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<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to _________________
Commission File Number 1-6706
BADGER METER, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 39-0143280
--------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4545 West Brown Deer Road, Milwaukee, Wisconsin 53223
- ----------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (414) 355-0400
--------------
None
----
(Former name, former address and former fiscal year, if
changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No _____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at October 31, 1995
- --------------------------- -------------------------------
Common Stock, $1.00 par value 1,193,607
Class B Common Stock, $.10 par value 562,785
<PAGE> 2
BADGER METER, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I. Financial Information:
Item 1 Financial Statements:
Consolidated Condensed Balance Sheets - -
September 30, 1995 and December 31, 1994 3
Consolidated Condensed Statements of Operations - -
Three and Nine Months Ended September 30, 1995 and 1994 4
Consolidated Condensed Statements of Cash Flows - -
Nine Months Ended September 30, 1995 and 1994 5
Notes to Consolidated Condensed Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part II. Other Information
Item 6(a) Exhibits 7
Item 6(b) Reports on Form 8-K 7
Exhibit Index 9
</TABLE>
-2-
<PAGE> 3
Part I - Financial Information
BADGER METER, INC.
Item 1 Financial Statements
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
---- ----
Assets (Unaudited)
------ -----------
<S> <C> <C> <C>
Current assets:
Cash $ 222 $ 365
Receivables 16,191 14,432
Inventories:
Finished goods 3,696 3,101
Work in process 9,334 9,495
Raw materials 5,150 5,871
---------- -----------
Total inventories 18,180 18,467
Prepaid expenses 604 735
---------- -----------
Total current assets 35,197 33,999
Property, plant and equipment 54,214 52,939
Less accumulated depreciation (37,421) (36,322)
----------- ------------
16,793 16,617
Intangible assets 1,368 1,632
Pension asset 5,782 5,307
Deferred income taxes 1,559 1,327
Deferred charges and other assets 2,939 3,111
---------- -----------
Total assets $ 63,638 $ 61,993
========== ===========
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
Short-term debt $ 9,255 $ 10,437
Payables 5,031 4,617
Accrued liabilities 4,191 4,209
Income taxes 398 168
---------- -----------
Total current liabilities 18,875 19,431
Accrued non-pension postretirement
benefits 8,229 8,334
Accrued employee benefits 4,032 3,678
Long-term debt 1,000 1,200
Shareholders' equity:
Common Stock 1,550 1,547
Less: Treasury stock (358) (358)
---------- -----------
1,192 1,189
Class B Common Stock 56 56
Capital in excess of par value 7,771 7,708
Reinvested earnings 23,997 22,164
Less: Employee benefit stock (1,126) (1,379)
Pension liability adjustment (388) (388)
---------- -----------
Total shareholders' equity 31,502 29,350
---------- -----------
Total liabilities and
shareholders' equity $ 63,638 $ 61,993
========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
-3-
<PAGE> 4
BADGER METER, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 25,856 $ 25,870 $ 82,363 $ 72,659
Operating costs and expenses:
Cost of sales 16,362 16,495 53,141 45,667
Marketing and administrative 6,091 6,214 18,913 18,029
Research and engineering 1,678 1,556 4,851 4,548
-------- -------- -------- --------
24,131 24,265 76,905 68,244
-------- -------- -------- --------
Operating earnings 1,725 1,605 5,458 4,415
Interest expense 225 209 711 631
Other deductions 17 8 245 10
-------- -------- -------- --------
Earnings before income taxes 1,483 1,388 4,502 3,774
Provision for income taxes 568 495 1,679 1,378
-------- -------- -------- --------
Net earnings $ 915 $ 893 $ 2,823 $ 2,396
======== ======== ======== ========
Per share amounts:
Net earnings $ .52 $ .51 $ 1.61 $ 1.39
======== ======== ======== ========
Dividends declared - Common Stock $ .20000 $ .18150 $ .58150 $ .52800
======== ======== ======== =======
Dividends declared - Class B
Common Stock $ .18200 $ .16500 $ .52900 $ .48000
======== ======== ======== ========
