<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
ITRON, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
YOUR PROMPT RETURN OF THE ENCLOSED PROXY CARD WILL SAVE THE POSTAGE EXPENSE OF
ADDITIONAL MAILINGS. YOUR IMMEDIATE ATTENTION TO THESE MATERIALS IS GREATLY
APPRECIATED.
[LOGO]
March 22, 1999
Dear Shareholder:
On behalf of the Board of Directors, it is my pleasure to invite you to
attend the 1999 Annual Meeting of Shareholders of Itron, Inc. We hope you can
join us. The Annual Meeting will be held:
At: Doubletree Hotel--Spokane City Center
Grand Ballroom--Salon 5
322 North Spokane Falls Court
Spokane, Washington 99201
On: Wednesday, May 5, 1999
Time: 8:00 a.m.
For our shareholders' convenience, a continental breakfast will be available
beginning at 7:30 a.m., at which time shareholders will have an opportunity to
meet personally with the Company's directors and officers to discuss any
questions they may have. The Annual Meeting will begin promptly at 8:00 a.m. The
Notice of the Annual Meeting and the Proxy Statement accompany this letter.
We know that many of our shareholders will be unable to attend the Annual
Meeting. Proxies are solicited so that each shareholder has an opportunity to
vote on all matters that are scheduled to come before the shareholders at the
Annual Meeting. Whether or not you plan to attend, please take the time now to
read the Proxy Statement and vote your shares by signing, dating and returning
your proxy card promptly in the enclosed postage-paid envelope. You may revoke
your proxy at any time before it is exercised. Regardless of the number of
Company shares you own, your presence by proxy is important for quorum purposes
and your vote is important for proper corporate action.
Thank you for your continuing interest in Itron. We look forward to seeing
as many of you as possible at our Annual Meeting.
Sincerely,
[SIG]
Johnny M. Humphreys
CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
Itron, Inc., P.O. Box 15288, Spokane, Washington 99215-5288; (509) 924-9900 or
(800) 635-5461
<PAGE>
ITRON, INC.
2818 NORTH SULLIVAN ROAD
SPOKANE, WASHINGTON 99216
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 5, 1999
------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Itron,
Inc. will be held at the Doubletree Hotel--Spokane City Center, Grand
Ballroom--Salon 5, 322 North Spokane Falls Court, Spokane, Washington, at 8:00
a.m., local time, on Wednesday, May 5, 1999 (the "Annual Meeting") for the
following purposes:
(1) To elect three directors of the Company;
(2) To approve the amendment of the Company's Employee Stock Purchase Plan;
(3) To ratify the appointment of the auditors of the Company; and
(4) To transact such other business that may come before the meeting and any
adjournment or postponement thereof.
The Board of Directors has established the close of business on February 26,
1999, as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting.
All shareholders are cordially invited to attend the Annual Meeting in
person.
To ensure representation at the Annual Meeting, shareholders are urged to
mark, sign, date and return the enclosed Proxy as promptly as possible, even if
they plan to attend the Annual Meeting. A return envelope, which requires no
postage if mailed in the United States, is enclosed for this purpose. Any
shareholder attending the Annual Meeting may vote in person even if such
shareholder has returned a Proxy.
By order of the Board of Directors
MariLyn R. Blair
CORPORATE SECRETARY
Spokane, Washington
March 22, 1999
<PAGE>
[LOGO]
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Itron, Inc. (the "Company") for use at the Annual Meeting
of Shareholders (the "Annual Meeting"). The meeting is to be held at the
Doubletree Hotel--Spokane City Center, Grand Ballroom--Salon 5, 322 North
Spokane Falls Court, Spokane, Washington, at 8:00 a.m., local time, on
Wednesday, May 5, 1999, for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders. The principal executive offices of the Company
are located at 2818 North Sullivan Road, Spokane, Washington 99216. It is
expected that this Proxy Statement and accompanying Proxy will be mailed to
shareholders on or about March 22, 1999.
RECORD DATE AND OUTSTANDING SHARES
Holders of the Company's common stock (the "Common Stock") of record at the
close of business on February 26, 1999, are entitled to notice of, and to vote
at, the Annual Meeting. On that date, there were 14,762,791 shares of Common
Stock outstanding.
REVOCABILITY OF PROXIES
Shares represented at the Annual Meeting by properly signed Proxies in the
accompanying form will be voted at the Annual Meeting, and, will be voted as
indicated. A Proxy given for use at the Annual Meeting may be revoked by the
shareholder at any time prior to the vote. A Proxy may be revoked either by (i)
filing a revocation or a later-dated Proxy with the Secretary of the Company
prior to the Annual Meeting, at the Company's principal executive offices or
(ii) attending the Annual Meeting and voting in person, regardless of whether a
Proxy has previously been given. Presence at the Annual Meeting will not revoke
the shareholder's Proxy unless the shareholder votes in person.
QUORUM AND VOTING
Each shareholder will be entitled to one vote per share of Common Stock
held. Holders of Common Stock are not entitled to cumulative voting rights in
the election of directors. The presence at the Annual Meeting, in person or
represented by proxy, of holders of a majority of the outstanding Common Stock
on the record date will constitute a quorum.
With respect to the election of directors, the nominees receiving the
greatest number of votes duly cast will be elected as directors. Abstentions
from voting on the election of directors have no effect on the outcome of this
proposal since the votes have not been cast in favor of any nominee. The
proposals to approve the amendment of the Employee Stock Purchase Plan and to
ratify the appointment of the Company's independent auditors will be approved if
the votes in favor of the proposal exceed the votes against the proposal.
Abstentions from voting on either of these proposals will have no impact on the
outcome of the proposal because such votes have not been cast for or against the
proposal. There can be no broker non-votes on any of these matters because
brokers who hold shares for the accounts of their clients have discretionary
authority to vote such shares with respect to all of the matters being presented
to shareholders.
1
<PAGE>
ITEM 1
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, with each director of
the Company generally holding office for a three-year term or until his or her
successor has been elected and qualified. At the Annual Meeting, three directors
are to be elected for a term of three years until 2002 or, in each case, until
his respective successor is duly elected and qualified. Unless authority to do
so is withheld, the persons named as proxies in the accompanying Proxy will vote
for the election of the nominees listed below. The Board of Directors has no
reason to believe that any of these nominees will be unable to serve as a
director. If, however, any such nominee becomes unavailable, the persons named
as proxies will have discretionary authority to vote for a substitute nominee.
NOMINEES TO SERVE UNTIL 2002
Ted C. DeMerritt (age 67) has been a director of the Company since 1994.
Until his retirement in 1998, Mr. DeMerritt was Chairman and CEO of Olsy North
America (formerly ISC Systems Corporation), which develops and implements system
solutions for the financial services and retail industries. From 1963 to 1980,
he was employed at Sacramento Savings and Loan Association, where he served as
Controller/ Senior Vice President in charge of the Savings and Operations
Division. Mr. DeMerritt is also a Trustee of the Washington State University
Foundation.
Jon E. Eliassen (age 52) has been a director of the Company since 1987. Mr.
Eliassen is Senior Vice President and Chief Financial Officer of Avista
Corporation ("Avista"), previously known as The Washington Water Power Company.
He joined Avista in 1970 and held numerous positions within the finance
department prior to assuming his current responsibilities in 1986. He serves as
a director of Pentzer Corporation as well as of other various subsidiaries and
affiliates of Avista. He also is a director of Northwest Venture Associates.
Stuart Edward White (age 48) has been a director of the Company since 1996.
Mr. White has been Executive Vice President of Itron, and Chairman of Utility
Translation Systems, Inc. ("UTS"), since October 1997. Prior to founding UTS,
which Itron acquired in March 1996, Mr. White held numerous engineering and
marketing management positions in the Meter Division of Westinghouse Electric
Corporation for 13 years.
CONTINUING DIRECTORS
Michael B. Bracy (age 57) has been a director of the Company since 1992. Mr.
Bracy's term as a director expires in 2000. Until his retirement in August 1997,
Mr. Bracy was Executive Vice President, Chief Financial Officer and a director
of NorAm Energy Corp. ("NorAm"), previously known as Arkla, Inc., an integrated
natural gas company. After joining NorAm in 1984, he held various executive
positions, including Chief Executive Officer of the Arkla Pipeline Group. Prior
to his joining NorAm, Mr. Bracy served as Executive Vice President and Chief
Financial Officer of El Paso Natural Gas Company, which he joined in 1977. Mr.
Bracy also serves as a director of Leviathan Gas Pipeline Partners, L.P., a
publicly traded limited partnership.
Johnny M. Humphreys (age 61) was elected Chairman of the Board in 1998 and
has been President, Chief Executive Officer and a director of Itron since 1987.
Mr. Humphreys' term as a director expires in 2001. From 1975 to 1986, Mr.
Humphreys was employed by Datachecker Systems, Inc. ("Datachecker"), a
subsidiary of National Semiconductor Corporation ("NSC"), in various executive
positions, including President from 1980 to 1986. In 1986, Mr. Humphreys was
appointed Senior Vice President of NSC's Information Systems Group and was
responsible for strategic planning for three operating divisions, National
Advanced Systems, Microcomputer Products Group and Datachecker. Mr. Humphreys
founded the Telxon Corp. in 1967.
