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Itron Announces Fourth Quarter and Fiscal 2014 Financial Results

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Itron, Inc. (NASDAQ:ITRI) announced today financial results for its fourth quarter and full year ended December 31, 2014. Highlights include:

  • Quarterly and full year revenues of $510 million and $2.0 billion;
  • Quarterly and full year GAAP net loss per share of $1.25 and 58 cents;
  • Quarterly and full year non-GAAP diluted earnings per share of 36 cents and $1.60;
  • Quarterly and full year adjusted EBITDA of $39 million and $161 million;
  • Twelve-month backlog of $747 million and total backlog of $1.5 billion; and
  • Quarterly bookings of $648 million.

“Although currency fluctuations impacted our fourth quarter revenues, strong sales performance delivered revenue growth in constant currency and significant increases in bookings and backlog,” said Philip Mezey, Itron’s president and chief executive officer. “Our results also include visible improvement in the performance of our Electricity segment, which was a top priority in 2014. At the same time, we have encountered near-term gross margin weakness, particularly in the Gas segment as we transition to new smart meters in important EMEA markets.”

Mezey added, “The restructuring plans we are implementing in 2015 and 2016 will deliver sustained financial improvement in Electricity. We will also drive margin improvements in the Gas and Water segments. Given our significant backlog expansion, operational efficiency projects and expanded services focus for smart cities and the Internet of Things, we are confident in our plans to drive continued revenue growth and improved profitability going forward.”

Financial Results

Revenues were $510 million for the quarter and $2.0 billion for the full year, compared with $524 million and $1.9 billion for the same periods in 2013. Changes in foreign currency exchange rates unfavorably impacted revenues by approximately $25 million for the quarter and $32 million for the year. Excluding the impact from foreign currency, revenues increased $12 million, or 2 percent, for the quarter and $54 million, or 3 percent, for the full year compared with the same periods in 2013. For the quarter, increased revenues were driven by growth in each segment – Electricity, Gas and Water. The increase for the full year period was driven by growth in the Water and Gas segments, which more than offset a decrease in the Electricity segment.

Gross margin for the quarter was 30.3 percent compared with the prior year period margin of 31.5 percent. For the full year, gross margin was 31.6 percent compared with 31.5 percent in 2013. Gross margin decreased in the quarter primarily due to an unfavorable product mix in the Gas and Water segments, partially offset by improved performance in Electricity. Gross margin for the year was consistent with the prior year as a result of improved performance in the Water segment offset by the impact of unfavorable product mix in the Gas segment. During the quarter, a net charge of $2 million was recorded in the Electricity segment for increased costs on an OpenWay project in North America. For the year, net charges on this project were $15.9 million which impacted the company’s 2014 gross margin by 90 basis points. A similar charge was recorded on this project in the prior year, impacting 2013 gross profit by $16.5 million, or 80 basis points of gross margin.

GAAP operating expenses were $204 million in the quarter and $619 million for the full year of 2014 compared with $314 million and $750 million in the same periods of 2013. In the prior year, a non-cash goodwill impairment charge of $173 million was recognized during the fourth quarter. During the fourth quarter of 2014, the company announced a restructuring plan to improve operational efficiencies and reduce expenses primarily in the Electricity segment and related general and administrative activities. A net restructuring charge of $53 million was recorded in the quarter related to this plan. In addition, we recorded an expense of $14.7 million during the quarter related to the settlement of a litigation matter associated with the SmartSynch acquisition in 2012.

GAAP operating loss for the quarter was $49 million compared with $149 million in the same period of 2013. GAAP net loss for the quarter was $49 million, or $1.25 per share, compared with $154 million, or $3.93 per share. The operating and net losses for the quarter were attributable to lower gross profit, the restructuring charge and increased general and administrative expenses driven by the litigation settlement. A tax benefit was recorded in the quarter related to the operating losses partially offset by the write down of deferred tax assets. In addition, a benefit of approximately $4 million was recognized in the quarter related to the reinstatement of the U.S. research and development tax credit for 2014. The reduced level of operating and net losses compared with the prior year period were attributable to goodwill impairment recognized in the prior year partially offset by restructuring charges and higher general and administrative costs.

