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Shareholders' Equity | 6 Months Ended
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Jun. 30, 2024
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 June 30, 2024 or December 31, 2023. Stock Repurchase Program 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). The repurchase program is intended to comply with Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended. In June 2024, we repurchased 971,534 shares under the 2023 Stock Repurchase Program at an average price of $102.93 (excluding commissions) for a total of $100.0 million. This repurchase was completed in conjunction with the issuance of the convertible notes. 2021 Call Option Transactions We paid an aggregate amount of $84.1 million for the 2021 call option transactions. The 2021 call option transactions cover, subject to anti-dilution adjustments substantially similar to those in the 2021 Notes, approximately 3.7 million shares of our common stock, the same number of shares initially underlying the 2021 Notes, at a strike price of approximately $126.00, subject to customary adjustments. The 2021 call option transactions will expire upon the maturity of the 2021 Notes, subject to earlier exercise or termination. The 2021 call option transactions are expected generally to reduce the potential dilutive effect of the conversion of our 2021 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 2021 call option transactions, is greater than the strike price of the 2021 call option transactions. The 2021 call option transactions meet the criteria in Accounting Standards Codification (ASC) 815-40 to be classified within Stockholders' Equity, and therefore they are not revalued after their issuance. We made a tax election to integrate the 2021 Notes and the 2021 call option transactions. 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 2021 Notes, and results in a $20.6 million deferred tax asset recognized through equity. Warrant Transactions In addition, concurrently with entering into the 2021 call option 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. 2024 Capped Call Transactions In connection with the issuance of the 2024 Notes, we entered into privately negotiated capped call transactions on our common stock with certain commercial banks. The 2024 capped call transactions cover, subject to anti-dilution adjustments substantially similar to those in the 2024 Notes, approximately 6.1 million shares of our common stock, the same number of shares initially underlying the convertible notes, at a strike price of approximately $131.2353, subject to customary adjustments. The cap price of the 2024 capped call transactions will initially be $205.86 per share, which represents a premium of 100% over the last reported stock price per share of the Company's common stock on June 17, 2024, and is subject to certain adjustments under the terms of the 2024 capped call transactions. The 2024 capped call transactions will expire upon the maturity of the 2024 Notes, subject to earlier exercise or termination. We made a tax election to integrate the 2024 Notes and the 2024 capped call transactions. 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 capped call transactions deductible as original issue discount for tax purposes over the term of the 2024 Notes, and results in a $26.7 million deferred tax asset recognized through equity. 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, 2023 | $ | (83,193) |  |  | $ | (210) |  |  | $ | (14,380) |  |  | $ | 3,109 |  |  | $ | (94,674) |
OCI before reclassifications | 9,165 |  |  | — |  |  | — |  |  | — |  |  | 9,165 |
Amounts reclassified from AOCI | — |  |  | — |  |  | — |  |  | (213) |  |  | (213) |
Total other comprehensive income (loss) | 9,165 |  |  | — |  |  | — |  |  | (213) |  |  | 8,952 |
Balances at June 30, 2023 | $ | (74,028) |  |  | $ | (210) |  |  | $ | (14,380) |  |  | $ | 2,896 |  |  | $ | (85,722) |
Balances at January 1, 2024 | $ | (67,643) |  |  | $ | (210) |  |  | $ | (14,380) |  |  | $ | 1,043 |  |  | $ | (81,190) |
OCI before reclassifications | (16,269) |  |  | — |  |  | — |  |  | — |  |  | (16,269) |
Amounts reclassified from AOCI | — |  |  | — |  |  | — |  |  | (573) |  |  | (573) |
Total other comprehensive income (loss) | (16,269) |  |  | — |  |  | — |  |  | (573) |  |  | (16,842) |
Balances at June 30, 2024 | $ | (83,912) |  |  | $ | (210) |  |  | $ | (14,380) |  |  | $ | 470 |  |  | $ | (98,032) |
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 June 30, |  | Six Months Ended June 30,
In thousands | 2024 |  | 2023 |  | 2024 |  | 2023
Before-tax amount |  |  |  |  |  |  |
Foreign currency translation adjustment | $ | (5,453) |  |  | $ | 2,033 |  |  | $ | (16,361) |  |  | $ | 9,260 |
Net defined benefit plan gain reclassified to net income | (637) |  |  | (107) |  |  | (688) |  |  | (213) |
Total other comprehensive income (loss), before tax | $ | (6,090) |  |  | $ | 1,926 |  |  | $ | (17,049) |  |  | $ | 9,047 |
Tax (provision) benefit |  |  |  |  |  |  |
Foreign currency translation adjustment | $ | 35 |  |  | $ | (93) |  |  | $ | 92 |  |  | $ | (95) |
Net defined benefit plan loss reclassified to net income | 121 |  |  | — |  |  | 115 |  |  | — |
Total other comprehensive income (loss) tax (provision) benefit | $ | 156 |  |  | $ | (93) |  |  | $ | 207 |  |  | $ | (95) |
Net-of-tax amount |  |  |  |  |  |  |
Foreign currency translation adjustment | $ | (5,418) |  |  | $ | 1,940 |  |  | $ | (16,269) |  |  | $ | 9,165 |
Net defined benefit plan gain reclassified to net income | (516) |  |  | (107) |  |  | (573) |  |  | (213) |
Total other comprehensive income (loss), net of tax | $ | (5,934) |  |  | $ | 1,833 |  |  | $ | (16,842) |  |  | $ | 8,952 |

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