-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NhdEnycJctyLYNgXOwlqULPo8FnYSQIXnDBjNEox47o+YMqp08Jf3bMO7QJriN9L DGkQImCIYrhHefQTbFBBhQ== 0000950124-96-001346.txt : 19960328 0000950124-96-001346.hdr.sgml : 19960328 ACCESSION NUMBER: 0000950124-96-001346 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960327 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: BADGER METER INC CENTRAL INDEX KEY: 0000009092 STANDARD INDUSTRIAL CLASSIFICATION: TOTALIZING FLUID METERS & COUNTING DEVICES [3824] IRS NUMBER: 390143280 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06706 FILM NUMBER: 96539155 BUSINESS ADDRESS: STREET 1: 4545 WEST BROWN DEER ROAD STREET 2: C/O CORPORATE SECRETARY CITY: MILWAUKEE STATE: WI ZIP: 53223-0099 BUSINESS PHONE: 4143550400 FORMER COMPANY: FORMER CONFORMED NAME: BADGER METER MANUFACTURING CO DATE OF NAME CHANGE: 19710729 10-K 1 10-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [Fee Required] For the fiscal year ended December 31, 1995 [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [No Fee Required] For the transition period from____________to____________ Commission file number 1-6706 BADGER METER, INC. (Exact name of registrant as specified in charter) WISCONSIN 39-0143280 (State of Incorporation) (I.R.S. Employer Identification No.) 4545 W. BROWN DEER ROAD MILWAUKEE, WISCONSIN 53223 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 414 - 355-0400 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of class: on which registered: Common Stock American Stock Exchange Securities registered pursuant to Section 12(g) of the Act: NONE 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 and (2) has been subject to such filing requirements for the past 90 days. YES __X__ NO ____ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of voting stock held by nonaffiliates of the registrant was $31,095,900 as of February 29, 1996. At February 29, 1996, the registrant had 1,199,507 shares of Common Stock outstanding and 562,785 shares of Class B Common Stock outstanding. Documents Incorporated by Reference: Parts I and II incorporate information by reference from the Company's 1995 Annual Report to Shareholders. Part III incorporates information by reference from the definitive Proxy Statement for the Annual Meeting of Shareholders to be held on April 19, 1996 [to be filed with the Securities and Exchange Commission under Regulation 14A within 120 days after the end of the registrant's fiscal year]. 2 Part I Item 1. Business Badger Meter, Inc. (the Company) is a marketer and manufacturer of products using flow measurement and control technology serving industrial and utility markets worldwide. The Company's two major markets are within a single business segment. The Company was incorporated in 1905. The Company serves the flow measurement and control market with products including water meters and associated systems, wastewater meters, industrial meters, small valves and natural gas instrumentation. Because of marketing differences, the water meters and associated systems have been assigned to the Utility Division, and all of the other products to the Industrial Division. Beginning in 1997, the Company will expand into three operating units: Utility, Industrial and International. The Utility and Industrial Divisions will market their products in the United States and Canada while the International Division will market both Utility and Industrial products throughout the world except for the United States and Canada. Industrial Division The Industrial Division markets and manufactures products which are sold to industrial, certain municipal, and OEM (original equipment manufacturer) customers. There are six major markets for Industrial Division products: energy and petroleum; food and beverage; pharmaceutical; chemical; water, wastewater and process waters; and concrete. Sub-markets, niches, and applications within each market are numerous and many products serve more than one market. Many industrial products are custom engineered for highly technical, unique applications. The Industrial Division's products include ultrasonic flowmeters, precision control valves, flowmeters, energy instruments, disc meters, turbo meters, oscillating piston meters, flow tubes, lube meters, process controllers, allied instrumentation and parts. Industrial Division products are sold throughout the world through various selling arrangements including direct sales, distributors and independent sales representatives. A variety of products are available to satisfy the customers' needs. Within the sub-markets and niches, several of the products, including the research control valve, turbo valves for concrete batch plants and the lubrication meter, enjoy a strong market position. There are several competitors in each of the markets in which the Company sells the foregoing products, and the competition varies from moderate to intense. A number of the Company's competitors in certain markets have greater financial resources. The Company believes it currently provides the leading technology in certain types of high precision valves, energy instruments and ultrasonic flowmeters. Technological differentiation and customization to various flow applications are important. As a result of significant research and development activities, the Company enjoys a favorable patent position for its natural gas instrumentation products. At December 31, 1995, the backlog for Industrial Division products was $5,570,000 versus $4,584,000 at year-end 1994. The Industrial Division is not dependent on a single customer or group of customers, and there is only a modest seasonal impact on sales. There is no single-source dependency for raw materials used in Industrial Division products. Industrial products utilize microprocessors, plastic resins, and metals or alloys, such as aluminum, stainless steel, cast iron, brass and stellite. -2- 3 Utility Division The Utility Division markets and manufactures products which are sold to public and private water and natural gas utilities. Principal products include disc meters, turbo and compound meters, and automated and automatic remote meter reading systems. The Utility Division also supplies custom molded plastic products on an OEM basis to non-utility customers from its Rio Rico, Arizona facility. Water meters and meter reading devices purchased by utilities to generate income from residential water usage constitute the Company's only class of product which contributed 10% or more to total sales. The percent of the Company's total sales attributable to sales of such class of products for the past three years is as follows: 1995, 66%; 1994, 62%; 1993, 58%. Some of the sales in the Utility Division markets are by competitive bid. In addition to price, some customers consider quality and customer service in making purchasing decisions. Public bids for water meters may include both small and large meters. At December 31, 1995, the Utility Division backlog was $7,442,000 versus the December 31, 1994 backlog of $11,929,000. The 1994 backlog included approximately $4,000,000 of a large Mexican order, most of which was shipped in 1995. The Company believes that its sales exceed 25% of the total sales in the domestic small-meter market, and considerably less of the total sales in the domestic large-meter market. Major competitors include Sensus Technologies, Inc., Schlumberger Industries, Inc. and ABB-Kent Meters, Inc. The Utility Division products are sold by direct salespersons and through distributors. The Utility Division products are marketed throughout North America and, to a lesser extent, in Central and South America and Europe. The most important raw materials for Utility Division products are bronze castings, plastic resins, electronic subassemblies and glass. There are multiple sources for these raw materials, but the Company purchases bronze castings from a single supplier. The Company believes bronze castings would be available from other sources, but that the loss of its current supplier would result in higher cost of castings, short-term increases in inventory and higher quality control costs. Prices may be affected by world commodity markets. No single customer accounts for 10% or more of the total sales of the Company. Backlog The dollar amount of the Company's total backlog of unshipped orders at December 31, 1995 and 1994 was $13,012,000 and $16,513,000, respectively. All of the December 31, 1995 backlog is expected to be shipped in 1996. Research and Development Expenditures for research and development activities relating to the development of new products, the improvement of existing products and manufacturing process improvements were $3,858,000 during 1995, as compared to $3,278,000 during 1994 and $3,642,000 during 1993. Research and development activities are primarily sponsored by the Company. Intangible Assets The Company owns or controls many patents, trademarks, tradenames and license agreements, in the United States and other countries, related to its products and technologies in both the Industrial and Utility Divisions. No single patent, trademark, tradename or license is material to the Company's business as a whole. -3- 4 Environmental Protection The Company is subject to contingencies relative to the compliance with Federal, State and local provisions and regulations relating to the protection of the environment. Currently the Company is in the process of resolving several cases relative to Superfund sites. Provision has been made for any known settlement costs. Expenditures during 1995 for compliance with environmental control provisions and regulations were not material. To insure compliance with all environmental regulations at all company sites, in 1991 the Board of Directors established a Compliance Committee which provides monitoring of the Company's compliance with all regulatory authorities in regard to, among other things, environmental matters. Employees The Company and its subsidiaries employed 904 persons at December 31, 1995. International Operations The Company has distributors throughout the world. Additionally, the Company has a sales, assembly, and distribution facility in Stuttgart, Germany, a sales and customer service office in Mexico City and an assembly facility in Nogales, Sonora, Mexico. The Company exports products manufactured in Milwaukee, WI., Tulsa, OK., and Rio Rico, AZ. In January 1996, a Vice President - International was hired. His responsibility will be to manage the distribution of all of the Company's products in all countries outside of the United States and Canada. Financial Information about Foreign Operations and Export Sales Information about the Company's foreign operations and export sales is included on page 26 of the Company's 1995 Annual Report to Shareholders and such information is incorporated herein by reference. Financial Information About Industry Segments The Company operates in one industry segment as a marketer and manufacturer of various flow measurement products. Item 2. Properties The principal facilities utilized by the Company at December 31, 1995, are listed below. Except as indicated, all of such facilities are owned in fee simple by the Company. Approximate Area Location Principal Use (Square Feet) ----------- ----------------------------------- ------------------ Brown Deer, Wisconsin Manufacturing and offices 287,000 Tulsa, Oklahoma Manufacturing and offices 89,500(1) Rio Rico, Arizona Manufacturing and offices 36,000 Nogales, Mexico Assembly, manufacturing and offices 41,700(2) Stuttgart, Germany Assembly, manufacturing and offices 8,253(3)
-4- 5 (1) Includes 30,000 sq. ft. leased facility. Lease term expires December 31, 1996. (2) Leased facility. Lease term exprires January 31, 1998. (3) Leased facility. Lease expires December, 1998. In addition to the foregoing facilities, the Company leases several sales offices. The Company believes that its facilities are generally well maintained and have sufficient capacity for its current needs. Item 3. Legal Proceedings There are currently no material legal proceedings pending with relation to the Company. Item 4. Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of the Company's shareholders during the quarter ended December 31, 1995. Executive Officers of the Company The following table sets forth certain information regarding the executive officers of the Company. Age at Name Position 2/29/96 ------------------------ --------------------------------------- ------- James L. Forbes President and Chief 63 Executive Officer Robert D. Belan Vice President - Utility Division 55 William H. Vander Heyden Vice President - Industrial Division 59 Ronald H. Dix Vice President Administration 51 and Human Resources Deirdre C. Elliott Vice President - Corporate Counsel 39 and Secretary Richard A. Meeusen Vice President - Finance, Treasurer and 41 Chief Financial Officer William J. Shinners Vice President-Controller 61 Theodore N. Townsend Vice President - International 51
There are no family relationships between any of the executive officers. All of the officers are elected annually at the first meeting of the Board of Directors held after each annual meeting of the shareholders. Each officer holds office until his successor has been elected or until his death, resignation or removal. There is no arrangement or understanding between any executive officer and any other person pursuant to which he was elected as an officer. Mr. Forbes has served as President and Chief Executive Officer for more than five years. Mr. Belan was elected Vice President - Utility Divison in March 1992. In October 1991, he was appointed President of the Utility Division and currently also serves in that capacity. From September 1989 to October 1991, he was Vice President of Operations in the Utility Division. -5- 6 Mr. Vander Heyden was elected Vice President - Industrial Division in April 1993. From April 1989 to April 1993, Mr. Vander Heyden was Executive Vice President and Chief Technical Officer. Mr. Vander Heyden was appointed President of the Industrial Division in 1990 and currently also serves in that capacity. Mr. Dix has served as Vice President of Administration and Human Resources for more than five years. Ms. Elliott was elected Vice President - Corporate Counsel and Secretary in December 1993. From October 1991 to December 1993, she served as Vice President - Corporate Counsel. Ms. Elliott joined the Company in February 1991 as Corporate Counsel. Mr. Meeusen joined the Company and was elected Vice President - Finance and elected Chief Financial Officer in November 1995 and was elected Treasurer in January 1996. Prior to joining the Company, Mr. Meeusen was Vice President - - Finance and Treasurer for Zenith Sintered Products for more than five years. Mr. Shinners was elected Vice President-Controller of the Company in April 1989. Mr. Townsend joined the Company and was elected Vice President - International in February 1996. From 1993 to 1995, Mr. Townsend was Managing Director of International Gas Measurement, based in London England for twelve companies related to Elster/Kromshroder and American Meter Companies. From 1990 to 1992, Mr. Townsend was a Vice President of American Meter Company. Part II Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters The information set forth on page 26 in the Company's 1995 Annual Report to Shareholders is incorporated herein by reference in response to this Item. Item 6. Selected Financial Data The information set forth on pages 1 and 28 in the Company's 1995 Annual Report to Shareholders is incorporated herein by reference in response to this Item. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The information set forth on pages 14,15 and 16 in the Company's 1995 Annual Report to Shareholders is incorporated herein by reference in response to this Item. Item 8. Financial Statements and Supplementary Data Consolidated financial statements of the Company at December 31, 1995 and 1994 and for each of the three years in the period ended December 31, 1995 and the auditor's report thereon and the Company's unaudited quarterly financial data for the two-year period ended December 31, 1995 are incorporated herein by reference from the 1995 Annual Report to Shareholders, pages 17 through 27. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. -6- 7 Part III Item 10. Directors and Executive Officers of the Registrant Information required by this Item with respect to directors is included under the headings "Nomination and Election of Directors" and "Other Matters" in the Company's definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on April 19, 1996, and is incorporated herein by reference. Information concerning the executive officers of the Company is included in Part I of this Form 10-K. Item 11. Executive Compensation Information required by this Item is included under the headings "Nomination and Election of Directors - Director Compensation" and "Executive Compensation" in the Company's definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on April 19, 1996, and is incorporated herein by reference; provided, however, that the subsection entitled "Executive Compensation-Board Compensation Committee Report on Executive Compensation" shall not be deemed to be incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management Information required by this Item is included under the heading "Stock Ownership of Management and Others" in the Company's definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on April 19, 1996, and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions Information required by this Item is included under the headings "Compensation Committee Interlocks and Insider Participation" and "Certain Transactions" in the Company's definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on April 19, 1996, and is incorporated herein by reference. Part IV Item 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K. (a) Documents filed 1. and 2. Financial Statements and Financial Statement Schedule. See index to Financial Statements and Financial Statement Schedule on page F-0 which is incorporated herein by reference. 3. Exhibits. See the Exhibit Index included as the last pages of this report which is incorporated herein by reference. (b) Reports on Form 8-K No report on Form 8-K was required to be filed by the Registrant during the quarter ended December 31, 1995. -7- 8 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized. BADGER METER, INC. Registrant By: /s/ Richard A. Meeusen By: /s/ Deirdre C. Elliott -------------------------------------- ------------------------------ Richard A. Meeusen Deirdre C. Elliott Vice President - Finance and Treasurer Vice President - Corporate Chief Financial Officer Counsel and Secretary February 16, 1996 February 16, 1996 By: /s/ William J. Shinners -------------------------------------- William J. Shinners Vice President - Controller Chief Accounting Officer February 16, 1996 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated: /s/ James O. Wright /s/ James L. Forbes - ------------------------- ------------------------ James O. Wright James L. Forbes Director and Chairman Director, President and February 16, 1996 Chief Executive Officer February 16, 1996 /s/ Robert M. Hoffer /s/ Pamela B. Strobel - ------------------------- ------------------------ Robert M. Hoffer Pamela B. Strobel Director Director February 16, 1996 February 16, 1996 /s/ Charles F. James, Jr. /s/ Warren R. Stumpe - ------------------------- ------------------------ Charles F. James, Jr. Warren R. Stumpe Director Director February 16, 1996 February 16, 1996 /s/ Donald J. Schuenke /s/ Edwin P. Wiley - ------------------------- ------------------------ Donald J. Schuenke Edwin P. Wiley Director Director February 16, 1996 February 16, 1996 /s/ John J. Stollenwerk /s/ James O. Wright, Jr. - ------------------------- ------------------------ John J. Stollenwerk James O. Wright, Jr. Director Director February 16, 1996 February 16, 1996 9 BADGER METER, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
Page References Annual Report to Shareholders Form 10-K Page Number Page Number ------------- ----------- Item 14(a) 1 Financial statements: Consolidated balance sheets at December 31, 1995 and 1994 18 Consolidated statements of operations for each of the three years in the period ended December 31, 1995 17 Consolidated statements of cash flows for each of the three years in the period ended December 31, 1995 19 Consolidated statements of shareholders' equity for each of the three years in the period ended December 31, 1995 20 Notes to consolidated financial statements 21 - 26 Item 14(a) 2 Financial statement schedules: Consolidated schedules for each of the three years in the period ended December 31, 1995: II - Valuation and qualifying accounts F-1
All other schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedules, or because the information required is included in the financial statements and the notes thereto. F-0 10 BADGER METER, INC. SCHEDULE II - CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS Years ended December 31, 1995, 1994, and 1993
Balance at Additions Deductions Balance beginning charged to from at end of year earnings allowances of year Allowance for doubtful receivables: 1995 $135,000 $137,000 $56,000(a) $216,000 ======== ======== ========== ======== 1994 $ 99,000 $ 62,000 $26,000(a) $135,000 ======== ======== ========== ======== 1993 $ 88,000 $ 40,801 $29,801(a) $ 99,000 ======== ======== ========== ========
Note: (a) Accounts receivable written off, less recoveries, against the allowance. F-1 11 EXHIBIT INDEX
Exhibit No. Exhibit Description Page No. - ----------- ------------------- -------- (3.0) Restated Articles of Incorporation effective April 23, 1993. [Incorporated -- by reference from Exhibit (4.3) to the Registrant's Form S-8 Registration Statement (Registration No. 33-65618)]. (3.1) Restated By-Laws as amended February 16, 1996. Included (4.0) Loan Agreement between the First Wisconsin National Bank of Milwaukee -- and the Badger Meter Employee Stock Ownership Plan and Trust, dated June 22, 1984. [Incorporated by reference from Exhibit (4.1) to the Registrant's Quarterly Report on Form 10-Q for the period ended June 30, 1984]. (4.1) Loan Agreement, as amended April 30, 1988, between the Registrant and -- the M&I Marshall & Ilsley Bank relating to the Registrant's revolving credit loan. [Incorporated by reference from Exhibit (4.0) to the Registrant's Quarterly Report on Form 10-Q for the period ended March 31, 1988]. (4.2) Loan Agreement between the First Wisconsin National Bank of Milwaukee and -- the Badger Meter Employee Stock Ownership Plan and Trust, dated August 2, 1990. [Incorporated by reference from Exhibit (10.0) to the Registrant's Quarterly Report on Form 10-Q for the period ended September 30, 1990]. (4.3) Loan Agreement between Firstar Bank Milwaukee, N.A. and The Badger Meter Employee Included Savings and Stock Ownership Plan and Trust, dated December 1, 1995. (9.0) Badger Meter, Inc. Voting Trust Agreement dated June 1, 1953 as amended. -- [Incorporated by reference from Exhibit (13) to the Registrant's Form 10 dated April 28, 1967]. (9.1) Badger Meter Officers' Voting Trust Agreement dated December 18, 1991. -- [Incorporated by reference from Exhibit (9.1) to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1991]. (10.0) * Badger Meter, Inc. Restricted Stock Plan, as amended. [Incorporated by -- reference from Exhibit (4.1) to the Registrant's Form S-8 Registration Statement (Registration No. 33-27649)]. (10.1) * Badger Meter, Inc. 1989 Stock Option Plan. [Incorporated by reference from -- Exhibit (4.1) to the Registrant's Form S-8 Registration Statement (Registration No. 33-27650)]. (10.2) * Badger Meter, Inc. 1993 Stock Option Plan. [Incorporated by reference -- from Exhibit (4.3) to the Registrant's Form S-8 Registration Statement (Registration No. 33-65618)]. (10.3) * Badger Meter, Inc. Deferred Compensation Plan. [Incorporated by -- reference from Exhibit (10.5) to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1993]. (10.4) * Badger Meter, Inc. 1995 Stock Option Plan [Incorporated by reference -- from Exhibit (4.1) to the Registrants Form S-8 Registration Statement (Registration No. 033-62239)].
