As filed with the Securities and Exchange Commission on March 12, 2002
Registration No. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ITRON, INC.
(Exact name of registrant as specified in its charter)
Washington 91-1011792
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(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
Itron, Inc.
2818 North Sullivan Road
Spokane, Washington 99216-1897
(509) 924-9900
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
David G. Remington
Vice President & Chief Financial Officer
Itron, Inc.
2818 North Sullivan Road
Spokane, Washington 99216-1897
(509) 924-9900
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies to:
C. Kent Carlson, Esq. Andrew Bor, Esq.
Michael P. Moyer, Esq. Lance W. Bass, Esq.
Preston Gates Ellis LLP Michael Wood, Esq.
701 Fifth Avenue, Suite 5000 Perkins Coie LLP
Seattle, Washington 98104 1201 Third Avenue, Suite 4800
(206) 623-7580 Seattle, Washington 98101
(206) 583-8888
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Approximate date of commencement of proposed sale to the public: From time
to time after the Effective Date of this Registration Statement as determined by
the selling shareholders.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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Title of each class of Proposed maximum Proposed maximum Amount of
securities Amount to be offering price per aggregate offering registration fee
to be registered registered (1) unit (2) price (2)
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Common Stock, no par value 848,870 shares $27.17 $23,063,797.90 $2,121.87
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(1) All 848,870 shares registered pursuant to this registration statement are
to be offered by the selling shareholders.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933 based on the
average of the high and low sales prices of the common stock as reported on
the Nasdaq National Market on March 12, 2002.
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The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The information in this prospectus is not complete and may be changed. The
selling shareholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
SUBJECT TO COMPLETION, DATED _________ __, 2002
PROSPECTUS
848,870 Shares
[LOGO OF ITRON, INC.]
Itron, Inc.
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Common Stock
with no par value per share
---------------------
This prospectus is part of a registration statement that covers 848,870
shares of our common stock. These shares may be offered and sold from time to
time by the selling shareholders listed in this prospectus. We will not receive
any of the proceeds from sales of these shares by the selling shareholders.
Our common stock is traded on The Nasdaq National Market(R) under the
symbol "ITRI". On March 11, 2002, the last sale price of the common stock, as
reported on The Nasdaq National Market, was $27.46 per share.
The selling shareholders, directly or through agents, brokers or dealers
designated from time to time, may sell their shares from time to time on The
Nasdaq National Market or otherwise. They may sell the shares at prevailing
market prices or at prices negotiated with purchasers. The selling shareholders
will be responsible for any commissions or discounts due to brokers or dealers.
The amount of those commissions or discounts cannot be known now because they
will be negotiated at the time of the sales. We will pay all other offering
expenses.
Before buying any shares you should read the discussion of material risks
of investing in our common stock in "Risk Factors" beginning on page 3.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is __________________ ____, 2002.
CONTENTS
SUMMARY OF THE TRANSACTION ................................................. 2
RISK FACTORS ............................................................... 3
FORWARD-LOOKING STATEMENTS ................................................. 8
WHERE YOU CAN FIND MORE INFORMATION ........................................ 8
INCORPORATION OF INFORMATION WE FILE WITH THE SEC .......................... 8
USE OF PROCEEDS ............................................................ 9
DETERMINATION OF OFFERING PRICE ............................................ 9
SELLING SHAREHOLDERS ....................................................... 9
PLAN OF DISTRIBUTION ....................................................... 11
LEGAL MATTERS .............................................................. 12
EXPERTS .................................................................... 12
We have not authorized any person to give you any information or to make
any representations other than those contained in this prospectus. You should
not rely on any information or representations other than this prospectus. This
prospectus is not an offer to sell or a solicitation of an offer to buy any
securities other than the common stock. It is not an offer to sell or a
solicitation of an offer to buy securities if the offer or solicitation would be
unlawful. Our affairs may have changed since the date of this prospectus. You
should not assume that the information in this prospectus is correct at any time
subsequent to its date.
PROSPECTUS SUMMARY
This summary highlights selected information contained elsewhere in this
prospectus. This summary may not contain all the information that you should
consider before investing in our common stock. You should read the entire
prospectus carefully, including "Risk Factors" and the consolidated financial
statements incorporated by reference into this prospectus, before making an
investment decision. References in this prospectus to "Itron", "we", "our" and
"us" refer to Itron, Inc. Our principal executive offices are located at 2818
North Sullivan Road, Spokane, Washington 99216-1897 and our telephone number is
(509) 924-9900.
Itron provides technology and knowledge to the energy and water industry
for collecting, analyzing and applying data about electric, gas and water usage.
We design, develop, manufacture, market, install and service hardware, software
and integrated systems related to the energy and water industries. Our sales
include hardware, custom and licensed software, consulting, project management
and installation and sales support activities. Our services include post-sale
maintenance support and outsourcing services where we own and operate systems.
We also operate systems for a periodic fee.
For additional information about Itron's business, see Itron's Annual
Report on Form 10-K/A for the fiscal year ended December 31, 2000 including
financial statements and other information contained therein, and other
documents Itron has filed with the Securities and Exchange Commission, which are
incorporated into this prospectus by reference. See "WHERE YOU CAN FIND MORE
INFORMATION" at page 8. The information on Itron's web site is not part of this
prospectus.
