0000780571 12/31 2020 Q3 false 6 0000780571 2020-01-01 2020-09-30 xbrli:shares 0000780571 2020-10-30 iso4217:USD 0000780571 us-gaap:ProductMember 2020-07-01 2020-09-30 0000780571 us-gaap:ProductMember 2019-07-01 2019-09-30 0000780571 us-gaap:ProductMember 2020-01-01 2020-09-30 0000780571 us-gaap:ProductMember 2019-01-01 2019-09-30 0000780571 us-gaap:ServiceMember 2020-07-01 2020-09-30 0000780571 us-gaap:ServiceMember 2019-07-01 2019-09-30 0000780571 us-gaap:ServiceMember 2020-01-01 2020-09-30 0000780571 us-gaap:ServiceMember 2019-01-01 2019-09-30 0000780571 2020-07-01 2020-09-30 0000780571 2019-07-01 2019-09-30 0000780571 2019-01-01 2019-09-30 iso4217:USD xbrli:shares 0000780571 2020-09-30 0000780571 2019-12-31 0000780571 us-gaap:CommonStockMember 2019-12-31 0000780571 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2019-12-31 0000780571 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0000780571 us-gaap:RetainedEarningsMember 2019-12-31 0000780571 us-gaap:ParentMember 2019-12-31 0000780571 us-gaap:NoncontrollingInterestMember 2019-12-31 0000780571 us-gaap:RetainedEarningsMember 2020-01-01 2020-03-31 0000780571 us-gaap:ParentMember 2020-01-01 2020-03-31 0000780571 us-gaap:NoncontrollingInterestMember 2020-01-01 2020-03-31 0000780571 2020-01-01 2020-03-31 0000780571 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-03-31 0000780571 us-gaap:CommonStockMember 2020-01-01 2020-03-31 0000780571 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2020-01-01 2020-03-31 0000780571 us-gaap:CommonStockMember 2020-03-31 0000780571 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2020-03-31 0000780571 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-03-31 0000780571 us-gaap:RetainedEarningsMember 2020-03-31 0000780571 us-gaap:ParentMember 2020-03-31 0000780571 us-gaap:NoncontrollingInterestMember 2020-03-31 0000780571 2020-03-31 0000780571 us-gaap:RetainedEarningsMember 2020-04-01 2020-06-30 0000780571 us-gaap:ParentMember 2020-04-01 2020-06-30 0000780571 us-gaap:NoncontrollingInterestMember 2020-04-01 2020-06-30 0000780571 2020-04-01 2020-06-30 0000780571 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-04-01 2020-06-30 0000780571 us-gaap:CommonStockMember 2020-04-01 2020-06-30 0000780571 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2020-04-01 2020-06-30 0000780571 us-gaap:CommonStockMember 2020-06-30 0000780571 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2020-06-30 0000780571 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-06-30 0000780571 us-gaap:RetainedEarningsMember 2020-06-30 0000780571 us-gaap:ParentMember 2020-06-30 0000780571 us-gaap:NoncontrollingInterestMember 2020-06-30 0000780571 2020-06-30 0000780571 us-gaap:RetainedEarningsMember 2020-07-01 2020-09-30 0000780571 us-gaap:ParentMember 2020-07-01 2020-09-30 0000780571 us-gaap:NoncontrollingInterestMember 2020-07-01 2020-09-30 0000780571 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-07-01 2020-09-30 0000780571 us-gaap:CommonStockMember 2020-07-01 2020-09-30 0000780571 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2020-07-01 2020-09-30 0000780571 us-gaap:CommonStockMember 2020-09-30 0000780571 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2020-09-30 0000780571 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-09-30 0000780571 us-gaap:RetainedEarningsMember 2020-09-30 0000780571 us-gaap:ParentMember 2020-09-30 0000780571 us-gaap:NoncontrollingInterestMember 2020-09-30 0000780571 us-gaap:CommonStockMember 2018-12-31 0000780571 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2018-12-31 0000780571 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0000780571 us-gaap:RetainedEarningsMember 2018-12-31 0000780571 us-gaap:ParentMember 2018-12-31 0000780571 us-gaap:NoncontrollingInterestMember 2018-12-31 0000780571 2018-12-31 0000780571 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-31 0000780571 us-gaap:ParentMember 2019-01-01 2019-03-31 0000780571 us-gaap:NoncontrollingInterestMember 2019-01-01 2019-03-31 0000780571 2019-01-01 2019-03-31 0000780571 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0000780571 us-gaap:CommonStockMember 2019-01-01 2019-03-31 0000780571 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0000780571 us-gaap:CommonStockMember 2019-03-31 0000780571 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2019-03-31 0000780571 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0000780571 us-gaap:RetainedEarningsMember 2019-03-31 0000780571 us-gaap:ParentMember 2019-03-31 0000780571 us-gaap:NoncontrollingInterestMember 2019-03-31 0000780571 2019-03-31 0000780571 us-gaap:RetainedEarningsMember 2019-04-01 2019-06-30 0000780571 us-gaap:ParentMember 2019-04-01 2019-06-30 0000780571 us-gaap:NoncontrollingInterestMember 2019-04-01 2019-06-30 0000780571 2019-04-01 2019-06-30 0000780571 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-04-01 2019-06-30 0000780571 us-gaap:CommonStockMember 2019-04-01 2019-06-30 0000780571 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2019-04-01 2019-06-30 0000780571 us-gaap:CommonStockMember 2019-06-30 0000780571 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2019-06-30 0000780571 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 0000780571 us-gaap:RetainedEarningsMember 2019-06-30 0000780571 us-gaap:ParentMember 2019-06-30 0000780571 us-gaap:NoncontrollingInterestMember 2019-06-30 0000780571 2019-06-30 0000780571 us-gaap:RetainedEarningsMember 2019-07-01 2019-09-30 0000780571 us-gaap:ParentMember 2019-07-01 2019-09-30 0000780571 us-gaap:NoncontrollingInterestMember 2019-07-01 2019-09-30 0000780571 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-07-01 2019-09-30 0000780571 us-gaap:CommonStockMember 2019-07-01 2019-09-30 0000780571 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2019-07-01 2019-09-30 0000780571 us-gaap:CommonStockMember 2019-09-30 0000780571 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2019-09-30 0000780571 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-09-30 0000780571 us-gaap:RetainedEarningsMember 2019-09-30 0000780571 us-gaap:ParentMember 2019-09-30 0000780571 us-gaap:NoncontrollingInterestMember 2019-09-30 0000780571 2019-09-30 0000780571 us-gaap:DevelopedTechnologyRightsMember 2020-09-30 0000780571 us-gaap:DevelopedTechnologyRightsMember 2019-12-31 0000780571 us-gaap:CustomerRelationshipsMember 2020-09-30 0000780571 us-gaap:CustomerRelationshipsMember 2019-12-31 0000780571 us-gaap:TrademarksAndTradeNamesMember 2020-09-30 0000780571 us-gaap:TrademarksAndTradeNamesMember 2019-12-31 0000780571 us-gaap:OtherIntangibleAssetsMember 2020-09-30 0000780571 us-gaap:OtherIntangibleAssetsMember 2019-12-31 0000780571 2020-06-25 0000780571 itri:DeviceSolutionsMember 2019-12-31 0000780571 itri:NetworkedSolutionsSegmentMember 2019-12-31 0000780571 itri:OutcomesSegmentMember 2019-12-31 0000780571 itri:DeviceSolutionsMember 2020-01-01 2020-09-30 0000780571 itri:NetworkedSolutionsSegmentMember 2020-01-01 2020-09-30 0000780571 itri:OutcomesSegmentMember 2020-01-01 2020-09-30 0000780571 itri:DeviceSolutionsMember 2020-09-30 0000780571 itri:NetworkedSolutionsSegmentMember 2020-09-30 0000780571 itri:OutcomesSegmentMember 2020-09-30 0000780571 itri:UsdDenominatedTermLoanMember 2020-09-30 0000780571 itri:UsdDenominatedTermLoanMember 2019-12-31 0000780571 us-gaap:LineOfCreditMember 2020-09-30 0000780571 us-gaap:LineOfCreditMember 2019-12-31 0000780571 us-gaap:SeniorNotesMember 2020-09-30 0000780571 us-gaap:SeniorNotesMember 2019-12-31 0000780571 us-gaap:SecuredDebtMember 2020-09-30 0000780571 us-gaap:SecuredDebtMember 2019-12-31 0000780571 2019-10-18 0000780571 itri:UsdDenominatedTermLoanMember 2019-10-18 0000780571 us-gaap:StandbyLettersOfCreditMember 2019-10-18 0000780571 us-gaap:RevolvingCreditFacilityMember 2019-10-18 xbrli:pure 0000780571 srt:MinimumMember 2020-01-01 2020-09-30 0000780571 srt:MaximumMember 2020-01-01 2020-09-30 0000780571 srt:MinimumMember 2020-09-30 0000780571 srt:MaximumMember 2020-09-30 0000780571 itri:FourthQuarter2020Member us-gaap:LineOfCreditMember us-gaap:SubsequentEventMember 2020-10-19 0000780571 us-gaap:LineOfCreditMember itri:FirstQuarter2021Member us-gaap:SubsequentEventMember 2020-10-19 0000780571 srt:MinimumMember us-gaap:LineOfCreditMember us-gaap:SubsequentEventMember 2020-10-19 2020-10-19 0000780571 srt:MaximumMember us-gaap:LineOfCreditMember us-gaap:SubsequentEventMember 2020-10-19 2020-10-19 0000780571 srt:MinimumMember us-gaap:LineOfCreditMember us-gaap:SubsequentEventMember 2020-10-19 0000780571 srt:MaximumMember us-gaap:LineOfCreditMember us-gaap:SubsequentEventMember 2020-10-19 0000780571 us-gaap:LineOfCreditMember us-gaap:SubsequentEventMember 2020-10-19 0000780571 us-gaap:SecuredDebtMember 2020-01-01 2020-09-30 0000780571 us-gaap:LondonInterbankOfferedRateLIBORMember 2020-01-01 2020-09-30 0000780571 itri:EURIBORMember 2020-01-01 2020-09-30 0000780571 itri:AlternateBaseRateMember 2020-01-01 2020-09-30 0000780571 itri:AlternateBaseRate1Member 2020-01-01 2020-09-30 0000780571 itri:AlternateBaseRate2Member 2020-01-01 2020-09-30 0000780571 us-gaap:FederalFundsEffectiveSwapRateMember 2020-01-01 2020-09-30 0000780571 itri:AlternateBaseRate3Member 2020-01-01 2020-09-30 0000780571 us-gaap:LondonInterbankOfferedRateLIBORMember 2020-09-30 0000780571 us-gaap:LineOfCreditMember 2020-03-25 0000780571 us-gaap:StandbyLettersOfCreditMember 2020-09-30 0000780571 us-gaap:RevolvingCreditFacilityMember 2020-09-30 0000780571 us-gaap:LineOfCreditMember us-gaap:SubsequentEventMember 2020-10-01 2020-11-02 0000780571 2017-12-22 0000780571 2018-01-19 0000780571 us-gaap:DebtInstrumentRedemptionPeriodOneMember srt:ScenarioForecastMember 2021-01-15 2022-01-14 0000780571 srt:ScenarioForecastMember us-gaap:DebtInstrumentRedemptionPeriodTwoMember 2022-01-15 2023-01-14 0000780571 us-gaap:DebtInstrumentRedemptionPeriodThreeMember srt:ScenarioForecastMember 2023-01-15 2026-01-15 0000780571 srt:MaximumMember srt:ScenarioForecastMember 2017-12-22 2021-01-14 0000780571 us-gaap:DebtInstrumentRedemptionPeriodFourMember srt:ScenarioForecastMember 2017-12-22 2021-01-14 0000780571 srt:MinimumMember srt:ScenarioForecastMember 2017-12-22 2021-01-14 0000780571 us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:InterestRateSwapMember us-gaap:OtherCurrentAssetsMember 2020-09-30 0000780571 us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:InterestRateSwapMember us-gaap:OtherCurrentAssetsMember 2019-12-31 0000780571 us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:InterestRateCapMember us-gaap:OtherCurrentAssetsMember 2020-09-30 0000780571 us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:InterestRateCapMember us-gaap:OtherCurrentAssetsMember 2019-12-31 0000780571 us-gaap:CurrencySwapMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:OtherCurrentAssetsMember 2020-09-30 0000780571 us-gaap:CurrencySwapMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:OtherCurrentAssetsMember 2019-12-31 0000780571 us-gaap:CurrencySwapMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:OtherNoncurrentAssetsMember 2020-09-30 0000780571 us-gaap:CurrencySwapMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:OtherNoncurrentAssetsMember 2019-12-31 0000780571 us-gaap:NondesignatedMember us-gaap:OtherCurrentAssetsMember 2020-09-30 0000780571 us-gaap:NondesignatedMember us-gaap:OtherCurrentAssetsMember 2019-12-31 0000780571 us-gaap:OtherCurrentLiabilitiesMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:InterestRateSwapMember 2020-09-30 0000780571 us-gaap:OtherCurrentLiabilitiesMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:InterestRateSwapMember 2019-12-31 0000780571 us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:InterestRateSwapMember us-gaap:OtherNoncurrentLiabilitiesMember 2020-09-30 0000780571 us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:InterestRateSwapMember us-gaap:OtherNoncurrentLiabilitiesMember 2019-12-31 0000780571 us-gaap:OtherCurrentLiabilitiesMember us-gaap:NondesignatedMember 2020-09-30 0000780571 us-gaap:OtherCurrentLiabilitiesMember us-gaap:NondesignatedMember 2019-12-31 0000780571 itri:AccumulatedNetGainLossfromDerivativeandNonderivativeInstrumentsDesignatedasHedgingInstrumentsMember 2019-12-31 0000780571 itri:AccumulatedNetGainLossfromDerivativeandNonderivativeInstrumentsDesignatedasHedgingInstrumentsMember 2018-12-31 0000780571 itri:AccumulatedNetGainLossfromDerivativeandNonderivativeInstrumentsDesignatedasHedgingInstrumentsMember 2020-09-30 0000780571 itri:AccumulatedNetGainLossfromDerivativeandNonderivativeInstrumentsDesignatedasHedgingInstrumentsMember 2019-09-30 0000780571 itri:AccumulatedOtherComprehensiveIncomeNetUnrealizedGainLossOnNonderivativeInstrumentsMember 2020-09-30 0000780571 itri:AccumulatedOtherComprehensiveIncomeNetUnrealizedGainLossOnNonderivativeInstrumentsMember 2019-09-30 0000780571 itri:NumberOfCounterpartiesMember 2020-09-30 0000780571 itri:NumberOfCounterpartiesMember 2019-12-31 0000780571 us-gaap:LondonInterbankOfferedRateLIBORMember us-gaap:SecuredDebtMember 2020-09-30 0000780571 us-gaap:InterestRateSwapMember 2015-10-31 0000780571 us-gaap:InterestRateSwapMember 2020-06-30 0000780571 us-gaap:InterestRateSwapMember 2020-09-30 0000780571 us-gaap:InterestRateCapMember 2015-11-30 0000780571 us-gaap:InterestRateCapMember 2016-12-31 0000780571 us-gaap:InterestRateCapMember 2015-11-30 2015-11-30 0000780571 us-gaap:CurrencySwapMember 2018-04-30 0000780571 us-gaap:CurrencySwapMember 2020-09-30 0000780571 us-gaap:ForeignExchangeOptionMember 2020-02-28 0000780571 us-gaap:ForeignExchangeOptionMember 2020-02-28 2020-02-28 0000780571 us-gaap:InterestRateSwapMember 2020-07-01 2020-09-30 0000780571 us-gaap:InterestRateSwapMember 2019-07-01 2019-09-30 0000780571 us-gaap:InterestExpenseMember us-gaap:InterestRateSwapMember 2020-07-01 2020-09-30 0000780571 us-gaap:InterestExpenseMember us-gaap:InterestRateSwapMember 2019-07-01 2019-09-30 0000780571 us-gaap:InterestRateCapMember 2020-07-01 2020-09-30 0000780571 us-gaap:InterestRateCapMember 2019-07-01 2019-09-30 0000780571 us-gaap:InterestExpenseMember us-gaap:InterestRateCapMember 2020-07-01 2020-09-30 0000780571 us-gaap:InterestExpenseMember us-gaap:InterestRateCapMember 2019-07-01 2019-09-30 0000780571 us-gaap:ForeignExchangeOptionMember 2020-07-01 2020-09-30 0000780571 us-gaap:ForeignExchangeOptionMember 2019-07-01 2019-09-30 0000780571 us-gaap:CostOfSalesMember us-gaap:ForeignExchangeOptionMember 2020-07-01 2020-09-30 0000780571 us-gaap:CostOfSalesMember us-gaap:ForeignExchangeOptionMember 2019-07-01 2019-09-30 0000780571 itri:CurrencySwap1Member 2020-07-01 2020-09-30 0000780571 itri:CurrencySwap1Member 2019-07-01 2019-09-30 0000780571 us-gaap:CurrencySwapMember us-gaap:InterestExpenseMember 2020-07-01 2020-09-30 0000780571 us-gaap:CurrencySwapMember us-gaap:InterestExpenseMember 2019-07-01 2019-09-30 0000780571 itri:CurrencySwap2Member 2020-07-01 2020-09-30 0000780571 itri:CurrencySwap2Member 2019-07-01 2019-09-30 0000780571 itri:OtherIncomeExpenseMember us-gaap:CurrencySwapMember 2020-07-01 2020-09-30 0000780571 itri:OtherIncomeExpenseMember us-gaap:CurrencySwapMember 2019-07-01 2019-09-30 0000780571 us-gaap:InterestRateSwapMember 2020-01-01 2020-09-30 0000780571 us-gaap:InterestRateSwapMember 2019-01-01 2019-09-30 0000780571 us-gaap:InterestExpenseMember us-gaap:InterestRateSwapMember 2020-01-01 2020-09-30 0000780571 us-gaap:InterestExpenseMember us-gaap:InterestRateSwapMember 2019-01-01 2019-09-30 0000780571 us-gaap:InterestRateCapMember 2020-01-01 2020-09-30 0000780571 us-gaap:InterestRateCapMember 2019-01-01 2019-09-30 0000780571 us-gaap:InterestExpenseMember us-gaap:InterestRateCapMember 2020-01-01 2020-09-30 0000780571 us-gaap:InterestExpenseMember us-gaap:InterestRateCapMember 2019-01-01 2019-09-30 0000780571 us-gaap:ForeignExchangeOptionMember 2020-01-01 2020-09-30 0000780571 us-gaap:ForeignExchangeOptionMember 2019-01-01 2019-09-30 0000780571 us-gaap:CostOfSalesMember us-gaap:ForeignExchangeOptionMember 2020-01-01 2020-09-30 0000780571 us-gaap:CostOfSalesMember us-gaap:ForeignExchangeOptionMember 2019-01-01 2019-09-30 0000780571 itri:CurrencySwap1Member 2020-01-01 2020-09-30 0000780571 itri:CurrencySwap1Member 2019-01-01 2019-09-30 0000780571 us-gaap:CurrencySwapMember us-gaap:InterestExpenseMember 2020-01-01 2020-09-30 0000780571 us-gaap:CurrencySwapMember us-gaap:InterestExpenseMember 2019-01-01 2019-09-30 0000780571 itri:CurrencySwap2Member 2020-01-01 2020-09-30 0000780571 itri:CurrencySwap2Member 2019-01-01 2019-09-30 0000780571 itri:OtherIncomeExpenseMember us-gaap:CurrencySwapMember 2020-01-01 2020-09-30 0000780571 itri:OtherIncomeExpenseMember us-gaap:CurrencySwapMember 2019-01-01 2019-09-30 itri:contracts 0000780571 us-gaap:ForwardContractsMember 2020-09-30 0000780571 srt:MinimumMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2020-09-30 0000780571 srt:MaximumMember us-gaap:ForeignExchangeContractMember us-gaap:NondesignatedMember 2020-09-30 0000780571 itri:OtherIncomeExpenseMember 2020-07-01 2020-09-30 0000780571 itri:OtherIncomeExpenseMember 2019-07-01 2019-09-30 0000780571 itri:OtherIncomeExpenseMember 2020-01-01 2020-09-30 0000780571 itri:OtherIncomeExpenseMember 2019-01-01 2019-09-30 0000780571 itri:StockIncentivePlanMember 2020-09-30 0000780571 us-gaap:EmployeeStockMember 2020-09-30 0000780571 us-gaap:PhantomShareUnitsPSUsMember 2020-07-01 2020-09-30 0000780571 us-gaap:PhantomShareUnitsPSUsMember 2019-07-01 2019-09-30 0000780571 us-gaap:PhantomShareUnitsPSUsMember 2020-01-01 2020-09-30 0000780571 us-gaap:PhantomShareUnitsPSUsMember 2019-01-01 2019-09-30 0000780571 us-gaap:EmployeeStockOptionMember 2018-12-31 0000780571 us-gaap:EmployeeStockOptionMember 2019-01-01 2019-03-31 0000780571 us-gaap:EmployeeStockOptionMember 2019-01-01 2019-09-30 0000780571 us-gaap:EmployeeStockOptionMember 2019-09-30 0000780571 us-gaap:EmployeeStockOptionMember 2019-12-31 0000780571 us-gaap:EmployeeStockOptionMember 2020-01-01 2020-03-31 0000780571 us-gaap:EmployeeStockOptionMember 2020-01-01 2020-09-30 0000780571 us-gaap:EmployeeStockOptionMember 2020-09-30 0000780571 us-gaap:EmployeeStockOptionMember 2020-07-01 2020-09-30 0000780571 us-gaap:EmployeeStockOptionMember 2019-07-01 2019-09-30 0000780571 us-gaap:RestrictedStockUnitsRSUMember 2018-12-31 0000780571 us-gaap:RestrictedStockUnitsRSUMember 2019-01-01 2019-09-30 0000780571 us-gaap:RestrictedStockUnitsRSUMember itri:VestedAndReleasedMember 2019-01-01 2019-09-30 0000780571 us-gaap:RestrictedStockUnitsRSUMember 2019-09-30 0000780571 us-gaap:RestrictedStockUnitsRSUMember 2019-12-31 0000780571 us-gaap:RestrictedStockUnitsRSUMember 2020-01-01 2020-09-30 0000780571 us-gaap:RestrictedStockUnitsRSUMember itri:VestedAndReleasedMember 2020-01-01 2020-09-30 0000780571 us-gaap:RestrictedStockUnitsRSUMember 2020-09-30 0000780571 us-gaap:RestrictedStockUnitsRSUMember itri:VestedButNotReleasedMember 2020-01-01 2020-09-30 0000780571 us-gaap:RestrictedStockUnitsRSUMember itri:LongTermPerformanceRestrictedStockAwardMember 2020-07-01 2020-09-30 0000780571 us-gaap:RestrictedStockUnitsRSUMember itri:LongTermPerformanceRestrictedStockAwardMember 2019-07-01 2019-09-30 0000780571 us-gaap:RestrictedStockUnitsRSUMember itri:LongTermPerformanceRestrictedStockAwardMember 2020-01-01 2020-09-30 0000780571 us-gaap:RestrictedStockUnitsRSUMember itri:LongTermPerformanceRestrictedStockAwardMember 2019-01-01 2019-09-30 0000780571 itri:CreditFacilityMember 2020-09-30 0000780571 itri:CreditFacilityMember 2019-12-31 0000780571 itri:UnsecuredMulticurrencyRevolvingLinesOfCreditMember 2020-09-30 0000780571 itri:UnsecuredMulticurrencyRevolvingLinesOfCreditMember 2019-12-31 0000780571 us-gaap:SuretyBondMember 2020-09-30 0000780571 us-gaap:SuretyBondMember 2019-12-31 0000780571 itri:A2020ProjectsMember srt:MinimumMember 2020-09-17 0000780571 srt:MaximumMember itri:A2020ProjectsMember 2020-09-17 0000780571 itri:A2020ProjectsMember 2020-09-17 2020-09-17 0000780571 itri:A2020ProjectsMember 2020-01-01 2020-09-30 0000780571 us-gaap:EmployeeSeveranceMember itri:A2020ProjectsMember 2020-09-30 0000780571 us-gaap:EmployeeSeveranceMember itri:A2020ProjectsMember 2019-12-31 0000780571 us-gaap:EmployeeSeveranceMember itri:A2020ProjectsMember 2020-01-01 2020-09-30 0000780571 itri:A2020ProjectsMember itri:AssetImpairmentAndNetGainLossOnSaleOrDisposalMember 2020-09-30 0000780571 itri:A2020ProjectsMember itri:AssetImpairmentAndNetGainLossOnSaleOrDisposalMember 2019-12-31 0000780571 itri:A2020ProjectsMember itri:AssetImpairmentAndNetGainLossOnSaleOrDisposalMember 2020-01-01 2020-09-30 0000780571 itri:A2020ProjectsMember us-gaap:OtherRestructuringMember 2020-09-30 0000780571 itri:A2020ProjectsMember us-gaap:OtherRestructuringMember 2019-12-31 0000780571 itri:A2020ProjectsMember us-gaap:OtherRestructuringMember 2020-01-01 2020-09-30 0000780571 itri:A2020ProjectsMember 2020-09-30 0000780571 itri:A2020ProjectsMember 2019-12-31 0000780571 itri:A2018ProjectsMember 2020-01-01 2020-09-30 0000780571 us-gaap:EmployeeSeveranceMember itri:A2018ProjectsMember 2020-09-30 0000780571 us-gaap:EmployeeSeveranceMember itri:A2018ProjectsMember 2019-12-31 0000780571 us-gaap:EmployeeSeveranceMember itri:A2018ProjectsMember 2020-01-01 2020-09-30 0000780571 itri:A2018ProjectsMember itri:AssetImpairmentAndNetGainLossOnSaleOrDisposalMember 2020-09-30 0000780571 itri:A2018ProjectsMember itri:AssetImpairmentAndNetGainLossOnSaleOrDisposalMember 2019-12-31 0000780571 itri:A2018ProjectsMember itri:AssetImpairmentAndNetGainLossOnSaleOrDisposalMember 2020-01-01 2020-09-30 0000780571 us-gaap:OtherRestructuringMember itri:A2018ProjectsMember 2020-09-30 0000780571 us-gaap:OtherRestructuringMember itri:A2018ProjectsMember 2019-12-31 0000780571 us-gaap:OtherRestructuringMember itri:A2018ProjectsMember 2020-01-01 2020-09-30 0000780571 itri:A2018ProjectsMember 2020-09-30 0000780571 itri:A2018ProjectsMember 2019-12-31 0000780571 us-gaap:EmployeeSeveranceMember 2019-12-31 0000780571 itri:AssetImpairmentAndNetGainLossOnSaleOrDisposalMember 2019-12-31 0000780571 us-gaap:OtherRestructuringMember 2019-12-31 0000780571 us-gaap:EmployeeSeveranceMember 2020-01-01 2020-09-30 0000780571 itri:AssetImpairmentAndNetGainLossOnSaleOrDisposalMember 2020-01-01 2020-09-30 0000780571 us-gaap:OtherRestructuringMember 2020-01-01 2020-09-30 0000780571 us-gaap:EmployeeSeveranceMember 2020-09-30 0000780571 itri:AssetImpairmentAndNetGainLossOnSaleOrDisposalMember 2020-09-30 0000780571 us-gaap:OtherRestructuringMember 2020-09-30 0000780571 2019-03-14 0000780571 2019-01-01 2019-12-31 0000780571 us-gaap:AccumulatedTranslationAdjustmentMember 2018-12-31 0000780571 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2018-12-31 0000780571 itri:AccumulatedOtherComprehensiveIncomeNetUnrealizedGainLossOnNonderivativeInstrumentsMember 2018-12-31 0000780571 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2018-12-31 0000780571 us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember 2018-12-31 0000780571 us-gaap:AccumulatedTranslationAdjustmentMember 2019-01-01 2019-09-30 0000780571 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2019-01-01 2019-09-30 0000780571 itri:AccumulatedOtherComprehensiveIncomeNetUnrealizedGainLossOnNonderivativeInstrumentsMember 2019-01-01 2019-09-30 0000780571 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-01-01 2019-09-30 0000780571 us-gaap:AccumulatedTranslationAdjustmentMember 2019-09-30 0000780571 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2019-09-30 0000780571 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-09-30 0000780571 us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember 2019-09-30 0000780571 us-gaap:AccumulatedTranslationAdjustmentMember 2019-12-31 0000780571 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2019-12-31 0000780571 itri:AccumulatedOtherComprehensiveIncomeNetUnrealizedGainLossOnNonderivativeInstrumentsMember 2019-12-31 0000780571 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2019-12-31 0000780571 us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember 2019-12-31 0000780571 us-gaap:AccumulatedTranslationAdjustmentMember 2020-01-01 2020-09-30 0000780571 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2020-01-01 2020-09-30 0000780571 itri:AccumulatedOtherComprehensiveIncomeNetUnrealizedGainLossOnNonderivativeInstrumentsMember 2020-01-01 2020-09-30 0000780571 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-01-01 2020-09-30 0000780571 us-gaap:AccumulatedTranslationAdjustmentMember 2020-09-30 0000780571 us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember 2020-09-30 0000780571 us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember 2020-09-30 0000780571 us-gaap:AociIncludingPortionAttributableToNoncontrollingInterestMember 2020-09-30 0000780571 us-gaap:CarryingReportedAmountFairValueDisclosureMember itri:UsdDenominatedTermLoanMember 2020-09-30 0000780571 us-gaap:EstimateOfFairValueFairValueDisclosureMember itri:UsdDenominatedTermLoanMember 2020-09-30 0000780571 us-gaap:CarryingReportedAmountFairValueDisclosureMember itri:UsdDenominatedTermLoanMember 2019-12-31 0000780571 us-gaap:EstimateOfFairValueFairValueDisclosureMember itri:UsdDenominatedTermLoanMember 2019-12-31 0000780571 us-gaap:LineOfCreditMember us-gaap:CarryingReportedAmountFairValueDisclosureMember 2020-09-30 0000780571 us-gaap:LineOfCreditMember us-gaap:EstimateOfFairValueFairValueDisclosureMember 2020-09-30 0000780571 us-gaap:LineOfCreditMember us-gaap:CarryingReportedAmountFairValueDisclosureMember 2019-12-31 0000780571 us-gaap:LineOfCreditMember us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-12-31 0000780571 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2020-09-30 0000780571 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2020-09-30 0000780571 us-gaap:CarryingReportedAmountFairValueDisclosureMember 2019-12-31 0000780571 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-12-31 0000780571 us-gaap:ProductMember itri:DeviceSolutionsMember 2020-07-01 2020-09-30 0000780571 us-gaap:ProductMember itri:DeviceSolutionsMember 2019-07-01 2019-09-30 0000780571 us-gaap:ProductMember itri:DeviceSolutionsMember 2020-01-01 2020-09-30 0000780571 us-gaap:ProductMember itri:DeviceSolutionsMember 2019-01-01 2019-09-30 0000780571 us-gaap:ProductMember itri:NetworkedSolutionsSegmentMember 2020-07-01 2020-09-30 0000780571 us-gaap:ProductMember itri:NetworkedSolutionsSegmentMember 2019-07-01 2019-09-30 0000780571 us-gaap:ProductMember itri:NetworkedSolutionsSegmentMember 2020-01-01 2020-09-30 0000780571 us-gaap:ProductMember itri:NetworkedSolutionsSegmentMember 2019-01-01 2019-09-30 0000780571 us-gaap:ProductMember itri:OutcomesSegmentMember 2020-07-01 2020-09-30 0000780571 us-gaap:ProductMember itri:OutcomesSegmentMember 2019-07-01 2019-09-30 0000780571 us-gaap:ProductMember itri:OutcomesSegmentMember 2020-01-01 2020-09-30 0000780571 us-gaap:ProductMember itri:OutcomesSegmentMember 2019-01-01 2019-09-30 0000780571 itri:DeviceSolutionsMember us-gaap:ServiceMember 2020-07-01 2020-09-30 0000780571 itri:DeviceSolutionsMember us-gaap:ServiceMember 2019-07-01 2019-09-30 0000780571 itri:DeviceSolutionsMember us-gaap:ServiceMember 2020-01-01 2020-09-30 0000780571 itri:DeviceSolutionsMember us-gaap:ServiceMember 2019-01-01 2019-09-30 0000780571 us-gaap:ServiceMember itri:NetworkedSolutionsSegmentMember 2020-07-01 2020-09-30 0000780571 us-gaap:ServiceMember itri:NetworkedSolutionsSegmentMember 2019-07-01 2019-09-30 0000780571 us-gaap:ServiceMember itri:NetworkedSolutionsSegmentMember 2020-01-01 2020-09-30 0000780571 us-gaap:ServiceMember itri:NetworkedSolutionsSegmentMember 2019-01-01 2019-09-30 0000780571 itri:OutcomesSegmentMember us-gaap:ServiceMember 2020-07-01 2020-09-30 0000780571 itri:OutcomesSegmentMember us-gaap:ServiceMember 2019-07-01 2019-09-30 0000780571 itri:OutcomesSegmentMember us-gaap:ServiceMember 2020-01-01 2020-09-30 0000780571 itri:OutcomesSegmentMember us-gaap:ServiceMember 2019-01-01 2019-09-30 0000780571 itri:DeviceSolutionsMember 2020-07-01 2020-09-30 0000780571 itri:DeviceSolutionsMember 2019-07-01 2019-09-30 0000780571 itri:DeviceSolutionsMember 2019-01-01 2019-09-30 0000780571 itri:NetworkedSolutionsSegmentMember 2020-07-01 2020-09-30 0000780571 itri:NetworkedSolutionsSegmentMember 2019-07-01 2019-09-30 0000780571 itri:NetworkedSolutionsSegmentMember 2019-01-01 2019-09-30 0000780571 itri:OutcomesSegmentMember 2020-07-01 2020-09-30 0000780571 itri:OutcomesSegmentMember 2019-07-01 2019-09-30 0000780571 itri:OutcomesSegmentMember 2019-01-01 2019-09-30 0000780571 us-gaap:CorporateNonSegmentMember 2020-07-01 2020-09-30 0000780571 us-gaap:CorporateNonSegmentMember 2019-07-01 2019-09-30 0000780571 us-gaap:CorporateNonSegmentMember 2020-01-01 2020-09-30 0000780571 us-gaap:CorporateNonSegmentMember 2019-01-01 2019-09-30 0000780571 us-gaap:DiscontinuedOperationsDisposedOfBySaleMember 2020-06-25 2020-06-25 0000780571 itri:CustomerAMember us-gaap:SalesMember 2020-07-01 2020-09-30 0000780571 itri:CustomerAMember us-gaap:SalesMember 2019-07-01 2019-09-30 0000780571 itri:CustomerAMember us-gaap:SalesMember 2019-01-01 2019-09-30 0000780571 itri:CustomerAMember us-gaap:SalesMember 2020-01-01 2020-09-30 0000780571 itri:UnitedStatesAndCanadaMember 2020-07-01 2020-09-30 0000780571 itri:UnitedStatesAndCanadaMember 2019-07-01 2019-09-30 0000780571 itri:UnitedStatesAndCanadaMember 2020-01-01 2020-09-30 0000780571 itri:UnitedStatesAndCanadaMember 2019-01-01 2019-09-30 0000780571 us-gaap:EMEAMember 2020-07-01 2020-09-30 0000780571 us-gaap:EMEAMember 2019-07-01 2019-09-30 0000780571 us-gaap:EMEAMember 2020-01-01 2020-09-30 0000780571 us-gaap:EMEAMember 2019-01-01 2019-09-30 0000780571 itri:OtherCountriesMember 2020-07-01 2020-09-30 0000780571 itri:OtherCountriesMember 2019-07-01 2019-09-30 0000780571 itri:OtherCountriesMember 2020-01-01 2020-09-30 0000780571 itri:OtherCountriesMember 2019-01-01 2019-09-30 0000780571 us-gaap:CorporateNonSegmentMember 2020-07-01 2020-09-30 0000780571 us-gaap:CorporateNonSegmentMember 2019-07-01 2019-09-30 0000780571 us-gaap:CorporateNonSegmentMember 2020-01-01 2020-09-30 0000780571 us-gaap:CorporateNonSegmentMember 2019-01-01 2019-09-30 0000780571 2020-07-01 2020-09-30 0000780571 2020-04-01 2020-09-30 itri:numberOfSubsidiaries 0000780571 us-gaap:DiscontinuedOperationsDisposedOfBySaleMember 2020-06-25 0000780571 us-gaap:DiscontinuedOperationsDisposedOfBySaleMember 2020-07-01 2020-09-30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020
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 000-22418
ITRON, INC.
(Exact name of registrant as specified in its charter)