2
<PAGE>
Mary Ann Peters (age 55) has been a director of the Company since 1994. Ms.
Peters' term as director expires in 2000. Ms. Peters is Managing Director of
McGillicuddy and Peters, a business and marketing consultancy she founded in
1984. She began her marketing career with International Business Machines
Corporation in 1972 and subsequently held a variety of marketing positions with
General Electric Company, Wells Fargo and Company, Inc., Atari Corp. and Apple
Computer, Inc.
Paul A. Redmond (age 62) has been a director of the Company since 1985. Mr.
Redmond's term as a director expires in 2001. Until his retirement in June 1998,
Mr. Redmond was Chairman of the Board and Chief Executive Officer of The
Washington Water Power Company ("WWP"), now known as Avista. Mr. Redmond joined
WWP in 1965, where he held numerous management and executive positions. Mr.
Redmond also serves as a director of USbancorp, and Hecla Mining Co.
Graham M. Wilson (age 54) has been a director of the Company since 1990. Mr.
Wilson's term as a director expires in 2000. Mr. Wilson has been employed by
Westcoast Energy Inc., a major Canadian natural resource company, since 1988,
where he is currently Executive Vice President and Chief Financial Officer. From
1983 to 1988, he was Vice President, Finance and Administration of Petro-Canada
Inc. Mr. Wilson also serves as a director of Union Gas Limited, Pacific Northern
Gas Ltd. and Centra Gas, Inc., all of which are affiliates of Westcoast Energy
Inc.
COMPENSATION OF DIRECTORS
Nonemployee directors receive an annual $8,000 retainer, which is payable
quarterly. In addition, nonemployee directors receive $800 for each Board
meeting and $800 for each Committee meeting attended ($900 for each of those
Committee meetings at which they serve as chairperson). Nonemployee directors
who participate on behalf of the Company in business activities including, but
not limited to, meetings with investors, meetings with customers and other third
party meeting activities, are paid a fee in the amount of $800 for each such
meeting. Under the Company's 1992 Stock Option Plan for Nonemployee Directors,
nonemployee directors receive stock option grants to purchase 10,000 shares of
the Company's common stock upon their initial appointment or election as a
director, and option grants to purchase 2,000 shares of the Company's common
stock annually thereafter. The exercise price of such options is the fair market
value of the common stock on the date of grant. Such options are fully vested
and immediately exercisable on the date of grant.
INFORMATION ON COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
The Company's Board of Directors has established an Audit/Finance Committee
and a Compensation Committee.
The Audit/Finance Committee reviews the Company's accounting practices,
internal accounting controls and financial results and oversees the engagement
of the Company's independent auditors. The Audit/Finance Committee consists of
Jon E. Eliassen, Graham M. Wilson and Ted C. DeMerritt and held ten meetings
during 1998.
The Compensation Committee is responsible for setting compensation levels
for the Company's executive officers, overseeing the administration of various
incentive compensation and benefit plans and performing such other functions
regarding compensation that the Board may delegate. The Compensation Committee
consists of Paul A. Redmond, Michael B. Bracy and Mary Ann Peters. The
Compensation Committee held six meetings in 1998.
During 1998 there were nine Board meetings. All Board members attended at
least 75 percent of the meetings of the Board and of each committee of which
they were a member.
3
<PAGE>
ITEM 2
APPROVAL OF AMENDMENT OF THE
ITRON, INC. EMPLOYEE STOCK PURCHASE PLAN
The Company's 1996 Employee Stock Purchase Plan (the "Plan") provides a
means for eligible employees of the Company and its subsidiaries to purchase
shares of Itron common stock under favorable terms through payroll deductions.
Approximately 1,000 employees are eligible for participation in the Plan,
including each of the executive officers named in the compensation table and
five other executive officers. Nonemployee directors of the Company are not
eligible to participate in the Plan. The Plan, which was approved by the
Company's Shareholders on April 30, 1996, has an aggregate of 180,000 shares of
Itron common stock authorized for issuance. On February 23, 1999, the Company's
Board of Directors unanimously adopted an amendment to the Plan that, subject to
shareholder approval, would authorize an additional 250,000 shares to be
available for future issuance under the Plan. As of the date of this Proxy
Statement, approximately 27,550 shares remained available for future issuance
under the Plan. Because of the limited number of remaining shares available for
future issuance on February 23, 1999, the Plan was temporarily suspended until
the Company's shareholders approve the amendment of the Plan increasing the
number of shares available for issuance thereunder.
The Board believes that the allocation of additional shares to the Plan will
promote the interests of the Company and its shareholders by assisting the
Company in attracting, retaining, and stimulating the strong performance of
employees, and by aligning employees' interests, through their purchases of the
Company's common stock, with the interests of shareholders.
A copy of the Plan is attached to this Proxy Statement as Appendix A and is
incorporated herein by reference. The following description of the Plan (as
proposed to be amended) is a summary and is not a complete description. See
Appendix A for more detailed information.
Under the Plan, eligible employees are those who have completed three months
of service, work more than 20 hours each week, and are employed more than five
months in any calendar year. Employees who own 5 percent or more of Itron common
stock are not eligible to participate in the Plan. Eligible employees may
authorize payroll deductions between 1 percent and 10 percent of their regular
cash compensation. Such deductions are applied toward the discounted purchase of
the Company's common stock, subject to a maximum fair market value purchase
amount of $25,000 in any calendar year.
Separate six-month offering periods ("Offerings") commence on January 1 and
July 1 of each year. Each Offering period consists of two consecutive purchase
periods ("Purchase Periods") commencing on January 1, April 1, July 1 and
October 1. On the last business day of each Purchase Period (the "Purchase
Date"), the employee is deemed to have exercised the right to purchase as many
shares as his or her accumulated payroll deductions allow, at the purchase
price. The purchase price is 85 percent of the lesser of (a) the fair market
value of the stock on the first business day of the Offering, or (b) the fair
market value of the stock on the Purchase Date. An employee's right to acquire
Itron common stock under the Plan is not transferable and may not be exercised
after termination of employment.
The Company intends that the Plan qualify as an "employee stock purchase
plan" under Section 423 of the Internal Revenue Code. Section 423 allows an
employer to grant options to its employees to purchase company stock at a
stipulated price without having the employees realize taxable income at the time
the option is granted or when exercised. The basis of the stock received on
exercise of an option under this Plan is the exercise price paid for the stock.
The required holding period for favorable tax treatment upon disposition of the
Itron common stock acquired under the Plan is the later of two years after the
grant date or one year after the purchase date. When the stock is sold after
this holding period, the employee will realize ordinary income in an amount
equal to the lesser of (i) the excess of the fair market value of such stock at
the time of the disposition over the amount paid for the stock, or (ii) the
excess of the fair market value of the shares on the date they were acquired by
the employee over the
4
<PAGE>
amount paid for the stock. Any further gain is taxed at long-term capital gain
rates. If the stock is sold before the holding period expires, the employee will
realize ordinary income to the extent of the difference between the price
actually paid for the stock and the fair market value of the stock at the
purchase date, regardless of the price at which the stock is sold. If the sale
price is less than the fair market value of the stock at the purchase date, then
the employee will have a capital loss equal to such difference.
The Company may not take a deduction for the difference between the fair
market value of the stock and the purchase price paid for the stock by the
employee unless the employee disposes of the stock before the statutory holding
period expires.
The Compensation Committee of the Board of Directors is authorized to serve
as the Administrator of the Plan. Subject to the terms and conditions of the
Plan, the Administrator may set different Offering and Purchase Periods and,
subject to the maximum allowable discount described above, a different purchase
price for an Offering period. The closing price of a share of Itron common stock
on February 26, 1999, was $7.00, as reported by the Nasdaq National Market.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF THE
AMENDMENT OF THE COMPANY'S EMPLOYEE STOCK PURCHASE PLAN.
ITEM 3
RATIFICATION OF AUDITORS
Shareholders are asked to ratify the selection of Deloitte & Touche LLP as
independent auditors for the Company for the fiscal year ending December 31,
1999. Unless instructed otherwise, it is the intention of the persons named in
the accompanying Proxy to vote shares represented by properly executed Proxies
for ratification of the selection of Deloitte & Touche LLP as independent
auditors.
Deloitte & Touche LLP has audited the books and records of the Company for
the fiscal years ended December 31, 1996, 1997 and 1998. It is anticipated that
representatives of Deloitte & Touche LLP will be present at the Annual Meeting.
The representatives will have the opportunity to make a statement, if they so
desire, and are expected to be available to respond to appropriate questions
from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF DELOITTE &
TOUCHE LLP AS INDEPENDENT AUDITORS.
OTHER BUSINESS
The Board of Directors does not intend to present any business at the Annual
Meeting other than what is set forth in the accompanying Notice of Annual
Meeting of Shareholders and has no present knowledge that any others intend to
present business at the meeting. If, however, other matters requiring the vote
of the shareholders properly come before the Annual Meeting or any adjournment
or postponement thereof, the persons named in the accompanying proxy will have
discretionary authority to vote the proxies held by them in accordance with
their judgment as to such matters.