GAAP operating income for the full year was $4 million compared with an operating loss of $135 million in 2013. The increase was driven by higher revenues and lower operating expenses primarily driven by a decrease in goodwill impairment. GAAP net loss for the full year was $23 million, or 58 cents per share, compared with $147 million, or $3.74 per share, in 2013. The reduction in GAAP net loss compared with 2013 was driven by higher operating income, partially offset by higher net interest expense, higher foreign exchange losses due to the devaluation of currencies in certain markets and increased tax expense primarily related to the write down of deferred tax assets and lower U.S. research and development tax credits. In the prior year, the company recorded approximately $8 million in U.S. research and development tax credits, representing the credits for both 2013 and 2012. In the current year, a credit for 2014 was recognized for approximately $4 million.

Non-GAAP operating expenses, which exclude amortization of intangibles, restructuring charges, acquisition related expenses and the goodwill impairment, were $126 million for the quarter compared with $127 million in the prior year quarter. Increased global sales and marketing expenses offset lower general and administrative expenses primarily related to legal reserves. For the full year, non-GAAP operating expenses were $508 million compared with $497 million in 2013. The increase in expenses for the year was due to increased global sales and marketing expenses and higher general and administrative expenses primarily related to variable compensation.

Non-GAAP operating income was $29 million for the quarter compared with $38 million in the same period in 2013. The decrease in non-GAAP operating income was driven primarily by lower gross profit. Non-GAAP net income and diluted earnings for the quarter were $14 million, or 36 cents per share, compared with $14 million, or 36 cents per share in the prior year quarter. Tax expense for the quarter decreased compared with the same period in 2013 due to recognition of the U.S. research and development tax credit of approximately $4 million for 2014 and lower deferred tax asset write downs.

Non-GAAP operating income for the full year was $115 million compared with $118 million in 2013. Non-GAAP net income and diluted earnings for the year were $63 million, or $1.60 per share, compared with $75 million, or $1.90 per share, in 2013. The decrease in non-GAAP operating income for the full year was attributable to higher gross profit offset by increased operating expenses. Non-GAAP net income for the year was negatively impacted by higher net interest expense, higher foreign exchange losses due to the devaluation of currencies in certain markets and a higher effective tax rate driven primarily by the write down of deferred tax assets and year-over-year decrease in U.S. research and development tax credits of approximately $4 million.

Free cash flow was $4 million for the quarter compared with $24 million in the prior year quarter. The decrease was largely due to the timing of collection of certain accounts receivables and cash disbursements for payables, partially offset by improved inventory management and lower capital expenditures. Free cash flow for the full year was $88 million compared with $45 million in 2013. The increase over the prior year was primarily due to improvement in working capital management, particularly inventory, and lower capital expenditures.

During the quarter, the company repurchased 599,813 shares of Itron common stock at an average price of $40.58 per share pursuant to Board authorization to repurchase up to $50 million of Itron common stock during a 12-month period beginning March 2014. As of December 31, 2014, the company had repurchased 910,990 shares of Itron common stock at an average price of $40.30 per share, since inception of the authorized plan. In January 2015, the company repurchased 335,251 shares of common stock at an average price of $39.62, which fully utilized the $50 million authorized under the plan.

Financial Guidance

Itron’s guidance for the full year 2015 is as follows:

  • Revenue between $1.8 and $1.9 billion
  • Non-GAAP diluted EPS between $1.60 and $2.00

The company’s guidance reflects the negative effects of currency realignments, assuming a Euro to U.S. dollar average exchange rate of $1.14 in 2015 compared with an average rate of $1.33 in 2014. These currency realignments will have an unfavorable translation impact on both revenue and earnings and cause variability not seen in previous, more stable currency environments. The guidance also assumes a gross margin of 32 to 33 percent, average shares outstanding of approximately 39 million for the year and a non-GAAP effective tax rate for the year of 37 percent.

