<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 June 30, 1996
-------------
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 July 25, 1996
- - ---------------------------- ----------------------------
Common Stock, $1.00 par value 1,211,017
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 - -
June 30, 1996 and December 31, 1995 3
Consolidated Condensed Statements of Operations - -
Three and Six Months Ended June 30, 1996 and 1995 4
Consolidated Condensed Statements of Cash Flows - -
Six Months Ended June 30, 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 4 Submission of Matters to a Vote of Security Holders 8
Item 6(a) Exhibits 8
Item 6(b) Reports on Form 8-K 8
Exhibit Index 10
</TABLE>
-2-
<PAGE> 3
Part I - Financial Information
BADGER METER, INC.
Item 1 Financial Statements
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---- ----
Assets (Unaudited)
------ -----------
<S> <C> <C>
Current assets:
Cash $ 159 $ 1,177
Receivables 16,415 13,661
Inventories:
Finished goods 3,814 3,403
Work in process 7,721 6,750
Raw materials and purchased parts 5,558 5,681
-------- ---------
Total inventories 17,093 15,834
Prepaid expenses 756 745
-------- ---------
Total current assets 34,423 31,417
Property, plant and equipment 54,524 55,101
Less accumulated depreciation (37,065) (37,714)
-------- ---------
17,459 17,387
Intangible assets, at cost less accumulated amortization 1,047 1,217
Pension asset 5,993 5,821
Deferred income taxes 1,527 1,536
Deferred charges and other assets 3,300 3,149
-------- ---------
Total assets $ 63,749 $ 60,527
======== =========
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
Short-term debt $ 4,211 $ 5,515
Payables 7,452 4,922
Accrued liabilities 4,343 4,577
Income taxes 386 226
-------- ---------
Total current liabilities 16,392 15,240
Accrued non-pension postretirement benefits 8,208 8,396
Other accrued employee benefits 4,094 3,728
Long-term debt 1,000 1,000
Shareholders' equity:
Common Stock 1,568 1,552
Less: Treasury stock (358) (358)
-------- ---------
1,210 1,194
Class B Common Stock 56 56
Capital in excess of par value 8,114 7,832
Reinvested earnings 26,111 24,552
Less: Employee benefit stock (1,067) (1,102)
Pension liability adjustment (369) (369)
-------- ---------
Total shareholders' equity 34,055 32,163
-------- ---------
Total liabilities and shareholders' equity $ 63,749 $ 60,527
======== =========
</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 Six Months Ended
June 30, June 30,
-------- --------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 30,542 $ 28,579 $ 57,177 $ 56,508
Operating costs and expenses:
Cost of sales 19,739 18,588 36,453 36,779
Marketing and administrative 6,841 6,407 13,640 12,822
Research and engineering 1,568 1,588 3,127 3,173
--------- --------- --------- ---------
28,148 26,583 53,220 52,774
--------- --------- --------- ---------
Operating earnings 2,394 1,996 3,957 3,734
Interest expense 103 237 221 486
Other deductions 62 123 116 229
--------- --------- --------- ---------
Earnings before income taxes 2,229 1,636 3,620 3,019
Provision for income taxes 840 585 1,343 1,111
--------- --------- --------- ---------
Net earnings $ 1,389 $ 1,051 $ 2,277 $ 1,908
========= ========= ========= =========
Per share amounts:
Net earnings * $ .76 $ .60 $ 1.25 $ 1.09
========= ========= ========= =========
Dividends declared - Common Stock $ .2200 $ .2000 $ .4200 $ .3815
========= ========= ========= =========
Dividends declared - Class B
Common Stock $ .200 $ .182 $ .382 $ .347
========= ========= ========= =========
Weighted average shares
outstanding 1,769,489 1,754,092 1,765,138 1,752,792
========= ========= ========= =========
</TABLE>
*1996 Earnings Per Share include the effect of dilutive stock options.