5
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following table sets forth certain information as to Itron's Chief
Executive Officer and each of the Company's five other most highly compensated
executive officers, including one former executive officer, for services
rendered in all capacities for the Company during the fiscal years ended
December 31, 1998, 1997 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION(1)
-----------------
ANNUAL COMPENSATION(1) SECURITIES
--------------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) OPTIONS # COMPENSATION(3)
- -------------------------------------------------- --------- --------- ----------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
Johnny M. Humphreys............................... 1998 $ 400,475 $ -- 100,000 $ 24,505
Chairman, President and Chief 1997 $ 378,706 $ 196,409 70,000 $ 24,339
Executive Officer 1996 $ 363,142 $ -- -- $ 14,958
Carl Robert Aron(4)............................... 1998 $ 315,000 $ 191,008 30,000 $ 911,768(5)
Former Executive Vice President and 1997 $ 315,588 $ 173,674 30,000 $ 13,051
Chief Strategist 1996 $ 299,986 $ -- 70,000 $ 56,778
Stuart Edward White............................... 1998 $ 289,495 $ -- 80,000 $ 4,800
Executive Vice President 1997 $ 210,392 $ 98,035 10,000 $ 10,000
1996 $ 181,538 $ -- -- $ 2,249
David G. Remington................................ 1998 $ 265,375 $ -- 70,000 $ 11,362
Vice President and 1997 $ 262,990 $ 130,772 40,000 $ 11,000
Chief Financial Officer 1996 $ 208,654 $ -- 45,000 $ 8,708
Russell E. Vanos.................................. 1998 $ 260,021(6) $ -- 60,000 $ 4,800
Vice President, Utility & Energy 1997 $ 267,306(6) $ 49,648 10,000 $ 4,750
Services Solutions 1996 $ 203,813(6) $ -- 10,000 $ 4,750
Michael J. O'Callaghan............................ 1998 $ 212,300 $ -- 52,000 $ 39,700
Vice President, Corporate Relationships 1997 $ 210,392 $ 101,657 12,000 $ 12,000
1996 $ 206,494 $ -- 17,500 $ 9,206
</TABLE>
- ------------------------------
(1) Executive officer compensation for 1998 was subject to the Company's
restructuring plan implemented in the third quarter of 1998, described in
"--Compensation Committee Report on Compensation--1998 Restructuring" and
"--Executive Incentive Compensation ("EIC Plan")" contained herein.
(2) Includes amounts paid under the Company's Executive Compensation Plan and
certain incentive bonuses. In addition, for Mr. Aron in 1998 includes bonus
paid pursuant to an Employment Agreement with Mr. Aron in connection with
the termination of his employment.
(3) For the year ended December 31, 1998 consists of matching contributions to a
401(k) savings plan ($4,800 for Messrs. Humphreys, Aron, White, Remington,
Vanos, and O'Callaghan) and matching contributions to a deferred
compensation plan ($19,705, $4,197, $6,562, and $28,506 for each of Messrs.
Humphreys, Aron, Remington, and O'Callaghan, respectively). Also includes
$7,225 and $6,394 of reimbursed medical and other expenses for Mr. Aron and
Mr. O'Callaghan, respectively.
(4) Mr. Aron was no longer an officer of the company at December 31, 1998.
(5) Includes $895,546 paid pursuant to an Employment Agreement with Mr. Aron in
connection with the termination of his employment.
(6) Includes $120,096, $130,551 and $73,813 paid to Mr. Vanos for commissions in
1998, 1997 and 1996, respectively.
6
<PAGE>
OPTION GRANTS
The following table sets forth certain information regarding options granted
during the year ended December 31, 1998 to the Company's executive officers for
whom compensation is reported in this Proxy Statement.
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------------------------
POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
TOTAL OPTIONS ANNUAL RATES OF
NUMBER OF GRANTED TO EXERCISE STOCK PRICE
OPTIONS EMPLOYEES IN PRICE EXPIRATION APPRECIATION FOR
NAME GRANTED(1) FISCAL YEAR(2) ($/SHARE) DATE(1) OPTION TERM(3)
- ------------------------------------------------------- ---------- -------------- --------- ---------- --------------------
5% 10%
-------- ----------
<S> <C> <C> <C> <C> <C> <C>
Johnny M. Humphreys.................................... 50,000 4.93% $15.34 5/05/08 $482,482 $1,222,703
50,000 4.93% $ 5.16 10/27/08 $162,138 $ 410,891
Carl Robert Aron....................................... 30,000 2.96% $15.34 5/05/08 $289,489 $ 733,622
Stuart Edward White.................................... 30,000 2.96% $15.34 5/05/08 $289,489 $ 733,622
50,000 4.93% $ 5.16 10/27/08 $162,138 $ 410,891
David G. Remington..................................... 20,000 1.97% $15.34 5/05/08 $192,993 $ 489,081
50,000 4.93% $ 5.16 10/27/08 $162,138 $ 410,891
Russell E. Vanos....................................... 20,000 1.97% $15.34 5/05/08 $192,993 $ 489,081
40,000 3.95% $ 5.16 10/27/08 $129,711 $ 328,713
Michael J. O'Callaghan................................. 12,000 1.18% $15.34 5/05/08 $115,796 $ 293,449
40,000 3.95% $ 5.16 10/27/08 $129,711 $ 328,713
</TABLE>
- ------------------------
(1) The options granted on May 5, 1998 vest on a four-year schedule, and options
granted on October 27, 1998 vest on a three-year schedule, with the options
becoming fully exercisable on May 5, 2002 and October 27, 2001,
respectively, provided the holder remains employed by the Company. Options
granted on October 27, 1998 were pursuant to the Company's 1998
restructuring measures and were an acceleration of expected option grants in
1999 and possibly 2000, as more fully set forth in "--Compensation Committee
Report on Compensation--Executive Incentive Compensation ("EIC
Plan")--Long-Term Incentives" contained herein. The exercise price of the
options is the fair market value of the Company's common stock on the date
of grant.
(2) Options issued to employees who are not executive officers in exchange for
cancellation of their existing options were not considered option grants for
purposes of this calculation.
(3) Future value of current year grants assuming appreciation of 5% and 10% per
year over the ten-year option period. The actual value realized may be
greater than or less than the potential realizable values set forth on the
table.
7
<PAGE>
OPTION EXERCISES AND YEAR-END VALUES
The following table sets forth certain information regarding options held as
of December 31, 1998 by each of the Company's executive officers for whom
compensation is reported in this Proxy Statement. None of such executive
officers exercised any options during the year ended December 31, 1998.
AGGREGATED 1998 FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
TOTAL NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
-------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------- ----------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Johnny M. Humphreys....................................... 17,500 152,500 -- $ 90,625
Carl Robert Aron.......................................... -- -- -- --
Stuart Edward White....................................... 2,500 87,500 -- $ 90,625
David G. Remington........................................ 40,000 115,000 -- $ 90,625
Russell E. Vanos.......................................... 35,082 83,752 -- $ 72,500
Michael J. O'Callaghan.................................... 53,416 68,084 -- $ 72,500
</TABLE>
- ------------------------
(1) Calculated based on a price of $6.97 per share (the closing price of the
Company's common stock on December 31, 1998 as reported by the Nasdaq
National Market), less the exercise price.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company's Board of Directors (the
"Committee") annually reviews and recommends to the full Board compensation
levels for executive officers of the Company. The Committee is comprised of
Board members who are not employees of the Company.
The Committee's primary objective in establishing compensation opportunities
for the Company's executive officers is to support the Company's goal of
maximizing the value of shareholders' interests in the Company. To achieve this
objective, the Committee believes it is critical to:
- Pay competitively to attract, retain and motivate a highly competent
executive team;
- Provide incentive opportunities that link corporate performance and
executive pay and pay executives competitive levels of incentive
compensation when corporate financial performance expectations are
achieved; and
- Align executives' financial interests with the creation of shareholder
value by providing long-term incentives in the form of options to acquire
common stock.
The Committee makes recommendations to the Board of Directors pertaining to
the Company's executive compensation plans which promote the objectives detailed
above. The Committee periodically engages outside consultants to determine
approximate compensation levels among executives in comparable jobs in
comparable high-tech companies. The Committee believes that the Company's
current compensation plans support the Company's business mission and contribute
to the Company's financial success. Section 162(m) of the Internal Revenue Code
limits the tax deduction available to public companies for compensation paid to
individual executive officers to $1 million in any taxable year, unless certain
performance, disclosure and shareholder approval requirements are met. When
consistent with its compensation philosophy, the Committee intends to structure
its compensation programs so that compensation expense is deductible by the
Company for tax purposes.
8
<PAGE>
BASE SALARY
The Committee annually reviews each executive officer's base salary. The
factors that the Committee considers in making recommendations regarding base
salary include: levels of pay among executives in similar jobs within similar
high-tech companies, level of responsibility, prior experience, breadth of
knowledge, company performance and job performance. Base salaries are targeted
at the 50-75th percentile of the market. The market is defined as similar
high-tech companies, nationwide, the annual revenues of which are approximately
$250 million and which have similar executive level jobs. These companies are
not necessarily the same as the companies included in the Company's peer
reference group used in the performance graph. In general, in 1998, base
salaries for the executive officers are near the 75th percentile of the market.