Earnings Conference Call:

Itron will host a conference call to discuss the financial results and guidance contained in this release at 5:00 p.m. Eastern Standard Time (EST) on Feb. 11, 2015. The call will be webcast in a listen-only mode. Webcast information and conference call materials will be made available 10 minutes before the start of the call and are accessible on Itron’s website at http://investors.itron.com/events.cfm. A replay of the audio webcast will be available within 90 minutes of the conclusion of the live call and available for one year at http://investors.itron.com/events.cfm. A telephone replay of the conference call will be available through Feb. 13, 2015. To access the telephone replay, dial (888) 203-1112 (Domestic) or (719) 457-0820 (International) and enter passcode 1686085.

About Itron

Itron is a world-leading technology and services company dedicated to the resourceful use of energy and water. We provide comprehensive solutions that measure, manage and analyze energy and water. Our broad product portfolio includes electricity, gas, water and thermal energy measurement devices and control technology; communications systems; software; as well as managed and consulting services. With thousands of employees supporting nearly 8,000 customers in more than 100 countries, Itron applies knowledge and technology to better manage energy and water resources. Together, we can create a more resourceful world. Join us: www.itron.com.

Forward Looking Statements:

This release contains forward-looking statements concerning our expectations about operations, financial performance, sales, earnings and cash flows. These statements reflect our current plans and expectations and are based on information currently available. The statements rely on a number of assumptions and estimates, which could be inaccurate, and which are subject to risks and uncertainties that could cause our actual results to vary materially from those anticipated. Risks and uncertainties include the rate and timing of customer demand for our products, rescheduling of current customer orders, changes in estimated liabilities for product warranties, 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 and other factors that are more fully described in our Annual Report on Form 10-K for the year ended December 31, 2013 and other reports on file with the Securities and Exchange Commission. Itron undertakes no obligation to update publicly or revise any forward-looking statements, including our business outlook.

Non-GAAP Financial Information:

To supplement our consolidated financial statements presented 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 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. Specifically, these non-GAAP financial measures are provided to enhance investors’ overall understanding of our current financial performance and our future anticipated performance by excluding infrequent or non-cash costs, particularly those associated with acquisitions. We exclude certain costs in our non-GAAP financial measures as we believe the net result is a measure of our core business. Non-GAAP performance measures should be considered in addition to, and not as a substitute for, results prepared in accordance with GAAP. Our non-GAAP financial measures may be different from those reported by other companies. A more detailed discussion of why we use non-GAAP financial measures, the limitations of using such measures, and reconciliations between non-GAAP and the nearest GAAP financial measures are included in this press release.

Statements of operations, segment information, balance sheets, cash flow statements and reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures follow.