Washington |  | 91-1011792
(State of Incorporation) |  | (I.R.S. Employer Identification Number)

2111 N Molter Road, Liberty Lake, Washington 99019
(509) 924-9900
(Address and telephone number of registrant's principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading Symbol(s) |  | Name of each exchange on which registered
Common stock, no par value |  | ITRI |  | NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None
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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

| Large accelerated filer | ☒ |  | Accelerated filer | ☐ |
| Non-accelerated filer | ☐ | (Do not check if a smaller reporting company) | Smaller reporting company | ☐ |
|  |  |  | Emerging growth company | ☐ |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of October 30, 2020, there were outstanding 40,396,909 shares of the registrant's common stock, no par value, which is the only class of common stock of the registrant.

Table of Contents
Itron, Inc.
Table of Contents

| Page
PART I: FINANCIAL INFORMATION |
Item 1: Financial Statements (Unaudited) |
Consolidated Statements of Operations | 1
Consolidated Statements of Comprehensive Income (Loss) | 2
Consolidated Balance Sheets | 3
Consolidated Statements of Equity | 4
Consolidated Statements of Cash Flows | 5
Notes to Consolidated Financial Statements | 6
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations | 27
Item 3: Quantitative and Qualitative Disclosures About Market Risk | 47
Item 4: Controls and Procedures | 48
PART II: OTHER INFORMATION |
Item 1: Legal Proceedings | 49
Item 1A: Risk Factors | 49
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds | 50
Item 5: Other Information | 50
Item 6: Exhibits | 51
SIGNATURE | 52

Table of Contents
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements (Unaudited)
ITRON, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

| Three Months Ended September 30, |  | Nine Months Ended September 30,
In thousands, except per share data | 2020 |  | 2019 |  | 2020 |  | 2019
Revenues |  |  |  |  |  |  |
Product revenues | $ | 470,658 |  |  | $ | 552,897 |  |  | $ | 1,437,780 |  |  | $ | 1,663,794 |
Service revenues | 69,526 |  |  | 71,577 |  |  | 210,413 |  |  | 210,293 |
Total revenues | 540,184 |  |  | 624,474 |  |  | 1,648,193 |  |  | 1,874,087 |
Cost of revenues |  |  |  |  |  |  |
Product cost of revenues | 358,297 |  |  | 389,778 |  |  | 1,072,271 |  |  | 1,176,913 |
Service cost of revenues | 38,636 |  |  | 38,292 |  |  | 122,588 |  |  | 122,293 |
Total cost of revenues | 396,933 |  |  | 428,070 |  |  | 1,194,859 |  |  | 1,299,206 |
Gross profit | 143,251 |  |  | 196,404 |  |  | 453,334 |  |  | 574,881 |
Operating expenses |  |  |  |  |  |  |
Sales, general and administrative | 64,982 |  |  | 83,666 |  |  | 215,018 |  |  | 264,640 |
Research and development | 46,224 |  |  | 50,612 |  |  | 148,999 |  |  | 150,551 |
Amortization of intangible assets | 11,183 |  |  | 16,095 |  |  | 33,488 |  |  | 48,185 |
Restructuring | 44,462 |  |  | 6,592 |  |  | 41,531 |  |  | 7,685 |
Loss on sale of business | 380 |  |  | — |  |  | 57,295 |  |  | — |
Total operating expenses | 167,231 |  |  | 156,965 |  |  | 496,331 |  |  | 471,061 |
Operating income (loss) | (23,980) |  |  | 39,439 |  |  | (42,997) |  |  | 103,820 |
Other income (expense) |  |  |  |  |  |  |
Interest income | 354 |  |  | 517 |  |  | 2,165 |  |  | 1,379 |
Interest expense | (10,810) |  |  | (12,868) |  |  | (33,771) |  |  | (39,899) |
Other income (expense), net | (2,607) |  |  | (2,759) |  |  | (3,414) |  |  | (6,463) |
Total other income (expense) | (13,063) |  |  | (15,110) |  |  | (35,020) |  |  | (44,983) |
Income (loss) before income taxes | (37,043) |  |  | 24,329 |  |  | (78,017) |  |  | 58,837 |
Income tax benefit (provision) | 11,985 |  |  | (6,152) |  |  | (366) |  |  | (20,692) |
Net income (loss) | (25,058) |  |  | 18,177 |  |  | (78,383) |  |  | 38,145 |
Net income attributable to noncontrolling interests | 299 |  |  | 1,330 |  |  | 1,092 |  |  | 3,759 |
Net income (loss) attributable to Itron, Inc. | $ | (25,357) |  |  | $ | 16,847 |  |  | $ | (79,475) |  |  | $ | 34,386 |
Net income (loss) per common share - Basic | $ | (0.63) |  |  | $ | 0.43 |  |  | $ | (1.98) |  |  | $ | 0.87 |
Net income (loss) per common share - Diluted | $ | (0.63) |  |  | $ | 0.42 |  |  | $ | (1.98) |  |  | $ | 0.86 |
Weighted average common shares outstanding - Basic | 40,337 |  |  | 39,478 |  |  | 40,199 |  |  | 39,508 |
Weighted average common shares outstanding - Diluted | 40,337 |  |  | 39,903 |  |  | 40,199 |  |  | 39,884 |

The accompanying notes are an integral part of these consolidated financial statements.
1

Table of Contents
ITRON, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)

| Three Months Ended September 30, |  | Nine Months Ended September 30,
In thousands | 2020 |  | 2019 |  | 2020 |  | 2019
Net income (loss) | $ | (25,058) |  |  | $ | 18,177 |  |  | $ | (78,383) |  |  | $ | 38,145 |
Other comprehensive income (loss), net of tax: |  |  |  |  |  |  |
Foreign currency translation adjustments | 13,988 |  |  | (16,345) |  |  | (147) |  |  | (13,544) |
Foreign currency translation adjustment reclassified to net income on sale of business | (14) |  |  | 2,443 |  |  | 52,074 |  |  | 2,443 |
Net unrealized gain (loss) on derivative instruments, designated as cash flow hedges | (1) |  |  | 695 |  |  | (2,157) |  |  | (804) |
Pension benefit obligation adjustment | (159) |  |  | 502 |  |  | 889 |  |  | 1,156 |
Total other comprehensive income (loss), net of tax | 13,814 |  |  | (12,705) |  |  | 50,659 |  |  | (10,749) |
Total comprehensive income (loss), net of tax | (11,244) |  |  | 5,472 |  |  | (27,724) |  |  | 27,396 |
Comprehensive income attributable to noncontrolling interests, net of tax | 299 |  |  | 1,330 |  |  | 1,092 |  |  | 3,759 |
Comprehensive income (loss) attributable to Itron, Inc. | $ | (11,543) |  |  | $ | 4,142 |  |  | $ | (28,816) |  |  | $ | 23,637 |

The accompanying notes are an integral part of these consolidated financial statements.
2

Table of Contents
ITRON, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

In thousands | September 30, 2020 |  | December 31, 2019
ASSETS |  |  |
Current assets |  |  |
Cash and cash equivalents | $ | 586,167 |  |  | $ | 149,904 |
Accounts receivable, net | 386,920 |  |  | 472,925 |
Inventories | 205,178 |  |  | 227,896 |
Other current assets | 173,906 |  |  | 146,526 |
Total current assets | 1,352,171 |  |  | 997,251 |
Property, plant, and equipment, net | 205,930 |  |  | 233,228 |
Deferred tax assets, net | 72,305 |  |  | 63,899 |
Other long-term assets | 47,929 |  |  | 44,686 |
Operating lease right-of-use assets, net | 78,190 |  |  | 79,773 |
Intangible assets, net | 144,888 |  |  | 185,097 |
Goodwill | 1,114,511 |  |  | 1,103,907 |
Total assets | $ | 3,015,924 |  |  | $ | 2,707,841 |
LIABILITIES AND EQUITY |  |  |
Current liabilities |  |  |
Accounts payable | $ | 232,236 |  |  | $ | 328,128 |
Other current liabilities | 76,509 |  |  | 63,785 |
Wages and benefits payable | 91,225 |  |  | 119,220 |
Taxes payable | 15,482 |  |  | 22,193 |
Current portion of debt | 21,406 |  |  | — |
Current portion of warranty | 32,118 |  |  | 38,509 |
Unearned revenue | 117,729 |  |  | 99,556 |
Total current liabilities | 586,705 |  |  | 671,391 |
Long-term debt, net | 1,313,459 |  |  | 932,482 |
Long-term warranty | 10,969 |  |  | 14,732 |
Pension benefit obligation | 103,273 |  |  | 98,712 |
Deferred tax liabilities, net | 1,854 |  |  | 1,809 |
Operating lease liabilities | 68,847 |  |  | 68,919 |
Other long-term obligations | 133,552 |  |  | 118,981 |
Total liabilities | 2,218,659 |  |  | 1,907,026 |
Equity |  |  |
Preferred stock, no par value, 10,000 shares authorized, no shares issued or outstanding | — |  |  | — |
Common stock, no par value, 75,000 shares authorized, 40,356 and 39,941 shares issued and outstanding | 1,381,774 |  |  | 1,357,600 |
Accumulated other comprehensive loss, net | (154,013) |  |  | (204,672) |
Accumulated deficit | (455,865) |  |  | (376,390) |
Total Itron, Inc. shareholders' equity | 771,896 |  |  | 776,538 |
Noncontrolling interests | 25,369 |  |  | 24,277 |
Total equity | 797,265 |  |  | 800,815 |
Total liabilities and equity | $ | 3,015,924 |  |  | $ | 2,707,841 |

The accompanying notes are an integral part of these consolidated financial statements.
3

Table of Contents
ITRON, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(UNAUDITED)

| Common Stock |  | Accumulated Other Comprehensive Loss |  | Accumulated Deficit |  | Total Itron, Inc. Shareholders' Equity |  | Noncontrolling Interests |  | Total Equity
In thousands | Shares |  | Amount |  |  |  |  |
Balances at January 1, 2020 | 39,941 |  |  | $ | 1,357,600 |  |  | $ | (204,672) |  |  | $ | (376,390) |  |  | $ | 776,538 |  |  | $ | 24,277 |  |  | $ | 800,815 |
Net income |  |  |  |  |  |  | 8,684 |  |  | 8,684 |  |  | 478 |  |  | 9,162 |
Other comprehensive income (loss), net of tax |  |  |  |  | (25,211) |  |  |  |  | (25,211) |  |  |  |  | (25,211) |
Net stock issues and repurchases | 235 |  |  | 2,247 |  |  |  |  |  |  | 2,247 |  |  |  |  | 2,247 |
Stock-based compensation expense |  |  | 8,482 |  |  |  |  |  |  | 8,482 |  |  |  |  | 8,482 |
Balances at March 31, 2020 | 40,176 |  |  | 1,368,329 |  |  | (229,883) |  |  | (367,706) |  |  | 770,740 |  |  | 24,755 |  |  | 795,495 |
Net income (loss) |  |  |  |  |  |  | (62,802) |  |  | (62,802) |  |  | 315 |  |  | (62,487) |
Other comprehensive income (loss), net of tax |  |  |  |  | 62,056 |  |  |  |  | 62,056 |  |  |  |  | 62,056 |
Net stock issues and repurchases | 58 |  |  | 706 |  |  |  |  |  |  | 706 |  |  |  |  | 706 |
Stock-based compensation expense |  |  | 7,099 |  |  |  |  |  |  | 7,099 |  |  |  |  | 7,099 |
Balances at June 30, 2020 | 40,234 |  |  | 1,376,134 |  |  | (167,827) |  |  | (430,508) |  |  | 777,799 |  |  | 25,070 |  |  | 802,869 |
Net income (loss) |  |  |  |  |  |  | (25,357) |  |  | (25,357) |  |  | 299 |  |  | (25,058) |
Other comprehensive income (loss), net of tax |  |  |  |  | 13,814 |  |  |  |  | 13,814 |  |  |  |  | 13,814 |
Net stock issues and repurchases | 122 |  |  | 583 |  |  |  |  |  |  | 583 |  |  |  |  | 583 |
Stock-based compensation expense |  |  | 5,057 |  |  |  |  |  |  | 5,057 |  |  |  |  | 5,057 |
Balances at September 30, 2020 | 40,356 |  |  | $ | 1,381,774 |  |  | $ | (154,013) |  |  | $ | (455,865) |  |  | $ | 771,896 |  |  | $ | 25,369 |  |  | $ | 797,265 |

| Common Stock |  | Accumulated Other Comprehensive Loss |  | Accumulated Deficit |  | Total Itron, Inc. Shareholders' Equity |  | Noncontrolling Interests |  | Total Equity
In thousands | Shares |  | Amount |  |  |  |  |
Balances at January 1, 2019 | 39,498 |  |  | $ | 1,334,364 |  |  | $ | (196,305) |  |  | $ | (425,396) |  |  | $ | 712,663 |  |  | $ | 21,385 |  |  | $ | 734,048 |
Net income (loss) |  |  |  |  |  |  | (1,907) |  |  | (1,907) |  |  | 1,758 |  |  | (149) |
Other comprehensive income (loss), net of tax |  |  |  |  | (1,780) |  |  |  |  | (1,780) |  |  |  |  | (1,780) |
Distributions to noncontrolling interests |  |  |  |  |  |  |  |  |  |  | (517) |  |  | (517) |
Net stock issues and repurchases | 360 |  |  | 1,195 |  |  |  |  |  |  | 1,195 |  |  |  |  | 1,195 |
Stock-based compensation expense |  |  | 7,048 |  |  |  |  |  |  | 7,048 |  |  |  |  | 7,048 |
Stock repurchased | (165) |  |  | (7,814) |  |  |  |  |  |  | (7,814) |  |  |  |  | (7,814) |
Balances at March 31, 2019 | 39,693 |  |  | 1,334,793 |  |  | (198,085) |  |  | (427,303) |  |  | 709,405 |  |  | 22,626 |  |  | 732,031 |
Net income |  |  |  |  |  |  | 19,446 |  |  | 19,446 |  |  | 671 |  |  | 20,117 |
Other comprehensive income (loss), net of tax |  |  |  |  | 3,736 |  |  |  |  | 3,736 |  |  |  |  | 3,736 |
Net stock issues and repurchases | 66 |  |  | 1,481 |  |  |  |  |  |  | 1,481 |  |  |  |  | 1,481 |
Stock-based compensation expense |  |  | 6,420 |  |  |  |  |  |  | 6,420 |  |  |  |  | 6,420 |
Stock repurchased | (364) |  |  | (17,186) |  |  |  |  |  |  | (17,186) |  |  |  |  | (17,186) |
Balances at June 30, 2019 | 39,395 |  |  | 1,325,508 |  |  | (194,349) |  |  | (407,857) |  |  | 723,302 |  |  | 23,297 |  |  | 746,599 |
Net Income |  |  |  |  |  |  | 16,847 |  |  | 16,847 |  |  | 1,330 |  |  | 18,177 |
Other comprehensive income (loss), net of tax |  |  |  |  | (12,705) |  |  |  |  | (12,705) |  |  |  |  | (12,705) |
Net stock issues and repurchases | 138 |  |  | 2,722 |  |  |  |  |  |  | 2,722 |  |  |  |  | 2,722 |
Stock-based compensation expense |  |  | 7,123 |  |  |  |  |  |  | 7,123 |  |  |  |  | 7,123 |
Balances at September 30, 2019 | 39,533 |  |  | $ | 1,335,353 |  |  | $ | (207,054) |  |  | $ | (391,010) |  |  | $ | 737,289 |  |  | $ | 24,627 |  |  | $ | 761,916 |

The accompanying notes are an integral part of these consolidated financial statements.
4