With respect to the Chief Executive Officer's compensation, in January 1998
the Committee determined that a $415,000 base salary for Mr. Humphreys was
appropriate and consistent with the Company's overall salary plan. Subsequently,
however, in light of the Company's financial performance, Mr. Humphreys' base
salary, along with other members of executive management, was decreased. For
more information on the executive salary decreases see "1998 Restructuring"
below. The Committee believes that it is important that Mr. Humphreys' base
salary be competitive with those of other chief executive officers with similar
responsibilities and broad leadership experience in the market defined above
because the Committee recognizes and highly values Mr. Humphreys' visionary
leadership, breadth of knowledge, and business and utility experience, all of
which have contributed significantly to the long-term success of the Company.
1998 RESTRUCTURING
In early 1998 the Committee continued its practice of conducting annual
reviews of each executive officer's base salary and making individual
adjustments as warranted. Subsequently, however, in the third quarter of 1998,
in response to declining financial performance, the Company implemented a
restructuring plan which included a reduction of base and incentive cash
compensation for executive officers. Included as part of the restructuring
measures was a 10% reduction in base compensation for executive officers,
retroactive to July 1, 1998. This reduction consisted of a 7% reduction in base
salary and a 3% reduction in compensation through a reduction of benefits
provided under the executive flex benefit plan which reimburses executive
officers for out-of-pocket expenses relating to medical, legal and other
qualified expenses. Of the 3% reduction, 1 1/2% was attributable to the second
half of 1998, with the remaining 1 1/2% relating to 1999. The 7% reduction in
base salary will remain in effect until at least June 30, 1999. Additionally,
pursuant to the restructuring effort, the Company does not intend to pay cash
bonuses in the first half of 1999, even if the Company is meeting its
performance goals. If performance targets are met during the second half of
1999, the Company intends to make bonus payments to management in accordance
with target achievement.
EXECUTIVE INCENTIVE COMPENSATION PLAN ("EIC PLAN")
The EIC plan provides the opportunity for executive officers to earn both
annual and long-term incentives in addition to their base salaries. The
Committee believes that having as much as or more than 50% of an executive
officer's total compensation at risk fosters achievement of the Company's
short-term and long-term financial performance goals.
ANNUAL INCENTIVES: The Compensation Committee each year establishes annual
financial goals which relate to one or more indicators of corporate financial
performance and targets amounts as a specified percentage of the executive
officer's salary. For 1998, such percentages ranged from 35% to 50% of base
salary. Incentive awards, which are made in cash, are paid to participating
executives under the EIC Plan only when the established financial goals are
achieved. Depending on the extent to which corporate goals are achieved, an
executive officer may be entitled to receive from zero up to 150% of such
targeted award.
9
<PAGE>
For 1998, the annual incentive award opportunity was contingent upon attaining
an established level of net profit after tax. This goal was not achieved during
1998 and no incentive compensation was earned. Annual incentive payments and any
special incentive payments are reflected in the Summary Compensation Table under
the column entitled "Bonus."
LONG-TERM INCENTIVES: Long-term incentives consist of stock options. The
number of stock options granted is determined by the recipient's position and
amount of options currently held, and is intended to recognize different levels
of responsibility. All options are granted with an option exercise price equal
to the fair market value of the Company's common stock on the date of grant.
This closely links a significant portion of executive compensation to benefits
produced for all shareholders. The Compensation Committee approved normal stock
option grants for key employees, including executive officers, based on the
above criteria during its regular meeting in May 1998. These options are shown
in the "Option Grants in 1998" table in this Proxy.
In addition, in October 1998, the Compensation Committee awarded additional
options to each of the Company's executive officers. These additional option
grants represented an acceleration of grants the Compensation Committee expected
to make to the Company's executive officers in 1999 and 2000. The Committee felt
it was important to accelerate these option grants because substantially all of
the options then held by executive officers were not in the money and were not
providing any meaningful incentive or retention value. The voluntary cash
compensation reduction taken by the Company's executive officers as part of the
1998 restructuring measures also contributed to the Compensation Committee's
decision to approve the acceleration of the option grants.
Members of the Compensation Committee
PAUL A. REDMOND MICHAEL B. BRACY MARY ANN PETERS
10
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return to shareholders on
the Company's common stock with the cumulative total return of the Nasdaq U.S.
Stock Market, Nasdaq Computer Manufacturers Index and the Company's peer group
for the period beginning December 31, 1993 and ending December 31, 1998, the end
of the Company's latest fiscal year.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ITRON,
INC. NASDAQ U.S. STOCK MARKET PEER GROUP NASDAQ COMPUTER MANUFACTURERS INDEX
<S> <C> <C> <C> <C>
31-Dec-93 $100 $100 $100 $100
30-Dec-94 $115 $98 $95 $110
29-Dec-95 $188 $139 $130 $173
31-Dec-96 $99 $170 $77 $232
31-Dec-97 $100 $209 $98 $281
31-Dec-98 $40 $293 $90 $610
</TABLE>
Until this year, the Company had been using the Nasdaq Computer
Manufacturers Index as a comparison index. However, due to the Company's unique
mix of products and services, the Company no longer feels that this index nor
any other published industry or business index, is appropriate for comparing
shareholder return. For this reason, the Company has selected a peer group
comprised of companies that provide data collection, analysis, and management
solutions, including wireless, wired, and handheld technologies. Many of these
companies are used by the investment community and others for comparative
purposes, and this combination has been selected to best represent the Company's
unique mix of products and services. The peer group includes the following
companies: Aerial Communications, Inc., CellNet Data Systems, Inc., Corsair
Communications, Kronos, Inc., LCC International, Inc., Lightbridge, Inc.,
Metrocall, Inc., Metricom, Inc., Omnipoint Corp., PageMart Wireless, Inc.,
Tekelec, Telxon Corp., T-Netix, Inc., and Trimble Navigations, Ltd.
The above presentation assumes $100 invested on December 31, 1993, in Itron
common stock, the Company's peer group, the Nasdaq Computer Manufacturers Index
and the Nasdaq U.S. Stock Market, with all dividends reinvested. With respect to
companies in the peer group, the returns of each such company have been weighted
to reflect relative stock market capitalization. Stock prices shown above for
the Company's common stock are historical and not necessarily indicative of
future price performance.
11
<PAGE>
SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "Commission").
Officers, directors and greater than 10% shareholders are required by Commission
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms received by the
Company, or written representations from certain reporting persons, the Company
believes that during the 1998 fiscal year all filing requirements applicable to
its officers, directors and beneficial owners of greater than 10% were complied
with by such persons.
12
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth as of February 28, 1999 certain information
with respect to the beneficial ownership of the Company's common stock by (i)
each director of the Company, (ii) each of the Company's executive officers for
whom compensation is reported in this Proxy Statement, (iii) all directors and
executive officers of the Company as a group, and (iv) each person known by the
Company to own beneficially more than 5% of the common stock. Except as
otherwise noted, the Company believes that the beneficial owners of the common
stock listed below, based on information furnished by such owners, have sole
voting and investment power with respect to such shares.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
-----------------------
NAME NUMBER PERCENT
- -------------------------------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS:
Johnny M. Humphreys(1)...................................................................... 228,813 1.55%
Carl Robert Aron(2)......................................................................... -- --
Stuart Edward White(3)...................................................................... 520,534 3.53%
David G. Remington(4)....................................................................... 56,956 *
Russell E. Vanos(5)......................................................................... 44,333 *
Michael J. O'Callaghan(6)................................................................... 57,788 *
Michael B. Bracy(7)......................................................................... 29,000 *
Paul A. Redmond(8).......................................................................... 26,000 *
Ted C. DeMerritt(9)......................................................................... 20,150 *
Graham M. Wilson(10)........................................................................ 19,000 *
Jon E. Eliassen(11)......................................................................... 18,000 *
Mary Ann Peters(12)......................................................................... 16,000 *
All directors and executive officers as a group (16 persons)(7)(8)(9)(10)(11)(12)(13)....... 1,302,889 8.83%
GREATER THAN 5% SHAREHOLDERS:
Kopp Investment Advisors, Inc.(14).......................................................... 2,310,732 15.65%
6600 France Ave. South, Suite 672
Edina, MN 55435
Franklin Resources Inc.(15)................................................................. 1,775,243 12.03%
777 Mariners Island Blvd.
San Mateo, CA 94404
Reliant Energy(16).......................................................................... 1,502,547 10.18%
P.O. Box 2628
Houston, TX 77252
</TABLE>
- ------------------------
* Less than 1%.
(1) Includes 35,000 shares issuable upon exercise of outstanding options that
are exercisable by Mr. Humphreys within 60 days at a weighted average
exercise price of $21.72 per share. Also includes 3,124 shares of common
stock held for Mr. Humphreys' individual account under the Company's 401(k)
employee savings plan. Also includes 300 shares held by Mr. Humphreys as
custodian under UGMA for his granddaughter and 300 shares held by Mr.
Humphreys as custodian under UGMA for his grandson.
(2) Mr. Aron was no longer an executive officer of the Company as of December
31, 1998.
