<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 March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-6706
BADGER METER, INC.
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(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
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(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.
<TABLE>
<CAPTION>
Class Outstanding at April 26, 1996
- ------------------------------------ -----------------------------
<S> <C>
Common Stock, $1.00 par value 1,199,607
Class B Common Stock, $.10 par value 562,785
</TABLE>
<PAGE> 2
BADGER METER, INC.
INDEX
Page No.
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Part I. Financial Information:
Item 1 Financial Statements:
Consolidated Condensed Balance Sheets - -
March 31, 1996 and December 31, 1995 3
Consolidated Condensed Statements of Operations - -
Three Months Ended March 31, 1996 and 1995 4
Consolidated Condensed Statements of Cash Flows - -
Three Months Ended March 31, 1996 and 1995 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 8
Item 6(b) Reports on Form 8-K 8
Exhibit Index 10
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<PAGE> 3
Part I - Financial Information
BADGER METER, INC.
Item 1 Financial Statements
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- -----------
Assets (Unaudited)
------
<S> <C> <C>
Current assets:
Cash $ 376 $ 1,177
Receivables 14,801 13,661
Inventories:
Finished goods 4,340 3,403
Work in process 7,697 6,750
Raw materials and purchased parts 5,242 5,681
-------- --------
Total inventories 17,279 15,834
Prepaid expenses 736 745
-------- --------
Total current assets 33,192 31,417
Property, plant and equipment 55,836 55,101
Less accumulated depreciation (38,655) (37,714)
-------- --------
17,181 17,387
Intangible assets, at cost less accumulated amortization 1,132 1,217
Pension asset 5,907 5,821
Deferred income taxes 1,624 1,536
Deferred charges and other assets 3,055 3,149
-------- --------
Total assets $ 62,091 $ 60,527
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Short-term debt $ 5,304 $ 5,515
Payables 5,804 4,922
Accrued liabilities 4,108 4,577
Income taxes 760 226
------- -------
Total current liabilities 15,976 15,240
Accrued non-pension postretirement benefits 8,349 8,396
Other accrued employee benefits 3,926 3,728
Long-term debt 1,000 1,000
Shareholders' equity:
Common Stock 1,558 1,552
Less: Treasury stock (358) (358)
------- -------
1,200 1,194
Class B Common Stock 56 56
Capital in excess of par value 7,941 7,832
Reinvested earnings 25,097 24,552
Less: Employee benefit stock (1,085) (1,102)
Pension liability adjustment (369) (369)
------- -------
Total shareholders' equity 32,840 32,163
------- -------
Total liabilities and shareholders' equity $ 62,091 $ 60,527
======= =======
</TABLE>
See accompanying notes to consolidated condensed financial statements.
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<PAGE> 4
BADGER METER, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
--------- ---------
<S> <C> <C>
Net sales $ 26,635 $ 27,928
Operating costs and expenses:
Cost of sales 16,714 18,191
Marketing and administrative 6,799 6,415
Research and engineering 1,559 1,584
--------- ---------
25,072 26,190
--------- ---------
Operating earnings 1,563 1,738
Interest expense 118 249
Other deductions 54 106
--------- ---------
Earnings before income taxes 1,391 1,383
Provision for income taxes 503 526
--------- ---------
Net earnings $ 888 $ 857
========= =========
Per share amounts:
Net earnings * $ .49 $ .49
========= =========
Dividends declared - Common Stock $ .20 $ .1815
========= =========
Dividends declared - Class B Common Stock $ .182 $ .165
========= =========
Weighted average shares outstanding 1,760,784 1,751,492
========= =========
</TABLE>
* 1996 earnings per share include the effect of dilutive stock options.
See accompanying notes to consolidated condensed financial statements.
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<PAGE> 5
BADGER METER, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
------- -------
<S> <C> <C>
Operating activities:
Net earnings $ 888 $ 857
Adjustments to reconcile net
earnings to net cash provided
by (used for) operations:
Depreciation 964 913
Amortization 208 192
Noncurrent employee benefits 82 17
Deferred income taxes (88) (18)
Other 14 10
Changes in:
Receivables (1,140) (2,877)
Inventory (1,445) (689)
Current liabilities other than short-term debt 927 831
Prepaid expenses 9 (25)
------- -------
Total adjustments (469) (1,646)
------- -------
Net cash provided by (used for) operations 419 (789)
------- -------
Investing activities:
Property, plant and equipment (775) (927)
Other - net (6) (100)
------- -------
Net cash used for investing activities (781) (1,027)
------- -------
Financing activities:
Bank borrowings (211) 2,051
Dividends (343) (308)
Exercised stock options 115 5
------- -------
Net cash provided by (used for)
financing activities (439) 1,748
------- -------
Increase (decrease) in cash (801) (68)
Beginning of year 1,177 365
------- -------
End of period $ 376 $ 297
======= =======
Supplemental disclosures of cash flow information:
Cash paid (refunded) during the period for:
Income taxes $ 57 $ (114)
======= =======
Interest $ 106 $ 266
======= =======
</TABLE>
See accompanying notes to consolidated condensed financial statements.
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<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 March 31, 1996 and the related results of
operations for the three-month periods ended March 31, 1996 and 1995 and
cash flows for the three-month periods ended March 31, 1996 and 1995. The
results of operations for the three-month period ended March 31, 1996 are
not necessarily indicative of the results to be expected for the full year.
The consolidated condensed balance sheet at December 31, 1995 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, 1995.