* A management contract or compensatory plan or arrangement. 12 EXHIBIT INDEX (CONTINUED)
Exhibit No. Exhibit Description Page No. - ----------- ------------------- --------- (10.5) Badger Meter, Inc. Employee Savings and Stock Ownership Plan -- [Incorporated by reference from Exhibit (4.1) to the Registrants Form S-8 Registration Statement (Registration No. 033-62241)]. (10.6) * Long-Term Incentive Plan. Included (10.7) * Badger Meter, Inc. Supplemental Non-Qualified Unfunded Pension Plan. Included (11.0) Computation of fully diluted earnings per share. Included (13.0) Portions of the Annual Report to Shareholders that are incorporated by reference. Included (21.0) Subsidiaries of the Registrant. Included (23.0) Consent of Ernst & Young LLP, Independent Auditors. Included (27.0) Financial Data Schedule. Included (99.0) Definitive Proxy Statement for the Annual Meeting of Shareholders to be held -- April 19, 1996. [To be filed with the Securities and Exchange Commission under Regulation 14A within 120 days after the end of the Registrant's fiscal year. With the exception of the information incorporated by reference into Items 10, 11, 12 and 13 of this Form 10-K, the definitive Proxy Statement is not deemed filed as part of this report].
EX-3.1 2 BY-LAWS 1 Exhibit (3.1) RESTATED BY-LAWS OF BADGER METER, INC. (AS AMENDED FEBRUARY 16, 1996) ARTICLE I SHAREHOLDERS Section 1. Annual Meeting. The annual meeting of shareholders of the Corporation shall be held on the second Saturday in April of each year, at the registered office of the Corporation in Brown Deer, Wisconsin, or at such other time or place as may be designated by the directors, for the purpose of electing directors and for the transaction of such other business as may be brought before the meeting. Section 2. Special Meetings. Special meetings of the shareholders of the Corporation may be called by the Chairman, the President or the Board of Directors, and shall be called by the Secretary on a written request to him signed by the holders of record of one-tenth of all the outstanding shares entitled to vote at the meeting. In the event a meeting is called on request of shareholders as aforesaid, the Secretary shall designate a date not more than fifteen (15) days following the receipt by him of such written request as the date of the meeting. Special meetings shall be held at such place in Brown Deer, Wisconsin or elsewhere, and at such time as the Chairman, the President or Board of Directors may designate; and in case the Chairman, the President or Board of Directors shall fail or neglect to make such designation, the Secretary shall designate the time and place of such meeting. Section 3. Notice of Meeting. Written notice stating the place, day and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) days nor more than fifty (50) days before the date of the meeting, either personally or by mail, by or at the direction of the Chairman, the President, or the Secretary, or other officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting unless a different period is required by law or the Articles of Incorporation. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his address as it appears on the stock record books of the Corporation with postage thereon prepaid. Section 4. Closing of Transfer Books or Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors shall fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than seventy (70) days and not less then ten (10) days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall be applied to any adjournment thereof except that no such adjourned meeting shall be held more than seventy (70) days after the date fixed for such determination of shareholders. Section 5. Voting Lists. The officer or agent having charge of the stock transfer books for shares of the Corporation shall make a complete list of the shareholders entitled to vote at such meeting, or any adjournment thereof, with the address of and the number of shares held by each, which list shall be produced and kept open at the offices of the Corporation and shall be subject to the inspection of any shareholder during the period beginning two (2) business days after notice of the meeting for which the list was prepared was given and continuing to the date of the meeting. 2 The original stock transfer books shall be prima facie evidence as to who are the shareholders entitled to examine such list or transfer books or to vote at any meeting of shareholders. Failure to comply with the requirements of this section shall not affect the validity of any action taken at such meeting. Section 6. Quorum. Except as otherwise provided in the Articles of Incorporation, a majority of votes represented by shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. Once a share is represented for any purpose at the meeting, other than for the purpose of objecting to holding the meeting or transacting business at the meeting, it is considered present for purposes of determining whether a quorum exists for the remainder of the meeting and for any adjournment of that meeting unless a new record date is set or must be set for the adjourned meeting. If a quorum is present, the affirmative vote of the majority of the votes represented by shares at the meeting and entitled to vote on the subject matter shall be the act of the shareholders unless the vote of a greater number or voting by classes is required by law or the Articles of Incorporation. Though less than a quorum of the outstanding shares are represented at a meeting, a majority of the votes represented by the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. Section 7. Voting of Shares. Each outstanding share shall be entitled to one vote upon each matter submitted to a vote at a meeting of shareholders, except to the extent that the voting rights of the shares of any class or classes are enlarged, limited or denied by the Articles of Incorporation. Section 8. Proxies. At all meetings of shareholders, a shareholder entitled to vote may vote in person or by proxy appointed in writing by the shareholder or by his duly authorized attorney in fact. Such proxy shall be filed with the Secretary of the Corporation before or at the time of the meeting. Unless otherwise provided in the proxy, a proxy may be revoked at any time before it is voted, either by written notice filed with the Secretary or the acting secretary of the meeting or by oral notice given by the shareholder to the presiding officer during the meeting. The presence of a shareholder who has filed his proxy shall not of itself constitute a revocation. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy. The Board of Directors shall have the power and authority to make rules establishing presumptions as to the validity and sufficiency of proxies. Section 9. Acceptance of Instruments Showing Shareholder Action. If the name signed on a vote, consent, waiver or proxy appointment corresponds to the name of a shareholder, the Corporation, if acting in good faith, may accept the vote, consent, waiver, or proxy appointment and give it effect as the act of a shareholder. If the name signed on a vote, consent, waiver, or proxy appointment does not correspond to the name of a shareholder, the Corporation, if acting in good faith, may accept the vote, consent, waiver, or proxy appointment and give it effect as the act of the shareholder if any of the following apply: (a) The shareholder is an entity and the name signed purports to be that of an officer or agent of the entity. (b) The name purports to be that of a personal representative, administrator, executor, guardian or conservator representing the shareholder and, if the corporation requests, evidence of fiduciary status acceptable to the corporation is presented with respect to the vote, consent, waiver or proxy appointment. (c) The name signed purports to be that of a receivor or trustee in bankruptcy of the shareholder and, if the corporation requests, evidence of the status acceptable to the corporation is presented with respect to the vote, consent, waiver or proxy appointment. (d) The name signed purports to be that of a pledgee, beneficial owner, or attorney-in-fact of the shareholder and, if the corporation requests, evidence acceptable to the corporation of the signatory's authority to sign for the shareholder is presented with respect to the vote, consent, waiver or proxy appointment. 2 3 (e) Two or more persons are the shareholders as co-tenants or fiduciaries and the name signed purports to be the name of at least one of the co-owners and the person signing appears to be acting on behalf of all co-owners. The corporation may reject a vote, consent, waiver or proxy appointment if the Secretary or other officer or agent of the Corporation authorized to tabulate votes, acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory's authority to sign for the shareholder. Section 10. Waiver of Notice by Shareholders. Whenever any notice whatever is required to be given to any shareholder of the Corporation under the Articles of Incorporation or By-laws or any provision of law, a waiver thereof in writing, signed at any time, whether before or after the time of meeting, by the shareholder entitled to such notice, shall be deemed equivalent to the giving of such notice; provided that such waiver in respect to any matter of which notice is required under any provisions of the Wisconsin Business Corporation Law, shall contain the same information as would have been required to be included in such notice, except the time and place of meeting. ARTICLE II BOARD OF DIRECTORS Section 1. General Powers and Number. All corporate powers of the Corporation shall be exercised by or under the authority of, and the business and affairs of the Corporation managed under, the direction of its Board of Directors, which shall consist of ten (10) directors. The Board of Directors shall elect one of its members as Chairman, who, when present, shall preside at all meetings of the shareholders and Board of Directors. Section 2. Tenure and Qualifications. Each director shall hold office until the next annual meeting of shareholders and until his successor shall have been elected, or until his prior death, resignation or removal. A director may be removed from office by affirmative vote of a majority of the outstanding shares entitled to vote for the election of such director, taken at a meeting of shareholders called for that purpose. A director shall not be eligible to stand for re-election at the next annual meeting of shareholders following his 70th birthday, except that any directors who are over 70 years old and hold office before February 19, 1993, may be entitled to be re-elected without limitation and to hold office until death, resignation or removal. A director may resign at any time by delivering written notice which complies with the Wisconsin Business Corporation Law to the Board of Directors, to the Chairman of the Board, if any, or to the corporation. A director's resignation is effective when such notice is delivered unless the notice specifies a later date. Directors need not be residents of the State of Wisconsin or shareholders of the Corporation. Section 3. Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than this By-law immediately after, and at the same place as, the annual meeting of shareholders, and each adjourned session thereof. The Board of Directors may provide, by resolution, the time and place, either within or without the State of Wisconsin, for the holding of additional regular meetings without other notice than such resolution. Section 4. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the Chairman, the President, Secretary or any two directors. The person or persons calling any special meeting of the Board of Directors may fix any place, either within or without the State of Wisconsin, as the place for holding any special meeting of the Board of Directors called by them, and if no other place is fixed, the place of meeting shall be the principal business office of the Corporation in the State of Wisconsin. 3 4 Section 5. Notice; waiver. Notice of each meeting of the Board of Directors (unless otherwise provided in or pursuant to Section 4, Article II) shall be given by written notice delivered personally or given by telegram, teletype, facsimile or other form of wire or wireless communication not less than twenty-four (24) hours prior to the meeting or mailed or delivered by private carrier not less than forty-eight (48) hours prior to the meeting to each director at his business address or at such other address as such director shall have designated in writing filed with the Secretary. If mailed or delivered by a private carrier, such notice shall be deemed to be delivered when deposited in the United States mail or delivered to the private carrier so addressed, with postage or delivery cost thereon prepaid. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. If notice be given by teletype, facsimile or other form of wire or wireless communication, such notice shall be deemed to be delivered when evidence of its transmittal is received. Whenever any notice whatever is required to be given to any director of the Corporation under the Articles of Incorporation or By-laws or any provision of law, a waiver thereof in writing, signed at any time, whether before or after the time of meeting, by the director entitled to such notice, shall be deemed equivalent to the giving of such notice. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting and objects thereat to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. Section 6. Quorum. A majority of the directors shall constitute a quorum for the transaction of business; and, except as otherwise provided by law or by the Articles of Incorporation or these By-laws, a majority of the votes cast at any meeting of the Board of Directors at which a quorum is present shall be decisive of any action. A majority of the directors present at a meeting, though less than quorum, may adjourn the meeting from time to time without further notice. Section 7. Vacancies. Any vacancy occurring in the Board of Directors, including a vacancy created by an increase in the number of directors, may be filled until the next succeeding annual election by the affirmative vote of a majority of the directors then in office, though less than a quorum of the Board of Directors; provided, that in case of a vacancy created by the removal of a director by vote of the shareholders, the shareholders shall have the right to fill such vacancy at the same meeting or any adjournment thereof. Section 8. Compensation. The Board of Directors, by affirmative vote of a majority of the directors then in office, and irrespective of any personal interest of any of its members, may establish reasonable compensation of all directors for services to the Corporation as directors, officers or otherwise, or may delegate such authority to an appropriate committee. The Board of Directors also shall have authority to provide for or to delegate authority to an appropriate committee to provide for reasonable pensions, disability or death benefits, and other benefits or payments, to directors, officers and employees and to their estates, families, dependents or beneficiaries on account of prior services rendered by such directors, officers and employees to the Corporation. Section 9. Presumption of Assent. A director of the Corporation who is present at a meeting of the Board of Directors or a committee thereof of which he is a member at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. 4 5 Section 10. Committees. The Board of Directors by resolution adopted by the affirmative vote of a majority of the number of directors set forth in Section 1 of this Article II may designate one or more committees, each committee to consist of three or more directors elected by the Board of Directors, which shall have and may exercise, when the Board of Directors is not in session, the powers of the Board of Directors in the management of the business and affairs of the Corporation, in the committee's designated area of responsibility, except action in respect to dividends to shareholders, election of the principal officers or the filling of vacancies on the Board of Directors or committees created pursuant to this section, with respect to the approval or proposal of actions that the law requires to be approved by the shareholders, amendment of the Articles of Incorporation, the adoption, amendment or repeal of the by-laws, the approval of a plan of merger not requiring shareholder approval, the authorization or approval of the re-acquisition of shares other than according to a method prescribed by the Board of Directors, and the authorization for approval of the issuance or sale or contract for sale of shares, or the determination of the designation and relative rights, preferences and limitations of a class or series of shares, unless authorized to do so by the Board of Directors within prescribed limits. The Board of Directors may elect one or more of its members as alternate members of any such committee who may take the place of any absent member or members at any meeting of such committee, upon request by the Chairman or upon request by the chairman of such meeting. Each such committee shall fix its own rules governing the conduct of its activities and shall make such reports to the Board of Directors of its activities as the Board of Directors may request. Section 11. Unanimous Consent Without Meeting. Any action required or permitted by the Articles of Incorporation or By-laws or any provision of law to be taken by the Board of Directors at a meeting or by resolution may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors then in office. Section 12. Telephonic Meetings. Notwithstanding any place set forth in the notice of the meeting or these By-laws, members of the Board of Directors may participate in regular or special meetings of the Board of Directors and all Committees of the Board of Directors by or through the use of any means of communication by which all directors participating may simultaneously hear each other, such as by conference telephone; provided, however, that the Chairman of the Board or the chairman of the respective Committee and the Board or other person or persons calling a meeting may determine that the directors cannot participate by such means, in which case the notice of the meeting, or other notice to directors given prior to the meeting, shall state that each director's physical presence shall be required. If a meeting is conducted through the use of such means of communication, then at the commencement of such meeting all participating directors shall be informed that a meeting is taking place at which official business may be transacted. A director participating in a meeting by such means shall be deemed present in person at such meeting. ARTICLE III OFFICERS Section 1. General Officers. The general officers of the Corporation shall be the President, one or more Vice Presidents, a Secretary, a Treasurer, a Controller, and one or more Assistant Secretaries and one or more Assistant Treasurers, each of whom shall be elected annually by the Board of Directors and shall hold office until his or her successor shall have been duly elected and qualified. The President shall be chief executive officer of the Corporation and shall exercise general supervision of the business and affairs of the Corporation subject to the directives of the Board of Directors. Further, each general officer shall have such powers and duties as generally pertain to his or her respective office; provided, that such powers and duties may from time to time be modified, enlarged, restricted or augmented by the Board of Directors. Section 2. Additional Officers. The Board of Directors may appoint such additional corporate officers as it may deem necessary, each