2
RISK FACTORS
In addition to the other information contained or incorporated by reference
into this prospectus and in the documents to which we refer you, you should
consider carefully the following risk factors in deciding whether to purchase
shares of Itron's stock.
Itron is dependent on the utility industry, the economics of which are
uncertain due to mergers and acquisitions and regulatory reform:
We derive substantially all of our revenues from sales of products and
services to the utility industry. We have experienced variability of operating
results, on both an annual and a quarterly basis, due primarily to utility
purchasing patterns and delays of purchasing decisions as a result of changes or
potential changes in the state and federal regulatory frameworks within which
the utility industry operates, and mergers and acquisitions in the utility
industry. The utility industry, both domestic and foreign, is generally
characterized by long budgeting, purchasing and regulatory process cycles that
can take up to several years to complete. Our utility customers typically issue
requests for quotes and proposals, establish evaluation committees, review
different technical options with vendors, analyze performance and cost/benefit
justifications and perform a regulatory review, in addition to applying the
normal budget approval process within a utility. Purchases of our products are,
to a substantial extent, deferrable in the event that utilities reduce capital
expenditures as a result of mergers and acquisitions, pending or unfavorable
regulatory decisions, poor revenues due to weather conditions, rising interest
rates or general economic downturns, among other factors.
The domestic electric utility industry is currently the focus of regulatory
reform initiatives in virtually every state. These initiatives have resulted in
significant uncertainty for industry participants and raised concerns regarding
assets that would not be considered for recovery through ratepayer charges.
Consequently, in recent years, many utilities have delayed purchasing decisions
that involve significant capital commitments. While we expect some states will
act on these regulatory reform initiatives in the near term, and some states
have, there can be no assurance that the current regulatory uncertainty will be
resolved in the near future or that the advent of new regulatory frameworks will
not have a material adverse effect on our business, financial condition and
results of operations. For example, in California, where the new regulatory
framework put utilities in the position of selling electricity at prices
substantially below their cost, several of the large investor owned utilities,
including Pacific Gas and Electric Company have filed for bankruptcy or come
close to bankruptcy. In the event that additional utilities were to enter into
bankruptcy proceedings, our business could be adversely affected.
Moreover, in part as a result of the competitive pressures in the utility
industry arising from the regulatory reform process, many utility companies are
pursuing merger and acquisition strategies. We have experienced considerable
delays in purchase decisions by utilities that have become parties to merger or
acquisition transactions. Typically, such purchase decisions are put on hold
indefinitely when merger negotiations begin. The pattern of merger and
acquisition activity among utilities may continue for the foreseeable future. If
such merger and acquisition activity continues at its current rate or
intensifies, our revenues may continue to be materially adversely affected.
Certain state regulatory agencies are considering the "unbundling" of
metering and certain other services from the basic transport aspects of
electricity distribution. Unbundling includes the identification of the separate
costs of metering and other services and may extend to subjecting metering and
other services to competition. The discontinuance of a utility's metering
monopoly could have a significant impact upon the manner in which we market and
sell our products and services. As the customer for our products and services
could change from utilities alone to utilities and their competitive suppliers
of metering services, we could also be required to modify our products and
services (or develop new products and services) to meet the needs of the
participants in a competitive meter services market.
Itron has suffered recent operating losses:
While we were profitable in all quarters after March 31, 2000, we have
experienced operating losses in certain quarters and years from 1996 through the
first quarter of 2000. There can be no assurance that we will maintain
consistent profitability on a quarterly or annual basis. We have experienced
variability of quarterly results and believe our quarterly results will continue
to fluctuate as a result of factors such as size and timing of significant
customer orders, delays in
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customer purchasing decisions, FCC or other governmental actions, timing and
levels of development and other operating expenses, shifts in product or sales
channel mix, and increased competition. Our operating margins have in the past
been adversely affected by excess manufacturing capacity. We expect competition
in the automated meter reading market to increase as current competitors and new
market entrants introduce competitive products. Operating margins also may be
affected by other factors. For example, in the past, we entered into large
network automated meter reading contracts with Duquesne and Virginia Power with
margins significantly below our historical margins due to the early stage of our
network products at the time those systems were shipped and installed, and due
to competitive pressures.
Itron has a concentrated customer base, and therefore the loss of a single
customer could negatively affect its operating results:
In some years, our revenues are concentrated with a limited number of
customers, the identity of which changes over time. From time to time, we are
dependent on large, multi-year contracts that are subject to cancellation or
rescheduling by our customers. Cancellation or postponement of one or more of
these contracts would have a material adverse effect on us.
Itron depends on its ability to develop new products:
We have made, and expect to continue to make, substantial investments in
technology development. Our future success will depend, in part, on our ability
to continue to design and manufacture new competitive products and to enhance
our existing products. This product development will require continued
investment in order to maintain our market position. There can be no assurance
that unforeseen problems will not occur with respect to the development,
performance, market acceptance or regulatory compliance of our technologies or
products. Development schedules for technology products are subject to
uncertainty, and there can be no assurance that we will meet our product
development schedules. We have previously experienced significant delays and
cost overruns in development of new products, and there can be no assurance that
delays or cost overruns will not be experienced in the future. Delays in new
product development, including software, can result from a number of causes,
including changes in product definition during the development stage, changes in
customer or regulatory requirements, initial failures of products or unexpected
behavior of products under certain conditions, failure of third-party-supplied
components to meet specifications or lack of availability of such components,
unplanned interruptions caused by problems with existing products that can
result in reassignment of product development resources, and other factors.