Table of Contents
ITRON, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

| Nine Months Ended September 30,
In thousands | 2020 |  | 2019
Operating activities |  |  |
Net income (loss) | $ | (78,383) |  |  | $ | 38,145 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |  |
Depreciation and amortization | 72,306 |  |  | 85,691 |
Non-cash operating lease expense | 15,252 |  |  | 13,847 |
Stock-based compensation | 20,638 |  |  | 21,064 |
Amortization of prepaid debt fees | 3,029 |  |  | 3,686 |
Deferred taxes, net | (9,439) |  |  | 4,990 |
Loss on sale of business | 57,295 |  |  | — |
Restructuring, non-cash | 6,518 |  |  | (2,147) |
Other adjustments, net | 3,856 |  |  | (6,121) |
Changes in operating assets and liabilities |  |  |
Accounts receivable | 82,087 |  |  | (39,385) |
Inventories | 8,978 |  |  | (15,762) |
Other current assets | (12,862) |  |  | (10,494) |
Other long-term assets | (2,547) |  |  | 7,945 |
Accounts payable, other current liabilities, and taxes payable | (82,775) |  |  | (4,063) |
Wages and benefits payable | (28,446) |  |  | 30,220 |
Unearned revenue | 15,098 |  |  | 6,746 |
Warranty | (10,894) |  |  | (5,506) |
Other operating, net | 10,860 |  |  | (756) |
Net cash provided by operating activities | 70,571 |  |  | 128,100 |
Investing activities |  |  |
Net payments related to the sale of business | (748) |  |  | — |
Acquisitions of property, plant, and equipment | (36,297) |  |  | (44,570) |
Other investing, net | 3,573 |  |  | 9,977 |
Net cash used in investing activities | (33,472) |  |  | (34,593) |
Financing activities |  |  |
Proceeds from borrowings | 400,000 |  |  | 50,000 |
Payments on debt | — |  |  | (100,313) |
Issuance of common stock | 5,059 |  |  | 7,117 |
Repurchase of common stock | — |  |  | (25,000) |
Prepaid debt fees | (184) |  |  | (175) |
Other financing, net | (2,285) |  |  | (5,221) |
Net cash provided by (used in) financing activities | 402,590 |  |  | (73,592) |
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash | (3,426) |  |  | (543) |
Increase in cash, cash equivalents, and restricted cash | 436,263 |  |  | 19,372 |
Cash, cash equivalents, and restricted cash at beginning of period | 149,904 |  |  | 122,328 |
Cash, cash equivalents, and restricted cash at end of period | $ | 586,167 |  |  | $ | 141,700 |
Supplemental disclosure of cash flow information: |  |  |
Cash paid (received) during the period for: |  |  |
Income taxes, net | $ | (349) |  |  | $ | 8,842 |
Interest | 34,327 |  |  | 39,523 |

The accompanying notes are an integral part of these consolidated financial statements.
5

Table of Contents
ITRON, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(UNAUDITED)
In this Quarterly Report on Form 10-Q, the terms "we," "us," "our," "Itron," and the "Company" refer to Itron, Inc. and its subsidiaries.
Note 1: Summary of Significant Accounting Policies
Financial Statement Preparation
The consolidated financial statements presented in this Quarterly Report on Form 10-Q are unaudited and reflect entries necessary for the fair presentation of the Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2020 and 2019, Consolidated Statements of Equity for the three months ended September 30, 2020 and 2019, June 30, 2020 and 2019, and March 31, 2020 and 2019, the Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019, and the Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019, of Itron, Inc. and its subsidiaries. All entries required for the fair presentation of the financial statements are of a normal recurring nature, except as disclosed. The results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the results expected for the full year or for any other period.
Certain information and notes normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been partially or completely omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC) regarding interim results. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto for the fiscal year ended December 31, 2019 filed with the SEC in our Annual Report on Form 10-K on February 27, 2020 (2019 Annual Report). There have been no significant changes in financial statement preparation or significant accounting policies since December 31, 2019.
Risks and Uncertainties
The COVID-19 pandemic has had global economic impacts including disrupting global supply chains and creating market volatility. The extent of the recent pandemic and its ongoing impact on our operations is volatile, but is being monitored closely by our managem ent. We expect that certain of our customers’ projects and deployments may shift to 2021. At this time, we have not identified any significant decrease in long-term customer demand for our products and services. Nonetheless, a prolonged pandemic could adversely impact the efficiency and effectiveness of our organization, further impact our global supply chain network, result in delays or decreases in customer collections, reduce demand for our products and services, and inhibit our sales efforts, any of which could further materially impact our revenues, results of operations, cash flows and financial condition.
Restricted Cash and Cash Equivalents
Cash and cash equivalents that are contractually restricted from operating use are classified as restricted cash and cash equivalents.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows:

In thousands | September 30, 2020 |  | December 31, 2019 |  | September 30, 2019
Cash and cash equivalents | $ | 586,167 |  |  | $ | 149,904 |  |  | $ | 140,938 |
Current restricted cash included in other current assets | — |  |  | — |  |  | — |
Long-term restricted cash | — |  |  | — |  |  | 762 |
Total cash, cash equivalents, and restricted cash | $ | 586,167 |  |  | $ | 149,904 |  |  | $ | 141,700 |

Accounts Receivable, net
Accounts receivable are recognized for invoices issued to customers in accordance with our contractual arrangements. Interest and late payment fees are minimal. Unbilled receivables are recognized when revenues are recognized upon product shipment or service delivery and invoicing occurs at a later date. We recognize an allowance for doubtful accounts representing our estimate of the expected losses in accounts receivable at the date of the balance sheet based on our historical experience of bad debts, our specific review of outstanding receivables, and our review of current and expected economic conditions. Accounts receivable are written-off against the allowance when we believe an account, or a portion thereof, is no longer collectible.
6

Table of Contents
Recently Adopted Accounting Standards
In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Subsequent to 2016-13 the FASB also issued codification improvements and transition relief in ASU 2019-04, ASU 2019-05, ASU 2019-11, ASU 2020-02, and ASU 2020-03, hereafter collectively referred to as Accounting Standards Codification (ASC) 326. ASC 326 replaces the incurred loss impairment methodology in previous GAAP with a methodology based on expected credit losses, which results in losses being recognized earlier. The estimate of expected credit losses uses a broader range of reasonable and supportable information. We adopted ASC 326 on January 1, 2020, and the impacts on our consolidated financial position, results of operations, and cash flows were immaterial.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which amended the disclosure requirements under ASC 820. This update clarifies and unifies the disclosure of Level 3 fair value instruments. We adopted this standard on January 1, 2020, and it did not materially impact our consolidated financial statements.
In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans, which amends the disclosure requirements under ASC 715-20. This update clarifies annual disclosures for Defined Benefit Plans. We adopted this standard on January 1, 2020, and it did not materially impact our consolidated financial statements.
Recent Accounting Standards Not Yet Adopted
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which modifies certain provisions of ASC 740, in an effort to reduce the complexity of accounting for income taxes. ASU 2019-12 is effective for us beginning with our interim financial reports for the first quarter of 2021. We are currently evaluating the effects and do not believe this standard will have a material impact on our consolidated financial position, results of operations, or cash flows.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform. ASU 2020-04 applies to contracts that reference LIBOR or another reference rate expected to be terminated because of reference rate reform. An entity may elect certain optional expedients for hedging relationships that exist as of December 31, 2022, and maintain those optional expedients through the end of the hedging relationship. ASU 2020-04 can be adopted as of March 12, 2020. We do not currently have any contracts that have been changed to a new reference rate, but we will continue to evaluate our contracts and the effects of this standard on our consolidated financial position, results of operations, and cash flows prior to adoption.
Note 2: Earnings Per Share
The following table sets forth the computation of basic and diluted earnings (loss) per share (EPS):

| Three Months Ended September 30, |  | Nine Months Ended September 30,
In thousands, except per share data | 2020 |  | 2019 |  | 2020 |  | 2019
Net income (loss) available to common shareholders | $ | (25,357) |  |  | $ | 16,847 |  |  | $ | (79,475) |  |  | $ | 34,386 |
Weighted average common shares outstanding - Basic | 40,337 |  |  | 39,478 |  |  | 40,199 |  |  | 39,508 |
Dilutive effect of stock-based awards | — |  |  | 425 |  |  | — |  |  | 376 |
Weighted average common shares outstanding - Diluted | 40,337 |  |  | 39,903 |  |  | 40,199 |  |  | 39,884 |
Net income (loss) per common share - Basic | $ | (0.63) |  |  | $ | 0.43 |  |  | $ | (1.98) |  |  | $ | 0.87 |
Net income (loss) per common share - Diluted | $ | (0.63) |  |  | $ | 0.42 |  |  | $ | (1.98) |  |  | $ | 0.86 |

7

Table of Contents
Stock-based Awards
For stock-based awards, the dilutive effect is calculated using the treasury stock method. Under this method, the dilutive effect is computed as if the awards were exercised at the beginning of the period (or at time of issuance, if later) and assumes the related proceeds were used to repurchase our common stock at the average market price during the period. Related proceeds include the amount the employee must pay upon exercise and the future compensation cost associated with the stock award. Approximately 0.8 million stock-based awards were excluded from the calculation of diluted EPS for the three and nine months ended September 30, 2020 because they were anti-dilutive. Approximately 0.2 million and 0.4 million stock-based awards were excluded from the calculation of diluted EPS for the three and nine months ended September 30, 2019 because they were anti-dilutive. These stock-based awards could be dilutive in future periods.
Note 3: Certain Balance Sheet Components
A summary of accounts receivable from contracts with customers is as follows:

Accounts receivable, net |  |  |
In thousands | September 30, 2020 |  | December 31, 2019
Trade receivables (net of allowance of $1,846 and $3,064) | $ | 314,183 |  |  | $ | 415,887 |
Unbilled receivables | 72,737 |  |  | 57,038 |
Total accounts receivable, net | $ | 386,920 |  |  | $ | 472,925 |

Allowance for doubtful accounts activity | Three Months Ended September 30, |  | Nine Months Ended September 30,
In thousands | 2020 |  | 2019 |  | 2020 |  | 2019
Beginning balance | $ | 2,102 |  |  | $ | 4,360 |  |  | $ | 3,064 |  |  | $ | 6,331 |
Provision for (release of) doubtful accounts, net | (21) |  |  | (1) |  |  | 318 |  |  | (1,739) |
Accounts written-off | (278) |  |  | (468) |  |  | (1,489) |  |  | (740) |
Effect of change in exchange rates | 43 |  |  | (105) |  |  | (47) |  |  | (66) |
Ending balance | $ | 1,846 |  |  | $ | 3,786 |  |  | $ | 1,846 |  |  | $ | 3,786 |

Inventories |  |  |
In thousands | September 30, 2020 |  | December 31, 2019
Raw materials | $ | 124,662 |  |  | $ | 120,861 |
Work in process | 9,016 |  |  | 11,105 |
Finished goods | 71,500 |  |  | 95,930 |
Total inventories | $ | 205,178 |  |  | $ | 227,896 |

Property, plant, and equipment, net |  |  |
In thousands | September 30, 2020 |  | December 31, 2019
Machinery and equipment | $ | 306,367 |  |  | $ | 323,003 |
Computers and software | 113,639 |  |  | 109,924 |
Buildings, furniture, and improvements | 151,795 |  |  | 149,471 |
Land | 13,771 |  |  | 14,988 |
Construction in progress, including purchased equipment | 33,661 |  |  | 54,490 |
Total cost | 619,233 |  |  | 651,876 |
Accumulated depreciation | (413,303) |  |  | (418,648) |
Property, plant, and equipment, net | $ | 205,930 |  |  | $ | 233,228 |

Depreciation expense | Three Months Ended September 30, |  | Nine Months Ended September 30,
In thousands | 2020 |  | 2019 |  | 2020 |  | 2019
Depreciation expense | $ | 12,893 |  |  | $ | 12,528 |  |  | $ | 38,818 |  |  | $ | 37,506 |

8

Table of Contents
Note 4: Intangible Assets and Liabilities
The gross carrying amount and accumulated amortization (accretion) of our intangible assets and liabilities, other than goodwill, were as follows:

| September 30, 2020 |  | December 31, 2019
In thousands | Gross |  | Accumulated (Amortization) Accretion |  | Net |  | Gross |  | Accumulated (Amortization) Accretion |  | Net
Intangible Assets |  |  |  |  |  |  |  |  |  |  |
Core-developed technology | $ | 509,222 |  |  | $ | (476,689) |  |  | $ | 32,533 |  |  | $ | 507,669 |  |  | $ | (458,109) |  |  | $ | 49,560 |
Customer contracts and relationships | 372,539 |  |  | (264,075) |  |  | 108,464 |  |  | 381,288 |  |  | (251,509) |  |  | 129,779 |
Trademarks and trade names | 77,864 |  |  | (74,485) |  |  | 3,379 |  |  | 78,837 |  |  | (73,732) |  |  | 5,105 |
Other | 12,023 |  |  | (11,511) |  |  | 512 |  |  | 12,020 |  |  | (11,367) |  |  | 653 |
Total intangible assets | $ | 971,648 |  |  | $ | (826,760) |  |  | $ | 144,888 |  |  | $ | 979,814 |  |  | $ | (794,717) |  |  | $ | 185,097 |
Intangible Liabilities |  |  |  |  |  |  |  |  |  |  |
Customer contracts and relationships | $ | (23,900) |  |  | $ | 19,472 |  |  | $ | (4,428) |  |  | $ | (23,900) |  |  | $ | 13,450 |  |  | $ | (10,450) |

A summary of intangible assets and liabilities activity is as follows:

| Nine Months Ended September 30,
In thousands | 2020 |  | 2019
Intangible Assets, gross beginning balance | $ | 979,814 |  |  | $ | 981,160 |
Intangibles disposed in sale of business | (18,140) |  |  | — |
Effect of change in exchange rates | 9,974 |  |  | (15,574) |
Intangible Assets, gross ending balance | $ | 971,648 |  |  | $ | 965,586 |
Intangible Liabilities, gross beginning balance | $ | (23,900) |  |  | $ | (23,900) |
Effect of change in exchange rates | — |  |  | — |
Intangible Liabilities, gross ending balance | $ | (23,900) |  |  | $ | (23,900) |

On January 5, 2018, we completed our acquisition of Silver Spring Networks, Inc. (SSNI) and acquired intangible assets including in-process research and development (IPR&D), which were completed during 2019 and are now included within core-developed technology. Assumed intangible liabilities reflect the present value of the projected cash outflows for an existing contract where remaining costs are expected to exceed projected revenues.
The disposal of intangible assets was related to the sale of our Latin America business. The net book value of these assets was $0.8 million at the disposal date. Refer to "Note 17: Sale of Business" for additional information on the transaction.
Estimated future annual amortization (accretion) is as follows:

Year Ending December 31, |  | Amortization |  | Accretion |  | Estimated Annual Amortization, net
In thousands |  |
2020 (amount remaining at September 30, 2020) |  | $ | 13,252 |  |  | $ | (2,006) |  |  | $ | 11,246 |
2021 |  | 37,757 |  |  | (1,963) |  |  | 35,794 |
2022 |  | 27,368 |  |  | (459) |  |  | 26,909 |
2023 |  | 19,778 |  |  | — |  |  | 19,778 |
2024 |  | 15,605 |  |  | — |  |  | 15,605 |
Thereafter |  | 31,128 |  |  | — |  |  | 31,128 |
Total intangible assets subject to amortization (accretion) |  | $ | 144,888 |  |  | $ | (4,428) |  |  | $ | 140,460 |

9

Table of Contents
Note 5: Goodwill
The following table reflects changes in the carrying amount of goodwill for the nine months ended September 30, 2020:

In thousands | Device Solutions |  | Networked Solutions |  | Outcomes |  | Total Company
Goodwill balance at January 1, 2020 | $ | 54,930 |  |  | $ | 908,088 |  |  | $ | 140,889 |  |  | $ | 1,103,907 |
Goodwill allocated to business sold | (3,000) |  |  | — |  |  | — |  |  | (3,000) |
Effect of change in exchange rates | 574 |  |  | 11,277 |  |  | 1,753 |  |  | 13,604 |
Goodwill balance at September 30, 2020 | $ | 52,504 |  |  | $ | 919,365 |  |  | $ | 142,642 |  |  | $ | 1,114,511 |

We recognized a $3.0 million reduction in Device Solutions goodwill as part of our loss on sale of business. Refer to "Note 17: Sale of Business" for additional information on the transaction.
We test goodwill for impairment each year as of October 1, or more frequently should a significant impairment indicator occur. As part of the impairment test, we may elect to perform an assessment of qualitative factors. If this qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit, including goodwill, is less than its carrying amount, or if we elect to bypass the qualitative assessment, we would then proceed with the impairment test. The impairment test involves comparing the fair values of the reporting units to their carrying amounts. If the carrying amount of a reporting unit exceeds its fair value, we first evaluate the long-lived assets within the reporting unit for impairment and then recognize a goodwill impairment loss in an amount equal to any excess.
Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. We forecast discounted future cash flows at the reporting unit level using risk-adjusted discount rates and estimated future revenues and operating costs, which take into consideration factors such as existing backlog, expected future orders, supplier contracts, and expectations of competitive, business and economic environments. We also identify similar publicly traded companies and develop a correlation, referred to as a multiple, to apply to the operating results of the reporting units. These combined fair values are then reconciled to the aggregate market value of our common stock on the date of valuation, while considering a reasonable control premium.
Changes in market demand, fluctuations in the markets in which we operate, the volatility and decline in the worldwide equity markets, and a decline in our market capitalization could unfavorably impact the remaining carrying value of our goodwill, which could have a significant effect on our current and future results of operations and financial position. Due to our updated long-term forecast for the Device Solutions reporting unit, we completed an interim quantitative goodwill impairment test during the third quarter of 2020. As a result of the valuation of this reporting unit, we determined there was no impairment to be recognized.
Note 6: Debt
The components of our borrowings were as follows:

In thousands | September 30, 2020 |  | December 31, 2019
Credit facility |  |  |
USD denominated term loan | $ | 550,156 |  |  | $ | 550,156 |
Multicurrency revolving line of credit | 400,000 |  |  | — |
Senior notes | 400,000 |  |  | 400,000 |
Total debt | 1,350,156 |  |  | 950,156 |
Less: current portion of debt | 21,406 |  |  | — |
Less: unamortized prepaid debt fees - term loan | 3,017 |  |  | 3,661 |
Less: unamortized prepaid debt fees - senior notes | 12,274 |  |  | 14,013 |
Long-term debt, net | $ | 1,313,459 |  |  | $ | 932,482 |

Credit Facility
On October 18, 2019, we amended our credit facility that was initially entered on January 5, 2018 (together with the amendment, the "2018 credit facility"). The 2018 credit facility provides for committed credit facilities in the amount of $1.2 billion U.S. dollars. The 2018 credit facility consists of a $650 million U.S. dollar term loan (the term loan) and a multicurrency revolving line of credit (the revolver) with a principal amount of up to $500 million. The revolver also contains a
10

Table of Contents
$300 million standby letter of credit sub-facility and a $50 million swingline sub-facility. The October 18, 2019 amendment extended the maturity date to October 18, 2024 and re-amortized the term loan based on the new balance as of the amendment date. The amendment also modified the required interest payments and made it based on total net leverage instead of total leverage. Through the third quarter of 2020, amounts not borrowed under the revolver were subject to a commitment fee, which was paid in arrears on the last day of each fiscal quarter, ranging from 0.15% to 0.25% and drawn amounts were subject to a margin ranging from 1.00% to 1.75%.
On October 19, 2020, we completed a second amendment to our 2018 credit facility. This amendment adjusts the maximum total net leverage ratio thresholds for the period beginning with the fourth quarter of 2020 through the fourth quarter of 2021 to allow for increased operational flexibility. The maximum leverage ratio is increased to 4.75:1 for the fourth quarter of 2020 and the first quarter of 2021 and 4.50:1 for the second quarter through the fourth quarter of 2021. An additional level of pricing was added to the existing pricing grid and is effective throughout the remaining term of the 2018 credit facility. Beginning with the fourth quarter of 2020, the commitment fee ranges from 0.15% to 0.30% and drawn amounts are subject to a margin ranging from 1.00% to 2.00%. Debt fees of approximately $1.4 million were incurred for the amendment, as well as other legal and advisory fees. Both the term loan and the revolver can be repaid without penalty. Amounts repaid on the term loan may not be reborrowed, and amounts borrowed under the revolver may be repaid and reborrowed until the revolver's maturity, at which time all outstanding loans together with all accrued and unpaid interest must be repaid.
The 2018 credit facility permits us and certain of our foreign subsidiaries to borrow in U.S. dollars, euros, British pounds, or, with lender approval, other currencies readily convertible into U.S. dollars. All obligations under the 2018 credit facility are guaranteed by Itron, Inc. and material U.S. domestic subsidiaries and are secured by a pledge of substantially all of the assets of Itron, Inc. and material U.S. domestic subsidiaries. This includes a pledge of 100% of the capital stock of material U.S. domestic subsidiaries and up to 66% of the voting stock (100% of the non-voting stock) of first-tier foreign subsidiaries. In addition, the obligations of any foreign subsidiary who is a foreign borrower, as defined by the 2018 credit facility, are guaranteed by the foreign subsidiary and by its direct and indirect foreign parents. The 2018 credit facility includes debt covenants, which contain certain financial thresholds and place certain restrictions on the incurrence of debt, investments, and the issuance of dividends. We were in compliance with the debt covenants under the 2018 credit facility at September 30, 2020.
Under the 2018 credit facility, we elect applicable market interest rates for both the term loan and any outstanding revolving loans. We also pay an applicable margin, which is based on our total net leverage ratio as defined in the credit agreement. The applicable rates per annum may be based on either: (1) the LIBOR rate or EURIBOR rate (subject to a floor of 0%), plus an applicable margin, or (2) the Alternate Base Rate, plus an applicable margin. The Alternate Base Rate election is equal to the greatest of three rates: (i) the prime rate, (ii) the Federal Reserve effective rate plus 0.50%, or (iii) one-month LIBOR plus 1.00%. At September 30, 2020, the interest rate for both the term loan and revolver was 1.65%, which includes the LIBOR rate plus a margin of 1.50%.
In March 2020, we drew $400 million in U.S. dollars under the revolving line of credit within the 2018 credit facility to increase our cash position and preserve future financial flexibility. At September 30, 2020, $400 million was outstanding under the revolver, and $66.8 million was utilized by outstanding standby letters of credit, resulting in $33.2 million available for additional borrowings or standby letters of credit. At September 30, 2020, no amounts were outstanding under the swingline sub-facility. Subsequent to September 30, 2020, we repaid $100 million on the revolving line of credit.
Senior Notes
In December 2017 and January 2018, we issued $300 million and $100 million of aggregate principal amount of 5.00% senior notes maturing January 15, 2026 (Senior Notes). The proceeds were used to refinance existing indebtedness related to the acquisition of SSNI, pay related fees and expenses, and for general corporate purposes. Interest on the Senior Notes is payable semi-annually in arrears on January 15 and July 15. The Senior Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by each of our subsidiaries that guarantee the senior credit facilities.
Prior to maturity, we may redeem some or all of the Senior Notes, together with accrued and unpaid interest, if any, plus a "make-whole" premium. On or after January 15, 2021, we may redeem some or all of the Senior Notes at any time at declining redemption prices equal to 102.50% beginning on January 15, 2021, 101.25% beginning on January 15, 2022 and 100.00% beginning on January 15, 2023 and thereafter to the applicable redemption date. In addition, before January 15, 2021, and subject to certain conditions, we may redeem up to 35% of the aggregate principal amount of Senior Notes with the net proceeds of certain equity offerings at 105.00% thereof to the date of redemption; provided that (i) at least 65% of the aggregate principal amount of Senior Notes remains outstanding after such redemption and (ii) the redemption occurs within 60 days of the closing of any such equity offering.
11

Table of Contents
Debt Maturities
The amount of required minimum principal payments on our long-term debt in aggregate over the next five years is as follows:

Year Ending December 31, | Minimum Payments
In thousands |
2020 (amount remaining at September 30, 2020) | $ | — |
2021 | 32,422 |
2022 | 44,063 |
2023 | 44,063 |
2024 | 829,608 |
Thereafter | 400,000 |
Total minimum payments on debt | $ | 1,350,156 |

Note 7: Derivative Financial Instruments
As part of our risk management strategy, we use derivative instruments to hedge certain foreign currency and interest rate exposures. Refer to "Note 13: Shareholders' Equity" and "Note 14: Fair Values of Financial Instruments" for additional disclosures on our derivative instruments.
The fair values of our derivative instruments are determined using the income approach and significant other observable inputs (and are classified as "Level 2" in the fair value hierarchy). We have used observable market inputs based on the type of derivative and the nature of the underlying instrument. The key inputs include interest rate yield curves (swap rates and futures) and foreign exchange spot and forward rates, all of which are available in an active market. We have utilized the mid-market pricing convention for these inputs. We include, as a discount to the derivative asset, the effect of our counterparty credit risk based on current published credit default swap rates when the net fair value of our derivative instruments is in a net asset position. We consider our own nonperformance risk when the net fair value of our derivative instruments is in a net liability position by discounting our derivative liabilities to reflect the potential credit risk to our counterparty through applying a current market indicative credit spread to all cash flows.
The fair values of our derivative instruments were as follows:

|  | Fair Value
Derivative Assets | Balance Sheet Location | September 30, 2020 |  | December 31, 2019
Derivatives designated as hedging instruments under ASC 815-20 | In thousands
Interest rate swap contract | Other current assets | $ | — |  |  | $ | 174 |
Interest rate cap contracts | Other current assets | — |  |  | 1 |
Cross currency swap contract | Other current assets | 1,726 |  |  | 1,156 |
Cross currency swap contract | Other long-term assets | — |  |  | 2,870 |
Derivatives not designated as hedging instruments under ASC 815-20 |  |  |
Foreign exchange forward contracts | Other current assets | 291 |  |  | 96 |
Total asset derivatives |  | $ | 2,017 |  |  | $ | 4,297 |
Derivative Liabilities |  |  |  |
Derivatives designated as hedging instruments under ASC 815-20 |  |  |
Interest rate swap contracts | Other current liabilities | $ | 1,003 |  |  | $ | — |
Interest rate swap contracts | Other long-term obligations | 1,174 |  |  | — |
Derivatives not designated as hedging instruments under ASC 815-20 |  |  |
Foreign exchange forward contracts | Other current liabilities | 365 |  |  | 162 |
Total liability derivatives |  | $ | 2,542 |  |  | $ | 162 |

12

Table of Contents
The changes in accumulated other comprehensive income (loss) (AOCI), net of tax, for our derivative and nonderivative hedging instruments designated as hedging instruments, net of tax, were as follows:

In thousands | 2020 |  | 2019
Net unrealized loss on hedging instruments at January 1, | $ | (15,103) |  |  | $ | (13,179) |
Unrealized gain (loss) on hedging instruments | (4,727) |  |  | 4,995 |
Realized (gains) losses reclassified into net income (loss) | 2,570 |  |  | (5,799) |
Net unrealized loss on hedging instruments at September 30, | $ | (17,260) |  |  | $ | (13,983) |

Reclassification of amounts related to hedging instruments are included in interest expense in the Consolidated Statements of Operations for the periods ended September 30, 2020 and 2019. Included in the net unrealized gain (loss) on hedging instruments at September 30, 2020 and 2019 is a loss of $14.4 million, net of tax, related to our nonderivative net investment hedge, which terminated in 2011. This loss on our net investment hedge will remain in AOCI until earnings are impacted by a sale or liquidation of the associated foreign operation.
A summary of the effect of netting arrangements on our financial position related to the offsetting of our recognized derivative assets and liabilities under master netting arrangements or similar agreements is as follows:

Offsetting of Derivative Assets | Gross Amounts of Recognized Assets Presented in the Consolidated Balance Sheets |  | Gross Amounts Not Offset in the Consolidated Balance Sheets |  |
In thousands |  | Derivative Financial Instruments |  | Cash Collateral Received |  | Net Amount
September 30, 2020 | $ | 2,017 |  |  | $ | (291) |  |  | $ | — |  |  | $ | 1,726 |
December 31, 2019 | 4,297 |  |  | (56) |  |  | — |  |  | 4,241 |

Offsetting of Derivative Liabilities | Gross Amounts of Recognized Liabilities Presented in the Consolidated Balance Sheets |  | Gross Amounts Not Offset in the Consolidated Balance Sheets |  |
In thousands |  | Derivative Financial Instruments |  | Cash Collateral Pledged |  | Net Amount
September 30, 2020 | $ | 2,542 |  |  | $ | (291) |  |  | $ | — |  |  | $ | 2,251 |
December 31, 2019 | 162 |  |  | (56) |  |  | — |  |  | 106 |

Our derivative assets and liabilities subject to netting arrangements consist of foreign exchange forwards and options and interest rate contracts with four counterparties at September 30, 2020 and five counterparties at December 31, 2019. No derivative asset or liability balance with any of our counterparties was individually significant at September 30, 2020 or December 31, 2019. Our derivative contracts with each of these counterparties exist under agreements that provide for the net settlement of all contracts through a single payment in a single currency in the event of default. We have no pledges of cash collateral against our obligations, and we have not received pledges of cash collateral from our counterparties under the associated derivative contracts.
Cash Flow Hedges
As a result of our floating rate debt, we are exposed to variability in our cash flows from changes in the applicable interest rate index. We enter into interest rate caps and swaps to reduce the variability of cash flows from increases in the LIBOR based borrowing rates on our floating rate credit facility. These instruments do not protect us from changes to the applicable margin under our credit facility. At September 30, 2020, our LIBOR-based debt balance was $950.2 million.
In October 2015, we entered into one interest rate swap, which was effective August 31, 2016 and expired on June 23, 2020, to convert $214 million of our LIBOR-based debt from a floating LIBOR interest rate to a fixed interest rate of 1.42% (excluding the applicable margin on the debt). The notional balance amortized to maturity at the same rate as required minimum payments on our term loan. The cash flow hedge was expected to be highly effective in achieving offsetting cash flows attributable to the hedged risk through the term of the hedge. Consequently, effective changes in the fair value of the interest rate swap were recorded as a component of other comprehensive income (loss) (OCI) and recognized in earnings when the hedged item affected earnings. The amounts paid or received on the hedge were recognized as adjustment to interest expense.
In March 2020, we entered into an interest rate swap, which is effective from June 30, 2020 to June 30, 2023, and converts $240 million of our LIBOR-based debt from a floating LIBOR interest rate to a fixed interest rate of 0.617% (excluding the
13

Table of Contents
applicable margin). The notional balance will amortize to maturity at the same rate of originally required amortizations on our term loan. Changes in the fair value of the interest rate swap are recognized as a component of OCI and recognized in earnings when the hedged item affects earnings. The amounts paid or received on the hedge are recognized as adjustment to interest expense along with the earnings effect of the hedged item. The amount of net losses expected to be reclassified into earnings in the next 12 months is $1.0 million.
In November 2015, we entered into three interest rate cap contracts with a total notional amount of $100 million at a cost of $1.7 million. The interest rate cap contracts expired on June 23, 2020 and were entered into in order to limit our interest rate exposure on $100 million of our variable LIBOR based debt up to 2.00%. The interest rate cap contracts did not include the effect of the applicable margin. Changes in the fair value of these instruments were recognized as a component of OCI and recognized in earnings when the hedged item affected earnings. The amounts received on the hedge were recognized as an adjustment to interest expense along with the earnings effect of the hedged item.
In April 2018, we entered into one cross-currency swap, which converts $56.0 million of floating LIBOR-based U.S. dollar denominated debt into 1.38% fixed rate euro denominated debt. This cross-currency swap matures on April 30, 2021 and mitigates the risk associated with fluctuations in currency rates impacting cash flows related to U.S. dollar denominated debt in a euro functional currency entity. Changes in the fair value of the cross-currency swap are recognized as a component of OCI and are recognized in earnings when the hedged item affects earnings. The amounts paid or received on the hedge are recognized as an adjustment to interest expense along with the earnings effect of the hedged item. The amount of net gains expected to be reclassified into earnings in the next 12 months is $1.7 million.
As a result of our forecasted inventory purchases in a non-functional currency, we are exposed to foreign exchange risk. We hedge portions of these purchases. During February 2020, we entered into foreign exchange option contracts for a total notional amount of $96 million at a cost of $1.2 million. The contracts matured ratably through the year with final maturity in October 2020. Changes in the fair value of the option contracts were recognized as a component of OCI and were recognized in product cost of revenues when the hedged item affected earnings.
The before-tax effects of our accounting for derivative instruments designated as hedges on AOCI were as follows:

Derivatives in ASC 815-20 Cash Flow Hedging Relationships | Amount of Gain (Loss) Recognized in OCI on Derivative |  | Gain (Loss) Reclassified from AOCI into Income
Location |  | Amount
In thousands | 2020 |  | 2019 |  |  |  | 2020 |  | 2019
Three Months Ended September 30, |  |  |  |  |  |  |  |  |
Interest rate swap contracts | $ | (302) |  |  | $ | 13 |  |  | Interest expense |  | $ | (274) |  |  | $ | 359 |
Interest rate cap contracts | — |  |  | 356 |  |  | Interest expense |  | — |  |  | 252 |
Foreign exchange options | (252) |  |  | 1,011 |  |  | Product cost of revenues |  | (450) |  |  | 289 |
Cross currency swap contract | (2,326) |  |  | 2,703 |  |  | Interest expense |  | 88 |  |  | 387 |
Cross currency swap contract | — |  |  | — |  |  | Other income/(expense), net |  | (2,242) |  |  | 2,168 |
Nine Months Ended September 30, |  |  |  |  |  |  |  |  |
Interest rate swap contract | $ | (2,818) |  |  | $ | (987) |  |  | Interest expense |  | $ | (467) |  |  | $ | 1,278 |
Interest rate cap contracts | 782 |  |  | 646 |  |  | Interest expense |  | 392 |  |  | 849 |
Foreign exchange options | (1,221) |  |  | 1,229 |  |  | Product cost of revenues |  | (612) |  |  | 451 |
Cross currency swap contract | (1,969) |  |  | 4,126 |  |  | Interest expense |  | 537 |  |  | 1,297 |
Cross currency swap contract | — |  |  | — |  |  | Other income/(expense), net |  | (2,438) |  |  | 2,453 |

Derivatives Not Designated as Hedging Relationships
We are also exposed to foreign exchange risk when we enter into non-functional currency transactions, both intercompany and third party. At each period-end, non-functional currency monetary assets and liabilities are revalued with the change recognized within other income and expense. We enter into monthly foreign exchange forward contracts, which are not designated for hedge accounting, with the intent to reduce earnings volatility associated with currency exposures. As of September 30, 2020, a total of 43 contracts were offsetting our exposures from the euro, Canadian dollar, Pound Sterling, Brazilian Real, Chinese yuan and various other currencies, with notional amounts ranging from $102,000 to $26.4 million.
14

Table of Contents
The effect of our derivative instruments not designated as hedges on the Consolidated Statements of Operations was as follows:

Derivatives Not Designated as Hedging Instrument under ASC 815-20 | Location |  | Gain (Loss) Recognized on Derivatives in Other Income (Expense)
In thousands |  |  | 2020 |  | 2019
Three Months Ended September 30, |  |  |
Foreign exchange forward contracts | Other income (expense), net |  | $ | (1,646) |  |  | $ | (329) |
Nine Months Ended September 30, |  |  |  |  |
Foreign exchange forward contracts | Other income (expense), net |  | $ | (1,056) |  |  | $ | (1,241) |

We will continue to monitor and assess our interest rate and foreign exchange risk and may institute additional derivative instruments to manage such risk in the future.
Note 8: Defined Benefit Pension Plans
We sponsor both funded and unfunded defined benefit pension plans offering death and disability, retirement, and special termination benefits for certain of our international employees, primarily in Germany, France, Indonesia, India, and Italy. The defined benefit obligation is calculated annually by using the projected unit credit method. The measurement date for the pension plans was December 31, 2019.
Amounts recognized on the Consolidated Balance Sheets consist of:

In thousands | September 30, 2020 |  | December 31, 2019
Assets |  |  |
Plan assets in other long-term assets | $ | — |  |  | $ | 44 |
Liabilities |  |  |
Current portion of pension benefit obligation in wages and benefits payable | 3,937 |  |  | 2,885 |
Long-term portion of pension benefit obligation | 103,273 |  |  | 98,712 |
Pension benefit obligation, net | $ | 107,210 |  |  | $ | 101,553 |

Our asset investment strategy focuses on maintaining a portfolio using primarily insurance funds, which are accounted for as investments and measured at fair value, in order to achieve our long-term investment objectives on a risk adjusted basis. Our general funding policy for these qualified pension plans is to contribute amounts sufficient to satisfy regulatory funding standards of the respective countries for each plan.
Net periodic pension benefit cost for our plans include the following components:

|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
In thousands |  | 2020 |  | 2019 |  | 2020 |  | 2019
Service cost |  | $ | 1,007 |  |  | $ | 868 |  |  | $ | 3,000 |  |  | $ | 2,839 |
Interest cost |  | 434 |  |  | 564 |  |  | 1,364 |  |  | 1,719 |
Expected return on plan assets |  | (85) |  |  | (151) |  |  | (365) |  |  | (460) |
Amortization of prior service costs |  | 17 |  |  | 16 |  |  | 49 |  |  | 49 |
Amortization of actuarial net loss |  | 482 |  |  | 332 |  |  | 1,390 |  |  | 1,019 |
Settlement |  | 286 |  |  | 250 |  |  | 286 |  |  | 250 |
Net periodic benefit cost |  | $ | 2,141 |  |  | $ | 1,879 |  |  | $ | 5,724 |  |  | $ | 5,416 |

The components of net periodic benefit cost, other than the service cost component, are included in total other income (expense) on the Consolidated Statements of Operations.
Note 9: Stock-Based Compensation
We grant stock-based compensation awards under the Second Amended and Restated 2010 Stock Incentive Plan (Stock Incentive Plan), including stock options, restricted stock units, phantom stock, and unrestricted stock units. In the Stock Incentive Plan, we have 12,623,538 shares of common stock reserved and authorized for issuance subject to stock splits, dividends, and other similar events, and at September 30, 2020, 5,594,481 shares were available for grant. We issue new shares
15

Table of Contents
of common stock upon the exercise of stock options or when vesting conditions on restricted stock units are fully satisfied. These shares are subject to a fungible share provision such that the authorized share reserve is reduced by (i) one share for every one share subject to a stock option or share appreciation right granted under the Plan and (ii) 1.7 shares for every one share of common stock that was subject to an award other than an option or share appreciation right.
We also periodically award phantom stock units, which are settled in cash upon vesting and accounted for as liability-based awards with no impact to the shares available for grant.
In addition, we maintain the Employee Stock Purchase Plan (ESPP), for which 190,736 shares of common stock were available for future issuance at September 30, 2020.
All other forms of stock grants, including unrestricted stock, ESPP, and phantom stock units were not significant for the three and nine months ended September 30, 2020 and 2019.
Stock-Based Compensation Expense
Total stock-based compensation expense and the related tax benefit were as follows:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
In thousands | 2020 |  | 2019 |  | 2020 |  | 2019
Stock options | $ | 452 |  |  | $ | 389 |  |  | $ | 1,445 |  |  | $ | 1,413 |
Restricted stock units | 4,399 |  |  | 6,734 |  |  | 18,575 |  |  | 19,178 |
Unrestricted stock awards | 206 |  |  | 158 |  |  | 618 |  |  | 473 |
Phantom stock units | 582 |  |  | 822 |  |  | 2,075 |  |  | 2,265 |
Total stock-based compensation | $ | 5,639 |  |  | $ | 8,103 |  |  | $ | 22,713 |  |  | $ | 23,329 |
Related tax benefit | $ | 1,070 |  |  | $ | 1,443 |  |  | $ | 4,257 |  |  | $ | 4,161 |

Stock Options
A summary of our stock option activity is as follows:

| Shares |  | Weighted Average Exercise Price per Share |  | Weighted Average Remaining Contractual Life |  | Aggregate Intrinsic Value |  | Weighted Average Grant Date Fair Value
| (in thousands) |  |  |  | (years) |  | (in thousands) |  |
Outstanding, January 1, 2019 | 895 |  |  | $ | 47.93 |  |  | 6.2 |  | $ | 4,806 |  |  |
Granted | 76 |  |  | 76.55 |  |  |  |  |  |  | $ | 26.20 |
Exercised | (117) |  |  | 40.10 |  |  |  |  | 2,745 |  |  |
Forfeited | (8) |  |  | 67.38 |  |  |  |  |  |  |
Expired | (11) |  |  | 66.24 |  |  |  |  |  |  |
Outstanding, September 30, 2019 | 835 |  |  | $ | 51.22 |  |  | 5.5 |  | $ | 19,190 |  |  |
Outstanding, January 1, 2020 | 458 |  |  | $ | 56.38 |  |  | 7.0 |  | $ | 12,641 |  |  |
Granted | 80 |  |  | 84.38 |  |  |  |  |  |  | $ | 26.21 |
Exercised | (49) |  |  | 50.90 |  |  |  |  | 1,189 |  |  |
Forfeited | (5) |  |  | 83.80 |  |  |  |  |  |  |
Outstanding, September 30, 2020 | 484 |  |  | $ | 61.30 |  |  | 7.0 |  | $ | 3,816 |  |  |
Exercisable, September 30, 2020 | 319 |  |  | $ | 52.68 |  |  | 6.0 |  | $ | 3,764 |  |  |

At September 30, 2020, total unrecognized stock-based compensation expense related to nonvested stock options was $3.0 million, which is expected to be recognized over a weighted average period of approximately 2.0 years.
16

Table of Contents
The weighted average assumptions used to estimate the fair value of stock options granted and the resulting weighted average fair value are as follows:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Expected volatility | 41.5 | % |  | 31.7 | % |  | 32.1 | % |  | 31.7 | %
Risk-free interest rate | 0.3 | % |  | 1.7 | % |  | 1.3 | % |  | 1.7 | %
Expected term (years) | 5.3 |  | 6.1 |  | 5.3 |  | 6.1

Restricted Stock Units
The following table summarizes restricted stock unit activity:

In thousands, except fair value | Number of Restricted Stock Units |  | Weighted Average Grant Date Fair Value |  | Aggregate Intrinsic Value
Outstanding, January 1, 2019 | 817 |  |  |  |  |
Granted | 334 |  |  | $ | 62.04 |  |  |
Released (1) | (435) |  |  |  |  | $ | 26,852 |
Forfeited | (53) |  |  |  |  |
Outstanding, September 30, 2019 | 663 |  |  |  |  |
Outstanding, January 1, 2020 | 684 |  |  | $ | 64.38 |  |  |
Granted | 209 |  |  | 83.34 |  |  |
Released (1) | (338) |  |  | 65.01 |  |  | $ | 21,947 |
Forfeited | (23) |  |  | 69.12 |  |  |
Outstanding, September 30, 2020 | 532 |  |  | 71.45 |  |  |
Vested but not released, September 30, 2020 | 9 |  |  |  |  | $ | 549 |

(1) Shares released is presented gross of shares netted for employee payroll tax obligations.
At September 30, 2020, total unrecognized compensation expense on restricted stock units was $31.8 million, which is expected to be recognized over a weighted average period of approximately 1.8 years.
The weighted average assumptions used to estimate the fair value of performance-based restricted stock units granted with a service and market condition and the resulting weighted average fair value are as follows:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
Expected volatility | 52.6 | % |  | 33.4 | % |  | 38.2 | % |  | 31.4 | %
Risk-free interest rate | 0.2 | % |  | 1.8 | % |  | 1.5 | % |  | 2.5 | %
Expected term (years) | 2.3 |  | 2.5 |  | 1.8 |  | 1.6
Weighted average fair value | $ | 61.45 |  |  | $ | 72.18 |  |  | $ | 93.05 |  |  | $ | 61.25 |

17

Table of Contents
Note 10: Income Taxes
We determine the interim tax benefit (provision) by applying an estimate of the annual effective tax rate to the year-to-date pretax book income (loss) and adjusting for discrete items during the reporting period, if any. Tax jurisdictions with losses for which tax benefits cannot be realized are excluded.
Our tax rate for the three and nine months ended September 30, 2020 of 32% and 0%, respectively, differed from the federal statutory rate of 21% primarily due to a significant loss recognized in the second quarter for the divestiture of the majority of our Latin American business activities. Refer to "Note 17: Sale of Business" for additional information on the transaction. This loss was recognized for tax as a discrete item in the second quarter and resulted in no tax benefit. A discrete tax benefit was recorded in the third quarter for $10.1 million related to the release of a valuation allowance on U.S. foreign tax credit deferred tax assets. This release was triggered by the carryforward of tax attributes due to the filing of amended tax returns in the third quarter. Other rate drivers include losses in jurisdictions for which no benefit is recognized because of valuation allowances on deferred tax assets, the forecasted mix of earnings in domestic and international jurisdictions, a benefit related to excess stock-based compensation, and uncertain tax positions.
Our tax rate for the three and nine months ended September 30, 2019 of 25% and 35%, respectively, differed from the federal statutory rate of 21% primarily due to losses in jurisdictions for which no benefit is recognized because of valuation allowances on deferred tax assets as well as the forecasted mix of earnings in domestic and international jurisdictions, a benefit related to excess stock-based compensation, and uncertain tax positions.
We classify interest expense and penalties related to unrecognized tax liabilities and interest income on tax overpayments as components of income tax expense. The net interest and penalties expense amounts recognized were as follows:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
In thousands | 2020 |  | 2019 |  | 2020 |  | 2019
Net interest and penalties expense | $ | (198) |  |  | $ | 324 |  |  | $ | 422 |  |  | $ | 583 |

Accrued interest and penalties recognized were as follows:

In thousands | September 30, 2020 |  | December 31, 2019
Accrued interest | $ | 3,324 |  |  | $ | 2,849 |
Accrued penalties | 1,579 |  |  | 1,681 |

Unrecognized tax benefits related to uncertain tax positions and the amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate were as follows:

In thousands | September 30, 2020 |  | December 31, 2019
Unrecognized tax benefits related to uncertain tax positions | $ | 125,743 |  |  | $ | 121,715 |
The amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate | 124,362 |  |  | 120,410 |

At September 30, 2020, we are under examination by certain tax authorities. We believe we have appropriately accrued for the expected outcome of all tax matters and do not currently anticipate that the ultimate resolution of these examinations will have a material adverse effect on our financial condition, future results of operations, or cash flows.
Based upon the timing and outcome of examinations, litigation, the impact of legislative, regulatory, and judicial developments, and the impact of these items on the statute of limitations, it is reasonably possible that the related unrecognized tax benefits could change from those recognized within the next twelve months. However, at this time, an estimate of the range of reasonably possible adjustments to the balance of unrecognized tax benefits cannot be made.
We file income tax returns in various jurisdictions. The material jurisdictions where we are subject to examination include, among others, the United States, France, Germany, Italy, and the United Kingdom.
On March 27, 2020, the U.S. Federal government passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide economic relief from COVID-19. The CARES Act contains significant business tax provisions, which the Company has evaluated and determined will not have a material impact on the Company's financial statements or related disclosures.
18

Table of Contents
The CARES Act also provides employer payroll tax credits for wages paid to employees who are unable to work during the COVID-19 outbreak and options to defer payroll tax payments. The Company has elected to defer remittances of payroll and other taxes into the future as provided for under the Act, and may assess in subsequent quarters the impact and availability of payroll tax credits from the U.S. and similar programs provided for by foreign governments, as applicable.
Note 11: Commitments and Contingencies
Guarantees and Indemnifications
We are often required to obtain standby letters of credit (LOCs) or bonds in support of our obligations for customer contracts. These standby LOCs or bonds typically provide a guarantee to the customer for our future performance, which usually covers the installation phase of a contract and may, on occasion, cover the operations and maintenance phase of outsourcing contracts.
Our available lines of credit, outstanding standby LOCs, and bonds were as follows:

In thousands | September 30, 2020 |  | December 31, 2019
Credit facility |  |  |
Multicurrency revolving line of credit | $ | 500,000 |  |  | $ | 500,000 |
Long-term borrowings | (400,000) |  |  | — |
Standby LOCs issued and outstanding | (66,775) |  |  | (41,072) |
Net available for additional borrowings under the multi-currency revolving line of credit | $ | 33,225 |  |  | $ | 458,928 |
Net available for additional standby LOCs under sub-facility | $ | 33,225 |  |  | $ | 258,928 |
Unsecured multicurrency revolving lines of credit with various financial institutions |  |  |
Multicurrency revolving lines of credit | $ | 103,357 |  |  | $ | 107,206 |
Standby LOCs issued and outstanding | (24,021) |  |  | (25,100) |
Short-term borrowings | (559) |  |  | (173) |
Net available for additional borrowings and LOCs | $ | 78,777 |  |  | $ | 81,933 |
Unsecured surety bonds in force | $ | 162,324 |  |  | $ | 136,004 |

In the event any such standby LOC or bond is called, we would be obligated to reimburse the issuer of the standby LOC or bond; however, as of November 2, 2020, we do not believe that any outstanding LOC or bond will be called.
We generally provide an indemnification related to the infringement of any patent, copyright, trademark, or other intellectual property right on software or equipment within our sales contracts, which indemnifies the customer from and pays the resulting costs, damages, and attorney's fees awarded against a customer with respect to such a claim provided that (a) the customer promptly notifies us in writing of the claim and (b) we have the sole control of the defense and all related settlement negotiations. We may also provide an indemnification to our customers for third-party claims resulting from damages caused by the negligence or willful misconduct of our employees/agents in connection with the performance of certain contracts. The terms of our indemnifications generally do not limit the maximum potential payments. It is not possible to predict the maximum potential amount of future payments under these or similar agreements.
Legal Matters
We are subject to various legal proceedings and claims of which the outcomes are subject to significant uncertainty. Our policy is to assess the likelihood of any adverse judgments or outcomes related to legal matters, as well as ranges of probable losses. A determination of the amount of the liability required, if any, for these contingencies is made after an analysis of each known issue. A liability would be recognized and charged to operating expense when we determine that a loss is probable and the amount can be reasonably estimated. Additionally, we disclose contingencies for which a material loss is reasonably possible, but not probable.
19

Table of Contents
Warranty
A summary of the warranty accrual account activity is as follows:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
In thousands | 2020 |  | 2019 |  | 2020 |  | 2019
Beginning balance | $ | 44,757 |  |  | $ | 57,112 |  |  | $ | 53,242 |  |  | $ | 60,443 |
New product warranties | 785 |  |  | 1,388 |  |  | 2,855 |  |  | 3,645 |
Other adjustments and expirations, net | 1,643 |  |  | 4,603 |  |  | 5,436 |  |  | 12,533 |
Claims activity | (5,044) |  |  | (8,453) |  |  | (19,349) |  |  | (21,970) |
Effect of change in exchange rates | 946 |  |  | (768) |  |  | 903 |  |  | (769) |
Ending balance | 43,087 |  |  | 53,882 |  |  | 43,087 |  |  | 53,882 |
Less: current portion of warranty | 32,118 |  |  | 38,018 |  |  | 32,118 |  |  | 38,018 |
Long-term warranty | $ | 10,969 |  |  | $ | 15,864 |  |  | $ | 10,969 |  |  | $ | 15,864 |

Total warranty expense is classified within cost of revenues and consists of new product warranties issued, costs related to insurance and supplier recoveries, other changes and adjustments to warranties, and customer claims. Warranty expense was as follows:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
In thousands | 2020 |  | 2019 |  | 2020 |  | 2019
Total warranty expense | $ | 2,428 |  |  | $ | 5,991 |  |  | $ | 8,321 |  |  | $ | 13,957 |

Note 12: Restructuring
2020 Projects
On September 17, 2020, our Board of Directors approved a restructuring plan (the 2020 Projects). The 2020 Projects include activities that continue our efforts to optimize our global supply chain and manufacturing operations, sales and marketing organizations, and other overhead. These projects are scheduled to be substantially complete by the end of 2022. We estimate pre-tax restructuring charges of $55 million to $65 million, of which approximately $35 million to $45 million will result in cash expenditures, and the remainder relates to non-cash charges. Of the total expected costs, $43.9 million was recognized in the third quarter of 2020. The largest component of expected remaining costs to be recognized is related to a non-cash cumulative translation adjustment charge. Many of the affected employees are represented by unions or works councils, which require consultation, and potential restructuring projects may be subject to regulatory approval, both of which could impact the timing of charges, total expected charges, cost recognized, and planned savings in certain jurisdictions.
The total expected restructuring costs, the restructuring costs recognized, and the remaining expected restructuring costs related to the 2020 Projects were as follows:

In thousands | Total Expected Costs at September 30, 2020 |  | Costs Recognized in Prior Periods |  | Cost Recognized During the Nine Months Ended September 30, 2020 |  | Expected Remaining Costs to be Recognized at September 30, 2020
Employee severance costs | $ | 36,625 |  |  | $ | — |  |  | $ | 36,625 |  |  | $ | — |
Asset impairments & net loss (gain) on sale or disposal | 7,240 |  |  | — |  |  | 7,240 |  |  | — |
Other restructuring costs | 16,508 |  |  | — |  |  | — |  |  | 16,508 |
Total | $ | 60,373 |  |  | $ | — |  |  | $ | 43,865 |  |  | $ | 16,508 |

2018 Projects
On February 22, 2018, our Board of Directors approved a restructuring plan (the 2018 Projects) to continue our efforts to optimize our global supply chain and manufacturing operations, research and development, and sales and marketing organizations. We expect to substantially complete expense recognition on the plan by the end of 2020. Many of the affected employees are represented by unions or works councils, which require consultation, and potential restructuring projects may be subject to regulatory approval, both of which could impact the timing of charges, total expected charges, cost recognized, and planned savings in certain jurisdictions. All prior restructuring plans are substantially complete and are not presented below.
20

Table of Contents
During the three months ended June 30, 2020, we reversed expenses for employee severance costs and asset impairments we will no longer incur as a result of selling our operations in Latin America.
The total expected restructuring costs, the restructuring costs recognized, and the remaining expected restructuring costs related to the 2018 Projects were as follows:

In thousands | Total Expected Costs at September 30, 2020 |  | Costs Recognized in Prior Periods |  | Cost Recognized During the Nine Months Ended September 30, 2020 |  | Expected Remaining Costs to be Recognized at September 30, 2020
Employee severance costs | $ | 67,663 |  |  | $ | 72,133 |  |  | $ | (4,470) |  |  | $ | — |
Asset impairments & net loss (gain) on sale or disposal | 3,120 |  |  | 3,842 |  |  | (722) |  |  | — |
Other restructuring costs | 21,163 |  |  | 11,420 |  |  | 2,858 |  |  | 6,885 |
Total | $ | 91,946 |  |  | $ | 87,395 |  |  | $ | (2,334) |  |  | $ | 6,885 |

The following table summarizes the activity within the restructuring related balance sheet accounts for the 2020 Projects and 2018 Projects during the nine months ended September 30, 2020:

In thousands | Accrued Employee Severance |  | Asset Impairments & Net Loss (Gain) on Sale or Disposal |  | Other Accrued Costs |  | Total
Beginning balance, January 1, 2020 | $ | 53,741 |  |  | $ | — |  |  | $ | 2,366 |  |  | $ | 56,107 |
Costs charged to expense | 32,155 |  |  | 6,518 |  |  | 2,858 |  |  | 41,531 |
Cash (payments) receipts | (10,180) |  |  | 1,880 |  |  | (2,629) |  |  | (10,929) |
Net assets disposed and impaired | — |  |  | (8,398) |  |  | — |  |  | (8,398) |
Effect of change in exchange rates | 1,358 |  |  | — |  |  | 12 |  |  | 1,370 |
Ending balance, September 30, 2020 | $ | 77,074 |  |  | $ | — |  |  | $ | 2,607 |  |  | $ | 79,681 |

Asset impairments are determined at the asset group level. Revenues and net operating income from the activities we have exited or will exit under the restructuring projects are not material to our operating segments or consolidated results.
Other restructuring costs include expenses for employee relocation, professional fees associated with employee severance, and costs to exit the facilities once the operations in those facilities have ceased. Costs associated with restructuring activities are generally presented in the Consolidated Statements of Operations as restructuring, except for certain costs associated with inventory write-downs, which are classified within cost of revenues, and accelerated depreciation expense, which is recognized according to the use of the asset. Restructuring expense is part of the Corporate unallocated segment and is not part of the operating segments.
The current portion of restructuring liabilities was $24.6 million and $18.9 million as of September 30, 2020 and December 31, 2019. The current portion of restructuring liabilities is classified within other current liabilities on the Consolidated Balance Sheets. The long-term portion of restructuring liabilities balances was $55.1 million and $37.2 million as of September 30, 2020 and December 31, 2019. The long-term portion of restructuring liabilities is classified within other long-term obligations on the Consolidated Balance Sheets and includes severance accruals and facility exit costs.
Note 13: Shareholders' Equity
Preferred Stock
We have authorized the issuance of 10 million shares of preferred stock with no par value. In the event of a liquidation, dissolution, or winding up of the affairs of the corporation, whether voluntary or involuntary, the holders of any outstanding preferred stock will be entitled to be paid a preferential amount per share to be determined by the Board of Directors prior to any payment to holders of common stock. There was no preferred stock issued or outstanding at September 30, 2020 or December 31, 2019.
Stock Repurchase Authorization
On March 14, 2019, Itron's Board of Directors authorized the Company to repurchase up to $50 million of our common stock over a 12-month period (the 2019 Stock Repurchase Program). Following the announcement of the program and through
21

Table of Contents
December 31, 2019, we repurchased 529,396 shares at an average share price of $47.22 (including commissions) for a total of $25 million. The program expired on March 13, 2020 and no additional shares were repurchased during 2020.
Accumulated Other Comprehensive Income (Loss)
The changes in the components of AOCI, net of tax, were as follows:

In thousands | Foreign Currency Translation Adjustments |  | Net Unrealized Gain (Loss) on Derivative Instruments |  | Net Unrealized Gain (Loss) on Nonderivative Instruments |  | Pension Benefit Obligation Adjustments |  | Accumulated Other Comprehensive Income (Loss)
Balances at January 1, 2019 | $ | (157,489) |  |  | $ | 1,201 |  |  | $ | (14,380) |  |  | $ | (25,637) |  |  | $ | (196,305) |
OCI before reclassifications | (13,544) |  |  | 4,995 |  |  | — |  |  | 1,251 |  |  | (7,298) |
Amounts reclassified from AOCI | 2,443 |  |  | (5,799) |  |  | — |  |  | (95) |  |  | (3,451) |
Total other comprehensive income (loss) | (11,101) |  |  | (804) |  |  | — |  |  | 1,156 |  |  | (10,749) |
Balances at September 30, 2019 | $ | (168,590) |  |  | $ | 397 |  |  | $ | (14,380) |  |  | $ | (24,481) |  |  | $ | (207,054) |
Balances at January 1, 2020 | $ | (157,999) |  |  | $ | (723) |  |  | $ | (14,380) |  |  | $ | (31,570) |  |  | $ | (204,672) |
OCI before reclassifications | (147) |  |  | (4,727) |  |  | — |  |  | (1,151) |  |  | (6,025) |
Amounts reclassified from AOCI | 52,074 |  |  | 2,570 |  |  | — |  |  | 2,040 |  |  | 56,684 |
Total other comprehensive income (loss) | 51,927 |  |  | (2,157) |  |  | — |  |  | 889 |  |  | 50,659 |
Balances at September 30, 2020 | $ | (106,072) |  |  | $ | (2,880) |  |  | $ | (14,380) |  |  | $ | (30,681) |  |  | $ | (154,013) |

22

Table of Contents
The before-tax, income tax (provision) benefit, and net-of-tax amounts related to each component of OCI were as follows:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
In thousands | 2020 |  | 2019 |  | 2020 |  | 2019
Before-tax amount |  |  |  |  |  |  |
Foreign currency translation adjustment | $ | 15,521 |  |  | $ | (16,501) |  |  | $ | (387) |  |  | $ | (13,403) |
Foreign currency translation adjustment reclassified to net income on sale of business | (14) |  |  | 2,443 |  |  | 52,074 |  |  | 2,443 |
Net unrealized gain (loss) on derivative instruments, designated as cash flow hedges | (2,887) |  |  | 4,088 |  |  | (5,228) |  |  | 4,910 |
Net hedging (gain) loss reclassified to net income | 2,879 |  |  | (3,453) |  |  | 2,588 |  |  | (6,327) |
Net unrealized gain (loss) on defined benefit plans | (893) |  |  | 598 |  |  | (812) |  |  | 1,318 |
Net defined benefit plan (gain) loss reclassified to net income | 499 |  |  | (90) |  |  | 1,439 |  |  | (100) |
Total other comprehensive income (loss), before tax | $ | 15,105 |  |  | $ | (12,915) |  |  | $ | 49,674 |  |  | $ | (11,159) |
Tax (provision) benefit |  |  |  |  |  |  |
Foreign currency translation adjustment | $ | (1,533) |  |  | $ | 156 |  |  | $ | 240 |  |  | $ | (141) |
Foreign currency translation adjustment reclassified to net income on sale of business | — |  |  | — |  |  | — |  |  | — |
Net unrealized gain (loss) on derivative instruments, designated as cash flow hedges | 74 |  |  | (91) |  |  | 501 |  |  | 85 |
Net hedging (gain) loss reclassified to net income | (67) |  |  | 151 |  |  | (18) |  |  | 528 |
Net unrealized gain (loss) on defined benefit plans | (341) |  |  | (10) |  |  | (339) |  |  | (67) |
Net defined benefit plan (gain) loss reclassified to net income | 576 |  |  | 4 |  |  | 601 |  |  | 5 |
Total other comprehensive income (loss) tax benefit | $ | (1,291) |  |  | $ | 210 |  |  | $ | 985 |  |  | $ | 410 |
Net-of-tax amount |  |  |  |  |  |  |
Foreign currency translation adjustment | $ | 13,988 |  |  | $ | (16,345) |  |  | $ | (147) |  |  | $ | (13,544) |
Foreign currency translation adjustment reclassified to net income on sale of business | (14) |  |  | 2,443 |  |  | 52,074 |  |  | 2,443 |
Net unrealized gain (loss) on derivative instruments, designated as cash flow hedges | (2,813) |  |  | 3,997 |  |  | (4,727) |  |  | 4,995 |
Net hedging (gain) loss reclassified to net income | 2,812 |  |  | (3,302) |  |  | 2,570 |  |  | (5,799) |
Net unrealized gain (loss) on defined benefit plans | (1,234) |  |  | 588 |  |  | (1,151) |  |  | 1,251 |
Net defined benefit plan (gain) loss reclassified to net income | 1,075 |  |  | (86) |  |  | 2,040 |  |  | (95) |
Total other comprehensive income (loss), net of tax | $ | 13,814 |  |  | $ | (12,705) |  |  | $ | 50,659 |  |  | $ | (10,749) |

Note 14: Fair Values of Financial Instruments
The fair values at September 30, 2020 and December 31, 2019 do not reflect subsequent changes in the economy, interest rates, tax rates, and other variables that may affect the determination of fair value.

| September 30, 2020 |  | December 31, 2019
In thousands | Carrying Amount |  | Fair Value |  | Carrying Amount |  | Fair Value
Credit facility |  |  |  |  |  |  |
USD denominated term loan | $ | 547,139 |  |  | $ | 533,223 |  |  | $ | 546,495 |  |  | $ | 550,135 |
Multicurrency revolving line of credit | 400,000 |  |  | 386,086 |  |  | — |  |  | — |
Senior notes | 387,726 |  |  | 410,000 |  |  | 385,987 |  |  | 416,500 |

23

Table of Contents
The following methods and assumptions were used in estimating fair values:
Cash, cash equivalents, and restricted cash: Due to the liquid nature of these instruments, the carrying amount approximates fair value (Level 1).
Credit Facility - term loan and multicurrency revolving line of credit: The term loan and revolver are not traded publicly. The fair values, which are determined based upon a hypothetical market participant, are calculated using a discounted cash flow model with Level 2 inputs, including estimates of incremental borrowing rates for debt with similar terms, maturities, and credit profiles. Refer to "Note 6: Debt" for a further discussion of our debt.
Senior Notes: The Senior Notes are not registered securities nor listed on any securities exchange but may be actively traded by qualified institutional buyers. The fair value is estimated using Level 1 inputs, as it is based on quoted prices for these instruments in active markets.
Derivatives: See "Note 7: Derivative Financial Instruments" for a description of our methods and assumptions in determining the fair value of our derivatives, which were determined using Level 2 inputs. Each derivative asset and liability has a carrying value equal to fair value.
Note 15: Segment Information
We operate under the Itron brand worldwide and manage and report under three operating segments: Device Solutions, Networked Solutions, and Outcomes.
We have three GAAP measures of segment performance: revenues, gross profit (gross margin), and operating income (operating margin). Intersegment revenues are minimal. Certain operating expenses are allocated to the operating segments based upon internally established allocation methodologies. Corporate operating expenses, interest income, interest expense, other income (expense), and the income tax provision (benefit) are neither allocated to the segments, nor are they included in the measure of segment performance. 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
Device Solutions – This segment primarily includes hardware products used for measurement, control, or sensing that do not have communications capability embedded for use with our broader Itron systems, i.e., hardware-based products not part of a complete "end-to-end" solution. Examples from the Device Solutions portfolio include: standard endpoints that are shipped without Itron communications, such as our standard gas meters, electricity IEC meters, and water meters, in addition to our heat and allocation products; communicating meters that are not a part of an Itron solution such as Smart Spec meters; and the implementation and installation of non-communicating devices, such as gas regulators.
Networked Solutions – This segment primarily includes a combination of communicating devices (smart meters, modules, endpoints, and sensors), network infrastructure, and associated application software designed and sold as a complete solution for acquiring and transporting robust application-specific data. Networked Solutions combines the majority of the assets from the recently acquired SSNI organization with our legacy Itron networking products and software and the implementation and installation of communicating devices into one operating segment. Examples from the Networked Solutions portfolio include: communicating measurement, control, or sensing endpoints such as our Itron® and OpenWay® Riva meters, Itron traditional ERT® technology, Intelis smart gas or water meters, 500G gas communication modules, 500W water communication modules; GenX networking products, network modules and interface cards; and specific network control and management software applications. The IIoT solutions supported by this segment include automated meter reading (AMR), advanced metering infrastructure (AMI), smart grid and distribution automation (DA), and smart street lighting and smart city solutions.
Outcomes – This segment primarily includes our value-added, enhanced software and services in which we manage, organize, analyze, and interpret data to improve decision making, maximize operational profitability, drive resource efficiency, and deliver results for consumers, utilities, and smart cities. Outcomes places an emphasis on delivering to Itron customers high-value, turn-key, digital experiences by leveraging the footprint of our Device Solutions and Networked Solutions segments. The revenues from these offerings are primarily recurring in nature and would include any direct management of Device Solutions, Networked Solutions, and other products on behalf of our end customers. Examples from the Outcomes portfolio include: our meter data management and analytics offerings; our managed service solutions including network-as-a-service and platform-as-a-service, forecasting software and services; and any consulting-based engagement. Within the Outcomes segment, we also
24

Table of Contents
identify new business models, including performance-based contracting, to drive broader portfolio offerings across utilities and cities.
Revenues, gross profit, and operating income associated with our operating segments were as follows:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
In thousands | 2020 |  | 2019 |  | 2020 |  | 2019
Product revenues |  |  |  |  |  |  |
Device Solutions | $ | 174,039 |  |  | $ | 211,096 |  |  | $ | 501,157 |  |  | $ | 644,254 |
Networked Solutions | 282,677 |  |  | 330,487 |  |  | 898,465 |  |  | 978,259 |
Outcomes | 13,942 |  |  | 11,314 |  |  | 38,158 |  |  | 41,281 |
Total Company | $ | 470,658 |  |  | $ | 552,897 |  |  | $ | 1,437,780 |  |  | $ | 1,663,794 |
Service revenues |  |  |  |  |  |  |
Device Solutions | $ | 2,089 |  |  | $ | 2,253 |  |  | $ | 6,415 |  |  | $ | 8,573 |
Networked Solutions | 23,982 |  |  | 25,734 |  |  | 73,519 |  |  | 70,305 |
Outcomes | 43,455 |  |  | 43,590 |  |  | 130,479 |  |  | 131,415 |
Total Company | $ | 69,526 |  |  | $ | 71,577 |  |  | $ | 210,413 |  |  | $ | 210,293 |
Total revenues |  |  |  |  |  |  |
Device Solutions | $ | 176,128 |  |  | $ | 213,349 |  |  | $ | 507,572 |  |  | $ | 652,827 |
Networked Solutions | 306,659 |  |  | 356,221 |  |  | 971,984 |  |  | 1,048,564 |
Outcomes | 57,397 |  |  | 54,904 |  |  | 168,637 |  |  | 172,696 |
Total Company | $ | 540,184 |  |  | $ | 624,474 |  |  | $ | 1,648,193 |  |  | $ | 1,874,087 |
Gross profit |  |  |  |  |  |  |
Device Solutions | $ | 20,528 |  |  | $ | 40,945 |  |  | $ | 64,843 |  |  | $ | 122,451 |
Networked Solutions | 102,295 |  |  | 135,406 |  |  | 332,368 |  |  | 388,717 |
Outcomes | 20,428 |  |  | 20,053 |  |  | 56,123 |  |  | 63,713 |
Total Company | $ | 143,251 |  |  | $ | 196,404 |  |  | $ | 453,334 |  |  | $ | 574,881 |
Operating income (loss) |  |  |  |  |  |  |
Device Solutions | $ | 11,017 |  |  | $ | 27,905 |  |  | $ | 28,095 |  |  | $ | 81,717 |
Networked Solutions | 71,404 |  |  | 105,637 |  |  | 237,466 |  |  | 298,994 |
Outcomes | 12,044 |  |  | 10,843 |  |  | 29,468 |  |  | 35,620 |
Corporate unallocated | (118,445) |  |  | (104,946) |  |  | (338,026) |  |  | (312,511) |
Total Company | (23,980) |  |  | 39,439 |  |  | (42,997) |  |  | 103,820 |
Total other income (expense) | (13,063) |  |  | (15,110) |  |  | (35,020) |  |  | (44,983) |
Income (loss) before income taxes | $ | (37,043) |  |  | $ | 24,329 |  |  | $ | (78,017) |  |  | $ | 58,837 |

Our corporate unallocated operating loss for the three and nine months ended September 30, 2020 includes a $57.3 million loss from the sale of our Latin American business. Refer to "Note 17: Sale of Business" for additional information on the transaction.
For the three months ended September 30, 2020, no customer represented more than 10% of total company revenue. During the three months ended September 30, 2019, one customer represented 10% of total company revenues. For the nine months ended September 30, 2020 and 2019, one customer represented 11% of total company 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.
25

Table of Contents
Revenues by region were as follows:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
In thousands | 2020 |  | 2019 |  | 2020 |  | 2019
United States and Canada | $ | 354,841 |  |  | $ | 405,973 |  |  | $ | 1,110,028 |  |  | $ | 1,221,448 |
Europe, Middle East, and Africa (EMEA) | 156,810 |  |  | 157,159 |  |  | 431,593 |  |  | 495,715 |
Latin America and Asia Pacific(1) | 28,533 |  |  | 61,342 |  |  | 106,572 |  |  | 156,924 |
Total Company | $ | 540,184 |  |  | $ | 624,474 |  |  | $ | 1,648,193 |  |  | $ | 1,874,087 |

(1) On June 25, 2020, Itron closed on the sale of its Latin American operations. We will continue to sell into the region through an exclusive distributor.
Depreciation expense is allocated to the operating segments based upon each segment's use of the assets. All amortization expense is recognized within Corporate unallocated. Depreciation and amortization of intangible assets expense associated with our operating segments was as follows:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
In thousands | 2020 |  | 2019 |  | 2020 |  | 2019
Device Solutions | $ | 5,926 |  |  | $ | 6,373 |  |  | $ | 18,423 |  |  | $ | 19,155 |
Networked Solutions | 4,377 |  |  | 3,077 |  |  | 12,447 |  |  | 9,530 |
Outcomes | 1,327 |  |  | 1,408 |  |  | 4,132 |  |  | 3,995 |
Corporate unallocated | 12,446 |  |  | 17,765 |  |  | 37,304 |  |  | 53,011 |
Total Company | $ | 24,076 |  |  | $ | 28,623 |  |  | $ | 72,306 |  |  | $ | 85,691 |

Note 16: Revenues
A summary of significant net changes in the contract assets and the contract liabilities balances during the period is as follows:

In thousands | Contract liabilities, less contract assets
Beginning balance, January 1, 2020 | $ | 88,215 |
Revenues recognized from beginning contract liability | (82,438) |
Increases due to amounts collected or due | 252,212 |
Revenues recognized from current period increases | (145,016) |
Other | (5,054) |
Ending balance, September 30, 2020 | $ | 107,919 |

On January 1, 2020, total contract assets were $50.7 million and total contract liabilities were $138.9 million. On September 30, 2020, total contract assets were $50.4 million and total contract liabilities were $158.3 million. The contract assets primarily relate to contracts that include a retention clause and allocations related to contracts with multiple performance obligations. The contract liabilities primarily relate to deferred revenue, such as extended warranty and maintenance cost.
Transaction price allocated to the remaining performance obligations
Total transaction price allocated to remaining performance obligations represents committed but undelivered products and services for contracts and purchase orders at period end. Twelve-month remaining performance obligations represent the portion of total transaction price allocated to remaining performance obligations that we estimate will be recognized as revenue over the next 12 months. Total transaction price allocated to remaining performance obligations is not a complete measure of our future revenues as we also receive orders where the customer may have legal termination rights but are not likely to terminate.
Total transaction price allocated to remaining performance obligations related to contracts is approximately $1.0 billion for the next twelve months and approximately $1.2 billion for periods longer than 12 months. The total remaining performance obligations consist of product and service components. The service component relates primarily to maintenance agreements for which customers pay a full year's maintenance in advance, and service revenues are generally recognized over the service period. Total transaction price allocated to remaining performance obligations also includes our extended warranty contracts, for which revenue is recognized over the warranty period, and hardware, which is recognized as units are delivered. The estimate of when remaining performance obligations will be recognized requires significant judgment.
26

Table of Contents
Cost to obtain a contract and cost to fulfill a contract with a customer
Cost to obtain a contract and costs to fulfill a contract were capitalized and amortized using a systematic rational approach to align with the transfer of control of underlying contracts with customers. While amounts were capitalized, they are not material.
Disaggregation of revenue
Refer to "Note 15: Segment Information" and the Consolidated Statements of Operations for disclosure regarding the disaggregation of revenue into categories, which depict how revenue and cash flows are affected by economic factors. Specifically, our operating segments and geographical regions as disclosed, and categories for products, which include hardware and software and services, are presented.
Note 17: Sale of Business
Latin America Divestiture
On June 25, 2020, we closed on the sale of five subsidiaries comprising our manufacturing and sales operations in Latin America to buyers led by Instalación Profesional y Tecnologías del Centro S.A. de C.V., a Mexican company doing business as Accell in Brazil (Accell), through the execution of various definitive stock purchase agreements. The sale of these Latin America-based operations is part of our continued strategy to improve profitability and focus on growing our Networked Solutions and Outcomes businesses in Latin America and throughout the world. We retained the intellectual property rights to our products sold in Latin America. As part of the transaction, we entered into an intellectual property license agreement whereby Accell pays a royalty on certain products manufactured by Accell using licensed Company intellectual property. In addition, Accell serves as the exclusive distributor for our Device Solutions, Networked Solutions, and Outcomes products and services offerings in Latin America.
Based on the sales price and the net assets of the five subsidiaries sold, we recognized a total loss of $57.3 million in the second and third quarters of 2020. The loss was primarily due to the recognition of $52.1 million in foreign currency translation losses accumulated since the acquisition of these subsidiaries in 2006 and 2007, and allocated goodwill of $3.0 million. Accell assumed all recognized liabilities, as well as all future liabilities, of the subsidiaries. We have provided no indemnification for any future losses that may be incurred. Following the close of the transaction, the terms of the agreement allow for adjustments to the $21.9 million working capital amount.
Of the total sales price, $2.5 million was received at closing, and the majority of the remaining portion is due by December 31, 2020. Included in the net assets sold was $6.1 million in cash. This resulted in net outflow of cash at closing of $3.6 million. During the quarter ended September 30, 2020, we received $2.9 million of payments for the purchase price evidenced by a promissory note.
The loss on sale of business was calculated as follows:

In thousands | Loss on sale of business
Sales price | $ | 35,008 |
Net assets sold (including working capital) | (36,198) |
Currency translation adjustment loss | (52,074) |
Goodwill allocated | (3,000) |
Legal fees | (1,031) |
Total loss on sale of business | $ | (57,295) |

Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the unaudited consolidated financial statements and notes included in this report and with the consolidated financial statements and the notes thereto for the fiscal year ended December 31, 2019 filed with the Securities and Exchange Commission (SEC) in our Annual Report on Form 10-K on February 27, 2020 (2019 Annual Report).
Documents we provide to the SEC are available free of charge under the Investors section of our website at www.itron.com as soon as practicable after they are filed with or furnished to the SEC. In addition, these documents are available at the SEC's website (http://www.sec.gov).
27