(3) Includes 5,000 shares issuable upon exercise of outstanding options that
are exercisable by Mr. White within 60 days at a weighted average exercise
price of $21.06 per share. Also includes 534 shares of
13
<PAGE>
Common Stock held for Mr. White's individual account under the Company's
401(k) employee savings plan.
(4) Includes 50,000 shares issuable upon exercise of outstanding options that
are exercisable by Mr. Remington within 60 days at a weighted average
exercise price of $19.34 per share. Also includes 456 shares of Common
Stock held for Mr. Remington's individual account under the Company's
401(k) employee savings plan.
(5) Includes 41,332 shares issuable upon exercise of outstanding options that
are exercisable by Mr. Vanos within 60 days at a weighted average exercise
price of $22.17 per share. Also includes 2,969 shares of common stock held
for Mr. Vanos' individual account under the Company's 401(k) employee
savings plan.
(6) Includes 56,416 shares issuable upon exercise of outstanding options that
are exercisable by Mr. O'Callaghan within 60 days at a weighted average
exercise price of $15.10 per share. Also includes 1,372 shares of Common
Stock held for Mr. O'Callaghan's individual account under the Company's
401(k) employee savings plan.
(7) Includes 19,000 shares issuable to Mr. Bracy upon exercise of outstanding
options at a weighted average exercise price of $25.50 per share.
(8) Includes 21,500 shares issuable to Mr. Redmond upon exercise of outstanding
options at a weighted average exercise price of $22.87 per share.
(9) Includes 18,000 shares issuable to Mr. DeMerritt upon exercise of
outstanding options at a weighted average exercise price of $26.08 per
share.
(10) Includes 19,000 shares issuable to Mr. Wilson upon exercise of outstanding
options at a weighted average exercise price of $25.50 per share. Excludes
608,340 shares held by Centra, as to which Mr. Wilson disclaims beneficial
ownership. Mr. Wilson is a director of Centra Gas Inc.
(11) Includes 18,000 shares issuable to Mr. Eliassen upon exercise of
outstanding options at a weighted average exercise price of $26.17 per
share. Excludes 291,788 shares held by Avista Corporation, as to which Mr.
Eliassen disclaims beneficial ownership. Mr. Eliassen is an officer of
Avista Corporation.
(12) Includes 16,000 shares issuable to Ms. Peters upon exercise of outstanding
options at a weighted average exercise price of $27.22 per share.
(13) Includes 439,780 shares issuable upon exercise of outstanding options that
are held by executive officers and are exercisable within 60 days. Also
includes 16,038 shares of Common Stock held for such officers' individual
accounts under the Company's 401(k) employee savings plan and 62 shares
held for such officers' individual accounts under the Company's employee
stock ownership plan.
(14) Information is based on a Schedule 13G dated February 1, 1999 filed by
Kopp Investment Advisors, Inc. and LeRoy Kopp with the Securities and
Exchange Commission. Such filing indicates that Kopp Investment Advisors,
Inc. has shared investment discretion over 1,810,732 of these shares, has
sole investment discretion over 380,000 of these shares, and has sole
voting power over 647,500 of these shares. In addition, such filing
indicates that Mr. Kopp has sole investment and voting power over 120,000
of these shares.
(15) Information is based on a Schedule 13G dated January 27, 1999, filed by
Franklin Resources, Inc., Franklin Advisers, Inc., Charles B. Johnson and
Rupert H. Johnson, Jr. with the Securities and Exchange Commission.
Includes 453,543 shares of Common Stock that are issuable upon the
conversion of 10,750,000 of the Company's Convertible Subordinated
Debentures.
(16) Information is based on a Schedule 13G dated August 6, 1997 filed by
Houston Industries Incorporated (d/b/a Reliant Energy, Incorporated),
Reliant Energy Resources Corp. (formerly NorAm Energy Corp.), and Arkla
Finance Corporation with the Securities and Exchange Commission. Such
filing indicates that these three entities share investment and voting
power as to these shares.
14
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CHANGE OF CONTROL AGREEMENTS
The Company has entered into Change of Control Agreements with its executive
officers to provide compensation and benefits in the event of a change of
control of the Company. Pursuant to such agreements, executive officers agree to
remain employed by the Company on an annual basis and are compensated by an
annual salary and bonus as determined by the Compensation Committee of the Board
of Directors. In the event the employment relationship is terminated by the
Company for other than cause or by the executive officer for good reason within
a specified period following a change of control, (three years for Messrs.
Humphreys, Remington and White, and two years or one year for other executive
officers, such period of time being the "Change of Control Period"), the
executive officer will receive any salary or bonus due to such executive
officer, group insurance benefits and severance pay equal to the executive's
annual base salary and bonus for the fiscal year in which the termination
occurs, multiplied by the Change of Control Period. Severance amounts are
partially offset in the event the executive officer realizes a benefit from the
acceleration of stock options in connection with the change of control. The
executive officers will also receive a bonus equal to their annual salary plus
annual bonus if their employment continues for the full one-year period
following a change of control.
EMPLOYMENT AGREEMENTS
Johnny M. Humphreys, President and Chief Executive Officer of the Company,
is party to an Employment Agreement with the Company dated February 9, 1987. The
only remaining operative provision of the Employment Agreement, which may be
terminated by either party at any time, provides that if termination is by the
Company, it is obligated to pay Mr. Humphreys' base salary and benefits for a
six-month period.
David G. Remington, who joined the Company as Vice President and Chief
Financial Officer in February 1996, is party to an Employment Agreement with the
Company. The Agreement provides for an initial base salary of $250,000 which may
be increased annually by the Chief Executive Officer, subject to the approval of
the Compensation Committee. The Agreement also provides for annual incentive
bonus payments. The Agreement may be terminated by either party under certain
conditions. If termination is by the Company for other than cause, the Company
is required to pay Mr. Remington an amount equal to his then current annual base
salary. The Agreement also provided for an option grant of 45,000 shares of the
Company's common stock at the fair market value of the Company's common stock on
the date of the grant. These options become vested ratably over a three-year
period. The Agreement contains certain vesting acceleration clauses for
termination, death or disability.
OTHER RELATED PARTY AGREEMENTS
In July 1995, the Company purchased its principal office and manufacturing
facilities in Spokane, Washington, from Pentzer Development Corporation. Pentzer
Development Corporation is a subsidiary of Avista Corporation. The Company has a
member on its Board of Directors who is an employee of Avista Corporation. Cash
paid at closing was $2.4 million. The Company has a long-term note payable to
Avista for $5.6 million related to the purchase. The principal balance of the
note bears interest at a rate of 9%. Monthly payments of principal and interest
are due through maturity in August 2015.
In May 1996, the Company purchased an additional facility from Pentzer
Development Corporation for some of its manufacturing and engineering
operations. Of the total purchase price, $210,000 was paid at closing with the
remaining $840,000 due under a note payable. The note payable bears
interest-only payments at 7.5% through June 1, 1999 and then principal and
interest payments at 8.5% through maturity on June 1, 2019.
15
<PAGE>
In February 1998, the Company purchased International Mobile Systems S.A.
("IMS"), which provides integrated solutions for mobile computing. The purchase
price of $500,000 is payable in cash over a period of five years. Mr. Robert
Frati, Vice President of Itron, and his spouse held approximately 64% of the
outstanding shares of IMS at the time of purchase.
ANNUAL REPORT AND FINANCIAL STATEMENTS
A copy of the Company's 1998 Annual Report to Shareholders, including
financial statements, accompanies this Proxy Statement.
ADDITIONAL INFORMATION
SHAREHOLDER PROPOSALS
Under the federal proxy solicitation rules, proposals submitted by a
shareholder for inclusion in the Company's proxy materials for the 2000 Annual
Meeting must be received by the Company by December 1, 1999.
In addition, the Company's Bylaws include advance notice provisions whereby
shareholders desiring to bring business before a shareholders' meeting must do
so in accordance with the terms of the advance notice provisions. These advance
notice provisions require that, among other things, shareholders give timely
written notice to the Company's Secretary regarding such business. To be timely,
the notice must be received at least 90 days prior to the anniversary date of
the prior year's annual meeting. Accordingly, a shareholder who intends to
present a proposal at the 2000 Annual Meeting without inclusion of the proposal
in the Company's proxy materials must provide written notice of the business
they wish to propose to the Company's Secretary not later than February 5, 2000.
The Company reserves the right to reject, rule out of order, or take other
appropriate action with respect to any proposal that does not comply with these
and other applicable requirements.
Such proposals should be directed to the Corporate Secretary, Itron, Inc.,
P.O. Box 15288, Spokane, Washington 99215-5288.
PROXY SOLICITATION COSTS
The Company has retained Corporate Investor Communications, Inc., 111
Commerce Road, Carlstadt, New Jersey, to aid in the solicitation of Proxies. It
is estimated that the cost of these services will be approximately $4,500 plus
expenses. The cost of soliciting Proxies will be borne by the Company. Proxies
will be solicited by personal interview, mail and telephone. In addition, the
Company may reimburse brokerage firms and other persons representing beneficial
owners of shares of common stock for their expenses in forwarding solicitation
materials to such beneficial owners. Proxies may also be solicited by certain of
the Company's directors, officers and regular employees, without additional
compensation, personally or by telephone.
