454

 
$
495,491

 
$
1,460,602

 
$
1,425,202



Depreciation and amortization expense associated with our segments was as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
 
(in thousands)
Electricity
$
11,596

 
$
11,740

 
$
36,754

 
$
35,084

Gas
6,486

 
6,736

 
19,590

 
20,211

Water
6,466

 
6,201

 
18,679

 
18,379

Corporate Unallocated
79

 
41

 
210

 
75

Total Company
$
24,627

 
$
24,718

 
$
75,233

 
$
73,749