Itron (ITRI) Announces Failing of Communication Modules from Water Business; See Charge

On May 22, 2015, Itron (NASDAQ: ITRI) concluded it was necessary to issue a product replacement notification to customers of its Water business line who had purchased certain communication modules, manufactured between July 2013 and December 2014. The Company determined that a component of the modules was failing prematurely.

As a result, Itron will recognize a pre-tax warranty charge estimated in the range of $22 to $25 million during the second quarter of 2015. A charge of $3.1 million (pre-tax) was recorded for this same matter in the first quarter of 2015. The amount of the first quarter charge was based on information available at that time.

Itron carries insurance for such matters and has filed a claim under the respective policies. Any recovery from the insurance would be recognized in the period in which proceeds are received or are determined to no longer be contingent. Under the insurance policies, the Company must bear the first $10 million of loss, and costs in excess of this amount may be recoverable. At this time, Itron cannot provide any assurance of recovery from insurance.

Itron will disclose to what extent, if at all, this warranty charge impacts the Company’s full year 2015 non-GAAP EPS guidance range when it reports its second quarter earnings results.

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