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Shareholders' Equity | 9 Months Ended
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Sep. 30, 2023
Stockholders' Equity Note [Abstract] |
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 would 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, 2023 or December 31, 2022. Stock Repurchase Authorization Effective May 11, 2023, Itron's Board of Directors authorized a share repurchase up to $100 million of our common stock over an 18-month period (the 2023 Stock Repurchase Program). Repurchases will be made in the open market pursuant to the terms of any Rule 10b5-1 plans that we may enter into, and in accordance with applicable securities laws. The repurchase program is intended to comply with Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended. Depending on market conditions and other factors, these repurchases may be commenced or suspended from time to time without prior notice. There have been no repurchases under the 2023 Stock Repurchase Program through November 2, 2023. Convertible Note Hedge Transactions We paid an aggregate amount of $84.1 million for the convertible note hedge transactions. The convertible note hedge transactions cover, subject to anti-dilution adjustments substantially similar to those in the convertible notes, approximately 3.7 million shares of our common stock, the same number of shares initially underlying the convertible notes, at a strike price of approximately $126.00, subject to customary adjustments. The convertible note hedge transactions will expire upon the maturity of the convertible notes, subject to earlier exercise or termination. The convertible note hedge transactions are expected generally to reduce the potential dilutive effect of the conversion of our convertible notes and/or offset any cash payments we are required to make in excess of the principal amount of the converted notes, as the case may be, in the event that the market price per share of our common stock, as measured under the terms of the convertible note hedge transactions, is greater than the strike price of the convertible note hedge transactions. The convertible note hedge transactions meet the criteria in Accounting Standards Codification (ASC) 815-40 to be classified within Stockholders' Equity, and therefore the convertible note hedge transactions are not revalued after their issuance. We made a tax election to integrate the convertible notes and the call options. We are retaining the identification statements in our books and records, together with a schedule providing the accruals on the synthetic debt instruments. The accounting impact of this tax election makes the call options deductible as original issue discount for tax purposes over the term of the convertible notes, and results in a $20.6 million deferred tax asset recognized through equity. Warrant Transactions In addition, concurrently with entering into the convertible note hedge transactions, we separately entered into privately-negotiated warrant transactions (the warrant transactions), whereby we sold to the Counterparties warrants to acquire, collectively, subject to anti-dilution adjustments, 3.7 million shares of our common stock at an initial strike price of $180.00 per share, which represents a premium of 100% over the public offering price in the common stock issuance. We received aggregate proceeds of $45.3 million from the warrant transactions with the Counterparties, with such proceeds partially offsetting the costs of entering into the convertible note hedge transactions. The warrants expire in June 2026. If the market value per share of our common stock, as measured under the warrant transactions, exceeds the strike price of the warrants, the warrants will have a dilutive effect on our earnings per share, unless we elect, subject to certain conditions, to settle the warrants in cash. The warrants meet the criteria in ASC 815-40 to be classified within Stockholders' Equity, and therefore the warrants are not revalued after issuance. Accumulated Other Comprehensive Income (Loss) (AOCI) 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, 2022 | $ | (111,766) |  |  | $ | (210) |  |  | $ | (14,380) |  |  | $ | (21,742) |  |  | $ | (148,098) |
OCI before reclassifications | (55,716) |  |  | — |  |  | — |  |  | 4,183 |  |  | (51,533) |
Amounts reclassified from AOCI | 57,321 |  |  | — |  |  | — |  |  | 489 |  |  | 57,810 |
Total other comprehensive income (loss) | 1,605 |  |  | — |  |  | — |  |  | 4,672 |  |  | 6,277 |
Balances at September 30, 2022 | $ | (110,161) |  |  | $ | (210) |  |  | $ | (14,380) |  |  | $ | (17,070) |  |  | $ | (141,821) |
Balances at January 1, 2023 | $ | (83,193) |  |  | $ | (210) |  |  | $ | (14,380) |  |  | $ | 3,109 |  |  | $ | (94,674) |
OCI before reclassifications | (5,844) |  |  | — |  |  | — |  |  | — |  |  | (5,844) |
Amounts reclassified from AOCI | — |  |  | — |  |  | — |  |  | (322) |  |  | (322) |
Total other comprehensive income (loss) | (5,844) |  |  | — |  |  | — |  |  | (322) |  |  | (6,166) |
Balances at September 30, 2023 | $ | (89,037) |  |  | $ | (210) |  |  | $ | (14,380) |  |  | $ | 2,787 |  |  | $ | (100,840) |
The before-tax, income tax (provision) benefit, and net-of-tax amounts related to each component of other comprehensive income (OCI) were as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
In thousands | 2023 |  | 2022 |  | 2023 |  | 2022
Before-tax amount |  |  |  |  |  |  |
Foreign currency translation adjustment | $ | (15,094) |  |  | $ | (28,380) |  |  | $ | (5,834) |  |  | $ | (55,917) |
Foreign currency translation adjustment reclassified to net income (loss) on sale of business | — |  |  | 1,885 |  |  | — |  |  | 57,321 |
Net unrealized gain (loss) on defined benefit plans | — |  |  | — |  |  | — |  |  | 4,205 |
Net defined benefit plan (gain) loss reclassified to net income (loss) | (107) |  |  | 204 |  |  | (320) |  |  | 492 |
Total other comprehensive income (loss), before tax | $ | (15,201) |  |  | $ | (26,291) |  |  | $ | (6,154) |  |  | $ | 6,101 |
Tax (provision) benefit |  |  |  |  |  |  |
Foreign currency translation adjustment | $ | 85 |  |  | $ | 183 |  |  | $ | (10) |  |  | $ | 201 |
Foreign currency translation adjustment reclassified to net income (loss) on sale of business | — |  |  | — |  |  | — |  |  | — |
Net unrealized gain (loss) on defined benefit plans | — |  |  | (6) |  |  | — |  |  | (22) |
Net defined benefit plan (gain) loss reclassified to net income (loss) | (2) |  |  | (2) |  |  | (2) |  |  | (3) |
Total other comprehensive income (loss) tax (provision) benefit | $ | 83 |  |  | $ | 175 |  |  | $ | (12) |  |  | $ | 176 |
Net-of-tax amount |  |  |  |  |  |  |
Foreign currency translation adjustment | $ | (15,009) |  |  | $ | (28,197) |  |  | $ | (5,844) |  |  | $ | (55,716) |
Foreign currency translation adjustment reclassified to net income (loss) on sale of business | — |  |  | 1,885 |  |  | — |  |  | 57,321 |
Net unrealized gain (loss) on defined benefit plans | — |  |  | (6) |  |  | — |  |  | 4,183 |
Net defined benefit plan (gain) loss reclassified to net income (loss) | (109) |  |  | 202 |  |  | (322) |  |  | 489 |
Total other comprehensive income (loss), net of tax | $ | (15,118) |  |  | $ | (26,116) |  |  | $ | (6,166) |  |  | $ | 6,277 |

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