of whom shall have such powers and duties as from time to time may be conferred by the Board of Directors, and shall serve for such terms as the Board may fix. 5 6 Section 3. Removal of Officers. Any officer or agent elected or appointed by the Board of Directors may be removed by the Board of Directors whenever in its judgment, the best interests of the Corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Section 4. Vacancies. A vacancy in any principal office because of death, resignation, removal, disqualification or otherwise, shall be filled by the Board of Directors for the unexpired portion of the term. The resignation of an officer by the delivery of written notice to the President or Secretary of the Corporation is effective upon delivery of the notice, unless the notice specifies a later date and the Corporation accepts the later date. ARTICLE IV SPECIAL CORPORATE ACTS Section 1. Voting of Securities Owned by This Corporation. Subject always to the specific directions of the Board of Directors, (a) any shares or other securities issued by any other corporation and owned or controlled by this Corporation may be voted at any meeting of security holders of such other corporation by the Chairman of this Corporation if he be present, or in his absence by the President or any Vice President of this Corporation who may be present, and (b) whenever, in the judgment of the Chairman, or in his absence, of the President or any Vice President, it is desirable for this Corporation to execute a proxy or give a shareholder's consent in respect to any shares or other securities issued by any other corporation and owned by this Corporation, such proxy or consent shall be executed in the name of this Corporation by the Chairman, or the President or one of the Vice Presidents of this Corporation without necessity of any authorization by the Board of Directors, affixation of corporate seal or countersignature or attestation by another officer. Any person or persons designated in the manner above stated as the proxy or proxies of this Corporation shall have full right, power and authority to vote the share or shares of stock issued by such other corporation and owned by this Corporation the same as such share or shares might be voted by this Corporation. Section 2. Contracts. The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute or deliver any instrument in the name of and on behalf of the Corporation, and such authorization may be general or confined to specific instances. In the absence of other designation, all deeds, mortgages, and instruments of assignment or pledge made by the Corporation shall be executed in the name of the Corporation by the Chairman or the President or one of the Vice Presidents and by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer; the Secretary or an Assistant Secretary, when necessary or required, shall affix the corporate seal thereto; and when so executed no other party to such instrument or any third party shall be required to make any inquiry into the authority of the signing officer or officers. ARTICLE V CERTIFICATES FOR SHARES AND THEIR TRANSFER Section 1. Certificates for Shares. Certificates representing shares of the Corporation shall be in such form as shall be determined by the Board of Directors. Such certificates shall be signed by the Chairman or the President or a Vice President and by the Secretary or an Assistant Secretary. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the Corporation. All certificates surrendered to the Corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except as provided in Section 6 of this Article V. 6 7 Section 2. Facsimile Signatures and Seal. The seal of the corporation on any certificates for shares may be a facsimile. The signatures of the Chairman or President or Vice President and the Secretary or Assistant Secretary upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent, or registered by a registrar, other than the Corporation itself or an employee of the Corporation. Section 3. Signature by Former Officers. In case any officer, who has signed or whose facsimile signature has been placed upon any certificate for shares, shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of its issue. Section 4. Transfer of Shares. Prior to due presentment of a certificate for shares for registration of transfer the Corporation may treat the registered owner of such shares as the person exclusively entitled to vote, to receive notifications and otherwise to exercise all the rights and powers of an owner. Where a certificate for shares is presented to the Corporation with a request to register for transfer, the Corporation shall not be liable to the owner or any other person suffering loss as a result of such registration of transfer if (a) there were on or with the certificate the necessary endorsements, and (b) the Corporation had no duty to inquire into adverse claims or has discharged any such duty. The Corporation may require reasonable assurance that said endorsements are genuine and effective and in compliance with such other regulations as may be prescribed under the authority of the Board of Directors. Section 5. Restrictions on Transfer. The face or reverse side of each certificate representing shares shall bear a conspicuous notation of any restriction imposed by the Corporation upon the transfer of such shares. Section 6. Lost, Destroyed or Stolen Certificates. Where the owner claims that his certificate for shares has been lost, destroyed or wrongfully taken, then a new certificate shall be issued in place thereof if the owner (a) so requests before the Corporation has notice that such shares have been acquired by a bona fide purchaser, and (b) files with the Corporation a sufficient indemnity bond, and (c) satisfied such other reasonable requirements as the Board of Directors may prescribe. Section 7. Consideration for Shares. The shares of the Corporation may be issued for such consideration as shall be fixed from time to time by the Board of Directors, provided that any shares having a par value shall not be issued for a consideration less than the par value thereof. The consideration to be paid for shares may be paid in whole or in part, in money, in other property, tangible or intangible, or in labor or services actually performed for the Corporation. When payment of the consideration for which shares are to be issued shall have been received by the Corporation, such shares shall be deemed to be fully paid and nonassessable by the Corporation. No certificate shall be issued for any share until such share is fully paid. Section 8. Stock Regulations. The Board of Directors shall have the power and authority to make all such further rules and regulations not inconsistent with the statutes of the State of Wisconsin as it may deem expedient concerning the issue, transfer and registration of certificates representing shares of the Corporation. ARTICLE VI CORPORATE SEAL The Board of Directors shall provide a corporate seal which shall be circular in form and shall have inscribed thereon the name of the Corporation and the state of incorporation and the words, "Corporate Seal". 7 8 ARTICLE VII AMENDMENTS Section 1. By Shareholders. These By-laws may be altered, amended, repealed, augmented and new By-laws may be adopted by the shareholders by affirmative vote of not less than a majority of the votes represented by the shares present or represented at any annual or special meeting of the shareholders at which a quorum is in attendance. Section 2. By Directors. These By-laws may also be altered, amended, repealed, augmented and new By-laws may be adopted by the Board of Directors by affirmative vote of a majority of the number of directors present at any meeting at which a quorum is in attendance; but no By-law adopted by the shareholders shall be amended or repealed by the Board of Directors if the By-law so adopted so provides. Section 3. Implied Amendments. Any action taken or authorized by the shareholders or by the Board of Directors, which would be inconsistent with the By-laws then in effect but is taken or authorized by affirmative vote of not less than the number of shares or the number of directors required to amend the By-laws so that the By-laws would be consistent with such action, shall be given the same effect as though the By-laws had been temporarily amended or suspended so far, but only so far, as is necessary to permit the specific action so taken or authorized. ARTICLE VIII INDEMNIFICATION Section 1.01. Certain Definitions. All capitalized terms used in this Article VIII and not otherwise hereinafter defined in this Section 1.01 shall have the meaning set forth in Section 180.0850 of the Statute (as hereinafter defined). The following capitalized terms (including any plural forms thereof) used in this Article VIII shall be defined as follows: (a) "Affiliate" shall include, without limitation, any corporation, partnership, joint venture, employee benefit plan, trust or other enterprise that directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Corporation. (b) "Authority" shall mean the entity selected by the Director or Officer to determine his or her right to indemnification pursuant to Section 1.04 of this Article. (c) "Board" shall mean the entire then elected and serving board of directors of the Corporation, including all members thereof who are Parties to the subject Proceeding or any related Proceeding. (d) "Breach of Duty" shall mean the Director or Officer breached or failed to perform his or her duties to the Corporation and his or her breach of or failure to perform those duties is determined, in accordance with Section 1.04 of this Article, to constitute misconduct under Section 180.0851 (2) (a) 1, 2, 3 or 4 of the Statute. (e) "Corporation," as used herein and as defined in the Statute and incorporated by reference into the definitions of certain capitalized terms used herein, shall mean this Corporation, including, without limitation, any successor corporation or entity to the Corporation by way of merger, consolidation or acquisition of all or substantially all of the capital stock or assets of this Corporation. (f) "Director or Officer" shall have the meaning set forth in the Statute; provided, that, for purposes of this Article, it shall be conclusively presumed that any Director or Officer serving as a director, officer, partner, trustee, member of any governing or decision-making committee, employee or agent of an Affiliate shall be so serving at the request of the Corporation. 8 9 (g) "Disinterested Quorum" shall mean a quorum of the Board who are not Parties to the subject Proceeding or any related Proceeding. (h) "Party" shall have the meaning set forth in the Statute; provided, that, for purposes of this Article, the term "Party" shall also include any Director, Officer or employee who is or was a witness in a Proceeding at a time when he or she has not otherwise been formally named a Party thereto. (i) "Proceeding" shall have the meaning set forth in the Statute; provided, that, for purposes of this Article, "Proceeding" shall include all Proceedings (i) brought under (in whole or in part) the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, their respective state counterparts, and/or any rule or regulation promulgated under any of the foregoing; (ii) brought before an Authority or otherwise to enforce rights hereunder; (iii) any appeal from a Proceeding; and (iv) any Proceeding in which the Director or Officer is a plaintiff or petitioner because he or she is a Director or Officer, provided, however, that such Proceeding is authorized by a majority vote of a Disinterested Quorum. (j) "Statute" shall mean Sections 180.0850 through 180.0859, inclusive, of the Wisconsin Business Corporation Law, Chapter 180 of the Wisconsin Statutes, including any amendments thereto, but, in the case of any such amendment, only to the extent such amendment permits or requires the Corporation to provide broader indemnification rights than the Statute permitted or required the Corporation to provide prior to such amendment. Section 1.02. Mandatory Indemnification. To the fullest extent permitted or required by the Statute, the Corporation shall indemnify a Director or Officer against all Liabilities incurred by or on behalf of such Director or Officer in connection with a Proceeding in which the Director or Officer is a Party because he or she is a Director or Officer. Section 1.03. Procedural Requirements. (a) A Director or Officer who seeks indemnification under Section 1.02 of this Article shall make a written request therefor to the Corporation. Subject to Section 1.03 (b) of this Article, within sixty days of the Corporation's receipt of such request, the Corporation shall pay or reimburse the Director or Officer for the entire amount of Liabilities incurred by the Director or Officer in connection with the subject Proceeding (net of any Expenses previously advanced pursuant to Section 1.05 of this Article). (b) No indemnification shall be required to be paid by the Corporation pursuant to Section 1.03 (a) of this Article if, within such sixty-day period: (i) a Disinterested Quorum, by a majority vote thereof, determines that the Director or Officer requesting indemnification engaged in misconduct constituting a Breach of Duty; or (ii) a Disinterested Quorum cannot be obtained. (c) In either case of nonpayment pursuant to Section 1.03 (b) of this Article, the Board shall immediately authorize by resolution that an Authority, as provided in Section 1.04 of this Article, determine whether the Director's or Officer's conduct constituted a Breach of Duty and, therefore, whether indemnification should be denied hereunder. (d) (i) If the Board does not authorize an Authority to determine the Director's or Officer's right to indemnification hereunder within such sixty-day period and/or (ii) if indemnification of the requested amount of Liabilities is paid by the Corporation, then it shall be conclusively presumed for all purposes that a Disinterested Quorum has determined that the Director or Officer did not engage in misconduct constituting a Breach of Duty and, in the case of subsection (i) above (but not subsection (ii)), indemnification by the Corporation of the requested amount of Liabilities shall be paid to the Officer or Director immediately. 9 10 Section 1.04. Determination of Indemnification. (a) When the Board authorized an Authority to determine a Director's or Officer's right to indemnification pursuant to Section 1.03 of this Article, then the Director or Officer requesting indemnification shall have the absolute discretionary authority to select one of the following as such Authority: (i) An independent legal counsel; provided, that such counsel shall be mutually selected by such Director or Officer and by a majority vote of a Disinterested Quorum or, if a Disinterested Quorum cannot be obtained, then by a majority vote of the Board; (ii) A panel of three arbitrators selected from the panels of arbitrators of the American Arbitration Association in Milwaukee, Wisconsin; provided, that (A) one arbitrator shall be selected by such Director or Officer, the second arbitrator shall be selected by a majority vote of a Disinterested Quorum or, if a Disinterested Quorum cannot be obtained, then by a majority vote of the Board, and the third arbitrator shall be selected by the two previously selected arbitrators; and (B) in all other respects, such panel shall be governed by the American Arbitration Association's then existing Commercial Arbitration Rules; or (iii) A court pursuant to and in accordance with Section 180.0854 of the Statute. (b) In any such determination by the selected Authority there shall exist a rebuttable presumption that the Director's or Officer's conduct did not constitute a Breach of Duty and that indemnification against the requested amount of Liabilities is required. The burden of rebutting such a presumption by clear and convincing evidence shall be on the Corporation or such other party asserting that such indemnification should not be allowed. (c) The Authority shall make its determination within sixty days of being selected and shall submit a written opinion of its conclusion simultaneously to both the Corporation and the Director or Officer. (d) If the Authority determines that indemnification is required hereunder, the Corporation shall pay the entire requested amount of Liabilities (net of any Expenses previously advanced pursuant to Section 1.05 of this Article), including interest thereon at a reasonable rate, as determined by the Authority, within ten days of receipt of the Authority's opinion; provided, that, if it is determined by the Authority that a Director or Officer is entitled to indemnification as to some claims, issues or matters, but not as to other claims, issues or matters, involved in the subject Proceeding, the Corporation shall be required to pay (as set forth above) only the amount of such requested Liabilities as the Authority shall deem appropriate in light of all of the circumstances of such Proceeding. (e) The determination by the Authority that indemnification is required hereunder shall be binding upon the Corporation regardless of any prior determination that the Director or Officer engaged in a Breach of Duty. (f) All Expenses incurred in the determination process under this Section 1.04 by either the Corporation or the Director or Officer, including, without limitation, all Expenses of the selected Authority, shall be paid by the Corporation. Section 1.05. Mandatory Allowance of Expenses. (a) The Corporation shall pay or reimburse, within ten days after the receipt of the Director's or Officer's written request therefor, the reasonable Expenses of the Director or Officer as such Expenses are incurred, provided the following conditions are satisfied: (i) The Director or Officer furnishes to the Corporation an executed written certificate affirming his or her good faith belief that he or she has not engaged in misconduct which constitutes a Breach of Duty; and 10 11 (ii) The Director or Officer furnishes to the Corporation an unsecured executed written agreement to repay any advances made under this Section 1.05 if it is ultimately determined by an Authority that he or she is not entitled to be indemnified by the Corporation for such Expenses pursuant to Section 1.04 of this Article. (b) If the Director or Officer must repay any previously advanced Expenses pursuant to this Section 1.05, such Director or Officer shall not be required to pay interest on such amounts. Section 1.06. Indemnification and Allowance of Expenses of Certain Others. (a) The Corporation shall indemnify a director or officer of an Affiliate (who is not otherwise serving as a Director or Officer) against all Liabilities, and shall advance the reasonable Expenses, incurred by such director or officer in a Proceeding to the same extent hereunder as if such director or officer incurred such Liabilities because he or she was a Director or Officer, if such director or officer is a Party thereto because he or she is or was a director or officer of the Affiliate. (b) Except as hereinafter provided, the Corporation shall indemnify each employee of the Corporation or an Affiliate of the Corporation acting within the scope of his or her duties as such, against all Liabilities, and shall advance Reasonable Expenses, incurred by or on behalf of such employee in connection with a Proceeding in which he or she is a Party by virtue of being an employee of the Corporation or an Affiliate of the Corporation, to the same extent and in the same manner as a Director or Officer hereunder. The foregoing provision shall not apply, and the Corporation shall not indemnify any employee, with respect to any Liability to the extent covered by insurance maintained by or on behalf of such employee (other than insurance maintained by the Corporation or an Affiliate of the Corporation). (c) The Board may, in its sole and absolute discretion as it deems appropriate, pursuant to a majority vote thereof, indemnify against Liabilities incurred by, and/or provide for the allowance of reasonable Expenses of, an authorized agent of the Corporation acting within the scope of his or her duties as such and who is not otherwise a Director or Officer. Section 1.07. Insurance. The Corporation may purchase and maintain insurance on behalf of a Director, Officer and/or any individual who is or was an authorized employee or agent of the Corporation against any Liability asserted against or incurred by such individual in his or her capacity as such or arising from his or her status as such, regardless of whether the Corporation is required or permitted to indemnify against any such Liability under this Article. Section 1.08. Notice to the Corporation. A Director, Officer or employee shall promptly notify the Corporation in writing when he or she has actual knowledge of a Proceeding which may result in a claim or indemnification against Liabilities or allowance of Expenses hereunder, but the failure to do so shall not relieve the Corporation of any liability to the Director, Officer or employee hereunder unless the Corporation shall have been irreparably prejudiced by such failure (as determined by an Authority). Section 1.09. Report to Shareholders. In the event that the Corporation indemnifies or advances expenses to a Director or Officer in connection with a proceeding brought in the right of the Corporation, the Corporation shall report the indemnification or advance in writing to shareholders with or before the notice of the next meeting of shareholders. The report shall be delivered to shareholders who are entitled to receive notice of the next meeting of shareholders. Section 1.10. Severability. If any provision of this Article shall be deemed invalid or inoperative, or if a court of competent jurisdiction determines that any of the provisions of this Article contravene public policy, this Article shall be construed so that the remaining provisions shall not be affected, but shall remain in full force and effect, and any such provisions which are invalid or inoperative or which contravene public policy shall be deemed, without further action or deed by or on behalf of the Corporation, to be modified, amended and/or limited, but only to the extent necessary to render the same valid and enforceable. 