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>
Six Months Ended
June 30,
--------
1996 1995
---- ----
<S> <C> <C>
Operating activities:
Net earnings $ 2,277 $ 1,908
Adjustments to reconcile net
earnings to net cash provided
by (used for) operations:
Depreciation 1,927 1,831
Amortization 425 390
Noncurrent employee benefits 31 55
Deferred income taxes 9 (237)
Other 14 10
Changes in:
Receivables (2,754) (2,231)
Inventory (1,259) (1,130)
Current liabilities 2,439 1,205
Prepaid expenses (11) 51
---------- ------------
Total adjustments 821 (56)
---------- ------------
Net cash provided by operations 3,098 1,852
---------- ------------
Investing activities:
Property, plant and equipment (2,013) (1,836)
Other - net (388) (150)
---------- ------------
Net cash used for investing activities (2,401) (1,986)
---------- ------------
Financing activities:
Bank borrowings (repayments) (1,304) 520
Treasury stock 5 --
Dividends (718) (649)
Exercised stock options 302 57
---------- ------------
Net cash provided by (used for)
financing activities (1,715) (72)
---------- ------------
Increase (decrease) in cash (1,018) (206)
Beginning of year 1,177 365
---------- ------------
End of period $ 159 $ 159
========== ============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes $ 1,174 $ 896
========== ============
Interest $ 177 $ 477
========== ============
</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 June 30, 1996 and the results of operations
for the three and six-month periods ended June 30, 1996 and 1995 and the
cash flows for the six-month periods ended June 30, 1996 and 1995. The
results of operations for the six-month period ended June 30, 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.
-6-
<PAGE> 7
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
Financial Condition
Record sales caused receivables to increase 20%, or $2,754,000, from the
seasonally low December 31, 1995 balance. Inventories increased 8%, or
$1,259,000, primarily to support future sales needs. Payables increased 51%,
or $2,530,000, due to increased inventory purchases and other trade payables
since December 31, 1995. Reduced cash balances of $1,018,000, combined with
funds generated by net earnings, were used to pay down short-term debt by
$1,304,000 and also to fund the net working capital requirements.
As of June 30,1996, the company had approximately $27,000,000 of credit lines
with domestic and foreign banks of which $4,211,000 was in use. This compares
to $10,957,000 in use at June 30, 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 second quarter of 1996 of $30,542,000 reflect a 6.9% increase
over sales of $28,579,000 for the same period in 1995. The increase was
primarily related to pricing and product mix. For the first six months of
1996, sales were $57,177,000, a 1.2% increase over sales of $56,508,000 for the
same period in 1995.
The gross profit margin improved from 34.9% for the first six months of 1995 to
36.2% for the same period in 1996. This increase was due primarily to increased
manufacturing efficiencies and favorable pricing.
Marketing and administrative costs increased 6.8% for the quarter and 6.4% for
the six months ended June 30, 1996 as compared to the same periods of 1995.
The increase was primarily due to the development of an international group and
the provision for a new long-term compensation plan. Research and engineering
expenses were comparable between the periods. Interest expense decreased
$134,000 for the quarter and $265,000 for the six months ended June 30, 1996 as
compared to the same periods of 1995, due to lower interest rates and lower
debt balances outstanding. Other deductions decreased due primarily to
favorable foreign exchange transactions.
The effective tax rate for the second quarter of 1996 was estimated to be
37.7%, which is higher than the 35.8% used for the second quarter of 1995, due
to changes in estimated deductions and tax credits for 1996. These same
factors caused the 1996 year-to-date tax rate of 37.1% to increase over the
36.8% rate used for the same period of 1995.
Earnings for the second quarter of 1996 of $1,389,000 have increased 32.2% over
second quarter 1995 earnings of $1,051,000, due primarily to the higher sales,
improved margins and lower interest costs. The 1996 year-to-date earnings of
$2,277,000 increased 19.3% over the same period of 1995 earnings of $1,908,000
due primarily to improved margins and lower interest expense. Earnings per
share percentage increases were slightly lower 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 4 Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Shareholders was held April 19, 1996.
(b) Proxies were solicited for the election of eight directors. There was no
solicitation in opposition to management's nominees and all nominees were
re-elected. As of the record date, February 29, 1996, the total number of
votes represented by shares of Common Stock and Class B Common Stock was
6,827,357 votes.
(c) 1. The Badger Meter, Inc. 1995 Stock Option Plan (as amended) ("Option
Plan") was approved. The Option Plan provides for the grant of options
representing up to an aggregate of 100,000 shares of Common Stock to
approximately 250 employees eligible to participate in the Option Plan. The
option price will not be less than 50% (100% in the case of Incentive Stock
Options) of fair market value on the date of grant.
