ITRON, INC.ITRI
ITRON, INC. Commitments Disclosure
Commitments and Contingencies
Guarantees and Indemnifications
We are often required to obtain standby letters of credit (LOCs) or bonds in support of our obligations for customer contracts. These standby LOCs or bonds typically provide a guarantee to the customer for our future performance, which typically covers the installation phase of a contract and may, on occasion, cover the operations and maintenance phase of outsourcing contracts.
Our available lines of credit, outstanding standby LOCs, and bonds were as follows:
December 31, | |||||||||||
| In thousands | 2025 | 2024 | |||||||||
| Credit facility | |||||||||||
| Multicurrency revolving line of credit | $ | 750,000 | $ | 500,000 | |||||||
| Standby LOCs issued and outstanding | (43,824) | (46,013) | |||||||||
| Net available for additional borrowings under the multicurrency revolving line of credit | $ | 706,176 | $ | 453,987 | |||||||
| Net available for additional standby LOCs under sub-facility | $ | 256,176 | $ | 253,987 | |||||||
| Unsecured multicurrency revolving lines of credit with various financial institutions | |||||||||||
| Multicurrency revolving lines of credit | $ | 98,128 | $ | 87,230 | |||||||
| Standby LOCs issued and outstanding | (25,815) | (19,541) | |||||||||
| Short-term borrowings | — | — | |||||||||
| Net available for additional borrowings and LOCs | $ | 72,313 | $ | 67,689 | |||||||
| Unsecured surety bonds in force | $ | 522,098 | $ | 363,097 | |||||||
In the event any such standby LOC or bond were called, we would be obligated to reimburse the issuer of the standby LOC or bond. As of February 17, 2026, we are not aware of any valid claims against our outstanding standby LOCs or bonds.
We generally provide an indemnification related to the infringement of any patent, copyright, trademark, or other intellectual property right on software or equipment within our sales contracts, which indemnifies the customer from, and pays the resulting costs, damages, and attorney's fees awarded against a customer with respect to, such a claim provided that (a) the customer promptly notifies us in writing of the claim and (b) we have the sole control of the defense and all related settlement negotiations. We may also provide an indemnification to our customers for third-party claims resulting from damages caused by the negligence or willful misconduct of our employees/agents in connection with the performance of certain contracts. The terms of our indemnifications generally do not limit the maximum potential payments. It is not possible to predict the maximum potential amount of future payments under these or similar agreements.
Legal Matters
We are subject to various legal proceedings and claims of which the outcomes are subject to significant uncertainty. Our policy is to assess the likelihood of any adverse judgments or outcomes related to legal matters, as well as ranges of probable losses. A determination of the amount of the liability required, if any, for these contingencies is made after an analysis of each known issue. A liability would be recognized and charged to operating expense when we determine that a loss is probable and the amount can be reasonably estimated. Additionally, we disclose contingencies for which a material loss is reasonably possible, but not probable.
Warranty
A summary of the warranty accrual account activity is as follows:
| Year Ended December 31, | |||||||||||||||||
| In thousands | 2025 | 2024 | 2023 | ||||||||||||||
| Beginning balance | $ | 22,141 | $ | 22,164 | $ | 25,698 | |||||||||||
| New product warranties | 4,443 | 6,132 | 6,665 | ||||||||||||||
| Other adjustments and expirations, net | 1,894 | 1,975 | 710 | ||||||||||||||
| Claims activity | (10,782) | (7,894) | (11,187) | ||||||||||||||
| Effect of change in exchange rates | 522 | (236) | 278 | ||||||||||||||
| Ending balance | 18,218 | 22,141 | 22,164 | ||||||||||||||
| Less: current portion of warranty | 10,868 | 14,302 | 14,663 | ||||||||||||||
| Long-term warranty | $ | 7,350 | $ | 7,839 | $ | 7,501 | |||||||||||
Total warranty expense is classified within cost of revenues and consists of new product warranties issued, costs related to insurance and supplier recoveries, other changes and adjustments to warranties, and customer claims.
Warranty expense was as follows:
| Year Ended December 31, | |||||||||||||||||
| In thousands | 2025 | 2024 | 2023 | ||||||||||||||
| Total warranty expense | $ | 6,337 | $ | 8,107 | $ | 7,375 | |||||||||||
Health Benefits
We are self-insured for a substantial portion of the cost of our U.S. employee group health insurance. We purchase insurance from a third-party, which provides individual and aggregate stop-loss protection for these costs. Each reporting period, we expense the costs of our health insurance plan including paid claims, the change in the estimate of incurred but not reported (IBNR) claims, taxes, and administrative fees (collectively, the plan costs).
Plan costs were as follows:
| Year Ended December 31, | |||||||||||||||||
| In thousands | 2025 | 2024 | 2023 | ||||||||||||||
| Plan costs | $ | 46,735 | $ | 39,042 | $ | 36,326 | |||||||||||
IBNR accrual, which is included in wages and benefits payable, was as follows:
| December 31, | |||||||||||
| In thousands | 2025 | 2024 | |||||||||
| IBNR accrual | $ | 3,983 | $ | 3,658 | |||||||
Our IBNR accrual and expenses may fluctuate due to the number of plan participants, claims activity, and deductible limits.
For our employees located outside of the United States, health benefits are provided primarily through governmental social plans, which are funded through employee and employer tax withholding.
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.