11 12 Section 1.11. Nonexclusivity of this Article. The rights of a Director, Officer or employee (or any other person) granted under this Article shall not be deemed exclusive of any other rights to indemnification against Liabilities or advancement of Expenses which the Director, Officer or employee (or such other person) may be entitled to under any written agreement, Board resolution, vote of shareholders of the Corporation or otherwise, including without limitation under the Statute. Nothing contained in this Article shall be deemed to limit the Corporation's obligations to indemnify a Director, Officer or employee under the Statute. Section 1.12. Contractual Nature of this Article; Repeal or Limitation of Rights. This Article shall be deemed to be a contract between the Corporation and each Director, Officer and employee and any repeal or other limitation of this Article or any repeal or limitation of the Statute or any other applicable law shall not limit any rights of indemnification against Liabilities or allowance of Expenses then existing or arising out of events, acts or omissions occurring prior to such repeal or limitation, including, without limitation, the right of indemnification against Liabilities or allowance of Expenses for Proceedings commenced after such repeal or limitation to enforce this Article with regard to acts, omissions or events arising prior to such repeal or limitation. Section 1.13. Subrogation Rights. Notwithstanding any provision to the contrary set forth herein, the Corporation's obligations hereunder are not intended to constitute, and shall not constitute, a waiver of any right to subrogation which the Corporation may have against any person or entity. 12 EX-4.3 3 LOAN AGREEMENT 1 Exhibit 4.3 Loan Agreement Between Firstar Bank Milwaukee, N.A. and The Badger Meter Employee Savings and Stock Ownership Plan and Trust Dated as of December 1, 1995 2 Firstar Bank Milwaukee, N.A. (the "Bank") and the Badger Meter Employee Savings and Stock Ownership Plan and Trust (the "ESSOP") as established under that certain Trust Agreement effective January 1, 1991, between Badger Meter, Inc. and Marshall & Ilsley Trust Company, as Trustee (the "Trustee'), agree as follows: 1. Definitions. As used in this Agreement, the following terms shall have the following meanings, whether or not they are hereinafter capitalized. 1.1 "Closing Date" means the date of the closing of this agreement by and between the Bank and the ESSOP. 1.2 "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. 1.3 "Eurodollar Loans" shall mean loans under this Agreement in the minimum amount of $100,000, the interest rates on which are determined on the basis of the 30, 60, 90 or 180 day LIBOR Rate shown on the Dow Jones Telerate screen, page 3750 (or as reported by any comparable interest rate service selected by the Bank) as quoted by the Bank and as agreed to by the ESSOP for the corresponding Interest Period. LIBOR Rate quotes shall be subject to availability to the Bank and the Bank retains the right to adjust the reported LIBOR Rate to reflect reserve or insurance requirements which may be imposed by any regulatory agency having jurisdiction over the Bank. 1.4 "Guarantor" means Badger Meter, Inc. 1.5 "Guaranty" means the unlimited obligation assumed by Badger Meter, Inc. to guarantee the performance by the ESSOP of all the terms and conditions under this loan agreement in the form of Exhibit A attached hereto. 1.6 "Interest Period" shall mean, with respect to any Eurodollar Loan, each period commencing on the date such Eurodollar Loan is made or converted from a Prime Rate Loan or the last day of the next preceding Interest Period for such Loan and ending on the numerically corresponding day in the first, second, third or sixth calendar month thereafter, as the ESSOP may select, except that each Interest Period which commences on the last Business Day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last Business Day of the appropriate subsequent calendar month; provided, that (i) if any Interest Period would otherwise end after the Termination Date, such Interest Period shall end on the Termination Date, and (ii) each Interest Period which would otherwise end on a day which is not a Business Day shall end on the next succeeding Business Day or, if such next succeeding Business Day falls in the next succeeding calendar month, on the next preceding Business Day. 1.7 "Loan" means the loan described in Section 2.1 of this Agreement. 1.8 "Note" means the Promissory Note in the form of Exhibit B attached hereto. 1.9 "Pledge Agreement" means the agreement by the ESSOP to pledge, as collateral for the Loan, the Badger Meter, Inc. common stock and class B common stock being acquired with the proceeds of the Loan in the form of Exhibit C attached hereto. 1.10 "Prime Rate" shall mean the rate announced by the Bank as its prime rate, with such rate changing as and when the Bank announces any change in its prime rate. The Prime Rate is not the lowest rate of interest charged by the Bank. 1.11 "Prime Rate Loans" shall mean loans under this Agreement,the interest rate on which are determined on the basis of the Prime Rate. 2. The Loan 2.1 Stock Acquisition Loan. The Bank agrees to lend to the ESSOP, subject to the terms and conditions hereof, the principal amount of $1,000,000 to be used by the ESSOP to refinance a prior loan from the Bank made to finance the acquisition of Badger Meter, Inc. common stock for the benefit of the participants of the ESSOP. The entire principal amount and accrued interest shall be paid in full on or before December 1, 2001. The loan shall be evidenced by the Note. 2 3 2.2 Interest. (a) The ESSOP shall have the option of designating the outstanding balance as a Prime Rate Loan or as a Eurodollar Loan. In the event that the ESSOP and the Bank have not agreed upon the rate and interest period for a Eurodollar Loan, then, prior to an event of default described in Section 6 below, the outstandings shall be deemed to be a Prime Rate Loan. The ESSOP promises to pay to the Bank interest on the unpaid principal amount of each loan for the period from and including the date of such loan to, but excluding the date such loan shall be paid in full, (i) while such loan is a Prime Rate Loan, at a rate per annum equal to the Prime Rate (as in effect from time to time); (ii) while such loan is a Eurodollar Loan, for each Interest Period relating thereto, at a rate per annum equal to the LIBOR Rate applicable to such loan for such Interest Period, plus 1.50%. The ESSOP hereby delegates authority to select interest rates and interest periods hereunder to the Guarantor, and the Bank may rely on any such directions received from the Guarantor. (b) Notwithstanding the foregoing, the ESSOP will pay to the Bank on demand interest at the rate of two percent in excess of the rate otherwise in effect for any principal which shall not be paid in full when due (whether at stated maturity, by acceleration or otherwise), for each day during the period from and including the due date thereof to, but excluding the date the same is paid in full. (c) Accrued interest shall be payable (i) in 'the case of a Prime Rate Loan, quarterly on the last day of each quarter, (ii) in the case of a Eurodollar Loan, on the last day of each Interest Period therefor, and (iii) in the case of any loan, upon the payment or mandatory or voluntary prepayment thereof or the conversion of such loan to a loan of another type (but only on the principal amount so paid, prepaid or converted). (d) Prime Rate Loans may be prepaid by the ESSOP at any time without penalty. Eurodollar Loans may be prepaid only if the ESSOP reimburses all of the Bank's actual costs and penalties incurred as a result of such prepayment. (e) The terms of individual Eurodollar Loans shall be agreed upon by telephone calls between the Bank and the ESSOP, and may be confirmed in writing from time to time by correspondence from the ESSOP to the Bank. 3. Representations and Warranties. In order to induce the Bank to make the loan, the Guarantor represents and warrants to the Bank: 3.1 Valid Existence. The ESSOP is a duly qualified employee stock ownership plan meeting the requirements of Sections 401(a) and 4975(e)(7) of the Internal Revenue Code and complies with the applicable requirements thereof, and with the requirements of any other applicable state or federal law. 3.2 Execution and Delivery of Agreement, Note, and Pledge Agreement. The execution and delivery of this Agreement, the Note, and the Pledge Agreement, and the performance by the ESSOP of its obligations hereunder and thereunder, are within the ESSOP's general powers, have been fully authorized by all necessary and proper action under the terms of the applicable ESSOP Trust documents, and do not (a) conflict with or result in a breach of any of the provisions of the applicable Trust documents, (b) contravene any law, rule or regulation of the State of Wisconsin, or the United States, or any order, writ, judgment, injunction, decree, determination or award presently in effect which affects or binds the ESSOP, (c) conflict with or result in a breach of or default under any indenture or loan or credit agreement or any other agreement or instrument to which the ESSOP is a party in respect of indebtedness for money borrowed or (d) require the approval or consent of any governmental body, agency or authority or any other person or entity. This Agreement, the Note, and the Pledge Agreement, when executed and delivered, will constitute the valid and binding obligations of the ESSOP enforceable in accordance with their terms, in each case (a) except as the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforceability of creditors' rights generally, (b) subject to the availability of equitable remedies for the enforcement of such obligations, and (c) subject to applicable laws and equitable principles which may limit or otherwise affect the remedies provided therein. 3.3 Use of Proceeds. The ESSOP will not use the loan proceeds for any purpose other than to refinance the acquisition of Badger Meter, Inc. common stock and class B common stock. 3.4 Other Loans. The ESSOP will not enter into any other loan agreements without the prior written consent of the Bank, which consent will not be unreasonably withheld. 3 4 3.5 Investment Company. The ESSOP is not an "investment company" or a company controlled by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. 3.6 Litigation. There is no litigation or administrative or regulatory proceeding pending or threatened against the ESSOP which might result in any material adverse change in the financial condition of the ESSOP. 4. Conditions of Borrowing. The Bank's obligation to make the Loan is subject to the satisfaction of the following conditions: 4.1 Opinion of Counsel. The Bank shall have received from counsel for the ESSOP, a favorable opinion in form and substance satisfactory to the Bank and dated as of the Closing Date as to (i) the matters referred to in Sections 3.1, 3.2, 3.5 and 3.6 hereof; and (ii) such other matters incident to the matters herein contemplated as the Bank may reasonably request. 4.2 Guaranty. The Bank shall have received from the Guarantor the Guaranty and a favorable opinion from counsel for the Guarantor in form and substance satisfactory to the Bank and dated as of the Closing Date that (i) the Guarantor is a legally organized, validly existing corporation and in good standing under the laws of the State of Wisconsin; (ii) the execution and delivery of the Guaranty, and the performance by the Guarantor of its obligations under the Guaranty are within its corporate powers, have been duly authorized by all necessary corporate action on the part of the Guarantor, and do not (a) conflict with or result in a breach of any of the provisions of its Articles of Incorporation or By-Laws, (b) contravene any law, rule, or regulation of the State of Wisconsin, or of the United States, or any order, writ, judgment, injunction, decree, determination or award presently in effect which affects or binds it, (c) conflict with or result in a breach of or default under any indenture or loan or credit agreement or any other agreement or instrument to which it is a party in respect of indebtedness for money borrowed or (d) require the approval or consent of any other person or entity; (iii) the Guaranty, when executed and delivered, will constitute the valid and binding obligation of the Guarantor enforceable in accordance with its terms, in each case (a) except as the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforceability of creditors' rights generally, (b) subject to the availability of equitable remedies for the enforcement of such obligations and (c) subject to applicable laws and equitable principles which may limit or otherwise affect the remedies provided, therein; and (iv) such other matters incident to the matters herein contemplated as the Bank may reasonably request. The Bank shall also have received copies, certified by the Secretary of the Guarantor to be true and correct and in full force and effect on the Closing Date, of (i) the Articles of Incorporation and By-Laws of the Guarantor; (ii) resolutions of the Board of Directors of the Guarantor authorizing the issuance, execution and delivery of the Guaranty and authorizing and directing the Guarantor to make a stream of contribution payments to the ESSOP sufficient to enable the ESSOP to repay the principal and interest as they come due on the Note. 4.3 Pledge Agreement. The Bank shall have received from the ESSOP, the duly executed Pledge Agreement in a form acceptable to the Bank. 4.4 Representations and Warranties True and Correct. The representations and warranties contained in Section 3 hereof shall be true and correct on and as of the Closing Date; there shall exist on the Closing Date no conditions, event or act which would constitute a default hereunder and no condition, event, act or omission shall have occurred which, with the giving of notice or the passage of time, would constitute an event of default hereunder. 4.5 Proceedings Satisfactory to Bank. All proceedings taken in connection with the transactions contemplated by this agreement and all instruments, authorizations and other documents applicable thereto shall be satisfactory in form and content to the Bank and the Bank shall have received copies of all such documents reasonably required by it. 4.6 Closing Fee. The Bank shall have received a closing fee in the amount of $3,750. 5. Affirmative Covenants. The Guarantor covenants that it will, while any part of the Note remains unpaid, unless prior written waiver is granted by the Bank: 5.1 Books and Records. Keep proper, complete and accurate books of record and account and permit any representatives of the Bank to visit and inspect any of the books and records of the ESSOP at any reasonable time and as often as may reasonably be desired. 4 5 5.2 Other Financial Information. Furnish to the Bank, as soon as available, copies of such other financial information as the Bank may from time to time reasonably request. 5.3 Maintenance of Valid Existence. The Guarantor agrees that the ESSOP will maintain its valid existence and will neither dissolve nor institute any proceedings for dissolution. 5.4 ERISA Notice and Certificate. As soon as possible upon the occurrence of a reportable event under ERISA and in any event within thirty (30) days after the Guarantor becomes aware of the same, the Guarantor shall furnish a certificate setting forth the details as to such reportable event as well as a copy of each notice thereof which is sent to the Department of Labor in accordance with applicable regulations. 6. Events of Default. If any one or more of the following events of default shall occur: 6.1 Failure to Pay Note. The ESSOP shall default in the due and punctual payment of any installment of principal of or interest on the Note or any other obligation to the Bank and such default shall continue uncured for a period of five (5) days; or 6.2 Falsity of Representations and Warranties. Any representation or warranty made by the ESSOP or Guarantor herein or in any writing furnished in connection with or pursuant to this Agreement shall be false in any material respect on the date as of which made or as of which the same is to be effective; or 6.3 Default in Other Provisions. The ESSOP or Guarantor shall default in the performance or observance of any other agreement herein contained and such default shall continue for a period of 30 days after written notice to the ESSOP or Guarantor from the holder of the Note; or 6.4 Default in Other Agreements. The Guarantor shall default in the performance of the terms of any other evidence of indebtedness for borrowed money issued or assumed by the Guarantor or in the terms of any agreement under which such indebtedness is issued or secured and such default is not waived by the creditor and shall continue beyond the period of grace, if any, therein provided and which indebtedness is, in the reasonable judgment of the Bank, material to the Guarantor; or 6.5 Entry of Final Judgments. A final judgment is entered against the ESSOP and such judgment shall remain unsatisfied, unbonded or unstayed for a period of sixty (60) days after the entry thereof; or 6.6 Insolvency, Failure to Pay Debts or Appointment of Receiver, Etc. The taking of action by the ESSOP or Guarantor to authorize such organization to become the subject of proceedings under the Federal Bankruptcy Code; or the execution by the ESSOP or Guarantor of a petition to become a debtor under the Federal Bankruptcy Code; or the filing of an involuntary petition against the ESSOP or Guarantor under the Federal Bankruptcy Code which remains undismissed for a period of sixty (60) days; or the entry of an order for relief under the Federal Bankruptcy Code against the ESSOP or Guarantor. Then and in any such event, as to the events described in Section 6.1 through 6.6, inclusive, the Bank may, at its option, declare the Note to be, and the Note shall thereupon, become immediately due and payable, together with accrued interest thereon. In the event of default, said Note shall bear interest at a rate equal to two percent (2%) in excess of the rate otherwise applicable. Presentment, demand, protest and notice of acceleration, nonpayment and dishonor in such case are hereby expressly waived. 