Delays in the availability of new products, or the inability to successfully
develop or acquire products that meet customer needs, could result in increased
competition, the loss of revenue or increased service and warranty costs, any of
which would have a material adverse effect on our business, financial condition
and results of operations.
Itron depends in part on the installation, operations and maintenance of
automated meter reading systems pursuant to outsourcing contracts:
A portion of our business consists of outsourcing, wherein we install,
operate and maintain automated meter reading systems that we may continue to own
in order to provide meter reading and other related services to utilities and
their customers. We currently have three outsourcing contracts involving mobile
automated meter reading solutions and, in one of those cases, the system has
been sold on a turnkey basis. We use the service contract method of accounting
for our outsourcing contracts. These outsourcing contracts are subject to
cancellation in certain circumstances in the event of a material and continuing
failure on our part to meet contractual performance standards on a consistent
basis over agreed time periods. Cancellation of any of these outsourcing
contracts in whole or in part would mean that a portion of the approximately
$12.9 million of our equipment used in such contracts would be of no value.
Itron is facing increasing competition in the telecommunications industry:
We face competitive pressures from a variety of companies in each of the
markets we serve. In the radio-based network automated meter reading market,
companies such as Schlumberger, Nexus, Innovatec, Ramar and Hexagram currently
offer alternative solutions to the utility industry and compete aggressively
with us. The emerging market for two-way communications systems for advanced
metering and billing for the utility industry, together with the potential
market for the same kind of systems to provide energy delivery optimization and
Internet connections to customers, have led communications, electronics and
utility companies to begin developing various systems, some of which currently
compete, and others of which may in the future compete, with our current and
future product and service offerings. These competitors
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can be expected to offer a variety of technologies and communications
approaches, as well as meter reading, installation and other services, to
utilities and other industry participants. We believe that several large
suppliers of equipment, services or technology to the utility industry may be
developing competitive products for the automated meter reading market. In
addition, large meter manufacturers could expand their current product and
services offerings so as to compete directly with us. To stimulate demand, and
due to increasing competition in the automated meter reading market, we have
from time to time lowered prices on our automated meter reading products and may
continue to do so in the future. We also anticipate increasing competition with
respect to the features and functions of our products. In the handheld systems
market, we have encountered competition from a number of companies, resulting in
margin pressures in the maturing domestic handheld systems business and in some
international markets. Many of our present and potential future competitors have
or may have substantially greater financial, marketing, technical or
manufacturing resources, and in some cases, greater name recognition and
experience than we do. Our competitors may be able to respond more quickly to
new or emerging technologies and changes in customer requirements or to devote
greater resources to the development, promotion and sale of their products and
services than we can. In addition, current and potential competitors may make
strategic acquisitions or establish cooperative relationships among themselves
or with third parties that increase their ability to address the needs of our
prospective customers. It is possible that new competitors or alliances among
current and new competitors may emerge and rapidly gain significant market
share. There can be no assurance that we will be able to compete successfully
against current and future competitors, and any failure to do so would have a
material adverse effect on our business, financial condition, results of
operations and cash flow.
Itron may be affected by uncertainty of market acceptance of new
technology:
The automated meter reading market is evolving, and it is difficult to
predict the future growth rate and size of this market. International market
demand for automated meter reading systems varies by country based on such
factors as the regulatory and business environment, labor costs and other
economic conditions. Further market acceptance of our new automated meter
reading products and systems will depend in part on our ability to demonstrate
cost effectiveness, strategic and other benefits of our products and systems,
the utilities' ability to justify such expenditures and the direction and pace
of federal and state regulatory reform actions. In the event that the utility
industry does not adopt our technology or does not adopt it as quickly as we
expect, our future results will be materially and adversely affected.
The telecommunications industry is characterized by rapid technological
evolution:
The telecommunications industry, including the data transmission segment,
currently is experiencing rapid and dramatic technology advances. The advent of
computer-linked electronic networks, fiber optic transmission, advanced data
digitization technology, cellular and satellite communications capabilities, and
private communications networks has greatly expanded communications capabilities
and market opportunities. Many companies from diverse industries are actively
seeking solutions for the transmission of data over traditional communications
mediums, including radio-based and cellular telephone networks. Competitors may
be capable of offering significant cost savings or other benefits to our
customers. There can be no assurance that technological advances will not cause
our technology to become obsolete or uneconomical.
Itron is susceptible to the availability and regulation of radio spectrum:
A significant portion of our products use radio spectrum, and in the United
States are subject to regulation by the FCC. Licenses for radio frequencies must
be obtained and periodically renewed. There can be no assurance that any license
granted to us or our customers will be renewed on acceptable terms, if at all,
or that the FCC will keep in place rules for our frequency bands that are
compatible with our business. In the past, the FCC has adopted changes to the
requirements for equipment using radio spectrum, and there can be no assurance
that the FCC or Congress will not adopt additional changes in the future.
More recently, on January 2, 2002, the FCC released a Report and Order
choosing among three options for allocating the 1427-1432 MHz band. The FCC
chose a modified option that incorporated a "band plan" suggested by Itron and
the representatives of wireless medical telemetry, but deferred to a future
proceeding adoption of rules that would provide more assurance that Itron would
have access to adequate spectrum in this band. There can be no guarantee that
the FCC ruling on this matter will not have a materially adverse impact on the
Company's financial condition.