Table of Contents
Certain Forward-Looking Statements
This report contains, and our officers and representatives may from time to time make, "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical factors nor assurances of future performance. These statements are based on our expectations about, among others, revenues, operations, financial performance, earnings, liquidity, earnings per share, cash flows and restructuring activities including headcount reductions and other cost savings initiatives. This document reflects our current strategy, plans and expectations and is based on information currently available as of the date of this Quarterly Report on Form 10-Q. When we use words such as "expect," "intend," "anticipate," "believe," "plan," “goal,” “seek,” "project," "estimate," "future," “strategy,” "objective," "may," “likely,” “should,” "will," "will continue," and similar expressions, including related to future periods, they are intended to identify forward-looking statements. Forward-looking statements rely on a number of assumptions and estimates. Although we believe the estimates and assumptions upon which these forward-looking statements are based are reasonable, any of these estimates or assumptions could prove to be inaccurate and the forward-looking statements based on these estimates and assumptions could be incorrect. Our operations involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, could materially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. Actual results and trends in the future may differ materially from those suggested or implied by the forward-looking statements depending on a variety of factors. Therefore, you should not rely on any of these forward-looking statements. Some of the factors that we believe could affect our results include our ability to execute on our restructuring plan, our ability to achieve estimated cost savings, the rate and timing of customer demand for our products, rescheduling of current customer orders, changes in estimated liabilities for product warranties, adverse impacts of litigation, changes in laws and regulations, our dependence on new product development and intellectual property, future acquisitions, changes in estimates for stock-based and bonus compensation, increasing volatility in foreign exchange rates, international business risks, uncertainties caused by adverse economic conditions, including, without limitation those resulting from extraordinary events or circumstances such as the COVID-19 pandemic and other factors that are more fully described in Item 1A: “Risk Factors” included in our 2019 Annual Report, Part II - Item 1A of this document, and other reports on file with the SEC. We do not undertake any obligation to publicly update or revise any forward-looking statement, whether written or oral.
The impact caused by the ongoing COVID-19 pandemic includes uncertainty as to the duration, spread, severity, and any recurrence of the COVID-19 pandemic, the duration and scope of related government orders and restrictions, impact on overall demand, impact on our customers’ businesses and workforce levels, disruptions of our business and operations, including the impact on our employees, limitations on, or closures of, our facilities, or the business and operations of our customers or suppliers. Our estimates and statements regarding the impact of COVID-19 are made in good faith to provide insight to our current and future operating and financial environment and any of these may materially change due to factors outside our control. For more information on risks associated with the COVID-19 pandemic, please see our updated risk in Part II, Item 1A, “Risk Factors” of this document.
Overview
We are a technology and service company, which is a leader in the Industrial Internet of Things (IIoT). We offer solutions that enable utilities and municipalities to safely, securely, and reliably operate their critical infrastructure. Our solutions include the deployment of smart networks, software, services, devices, sensors, and data analytics that allow our customers to manage assets, secure revenue, lower operational costs, improve customer service, improve safety, and enable efficient management of valuable resources. Our comprehensive solutions and data analytics address the unique challenges facing the energy, water, and municipality sectors, including increasing demand on resources, non-technical loss, leak detection, environmental and regulatory compliance, and improved operational reliability.
We operate under the Itron brand worldwide and manage and report under three operating segments: Device Solutions, Networked Solutions, and Outcomes. The product and operating definitions of the three segments are as follows:
Device Solutions – This segment primarily includes hardware products used for measurement, control, or sensing that do not have communications capability embedded for use with our broader Itron systems, i.e., hardware-based products not part of a complete "end-to-end" solution. Examples from the Device Solutions portfolio include: standard endpoints that are shipped without Itron communications, such as our standard gas meters, electricity IEC meters, and water meters, in addition to our heat and allocation products; communicating meters that are not a part of an Itron solution such as Smart Spec meters; and the implementation and installation of non-communicating devices, such as gas regulators.
Networked Solutions – This segment primarily includes a combination of communicating devices (smart meters, modules, endpoints, and sensors), network infrastructure, and associated application software designed and sold as a complete solution for acquiring and transporting robust application-specific data. Networked Solutions combines the majority of the assets from the recently acquired SSNI organization with our legacy Itron networking products and software and the implementation and installation of communicating devices into one operating segment. Examples from the Networked Solutions portfolio include:
28

Table of Contents
communicating measurement, control, or sensing endpoints such as our Itron® and OpenWay® Riva meters, Itron traditional ERT® technology, Intelis smart gas or water meters, 500G gas communication modules, 500W water communication modules; GenX networking products, network modules and interface cards; and specific network control and management software applications. The IIoT solutions supported by this segment include automated meter reading (AMR), advanced metering infrastructure (AMI), smart grid and distribution automation (DA), and smart street lighting and smart city solutions.
Outcomes – This segment primarily includes our value-added, enhanced software and services in which we manage, organize, analyze, and interpret data to improve decision making, maximize operational profitability, drive resource efficiency, and deliver results for consumers, utilities, and smart cities. Outcomes places an emphasis on delivering to Itron customers high-value, turn-key, digital experiences by leveraging the footprint of our Device Solutions and Networked Solutions segments. The revenues from these offerings are primarily recurring in nature and would include any direct management of Device Solutions, Networked Solutions, and other products on behalf of our end customers. Examples from the Outcomes portfolio include: our meter data management and analytics offerings; our managed service solutions including network-as-a-service and platform-as-a-service, forecasting software and services; and any consulting-based engagement. Within the Outcomes segment, we also identify new business models, including performance-based contracting, to drive broader portfolio offerings across utilities and cities.
We have three measures of segment performance: revenues, gross profit (margin), and operating income (margin). Intersegment revenues are minimal. Certain operating expenses are allocated to the operating segments based upon internally established allocation methodologies. Interest income, interest expense, other income (expense), the income tax provision (benefit), and certain corporate operating expenses are neither allocated to the segments nor included in the measures of segment performance.
Non-GAAP Measures
To supplement our consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States (GAAP), we use certain adjusted or non-GAAP financial measures, including non-GAAP operating expense, non-GAAP operating income, non-GAAP net income, non-GAAP diluted earnings per share (EPS), adjusted EBITDA, adjusted EBITDA margin, constant currency, and free cash flow. We provide these non-GAAP financial measures because we believe they provide greater transparency and represent supplemental information used by management in its financial and operational decision making. We exclude certain costs in our non-GAAP financial measures as we believe the net result is a measure of our core business. We believe these measures facilitate operating performance comparisons from period to period by eliminating potential differences caused by the existence and timing of certain expense items that would not otherwise be apparent on a GAAP basis. Non-GAAP performance measures should be considered in addition to, and not as a substitute for, results prepared in accordance with GAAP. We strongly encourage investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. Our non-GAAP financial measures may be different from those reported by other companies.
In our discussions of the operating results below, we sometimes refer to the impact of foreign currency exchange rate fluctuations, which are references to the differences between the foreign currency exchange rates we use to convert operating results from local currencies into U.S. dollars for reporting purposes. We also use the term "constant currency", which represents results adjusted to exclude foreign currency exchange rate impacts. We calculate the constant currency change as the difference between the current period results translated using the current period currency exchange rates and the comparable prior period's results restated using current period currency exchange rates. We believe the reconciliations of changes in constant currency provide useful supplementary information to investors in light of fluctuations in foreign currency exchange rates.
Refer to the Non-GAAP Measures section below on pages 43-46 for information about these non-GAAP measures and the detailed reconciliation of items that impacted free cash flow, non-GAAP operating expense, non-GAAP operating income, non-GAAP net income, adjusted EBITDA, and non-GAAP diluted EPS in the presented periods.
29

Table of Contents
Total Company Highlights
Highlights and significant developments for the three months ended September 30, 2020 compared with the three months ended September 30, 2019
•Revenues were $540.2 million compared with $624.5 million in 2019, a decrease of $84.3 million, or 13%
•Gross margin was 26.5%, compared with 31.5% in the same period last year
•Operating expenses increased $10.3 million, or 7%, compared with 2019, including $43.9 million of restructuring expense related to the 2020 Projects
•Net loss attributable to Itron, Inc. was $25.4 million compared with net income of $16.8 million in 2019
•GAAP diluted EPS decreased by $1.05 to a diluted loss per share of $0.63 in 2020
•Non-GAAP net income attributable to Itron, Inc. was $24.6 million compared with $41.4 million in 2019
•Non-GAAP diluted EPS was $0.61, a decrease of $0.43 compared with 2019
•Adjusted EBITDA was $39.7 million compared with $74.5 million in 2019
•Total backlog was $2.8 billion and twelve-month backlog was $1.1 billion at September 30, 2020
Highlights and significant developments for the nine months ended September 30, 2020 compared with the nine months ended September 30, 2019
•Revenues were $1.65 billion compared with $1.87 billion in 2019, a decrease of $225.9 million, or 12%
•Gross margin was 27.5% compared with 30.7% in 2019
•Operating expenses increased $25.3 million, or 5%, compared with 2019, including $43.9 million of restructuring expense related to the 2020 Projects and a $57.3 million loss on sale of business
•Net loss attributable to Itron, Inc. was $79.5 million, compared with net income of $34.4 million in 2019
•GAAP diluted EPS decreased by $2.84 to a diluted loss per share of $1.98 as compared with 2019
•Non-GAAP net income attributable to Itron, Inc. was $48.9 million compared with $103.9 million in 2019
•Non-GAAP diluted EPS was $1.21, a decrease of $1.39 compared with 2019
•Adjusted EBITDA was $122.9 million compared with $213.2 million in 2019
Outlook for 2020 due to COVID-19
The COVID-19 pandemic has had global economic impacts including disrupting global supply chains and creating market volatility. The extent of the recent pandemic and its ongoing impact on our operations is volatile but is being monitored closely by management. While certain of our European factories were closed during portions of the first half of 2020 due to government actions and local conditions, all were open throughout the third quarter. Any further closures that may be imposed on us could impact our results for the remainder of 2020. We expect that certain of our customers’ projects and deployments may shift into 2021. Incremental costs we have incurred related to COVID-19, such as personal protective equipment, increased cleaning and sanitizing of our facilities, and other such items, have not been material to date. At this time, we have not identified any significant decrease in long-term customer demand for our products and services. For more information on risks associated with the COVID-19 pandemic, please see our updated risk in Part II, Item 1A, "Risk Factors".
The COVID-19 pandemic remains a rapidly evolving situation. Changes in the mix of earnings or losses from our different geographical operations, as well as any future enactment of tax legislation and other factors, may result in more volatile quarterly and annual effective tax rates. The detrimental impacts to financial results may be partially offset by financial assistance from the U.S. and foreign governments, including employer payroll tax credits for wages paid to employees who are unable to work during the COVID-19 outbreak. Other benefits, including options to defer payroll tax payments and additional deductions, has resulted in reduced future cash outlays in the near term.
2020 Restructuring Plan
On September 17, 2020, our Board of Directors approved a restructuring plan (the "2020 Projects"). The 2020 Projects include activities that continue the Company’s efforts to optimize its global supply chain and manufacturing operations, sales and marketing organizations, and other overhead. These projects are scheduled to be substantially complete by the end of 2022. We estimate pre-tax restructuring charges of $55 million to $65 million, of which approximately $35 million to $45 million will result in cash expenditures, and the remainder relates to non-cash charges. Of the total expected costs, $43.9 million was
30

Table of Contents
recognized in the third quarter. Once the 2020 Projects are substantially completed, the Company estimates $20 to $25 million of annualized savings.
Sale of Business
On June 25, 2020, we closed on the sale of five subsidiaries comprising our manufacturing and sales operations in Latin America to buyers led by Instalación Profesional y Tecnologías del Centro S.A. de C.V., a Mexican company doing business as Accell in Brazil (Accell), through the execution of various definitive stock purchase agreements. The sale of these Latin America-based operations is part of our continued strategy to improve profitability and focus on growing our Networked Solutions and Outcomes businesses in Latin America and throughout the world. We retained the intellectual property rights to our products sold in Latin America. As part of the transaction, we entered into an intellectual property license agreement whereby Accell will pay a royalty on certain products manufactured by Accell using licensed Company intellectual property. In addition, Accell will serve as an exclusive distributor for our Device Solutions, Networked Solutions, and Outcomes products and services offerings in Latin America. We recognized a loss on sale of business of $57.3 million during the nine months ended September 30, 2020, primarily due to foreign currency translation losses and allocated goodwill. Refer to Item 1: "Financial Statements (Unaudited), Note 17: Sale of Business" for more information.
Credit Facility
In March 2020, we drew $400 million U.S. dollars under the revolving line of credit within the 2018 credit facility. In light of the current uncertain environment, we deemed it prudent to increase our cash position and preserve future financial flexibility. The Total Net Leverage Ratio, as defined in the amended 2018 credit facility agreement, was unchanged by this drawing.
31

Table of Contents
Total Company GAAP and Non-GAAP Highlights and Unit Shipments:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
In thousands, except margin and per share data | 2020 |  | 2019 |  | % Change |  | 2020 |  | 2019 |  | % Change
GAAP |  |  |  |  |  |  |  |  |  |  |
Revenues |  |  |  |  |  |  |  |  |  |  |
Product revenues | $ | 470,658 |  |  | $ | 552,897 |  |  | (15)% |  | $ | 1,437,780 |  |  | $ | 1,663,794 |  |  | (14)%
Service revenues | 69,526 |  |  | 71,577 |  |  | (3)% |  | 210,413 |  |  | 210,293 |  |  | —%
Total revenues | 540,184 |  |  | 624,474 |  |  | (13)% |  | 1,648,193 |  |  | 1,874,087 |  |  | (12)%
Gross profit | $ | 143,251 |  |  | $ | 196,404 |  |  | (27)% |  | $ | 453,334 |  |  | $ | 574,881 |  |  | (21)%
Operating expenses | 167,231 |  |  | 156,965 |  |  | 7% |  | 496,331 |  |  | 471,061 |  |  | 5%
Operating income (loss) | (23,980) |  |  | 39,439 |  |  | NM |  | (42,997) |  |  | 103,820 |  |  | NM
Other income (expense) | (13,063) |  |  | (15,110) |  |  | (14)% |  | (35,020) |  |  | (44,983) |  |  | (22)%
Income tax provision | 11,985 |  |  | (6,152) |  |  | NM |  | (366) |  |  | (20,692) |  |  | (98)%
Net income (loss) attributable to Itron, Inc. | (25,357) |  |  | 16,847 |  |  | NM |  | (79,475) |  |  | 34,386 |  |  | NM
Non-GAAP(1) |  |  |  |  |  |  |  |  |  |  |
Non-GAAP operating expenses | $ | 113,554 |  |  | $ | 130,387 |  |  | (13)% |  | $ | 364,788 |  |  | $ | 388,985 |  |  | (6)%
Non-GAAP operating income | 29,697 |  |  | 66,017 |  |  | (55)% |  | 88,546 |  |  | 185,896 |  |  | (52)%
Non-GAAP net income attributable to Itron, Inc. | 24,634 |  |  | 41,396 |  |  | (40)% |  | 48,929 |  |  | 103,886 |  |  | (53)%
Adjusted EBITDA | 39,684 |  |  | 74,456 |  |  | (47)% |  | 122,858 |  |  | 213,180 |  |  | (42)%
GAAP Margins and Earnings Per Share |  |  |  |  |  |  |  |  |  |  |
Gross margin |  |  |  |  |  |  |  |  |  |  |
Product gross margin | 23.9 | % |  | 29.5 | % |  |  |  | 25.4 | % |  | 29.3 | % |  |
Service gross margin | 44.4 | % |  | 46.5 | % |  |  |  | 41.7 | % |  | 41.8 | % |  |
Total gross margin | 26.5 | % |  | 31.5 | % |  |  |  | 27.5 | % |  | 30.7 | % |  |
Operating margin | (4.4) | % |  | 6.3 | % |  |  |  | (2.6) | % |  | 5.5 | % |  |
Net income (loss) per common share - Basic | $ | (0.63) |  |  | $ | 0.43 |  |  |  |  | $ | (1.98) |  |  | $ | 0.87 |  |  |
Net income (loss) per common share - Diluted | $ | (0.63) |  |  | $ | 0.42 |  |  |  |  | $ | (1.98) |  |  | $ | 0.86 |  |  |
Non-GAAP Earnings Per Share(1) |  |  |  |  |  |  |  |  |  |  |
Non-GAAP diluted EPS | $ | 0.61 |  |  | $ | 1.04 |  |  |  |  | $ | 1.21 |  |  | $ | 2.60 |  |  |

(1)These measures exclude certain expenses that we do not believe are indicative of our core operating results. See pages 43-46 for information about these non-GAAP measures and reconciliations to the most comparable GAAP measures.
32

Table of Contents
Endpoints Summary
Our revenue is driven significantly by sales of endpoints. We classify our endpoints into two categories:
•Standard Endpoints – an Itron product delivered primarily via our Device Solutions segment. The majority of our standard endpoint devices are used for delivery and metrology in the electricity, water, and gas distribution industries, and have no built-in remote reading communication technology. However, some standard endpoint devices are shipped with non-Itron communications capabilities and are not a part of an Itron solution, such as the Smart Spec meters, and are classified as a standard endpoint.
•Networked Endpoints – an Itron product with the capability of one-way communication or two-way communication of data including remote device configuration and upgrade (consisting primarily of our OpenWay® or Gen X technology). This primarily includes Itron devices used in electricity, water, and gas distribution industries. Networked endpoints also include smart communication modules and network interface cards (NICs). NICs are communicating modules that can be sold separately from the device directly to our customers or to third party manufacturers for use in endpoints such as electric, water, and gas meters; streetlights and smart city devices; sensors or another standard device that the end customer would like to connect to our OpenWay or Gen X Networked Solutions. These endpoints are primarily delivered via our Networked Solutions segment.
A summary of our endpoints shipped is as follows:

| Three Months Ended September 30, |  | Nine Months Ended September 30,
Units in thousands | 2020 |  | 2019 |  | 2020 |  | 2019
Itron Endpoints |  |  |  |  |  |  |
Standard endpoints | 3,890 |  |  | 5,420 |  |  | 12,410 |  |  | 16,460 |
Networked endpoints | 3,860 |  |  | 3,940 |  |  | 11,950 |  |  | 12,180 |
Total endpoints | 7,750 |  |  | 9,360 |  |  | 24,360 |  |  | 28,640 |

Results of Operations
Revenues and Gross Margin
The actual results of and effects of changes in foreign currency exchange rates on revenues and gross profit were as follows:

|  |  |  |  |  | Effect of Changes in Foreign Currency Exchange Rates |  | Constant Currency Change |  | Total Change
|  | Three Months Ended September 30, |  |  |
In thousands | 2020 |  | 2019 |  |  |
Total Company |  |  |  |  |  |  |  |  |
| Revenues | $ | 540,184 |  |  | $ | 624,474 |  |  | $ | 5,539 |  |  | $ | (89,829) |  |  | $ | (84,290) |
| Gross profit | 143,251 |  |  | 196,404 |  |  | 1,261 |  |  | (54,414) |  |  | (53,153) |
|  |  |  | Effect of Changes in Foreign Currency Exchange Rates |  | Constant Currency Change |  | Total Change
|  | Nine Months Ended September 30, |  |  |
In thousands | 2020 |  | 2019 |  |  |
Total Company |  |  |  |  |  |  |  |  |
| Revenues | $ | 1,648,193 |  |  | $ | 1,874,087 |  |  | $ | (13,641) |  |  | (212,253) |  |  | $ | (225,894) |
| Gross profit | 453,334 |  |  | 574,881 |  |  | (3,228) |  |  | (118,319) |  |  | (121,547) |

Revenues - Three months ended September 30, 2020 vs. Three months ended September 30, 2019
Total revenues decreased $84.3 million, or 13%, in the current 2020 quarter, compared with the same period in 2019. We have been negatively impacted by COVID-19, which played a significant role in lower year-over-year results. Product revenues decreased by $82.2 million, and service revenues decreased slightly. Device Solutions decreased by $37.2 million; Networked Solution decreased by $49.6 million; and Outcomes increased by $2.5 million when compared with the same period last year. Changes in exchange rates favorably impacted total revenues in the 2020 period by $5.5 million, of which $5.1 million favorably impacted Device Solutions.
33

Table of Contents
Revenues - Nine months ended September 30, 2020 vs. Nine months ended September 30, 2019
Total revenues decreased $225.9 million, or 12%, for the first nine months of 2020, compared with the same period in 2019. We have been negatively impacted by COVID-19, which played a significant role in lower year-over-year results. Product revenues decreased by $226.0 million, and service revenues increased slightly. Device Solutions decreased by $145.3 million; Networked Solutions decreased by $76.6 million; and Outcomes decreased by $4.1 million when compared with the same period last year. C hanges in exchange rates unfavorably impacted total revenues by $13.6 million, of which $11.6 million unfavorably impacted Device Solutions.
Gross Margin - Three months ended September 30, 2020 vs. Three months ended September 30, 2019
Gross margin in the 2020 period was 26.5%, compared with 31.5% in 2019. We were negatively impacted by unfavorable product mix, inventory reserves, and manufacturing inefficiencies caused by COVID-19. Product sales gross margin decreased to 23.9% for the quarter in 2020, compared with 29.5% in 2019. Gross margin on service revenues decreased to 44.4% in 2020, compared with 46.5% in 2019.
Gross Margin - Nine months ended September 30, 2020 vs. Nine months ended September 30, 2019
Gross margin for the current year was 27.5%, compared with 30.7% in 2019. Unfavorable product mix and manufacturing inefficiencies caused by COVID-19 negatively impacted our results. Product sales gross margin decreased to 25.4% in the 2020 period, compared with 29.3% in 2019 and gross margin on service revenues decreased to 41.7%, compared with 41.8% in 2019.
Refer to Operating Segment Results section below for further detail on total company revenues and gross margin.
Operating Expenses
The actual results of and effects of changes in foreign currency exchange rates on operating expenses were as follows:

|  |  |  | Effect of Changes in Foreign Currency Exchange Rates |  | Constant Currency Change |  | Total Change
|  | Three Months Ended September 30, |  |  |
In thousands | 2020 |  | 2019 |  |  |
Total Company |  |  |  |  |  |  |  |  |
| Sales, general and administrative | $ | 64,982 |  |  | $ | 83,666 |  |  | $ | 1,011 |  |  | $ | (19,695) |  |  | $ | (18,684) |
| Research and development | 46,224 |  |  | 50,612 |  |  | 239 |  |  | (4,627) |  |  | (4,388) |
| Amortization of intangible assets | 11,183 |  |  | 16,095 |  |  | 80 |  |  | (4,992) |  |  | (4,912) |
| Restructuring | 44,462 |  |  | 6,592 |  |  | 171 |  |  | 37,699 |  |  | 37,870 |
| Loss on sale of business | 380 |  |  | — |  |  | — |  |  | 380 |  |  | 380 |
| Total Operating expenses | $ | 167,231 |  |  | $ | 156,965 |  |  | $ | 1,501 |  |  | $ | 8,765 |  |  | $ | 10,266 |
|  |  |  | Effect of Changes in Foreign Currency Exchange Rates |  | Constant Currency Change |  | Total Change
|  | Nine Months Ended September 30, |  |  |
In thousands | 2020 |  | 2019 |  |  |
Total Company |  |  |  |  |  |  |  |  |
| Sales, general and administrative | $ | 215,018 |  |  | $ | 264,640 |  |  | $ | (1,266) |  |  | $ | (48,356) |  |  | $ | (49,622) |
| Research and development | 148,999 |  |  | 150,551 |  |  | (104) |  |  | (1,448) |  |  | (1,552) |
| Amortization of intangible assets | 33,488 |  |  | 48,185 |  |  | (71) |  |  | (14,626) |  |  | (14,697) |
| Restructuring | 41,531 |  |  | 7,685 |  |  | (10) |  |  | 33,856 |  |  | 33,846 |
| Loss on sale of business | 57,295 |  |  | — |  |  | — |  |  | 57,295 |  |  | 57,295 |
| Total Operating expenses | $ | 496,331 |  |  | $ | 471,061 |  |  | $ | (1,451) |  |  | $ | 26,721 |  |  | $ | 25,270 |

Operating expenses increased $10.3 million for the third quarter of 2020 as compared with the same period in 2019. This was primarily the result of $43.9 million in restructuring expenses recognized for the 2020 Projects during the third quarter of 2020. An additional $0.4 million recognized for the loss on sale of business from the Latin America divestiture, which closed in June 2020. The increase was partially offset by decreases of $18.7 million in sales, general and administrative expenses due to lower variable compensation and reduced travel expenses, and $4.9 million in amortization of intangible assets compared with the
34

Table of Contents
2019 period. Acquisition and integration costs, which are classified within sales, general and administrative expenses, decreased by $6.2 million compared with the same period in 2019.
Operating expenses increased $25.3 million for the nine months ended September 30, 2020 as compared with the same period in 2019. This was primarily the result of $43.9 million in restructuring expense recognized for the 2020 Projects during the third quarter of 2020 and a $57.3 million loss on sale of business resulting from the Latin America divestiture during the second quarter of 2020. The increase was partially offset by decreases of $49.6 million in sales, general and administrative expenses due to lower variable compensation and reduced travel expenses, and $14.7 million in amortization of intangible assets. Acquisition and integration costs, which are classified within sales, general and administrative expenses, decreased by $25.3 million compared with the same period in 2019.
Other Income (Expense)
The following table shows the components of other income (expense):

| Three Months Ended September 30, |  | % Change |  | Nine Months Ended September 30, |  | % Change
In thousands | 2020 |  | 2019 |  |  | 2020 |  | 2019 |
Interest income | $ | 354 |  |  | $ | 517 |  |  | (32)% |  | $ | 2,165 |  |  | $ | 1,379 |  |  | 57%
Interest expense | (9,794) |  |  | (11,584) |  |  | (15)% |  | (30,742) |  |  | (36,213) |  |  | (15)%
Amortization of prepaid debt fees | (1,016) |  |  | (1,284) |  |  | (21)% |  | (3,029) |  |  | (3,686) |  |  | (18)%
Other income (expense), net | (2,607) |  |  | (2,759) |  |  | (6)% |  | (3,414) |  |  | (6,463) |  |  | (47)%
Total other income (expense) | $ | (13,063) |  |  | $ | (15,110) |  |  | (14)% |  | $ | (35,020) |  |  | $ | (44,983) |  |  | (22)%

Total other income (expense) for the three and nine months ended September 30, 2020 was a net expense of $13.1 million and $35.0 million, compared with net expense of $15.1 million and $45.0 million in the same periods in 2019.
The lower total expense for the three months ended September 30, 2020, as compared with the same period in 2019, was driven primarily by $2.9 million in lower interest expense for the credit facility due to a lower interest rate in 2020.
The decrease in other income (expense) for the nine months ended September 30, 2020, as compared with the same period in 2019, was primarily driven by $7.1 million in lower interest expense for the credit facility due to a lower interest rate in 2020, and lower foreign currency exchange losses resulting from transactions denominated in a currency other than the reporting entity's functional currency.
Income Tax Provision
For the three and nine months ended September 30, 2020, our income tax expense (benefit) was $(12.0) million and $0.4 million compared with income tax expense of $6.2 million and $20.7 million for the same periods in 2019. Our tax rate for the three and nine months ended September 30, 2020 of 32% and 0%, respectively, differed from the federal statutory rate of 21% primarily due to a significant loss recognized in the second quarter for the divestiture of the majority of our Latin American business activities. Refer to "Note 17: Sale of Business" for additional information on the transaction. This loss was recognized for tax as a discrete item and resulted in no tax benefit. A discrete tax benefit was recorded in the third quarter for $10.1 million related to the release of a valuation allowance on U.S. foreign tax credit deferred tax assets. This release was triggered by the carryforward of tax attributes due to the filing of amended tax returns in the third quarter. Other rate drivers include losses in jurisdictions for which no benefit is recognized because of valuation allowances on deferred tax assets, the forecasted mix of earnings in domestic and international jurisdictions, a benefit related to excess stock-based compensation, and uncertain tax positions. Our tax rate for the three and nine months ended September 30, 2019 of 25% and 35%, respectively, differed from the federal statutory rate of 21% primarily due to losses in jurisdictions for which no benefit is recognized because of valuation allowances on deferred tax assets as well as the forecasted mix of earnings in domestic and international jurisdictions, a benefit related to excess stock-based compensation, and uncertain tax positions.
For additional discussion related to income taxes, see Item 1: "Financial Statements (Unaudited), Note 10: Income Taxes".
35