7. Miscellaneous. 7.1 Survival of Representations and Warranties. The ESSOP's representations and warranties contained in this Agreement shall survive closing and execution and delivery of the Note. 7.2 Notices. All notices provided for herein shall be sent by first class mail and, if to the Bank, addressed to it at 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202, attention of the Corporate Banking Division, and if to the ESSOP, addressed to Marshall and Ilsley Trust Company at 1000 North Water Street, Milwaukee, Wisconsin 53202, attention of the officer signing this Agreement, with a copy to the Guarantor, addressed to 4545 West Brown Deer Road, Brown Deer, Wisconsin, 53223 to the attention of the Vice President-Finance or to such other address with respect to either party as such party shall notify the other in writing; such notices shall be deemed given when mailed. 5 6 7.3 Non-Recourse To ESSOP. Notwithstanding any provisions herein to the contrary, the Bank shall have no recourse against the ESSOP except as provided in the Pledge Agreement and as to such other assets of the ESSOP as may be permitted by law. 7.4 Titles. The titles of sections in this Agreement are for convenience only and do not limit or construe the meaning of any section. 7.5 Parties Bound; Waiver. The provisions of this Agreement shall inure to the benefit of and be binding upon any successor of any of the parties hereto and shall extend and be available to any holder of the Note; provided that the ESSOP's rights under this Agreement are not assignable. No delay on the part of any holder of the Note in exercising any right, power or privilege hereunder shall operate as a waiver thereof, and no single or partial exercise of any right, power or privilege hereunder shall preclude other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein specified are cumulative and not exclusive of any rights or remedies which the holder of a Note would otherwise have. 7.6 Governing Law. This Agreement is being delivered and is intended to be performed in the State of Wisconsin and shall be construed and enforced in accordance with the internal laws of that state. 7.7 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which together shall constitute but one and the same instrument. 7.8 Severability. Should any portion of this Agreement be found to be invalid or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall remain in full force and effect. 7.9 Entire Agreement. This Agreement along with the Note, the Pledge Agreement and the Guaranty shall constitute the entire agreement of the parties pertaining to the subject matter hereof and supersede all prior or contemporaneous agreements and understandings of the parties in connection therewith. IN WITNESS WHEREOF, the undersigned have executed this Loan Agreement as of the date first set forth above. FIRSTAR BANK MILWAUKEE, N.A. By: ---------------------------- Michael H. Gandrud Commercial Banking Officer BADGER METER EMPLOYEE SAVINGS AND STOCK OWNERSHIP PLAN & TRUST By: ---------------------------- On behalf of Marshall and Ilsley Trust Company, as Trustee The undersigned Badger Meter, Inc. is signing below only to acknowledge the representations, warranties and covenants set forth in sections 3 and 5 above. BADGER METER, INC. By: ---------------------------- Title: ---------------------------- 6 7 PROMISSORY NOTE $1,000,000 December 1, 1995 FOR VALUE RECEIVED, the undersigned borrower (the "BORROWER"), promises to pay to the order of Firstar Bank Milwaukee, N.A. (the "BANK"), at its main office in Milwaukee, Wisconsin, the principal sum of One Million Dollars ($1,000.000) on or before December 1, 2001. The unpaid principal balance will bear interest and interest shall be payable as set forth in the Loan Agreement between the Borrower and the Bank dated of even date herewith (the "Loan Agreement"). Interest will be computed for the actual number of days principal is unpaid, using a daily factor obtained by dividing the stated interest rate by 365. Principal and interest not paid when due shall bear interest from and after the due date until paid at a rate of 2% per annum plus the rate otherwise payable hereunder. If any payment is not made on or before 10 days after its due date, the Bank may collect a delinquency charge of 5.0% of the unpaid amount. Without affecting the liability of any Borrower, endorser, surety or guarantor, the Bank may, without notice, renew or extend the time for payment, accept partial payments, release or impair any collateral security for the payment of this Note, or agree not to sue any party liable on it. This Note constitutes the Note issued under the Loan Agreement between the Borrower and the Bank, to which Agreement reference is hereby made for a statement of the terms under which the loan evidenced hereby was made and a description of the terms and conditions upon which the maturity of this Note may be accelerated, and for a description of the collateral securing this Note. BADGER METER EMPLOYEE SAVINGS AND STOCK OWNERSHIP PLAN & TRUST By: ----------------------------- On behalf of Marshall and Ilsley Trust Company, as Trustee 8 PLEDGE AGREEMENT Agreement made December 1, 1995, between Firstar Bank Milwaukee, N.A. ("Bank") and Badger Meter Employee Savings and Stock Ownership Plan and Trust ("ESSOP") as established under that certain Trust Agreement effective January 1, 1991, by and between Badger Meter, Inc., and Marshall & Ilsley Trust Company, as Trustee (the "Trustee"). WHEREAS, the Bank is concurrently making a loan to the ESSOP in the principal amount of $1,000,000 as evidenced by the Loan Agreement dated December 1, 1995 (the "Loan Agreement") and the Promissory Note dated December 1, 1995 (the "Note"), and WHEREAS, the ESSOP has delivered to the Bank 57,145 shares of Badger Meter, Inc. common stock and class B common stock (the "Pledged Stock"), as security for the performance of its obligations under said Loan Agreement and Note, NOW, THEREFORE, in consideration of the foregoing premises, it is agreed as follows: 1. The Bank's duty with reference to the Pledged Stock shall be solely to use reasonable care in the custody and preservation of the Pledged Stock in its possession, which shall not include any step necessary to preserve rights against prior parties nor the duty to send notices, perform services, or take any action in connection with the management of the Pledged Stock. 2. Shares of the Pledged Stock shall be released as security under this Pledge Agreement upon payment of principal and interest outstanding under the Loan Agreement and Note, determined as follows: The number of shares to be released by the Bank shall be: (i) the total number of shares held by the Bank immediately prior to the release for the plan year times (ii) a fraction, the numerator of which is the amount of principal and interest paid on the Note for the plan year and the denominator of which is the sum of principal and interest on the Note paid for the plan year and the principal and interest on the Note to be paid for all future plan years, computed by using the interest rate in effect as of the end of the plan year. In any event, upon the full performance by the ESSOP of its obligations under the Loan Agreement and Note, the Bank shall release any and all Pledged Stock remaining as security hereunder and shall redeliver same to the ESSOP. 3. In the event that the ESSOP defaults in the performance of its obligations under the Loan Agreement and Note, the Bank shall have the following rights and remedies under this Pledge Agreement: (a) the Bank (i) may sell any or all of the Pledged Stock (other than class B common stock) at public or private sale, by one or more contracts, in one or more parcels, at the same or different times, for cash and/or credit, or upon any other terms, at such places and times, and to such persons as the Bank deems best, (ii) shall apply any cash proceeds actually received from any sale in the order and subject to the conditions provided under Section 409.504 of the Wisconsin Statutes, and (iii) shall pay any surplus to the ESSOP, (b) the ESSOP shall take all action necessary to convert any class B common stock to common stock, which action shall include the ESSOP first contacting Badger Meter, Inc. to allow Badger Meter, Inc. to exchange shares of common stock for the shares of class B common stock for delivery to the Bank,(c) if the ESSOP for any reason fails or refuses to convert class B common stock to common stock then the Bank is irrevocably appointed as the ESSOP's attorney-in-fact, authorized to execute documents or take any other steps necessary to effect such conversion and (d) the Bank shall have any other rights and remedies of a secured party under the Wisconsin Uniform Commercial Code, all such rights and remedies being cumulative, not exclusive, and enforceable alternatively, successively, or concurrently. 4. At any time requested by the Bank, the ESSOP shall perform such other acts and sign such other documents and instruments as may be necessary, proper, or convenient in order to carry out the purposes and provisions of this Pledge Agreement. 5. This Pledge Agreement shall be binding upon the parties, and their successors and assigns. 9 IN WITNESS WHEREOF, the parties have signed this Pledge Agreement as of the day and year first above written. BADGER METER EMPLOYEE SAVINGS AND STOCK OWNERSHIP PLAN & TRUST By: -------------------------------------- On Behalf of Marshall and Ilsley Trust Company, as Trustee FIRSTAR BANK MILWAUKEE, N.A. By: -------------------------------------- Michael H. Gandrud Commercial Banking Officer 10 [FIRSTAR BANK LOGO] GUARANTY OF SPECIFIC TRANSACTION 1. GUARANTEE. For value received, and to induce Firstar Bank Milwaukee, N.A (the "BANK") to extend or continue credit or other financial accommodations now or in the future to Badger Meter Employee Savings and Stock Ownership Plan & Trust (the "BORROWER"), the undersigned (the "GUARANTOR") hereby unconditionally guarantees payment of and promises to pay or cause be paid to the Bank the Obligations (as hereinafter defined), whether or not the Obligations are valid and enforceable against the Borrower whenever the Obligations become due, whether on demand, at maturity or by reason of acceleration, or at the time the Borrower or the Guarantor shall become the subject of any bankruptcy or insolvency proceeding. As used herein, the term "OBLIGATIONS" shall mean all loans, drafts, overdrafts, checks, notes and all other debts, liabilities and obligations of every kind owing by the Borrower to the Bank under a promissory note payable to the Bank, executed by the Borrower and dated December 1, 1995, in the original principal amount of $1,000,000, including any extensions, renewals or deferrals of such note, whether direct or indirect, absolute or contingent, liquidated or unliquidated and whether existing now or in the future, including interest thereon and all costs, expenses and reasonable attorneys' fees (including fees of inside counsel) paid or incurred by the Bank at any time before or after judgment in attempting to collect any of the foregoing, to realize on any collateral securing any of the foregoing or this Guaranty, and to enforce this Guaranty. The definition of "Obligations" also includes the amount of any payments made to the Bank or another on behalf of the Borrower (including payments resulting from liquidation of collateral) which are recovered from the Bank by a trustee, receiver, creditor or other party pursuant to applicable Federal or state law (the "SURRENDERED PAYMENTS"). In the event that the Bank makes any Surrendered Payments (including pursuant to a negotiated settlement), the Surrendered Payments shall immediately be reinstated as Obligations, regardless of whether the Bank has surrendered or canceled this Guaranty prior to returning the Surrendered Payments. 2. CONSENT TO BANK ACTIONS; NO DISCHARGE. The Guarantor agrees that the Bank does not have to take any steps whatsoever to realize upon any collateral securing the Obligations, or to proceed against the Borrower or any other guarantor or surety for the Obligations either before or after proceeding against the Guarantor; and the Guarantor waives any claim of marshaling of assets against the Bank or any collateral. The Guarantor also agrees that the Bank may do or refrain from doing any of the following without notice to, or the consent of, the Guarantor, without reducing or discharging the Guarantor's liability under this Guaranty: (i) renew, amend, modify, extend or release any existing or future Obligations (including making additional advances, or changing the amount, time or manner of payment of any Obligations), regardless of when such modifications are made; (ii) amend, supplement and waive compliance with any of the provisions of documents evidencing or related to any of the Obligations; (iii) settle, modify, release, compromise or subordinate any Obligation, any collateral securing any Obligation or this Guaranty, or the liability of any other party responsible for payment of any Obligation; and (iv) accept partial payments, and apply any payments and all other amounts received from the Borrower, from liquidation of any collateral or from any other guarantor to the Obligations (or any other amounts due to the Bank) in any manner that the Bank elects. The Guarantor also expressly agrees that the Guarantor's liability will not be reduced or discharged by the Bank's failure or delay in perfecting (or to continue perfection of) any security interest, mortgage or other lien on any collateral securing the Obligations or this Guaranty, or to protect the value or condition of any such collateral. THE GUARANTOR SPECIFICALLY ACKNOWLEDGES THAT THE BANK CAN COLLECT FROM THE GUARANTOR WITHOUT FIRST TRYING TO COLLECT FROM THE BORROWER OR ANY OTHER GUARANTOR. 3. WAIVERS; DEPRIZIO WAIVER. The Guarantor expressly waives all rights of setoff and counterclaims, as well as diligence in collection or prosecution, presentment, demand of payment or performance, protest, notice of dishonor, nonpayment or nonperformance of any Obligation. The Guarantor also expressly waives notice of acceptance of this Guaranty, and the right to receive all other notices and demands of any kind relating to the Obligations or this Guaranty. The Guarantor makes the following "DEPRIZIO" waiver: The Guarantor shall not take, by assignment, subrogation or otherwise, any claim or collateral which the Bank might have or obtain against or from the Borrower; and the Guarantor irrevocably waives and releases, in addition to such claims, any claim for unjust enrichment, indemnification, contribution or reimbursement, and any and all other claims against the Borrower, whether by statute or contract, by law or in equity, whether actual or contingent and whether now or hereafter arising, except for claims by the Guarantor against the Borrower, if any, for employee compensation and benefits, for repayment of loans of the Guarantor to the Borrower and for any shareholder claims of the Guarantor against the Borrower. With respect to any claims designated above which 11 the Guarantor is entitled to make against the Borrower, the Guarantor hereby agrees that the Guarantor will not enforce or accept any payments on such claims until the Obligations are paid in full. 4. FINANCIAL INFORMATION. The Guarantor warrants that all financial information previously provided to the Bank was accurate when given, and that no material adverse change has occurred in the Guarantor's financial status since such information was given to the Bank. The Guarantor agrees to provide to the Bank from time to time upon request any information regarding the Guarantor's financial condition which the Bank reasonably requests; and without; request, the Guarantor will provide annual audited financial statements in form and content satisfactory to the Bank within 120 days of the end of each year.* 5. BORROWER'S FINANCIAL CONDITION. The Guarantor warrants and represents to the Bank that (i) the Guarantor is sufficiently knowledgeable and experienced in financial and business matters to evaluate and understand the risks assumed in connection with the execution of this Guaranty; (ii) the Guarantor has had the opportunity to examine the records, reports, financial statements, and other information relating to the financial condition of the Borrower; (iii) the Guarantor has relied solely upon investigations of the Borrower's financial condition conducted by the Guarantor or the Guarantor's authorized representative in deciding to execute this Guaranty; and (iv) the Guarantor, or its authorized representative, shall continue to independently review, monitor and investigate the financial condition of the Borrower while this Guaranty is in effect. THE GUARANTOR SPECIFICALLY RELIEVES THE BANK OF ANY DUTY, OBLIGATION OR RESPONSIBILITY OF ANY NATURE WHATSOEVER TO ADVISE THE GUARANTOR OF ANY CHANGE IN THE BORROWER'S FINANCIAL CONDITION. 6. COLLATERAL. The Guarantor hereby authorizes the Bank, without further notice to anyone, to charge any account of the Guarantor for the amount of any and all Obligations due under this Guaranty. 6(a) If the market value of the pledged shares of stock falls below $17.50/share, or the Bank otherwise has a collateral coverage ratio of less than 1 to 1, then the Guarantor agrees upon the request of the Bank to provide such additional collateral as the Bank deems to be sufficient to cover such shortfall. 7. DURATION OF GUARANTY. This Guaranty shall not be revoked by dissolution, merger, bankruptcy or insolvency of the Guarantor with respect to all Obligations, including any extensions, renewals or deferrals. 8. ACCELERATION OF OBLIGATIONS; SUCCESSORS; MULTIPLE GUARANTORS. If the Guarantor shall become the subject of any bankruptcy or insolvency proceedings, the Guarantor's liability hereunder to pay the Obligations shall become immediately due and payable whether or not the Obligations are then due and payable by the Borrower or any other guarantor. This Guaranty shall inure to the benefit of the Bank, its successors and assigns and of the holder and owner of any of the Obligations, and shall be binding on heirs, executors, administrators, successors and assigns of the Guarantor. If there is more than one Guarantor, the liability of the Guarantors shall be joint and several, and the reference to the "Guarantor" shall be deemed to refer to all Guarantors. * and Management-prepared financial statements within 45 days of the end of each of the first three quarters of each year. 9. SEVERABILITY; PRIOR AGREEMENTS; AMENDMENT. Invalidity of any provision of this Guaranty shall not affect the validity of any other provision. This Guaranty, the collateral documents securing this Guaranty and the documents evidencing the Obligations contain the entire agreement of the parties regarding this matter; and any prior representations, promises or agreements (whether oral or written) which are not a part of this Guaranty or the documents described above are not enforceable. The terms of this Guaranty may not be altered, amended or waived except by another written agreement signed by the Guarantor and the Bank. 10. GOVERNING LAW; JURISDICTION. This Guaranty shall be governed by the internal laws of the State of Wisconsin, except to the extent superseded by Federal law. THE GUARANTOR HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITUATED IN THE COUNTY OR FEDERAL JURISDICTION WHERE THE BANK'S MAIN OFFICE IS LOCATED, AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, WITH REGARD TO ANY ACTIONS, CLAIMS, DISPUTES OR PROCEEDINGS RELATING TO THIS GUARANTY, THE COLLATERAL, ANY RELATED DOCUMENT, OR ANY TRANSACTIONS ARISING THEREFROM, OR ENFORCEMENT AND/OR INTERPRETATION OF ANY OF THE FOREGOING. Nothing herein shall affect the Bank's right to serve process in any manner permitted by law, or limit the Bank's right to bring proceedings against the Guarantor in the competent courts of any other jurisdiction or jurisdictions. 