Weighted average shares
outstanding 1,754,925 1,742,969 1,753,503 1,724,167
========= ========= ========= =========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
-4-
<PAGE> 5
BADGER METER, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-------------
1995 1994
---- ----
<S> <C> <C>
Operating activities:
Net earnings $ 2,823 $ 2,396
Adjustments to reconcile net
earnings to net cash provided
by (used for) operations:
Depreciation 2,714 2,608
Amortization 593 609
Noncurrent employee benefits (172) (214)
Deferred income taxes (232) (114)
Other 111 52
Changes in:
Receivables (1,759) (3,696)
Inventory 287 (235)
Current liabilities 626 2,131
Prepaid expenses 131 (22)
---------- -----------
Total adjustments 2,299 1,119
---------- -----------
Net cash provided by operations 5,122 3,515
---------- -----------
Investing activities:
Property, plant and equipment (3,001) (2,493)
Other - net (158) (264)
---------- -----------
Net cash used for investing activities (3,159) (2,757)
---------- -----------
Financing activities:
Bank borrowings (repayments) (1,182) (840)
Dividends (990) (886)
Exercised stock options 66 254
---------- -----------
Net cash provided by (used for)
financing activities (2,106) (1,472)
---------- -----------
Increase (decrease) in cash (143) (714)
Beginning of year 365 874
---------- -----------
End of period $ 222 $ 160
========== ============
Supplemental disclosures of cash flow information:
Cash paid (refunded) during the period for:
Income taxes $ 1,481 $ 1,880
========== ============
Interest $ 694 $ 683
========== ============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
-5-
<PAGE> 6
BADGER METER, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting only of
normal recurring accruals) necessary to present fairly the consolidated
condensed financial position at September 30, 1995 and the results of
operations for the three and nine-month periods ended September 30, 1995
and 1994 and the cash flows for the nine-month periods ended September 30,
1995 and 1994. The results of operations for the nine-month period ended
September 30, 1995, are not necessarily indicative of the results to be
expected for the full year. The consolidated condensed balance sheet at
December 31, 1994 was derived from amounts included in the Annual Report to
Shareholders which was incorporated by reference in the Company's annual
report on Form 10-K for the year ended December 31, 1994.
-6-
<PAGE> 7
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
Financial Condition
A third quarter reduction in inventory of $1,417,000 and receivables of
$472,000 enabled the company to reduce short-term borrowings by $1,702,000 in
the third quarter of 1995. Short-term debt of $9,255,000 at September 30,
1995, compares to short-term debt of $11,742,000 at September 30, 1994. The
continuing high level of shipments of inventory and asset management account
for this improvement. Capital improvements are approximately $400,000 ahead of
1994 levels.
At September 30, 1995, the company had approximately $27,100,000 of credit
lines with domestic and foreign banks of which $9,255,000 was in use. The
company believes that the present lines of credit are adequate to meet
operating requirements.
Results of Operations
Sales of $25,856,000 for the third quarter of 1995 were down slightly from
sales of $25,870,000 for the same period in 1994. Earnings of $915,000 ($.52
per share) reflected a 2.5% increase over earnings of $893,000 ($.51 per share)
in the third quarter of 1995. Year-to-date sales of $82,363,000 are 13.4%
ahead of 1994 sales of $72,659,000. Net earnings of $2,823,000 or $1.61 per
share are up 17.8% from prior year earnings of $2,396,000 or $1.39 per share.
Markets for both the Utility and Industrial Divisions softened in the third
quarter. Year-to-date Utility Division sales are 20.5% ahead of 1994 on an
increase in unit volume. Domestic sales for the Utility Division remain strong
while there has been a slowdown in units shipped on the Mexico City project.
Dollar sales for the Industrial Division remain slightly ahead of 1994 levels
despite a unit volume decline due to customer delayed purchases.