5
We have committed, and will continue to commit, significant resources to
the development of products that use particular radio frequencies. Action by the
FCC could require modifications to our products. There can be no assurance that
we would be able to modify our products to meet such requirements, that we would
not experience delays in completing such modifications or that the cost of such
modifications would not have a material adverse effect on our future financial
condition and results of operations.
Our radio-based products currently employ both licensed and unlicensed
radio frequencies. There must be sufficient radio spectrum allocated by the FCC
for the use we intend. As to the licensed frequencies, there is some risk that
there may be insufficient available frequencies in some markets to sustain our
planned operations. The unlicensed frequencies are available for a wide variety
of uses and are not entitled to protection from interference by other users. In
the event that the unlicensed frequencies become unacceptably crowded or
restrictive, and no additional frequencies are allocated, our business could be
materially adversely affected.
We are also subject to regulatory requirements in international markets
that vary by country. To the extent we wish to introduce products designed for
use in the United States or another country into a new market, such products may
require significant modification or redesign in order to meet frequency
requirements and power specifications. Further, in some countries, limitations
on frequency availability or the cost of making necessary modifications may
preclude us from selling our products.
A number of key personnel are critical to the success of Itron's business:
Our success depends in large part upon our ability to retain highly
qualified technical and management personnel, the loss of one or more of whom
could have a material adverse effect on our business. Our success depends upon
our ability to continue to attract and retain highly qualified personnel in all
disciplines. There can be no assurance that we will be successful in hiring or
retaining the requisite personnel.
If Itron is not able to adequately protect its intellectual property, or if
Itron infringes the intellectual property of third parties, Itron may be
adversely affected:
While we believe that our patents, trademarks and other intellectual
property have significant value, there can be no assurance that these patents
and trademarks, or any patents or trademarks issued in the future, will provide
meaningful competitive advantages. There can be no assurance that our patents or
pending applications will not be challenged, invalidated or circumvented by
competitors or that rights granted thereunder will provide meaningful
proprietary protection. Despite our efforts to safeguard and maintain our
proprietary rights, there can also be no assurance that such rights will remain
protected or that our competitors will not independently develop patentable
technologies that are substantially equivalent or superior to our technologies.
Itron depends on certain key vendors for components and internal
manufacturing capabilities:
Certain of our products, subassemblies and components are procured from a
single source, and others are procured only from limited sources. Our reliance
on such components or on these limited or sole source vendors or subcontractors
involves certain risks, including the possibility of shortages and reduced
control over delivery schedules, manufacturing capability, quality and costs. In
particular, we currently obtain the majority of our handheld meter-reading
devices from one vendor with locations in Spokane and Liberty Lake, Washington.
Also, we may be affected by worldwide shortages of certain components such as
capacitors, inductors and certain types of memory and discrete semiconductor
devices. A significant price increase in certain components or subassemblies
could have a material adverse effect on our results of operations. Although we
believe alternative suppliers of these products, subassemblies and components
are available, in the event of supply problems from our sole- or limited-source
vendors or subcontractors, our inability to develop alternative sources of
supply quickly or cost-effectively could materially impair our ability to
manufacture our products and, therefore, could have a material adverse effect on
our business, financial condition and results of operations. In the event of a
significant interruption in production at our manufacturing facilities,
considerable time and effort could be required to establish an alternative
production line. Depending on which production lines were affected, such a break
in production would have a material adverse effect on our business, financial
condition, and results of operations.
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Itron is dependent on outsourcing financing:
We intend to utilize limited recourse, long-term, fixed-rate project
financing for our future outsourcing contracts. We have established Itron
Finance, Inc. as a wholly owned Delaware subsidiary and plan to establish
subsidiaries of Itron Finance, Inc. for this purpose. Although we completed a
project financing facility for an automated meter reading project in 1997, there
can be no assurance that we will be able to effect other project financing
facilities. If we are unable to utilize limited recourse, long-term, fixed-rate
project financing for our outsourcing contracts, our borrowing capacity will be
reduced, and we may be subject to the negative effects of floating interest
rates if we cannot hedge this exposure.
Itron is subject to international regulation and business uncertainties:
Our international sales and operations may be subject to risks such as the
imposition of government controls, political instability, export license
requirements, restrictions on the export of critical technology, currency
exchange rate fluctuations, generally longer receivables collection periods,
trade restrictions, changes in tariffs, difficulties in staffing and managing
international operations, potential insolvency of international dealers and
difficulty in collecting accounts receivable. In addition, the laws of certain
countries do not protect our products to the same extent as do the laws of the
United States. There can be no assurance that these factors will not have a
material adverse effect on our future international sales and, consequently, on
our business, financial condition, and results of operations.
Itron has anti-takeover provisions in place that make it more difficult for
a third party to acquire it:
We have the authority to issue 10 million shares of preferred stock in one
or more series, and to fix the powers, designations, preferences, and relative,
participating, optional or other rights thereof without any further vote or
action by our shareholders. The issuance of preferred stock could dilute the
voting power of holders of our common stock and could have the effect of
delaying or preventing a change in control of Itron. Certain provisions of our
Restated Articles of Incorporation, Restated Bylaws, shareholder rights plan and
employee benefit plans, as well as Washington law, may operate in a manner that
could discourage or render more difficult a takeover of Itron or the removal of
management or may limit the price certain investors would be willing to pay in
the future for shares of our common stock.