<TABLE>
<CAPTION>
Votes Votes Votes Broker
FOR AGAINST ABSTAIN Non-Votes
--- ------- ------- ---------
<S> <C> <C> <C> <C>
STOCK OPTION PLAN 6,351,608 48,184 8,743 131,941
</TABLE>
(c) 2. The following table represents the aggregate votes related to the
election of directors:
<TABLE>
<CAPTION>
Votes Votes
NAME FOR WITHHELD Not Voted
- - ---- --- -------- ---------
<S> <C> <C> <C>
James L.Forbes 6,531,834 7,642 287,881
Robert M. Hoffer 6,530,634 8,842 287,881
Charles F. James, Jr. 6,530,834 8,642 287,881
Donald J. Schuenke 6,530,634 8,842 287,881
John J. Stollenwerk 6,531,884 7,592 287,881
Pamela B. Strobel 6,530,634 8,842 287,881
James O. Wright 6,531,834 7,642 287,881
James O. Wright, Jr. 6,531,834 7,642 287,881
</TABLE>
(d) Not applicable.
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits:
(10.0) The Badger Meter, Inc. 1995 Stock Option Plan (as amended)
(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
June 30, 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: July 29, 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
-9-
<PAGE> 10
EXHIBIT INDEX
<TABLE>
<CAPTION>
Page Number
<S> <C> <C>
(10.0) The Badger Meter, Inc. 1995 Stock Option Plan (as amended) 11
(11.0) Computation of fully diluted earnings per share 15
(27.0) Financial Data Schedule
</TABLE>
-10-
<PAGE> 1
Exhibit (10.0)
BADGER METER, INC.
1995 STOCK OPTION PLAN
(AS AMENDED)
1. PURPOSE
The purpose of the Badger Meter, Inc. 1995 Stock Option Plan as amended
April 19, 1996 (the "Plan") is to promote the best interests of Badger Meter,
Inc. (the "Company") and its shareholders by encouraging directors and key
employees of the Company and its subsidiaries to secure or increase on
reasonable terms their stock ownership in the Company. The Board of Directors
of the Company believes the Plan will promote continuity of management,
increased incentive and personal interest in the welfare of the Company by
those who are primarily responsible for shaping and carrying out the long-range
plans of the Company and its subsidiaries and securing their continued growth
and financial success. It is intended that certain of the options issued under
the Plan may constitute incentive stock options within the meaning of Section
422 of the Internal Revenue Code ("Incentive Stock Options") and the remainder
of the options issued under the Plan will constitute non-qualified stock
options ("Non-qualified Stock Options").
2. EFFECTIVE DATE
The Plan shall become effective on the date of adoption by the Board of
Directors of the Company (the "Board"), subject to the approval and
ratification of the Plan by the shareholders of the Company within twelve (12)
months of the date of adoption by the Board, and all options granted prior to
such shareholder approval shall be subject to such approval.
3. ADMINISTRATION
(a) The Plan shall be administered by the Compensation Committee of the
Board (the "Committee") as such Committee may be constituted from time to time.
The Committee shall consist of not less than two members of the Board selected
by the Board, each of whom shall be a "disinterested person" within the meaning
of Rule 16b-3 under the Securities Exchange Act of 1934 ("Exchange Act"), or
any successor rule or regulation thereto. A majority of the members of the
Committee shall constitute a quorum. All determinations of the Committee shall
be made by a majority of its members. Any decision or determination reduced to
writing and signed by all of the members of the Committee shall be fully
effective as if it had been made by a majority vote at a meeting duly called
and held.
(b) Subject to the express provisions of the Plan, the Committee shall
have complete authority to select the key employees to whom options shall be
granted, to determine the number of shares subject to each option, the time at
which the option is to be granted, the type of option, the option period, the
option price and the manner in which options become exercisable, and shall
establish such other terms and conditions of the options as the Committee may
deem necessary or desirable. In making such determinations, the Committee may
take into account the nature of the services rendered by the respective
employees, their present and potential contribution to the success of their
respective organizations and such other factors as the Committee in its
discretion shall deem relevant. Subject to the express provisions of the Plan,
the Committee shall also have complete authority to interpret the Plan, to
prescribe, amend and rescind the rules and regulations relating to it, and to
make all other determinations necessary or advisable for the administration of
the Plan. The determinations of the Committee on the matters referred to in
this paragraph 3 shall be conclusive.