------------------------
A copy of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, as filed with the Securities and Exchange Commission, will be
furnished without charge to beneficial shareholders or shareholders of record on
February 26, 1999, upon request to Investor Relations at the Company's principal
executive offices.
16
<PAGE>
APPENDIX A
ITRON, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
As amended by Board on February 23, 1999
SECTION 1. PURPOSE
The purposes of the Itron, Inc. 1996 Employee Stock Purchase Plan (the
"Plan") are to (a) assist employees of Itron, Inc., a Washington corporation
(the "Company"), and its parent and subsidiary corporations in acquiring a stock
ownership interest in the Company pursuant to a plan that is intended to qualify
as an "employee stock purchase plan" under Section 423 of the Internal Revenue
Code of 1986, as amended (the "Code"), and (b) help employees provide for their
future security and to encourage them to remain in the employment of the Company
and its subsidiary corporations.
SECTION 2. DEFINITIONS
For purposes of the Plan, the following terms shall be defined as set forth
below.
"BOARD" means the Board of Directors of the Company.
"CHANGE NOTICE DATE" has the meaning set forth in Section 9.2.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" means Itron, Inc., a Washington corporation.
"DESIGNATED CORPORATION" has the meaning set forth under the definition of
"Eligible Employee" in this Section 2.
"ELIGIBLE COMPENSATION" means all regular cash compensation, including
overtime, cash bonuses and commissions. Regular cash compensation does not
include severance pay, hiring and relocation bonuses, pay in lieu of vacations,
sick leave or any other special payments.
"ELIGIBLE EMPLOYEE" means any employee of the Company (or any Parent
Corporation or Subsidiary Corporation designated by the Plan Administrator (a
"Designated Corporation")) who is in the employ of the Company (or any such
Designated Corporation) on one or more Offering Dates and who meets the
following criteria:
(a) the employee does not, immediately after the Option is granted, own
stock (as defined by Code Sections 423(b)(3) and 424(d)) possessing 5% or
more of the total combined voting power or value of all classes of stock
of the Company or of a Parent Corporation or Subsidiary Corporation of
the Company;
(b) the employee's customary employment is not 20 hours or fewer per week;
(c) the employee's customary employment is for more than five months in any
calendar year; and
(d) the employee has been employed for at least three months.
If the Company permits any employee of a Designated Corporation to
participate in the Plan, then all employees of that Designated Corporation who
meet the requirements of this paragraph shall also be considered Eligible
Employees.
"ESPP BROKER" has the meaning set forth in Section 10.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"OFFERING" has the meaning set forth in Section 5.1.
A-1
<PAGE>
"OFFERING DATE" means the first day of an Offering.
"OFFERING PERIOD" has the meaning set forth in Section 5.1.
"OPTION" means an option granted under the Plan to an Eligible Employee to
purchase shares of Stock.
"PARENT CORPORATION" means any corporation, other than the Company, in an
unbroken chain of corporations ending with the Company if, at the time of the
granting of the Option, each of the corporations, other than the Company, owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
"PARTICIPANT" means any Eligible Employee who has elected to participate in
an Offering in accordance with the procedures set forth in Section 6.1 and who
has not withdrawn from the Offering or whose participation in the Offering is
not terminated.
"PLAN" means the Itron, Inc. 1996 Employee Stock Purchase Plan.
"PLAN ADMINISTRATOR" means any committee of the Board designated to
administer the Plan under Section 3.1.
"PURCHASE DATE" means the last day of each Purchase Period.
"PURCHASE PERIOD" has the meaning set forth in Section 5.2.
"PURCHASE PRICE" has the meaning set forth in Section 8.
"STOCK" means the Common Stock, no par value, of the Company.
"SUBSCRIPTION DATE" means the last regular business day prior to an Offering
Date.
"SUBSIDIARY CORPORATION" means any corporation, other than the Company, in
an unbroken chain of corporations beginning with the Company if, at the time of
the granting of the Option, each of the corporations, other than the last
corporation in the unbroken chain, owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
SECTION 3. ADMINISTRATION
3.1 PLAN ADMINISTRATOR
The Plan shall be administered by the Compensation Committee of the Board,
except to the extent that the Board appoints another committee or committees
(which term includes subcommittees) consisting of one or more members of the
Board to administer the Plan. Committee members shall serve for such terms as
the Board may determine, subject to removal by the Board at any time. The
administration of the Plan with respect to officers and directors of the Company
who are subject to Section 16 of the Exchange Act with respect to securities of
the Company shall comply with the requirements of Rule 16b-3 under Section 16(b)
of the Exchange Act as then in effect.
3.2 ADMINISTRATION AND INTERPRETATION BY THE PLAN ADMINISTRATOR
Subject to the provisions of the Plan, the Plan Administrator shall have
exclusive authority, in its discretion, to determine all matters relating to
Options granted under the Plan, including all terms, conditions, restrictions
and limitations of Options; provided, however, that all Participants granted
Options pursuant to the Plan shall have the same rights and privileges within
the meaning of Code Section 423(b)(5). The Plan Administrator shall also have
exclusive authority to interpret the Plan and may from time to time adopt, and
change, rules and regulations of general application for the Plan's
administration. The Plan Administrator's interpretation of the Plan and its
rules and regulations, and all actions taken and determinations made by the Plan
Administrator pursuant to the Plan, shall be conclusive and binding on
A-2
<PAGE>
all parties involved or affected. The Plan Administrator may delegate
administrative duties to such of the Company's officers or employees as it so
determines.
SECTION 4. STOCK SUBJECT TO PLAN
Subject to adjustment from time to time as provided in Section 21, a maximum
of 430,000 shares of Stock shall be available for issuance under the Plan.
Shares issued under the Plan shall be drawn from authorized and unissued shares
or shares now held or subsequently acquired by the Company. Any shares of Stock
that have been made subject to an Option that cease to be subject to the Option
(other than by reason of exercise of the Option), including, without limitation,
in connection with the cancellation or termination of the Option shall again be
available for issuance in connection with future grants of Options under the
Plan.
SECTION 5. OFFERING DATES
5.1 OFFERING PERIODS
Except as otherwise set forth below, the Plan shall be implemented by a
series of Offerings (each, an "Offering"). Offerings shall commence on January 1
and July 1 of each year and end on the next June 30 and December 31,
respectively, occurring thereafter. Notwithstanding the foregoing, the Plan
Administrator may establish (a) a different term for one or more Offerings and
(b) different commencing and ending dates for such Offerings; provided, however,
that an Offering Period (the "Offering Period") may not exceed five years; and
provided further that if the Purchase Price may be less than 85% of the fair
market value of the Stock on the Purchase Date, the Offering Period may not
exceed 27 months. An employee who becomes eligible to participate in the Plan
after an Offering Period has commenced shall not be eligible to participate in
such Offering but may participate in any subsequent Offering, provided that such
employee is still an Eligible Employee as of the commencement of any such
subsequent Offering. Eligible Employees may not participate in more than one
Offering at a time. In the event the first or the last day of an Offering Period
is not a regular business day, then the first day of the Offering Period shall
be deemed to be the next regular business day and the last day of the Offering
Period shall be deemed to be the last preceding regular business day.
5.2 PURCHASE PERIODS
Each Offering Period shall consist of two consecutive Purchase Periods
(each, a "Purchase Period"). The last day of each Purchase Period shall be the
Purchase Date for such Purchase Period. Purchase Periods commencing on January
1, April 1, July 1 and October 1 shall end on the next March 31, June 30,
September 30 and December 31, respectively. Notwithstanding the foregoing, the
Plan Administrator may establish (a) a different term for one or more Purchase
Periods and (b) different commencing dates and Purchase Dates for any such
Purchase Period. In the event the first or last day of a Purchase Period is not
a regular business day, then the first day of the Purchase Period shall be
deemed to be the next regular business day and the last day of the Purchase
Period shall be deemed to be the last preceding regular business day.
SECTION 6. PARTICIPATION IN THE PLAN
6.1 INITIAL PARTICIPATION
An Eligible Employee shall become a Participant on the first Offering Date
after satisfying the eligibility requirements and delivering to the Company's
payroll office not later than the last business day before such Offering Date
(the "Subscription Date") a subscription agreement indicating the Eligible
Employee's election to participate in the Plan and authorizing payroll
deductions. An Eligible Employee who does not deliver a subscription agreement
to the Company's payroll office on or before the Subscription Date shall not
participate in the Plan for that Offering Period or for any subsequent Offering
A-3
<PAGE>
Period, unless such Eligible Employee subsequently enrolls in the Plan by filing
a subscription agreement with the Company by the Subscription Date for such
subsequent Offering Period. The Plan Administrator may, from time to time,
change the Subscription Date as deemed advisable by the Plan Administrator in
its sole discretion for the proper administration of the Plan.
6.2 CONTINUED PARTICIPATION
A Participant shall automatically participate in the next Offering Period
until such time as such Participant withdraws from the Plan pursuant to Section
11.2 or terminates employment as provided in Section 13. If a Participant
withdraws from an Offering pursuant to Section 11.1, the Participant is not
required to file any additional subscription agreements for the next subsequent
Offering in order to continue participation in the Plan. If a Participant is
automatically withdrawn from an Offering at the end of a Purchase Period
pursuant to Section 12, then the Participant shall automatically participate in
the Offering Period commencing on the next regular business day.
