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Segment Information | 6 Months Ended
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Jun. 30, 2018
Segment Reporting [Abstract] |
Segment Information | Segment Information We operate under the Itron brand worldwide and manage and report under four operating segments: Electricity, Gas, Water, and Networks. Our Water operating segment includes our global water, and heat and allocation solutions. Networks became a new operating segment with the acquisition of SSNI. This structure allows each operating segment to develop its own go-to-market strategy, prioritize its marketing and product development requirements, and focus on its strategic investments. Our sales and marketing function is managed under each operating segment. Our product development, service delivery, and manufacturing operations are managed on a worldwide basis to promote a global perspective in our operations and processes and yet still maintain alignment with the operating segments. We have three GAAP measures of segment performance: revenue, gross profit (margin), and operating income (margin). Intersegment revenues are minimal. Certain operating expenses are allocated to our Electricity, Gas, and Water operating segments based upon internally established allocation methodologies. We will not allocate operating expenses to our Networks operating segment until it is fully integrated and managed centrally. Corporate operating expenses, interest income, interest expense, other income (expense), and income tax provision are not allocated to the operating segments, nor are included in the measure of operating 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 operating segments on a balance sheet basis. Segment Products
Electricity | Standard electricity (electromechanical and electronic) meters; smart network and data platform solutions that include one or several of the following: smart electricity meters; smart electricity communication modules; prepayment systems, including smart key, keypad, and smart card communication technologies; smart systems including handheld, mobile, and fixed network collection technologies; smart network technologies; meter data management software; knowledge application solutions; installation; implementation; and professional services including consulting and analysis.
Gas | Standard gas meters; smart network and data platform solutions that include one or several of the following: smart gas meters; smart gas communication modules; prepayment systems, including smart key, keypad, and smart card communication technologies; smart systems, including handheld, mobile, and fixed network collection technologies; smart network technologies; meter data management software; knowledge application solutions installation; implementation; and professional services including consulting and analysis.
Water | Standard water and heat meters; smart network and data platform solutions that include one or several of the following: smart water meters and communication modules; smart heat meters; smart systems including handheld, mobile, and fixed network collection technologies; meter data management software; knowledge application solutions; installation; implementation; and professional services including consulting and analysis.
Networks | Smart network and data platform solutions for electricity, gas, water and smart cities including advanced metering, distribution automation, demand-side management, and street lights. Solutions include one or several of the following: communications modules, access points, relays and bridges; network operating software, grid management, security and grid analytics managed services and SaaS; installation; implementation; and professional services including consulting and analysis.
Revenues, gross profit, and operating income associated with our operating segments were as follows:
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2018 |  | 2017 |  | 2018 |  | 2017
| (in thousands)
Product revenues |  |  |  |  |  |  |
Electricity | $ | 212,236 |  |  | $ | 215,271 |  |  | $ | 426,113 |  |  | $ | 421,174 |
Gas | 129,397 |  |  | 130,872 |  |  | 259,640 |  |  | 247,999 |
Water | 118,574 |  |  | 108,570 |  |  | 244,161 |  |  | 217,905 |
Networks | 55,707 |  |  | — |  |  | 123,110 |  |  | — |
Total Company | $ | 515,914 |  |  | $ | 454,713 |  |  | $ | 1,053,024 |  |  | $ | 887,078 |
Service revenues |  |  |  |  |  |  |
Electricity | $ | 38,342 |  |  | $ | 35,061 |  |  | $ | 76,870 |  |  | $ | 67,909 |
Gas | 7,635 |  |  | 7,828 |  |  | 15,131 |  |  | 14,912 |
Water | 6,063 |  |  | 5,480 |  |  | 11,670 |  |  | 10,775 |