4. ELIGIBILITY
Any non-employee director ("Director") or key employee ("Employee") of the
Company or its present and future subsidiaries, as defined in Section 424(f) of
the Internal Revenue Code ("Subsidiaries"), whose judgment, initiative and
efforts contribute materially to the successful performance of the Company or
its Subsidiaries, shall be eligible to receive options under the Plan.
-11-
<PAGE> 2
5. SHARES SUBJECT TO THE PLAN
The shares which may be issued pursuant to options under the Plan shall be
shares of the Company's Common Stock, $1.00 par value ("Stock"), and may be
either authorized and unissued or treasury shares. The total number of shares
for which options may be granted and which may be purchased pursuant to options
under the Plan shall not exceed an aggregate of 100,000 shares, subject to
adjustment as provided in the following sentence and in paragraph 12 hereof.
If an option granted under the Plan expires, is canceled or terminates
unexercised as to any shares of Stock subject thereto, or if shares of Stock
are used to satisfy the Company's withholding tax obligations, such shares
shall again be available for the granting of additional options under the Plan.
6. OPTION PRICE
The option price per share of Stock shall be fixed by the Committee, but
shall be not less than 50% (100% in the case of Incentive Stock Options) of the
fair market value of the Stock on the date the option is granted. Unless
otherwise determined by the Committee, the "fair market value" of Stock on the
date of grant shall be the closing price for a share of Stock on such date, or,
if such date is not a trading date, the next preceding trading date as quoted
on the American Stock Exchange Transaction Reporting System.
7. GRANT OF OPTIONS
(a) Subject to the terms and conditions of the Plan, the Committee may,
from time to time, grant to Employees options to purchase such number of shares
of Stock and on such terms and conditions as the Committee may determine. More
than one option may be granted to the same Employee. The day on which the
Committee approves the granting of an option shall be considered as the date on
which such option is granted.
(b) Notwithstanding the foregoing, each Director of the Company who is not
an employee of the Company or any subsidiary or affiliate thereof, and who
first became or becomes a Director after April 23, 1993, shall, upon approval
of the Plan by the shareholders of the Company, or at the time of their first
election to the Board, subject to adjustments as provided in paragraph 12,
automatically receive an option to purchase 3,000 shares of Stock on that date.
Any date on which a Director receives an option shall be referred to as a
"Grant Date". Such options shall be Non-qualified Stock Options with an
expiration date ten (10) years after the Grant Date. The option price per
share shall be the closing price for a share of Stock on the Grant Date, or if
such day is not a trading day, the next preceding trading day as quoted on the
American Stock Exchange Transaction Reporting System.
(c) Notwithstanding the foregoing, each Director or future Director of the
Company who is not an employee of the Company or any subsidiary or affiliate
thereof shall upon approval of the Plan by the shareholders of the Company, or
at the time of their first election to the Board, be entitled to receive an
option to purchase 1,000 shares of Stock on that date in order to increase the
Directors' stake in the future of the Company. Any date on which a Director
receives an option shall be referred to as a Grant Date. Such options shall be
Non-qualified Stock Options with an expiration date ten (10) years after the
Grant Date. The option price per share shall be the closing price for a share
of Stock on the Grant Date, or if such day is not a trading day, the next
preceding trading day as quoted on the American Stock Exchange Transaction
Reporting System.
8. OPTION PERIOD
Except as set forth in paragraph 7, the Committee shall determine the
expiration date of each option, but in the case of Incentive Stock Options such
expiration date shall be not later than ten (10) years after the date such
option is granted.
-12-
<PAGE> 3
9. MAXIMUM PER PARTICIPANT
The aggregate fair market value (determined at the time the option is
granted pursuant to paragraph 7) of the Stock with respect to which any
Incentive Stock Options are exercisable for the first time by an Employee
during any calendar year under the Plan or any other such plan of the Company
or any Subsidiary shall not exceed $100,000.