ITRON, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
Three Months Ended December 31, Twelve Months Ended December 31,
2014 2013 2014 2013
Revenues $ 510,095 $ 523,526 $ 1,970,697 $ 1,948,728
Cost of revenues 355,308 358,788 1,347,572 1,334,195
Gross profit 154,787 164,738 623,125 614,533
Operating expenses
Sales and marketing 47,027 41,923 185,239 180,371
Product development 44,789 46,835 175,500 176,019
General and administrative 48,472 38,387 163,101 142,559
Amortization of business acquisition-related intangible assets 10,523 10,640 43,619 42,019
Restructuring expense 53,068 2,720 50,857 35,497
Goodwill impairment 173,249 977 173,249
Total operating expenses 203,879 313,754 619,293 749,714
Operating income (loss) (49,092 ) (149,016 ) 3,832 (135,181 )
Other income (expense)
Interest income 181 219 494 1,620
Interest expense (2,765 ) (3,165 ) (11,602 ) (10,686 )
Other income (expense), net (2,191 ) (1,290 ) (7,633 ) (4,007 )
Total other income (expense) (4,775 ) (4,236 ) (18,741 ) (13,073 )
Income (loss) before income taxes (53,867 ) (153,252 ) (14,909 ) (148,254 )
Income tax benefit (provision) 5,038 (272 ) (6,641 ) 3,664
Net income (loss) (48,829 ) (153,524 ) (21,550 ) (144,590 )
Net income attributable to non-controlling interests 404 906 1,370 2,219
Net income (loss) attributable to Itron, Inc. $ (49,233 ) $ (154,430 ) $ (22,920 ) $ (146,809 )
Earnings (loss) per common share – Basic $ (1.25 ) $ (3.93 ) $ (0.58 ) $ (3.74 )
Earnings (loss) per common share – Diluted $ (1.25 ) $ (3.93 ) $ (0.58 ) $ (3.74 )
Weighted average common shares outstanding – Basic 38,937 39,148 39,184 39,281
Weighted average common shares outstanding – Diluted 38,937 39,148 39,184 39,281
ITRON, INC.
SEGMENT INFORMATION
(Unaudited, in thousands)
Three Months Ended December 31, Twelve Months Ended December 31,
2014 2013 2014 2013
Revenues
Electricity $ 226,730 $ 230,563 $ 794,144 $ 836,553
Gas 149,374 154,131 599,081 570,297
Water 133,991 138,832 577,472 541,878
Total Company $ 510,095 $ 523,526 $ 1,970,697 $ 1,948,728
Gross profit
Electricity $ 66,801 $ 63,818 $ 208,476 $ 218,913
Gas 43,206 51,843 211,815 207,915
Water 44,780 49,077 202,834 187,705
Total Company $ 154,787 $ 164,738 $ 623,125 $ 614,533
Operating income (loss)
Electricity $ (37,064 ) $ (178,987 ) $ (72,476 ) $ (235,908 )
Gas 1,709 21,001 75,598 83,882
Water 10,687 18,063 71,006 63,252
Corporate unallocated (24,424 ) (9,093 ) (70,296 ) (46,407 )
Total Company $ (49,092 ) $ (149,016 ) $ 3,832 $ (135,181 )
METER AND MODULE SUMMARY
(Units in thousands)
Three Months Ended December 31, Twelve Months Ended December 31,
2014 2013 2014 2013
Meters
Standard 4,610 4,150 18,740 17,850
Advanced and Smart 1,810 1,750 6,090 5,930
Total meters 6,420 5,900 24,830 23,780
Stand-alone communication modules
Advanced and Smart 1,360 1,400 5,770 5,550
ITRON, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
December 31, 2014 December 31, 2013
ASSETS
Current assets
Cash and cash equivalents $ 112,371 $ 124,805
Accounts receivable, net 348,389 356,709
Inventories 154,504 177,467
Deferred tax assets current, net 39,115 37,110
Other current assets 104,307 103,275
Total current assets 758,686 799,366
Property, plant, and equipment, net 207,789 246,820
Deferred tax assets noncurrent, net 74,598 58,880
Other long-term assets 28,503 33,027
Intangible assets, net 139,909 195,840
Goodwill 500,820 548,578
Total assets $ 1,710,305 $ 1,882,511
LIABILITIES AND EQUITY
Current liabilities
Accounts payable $ 184,132 $ 199,769
Other current liabilities 100,945 70,768
Wages and benefits payable 95,248 89,314
Taxes payable 21,951 10,700
Current portion of debt 30,000 26,250
Current portion of warranty 21,063 21,048
Unearned revenue 43,436 37,163
Total current liabilities 496,775 455,012
Long-term debt 293,969 352,500
Long-term warranty 15,403 24,098
Pension plan benefit liability 101,432 88,687
Deferred tax liabilities noncurrent, net 3,808 7,326
Other long-term obligations 84,437 81,917
Total liabilities 995,824 1,009,540
Commitments and contingencies
Equity
Preferred stock
Common stock 1,270,045 1,290,629
Accumulated other comprehensive loss, net (136,514 ) (21,722 )
Accumulated deficit (436,591 ) (413,671 )
Total Itron, Inc. shareholders’ equity 696,940 855,236
Non-controlling interests 17,541 17,735
Total equity 714,481 872,971
Total liabilities and equity $ 1,710,305 $ 1,882,511
ITRON, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Twelve Months Ended December 31,
2014 2013
Operating activities
Net income (loss) $ (21,550 ) $ (144,590 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 98,463 98,845
Stock-based compensation 17,860 18,850
Amortization of prepaid debt fees 1,657
Deferred taxes, net (31,542 ) (26,757 )
Goodwill impairment 977 173,249
Restructuring expense, non-cash 5,220 1,259
Other adjustments, net 2,526 551
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable (16,789 ) 13,652
Inventories 6,021 (10,861 )
Other current assets (9,447 ) (4,143 )
Other long-term assets 1,582 1,093
Accounts payable, other current liabilities, and taxes payable 55,924 (7,702 )
Wages and benefits payable 10,334 (1,995 )
Unearned revenue 9,240 (3,274 )
Warranty (6,364 ) (7,552 )
Other operating, net 10,518 3,139
Net cash provided by operating activities 132,973 105,421
Investing activities
Acquisitions of property, plant, and equipment (44,495 ) (60,020 )
Business acquisitions, net of cash equivalents acquired (860 )
Other investing, net 2,999 4,109
Net cash used in investing activities (41,496 ) (56,771 )
Financing activities
Proceeds from borrowings 47,657 35,000
Payments on debt (102,438 ) (73,750 )
Issuance of common stock 3,647 5,299
Repurchase of common stock (39,665 ) (26,977 )
Other financing, net (1,078 ) 2,990
Net cash used in financing activities (91,877 ) (57,438 )
Effect of foreign exchange rate changes on cash and cash equivalents (12,034 ) (2,818 )
Increase (decrease) in cash and cash equivalents (12,434 ) (11,606 )
Cash and cash equivalents at beginning of period 124,805 136,411
Cash and cash equivalents at end of period $ 112,371 $ 124,805