Itron is subject to regulatory compliance:
We are subject to various federal and state governmental regulations
related to occupational safety and health, labor, and wage practices as well as
federal, state, and local governmental regulations relating to the storage,
discharge, handling, emission, generation, manufacture, and disposal of toxic or
other hazardous substances used to produce our products. We believe that we are
currently in material compliance with such regulations. Failure to comply with
current or future environmental regulations could result in the imposition of
substantial fines on us, suspension of production, alteration of our production
processes, cessation of operations, or other actions which could materially and
adversely affect our business, financial condition, and results of operations.
In the ordinary course of our business, we use metals, solvents, and similar
materials, which are stored on site. The waste created by use of these materials
is transported off site on a regular basis by a state-registered waste hauler.
Although we are not aware of any material claim or investigation with respect to
these activities, there can be no assurance that such a claim will not arise in
the future, or that the cost of complying with governmental regulations in the
future, will not have a material adverse effect on us.
Itron's stock price may be extremely volatile:
The market price of Itron common stock has experienced significant
fluctuations since Itron became a publicly traded company in October 1996 and is
likely to fluctuate significantly in the future. Itron's stock price can
fluctuate for a number of reasons, including but not limited to:
. announcements about Itron or its competitors;
. quarterly variations in operating results;
. the introduction of new technology or products or changes in product
pricing policies by Itron or its competitors;
7
. changes in the regulatory environment;
. comments regarding Itron and the data storage market made on Internet
bulletin boards; and
. changes in earnings estimates by analysts or changes in accounting
policies.
In addition, stock markets have experienced extreme price and volume
volatility in recent years. This volatility has had a substantial effect on the
market prices of securities of many smaller public companies for reasons
frequently unrelated or disproportionate to the operating performance of the
specific companies. These broad market fluctuations may adversely affect the
market price of Itron common stock.
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated herein by reference include
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Exchange Act of 1934. All statements other
than statements of historical fact are "forward-looking statements" for purposes
of these provisions, including any projections of earnings, revenues or other
financial items, any statements of the plans and objectives of management for
future operations, any statements concerning proposed new products or services,
any statements regarding future economic conditions or performance, and any
statement of assumptions underlying any of the foregoing. In some cases,
forward-looking statements can be identified by the use of terminology such as
"may", "will", "expects", "plans", "anticipates", "estimates", "potential", or
"continue" or the negative thereof or other comparable terminology. Although we
believe that the expectations reflected in the forward-looking statements
contained herein and in such incorporated documents are reasonable, there can be
no assurance that such expectations or any of the forward-looking statements
will prove to be correct, and actual results could differ materially from those
projected or assumed in the forward-looking statements. Our future financial
condition and results of operations, as well as any forward-looking statements,
are subject to inherent risks and uncertainties, including but not limited to
the risk factors set forth above and for the reasons described elsewhere in this
prospectus. All forward-looking statements and reasons why results may differ
included in this prospectus are made as of the date hereof, and we assume no
obligation to update any such forward-looking statement or reason why actual
results might differ.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference room at 450 Fifth Street, N.W., Washington, DC 20549.
Please call the SEC at 1-800 SEC-0330 for further information on the public
reference room. The SEC maintains an Internet web site at http://www.sec.gov
that contains reports, proxy and information statements and other information
regarding issuers, including us, that file documents with the SEC
electronically. You can also inspect our SEC filings at the offices of The
Nasdaq Stock Market, 1735 K Street, N.W., Washington DC 20006.
This prospectus is a part of a registration statement on Form S-3 that we
filed with the SEC with respect to the common stock offered by this prospectus.
This prospectus does not contain all the information that is in the registration
statement. We omitted certain parts of the registration statement as allowed by
the SEC. You can obtain a copy of the registration statement and its exhibits
from the SEC at the address listed above or from the SEC web site.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to "incorporate by reference" into this prospectus the
information we file with them, which means that we can disclose important
information to you by referring to those documents. The information incorporated
by reference is an important part of this prospectus, and the information that
we file later with the SEC will automatically update and supersede this
information. We incorporate by reference the documents listed below and any
future filings made with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until this offering is completed:
. Our Current Report on Form 8-K as filed on March 1, 2002.
. Our Annual Report on Form 10-K/A for the year ended December 31, 2000 as
filed on March 1, 2002.
8
. Our Quarterly Report on Form 10-Q/A for the quarter ended March 31, 2001
as filed on March 11, 2002.
. Our Quarterly Report on Form 10-Q/A for the quarter ended June 30, 2001
as filed on March 11, 2002.
. Our Quarterly Report on Form 10-Q/A for the quarter ended September 30,
2001 as filed on March 11, 2002.
You may request a copy of these filings, at no cost, by writing to or
telephoning us at the address below. We will not provide copies of information
unless we specifically incorporated the exhibits by reference in this
prospectus. Attn: Investor Relations Department, Itron, Inc. 2818 North Sullivan
Road, Spokane, Washington 99216-1897 (509) 924-9900.
USE OF PROCEEDS
All of the shares of common stock offered by this prospectus are being
offered by the selling shareholders listed on page 10. We will not receive any
of the proceeds from the sale of our common stock offered by this prospectus.