10. EXERCISE OF OPTIONS
An option may be exercised, subject to its terms and conditions and the
terms and conditions of the Plan, in full at any time or in part from time to
time by delivery to the Company at its principal office of a written notice of
exercise specifying the number of shares with respect to which the option is
being exercised. Any notice of exercise shall be accompanied by full payment
of the option price of the shares being purchased (a) in cash or its
equivalent; or (b) with the consent of the Committee, by delivering to the
Company shares of Stock (valued at their fair market value as of the date of
exercise, as determined by the Committee consistent with the method of
valuation set forth in paragraphs 6 and 7); or (c) with the consent of the
Committee, by any combination of (a) and (b).
11. TRANSFERABILITY
To the extent required in order to comply with Rule 16b-3 or unless
otherwise determined by the Committee, no option shall be assignable or
transferable by a Director or an Employee other than by will or the laws of
descent and distribution, and may be exercised during the life of the Director
or Employee only by the Director or Employee or his guardian or legal
representative.
12. CAPITAL ADJUSTMENTS AFFECTING COMMON STOCK
In the event of a capital adjustment resulting from a stock dividend, stock
split, reorganization, recapitalization, merger, consolidation, combination or
exchange of shares or the like, the number of shares of Stock subject to the
Plan and the aggregate number and class of shares under option in outstanding
option agreements shall be adjusted in a manner consistent with such capital
adjustment; provided, however, that no such adjustment shall require the
Company to sell any fractional shares. The determination of the Committee as
to any adjustment shall be final. Notwithstanding the foregoing, options
subject to grant or previously granted to Directors under the Plan at the time
of any capital adjustments shall be subject only to such adjustments as shall
be necessary to maintain the relative proportionate interest of each Director
and preserve, without exceeding, the value of such options.
13. CORPORATE MERGERS AND OTHER CONSOLIDATIONS
The Committee may also grant options having terms and provisions which vary
from those specified in the Plan provided that any options granted pursuant to
this paragraph are granted in substitution for, or in connection with the
assumption of, existing options granted by another company and assumed or
otherwise agreed to be provided for by the Company pursuant to or by reason of
a transaction involving a corporate merger, consolidation, acquisition or other
reorganization to which the Company is a party.
14. OPTION AGREEMENTS
All options granted under the Plan shall be evidenced by written agreement
(which need not be identical) in such form as the Committee shall determine.
Each option agreement shall specify whether the option granted thereunder is
intended to constitute an Incentive Stock Option or a Non-qualified Stock
Option.
-13-
<PAGE> 4
15. TRANSFER RESTRICTIONS
Shares of Stock purchased under the Plan and held by any person who is an
officer or Director of the Company, or who directly or indirectly controls the
Company, may not be sold or otherwise disposed of except pursuant to an
effective registration statement under the Securities Act of 1933 or except in
a transaction which, in the opinion of counsel for the Company, is exempt from
registration under such Act. The Committee may waive the foregoing
restrictions in whole or in part in any particular case or cases, or may
terminate such restrictions, whenever the Committee determines that such
restrictions afford no substantial benefit to the Company.
16. AMENDMENT OF PLAN
Shareholder approval of any amendment of the Plan shall be obtained if
otherwise required by: (i) the rules and/or regulations promulgated under
Section 16 of the Exchange Act (in order for the Plan to remain qualified under
Rule 16b-3); (ii) the Internal Revenue Code of 1986, as amended, or any rules
promulgated thereunder (in order to allow for Incentive Stock Options to be
granted under the Plan); or (iii) the listing requirements of the American
Stock Exchange or any principal securities exchange or market on which the
Stock is then traded (in order to maintain the quotation or listing of the
Stock thereon). The provisions of paragraphs 7(b) and 7(c) cannot be amended
more than once every six (6) months other than to comport with changes in the
Internal Revenue Code of 1986, as amended, the Employee Retirement Income
Security Act of 1974, as amended, or the rules and regulations thereunder.
17. TERMINATION OF PLAN
The Board shall have the right to suspend or terminate the Plan at any
time; provided, however, that no Incentive Stock Options may be granted after
the tenth (10th) anniversary of the effective date of the Plan as described in
paragraph 2 hereof. Termination of the Plan shall not affect the rights of
Employees or Directors under options previously granted to them, and all
unexpired options shall continue in force and operation after termination of
the Plan except as they may lapse or be terminated by their own terms and
conditions.