Itron, Inc.

About Non-GAAP Financial Measures

The accompanying press release contains non-GAAP financial measures. To supplement our consolidated financial statements, which are prepared and presented 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 and free cash flow. 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. For more information on these non-GAAP financial measures please see the table captioned “Reconciliations of Non-GAAP Financial Measures to Most Directly Comparable GAAP Financial Measures.”

We use these non-GAAP financial measures for financial and operational decision making and 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 acquired through a business acquisition and non-recurring discrete cash and non-cash charges that are infrequent in nature such as purchase accounting adjustments, restructuring charges or goodwill impairment 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 expense and non-GAAP operating income – We define non-GAAP operating expense as operating expense excluding certain expenses related to the amortization of intangible assets acquired through a business acquisition, restructuring, acquisitions and goodwill impairment. We define non-GAAP operating income as operating income excluding the expenses related to the amortization of intangible assets acquired through a business acquisition, restructuring, acquisitions and goodwill impairment. 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 previous acquisitions and restructurings. 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 expense and non-GAAP operating income versus operating expense and operating income calculated in accordance with GAAP. Non-GAAP operating expense and non-GAAP operating income exclude some costs that are recurring. Additionally, the expenses that we exclude in our calculation of non-GAAP operating expense and non-GAAP operating income may differ from the expenses that our peer companies exclude when they report the results of their operations. We compensate for these limitations by providing specific information about the GAAP amounts we have excluded from our 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 GAAP operating income.

Non-GAAP net income and non-GAAP diluted EPS – We define non-GAAP net income as net income excluding the expenses associated with amortization of intangible assets acquired through a business acquisition, restructuring, acquisitions, goodwill impairment and amortization of debt placement fees. 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 and GAAP diluted EPS.

Adjusted EBITDA – We define adjusted EBITDA as net income (a) minus interest income, (b) plus interest expense, depreciation and amortization of business acquisition related intangible asset expenses, restructuring expense, acquisition related expense, goodwill impairment and (c) exclude the tax expense or benefit. We believe that providing this financial measure is important for management and investors to understand our ability to service our debt as it is a measure of the cash generated by our core business. 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-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.

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.

The accompanying tables have more detail on the GAAP financial measures that are most directly comparable to the non-GAAP financial measures and the related reconciliations between these financial measures.