Table of Contents
Operating Segment Results
For a description of our operating segments, refer to Item 1: "Financial Statements (Unaudited), Note 15: Segment Information". The following tables and discussion highlight significant changes in trends or components of each operating segment:

| Three Months Ended September 30, |  |  |  |  |  | Nine Months Ended September 30, |  |  |  |
In thousands | 2020 |  | 2019 |  | % Change |  |  |  | 2020 |  | 2019 |  | % Change |  |
Segment Revenues |  |  |  |  |  |  |  |  |  |  |
Device Solutions | $ | 176,128 |  |  | $ | 213,349 |  |  | (17)% |  |  |  | $ | 507,572 |  |  | $ | 652,827 |  |  | (22)% |  |
Networked Solutions | 306,659 |  |  | 356,221 |  |  | (14)% |  |  |  | 971,984 |  |  | 1,048,564 |  |  | (7)% |  |
Outcomes | 57,397 |  |  | 54,904 |  |  | 5% |  |  |  | 168,637 |  |  | 172,696 |  |  | (2)% |  |
Total revenues | $ | 540,184 |  |  | $ | 624,474 |  |  | (13)% |  |  |  | $ | 1,648,193 |  |  | $ | 1,874,087 |  |  | (12)% |  |
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
In thousands | Gross Profit |  | Gross Margin |  | Gross Profit |  | Gross Margin |  | Gross Profit |  | Gross Margin |  | Gross Profit |  | Gross Margin
Segment Gross Profit and Margin |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Device Solutions | $ | 20,528 |  |  | 11.7% |  | $ | 40,945 |  |  | 19.2% |  | $ | 64,843 |  |  | 12.8% |  | $ | 122,451 |  |  | 18.8%
Networked Solutions | 102,295 |  |  | 33.4% |  | 135,406 |  |  | 38.0% |  | 332,368 |  |  | 34.2% |  | 388,717 |  |  | 37.1%
Outcomes | 20,428 |  |  | 35.6% |  | 20,053 |  |  | 36.5% |  | 56,123 |  |  | 33.3% |  | 63,713 |  |  | 36.9%
Total gross profit and margin | $ | 143,251 |  |  | 26.5% |  | $ | 196,404 |  |  | 31.5% |  | $ | 453,334 |  |  | 27.5% |  | $ | 574,881 |  |  | 30.7%
| Three Months Ended September 30, |  |  |  |  |  | Nine Months Ended September 30, |  |  |  |
In thousands | 2020 |  | 2019 |  | % Change |  |  |  | 2020 |  | 2019 |  | % Change |  |
Segment Operating Expenses |  |  |  |  |  |  |  |  |  |  |
Device Solutions | $ | 9,511 |  |  | $ | 13,040 |  |  | (27)% |  |  |  | $ | 36,748 |  |  | $ | 40,734 |  |  | (10)% |  |
Networked Solutions | 30,891 |  |  | 29,769 |  |  | 4% |  |  |  | 94,902 |  |  | 89,723 |  |  | 6% |  |
Outcomes | 8,384 |  |  | 9,210 |  |  | (9)% |  |  |  | 26,655 |  |  | 28,093 |  |  | (5)% |  |
Corporate unallocated | 118,445 |  |  | 104,946 |  |  | 13% |  |  |  | 338,026 |  |  | 312,511 |  |  | 8% |  |
Total operating expenses | $ | 167,231 |  |  | $ | 156,965 |  |  | 7% |  |  |  | $ | 496,331 |  |  | $ | 471,061 |  |  | 5% |  |
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 |  | 2019 |  | 2020 |  | 2019
In thousands | Operating Income (Loss) |  | Operating Margin |  | Operating Income (Loss) |  | Operating Margin |  | Operating Income (Loss) |  | Operating Margin |  | Operating Income (Loss) |  | Operating Margin
Segment Operating Income (Loss) and Operating Margin |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Device Solutions | $ | 11,017 |  |  | 6.3% |  | $ | 27,905 |  |  | 13.1% |  | $ | 28,095 |  |  | 5.5% |  | $ | 81,717 |  |  | 12.5%
Networked Solutions | 71,404 |  |  | 23.3% |  | 105,637 |  |  | 29.7% |  | 237,466 |  |  | 24.4% |  | 298,994 |  |  | 28.5%
Outcomes | 12,044 |  |  | 21.0% |  | 10,843 |  |  | 19.7% |  | 29,468 |  |  | 17.5% |  | 35,620 |  |  | 20.6%
Corporate unallocated | (118,445) |  |  | (21.9)% |  | (104,946) |  |  | (16.8)% |  | (338,026) |  |  | (20.5)% |  | (312,511) |  |  | (16.7)%
Total operating income (loss) and operating margin | $ | (23,980) |  |  | (4.4)% |  | $ | 39,439 |  |  | 6.3% |  | $ | (42,997) |  |  | (2.6)% |  | $ | 103,820 |  |  | 5.5%

36

Table of Contents
Device Solutions
The effects of changes in foreign currency exchange rates and the constant currency changes in certain Device Solutions segment financial results were as follows:

|  |  |  | Effect of Changes in Foreign Currency Exchange Rates |  | Constant Currency Change |  | Total Change
|  | Three Months Ended September 30, |  |  |
In thousands | 2020 |  | 2019 |  |  |
Device Solutions Segment |  |  |  |  |  |  |  |  |
| Revenues | $ | 176,128 |  |  | $ | 213,349 |  |  | $ | 5,123 |  |  | $ | (42,344) |  |  | $ | (37,221) |
| Gross profit | 20,528 |  |  | 40,945 |  |  | 1,064 |  |  | (21,481) |  |  | (20,417) |
| Operating expenses | 9,511 |  |  | 13,040 |  |  | 147 |  |  | (3,676) |  |  | (3,529) |
|  |  |  | Effect of Changes in Foreign Currency Exchange Rates |  | Constant Currency Change |  | Total Change
|  | Nine Months Ended September 30, |  |  |
In thousands | 2020 |  | 2019 |  |  |
Device Solutions Segment |  |  |  |  |  |  |  |  |
| Revenues | $ | 507,572 |  |  | $ | 652,827 |  |  | $ | (11,588) |  |  | $ | (133,667) |  |  | $ | (145,255) |
| Gross profit | 64,843 |  |  | 122,451 |  |  | (2,402) |  |  | (55,206) |  |  | (57,608) |
| Operating expenses | 36,748 |  |  | 40,734 |  |  | (59) |  |  | (3,927) |  |  | (3,986) |

Revenues - Three months ended September 30, 2020 vs. Three months ended September 30, 2019
Revenues decreased $37.2 million, or 17%. Changes in foreign currency exchange rates favorably impacted revenues by $5.1 million. Revenue was negatively impacted by $18.0 million in the Latin America region in part due to the sale of the business in June 2020, as well as lower shipments in all regions due to reduced demand primarily from COVID-19 delays.
Revenues - Nine months ended September 30, 2020 vs. Nine months ended September 30, 2019
Revenues decreased $145.3 million, or 22%. Changes in foreign currency exchange rates unfavorably impacted revenues by $11.6 million. We had reduced shipments driven by COVID-19 delays, and revenue decreased $22.0 million in the Latin America region in part due to the sale of the business in June 2020.
Gross Margin - Three months ended September 30, 2020 vs. Three months ended September 30, 2019
For the three months ended September 30, 2020, gross margin was 11.7%, compared with 19.2% for the same period in 2019. The 750 basis point reduction over the prior year was primarily due to unfavorable product mix, inventory reserves, and COVID-19 induced operational inefficiencies.
Gross Margin - Nine months ended September 30, 2020 vs. Nine months ended September 30, 2019
For the nine months ended September 30, 2020, gross margin was 12.8%, compared with 18.8% for the same period in 2019. The 600 basis point reduction over the prior year was primarily due to $37.5 million of unfavorable product mix, inventory reserves, and COVID-19 induced operating inefficiencies, partially offset by lower warranty expense of $2.0 million.
Operating Expenses - Three months ended September 30, 2020 vs. Three months ended September 30, 2019
Operating expenses decreased $3.5 million, or 27%, compared with 2019. The decrease was primarily related to $2.8 million decrease in research and development costs, and a decrease in sales and marketing expenses of $0.9 million.
Operating Expenses - Nine months ended September 30, 2020 vs. Nine months ended September 30, 2019
Operating expenses decreased $4.0 million, or 10%, for the first nine months of 2020, compared with the same period in 2019. The decrease was primarily a result of a $3.0 million decrease in research and development cost, and a $0.9 million decrease in sales and marketing expenses.
37

Table of Contents
Networked Solutions
The effects of changes in foreign currency exchange rates and the constant currency changes in certain Networked Solutions segment financial results were as follows:

|  |  |  |  |  | Effect of Changes in Foreign Currency Exchange Rates |  | Constant Currency Change |  | Total Change
|  | Three Months Ended September 30, |  |  |
In thousands | 2020 |  | 2019 |  |  |
Networked Solutions Segment |  |  |  |  |  |  |  |  |
| Revenues | $ | 306,659 |  |  | $ | 356,221 |  |  | $ | (48) |  |  | $ | (49,514) |  |  | $ | (49,562) |
| Gross profit | 102,295 |  |  | 135,406 |  |  | (39) |  |  | (33,072) |  |  | (33,111) |
| Operating expenses | 30,891 |  |  | 29,769 |  |  | 37 |  |  | 1,085 |  |  | 1,122 |
|  |  |  |  |  | Effect of Changes in Foreign Currency Exchange Rates |  | Constant Currency Change |  | Total Change
|  | Nine Months Ended September 30, |  |  |
In thousands | 2020 |  | 2019 |  |  |
Networked Solutions Segment |  |  |  |  |  |  |  |  |
| Revenues | $ | 971,984 |  |  | $ | 1,048,564 |  |  | $ | (1,539) |  |  | $ | (75,041) |  |  | $ | (76,580) |
| Gross profit | 332,368 |  |  | 388,717 |  |  | (576) |  |  | (55,773) |  |  | (56,349) |
| Operating expenses | 94,902 |  |  | 89,723 |  |  | (1) |  |  | 5,180 |  |  | 5,179 |

Revenues - Three months ended September 30, 2020 vs. Three months ended September 30, 2019
Revenues decreased $49.6 million, or 14%, in 2020 compared with 2019. The change was primarily due to delayed deployments driven by COVID-19 delays, with lower product revenue of $47.8 million and lower maintenance service revenue of $1.8 million.
Revenues - Nine months ended September 30, 2020 vs. Nine months ended September 30, 2019
Revenues decreased $76.6 million, or 7%, for the first nine months of 2020 compared with the same period in 2019. The change was primarily due to delayed deployments driven by COVID-19 delays, with lower product revenue of $79.8 million partially offset by higher maintenance service revenue of $3.2 million.
Gross Margin - Three months ended September 30, 2020 vs. Three months ended September 30, 2019
Gross margin was 33.4% for the period ending September 30, 2020, compared with 38.0% in 2019. The 460 basis point decrease was primarily related to unfavorable product mix and COVID-19 related inefficiencies.
Gross Margin - Nine months ended September 30, 2020 vs. Nine months ended September 30, 2019
Gross margin was 34.2% for the 2020 period, compared with 37.1% in 2019. The 290 basis point decrease was primarily related to unfavorable product mix and COVID-19 induced operational inefficiencies.
Operating Expenses - Three months ended September 30, 2020 vs. Three months ended September 30, 2019
Operating expenses increased $1.1 million, or 4%, for the quarter in 2020, compared with the same period in 2019. The increase was primarily related to higher research and development expenses of $2.6 million, partially offset by a decrease of $1.5 million in sales and marketing expenses.
Operating Expenses - Nine months ended September 30, 2020 vs. Nine months ended September 30, 2019
Operating expenses increased $5.2 million, or 6%, for the first nine months of 2020, compared with the same period in 2019. The increase was primarily related to higher research and development expenses of $7.4 million, partially offset by a decrease of $2.3 million in sales and marketing expenses.
38

Table of Contents
Outcomes
The effects of changes in foreign currency exchange rates and the constant currency changes in certain Outcomes segment financial results were as follows:

|  |  |  | Effect of Changes in Foreign Currency Exchange Rates |  | Constant Currency Change |  | Total Change
|  | Three Months Ended September 30, |  |  |
In thousands | 2020 |  | 2019 |  |  |
Outcomes Segment |  |  |  |  |  |  |  |  |
| Revenues | $ | 57,397 |  |  | $ | 54,904 |  |  | $ | 466 |  |  | $ | 2,027 |  |  | $ | 2,493 |
| Gross profit | 20,428 |  |  | 20,053 |  |  | 234 |  |  | 141 |  |  | 375 |
| Operating expenses | 8,384 |  |  | 9,210 |  |  | 25 |  |  | (851) |  |  | (826) |
|  |  |  | Effect of Changes in Foreign Currency Exchange Rates |  | Constant Currency Change |  | Total Change
|  | Nine Months Ended September 30, |  |  |
In thousands | 2020 |  | 2019 |  |  |
Outcomes Segment |  |  |  |  |  |  |  |  |
| Revenues | $ | 168,637 |  |  | $ | 172,696 |  |  | $ | (513) |  |  | $ | (3,546) |  |  | $ | (4,059) |
| Gross profit | 56,123 |  |  | 63,713 |  |  | (252) |  |  | (7,338) |  |  | (7,590) |
| Operating expenses | 26,655 |  |  | 28,093 |  |  | (8) |  |  | (1,430) |  |  | (1,438) |

Revenues - Three months ended September 30, 2020 vs. Three months ended September 30, 2019
For the 2020 period, revenues increased $2.5 million, or 5%, compared with the 2019 period. This increase was driven by an increase in software license sales and professional services.
Revenues - Nine months ended September 30, 2020 vs. Nine months ended September 30, 2019
Revenues decreased $4.1 million, or 2%, for the first nine months of 2020, compared with 2019. This decline was driven by a decrease in hardware and software license sales and professional services.
Gross Margin - Three months ended September 30, 2020 vs. Three months ended September 30, 2019
Gross margin decreased to 35.6% for the third quarter of 2020, compared with 36.5% for the same period last year. The 90 basis point decrease was driven by unfavorable product mix and infrastructure investments.
Gross Margin - Nine months ended September 30, 2020 vs. Nine months ended September 30, 2019
Gross margin decreased to 33.3% for the period ending in 2020, compared with 36.9% for last year. The 360 basis point decrease was driven by unfavorable product mix and infrastructure investments.
Operating Expenses - Three months ended September 30, 2020 vs. Three months ended September 30, 2019
Operating expenses for the 2020 period decreased $0.8 million, compared with the same period last year, with lower product marketing expenses of $0.2 million and lower research and development expenses of $0.6 million.
Operating Expenses - Nine months ended September 30, 2020 vs. Nine months ended September 30, 2019
Operating expenses for the first nine months of 2020 decreased $1.4 million, or 5%, compared with the same period last year. This was primarily related to lower product marketing expenses of $0.7 million and lower research and development expenses of $0.7 million.
Corporate Unallocated
Corporate Unallocated Expenses - Three months ended September 30, 2020 vs. Three months ended September 30, 2019
Operating expenses not directly associated with an operating segment are classified as "Corporate unallocated". These expenses increased $13.5 million, or 13%, for the three months ended September 30, 2020 compared with the same period in 2019. This was primarily the result of a $43.9 million restructuring expenses recognized for the 2020 Projects during the third quarter of 2020. The increase was offset by $18.7 million in reduced sales, general and administrative expenses due to lower employee medical costs and reduced travel expenses and a $4.9 million reduction in amortization of intangible assets. Acquisition and
39

Table of Contents
integration costs, which are classified within sales, general and administrative expenses, decreased by $6.2 million compared with the same period in 2019.
Corporate Unallocated Expenses - Nine months ended September 30, 2020 vs. Nine months ended September 30, 2019
For the first nine months of 2020, corporate unallocated expenses increased $25.5 million, or 8%, compared with the 2019 period. This was primarily the result of a $57.3 million loss on sale of business due to the Latin America divestiture and a $43.9 million restructuring expense recognized for the Itron 2020 Projects during the nine months ended in 2020. The increase was offset by $49.6 million in reduced sales, general and administrative expenses due to lower employee medical costs and reduced travel expenses, and $14.7 million in lower amortization of intangible assets. Acquisition and integration costs, which are classified within sales, general and administrative expenses, decreased by $25.3 million compared with the same period in 2019.
Bookings and Backlog of Orders
Bookings for a reported period represent customer contracts and purchase orders received during the period for hardware, software, and services that have met certain conditions, such as regulatory and/or contractual approval. Total backlog represents committed but undelivered products and services for contracts and purchase orders at period-end. Twelve-month backlog represents the portion of total backlog that we estimate will be recognized as revenue over the next 12 months. Backlog is not a complete measure of our future revenues as we also receive significant book-and-ship orders, as well as frame contracts. Bookings and backlog may fluctuate significantly due to the timing of large project awards. In addition, annual or multi-year contracts are subject to rescheduling and cancellation by customers due to the long-term nature of the contracts. Beginning total backlog, plus bookings, minus revenues, will not equal ending total backlog due to miscellaneous contract adjustments, foreign currency fluctuations, and other factors. Total bookings and backlog include certain contracts with termination for convenience clause, which will not agree to the total transaction price allocated to the remaining performance obligations disclosed in Item 1: "Financial Statements (Unaudited), Note 16: Revenues".

Quarter Ended | Quarterly Bookings |  | Ending Total Backlog |  | Ending 12-Month Backlog
In millions |
September 30, 2020 | $ | 432 |  |  | $ | 2,795 |  |  | $ | 1,107 |
June 30, 2020 | 390 |  |  | 2,895 |  |  | 1,291 |
March 31, 2020 | 418 |  |  | 3,020 |  |  | 1,319 |
December 31, 2019 | 767 |  |  | 3,207 |  |  | 1,499 |
September 30, 2019 | 609 |  |  | 3,063 |  |  | 1,361 |

Financial Condition
Cash Flow Information

| Nine Months Ended September 30,
In thousands | 2020 |  | 2019
Cash provided by operating activities | $ | 70,571 |  |  | $ | 128,100 |
Cash used in investing activities | (33,472) |  |  | (34,593) |
Cash provided by (used in) financing activities | 402,590 |  |  | (73,592) |
Effect of exchange rates on cash, cash equivalents, and restricted cash | (3,426) |  |  | (543) |
Increase in cash, cash equivalents, and restricted cash | $ | 436,263 |  |  | $ | 19,372 |

Cash, cash equivalents, and restricted cash was $586.2 million at September 30, 2020, compared with $149.9 million at December 31, 2019. The $436.3 million increase in cash, cash equivalents, and restricted cash in the 2020 period was primarily the result of a $400 million draw from our credit facility in March 2020, along with cash flows from operating activities, partially offset by acquisitions of property, plant, and equipment.
Operating activities
Cash provided by operating activities during the nine months in 2020 was $70.6 million compared with $128.1 million during the same period in 2019. The decrease was primarily due to net loss, as a result of restructuring and loss on sale of business, partially offset by decreased cash used for working capital.
40

Table of Contents
Investing activities
Cash used in investing activities during 2020 was $1.1 million lower than in 2019. This slight decrease in use of cash was primarily related to the net cash outflow for the sale of our Latin America operation, and a decrease of $8.3 million in investment of property, plant, and equipment.
Financing activities
Net cash provided by financing activities during the nine months in 2020 was $402.6 million, compared with net cash used of $73.6 million for the same period in 2019. In March 2020, we drew on our revolver in the amount of $400 million to increase our cash position and preserve future financial flexibility. In 2019, we repurchased $25 million in shares of our common stock and had net repayments of debt of $50.3 million.
Effect of exchange rates on cash and cash equivalents
The effect of exchange rates on the cash balances of currencies held in foreign denominations at September 30, 2020 was a decrease of $3.4 million, compared with a decrease of $0.5 million for the same period in 2019. Our foreign currency exposure relates to non-U.S. dollar denominated balances in our international subsidiary operations.
Free cash flow (Non-GAAP)
To supplement our Consolidated Statements of Cash Flows presented on a GAAP basis, we use the non-GAAP measure of free cash flow to analyze cash flows generated from our operations. The presentation of non-GAAP free cash flow is not meant to be considered in isolation or as an alternative to net income as an indicator of our performance, or as an alternative to cash flows from operating activities as a measure of liquidity. We calculate free cash flows, using amounts from our Consolidated Statements of Cash Flows, as follows:

| Nine Months Ended September 30,
In thousands | 2020 |  | 2019
Cash provided by operating activities | $ | 70,571 |  |  | $ | 128,100 |
Acquisitions of property, plant, and equipment | (36,297) |  |  | (44,570) |
Free cash flow | $ | 34,274 |  |  | $ | 83,530 |

Free cash flow fluctuated primarily as a result of changes in cash provided by operating activities. See the cash flow discussion of operating activities above.
Off-balance sheet arrangements
We have no off-balance sheet financing agreements or guarantees as defined by Item 303 of Regulation S-K at September 30, 2020 and December 31, 2019 that we believe could reasonably likely have a current or future effect on our financial condition, results of operations, or cash flows.
Liquidity and Capital Resources
Our principal sources of liquidity are cash flows from operations, borrowings, and the sale of our common stock. Cash flows may fluctuate and are sensitive to many factors including changes in working capital and the timing and magnitude of capital expenditures and payments of debt. Working capital, which represents current assets less current liabilities, continues to be in a net favorable position.
Borrowings
On October 18, 2019 we amended our credit facility that was initially entered on January 5, 2018 (together with the amendment, the "2018 credit facility"). The 2018 credit facility provides for committed credit facilities in the amount of $1.2 billion U.S. dollars. The 2018 credit facility consists of a $650 million U.S. dollar term loan (the term loan) and a multicurrency revolving line of credit (the revolver) with a principal amount of up to $500 million. The revolver also contains a $300 million standby letter of credit sub-facility and a $50 million swingline sub-facility. The October 18, 2019, amendment extended the maturity date to October 18, 2024 and re-amortized the term loan based on the new balance as of the amendment date.
We drew $400 million in U.S. dollars under the revolving line of credit within the 2018 credit facility in March 2020. In light of the current uncertain environment, we deemed it prudent to increase our cash position and preserve future financial flexibility.
41

Table of Contents
The Total Net Leverage Ratio, as defined in the amended 2018 credit facility agreement, continues to be unchanged by this drawing. Subsequent to September 30, 2020, we repaid $100 million on the revolving line of credit.
On October 19, 2020, we completed a second amendment to our 2018 credit facility. This amendment adjusts the maximum total net leverage ratio thresholds for the period beginning with the fourth quarter of 2020 through the fourth quarter of 2021 to allow for increased operational flexibility. The maximum leverage ratio is increased to 4.75:1 for the fourth quarter of 2020 and the first quarter of 2021 and 4.5:1 for the second quarter through the fourth quarter of 2021. An additional level of pricing was added to the existing pricing grid and is effective throughout the remaining term of the 2018 credit facility. Beginning with the fourth quarter of 2020, the commitment fee ranges from 0.15% to 0.30% and drawn amounts are subject to a margin ranging from 1.00% to 2.00%. Going forward, we do not expect any significant increase in interest expense as the result of this amendment.
Amounts repaid on the term loan may not be reborrowed, and amounts borrowed under the revolver may be repaid and reborrowed until the revolver's maturity, at which time all outstanding loans together with all accrued and unpaid interest must be repaid.
In December 2017 and January 2018, we issued a combined $400 million in aggregate principal amount of 5.00% senior notes maturing January 15, 2026 (Senior Notes). The proceeds were used to refinance existing indebtedness related to the acquisition of SSNI, pay related fees and expenses, and for general corporate purposes. Interest on the Senior Notes is payable semi-annually in arrears on January 15 and July 15, commencing on July 15, 2018. The $10 million interest payment due on July 15, 2020 was paid as of June 30, 2020. The Senior Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by each of our subsidiaries that guarantee the 2018 credit facility.
Prior to maturity, we may redeem some or all of the Senior Notes, together with accrued and unpaid interest, if any, plus a "make-whole" premium. On or after January 15, 2021, we may redeem some or all of the Senior Notes at any time at declining redemption prices equal to 102.50% beginning on January 15, 2021, 101.25% beginning on January 15, 2022 and 100.00% beginning on January 15, 2023 and thereafter to the applicable redemption date. In addition, before January 15, 2021, and subject to certain conditions, we may redeem up to 35% of the aggregate principal amount of Senior Notes with the net proceeds of certain equity offerings at 105.00% of the principal amount thereof to the date of redemption; provided that (i) at least 65% of the aggregate principal amount of Senior Notes remains outstanding after such redemption and (ii) the redemption occurs within 60 days of the closing of any such equity offering.
For further description of our borrowings, refer to Item 1: "Financial Statements (Unaudited), Note 6: Debt".
For a description of our letters of credit and performance bonds, and the amounts available for additional borrowings or letters of credit under our lines of credit, including the revolver that is part of our credit facility, refer to Item 1: "Financial Statements (Unaudited), Note 11: Commitments and Contingencies".
Silver Spring Networks, Inc. Acquisition
As part of the acquisition of SSNI, we announced an integration plan to obtain approximately $50 million of annualized savings by the end of 2020. For the nine months ended September 30, 2020, we paid out $11.9 million and we have approximately $4 million to $8 million of estimated cash payments remaining on the integration plan, the majority of which is expected to be paid out in the next 12 months.
Restructuring
On September 17, 2020, our Board of Directors approved a restructuring plan (the "2020 Projects"). The 2020 Projects include activities that continue our efforts to optimize its global supply chain and manufacturing operations, sales and marketing organizations, and other overhead. These projects are scheduled to be substantially complete by the end of 2022. We estimate pre-tax restructuring charges of $55 million to $65 million. Of the total estimated charge, approximately $35 million to $45 million will result in cash expenditures, and the remainder relates to non-cash charges.
For the nine months ended September 30, 2020, we paid out a net $10.9 million related to the 2018 restructuring projects. As of September 30, 2020, $79.7 million was accrued for restructuring projects, of which $24.6 million is expected to be paid over the next 12 months.
For further details regarding our restructuring activities, refer to Item 1: "Financial Statements (Unaudited), Note 12: Restructuring".
42