12 11. By its acceptance of this Guaranty, the Bank acknowledges that it will, upon any event of default by the Borrower, notify Guarantor of such default and unless prohibited from doing so by any applicable law, regular or court order, make demand upon Guarantor, before liquidating collateral pledged by the Borrower. 12. In addition to the costs of collection agreed to in Section 1 above, the Guarantor agrees to pay the Bank's legal fees (including fees of in-house counsel) incurred in the preparation of the Loan Agreement between the Borrower and the Bank and all related documents. Dated as of December 1, 1995 BADGER METER, INC. By: -------------------------------------- Name and Title: James L. Forbes ------------------------- President & Chief Executive Officer By: -------------------------------------- Name and Title: William J. Shinners -------------------------- Vice President-Controller EX-10.6 4 LONG-TERM INCENTIVE PLAN 1 Exhibit (10.6) LONG-TERM INCENTIVE PLAN A long-term compensation program has been developed to provide an opportunity for the officers to gain or increase their equity interests in the Company. The program consists of the Company's 1989 Stock Option Plan (the "1989 Plan") the 1993 Stock Option Plan (the "1993 Plan") and the 1995 Stock Option Plan (the "1995 Plan"). All of the stock options are granted at the market price on the date of grant. At the January 16, 1996, meeting of the Compensation Committee of the Board of Directors, a long-term incentive plan was established, whereby members of the management group could earn cash bonuses based upon increases in earnings per share over the prior year. A cash bonus will be payable at the end of four or five years if the annual increase in earnings per share meets objectives established by the Board of Directors. During the next four or five years, the maximum annual amount payable to a participant would be 11.8 percent of his December 31, 1995, base salary. The Compensation Committee of the Board of Directors believes that basing the long-term incentive plan on increases in earnings per share ties management's compensation to the interests of the shareholders and is reasonable compared to other publicly held companies of a similar size. EX-10.7 5 UNFUNDED PENSION PLAN 1 Exhibit (10.7) BADGER METER, INC. SUPPLEMENTAL NON-QUALIFIED UNFUNDED PENSION PLAN Internal Revenue regulations limit the amount of compensation that may be considered in benefit calculations for pension payments to be made from qualified pension plans. In order to provide the company's normal pension to individuals whose salary and bonus exceeds the IRS limitations the company has approved a Supplemental Non-Qualified Pension Plan ("The Plan"). The Plan will supplement the pension benefits provided by the qualified plan and will calculate an individual pension as if there were no IRS salary limitations. Payments will be made partially from the funded qualified plan with the balance from general corporate assets. The computation of the total benefit will follow the following computation. Average annual compensation covered by the Qualified Pension Plan and the Supplemental Non-Qualified Plan is a participant's salary and bonus, whether or not such compensation has been deferred at the participant's election. Under the Pension Plan, the monthly pension at normal retirement (age 65) for all participants is equal to the sum of nine-tenths percent (0.9%) of the participant's average monthly compensation (based on the highest 60 months of the last 120 months compensation) multiplied by the participant's years of service, not to exceed thirty; and six-tenths percent (0.6%) of the participant's average monthly compensation in excess of the taxable Social Security monthly wage base, multiplied by the participant's years of service, not to exceed thirty. EX-11 6 COMPUTATION OF EARNINGS PER SHARE 1 Exhibit (11.0) BADGER METER, INC. COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
Year ended December 31 1995 1994 1993 PRIMARY (1) (1) (1) Shares Average shares outstanding 1,754,225 1,730,765 1,703,122 Shares issuable upon exercise of stock options 37,192 29,560 26,449 ---------- ---------- ---------- Total 1,791,417 1,760,325 1,729,571 ========== ========== ========== Net Earnings $3,718,679 $3,215,527 $2,164,365 ========== ========== ========== Net Earnings per share $2.08 $1.83 $1.25 ========== ========== ========== FULLY DILUTED Shares Average shares outstanding 1,754,225 1,730,765 1,703,122 Shares issuable upon exercise of stock options 47,749 32,726 26,449 ---------- ---------- ---------- Total 1,801,974 1,763,491 1,729,571 ========== ========== ========== Net Earnings $3,718,679 $3,215,527 $2,164,365 ========== ========== ========== Net Earnings per share $2.06 $1.82 $1.25 ========== ========== ========== Percentage dilution 2.6% 1.9% 1.5%
(1) Earnings per share for financial statement purposes does not include common stock equivalants since dilution is less than 3%. EX-13 7 1995 ANNUAL REPORT 1 Exhibit (13.0) Portions of Annual Report to Shareholders that are incorporated by reference. 2 (Page 1 of Annual Report to Shareholders) FINANCIAL HIGHLIGHTS BADGER METER, INC.
December 31, 1995 and 1994 =================================================================== 1995 1994 % CHANGE - ------------------------------------------------------------------- OPERATIONS Net sales $108,644,000 $99,155,000 9.6 Net earnings $ 3,719,000 $ 3,216,000 15.6 - ------------------------------------------------------------------- PER SHARE Net earnings $ 2.12 $ 1.86 14.0 Cash dividends declared: Common Stock $ .7815 $ .7095 10.1 Class B Common Stock $ .7110 $ .6450 10.2 Net book value $ 18.31 $ 16.76 9.2 - ------------------------------------------------------------------- YEAR-END FINANCIAL POSITION Working capital $ 16,178,000 $14,569,000 11.0 Current ratio 2.1 to 1 1.7 to 1 23.5 Long-term debt $ 1,000,000 $ 1,200,000 (16.7) Shareholders' equity $ 32,163,000 $29,351,000 9.6 Net earnings as a percent of equity 11.6% 11.0% 5.5 - ------------------------------------------------------------------- OTHER Number of employees 904 906 (.2) Number of shareholders: Common Stock: In employee plans 678 697 (2.7) Of record 608 648 (6.2) Class B Common Stock 9 8 12.5 Shares outstanding: Common Stock 1,193,607 1,188,607 .4 Class B Common Stock 562,785 562,785 0 ====================================================================
3 (Page 14 to 16 of Annual Report to Shareholders) Management's Discussion and Analysis Business Description Badger Meter, Inc. serves the flow measurement and control market with products including water meters and associated systems, wastewater meters, industrial meters, small valves and natural gas instrumentation. The Utility Division has product line responsibility for the water meters and associated systems and the Industrial Division is responsible for all of the other products. Beginning in 1997, the company will expand into three operating units: Utility, Industrial and International. The Utility and Industrial divisions will market their products in the U.S. and Canada and the International Division will market both Utility and Industrial division products in other countries throughout the world. Results of Operations Sales Badger Meter's sales have increased for the past three years. Sales were $108,644,000 in 1995, $99,155,000 in 1994 and $84,497,000 in 1993. The percent of increase in sales in 1995, 1994 and 1993 was 9.6 percent, 17.3 percent and 2.9 percent, respectively. Utility Division sales increased 14.7 percent in 1995, 22.0 percent in 1994 and 4.2 percent in 1993. Three factors determine the rate of sales increase: market conditions, new products and changes in distribution strategy. The 1995 sales increase was due to higher sales of the division's TRACE radio-frequency automated meter reading system and large Recordall meters. In 1994, the increase resulted from higher sales of TRACE automated meter reading systems and unit increases of both small and large meters. The sales increase in 1993 resulted from large increases in the unit volume of new products, partially offset by a decrease in the unit volume of mature products due to very soft market conditions and a change in distribution strategy which places less emphasis on the bid market. Industrial Division sales increased 1.2 percent in 1995, 10.5 percent in 1994 and 1.1 percent in 1993. The variation in the sales trend is a result of changes in market conditions and the rate of increase in sales of new products. The 1995 sales increase in the Industrial Division resulted from improved sales in Europe and higher sales of Research Control valves. Revenues for lubrication meters and ultrasonic meters were flat for the year. In 1994, sales increased both domestically and internationally. Domestically, unit volume increased for industrial flowmeters, lubrication meters, ultrasonic meters and valves. Internationally, markets were stronger than in 1993, particularly in Europe which experienced increased unit sales of lubrication meters. In 1993, the markets for the division's lubrication meters, industrial flowmeters and concrete meters improved, while the markets for chemical, petrochemical and pharmaceutical products were soft. Both divisions have product lines that include mature products and new products. Most of the new products incorporate higher technologies. Both divisions should continue to see increased sales from the recently developed new products. The level of sales of the mature products will be directly related to the strength of the various markets utilizing these products and the development of products to replace them. In 1996, the markets served by the Utility Division are expected to remain about as strong as in 1995. The Industrial Division serves a variety of markets, but overall, these markets are also expected to remain about as strong as in 1995. The rate of sales increase of the new products will depend upon the rate of acceptance of these new technologies, both domestically and internationally, and overall market conditions. In 1995, Badger Meter continued to enjoy large unit volume sales of TRACE radio-based automatic meter reading systems to Mexico. This particular contract should be completed during 1996. The company expects to continue to sell its products in Mexico and other Latin American countries. Although the current economic and political problems in Mexico are improving, there is uncertainty as to how quickly new business opportunities will be developed. In 1995, the company experienced no currency losses on its existing Mexican business. Because the company does business in Mexico in U.S. dollars, no 1996 currency losses are anticipated. 4 In the future, the company's sales increases should be derived from both new products and alliances that are being developed with other companies, particularly for the meter reading technology products. Badger Meter's strategy is to meet customers' meter reading technology needs with its proprietary technologies and other technologies available through alliances in the marketplace. Both alternatives enable the company to sell its meters and registration devices, either as part of a proprietary technology or as components that interface with systems developed by other companies. Gross profit margins Gross profit margins decreased in 1995 and 1994 and increased in 1993. The gross profit margin was 36.0 percent in 1995, 36.7 percent in 1994, and 38.3 percent in 1993. The gross profit margin decrease in both 1995 and 1994 resulted primarily from changes in the product mix, with the sale of meter reading technology products, particularly TRACE, achieving significant volume increases. The meter reading technology products, while increasingly more profitable each year, currently have a gross profit percentage below that of other Utility and Industrial products. Long term, the company expects the gross profit percentage of the various meter reading technology products to meet or exceed those of the established utility meter lines. Gross profit margin improvement in 1993 came from several sources, including increased unit sales of new products, the implementation of strategies to broaden the Utility Division's distribution channels and cost savings achieved through the company's continuous improvement program. In 1995, the company experienced slightly higher increases in raw materials including castings, plastic resin, glass, electronic components and cartons. Competitive marketing conditions make it somewhat difficult to pass along all of the raw material cost increases through higher selling prices. Increases in raw material prices were moderate in 1993 and 1994. Offsetting the increased raw material prices are cost reductions resulting from capital investment to improve manufacturing equipment and systems and from continued savings achieved from the company's cost reduction improvement programs. Higher unit volumes, particularly in the meter reading technology product line, also offset some of the increases in raw material prices. Net earnings The 1995 earnings improvement reflected the increased sales, partially offset by a decrease in gross profit margins. Effective expense controls also contributed to the increase in earnings as marketing and administrative expenses rose at a rate lower than the increase in sales. Only engineering expenses increased at a rate higher than the sales increase. In addition, interest expense decreased due to lower debt balances. Both the Utility and Industrial divisions were profitable in 1995. The 1994 earnings improvement resulted from sharply increased sales and increases in marketing, engineering and general and administrative expenses at a lower rate than the sales increase. Both the Utility Division and the Industrial Division were profitable in 1994. The 1993 earnings improvement resulted from increased sales, improved gross profit margins and expenses growing at a lower rate than the sales increase in all of the categories except marketing expenses. Investments in marketing were made to promote new products and expand international markets. Both divisions were profitable in 1993. Research and development costs increased 17.7 percent in 1995. The Utility Division continued to expand its line of meter reading technology products and develop a new line of large utility meters and the Industrial Division continued to upgrade and expand its ultrasonic and natural gas instrumentation product lines. In 1996, both divisions should continue to be profitable. Margins on new products should increase as unit volume increases. International markets, to the extent they are economically viable, should provide new opportunities for the higher technology products being marketed by both divisions. Income taxes Income taxes as a percentage of earnings before income taxes increased to 37.1 percent in 1995 compared to 35.3 percent in 1994 and 34.5 percent in 1993. The increased rate in 1995 continues to reflect reduced credits on an increasing base of taxable income. 5 The increased rate in 1994 reflected reduced tax credits on an increased base of taxable income and the 50 percent disallowance of meal and entertainment expense. The tax rate increased in 1993 as a result of reduced credits on a higher base of taxable income. The credits reflect the company's activities in research and development and in innovative approaches to manufacturing processes. The company currently has a net deferred tax asset of approximately $1,536,000, reflecting the net temporary differences between financial reporting and tax reporting. The company believes this net asset will be realized based on the earnings history of the company. Backlog The backlog at December 31, 1995, was $13,012,000, compared to $16,513,000 at December 31, 1994, and $9,308,000 at December 31, 1993. Approximately $4,000,000 of the 1994 backlog was related to the Mexico City order. While backlog continues to be an indicator of future sales and profitability, changes in the way business is conducted caused this indicator to be less important than in prior years. Customers in both divisions, with the exception of large contracts such as the Mexico City contract, enter orders on a just-in-time basis, expecting Badger Meter to provide faster product delivery. For the three year period, the backlog has varied each year because of changes in customer expectations, success in obtaining large international orders, changes in the distribution channels of both divisions and improvements that the company continues to make in its overall customer service. Liquidity and Capital Resources Total debt at December 31, 1995, was $6,515,000, compared to $11,636,000 at December 31, 1994, and $13,982,000 at December 31, 1993. The decrease in debt in 1995 resulted from increased earnings, improved inventory turns and a reduction in days sales outstanding. The decrease in debt in 1994 resulted from sharply increased earnings, improved inventory turns and stable days sales outstanding. Debt as a percent of total capital decreased to 16.8 percent at December 31, 1995, compared to 28.4 percent at December 31, 1994, and 34.9 percent at December 31, 1993. Although the percentage of debt to total capital is below company's goal of 20 to 40 percent, management believes that the lower debt levels are appropriate given its current operating requirements and business opportunities. Total indebtedness at December 31, 1995, was primarily comprised of short-term notes payable totaling $5,515,000, which included $4,458,000 of commercial paper. The company also had an interest rate swap agreement relating to $5,000,000 of this debt, enabling it to avoid exposure to short-term interest rate fluctuations. Long-term debt was $1,000,000 at December 31, 1995. The company had $21,573,000 of unused credit lines available at December 31, 1995, an amount sufficient for all known cash requirements. Significant changes in balance sheet accounts in 1995 occurred in accounts receivable and inventories. The decrease in accounts receivable reflects lower fourth quarter 1995 sales and a reduction in days sales outstanding. The decrease in the inventory balance during 1995 was due to improved inventory management and higher inventories at December 31, 1994, to service the Mexico City contract. Capital expenditures were $4,493,000 in 1995, compared to $3,553,000 in 1994 and $3,121,000 in 1993. This level of expenditure, up 26.5 percent in 1995 over 1994, enabled the company to continue to improve its manufacturing processes, invest in machinery, equipment and tooling to produce quality products, maintain competitive costs, continue to improve its level of customer service and improve facilities for marketing and engineering personnel. 6 (Page 17 of Annual Report to Shareholders) CONSOLIDATED STATEMENTS OF OPERATIONS BADGER METER, INC.