The gross profit margin for 1995 of 35.5% is down from 37.2% at this time in
1994. The year-to-date margin has shown a 0.6% improvement since June 1995.
Product mix, with greater volumes of lower margin Utility Division products,
has caused the margin to decline from the 1994 level.
Interest expense has increased 12.8% primarily due to higher interest rates.
Most of the aforementioned debt reduction occurred in September of 1995.
The effective tax rate of 37.3% in 1995 compares to the 1994 annual rate of
35.4%. A reduction in estimated tax benefits from foreign sales is the primary
reason for the increased rate.
Part II - Other Information
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits:
(11.0) Computation of fully diluted earnings per share
(27.0) Financial Data Schedule
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed for the three months ended
September 30, 1995.
-7-
<PAGE> 8
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BADGER METER, INC.
Dated: November 6, 1995 By /S/ Deirdre C. Elliott
---------------- ------------------------
Deirdre C. Elliott
Vice President -
Corporate Counsel
and Secretary
By /S/ W. J. Shinners
---------------------------
W. J. Shinners
Vice President - Controller
-8-
<PAGE> 9
EXHIBIT INDEX
<TABLE>
<CAPTION>
Page Number
<S> <C> <C>
(11.0) Computation of fully diluted earnings per share 10
(27.0) Financial Data Schedule
</TABLE>
<PAGE> 1
Exhibit 11
BADGER METER, INC.
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
September 30, September 30,
------------- -------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
PRIMARY
- -------
Shares
- ------
Average shares outstanding 1,754,925 1,742,969 1,753,503 1,724,167
Shares issuable upon exercise of
stock options 43,455 41,341 36,116 29,256
--------- --------- --------- ---------
Total 1,798,380 1,784,310 1,789,619 1,753,423
========= ========= ========= =========
Earnings
- --------
Net earnings applicable to adjusted
common shares $915 $893 $2,823 $2,396
==== ==== ====== ======
Per share amounts
- -----------------
Net earnings per share $.51 $.50 $1.58 $1.37
==== ==== ===== =====
FULLY DILUTED
- -------------
Shares
- ------
Average shares outstanding 1,754,925 1,742,969 1,753,503 1,724,167
Shares issuable upon exercise of
stock options 46,642 43,698 46,642 43,698
--------- --------- --------- ---------
Total 1,801,567 1,786,667 1,800,145 1,767,865
========= ========= ========= =========
Earnings
- --------
Earnings applicable to adjusted
common shares $915 $893 $2,823 $2,396
==== ==== ====== ======
Per share amounts
- -----------------
Net earnings per share $.51 $.50 $1.57 $1.36
==== ==== ===== =====
Percentage dilution (1) 2.5% 2.4% 2.6% 2.5%
==== ==== ==== ====
</TABLE>
(1) In 1995 and 1994 earnings per share for financial statement purposes does
not include common stock equivalents since dilution is less than 3%.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated condensed balance sheet and statement of operations of the
September 30, 1995 quarterly report form 10-Q and is qualified in its
entirety by reference to such quarterly report form 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 222
<SECURITIES> 0
<RECEIVABLES> 16,191
<ALLOWANCES> 0
<INVENTORY> 18,180
<CURRENT-ASSETS> 35,197
<PP&E> 54,214
<DEPRECIATION> (37,421)
<TOTAL-ASSETS> 63,638
<CURRENT-LIABILITIES> 18,187
<BONDS> 0
<COMMON> 1,248
0
0
<OTHER-SE> 30,254
<TOTAL-LIABILITY-AND-EQUITY> 63,638
<SALES> 82,363
<TOTAL-REVENUES> 82,363
<CGS> 53,141
<TOTAL-COSTS> 76,905
<OTHER-EXPENSES> 245
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 711
<INCOME-PRETAX> 4,502
<INCOME-TAX> 1,679
<INCOME-CONTINUING> 2,823
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,823
<EPS-PRIMARY> 1.61
<EPS-DILUTED> 1.61
</TABLE>
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