Table of Contents
Other Liquidity Considerations
We have tax credits and net operating loss carryforwards in various jurisdictions that are available to reduce cash taxes. However, utilization of tax credits and net operating losses are limited in certain jurisdictions. Based on current projections, we expect to pay, net of refunds, approximately $1 million in state taxes and approximately $7 million in local and foreign taxes during 2020. We expect to receive approximately $7 million in U.S. federal tax refunds. For a discussion of our tax provision and unrecognized tax benefits, see Item 1: "Financial Statements (Unaudited), Note 10: Income Taxes".
As of September 30, 2020, we are under examination by certain tax authorities. We believe we have appropriately accrued for the expected outcome of all tax matters and do not currently anticipate that the ultimate resolution of these examinations will have a material adverse effect on our financial condition, future results of operations, or liquidity.
As of September 30, 2020, there was $37.2 million of cash and short-term investments held by certain foreign subsidiaries in which we are permanently reinvested for tax purposes. As a result of recent changes in U.S. tax legislation, any repatriation in the future would not result in U.S. federal income tax. Accordingly, there is no provision for U.S. deferred taxes on this cash. If this cash were repatriated to fund U.S. operations, additional withholding tax costs may be incurred. Tax is only one of the many factors that we consider in the management of global cash. Accordingly, the amount of taxes that we would need to accrue and pay to repatriate foreign cash could vary significantly.
In several of our consolidated international subsidiaries, we have joint venture partners, who are minority shareholders. Although these entities are not wholly-owned by Itron, Inc., we consolidate them because we have a greater than 50% ownership interest and/or because we exercise control over the operations. The noncontrolling interest balance in our Consolidated Balance Sheets represents the proportional share of the equity of the joint venture entities, which is attributable to the minority shareholders. At September 30, 2020, $7.9 million of our consolidated cash balance is held in our joint venture entities. As a result, the minority shareholders of these entities have rights to their proportional share of this cash balance, and there may be limitations on our ability to repatriate cash to the United States from these entities.
General Liquidity Overview
Notwithstanding the expected short to mid-term impacts of the COVID-19 pandemic, we expect to grow through a combination of internal new research and development, licensing technology from and to others, distribution agreements, partnering arrangements, and acquisitions of technology or other companies. We expect these activities to be funded with existing cash, cash flow from operations, borrowings, or the sale of our common stock or other securities. We believe existing sources of liquidity will be sufficient to fund our existing operations and obligations for the next 12 months and into the foreseeable future, but offer no assurances. Our liquidity could be affected by the stability of the electricity, gas, and water industries, competitive pressures, our dependence on certain key vendors and components, changes in estimated liabilities for product warranties and/or litigation, duration of the COVID-19 pandemic, future business combinations, capital market fluctuations, international risks, and other factors described under "Risk Factors" within Item 1A of Part I of our 2019 Annual Report, as well as "Quantitative and Qualitative Disclosures About Market Risk" within Item 3 of Part I included in this Quarterly Report on Form 10-Q.
Contingencies
Refer to Item 1: "Financial Statements (Unaudited), Note 11: Commitments and Contingencies".
Critical Accounting Estimates and Policies
Our consolidated financial statements and accompanying notes are prepared in accordance with U.S. GAAP. Preparing consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. These estimates and assumptions are based on historical experience and on various other assumptions management believes to be reasonable. Actual results could differ from the amounts reported and disclosed herein. Our critical accounting policies that require the use of estimates and assumptions were discussed in detail in the 2019 Annual Report and have not changed materially.
Refer to Item 1: "Financial Statements (Unaudited), Note 1: Summary of Significant Accounting Policies" included in this Quarterly Report on Form 10-Q for further disclosures regarding new accounting pronouncements.
Non-GAAP Measures
The accompanying schedule contains non-GAAP financial measures. To supplement our consolidated financial statements, which are prepared in accordance with GAAP, we use certain non-GAAP financial measures, including non-GAAP operating expense, non-GAAP operating income, non-GAAP net income, non-GAAP diluted EPS, adjusted EBITDA, free cash flow, and
43

Table of Contents
constant currency. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and other companies may define such measures differently. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures".
We use these non-GAAP financial measures for financial and operational decision making and/or as a means for determining executive compensation. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and ability to service debt by excluding certain expenses that may not be indicative of our recurring core operating results. These non-GAAP financial measures facilitate management's internal comparisons to our historical performance, as well as comparisons to our competitors' operating results. Our executive compensation plans exclude non-cash charges related to amortization of intangibles and certain discrete cash and non-cash charges, such as acquisition and integration related expenses, or restructuring charges. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. We believe these non-GAAP financial measures are useful to investors because they provide greater transparency with respect to key metrics used by management in its financial and operational decision making and because they are used by our institutional investors and the analyst community to analyze the health of our business.
Non-GAAP operating expenses and non-GAAP operating income – We define non-GAAP operating expenses as operating expenses excluding certain expenses related to the amortization of intangible assets, restructuring, loss on sale of business, corporate transition cost, and acquisition and integration. We define non-GAAP operating income as operating income excluding the expenses related to the amortization of intangible assets, restructuring, loss on sale of business, corporate transition cost, and acquisition and integration. Acquisition and integration related expenses include costs, which are incurred to affect and integrate business combinations, such as professional fees, certain employee retention and salaries related to integration, severances, contract terminations, travel costs related to knowledge transfer, system conversion costs, and asset impairment charges. We consider these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of expenses that are related to acquisitions and restructuring projects. By excluding these expenses, we believe that it is easier for management and investors to compare our financial results over multiple periods and analyze trends in our operations. For example, in certain periods, expenses related to amortization of intangible assets may decrease, which would improve GAAP operating margins, yet the improvement in GAAP operating margins due to this lower expense is not necessarily reflective of an improvement in our core business. There are some limitations related to the use of non-GAAP operating expenses and non-GAAP operating income versus operating expenses and operating income calculated in accordance with GAAP. We compensate for these limitations by providing specific information about the GAAP amounts excluded from non-GAAP operating expense and non-GAAP operating income and evaluating non-GAAP operating expense and non-GAAP operating income together with GAAP operating expense and operating income.
Non-GAAP net income and non-GAAP diluted EPS – We define non-GAAP net income as net income attributable to Itron, Inc. excluding the expenses associated with amortization of intangible assets, amortization of debt placement fees, restructuring, loss on sale of business, corporate transition cost, acquisition and integration, and the tax effect of excluding these expenses. We define non-GAAP diluted EPS as non-GAAP net income divided by the weighted average shares, on a diluted basis, outstanding during each period. We consider these financial measures to be useful metrics for management and investors for the same reasons that we use non-GAAP operating income. The same limitations described above regarding our use of non-GAAP operating income apply to our use of non-GAAP net income and non-GAAP diluted EPS. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP measures and evaluating non-GAAP net income and non-GAAP diluted EPS together with GAAP net income attributable to Itron, Inc. and GAAP diluted EPS.
For interim periods, beginning the first quarter of 2019, the budgeted annual effective tax rate (AETR) is used, adjusted for any discrete items, as defined in ASC 740 - Income Taxes. The budgeted AETR is determined at the beginning of the fiscal year. The AETR is revised throughout the year based on changes to our full-year forecast. If the revised AETR increases or decreases by 200 basis points or more from the budgeted AETR due to changes in the full-year forecast during the year, the revised AETR is used in place of the budgeted AETR beginning with the quarter the 200 basis point threshold is exceeded and going forward for all subsequent interim quarters in the year. We continue to assess the AETR based on latest forecast throughout the year and use the most recent AETR anytime it increases or decreases by 200 basis points or more from the prior interim period.
Adjusted EBITDA – We define adjusted EBITDA as net income (a) minus interest income, (b) plus interest expense, depreciation and amortization of intangible assets, restructuring, loss on sale of business, corporate transition cost, acquisition and integration related expense, and (c) excluding income tax provision or benefit. Management uses adjusted EBITDA as a performance measure for executive compensation. A limitation to using adjusted EBITDA is that it does not represent the total increase or decrease in the cash balance for the period and the measure includes some non-cash items and excludes other non-
44

Table of Contents
cash items. Additionally, the items that we exclude in our calculation of adjusted EBITDA may differ from the items that our peer companies exclude when they report their results. We compensate for these limitations by providing a reconciliation of this measure to GAAP net income (loss).
Free cash flow – We define free cash flow as net cash provided by operating activities less cash used for acquisitions of property, plant and equipment. We believe free cash flow provides investors with a relevant measure of liquidity and a useful basis for assessing our ability to fund our operations and repay our debt. The same limitations described above regarding our use of adjusted EBITDA apply to our use of free cash flow. We compensate for these limitations by providing specific information regarding the GAAP amounts and reconciling to free cash flow.
Constant currency – We refer to the impact of foreign currency exchange rate fluctuations in our discussions of financial results, which references the differences between the foreign currency exchange rates used to translate operating results from the entity's functional currency into U.S. dollars for financial reporting purposes. We also use the term "constant currency", which represents financial results adjusted to exclude changes in foreign currency exchange rates as compared with the rates in the comparable prior year period. We calculate the constant currency change as the difference between the current period results and the comparable prior period's results restated using current period foreign currency exchange rates.
45

Table of Contents
Reconciliations of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures
The tables below reconcile the non-GAAP financial measures of operating expenses, operating income, net income, diluted EPS, adjusted EBITDA, and free cash flow with the most directly comparable GAAP financial measures.

TOTAL COMPANY RECONCILIATIONS | Three Months Ended September 30, |  | Nine Months Ended September 30,
| In thousands, except per share data | 2020 |  | 2019 |  | 2020 |  | 2019
| NON-GAAP OPERATING EXPENSES |  |  |  |  |  |  |
|  | GAAP operating expenses | $ | 167,231 |  |  | $ | 156,965 |  |  | $ | 496,331 |  |  | $ | 471,061 |
|  |  | Amortization of intangible assets | (11,183) |  |  | (16,095) |  |  | (33,488) |  |  | (48,185) |
|  |  | Restructuring | (44,462) |  |  | (6,592) |  |  | (41,531) |  |  | (7,685) |
|  |  | Loss on sale of business | (380) |  |  | — |  |  | (57,295) |  |  | — |
|  |  | Corporate transition cost | — |  |  | (57) |  |  | 33 |  |  | (1,613) |
|  |  | Acquisition and integration related expense | 2,348 |  |  | (3,834) |  |  | 738 |  |  | (24,593) |
|  | Non-GAAP operating expenses | $ | 113,554 |  |  | $ | 130,387 |  |  | $ | 364,788 |  |  | $ | 388,985 |
| NON-GAAP OPERATING INCOME |  |  |  |  |  |  |
|  | GAAP operating income (loss) | $ | (23,980) |  |  | $ | 39,439 |  |  | $ | (42,997) |  |  | $ | 103,820 |
|  |  | Amortization of intangible assets | 11,183 |  |  | 16,095 |  |  | 33,488 |  |  | 48,185 |
|  |  | Restructuring | 44,462 |  |  | 6,592 |  |  | 41,531 |  |  | 7,685 |
|  |  | Loss on sale of business | 380 |  |  | — |  |  | 57,295 |  |  | — |
|  |  | Corporate transition cost | — |  |  | 57 |  |  | (33) |  |  | 1,613 |
|  |  | Acquisition and integration related expense | (2,348) |  |  | 3,834 |  |  | (738) |  |  | 24,593 |
|  | Non-GAAP operating income | $ | 29,697 |  |  | $ | 66,017 |  |  | $ | 88,546 |  |  | $ | 185,896 |
| NON-GAAP NET INCOME & DILUTED EPS |  |  |  |  |  |  |
|  | GAAP net income (loss) attributable to Itron, Inc. | $ | (25,357) |  |  | $ | 16,847 |  |  | $ | (79,475) |  |  | $ | 34,386 |
|  |  | Amortization of intangible assets | 11,183 |  |  | 16,095 |  |  | 33,488 |  |  | 48,185 |
|  |  | Amortization of debt placement fees | 972 |  |  | 1,240 |  |  | 2,898 |  |  | 3,555 |
|  |  | Restructuring | 44,462 |  |  | 6,592 |  |  | 41,531 |  |  | 7,685 |
|  |  | Loss on sale of business | 380 |  |  | — |  |  | 57,295 |  |  | — |
|  |  | Corporate transition cost | — |  |  | 57 |  |  | (33) |  |  | 1,613 |
|  |  | Acquisition and integration related expense | (2,348) |  |  | 3,834 |  |  | (738) |  |  | 24,593 |
|  |  | Income tax effect of non-GAAP adjustments | (4,658) |  |  | (3,269) |  |  | (6,037) |  |  | (16,131) |
|  | Non-GAAP net income attributable to Itron, Inc. | $ | 24,634 |  |  | $ | 41,396 |  |  | $ | 48,929 |  |  | $ | 103,886 |
|  | Non-GAAP diluted EPS | $ | 0.61 |  |  | $ | 1.04 |  |  | $ | 1.21 |  |  | $ | 2.60 |
|  | Non-GAAP weighted average common shares outstanding - Diluted | 40,559 |  |  | 39,903 |  |  | 40,507 |  |  | 39,884 |
| ADJUSTED EBITDA |  |  |  |  |  |  |
|  | GAAP net income (loss) attributable to Itron, Inc. | $ | (25,357) |  |  | $ | 16,847 |  |  | $ | (79,475) |  |  | $ | 34,386 |
|  |  | Interest income | (354) |  |  | (517) |  |  | (2,165) |  |  | (1,379) |
|  |  | Interest expense | 10,810 |  |  | 12,868 |  |  | 33,771 |  |  | 39,899 |
|  |  | Income tax provision | (11,985) |  |  | 6,152 |  |  | 366 |  |  | 20,692 |
|  |  | Depreciation and amortization | 24,076 |  |  | 28,623 |  |  | 72,306 |  |  | 85,691 |
|  |  | Restructuring | 44,462 |  |  | 6,592 |  |  | 41,531 |  |  | 7,685 |
|  |  | Loss on sale of business | 380 |  |  | — |  |  | 57,295 |  |  | — |
|  |  | Corporate transition cost | — |  |  | 57 |  |  | (33) |  |  | 1,613 |
|  |  | Acquisition and integration related expense | (2,348) |  |  | 3,834 |  |  | (738) |  |  | 24,593 |
|  | Adjusted EBITDA | $ | 39,684 |  |  | $ | 74,456 |  |  | $ | 122,858 |  |  | $ | 213,180 |
| FREE CASH FLOW |  |  |  |  |  |  |
|  |  | Net cash provided by operating activities | $ | 44,785 |  |  | $ | 50,037 |  |  | $ | 70,571 |  |  | $ | 128,100 |
|  |  | Acquisitions of property, plant, and equipment | (7,248) |  |  | (18,059) |  |  | (36,297) |  |  | (44,570) |
|  | Free Cash Flow | $ | 37,537 |  |  | $ | 31,978 |  |  | $ | 34,274 |  |  | $ | 83,530 |

46

Table of Contents
Item 3: Quantitative and Qualitative Disclosures about Market Risk
In the normal course of business, we are exposed to interest rate and foreign currency exchange rate risks that could impact our financial position and results of operations. As part of our risk management strategy, we may use derivative financial instruments to hedge certain foreign currency and interest rate exposures. Our objective is to offset gains and losses resulting from these exposures with losses and gains on the derivative contracts used to hedge them, therefore reducing the impact of volatility on earnings or protecting the fair values of assets and liabilities. We use derivative contracts only to manage existing underlying exposures. Accordingly, we do not use derivative contracts for trading or speculative purposes.
Interest Rate Risk
We are exposed to interest rate risk through our variable rate debt instruments. In March 2020, we entered into an interest rate swap, which is effective from June 30, 2020 to June 30, 2023, and converts $240 million of our LIBOR-based debt from a floating LIBOR interest rate to a fixed interest rate of 0.617% (excluding the applicable margin). The notional balance will amortize to maturity at the same rate of originally required amortizations on our term loan. At September 30, 2020, our LIBOR-based debt balance was $950.2 million.
In April 2018, we entered into a cross-currency swap, which converts $56.0 million of floating rate LIBOR-based U.S. dollar denominated debt into 1.38% fixed rate euro denominated debt. This cross-currency swap matures on April 30, 2021 and mitigates the risk associated with fluctuations in interest and currency rates impacting cash flows related to a U.S. dollar denominated debt in a euro functional currency entity.
The table below provides information about our financial instruments that are sensitive to changes in interest rates and the scheduled minimum repayment of principal and the weighted average interest rates at September 30, 2020. Weighted average variable rates in the table are based on implied forward rates in the Reuters U.S. dollar yield curve as of September 30, 2020 and our estimated leverage ratio, which determines our additional interest rate margin at September 30, 2020.

Dollars in thousands | 2020 |  | 2021 |  | 2022 |  | 2023 |  | 2024 |  | Total |  | Fair Value
Variable Rate Debt |  |  |  |  |  |  |  |  |  |  |  |  |
Principal: U.S. dollar term loan | $ | — |  |  | $ | 32,422 |  |  | $ | 44,063 |  |  | $ | 44,063 |  |  | $ | 429,608 |  |  | $ | 550,156 |  |  | $ | 533,223 |
Weighted average interest rate | 1.65 | % |  | 1.64 | % |  | 1.65 | % |  | 1.72 | % |  | 1.87 | % |  |  |  |
Principal: Multicurrency revolving line of credit | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 400,000 |  |  | $ | 400,000 |  |  | $ | 386,086 |
Weighted average interest rate | 1.65 | % |  | 1.64 | % |  | 1.65 | % |  | 1.72 | % |  | 1.87 | % |  |  |  |
Interest rate swap |  |  |  |  |  |  |  |  |  |  |  |  |
Weighted average interest rate (pay) Fixed | 0.62 | % |  | 0.62 | % |  | 0.62 | % |  | 0.62 | % |  |  |  |  |  |
Weighted average interest rate (receive) Floating LIBOR | 0.15 | % |  | 0.14 | % |  | 0.15 | % |  | 0.19 | % |  |  |  |  |  |
Cross currency swap |  |  |  |  |  |  |  |  |  |  |  |  |
Weighted average interest rate (pay) Fixed - EURIBOR | 1.38 | % |  | 1.38 | % |  |  |  |  |  |  |  |  |  |
Weighted average interest rate (receive) Floating - LIBOR | 0.15 | % |  | 0.17 | % |  |  |  |  |  |  |  |  |  |

Based on a sensitivity analysis as of September 30, 2020, we estimate that, if market interest rates average one percentage point higher in 2020 than in the table above, our financial results in 2020 would not be materially impacted.
We continually monitor and assess our interest rate risk and may institute additional interest rate swaps or other derivative instruments to manage such risk in the future.
47

Table of Contents
Foreign Currency Exchange Rate Risk
We conduct business in a number of countries. Revenues denominated in functional currencies other than the U.S. dollar were 37% and 36% of total revenues for the three and nine months ended September 30, 2020 compared with 38% and 37% for the same respective periods in 2019. These transactions expose our account balances to movements in foreign currency exchange rates that could have a material effect on our financial results. Our primary foreign currency exposure relates to non-U.S. dollar denominated transactions in our international subsidiary operations, the most significant of which is the euro.
We are also exposed to foreign exchange risk when we enter into non-functional currency transactions, both intercompany and third party. At each period-end, non-functional currency monetary assets and liabilities are revalued with the change recognized to other income and expense. We enter into monthly foreign exchange forward contracts, which are not designated for hedge accounting, with the intent to reduce earnings volatility associated with currency exposures. As of September 30, 2020, a total of 43 contracts were offsetting our exposures from the euro, Canadian dollar, Pound Sterling, Brazilian Real, Chinese yuan and various other currencies, with notional amounts ranging from $102,000 to $26.4 million. Based on a sensitivity analysis as of September 30, 2020, we estimate that, if foreign currency exchange rates average ten percentage points higher in 2020 for these financial instruments, our financial results in 2020 would not be materially impacted.
In future periods, we may use additional derivative contracts to protect against foreign currency exchange rate risks.
Item 4: Controls and Procedures
Evaluation of disclosure controls and procedures
An evaluation was performed under the supervision and with the participation of our Company's management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e)) under the Securities Exchange Act of 1934 as amended. Based on that evaluation, the Company's management, including the Chief Executive Officer and Chief Financial Officer, concluded that as of September 30, 2020, the Company's disclosure controls and procedures were effective to ensure the information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.
Changes in internal controls over financial reporting
There have been no changes in our internal control over financial reporting during the three months ended September 30, 2020 that materially affected, or are reasonably likely to materially affect, internal control over financial reporting.
48

Table of Contents
PART II: OTHER INFORMATION
Item 1: Legal Proceedings
Refer to Item 1: "Financial Statements (Unaudited), Note 11: Commitments and Contingencies".
Item 1A: Risk Factors
For a complete list of Risk Factors, refer to Item 1A: "Risk Factors" of Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which was filed with the Securities and Exchange Commission on February 27, 2020.
We have been and will continue to be affected by the ongoing COVID-19 pandemic, and such effects could have an adverse effect on our business operations, results of operations, cash flows, and financial condition.
We have experienced disruptions to our business from the ongoing COVID-19 pandemic, and the full impact of the COVID-19 pandemic on all aspects of our business and geographic markets is highly uncertain and cannot be predicted with confidence. This includes how it may impact our customers, employees, vendors, strategic partners, managed services, and manufacturing operations. The COVID-19 pandemic has created significant volatility, uncertainty, and economic disruption, which has and may continue to materially and adversely affect our business operations, cash flows, and financial condition.
The impact of the virus on third parties on which we rely, such as our suppliers, contract manufacturers, distributors, and strategic partners, cannot be fully known or controlled by us. As a result, we may experience difficulties sourcing components and other critical inventory. The impact of the COVID-19 pandemic on our customers and demand for our products is also uncertain. Due to resulting financial constraints, illness within their organizations, quarantine and travel restrictions placed upon our customers’ employees, as well as individual actions our customers may take in response to the spread of COVID-19, our customers may have difficulty in making timely payments to us or may have an inability or unwillingness to purchase our products and services. Also, certain of our projects require regulatory approvals, and our customers may experience delays in regulatory approvals. Any of these effects may materially and adversely affect us.
Our management has taken measures, both voluntary and as a result of government directives and guidance, to mitigate the effects of the COVID-19 pandemic on us and others. These measures include, among others, restrictions on our employees' access to our physical work locations and the purchase of personal protective equipment. Additionally, we may implement the temporary closure or reduction in operations of certain of our manufacturing facilities, which would be disruptive to our operations. We have also implemented measures to allow certain employees to work remotely, which may place a burden on our IT systems and may expose us to increased vulnerability to cyber-attack and other cyber-disruption. Many of these measures may result in incremental costs to us, and such costs may not be recoverable or adequately covered by our insurance. Further, any focus by our management on mitigating COVID-19 effects has required, and will continue to require, a large investment of time and resources, which may delay other value-add initiatives.
As a company with global operations, we are subject to numerous government jurisdictions at all levels that are addressing COVID-19 differently. The guidance and directives provided by these governmental authorities is difficult to predict, may be unclear in their application, and are unknown in duration. This includes uncertainty in governmental authorities’ assessments of our business as “essential”. If governmental authorities were to reverse their designation of our business as “essential”, it could have a material effect on our results of operations and cash flows.
The full extent to which the COVID-19 pandemic impacts us depends on numerous evolving factors and future developments that we are not able to predict at this time, including: medical advancements to treat or stop the virus; governmental, business, and other actions (which could include limitations on our operations to provide products or services); the duration of the outbreak and the related limitations on our ability to conduct business; or the length of time and velocity at which we will return to more normalized operations. In addition, we cannot predict the impact that COVID-19 will have on our customers, vendors, strategic partners, and other business partners and each of their financial conditions; however, any material effect on these parties could materially and adversely impact us. The impact of COVID-19 may also include possible impairment or other charges and may exacerbate other risks discussed in Item 1A: Risk Factors in our Annual Report on Form 10-K, any of which could have a material effect on us. This situation is changing rapidly and additional impacts may arise that we are not aware of currently.
49

Table of Contents
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
(a)Not applicable.
(b)Not applicable.
(c)Issuer Repurchase of Equity Securities

Period | Total Number of Shares Purchased (1) |  | Average Price Paid per Share (2) |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |  | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
|  |  |  |  |  |  | In thousands
July 1, 2020 through July 31, 2020 | — |  |  | $ | — |  |  | — |  |  | $ | — |
August 1, 2020 through August 31, 2020 | 4,370 |  |  | 67.06 |  |  | — |  |  | — |
September 1, 2020 through September 30, 2020 | — |  |  | — |  |  | — |  |  | — |
Total | 4,370 |  |  |  |  | — |  |  |

(1)Shares repurchased represent shares transferred to us by certain employees who vested in restricted stock units and used shares to pay all, or a portion of, the related taxes.
(2)Includes commissions.
Item 5: Other Information
(a)No information was required to be disclosed in a report on Form 8-K during the third quarter of 2020 that was not reported.
(b)Not applicable.
50

Table of Contents
Item 6: Exhibits

Exhibit Number |  | Description of Exhibits
4.1 |  | Amendment No. 2 dated October 19, 2020, to the Second Amended and Restated Credit Agreement dated January 5, 2018 (incorporated by reference from the Form 8-K filed on January 12, 2018, by the Company) among Itron, Inc., certain foreign borrowers, guarantors, lenders and issuing parties thereto, and Wells Fargo Bank, National Association, as administrative agent.
31.1 |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101 |  | The following financial information from Itron, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) the Consolidated Statements of Operations, (ii) the Consolidated Statements of Comprehensive Income (Loss), (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Equity, (v) the Consolidated Statements of Cash Flows, and (vi) Notes to the Consolidated Financial Statements.
104 |  | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

51

Table of Contents
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

|  | ITRON, INC.
November 2, 2020 |  | By: | /s/ JOAN S. HOOPER
Date |  |  | Joan S. Hooper
|  |  | Senior Vice President and Chief Financial Officer

52