Years ended December 31, 1995, 1994 and 1993 - ------------------------------------------------------------------------------------ 1995 1994 1993 - ------------------------------------------------------------------------------------ Net sales $108,644,001 $99,154,839 $84,496,928 Operating costs and expenses: Cost of sales 69,499,606 62,806,600 52,126,717 Marketing and administrative 25,643,624 24,501,650 22,486,658 Research and engineering 6,479,329 5,923,735 5,940,057 - ------------------------------------------------------------------------------------ 101,622,559 93,231,985 80,553,432 - ------------------------------------------------------------------------------------ Operating earnings 7,021,442 5,922,854 3,943,496 Other (income) deductions: Interest expense 721,250 829,643 669,447 Other - net 389,513 119,684 (32,316) - ------------------------------------------------------------------------------------ 1,110,763 949,327 637,131 - ------------------------------------------------------------------------------------ Earnings before income taxes 5,910,679 4,973,527 3,306,365 Provision for income taxes (Note 8) 2,192,000 1,758,000 1,142,000 - ------------------------------------------------------------------------------------ Net earnings $3,718,679 $3,215,527 $2,164,365 - ------------------------------------------------------------------------------------ Earnings per share $2.12 $1.86 $1.27 ====================================================================================
See accompanying notes. -2- 7 (Page 18 of Annual Report to Shareholders) CONSOLIDATED BALANCE SHEETS BADGER METER, INC.
December 31, 1995 and 1994 ======================================================================================== ASSETS 1995 1994 - ---------------------------------------------------------------------------------------- Current assets: Cash $ 1,176,947 $ 364,586 Receivables (Note 3) 13,661,094 14,432,217 Inventories: Finished goods 3,403,329 3,101,388 Work in process 6,750,432 9,494,913 Raw materials and purchased parts 5,680,616 5,870,965 - ---------------------------------------------------------------------------------------- Total inventories 15,834,377 18,467,266 Prepaid expenses 744,989 735,352 - ---------------------------------------------------------------------------------------- Total current assets 31,417,407 33,999,421 Property, plant and equipment, at cost: Land and improvements 2,759,230 2,759,230 Buildings and improvements 11,354,085 10,719,670 Machinery and equipment 40,987,455 39,460,237 - ---------------------------------------------------------------------------------------- 55,100,770 52,939,137 Less accumulated depreciation 37,714,079 36,321,863 - ---------------------------------------------------------------------------------------- Net property, plant and equipment 17,386,691 16,617,274 Intangible assets, at cost less accumulated amortization 1,216,645 1,632,208 Prepaid pension (Note 7) 5,821,221 5,306,653 Deferred income taxes (Note 8) 1,536,120 1,326,740 Deferred charges and other assets (Note 7) 3,148,437 3,111,045 - ---------------------------------------------------------------------------------------- $60,526,521 $61,993,341 ======================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term debt (Note 4) $ 5,515,320 $10,436,540 Payables 4,921,374 4,616,743 Accrued compensation and employee benefits 4,249,643 3,846,920 Income taxes 226,224 168,667 Other taxes 327,131 361,706 - ---------------------------------------------------------------------------------------- Total current liabilities 15,239,692 19,430,576 Accrued non-pension postretirement benefits (Note 7) 8,396,000 8,334,000 Other accrued employee benefits (Notes 5 and 7) 3,727,880 3,678,015 Long-term debt (Note 7) 1,000,000 1,200,000 Commitments and contingencies (Note 6) Shareholders' equity: (Notes 2, 5 and 7) Common Stock, $1 par; authorized 5,000,000 shares; issued 1,551,912 shares in 1995, 1,546,912 shares in 1994 1,551,912 1,546,912 Less:Treasury stock, 358,305 shares in 1995 and 1994 (358,305) (358,305) - ---------------------------------------------------------------------------------------- 1,193,607 1,188,607 Class B Common Stock, $.10 par; authorized 5,000,000 shares; issued 562,785 shares in 1995 and 1994 56,278 56,278 Capital in excess of par value 7,831,877 7,708,277 Reinvested earnings 24,552,011 22,164,608 Less:Employee benefit stock (1,101,846) (1,378,747) Pension liability adjustment (Note 7) (368,978) (388,273) - ---------------------------------------------------------------------------------------- Total shareholders' equity 32,162,949 29,350,750 - ---------------------------------------------------------------------------------------- $60,526,521 $61,993,341 ========================================================================================
See accompanying notes. -3- 8 (Page 19 of Annual Report to Shareholders) CONSOLIDATED STATEMENTS OF CASH FLOWS BADGER METER, INC.
Years ended December 31, 1995, 1994 and 1993 =============================================================================================== 1995 1994 1993 - ----------------------------------------------------------------------------------------------- Operating activities: Net earnings $ 3,718,679 $ 3,215,527 $ 2,164,365 Adjustments to reconcile net earnings to net cash provided by operations: Depreciation 3,522,944 3,467,618 3,365,278 Amortization 874,683 968,585 926,287 Noncurrent employee benefits (205,529) (154,947) 233,569 Deferred income taxes (209,380) (325,740) (213,000) Other 200,329 94,346 38,482 Changes in: Receivables 771,123 (2,868,621) (360,228) Inventories 2,632,889 (482,246) (3,308,594) Current liabilities other than short-term debt 730,336 2,431,359 67,983 Prepaid expenses (9,637) (3,655) 54,617 - ----------------------------------------------------------------------------------------------- Total adjustments 8,307,758 3,126,699 804,394 - ----------------------------------------------------------------------------------------------- Net cash provided by operations 12,026,437 6,342,226 2,968,759 - ----------------------------------------------------------------------------------------------- Investing activities: Property, plant and equipment (4,492,690) (3,553,186) (3,120,831) Other - net (597,490) (276,364) (92,665) - ----------------------------------------------------------------------------------------------- Net cash used for investing activities (5,090,180) (3,829,550) (3,213,496) - ----------------------------------------------------------------------------------------------- Financing activities: Bank borrowings (repayments) (4,921,220) (2,145,303) 1,314,655 Dividends (1,331,276) (1,194,722) (1,067,599) Stock options 128,600 317,926 -- - ----------------------------------------------------------------------------------------------- Net cash provided by (used for) financing activities (6,123,896) (3,022,099) 247,056 - ----------------------------------------------------------------------------------------------- Increase (decrease) in cash 812,361 (509,423) 2,319 Cash - beginning of year 364,586 874,009 871,690 - ----------------------------------------------------------------------------------------------- Cash - end of year $ 1,176,947 $ 364,586 $ 874,009 =============================================================================================== Supplemental disclosures of cash flow information: Cash paid during the year for: Income taxes $ 2,141,821 $ 2,382,320 $ 976,577 Interest $ 767,189 $ 851,533 $ 635,227 Non-cash transactions (See Notes 1 and 7) ===============================================================================================
See accompanying notes. -4- 9 (Page 20 of Annual Report to Shareholders) CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY BADGER METER, INC. Years ended December 31, 1995, 1994 and 1993 ============================================================================================================================ Class B Capital in Employee Pension Common Stock Common Stock excess of Reinvested benefit liability $1.00 par value $.10 par value par value earnings stock adjustment - ---------------------------------------------------------------------------------------------------------------------------- Balance, December 31, 1992 $1,141,004 $56,278 $6,675,436 $19,047,037 $(2,026,092) -- Net earnings 2,164,365 Cash dividends, $.64625 per Common share (736,960) Cash dividends, $.58750 per Class B Common share (330,639) Restricted stock plan (Note 5): Amortization of unearned compensation 148,999 Shares cancelled (700 shares) (700) (12,425) 13,125 Employee stock ownership plan (Note 7): Amortization of unearned compensation 200,000 Tax benefit on dividends (Notes 5 and 7) 30,000 Pension liability adjustment (Note 7) (295,304) - ---------------------------------------------------------------------------------------------------------------------------- Balance, December 31, 1993 1,140,304 56,278 6,693,011 20,143,803 (1,663,968) (295,304) - ---------------------------------------------------------------------------------------------------------------------------- Net earnings 3,215,527 Cash dividends, $.7095 per Common share (831,726) Cash dividends, $.6450 per Class B Common share (362,996) Restricted stock plan (Note 5): Amortization of unearned compensation 66,471 Shares cancelled (1,000 shares) (1,000) (17,750) 18,750 Tax benefit on vested restricted stock 37,000 Employee stock ownership plan (Note 7): Amortization of unearned compensation 200,000 Stock options exercised (Note 5) 18,570 299,356 Tax benefit on stock options (Note 5) 55,000 Treasury stock issued (Note 1) 30,733 614,660 Tax benefit on dividends (Notes 5 and 7) 27,000 Pension liability adjustment (Note 7) (92,969) - ---------------------------------------------------------------------------------------------------------------------------- Balance, December 31, 1994 1,188,607 56,278 7,708,277 22,164,608 (1,378,747) (388,273) - ---------------------------------------------------------------------------------------------------------------------------- Net earnings 3,718,679 Cash dividends, $.7815 per Common share (931,136) Cash dividends, $.7110 per Class B Common share (400,140) Restricted stock plan (Note 5): Amortization of unearned compensation 76,901 Tax benefit on vested restricted stock 4,000 Employee stock ownership plan (Note 7): Amortization of unearned compensation 200,000 Stock options exercised (Note 5) 5,000 81,600 Tax benefit on stock options (Note 5) 11,000 Tax benefit on dividends (Notes 5 and 7) 27,000 Pension liability adjustment (Note 7) 19,295 - ---------------------------------------------------------------------------------------------------------------------------- Balance, December 31, 1995 $1,193,607 $56,278 $7,831,877 $24,552,011 $(1,101,846) $(368,978) - ----------------------------------------------------------------------------------------------------------------------------
See accompanying notes. 5 10 (Pages 21 to 26 of Annual Report to Shareholders) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1995, 1994 and 1993 BADGER METER, INC. 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PROFILE Badger Meter is a leading marketer and manufacturer of products using flow measurement and control technology serving industrial and utility markets worldwide. Its products are used to measure and control the flow of liquids and gases in a variety of applications. It operates in one segment serving several classes of customers. The company serves the flow measurement and control market with products including water meters and associated systems, wastewater meters, industrial meters, small valves and natural gas instrumentation. Because of market differences, the water meters and associated systems have been assigned to the Utility Division, and all of the other products to the Industrial Division. CONSOLIDATION The consolidated financial statements include the accounts of the company and its subsidiaries, all of which are wholly owned as of December 31, 1995. In May 1994, the company exercised its option pursuant to the Purchase and Stock Option Agreement of November 11, 1985, to purchase the remaining 10% of the stock of Precision Measurement Incorporated for 30,733 shares of the company's Common Stock having a market value of $645,393 on the date of the transfer. INVENTORIES Inventories are valued at the lower of cost (first-in, first-out method), or market. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at cost. Depreciation has been provided principally by the straight-line method. INTANGIBLE ASSETS Costs of purchased patents are amortized over the lives of the patents. Accumulated amortization at December 31, 1995 and 1994, was $2,173,000 and $2,413,000, respectively. RESEARCH AND DEVELOPMENT EXPENDITURES Research and development costs are charged to expense as incurred and amounted to $3,858,000, $3,278,000 and $3,642,000 in 1995, 1994 and 1993, respectively. EARNINGS PER SHARE Earnings per share is based on the weighted average shares outstanding during each period. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. FOREIGN CURRENCY TRANSLATION The company's functional currency for all of its foreign subsidiaries is the US dollar. Translation adjustments and transaction gains and losses are recognized in consolidated income as incurred. These amounts are reflected in Other-net in the Statements of Operations and have not been material. PROSPECTIVE ACCOUNTING CHANGES In March 1995, the Financial Accounting Standard Board (FASB) issued Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" (FAS 121) and in October 1995, the FASB issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (FAS 123). Both standards are effective for fiscal years beginning after December 15, 1995. -6- 11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The company believes that the future adoption of FAS 121 will have no material effect on results of operation or financial position. As allowed by FAS 123, the company intends to continue to use current standards for determining annual compensation charges and will disclose the impact of fair value. RECLASSIFICATIONS Certain reclassifications have been made to the 1994 and 1993 financial statements to conform to the 1995 presentation. 2 CLASS B COMMON STOCK Holders of Class B Common Stock are restricted in their ability to transfer such shares although they may convert their shares of Class B Common Stock into shares of Common Stock at any time. Holders of Common Stock are entitled to cash dividends per share equal to 110% of all dividends declared and paid on each share of the Class B Common Stock. Holders of Class B Common Stock are entitled to ten votes per share on any matters brought before the shareholders of the company while holders of Common Stock are entitled to one vote per share. Liquidation rights are the same for both classes of stock. 3 TRANSACTIONS WITH AFFILIATED COMPANY The company owns a 15% interest ($75,000) in a previously wholly-owned Mexican subsidiary, Medidores Azteca, S.A. (Azteca). The company also has a note receivable from the majority shareholders of Azteca, due in monthly installments through the year 2000. The balances outstanding on this note at December 31, 1995 and 1994, were $89,000 and $101,000, respectively. The investment and note receivable are included in other assets in the accompanying consolidated balance sheets. During 1995, 1994 and 1993, the company sold approximately $441,000, $974,000 and $685,000 of goods to Azteca. Trade receivables from Azteca at December 31, 1995 and 1994, were $615,000 and $688,000, respectively. 4 SHORT-TERM DEBT AND CREDIT LINES Short-term debt at December 31, 1995 and 1994, consisted of:
----------------------------------------------- 1995 1994 ----------------------------------------------- Notes payable to banks $1,057,320 $5,661,540 Commercial paper 4,458,000 4,775,000 ---------- ----------- TOTAL $5,515,320 $10,436,540 ========== ===========