DETERMINATION OF OFFERING PRICE
The shares of common stock are being registered for sale on a continuous
basis pursuant to Rule 415 of the Securities Act of 1933 and the selling
shareholders may sell the shares from time to time on the over-the-counter
market in regular brokerage transactions, in transactions directly with market
makers or in privately-negotiated transactions at prices and on terms prevailing
at the time of any such sale. The price to the public, underwriting discounts
and commissions and net proceeds to the selling shareholders from the sale of
the shares will depend on the nature and timing of the sales and therefore will
not be known until the sales are actually made, if at all.
SELLING SHAREHOLDERS
We issued the common stock covered by this prospectus in connection with
our acquisition of LineSoft in March of 2002.
We agreed to register these shares under the terms of the Merger Agreement;
however, the shares remain subject to transfer restrictions contained in the two
Support Agreements entered into between us and Fred A. Brown, and us and GFI
(Support Agreements). The transfer restriction in the Support Agreements is for
a period of one year and limits the number of shares that each of Fred A. Brown
and GFI can sell, contract to sell, transfer or otherwise dispose of in any
30-day period, to no more than fifty percent (50%) of the Itron common stock
received by each in connection with the consummation of this Merger.
In addition, each selling shareholder represented that he, she or it is an
"accredited investor" as such term is defined in Rule 501 under the Securities
Act of 1933, as amended. We agreed in the Merger Agreement to prepare and file a
registration statement in connection with the transactions contemplated by the
Merger Agreement and to bear all expenses, other than fees and expenses of
counsel or other advisors for the selling shareholders and underwriting
discounts and commissions and brokerage commissions and fees. We have also
agreed to prepare and file any amendments and supplements to the registration
statement as may be necessary to keep the registration statement effective until
one year after the date on which the shares were distributed by Itron to the
selling shareholders.
Unless otherwise noted below, no selling shareholder has had a material
relationship with us within the past three years, except as a result of the
ownership of the shares offered in this prospectus.
The following table sets forth the name of each selling shareholder, the
number of shares of common stock owned beneficially by each selling shareholder
before this offering and the number of shares that may be offered pursuant to
this prospectus. This information is based on information provided by the
selling shareholders. The shares are being registered to permit public secondary
trading of the shares, and the selling shareholders may offer the shares for
re-sale from time to time subject to the transfer restrictions contained in the
Support Agreements.
Because the selling shareholders may offer all or some of the shares which
they hold pursuant to the offering contemplated by this prospectus, and because
there currently are no agreements, arrangements or understandings, other than
the Support Agreements, with respect to the sale of any of the selling
shareholders' shares, we are unable to estimate the
9
amount of shares that will be held by the selling shareholders after the
completion of this offering. Our registration of the shares does not necessarily
mean that the selling shareholders will sell any or all of their shares, and the
selling shareholders are not making any representation that any shares covered
by this prospectus will be offered for sale. The selling shareholders reserve
the right to accept or reject, in whole or part, any proposed sale of shares.
This prospectus also covers any additional shares of common stock that
become issuable in connection with the shares being registered by reason of any
stock dividend, stock split, recapitalization or other similar transaction
effected without the receipt of consideration which results in an increase in
the number of our outstanding shares of common stock.
Shares Beneficially Number of Shares
Owned Prior to Offering Which May Be Offered
----------------------- --------------------
Name Number Percent(1)
---- ------ ----------
OCM/GFI Power Opportunities Fund L.P. 0 0 630,669
Fred A. Brown 0 0 149,936
James F. Brown 0 0 25,837
D.B.H. Chaffe, III 0 0 436
Steve Gevurtz 0 0 2,619
Steven Helmbrecht 0 0 5,674
Linda Hemingway 0 0 4,583
Robert Howells 0 0 109
Johnny Humphreys(2) 100,000(3) * 4,802
Tanya Miller 0 0 10,331
Richard Tinsley 0 0 436
John T. Wiitala 0 0 13,002
Total 100,000(3) * 848,870
____________________
* Less than 1%
(1) Applicable percentage of ownership is based on 16,344,662 shares of our
common stock outstanding on February 28, 2002.
(2) Johnny Humphreys was Itron's President and CEO until June 7, 1999, and
resigned as Chairman of Itron's Board of Directors on January 3, 2000.
(3) Does not include options to acquire 45,000 shares of Itron common stock,
32,500 of which are vested.
10
PLAN OF DISTRIBUTION
The shares covered by this prospectus may be offered, sold or distributed
from time to time by the selling shareholders or by their respective pledgees,
donees, transferees or other successors-in-interest. The selling shareholders
may also decide not to sell all the shares they are allowed to sell under this
prospectus. The selling shareholders will act independently of us in making
decisions with respect to the timing, manner and size of each sale. The sales
may be made on one or more exchanges or in the over-the-counter market or
otherwise, at prices and at terms then prevailing or at prices related to the
then current market prices, or in negotiated transactions. The selling
shareholders may effect such transactions by selling the shares to or through
broker-dealers. The shares may be sold by one or more of, or a combination of,
the following:
. a block trade in which the broker-dealer so engaged will attempt to sell
shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
. purchases by a broker-dealer as principal and re-sale by such
broker-dealer for its account pursuant to this prospectus;
. in an over-the-counter distribution in accordance with the rules of The
Nasdaq National Market;
. an exchange distribution in accordance with the rules of such exchange;
. in transactions "at the market" to or through market makers in our
common stock;
. ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
. in other was not involving market makers or established trading markets,
including direct sales of the shares to purchasers or sales effected through
agents;
. through transactions in options, swaps or other derivatives; and
. privately negotiated transactions.