2. In October, 1995, the Financial Accounting Standards Board issued
Financial Accounting Standard No. 123 "Accounting for Stock-Based
Compensation" (FAS 123), effective for fiscal years beginning after December
15, 1995. As allowed by FAS 123, the company intends to use prior standards
(APB 25) for determining annual compensation charges and will disclose the
impact of fair value.
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<PAGE> 7
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
---------------------------------------------------------------
Financial Condition
Receivables increased 8.3%, or $1,140,000, from the seasonally low December 31,
1995 balance. The increase was considered normal. Inventories increased
9.1%, or $1,445,000, primarily to support future sales needs. These working
capital requirements were partially funded by an increase of $882,000 in
accounts payable (primarily related to inventory purchases) and an $801,000
reduction in cash balances during the quarter. Earnings for the quarter
provided the balance of the working capital and funded a $211,000 decrease in
short-term debt.
As of March 31, 1996, the company had approximately $27,100,000 of credit lines
with domestic and foreign banks of which $5,304,000 was in use. This compares
to $12,488,000 in use at March 31, 1995 and $5,515,000 at December 31, 1995.
The company believes that the present lines of credit are adequate to meet
operating requirements.
Results of Operations
Net sales for the first quarter of 1996 of $26,635,000 reflect a 4.6% decrease
over sales of $27,928,000 for the same period in 1995. The decrease was
primarily related to lower unit volume of domestic water meter sales.
Increases in higher value meter reading technology products, lubrication
meters, natural gas instrumentation and primary flow products helped offset the
meter decline. A supplier problem and the harsh winter in the eastern half of
the country had an unfavorable effect on sales.
The gross profit margin improved from 34.9% in 1995 to 37.2% in 1996. This
increase was due primarily to higher margins earned on meter reading technology
products, as well as an increased percentage of higher margin industrial
products in the total sales for the first quarter of 1996 as compared to the
first quarter of 1995.
The increase in marketing and administrative costs was impacted by the
development of an international group and the provision for a new long-term
compensation plan. Research and engineering expenses were comparable between
the quarters. Interest expense decreased $131,000 between periods due to lower
interest rates and lower debt balances outstanding. Other deductions decreased
$49,000 due primarily to favorable foreign exchange transactions.
The effective tax rate for the first quarter of 1996 was 36.2% compared to
38.0% for the first quarter of 1995 and 37.1% for the entire year in 1995. The
rate decrease is primarily due to the impact of tax credits in 1996.
Earnings for the quarter of $888,000 have increased 3.6% over 1995 earnings of
$857,000. However, the earnings per share have remained constant at $.49 for
both periods due to the impact of dilutive options in 1996.
No risks or uncertainties were identified that could have a material impact on
operations and no long-lived assets have become permanently impaired in value.
-7-
<PAGE> 8
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
March 31, 1996.
-8-
<PAGE> 9
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: April 26, 1996 By /S/ Richard A. Meeusen
----------------------------------------
Richard A. Meeusen
Vice President - Finance and Treasurer
Chief Financial Officer
By /S/ William J. Shinners
----------------------------------------
William J. Shinners
Vice President - Controller
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<PAGE> 10
EXHIBIT INDEX
Page Number
(11.0) Computation of fully diluted earnings per share 11
(27.0) Financial Data Schedule
-10-
<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 March 31,
1996 1995
-------------- --------------
(1) (2)
<S> <C> <C>
PRIMARY
Shares
Average shares outstanding 1,760,784 1,751,492
Shares issuable upon exercise of stock options 51,281 28,264
--------- ---------
Total 1,812,065 1,779,756
========= =========
Earnings
Net earnings applicable to adjusted Common shares $ 888 $ 857
========= =========
Per share amounts
Net earnings per share $ .49 $ .48
========= =========
FULLY DILUTED
Shares
Average shares outstanding 1,760,784 1,751,492
Shares issuable upon exercise of stock options 51,897 31,905
--------- ---------
Total 1,812,681 1,783,397
========= =========
Earnings
Earnings applicable to adjusted Common shares $ 888 $ 857
========= =========
Per share amounts
Net earnings per share $ .49 $ .48
========= =========
Percentage dilution 2.9% 1.8%
</TABLE>
(1) In 1996, earnings per share for financial statement purposes includes Common
stock equivalents since dilution is approximately 3%.
(2) In 1995, earnings per share for financial statement purposes does not
include Common stock equivalents since dilution is less than 3%.
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information from the Company's
Quarterly Report on Form 10Q and is qualified in its entirety by reference to
such 10Q.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 376
<SECURITIES> 0
<RECEIVABLES> 14,801
<ALLOWANCES> 0
<INVENTORY> 17,279
<CURRENT-ASSETS> 33,192
<PP&E> 55,836
<DEPRECIATION> (38,655)
<TOTAL-ASSETS> 62,091
<CURRENT-LIABILITIES> 15,976
<BONDS> 0
0
0
<COMMON> 1,256
<OTHER-SE> 31,584
<TOTAL-LIABILITY-AND-EQUITY> 62,091
<SALES> 26,635
<TOTAL-REVENUES> 26,635
<CGS> 16,714
<TOTAL-COSTS> 25,072
<OTHER-EXPENSES> 54
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 118
<INCOME-PRETAX> 1,391
<INCOME-TAX> 503
<INCOME-CONTINUING> 888
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 888
<EPS-PRIMARY> .49
<EPS-DILUTED> .49
</TABLE>