18. TAX WITHHOLDING
(a) The Company may deduct and withhold from any cash otherwise payable to
an Employee such amount as may be required for the purpose of satisfying the
Company's obligation to withhold federal, state or local taxes as the result of
the exercise of an option. In the event the amount so withheld is insufficient
for such purpose, the Company may require that the Employee pay to the Company
upon its demand or otherwise make arrangements satisfactory to the Company for
payment of such amount as may be requested by the Company in order to satisfy
its obligation to withhold any such taxes.
(b) With the consent of the Committee, an Employee may be permitted to
satisfy the Company's withholding tax requirements by electing to have the
Company withhold shares of Stock otherwise issuable to the Employee or to
deliver to the Company shares of Stock having a fair market value on the date
income is recognized pursuant to the exercise of an option equal to the amount
required to be withheld. The election shall be made in writing and shall be
made according to such rules and procedures as the Committee may determine,
including, without limitation, such procedures as may be necessary to satisfy
the requirements of Rule 16b-3.
19. RIGHTS AS A SHAREHOLDER
A Director or an Employee shall have no rights as a shareholder with
respect to any shares subject to any option until the date the options shall
have been exercised, the shares shall have been fully paid and a stock
certificate shall have been issued.
-14-
<PAGE> 1
Exhibit (11.0)
BADGER METER, INC.
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
June 30, June 30,
-------- --------
1996 1995 1996 1995
---- ---- ---- ----
(1) (2) (1) (2)
<S> <C> <C> <C> <C>
PRIMARY
- - -------
Shares
- - ------
Average shares outstanding 1,769,489 1,754,092 1,765,138 1,752,792
Shares issuable upon exercise of
stock options 55,232 37,277 58,722 32,589
--------- --------- --------- ---------
Total 1,824,721 1,791,369 1,823,860 1,785,381
========= ========= ========= =========
Earnings
- - --------
Net earnings applicable to adjusted
common shares $1,389 $1,051 $2,277 $1,908
====== ====== ====== ======
Per share amounts
- - -----------------
Net earnings per share $.76 $.59 $1.25 $1.07
==== ==== ===== =====
FULLY DILUTED
- - -------------
Shares
- - ------
Average shares outstanding 1,769,489 1,754,092 1,765,138 1,752,792
Shares issuable upon exercise of
stock options 55,494 37,277 62,932 32,835
--------- --------- --------- ---------
Total 1,824,983 1,791,369 1,828,070 1,785,627
========= ========= ========= =========
Earnings
- - --------
Earnings applicable to adjusted
common shares $1,389 $1,051 $2,277 $1,908
====== ====== ====== ======
Per share amounts
- - -----------------
Net earnings per share $.76 $.59 $1.25 $1.07
==== ==== ===== =====
Percentage dilution (1) 3.0% 2.0% 3.4% 1.8%
==== ==== ==== ====
</TABLE>
(1) In 1996, earnings per share for financial statement purposes includes
Common Stock equivalents since dilution is 3%.
(2) In 1995, earnings per share for financial statement purposes does not
include Common Stock equivalents since dilution is less than 3%.
-15-
<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> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 159
<SECURITIES> 0
<RECEIVABLES> 16,415
<ALLOWANCES> 0
<INVENTORY> 17,093
<CURRENT-ASSETS> 34,423
<PP&E> 54,524
<DEPRECIATION> (37,065)
<TOTAL-ASSETS> 63,749
<CURRENT-LIABILITIES> 16,392
<BONDS> 0
0
0
<COMMON> 1,266
<OTHER-SE> 32,789
<TOTAL-LIABILITY-AND-EQUITY> 63,749
<SALES> 57,177
<TOTAL-REVENUES> 57,177
<CGS> 36,453
<TOTAL-COSTS> 53,220
<OTHER-EXPENSES> 116
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 221
<INCOME-PRETAX> 3,620
<INCOME-TAX> 1,343
<INCOME-CONTINUING> 2,277
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,277
<EPS-PRIMARY> 1.25
<EPS-DILUTED> 1.25
</TABLE>