SECTION 7. LIMITATIONS ON RIGHT TO PURCHASE SHARES
7.1 $25,000 LIMITATION
No Participant shall be entitled to purchase Stock under the Plan (or any
other employee stock purchase plan that is intended to meet the requirements of
Code Section 423 sponsored by the Company, a Parent Corporation or a Subsidiary
Corporation) at a rate that exceeds $25,000 in fair market value, determined as
of the Offering Date for each Offering Period (or such other limit as may be
imposed by the Code), for each calendar year in which a Participant participates
in the Plan (or any other employee stock purchase plan described in this Section
7.1).
7.2 PRO RATA ALLOCATION
In the event the number of shares of Stock that might be purchased by all
Participants in the Plan exceeds the number of shares of Stock available in the
Plan, the Plan Administrator shall make a pro rata allocation of the remaining
shares of Stock in as uniform a manner as shall be practicable and as the Plan
Administrator shall determine to be equitable. Fractional shares may be issued
under the Plan only to the extent permitted by the Board or the Plan
Administrator.
SECTION 8. PURCHASE PRICE
The purchase price (the "Purchase Price") at which Stock may be acquired in
an Offering pursuant to the exercise of all or any portion of an Option granted
under the Plan shall be 85% of the lesser of (a) the fair market value of the
Stock on the Offering Date of such Offering and (b) the fair market value of the
Stock on the Purchase Date. Notwithstanding the foregoing, the Plan
Administrator may establish a different Purchase Price for any Offering, which
shall not be less than the Purchase Price set forth in the preceding sentence.
The fair market value of the Stock on the Offering Date or on the Purchase Date
shall be the closing price of the Stock as reported by the Nasdaq National
Market (or any national stock exchange (an "exchange") on which the Stock is at
the time listed or admitted to trading) for a single trading day. If no sales of
the Stock were made on the Nasdaq National Market (or an exchange) on the
transaction date, fair market value shall mean the closing price of a share of
the Stock as reported for the next preceding day on which sales of the Stock
were made on the Nasdaq National Market (or an exchange).
A-4
<PAGE>
SECTION 9. PAYMENT OF PURCHASE PRICE
9.1 GENERAL RULES
Stock that is acquired pursuant to the exercise of all or any portion of an
Option may be paid for only by means of payroll deductions from the
Participant's Eligible Compensation. Except as set forth in this Section 9, the
amount of compensation to be withheld from a Participant's Eligible Compensation
during each pay period shall be determined by the Participant's subscription
agreement.
9.2 CHANGE NOTICES
During an Offering Period, a Participant may elect to decrease the amount
withheld from his or her compensation by filing an amended subscription
agreement with the Company's payroll office on or before the seventh day prior
to the end of the pay period for which such election is to be effective (the
"Change Notice Date"); provided, however, that the Plan Administrator may change
such Change Notice Date from time to time.
9.3 PERCENT WITHHELD
The amount of payroll withholding with respect to the Plan for any
Participant during any pay period shall be at least 1% of the Participant's
Eligible Compensation for such pay period, but shall not exceed 10% of the
Participant's Eligible Compensation for such pay period. Amounts shall be
withheld in only whole percentages.
9.4 PAYROLL DEDUCTIONS
Payroll deductions shall commence on the first payday following the Offering
Date and shall continue to the end of the Offering Period unless sooner altered
or terminated as provided in the Plan.
9.5 MEMORANDUM ACCOUNTS
Individual accounts shall be maintained for each Participant for memorandum
purposes only. All payroll deductions from a Participant's compensation shall be
credited to such account, but shall be deposited with the general funds of the
Company. All payroll deductions received or held by the Company may be used by
the Company for any corporate purpose.
9.6 NO INTEREST
Interest shall not be paid on sums withheld from a Participant's
compensation.
9.7 ACQUISITION OF STOCK
On each Purchase Date of an Offering Period, each Participant shall
automatically acquire, pursuant to the exercise of the Participant's Option, the
number of whole shares of Stock arrived at by dividing the total amount of the
Participant's accumulated payroll deductions for the Purchase Period by the
Purchase Price; provided, however, that in no event shall the number of shares
of Stock purchased by the Participant exceed the number of shares of Stock
subject to the Participant's Option. Fractional shares may be issued under the
Plan only to the extent permitted by the Board or the Plan Administrator.
9.8 REFUND OF EXCESS AMOUNTS
Any cash balance remaining in the Participant's account shall be refunded to
the Participant as soon as practical after the Purchase Date. In the event the
cash to be returned to a Participant pursuant to the preceding sentence is in an
amount less than the amount necessary to purchase a whole share of Stock, and
the Board or the Plan Administrator has determined that fractional shares may
not be issued, the Plan
A-5
<PAGE>
Administrator may establish procedures whereby such cash is maintained in the
Participant's account and applied to the purchase of Stock in the subsequent
Purchase Period or Offering Period.
9.9 WITHHOLDING OBLIGATIONS
At the time the Option is exercised, in whole or in part, or at the time
some or all of the Stock is disposed of, the Participant shall make adequate
provision for federal and state withholding obligations of the Company, if any,
that arise upon exercise of the Option or upon disposition of the Stock. The
Company may, but shall not be obligated to, withhold from the Participant's
compensation the amount necessary to meet such withholding obligations.
9.10 TERMINATION OF PARTICIPATION
No Stock shall be purchased on behalf of a Participant on a Purchase Date
whose participation in the Offering or the Plan has terminated on or before such
Purchase Date.
9.11 PROCEDURAL MATTERS
The Plan Administrator may, from time to time, establish (a) limitations on
the frequency and/or number of changes in the amount withheld during an
Offering, (b) an exchange ratio applicable to amounts withheld in a currency
other than U.S. dollars, (c) payroll withholding in excess of the amount
designated by a Participant in order to adjust for delays or mistakes in the
Company's processing of properly completed withholding elections, and (d) such
other limitations or procedures as deemed advisable by the Plan Administrator in
the Plan Administrator's sole discretion that are consistent with the Plan and
in accordance with the requirements of Code Section 423.
9.12 LEAVES OF ABSENCE
During leaves of absence approved by the Company and meeting the
requirements of Treasury Regulations Section 1.421-7(h)(2), a Participant may
continue participation in the Plan by delivering cash payments to the Company's
payroll office on the Participant's normal paydays equal to the amount of his or
her payroll deduction under the Plan had the Participant not taken a leave of
absence.
SECTION 10. EVIDENCE OF STOCK OWNERSHIP
Promptly following each Purchase Date, the number of shares of Stock
purchased by each Participant shall be deposited into an account established in
the Participant's name at a stock brokerage or other financial services firm
designated or approved by the Plan Administrator (the "ESPP Broker"). A
Participant shall be free to undertake a disposition of the shares of Stock in
his or her account at any time, but, in the absence of such a disposition, the
shares of Stock must remain in the Participant's account at the ESPP Broker
until the holding period set forth in Code Section 423(a) has been satisfied.
With respect to shares of Stock for which the Code Section 423(a) holding
periods have been satisfied, the Participant may move those shares of Stock to
another brokerage account of the Participant's choosing or request that a stock
certificate be issued and delivered to him or her. A Participant who is not
subject to payment of U.S. income taxes may move his or her shares of Stock to
another brokerage account of his or her choosing or request that a stock
certificate be delivered to him or her at any time, without regard to the Code
Section 423(a) holding period.
SECTION 11. VOLUNTARY WITHDRAWAL
11.1 WITHDRAWAL FROM AN OFFERING
A Participant may withdraw from an Offering by signing and delivering to the
Company's payroll office a written notice of withdrawal on a form provided by
the Plan Administrator for such purpose. Such
A-6
<PAGE>
withdrawal may be elected at any time prior to the end of an Offering Period;
provided, however, that if a Participant withdraws after the Purchase Date for a
Purchase Period of an Offering, the withdrawal shall not affect Stock acquired
by the Participant in the earlier Purchase Periods. Unless otherwise indicated,
withdrawal from an Offering shall not result in a withdrawal from the Plan or
any succeeding Offering therein. A Participant is prohibited from again
participating in the same Offering at any time upon withdrawal from such
Offering. The Company may, from time to time, impose a requirement that the
notice of withdrawal be on file with the Company's payroll office for a
reasonable period prior to the effectiveness of the Participant's withdrawal.
11.2 WITHDRAWAL FROM THE PLAN
A Participant may withdraw from the Plan by signing a written notice of
withdrawal on a form provided by the Plan Administrator for such purpose and
delivering such notice to the Company's payroll office. In the event a
Participant voluntarily elects to withdraw from the Plan, the withdrawing
Participant may not resume participation in the Plan during the same Offering
Period, but may participate in any subsequent Offering under the Plan by again
satisfying the definition of Participant. The Company may, from time to time
impose a requirement that the notice of withdrawal be on file with the Company's
payroll office for a reasonable period prior to the effectiveness of the
Participant's withdrawal.