To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. In effecting sales,
broker-dealers engaged by the selling shareholders may arrange for other
broker-dealers to participate in the re-sales.
The selling shareholders may enter into hedging transactions with
broker-dealers in connection with distributions of shares or otherwise. In such
transactions, broker-dealers may engage in short sales of shares in the course
of hedging the positions they assume with selling shareholders. The selling
shareholders also may sell shares short and redeliver shares to close out such
short positions. The selling shareholders may enter into option or other
transactions with broker-dealers that require the delivery of shares to the
broker-dealer. The broker-dealer may then re-sell or otherwise transfer such
shares pursuant to this prospectus. The selling shareholders also may lend or
pledge shares to a broker-dealer. The broker-dealer may sell the shares so
loaned, or upon a default the broker-dealer may sell the shares so pledged,
pursuant to this prospectus.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from selling shareholders. Broker-dealers
or agents may also receive compensation from the purchasers of shares for whom
they act as agents or to whom they sell as principals, or both. Compensation as
to a particular broker-dealer might be in excess of customary commissions and
will be in amounts to be negotiated in connection with transactions involving
shares. Broker-dealers or agents and any other participating broker-dealers or
the selling shareholders may be deemed to be "underwriters" within the meaning
of Section 2(11) of the Securities Act of 1933 in connection with sales of
shares. Accordingly, any such commission, discount or concession received by
them and any profit on the re-sale of shares purchased by them may be deemed to
be underwriting discounts or commissions under the Securities Act of 1933.
Because such persons may be deemed
11
to be "underwriters" within the meaning of Section 2(11) of the Securities Act
of 1933, they will be subject to the prospectus delivery requirements of the
Securities Act of 1933. In addition, any shares covered by this prospectus which
qualify for sale pursuant to Rule 144 promulgated under the Securities Act of
1933 may be sold under Rule 144 rather than pursuant to this prospectus. As of
March 11, 2002, the selling shareholders have advised us that they have not
entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of their shares.
The shares may be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
certain states the shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act of 1934, as
amended, any person engaged in the distribution of shares may not simultaneously
engage in market-making activities with respect to our common stock for a period
of two business days prior to the commencement of such distribution. In
addition, each selling shareholder will be subject to applicable provisions of
the Exchange Act of 1934 and the associated rules and regulations under the
Exchange Act of 1934, including Regulation M, which may limit the timing of
purchases and sales of shares of our common stock by the selling shareholders.
We will make copies of this prospectus available to the selling shareholders and
have informed them of the need for delivery of copies of this prospectus to
purchasers at or prior to the time of any sale of the shares.
We will file a supplement to this prospectus, if required, pursuant to Rule
424 under the Securities Act of 1933, upon being notified by a selling
shareholder that any material arrangement has been entered into with a
broker-dealer for the sale of shares through a block trade, special offering,
exchange distribution or secondary distribution or a purchase by a broker or
dealer. Such supplement will disclose:
. the name of each such selling shareholder and of the participating
broker-dealer(s);
. the number of shares involved;
. the price at which such shares were sold;
. the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable;
. that such broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this prospectus;
and
. other facts material to the transaction.
We will bear all costs, expenses and fees in connection with the
registration of the shares. The selling shareholders will bear all commissions
and discounts, if any, attributable to the sales of the shares. The selling
shareholders may agree to indemnify any broker-dealer or agent that participates
in transactions involving sales of the shares against certain liabilities,
including liabilities arising under the Securities Act of 1933.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for us by
Perkins Coie LLP, Seattle, Washington.
EXPERTS
Our financial statements and the related financial statement schedule
incorporated in this prospectus by reference from our Annual Report on Form
10-K/A for the year ended December 31, 2000, have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report dated February 2,
2001, and February 5, 2002, as to Note 16 (which expresses an unqualified
opinion and includes an explanatory paragraph relating to the change in the
method of accounting for revenues discussed in Note 1, and the restatement
discussed in Note 16), which is incorporated herein by reference, and has been
so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
12
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses of the
registrant in connection with the sale of the shares being registered. All
amounts are estimates except the SEC registration fee. The selling shareholders
will bear no portion of these expenses.
SEC registration fee $ 5,513
Legal fees and expenses $ 15,000
Accounting fees and expenses $ 8,000
Miscellaneous fees and expenses $ 1,000
---------
Total $ 29,513
=========
Item 15. Indemnification of Directors and Officers
Under the Washington Business Corporation Act, a corporation may
indemnify directors against reasonable expenses for liability incurred in the
defense of any proceeding to which such individuals were a party because of
their position with the corporation. The director must have acted in good faith
and reasonably believed that the conduct in the individual's official capacity
was in the best interests of the corporation and in all other cases that the
conduct at least was not opposed to the corporation's best interests. Indemnity
is available for criminal proceedings if the individual had no reasonable cause
to believe the conduct was unlawful. The Washington Business Corporation Act
prohibits indemnification, however, in connection with any proceeding by or in
the right of the corporation in which the individual is adjudged liable to the
corporation or in connection with any other proceeding in which the individual
was charged with and found liable for receiving an improper personal benefit.
Washington law also provides for discretionary indemnification of officers.