ITRON, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
TO THE MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES
(Unaudited, in thousands, except per share data)
TOTAL COMPANY RECONCILIATIONS Three Months Ended December 31, Twelve Months Ended December 31,
2014 2013 2014 2013
NON-GAAP NET INCOME & DILUTED EPS
GAAP net income $ (49,233) $ (154,430) $ (22,920) $ (146,809)
Amortization of intangible assets 10,523 10,640 43,619 42,019
Amortization of debt placement fees 375 387 1,512 1,556
Restructuring expense 53,068 2,720 50,857 35,497
Acquisition related expenses 14,743 479 15,538 2,290
Goodwill impairment 173,249 977 173,249
Income tax effect of non-GAAP adjustments (15,326) (18,760) (26,374) (32,666)
Non-GAAP net income $ 14,150 $ 14,285 $ 63,209 $ 75,136
Non-GAAP diluted EPS $ 0.36 $ 0.36 $ 1.60 $ 1.90
Weighted average common shares outstanding – Diluted 39,300 39,538 39,461 39,602
ADJUSTED EBITDA
GAAP net income $ (49,233) $ (154,430) $ (22,920) $ (146,809)
Interest income (181) (219) (494) (1,620)
Interest expense 2,765 3,165 11,602 10,686
Income tax (benefit) provision (5,038) 272 6,641 (3,664)
Depreciation and amortization 23,164 25,096 98,378 98,845
Restructuring expense 53,068 2,720 50,857 35,497
Acquisition related expenses 14,743 479 15,538 2,290
Goodwill impairment 173,249 977 173,249
Adjusted EBITDA $ 39,288 $ 50,332 $ 160,579 $ 168,474
FREE CASH FLOW
Net cash provided by operating activities $ 16,435 $ 39,544 $ 132,973 $ 105,421
Acquisitions of property, plant, and equipment (12,435) (15,472) (44,495) (60,020)
Free Cash Flow $ 4,000 $ 24,072 $ 88,478 $ 45,401
NON-GAAP OPERATING INCOME
GAAP operating income $ (49,092) $ (149,016) $ 3,832 $ (135,181)
Amortization of intangible assets 10,523 10,640 43,619 42,019
Restructuring expense 53,068 2,720 50,857 35,497
Acquisition related expenses 14,743 479 15,538 2,290
Goodwill impairment 173,249 977 173,249
Non-GAAP operating income $ 29,242 $ 38,072 $ 114,823 $ 117,874
NON-GAAP OPERATING EXPENSE
GAAP operating expense $ 203,879 $ 313,754 $ 619,293 $ 749,714
Amortization of intangible assets (10,523) (10,640) (43,619) (42,019)
Restructuring expense (53,068) (2,720) (50,857) (35,497)
Acquisition related expenses (14,743) (479) (15,538) (2,290)
Goodwill impairment (173,249) (977) (173,249)
Non-GAAP operating expense $ 125,545 $ 126,666 $ 508,302 $ 496,659
SEGMENT RECONCILIATIONS Three Months Ended December 31, Twelve Months Ended December 31,
2014 2013 2014 2013
NON-GAAP OPERATING INCOME – ELECTRICITY
Electricity – GAAP operating income $ (37,064) $ (178,987) $ (72,476) $ (235,908)
Amortization of intangible assets 5,979 4,764 24,452 18,835
Restructuring expense 29,659 1,779 21,115 25,149
Acquisition related expenses 14,743 479 15,491 2,287
Goodwill impairment 173,249 977 173,249
Electricity – Non-GAAP operating income $ 13,317 $ 1,284 $ (10,441) $ (16,388)
NON-GAAP OPERATING INCOME – GAS
Gas – GAAP operating income $ 1,709 $ 21,001 $ 75,598 $ 83,882
Amortization of intangible assets 2,489 3,115 10,471 12,264
Restructuring expense 9,454 2,403 9,192 3,471
Gas – Non-GAAP operating income $ 13,652 $ 26,519 $ 95,261 $ 99,617
NON-GAAP OPERATING INCOME – WATER
Water – GAAP operating income $ 10,687 $ 18,063 $ 71,006 $ 63,252
Amortization of intangible assets 2,055 2,761 8,696 10,920
Restructuring expense 1,106 (380) 2,279 3,076
Water – Non-GAAP operating income $ 13,848 $ 20,444 $ 81,981 $ 77,248
NON-GAAP OPERATING INCOME – CORPORATE UNALLOCATED
Corporate unallocated – GAAP operating income $ (24,424) $ (9,093) $ (70,296) $ (46,407)
Restructuring expense 12,849 (1,082) 18,271 3,801
Acquisition related expenses 47 3
Corporate unallocated – Non-GAAP operating income $ (11,575) $ (10,175) $ (51,978) $ (42,603)

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