11.3 RETURN OF PAYROLL DEDUCTIONS
Upon withdrawal from an Offering pursuant to Section 11.1 or from the Plan
pursuant to Section 11.2, the withdrawing Participant's accumulated payroll
deductions that have not been applied to the purchase of Stock shall be returned
as soon as practical after the withdrawal, without the payment of any interest,
to the Participant, and the Participant's interest in the Offering shall
terminate. Such accumulated payroll deductions may not be applied to any other
Offering under the Plan.
SECTION 12. AUTOMATIC WITHDRAWAL FROM AN OFFERING
If the fair market value of the Stock on a Purchase Date of an Offering
(other than the final Purchase Date of such Offering) is less than the fair
market value of the shares on the Offering Date for such Offering and the Plan
Administrator has established that the Purchase Price for the Offering may be
the lesser of the fair market value (or a percentage thereof) of the Stock on
the Offering Date and the fair market value of the Stock on the Purchase Date,
then every Participant shall automatically (a) be withdrawn from such Offering
at the close of such Purchase Date and (b) after the acquisition of Stock for
such Purchase Period, be enrolled in the Offering commencing on the first
business day subsequent to such Purchase Period.
SECTION 13. TERMINATION OF EMPLOYMENT
Termination of a Participant's employment with the Company for any reason,
including retirement, death or the failure of a Participant to remain an
Eligible Employee, shall immediately terminate the Participant's participation
in the Plan. In such event, the payroll deductions credited to the Participant's
account since the last Purchase Date shall, as soon as practical, be returned to
the Participant or, in the case of a Participant's death, to the Participant's
legal representative, and all the Participant's rights under the Plan shall
terminate. Interest shall not be paid on sums returned to a Participant pursuant
to this Section 13.
SECTION 14. RESTRICTIONS UPON ASSIGNMENT
An Option granted under the Plan shall not be transferable otherwise than by
will or the laws of descent and distribution, and is exercisable during the
Participant's lifetime only by the Participant. The Plan Administrator will not
recognize, and shall be under no duty to recognize, any assignment or
A-7
<PAGE>
purported assignment by a Participant, other than by will or the laws of descent
and distribution, of the Participant's interest in the Plan, of his or her
Option or of any rights under his or her Option.
SECTION 15. EXCHANGE ACT HOLDING PERIOD
Disposition of the shares of Stock obtained upon exercise of the Option
within six months of the Purchase Date by persons required to file Forms 3, 4
and 5 pursuant to Section 16 of the Exchange Act could result in short-swing
liability under Section 16(b) of the Exchange Act.
SECTION 16. NO RIGHTS OF SHAREHOLDER UNTIL CERTIFICATE ISSUED
With respect to shares of Stock subject to an Option, a Participant shall
not be deemed to be a shareholder of the Company, and he or she shall not have
any of the rights or privileges of a shareholder. A Participant shall have the
rights and privileges of a shareholder of the Company when, but not until, the
shares have been issued following exercise of the Participant's Option.
SECTION 17. AMENDMENT OF THE PLAN
The Board may amend the Plan in such respects as it shall deem advisable;
provided, however, that to the extent required for compliance with Rule 16b-3
under the Exchange Act, Code Section 423 or any applicable law or regulation,
shareholder approval will be required for any amendment that will (a) increase
the total number of shares as to which Options may be granted under the Plan,
(b) materially modify the class of persons eligible to receive Options, (c)
materially increase the benefits accruing to Participants under the Plan, (d)
decrease the Purchase Price below a price computed in the manner stated in
Section 8, or (e) otherwise require shareholder approval under any applicable
law or regulation.
SECTION 18. TERMINATION OF THE PLAN
The Company's shareholders or the Board may suspend or terminate the Plan at
any time. Unless the Plan shall theretofore have been terminated by the
Company's shareholders or the Board, the Plan shall terminate on, and no Options
shall be made after April 30, 2006, except that such termination shall have no
effect on Options made prior thereto. No Options shall be granted during any
period of suspension of the Plan.
SECTION 19. NO RIGHTS AS AN EMPLOYEE
Nothing in the Plan shall be construed to give any person (including any
Eligible Employee or Participant) the right to remain in the employ of the
Company or a Parent Corporation or Subsidiary Corporation or to affect the right
of the Company and the Parent Corporations and Subsidiary Corporations to
terminate the employment of any person (including any Eligible Employee or
Participant) at any time with or without cause.
SECTION 20. EFFECT UPON OTHER PLANS
The adoption of the Plan shall not affect any other compensation or
incentive plans in effect for the Company or any Parent Corporation or
Subsidiary Corporation. Nothing in the Plan shall be construed to limit the
right of the Company, any Parent Corporation or any Subsidiary Corporation to
(a) establish any other forms of incentives or compensation for employees of the
Company, any Parent Corporation or any Subsidiary Corporation or (b) grant or
assume options otherwise than under the Plan in connection with any proper
corporate purpose, including, but not by way of limitation, the grant or
assumption of options in connection with the acquisition, by purchase, lease
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, firm or association.
A-8
<PAGE>
SECTION 21. ADJUSTMENTS
21.1 ADJUSTMENT OF SHARES
In the event that, at any time or from time to time, a stock dividend, stock
split, spin-off, combination or exchange of shares, recapitalization, merger,
consolidation, distribution to shareholders other than a normal cash dividend,
or other change in the Company's corporate or capital structure results in (a)
the outstanding shares, or any securities exchanged therefor or received in
their place, being exchanged for a different number or class of securities of
the Company or of any other corporation or (b) new, different or additional
securities of the Company or of any other corporation being received by the
holders of shares of Stock, then the Plan Administrator, in its sole discretion,
shall make such equitable adjustments as it shall deem appropriate in the
circumstances in the maximum number of shares of Stock subject to the Plan as
set forth in Section 4. The determination by the Plan Administrator as to the
terms of any of the foregoing adjustments shall be conclusive and binding.
21.2 LIMITATIONS
The grant of Options will in no way affect the Company's right to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
SECTION 22. GENERAL
22.1 REGISTRATION; CERTIFICATES FOR SHARES
The Company shall be under no obligation to any Participant to register for
offering or resale under the Securities Act of 1933, as amended, or register or
qualify under state securities laws, any shares of Stock. The Company may issue
certificates for shares with such legends and subject to such restrictions on
transfer and stop-transfer instructions as counsel for the Company deems
necessary or desirable for compliance by the Company with federal and state
securities laws.
22.2 COMPLIANCE WITH RULE 16b-3
It is the Company's intention that, so long as any of the Company's equity
securities are registered pursuant to Section 12(b) or 12(g) of the Exchange
Act, the Plan shall comply in all respects with Rule 16b-3 under the Exchange
Act, and if any Plan provision is later found not to be in compliance with such
Rule, the provision shall be deemed null and void, and in all events the Plan
shall be construed in favor of its meeting the requirements of Rule 16b-3.
SECTION 23. EFFECTIVE DATE
The Plan's effective date is the date on which it is approved by the
Company's shareholders.
A-9
<PAGE>
[ITRON LOGO]
FOR ANNUAL MEETING OF SHAREHOLDERS -- MAY 5, 1999
THIS PROXY IS SOLICITED ON BEHALF OF ITRON'S BOARD OF DIRECTORS
The undersigned hereby appoints Paul A. Redmond and Johnny M. Humphreys
as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent the undersigned and to vote, as designated below,
and with discretionary authority as to any other matters that may properly
come before the meeting, all the shares of common stock of ITRON, INC. held of
record by the undersigned on February 26, 1999, at the Annual Meeting of
Shareholders to be held May 5, 1999 or any adjournment thereof.
PLEASE MARK THIS PROXY AS INDICATED ON THE REVERSE SIDE TO VOTE ON ANY
ITEM. IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS, PLEASE SIGN THE REVERSE SIDE; NO BOXES NEED TO BE CHECKED.
- ------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
(Continued and to be signed on the other side)
-----------
See Reverse
Side
-----------
<PAGE>
<TABLE>
<S><C>
Note: Shares represented by this proxy will be voted as directed by the Please mark /X
shareholder in the spaces provided. If no choice is specified, the proxies your choices
will be voted "For all nominees" in Item 1 and "For" Items 2 and 3. like this.
Item 1. ELECTION OF DIRECTORS
FOR AGAINST ABSTAIN
/ / FOR all nominees listed below Item 2. AMENDMENT OF / / / / / /
(except as marked to the contrary) 1996 EMPLOYEE STOCK
PURCHASE PLAN
/ / WITHHOLD AUTHORITY to vote for all nominees listed below
FOR AGAINST ABSTAIN
INSTRUCTION: To withhold authority to vote for any individual Item 3. APPROVAL OF DELOITTE & TOUCHE LLP / / / / / /
nominee, strike a line through the nominee's AS INDEPENDENT
name in the list below AUDITORS FOR THE
COMPANY
Ted C. DeMerritt
Jon E. Eliassen
Stuart Edward White
PLEASE MARK HERE IF YOU PLAN / /
TO ATTEND THE MEETING.
COMMENTS/ADDRESS CHANGE / /
PLEASE MARK THIS BOX IF YOU HAVE
WRITTEN ANY COMMENTS/ADDRESS
CHANGES ON THE REVERSE SIDE.
Signature(s)__________________________________________________________________________________ Dated ____________________________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by authorized person.
</TABLE>