Under no circumstances, however, may any director or officer be indemnified for:
. acts or omissions finally adjudged to be intentional misconduct
or a knowing violation of the law;
. conduct of a director or officer finally adjudged to be an
unlawful distribution; or
. any transaction with respect to which it was finally adjudged
that the director or officer personally received a benefit in
money, property or services to which the director or officer was
not legally entitled.
Itron's restated bylaws provide this indemnification to directors and
officers to the full extent of the law. This right to indemnification includes
the right to advancement of expenses upon an undertaking by the director or
officer to repay the expenses if it is later determined that such indemnitee was
not entitled to indemnification. Under Itron's restated bylaws, this right to
indemnification is a contract right.
Itron's restated bylaws provide that it may maintain insurance to
protect any director or officer against any loss, liability or expense whether
or not Itron would have the power to indemnify such person against such loss,
liability or expense, under the Washington Business Corporation Act. Itron's
restated bylaws also authorize Itron to enter into contracts with any director
or officer in furtherance of the provisions of the restated bylaws regarding
indemnification and to create a trust fund, grant a security interest or use
other means to ensure the payment of amounts necessary to effect this
indemnification.
Unless limited by the corporation's articles of incorporation,
Washington law requires indemnification if the director or officer is wholly
successful on the merits of the action or otherwise. Any indemnification of a
director in a derivative action must be reported to the shareholders in writing
with or before notice of the next shareholders' meeting. Itron's restated
articles of incorporation do not limit indemnification if the director or
officer is wholly successful on the merits of the action.
II-1
Item 16. Exhibits
Exhibit Number Description of Exhibit
-------------- ----------------------
2.1 Agreement and Plan of Reorganization, dated February
14, 2002, and as amended effective February 26, 2002,
among Itron, Inc., LS Combination, Inc., and LineSoft
Corporation.*
4.1 Support Agreement, dated as of February 14, 2002,
between Itron, Inc., and Fred A. Brown.*
4.2 Support Agreement, dated as of February 14, 2002,
between Itron, Inc., and OCM/GFI Power Opportunities
Fund L.P.*
5.1 Opinion of Perkins Coie LLP, counsel to the
registrant, regarding the legality of the common
stock
23.1 Consent of Deloitte & Touche LLP, independent
auditors
24.1 Power of attorney (contained on signature page)
--------------
* Incorporated by reference to designated exhibit included in
Itron's Current Report on Form 8-K dated March 1, 2002
Item 17. Undertakings
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act of 1934) that
is incorporated by reference in the registration statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is
II-2
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
D. The undersigned registrant hereby undertakes that: (1) For purposes of
determining any liability under the Securities Act of 1933, the information
omitted from the form of prospectus filed as part of this registration statement
in reliance upon Rule 430(A) and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
of 1933 shall be deemed to be part of this registration statement as of the time
it was declared effective: and (2) For the purposes of determining liability
under the Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunder duly
authorized, in the city of Spokane, state of Washington, on the 12th day of
March, 2002.
Itron, Inc.
By: /s/ David G. Remington
--------------------------------
David G. Remington, Vice President
and Chief Financial Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes
LeRoy D. Nosbaum and David G. Remington, or either of them, as attorneys-in-fact
with full power of substitution, to execute in the name and on the behalf of
each person, individually and in each capacity stated below, and to file, any
and all amendments to this registration statement, including any and all
post-effective amendments, and any related Rule 462(b) registration statement
and any amendment thereto.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated below on the 12th day of March, 2002.
Signature Title
--------- -----
/s/ S. Edward White Chairman of the Board
------------------
S. Edward White
/s/ LeRoy D. Nosbaum Chief Executive Officer
--------------------
LeRoy D. Nosbaum
/s/ Robert D. Neilson President and Chief Operating Officer
---------------------
Robert D. Neilson
/s/ David G. Remington Vice President and Chief Financial
---------------------- Officer (Principal Financial and
David G. Remington Accounting Officer)
/s/ Michael B. Bracy Director
--------------------
Michael B. Bracy
/s/ Michael J. Chesser Director
----------------------
Michael J. Chesser
/s/ Ted C. DeMerritt Director
--------------------
Ted C. DeMerritt
/s/ Jon E. Eliassen Director
-------------------
Jon E. Eliassen
/s/ Mary Ann Peters Director
-------------------
Mary Ann Peters
/s/ Thomas S. Glanville Director
-----------------------
Thomas S. Glanville
/s/ Graham M. Wilson Director
--------------------
Graham M. Wilson
II-4
EXHIBIT INDEX
Exhibit Number Description of Exhibit
-------------- ----------------------
2.1 Agreement and Plan of Reorganization, dated February
14, 2002, and as amended effective February 26, 2002,
among Itron, Inc., LS Combination, Inc., and LineSoft
Corporation.*
4.1 Support Agreement, dated as of February 14, 2002 by
and between Itron, Inc. and Fred A. Brown.*
4.2 Support Agreement, dated as of February 14, 2002 by
and between Itron, Inc. and OCM/GFI Power
Opportunities Fund L.P.*
5.1 Opinion of Perkins Coie LLP, counsel to the
registrant, regarding the legality of the common
stock
23.1 Consent of Deloitte & Touche LLP, independent
auditors
24.1 Power of attorney (contained on signature page)
---------------
* Incorporated by reference to designated exhibit included in Itron's
Current Report on Form 8-K dated March 1, 2002.