Networks | 17,936 |  |  | — |  |  | 36,416 |  |  | — |
Total Company | $ | 69,976 |  |  | $ | 48,369 |  |  | $ | 140,087 |  |  | $ | 93,596 |
Total revenues |  |  |  |  |  |  |
Electricity | $ | 250,578 |  |  | $ | 250,332 |  |  | $ | 502,983 |  |  | $ | 489,083 |
Gas | 137,032 |  |  | 138,700 |  |  | 274,771 |  |  | 262,911 |
Water | 124,637 |  |  | 114,050 |  |  | 255,831 |  |  | 228,680 |
Networks | 73,643 |  |  | — |  |  | 159,526 |  |  | — |
Total Company | $ | 585,890 |  |  | $ | 503,082 |  |  | $ | 1,193,111 |  |  | $ | 980,674 |
Gross profit |  |  |  |  |  |  |
Electricity | $ | 76,987 |  |  | $ | 78,645 |  |  | $ | 146,962 |  |  | $ | 145,895 |
Gas | 40,543 |  |  | 50,536 |  |  | 84,014 |  |  | 101,351 |
Water | 37,835 |  |  | 49,096 |  |  | 75,640 |  |  | 88,668 |
Networks | 21,212 |  |  | — |  |  | 49,816 |  |  | — |
Total Company | $ | 176,577 |  |  | $ | 178,277 |  |  | $ | 356,432 |  |  | $ | 335,914 |
Operating income (loss) |  |  |  |  |  |  |
Electricity | $ | 28,997 |  |  | $ | 17,839 |  |  | $ | 26,229 |  |  | $ | 34,923 |
Gas | 15,245 |  |  | 16,977 |  |  | (13,103 | ) |  | 38,708 |
Water | 8,824 |  |  | 16,866 |  |  | (2,886 | ) |  | 25,670 |
Networks | (28,219 | ) |  | — |  |  | (103,729 | ) |  | — |
Corporate unallocated | (4,284 | ) |  | (14,054 | ) |  | (26,396 | ) |  | (30,846 | )
Total Company | 20,563 |  |  | 37,628 |  |  | (119,885 | ) |  | 68,455 |
Total other income (expense) | (13,009 | ) |  | (6,061 | ) |  | (29,019 | ) |  | (11,827 | )
Income (loss) before income taxes | $ | 7,554 |  |  | $ | 31,567 |  |  | $ | (148,904 | ) |  | $ | 56,628 |
For the three and six months ended June 30, 2018, one customer represented 23% and 22%, respectively, of total Electricity operating segment revenues, and another customer represented 16% for the same three and six months periods. For both the three and six months ended June 30, 2018, one customer represented 12% of total Gas operating segment revenues. For the three and six ended June 30, 2018, no single customer represented more than 10% of the Water operating segment revenues. For the three and six months ended June 30, 2018, one customer represented 18% and 13%, respectively, and another customer represented 15% and 13%, respectively, of total Networks operating segment revenues. For the three months ended June 30, 2018, one customer represented 10% of total company revenues, and no single customer represented more than 10% of total company revenues for the six months ended June 30, 2018. For the three and six months ended June 30, 2017, one customer represented 22% and 20%, respectively, of total Electricity operating segment revenues. For the three months ended June 30, 2017, one customer represented 11% of total company revenues. For the six months ended June 30, 2017, no single customer represented more than 10% of total company revenues. For the three and six months ended June 30, 2017, no single customer represented more than 10% of the Gas or Water operating segment revenues. We currently buy a majority of our integrated circuit board assemblies from three suppliers. Management believes that other suppliers could provide similar products, but a change in suppliers, disputes with our suppliers, or unexpected constraints on the suppliers' production capacity could adversely affect operating results. Revenues by region were as follows:
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2018 |  | 2017 |  | 2018 |  | 2017
| (in thousands)
United States and Canada | $ | 348,101 |  |  | $ | 295,737 |  |  | $ | 704,033 |  |  | $ | 564,834 |
Europe, Middle East, and Africa | 184,748 |  |  | 158,766 |  |  | 386,822 |  |  | 321,581 |
Other(1) | 53,041 |  |  | 48,579 |  |  | 102,256 |  |  | 94,259 |
Total revenues | $ | 585,890 |  |  | $ | 503,082 |  |  | $ | 1,193,111 |  |  | $ | 980,674 |
(1) | The Other region includes our operations in Latin America and Asia Pacific.
Depreciation and amortization expense associated with our operating segments was as follows:
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2018 |  | 2017 |  | 2018 |  | 2017
| (in thousands)
Electricity | $ | 6,419 |  |  | $ | 5,774 |  |  | $ | 12,944 |  |  | $ | 11,085 |
Gas | 4,254 |  |  | 4,503 |  |  | 8,456 |  |  | 8,747 |
Water | 4,008 |  |  | 3,887 |  |  | 8,117 |  |  | 7,846 |
Networks | 15,223 |  |  | — |  |  | 30,235 |  |  | — |
Corporate unallocated | 1,003 |  |  | 926 |  |  | 2,227 |  |  | 1,790 |
Total Company | $ | 30,907 |  |  | $ | 15,090 |  |  | $ | 61,979 |  |  | $ | 29,468 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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