The company has $27,088,000 of short-term credit lines with domestic banks and a foreign bank which includes a $5,000,000 commercial paper line of credit. At December 31, 1995, $5,515,320 of these lines was used, which included $4,458,000 of commercial paper. The weighted average interest rate on the outstanding balance was 5.81% and 6.61% at December 31, 1995 and 1994. -7- 12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 5 RESTRICTED STOCK AND STOCK OPTION PLANS A. RESTRICTED STOCK PLAN The company's Restricted Stock Plan (The Plan) provided for the award of up to 100,000 shares of the company's Common Stock to certain officers and key employees and for the reimbursement to certain participants for the personal income tax liability resulting from such awards. The company provides for any income tax liability ratably throughout the restricted period. Plan participants are entitled to cash dividends and to vote their respective shares. The sale or transfer of the shares is limited during the restricted period, not exceeding eight years. All eligible shares have been issued. The value of such stock was established by the market price on the date of grant. Restrictions on 2,500 shares expired during 1995. Unearned compensation was charged for the market value of the restricted shares as these shares were issued in accordance with The Plan. The unearned compensation is shown as a reduction of shareholders' equity in the accompanying consolidated balance sheets and is being amortized ratably over the restricted period. During 1995, 1994 and 1993, $82,000, $101,000 and $178,000 was charged to expense relating to The Plan. B. STOCK OPTION PLANS The company has three stock option plans (The 1989, 1993 and 1995 Plans) which provide for the issuance of options to key employees of the company to purchase up to an aggregate of 100,000 shares of Common Stock under each plan. The 1993 Plan provided for the issuance of 3,000 options to each director who is not an employee of the company. The option plans are administered by the Compensation Committee of the Board which has the authority to select the participants, the number of shares subject to each option, the option period, the option price and the manner in which options become exercisable. As of December 31, 1995, substantially all of the 1989 and 1993 options have been granted and none of the 1995 options have been granted. The following table summarizes the transactions of the company's stock option plans for the three year period ended December 31, 1995:
Number of Shares Option Prices ---------------- ----------------- Unexercised options outstanding - December 31, 1992 88,800 $16.750 - $17.125 Options granted 74,200 $18.000 - $20.000 Options terminated (2,700) $17.125 - $18.000 ---------------- Unexercised options outstanding - December 31, 1993 160,300 $16.750 - $20.000 Options granted 2,100 $19.125 Options exercised (18,570) $17.125 - $18.000 Options terminated (4,500) $16.750 - $19.125 ---------------- Unexercised options outstanding - December 31, 1994 139,330 $16.750 - $20.000 Options granted 42,100 $22.250 - $19.125 Options exercised (5,000) $16.750 - $19.125 Options terminated (1,800) $16.750 - $22.250 ---------------- Unexercised options outstanding - December 31, 1995 174,630 $16.750 - $22.250 ================ Exercisable options - December 31, 1995 115,030 $16.750 - $20.000 ================
-8- 13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6 COMMITMENTS AND CONTINGENCIES A. COMMITMENTS The company leases equipment and facilities under operating leases. Future minimum lease payments under non-cancelable operating leases consisted of the following at December 31, 1995: -------------------------------------- 1996 $420,000 1997 201,000 1998 30,000 -------------------------------------- Total minimum lease payments $651,000 ======================================
Total rental expense charged to operations under all operating leases was approximately $1,362,000, $1,332,000 and $1,281,000 in 1995, 1994 and 1993, respectively. B. CONTINGENCIES In the normal course of business, the company is named in legal procedings. There are currently no material legal proceedings pending with relation to the company. The company is subject to contingencies relative to environmental laws and regulations. Currently the company is in the process of resolving several cases relative to landfill sites. The company does not believe the ultimate resolution of these claims will have a material adverse effect on the results of operations. Provision has been made for known settlement costs. The company has evaluated its worldwide operations to determine if any risks and uncertanties exist that could severely impact its operations in the near-term. In general the company does not believe that it is at risk. However, the company does rely on single suppliers for certain castings and components in several of its meter lines. Although alternate sources of supply exist for these items, loss of certain suppliers could disrupt operations. To protect itself against such disruption, the company has purchased contingent business interruption insurance which would generally prevent severe financial loss. 7 EMPLOYEE BENEFIT PLANS A. PENSION PLANS The company maintains non-contributory defined benefit pension plans covering substantially all domestic employees. Benefits from the Salaried Plan are based on compensation and years of service while benefits from the hourly plans are based on years of service. It is the company's policy to fund at least the minimum contribution required by ERISA. The following data is provided for the pension plans: -9- 14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Components of Net Periodic Pension Credit - ------------------------------------------------------------------------------- 1995 1994 1993 - ------------------------------------------------------------------------------- Service cost - benefits earned during the year $ 850,072 $ 940,006 $ 833,732 Interest cost on projected benefit obligations 2,148,189 1,904,504 1,866,132 Actual (return) loss on plan assets (6,409,454) 736,097 (1,865,977) Net amortization and deferral 3,175,733 (3,885,874) (1,128,520) - ------------------------------------------------------------------------------- Net periodic pension credit $ (235,460) $ (305,267) $ (294,633) =============================================================================== Reconciliation of Funded Status DECEMBER 31, - ----------------------------------------------------------------------------------------- 1995 1994 - ----------------------------------------------------------------------------------------- ASSETS ACCUMULATED ASSETS ACCUMULATED EXCEED BENEFITS EXCEED BENEFITS ACCUMULATED EXCEED ACCUMULATED EXCEED BENEFITS ASSETS BENEFITS ASSETS Actuarial present value of benefit obligations: Vested benefit obligation $15,563,014 $ 8,135,305 $13,400,664 $ 7,293,688 Non-vested benefit obligation 296,236 139,133 627,454 210,339 - ----------------------------------------------------------------------------------------- Accumulated benefit obligation $15,859,250 $ 8,274,438 $14,028,118 $ 7,504,027 ========================================================================================= Projected benefit obligation $21,711,321 $ 8,274,438 $18,534,624 $ 7,504,027 Plan assets at fair value 27,862,175 6,481,265 23,434,337 5,574,268 - ----------------------------------------------------------------------------------------- Plan assets in excess (less than) projected benefit obligation 6,150,854 (1,793,173) 4,899,713 (1,929,759) Unrecognized net (gain) loss 1,728,524 644,041 2,878,458 684,149 Unrecognized prior service cost 14,101 946,850 15,191 1,047,828 Unrecognized transition asset (2,072,258) (44,063) (2,486,709) (52,876) Adjustment required to recognize minimum liability (1) -- (1,546,828) -- (1,679,101) - ----------------------------------------------------------------------------------------- Prepaid pension asset (liability) included in balance sheet $ 5,821,221 $(1,793,173) $ 5,306,653 $(1,929,759) =========================================================================================
(1) The provisions of FAS No. 87, "Employers' Accounting for Pensions", require the recognition of an additional minimum liability for each defined benefit plan for which the accumulated benefit obligation exceeds plan assets. This amount has been recorded as a long-term liability with an offsetting intangible asset. Because the asset recognized may not exceed the amount of unrecognized prior service cost and transition obligation on an individual plan basis, the balance, net of tax benefits, is reported as a separate reduction of shareholders' equity at December 31, 1995 and 1994, as follows: -10- 15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1995 1994 - ------------------------------------------------------- Minimum liability adjustment $1,546,828 $1,679,101 Intangible asset 946,850 1,047,828 - ------------------------------------------------------- 599,978 631,273 Tax benefit 231,000 243,000 - ------------------------------------------------------- Pension liability adjustment to shareholders' equity $368,978 $388,273 =======================================================
The actuarial assumptions used in the preparation of the above information for 1995 were 7.5%, 9.0% and 5.0% and for 1994 were 8.25%, 9.0% and 5.0% for the discount rate, long-term rate of return and rate of compensation increases, respectively. Plan assets are primarily invested in listed securities and instruments of the U.S. Government. B. OTHER POSTRETIREMENT BENEFITS In addition to providing pension benefits for its domestic employees, the company has defined dollar postretirement plans that provide medical benefits for retirees and eligible dependents. Substantially all of the company's domestic employees may become eligible for these benefits if they reach normal retirement age while working for the company. It is the company's current policy to fund health care benefits on a cash basis. The plans are coordinated with Medicare when a retiree reaches age 65 and the plans require retiree contributions which equaled approximately 5.7% of 1995 and 6.9% of 1994 non-pension postretirement benefits costs, respectively. The following tables provide information on the plan status as of December 31,
1995 1994 - ------------------------------------------------------------------------ Accumulated postretirement benefit obligation: Retirees $7,626,000 $7,420,000 Fully eligible active plan participants 1,042,000 887,000 Other active participants 1,757,000 1,407,000 - ------------------------------------------------------------------------ Total 10,425,000 9,714,000 Unrecognized net loss (2,029,000) (1,380,000) - ------------------------------------------------------------------------ Accrued postretirement benefit cost recognized in the accompanying consolidated balance sheet $8,396,000 $8,334,000 ========================================================================
The assumed health care cost trend rates used in measuring the accumulated postretirement benefit obligation (APBO) for 1996 is approximately 8.6% grading down to 5.7%. For 1995, this rate was 8.7% going to 5.7%. The discount rate used to measure the APBO was 7.50% and 8.25% at December 31, 1995 and 1994, respectively. -11- 16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Net periodic postretirement benefit cost for the years ending December 31, 1995 1994 1993 --------------------------------------------------------------------------- Service cost, benefits attributed for service of active employees for the period $ 93,000 $102,000 $ 85,000 Interest cost on the accumulated postretirement benefit obligation 771,000 695,000 705,000 Unrecognized loss 26,000 29,000 -- --------------------------------------------------------------------------- Net periodic postretirement benefit cost $890,000 $826,000 $790,000 ===========================================================================
The impact of a 1% increase in the health care cost trend rate on the APBO would have been 8.2% at December 31, 1995 and 1994, and would have increased benefit cost by 8.3% for 1995, 8.0% for 1994 and 5.2% for 1993. C. BADGER METER EMPLOYEE SAVINGS AND STOCK OWNERSHIP PLAN In 1991, the company formed The Badger Meter Employee Savings and Stock Ownership Plan (The ESSOP) and guaranteed a loan made to The ESSOP which had been used to purchase Common Stock of the company from shares held in Treasury. The company is obligated to contribute sufficient cash to The ESSOP to enable it to repay the loan principal and interest. Each payment releases shares of Common Stock (11,428 shares in 1995, 1994 and 1993) for allocation to participants in The ESSOP. In 1993, the shareholders approved an amendment to the company's Restated Articles of Incorporation to permit the transfer of Class B Common Stock as shares equivalent to Common Stock to The ESSOP. As of December 31, 1995, The ESSOP held 12,000 shares of Class B Common Stock in unallocated shares. In 1995, The ESSOP renegotiated the terms of the loan. The new terms allow variable payments of principal with the final principal and interest payment due December 1, 2001. The balances at December 31, 1995 and 1994, respectively, were $1,000,000 and $1,200,000. Interest may be charged at either Prime Rate or at LIBOR plus 1.5%. As of December 31, 1995, the LIBOR-based loan had an interest rate of 7.2%. The ESSOP includes a voluntary 401(k) savings plan which allows domestic employees to defer up to 15% of their income on a pretax basis. The company matches 25% of each employee's contribution, with the match percentage applying to a maximum of 6%, 5% and 4% of the employee's salary for 1995, 1994 and 1993, respectively. The match is paid in company stock. For 1995, 1994 and 1993, respectively, 11,031, 9,102 and 9,185 shares of Common Stock released through the payment of The ESSOP debt were allocated to participants. In addition to the match, the company may, at the discretion of the Board of Directors, allocate additional available shares to participants who are not covered by a collective bargaining agreement. The shares allocated were 2,326 and 2,370 in 1994 and 1993. For 1995, no additional shares were available to allocate. The obligation related to The ESSOP has been recorded as long-term debt and a like amount of unearned compensation has been recorded as a reduction of shareholders' equity in the accompanying consolidated balance sheets. Charges to expense were $230,000, $200,000 and $221,000 in 1995, 1994 and 1993, respectively. -12- 17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8 INCOME TAX EXPENSE Details of earnings (loss) before income taxes are as follows:
- ------------------------------------------------------------------------------------------- 1995 1994 1993 - ------------------------------------------------------------------------------------------- Earnings (loss) before income taxes: Domestic $5,730,814 $5,053,140 $3,593,885 Foreign 179,865 (79,613) (287,520) - ------------------------------------------------------------------------------------------- Total $5,910,679 $4,973,527 $3,306,365 =========================================================================================== Income taxes: Current: Federal $1,956,000 $1,658,000 $1,210,000 State 339,000 300,000 148,000 Foreign 106,000 41,000 48,000 Deferred: Federal (145,000) (199,000) (150,000) State (12,000) 21,000 12,000 Foreign (52,000) (63,000) (126,000) - ------------------------------------------------------------------------------------------- Total $2,192,000 $1,758,000 $1,142,000 ===========================================================================================
The components of the net deferred tax asset as of December 31, were as follows:
DEFERRED TAX ASSETS: 1995 1994 - ---------------------------------------------------------------------------------------------------- Receivables $ 62,000 $ 46,000 Inventories 292,000 233,000 Accrued compensation 695,000 681,000 Other payables 266,000 181,000 Non-pension postretirement benefits 3,231,000 3,207,000 Accrued employee benefits 1,132,000 979,000 Intangible assets 21,000 5,000 Operating loss carryforward 218,000 137,000 - ---------------------------------------------------------------------------------------------------- Total deferred tax assets 5,917,000 5,469,000 DEFERRED TAX LIABILITIES: - ---------------------------------------------------------------------------------------------------- Prepaid expenses 63,000 52,000 Depreciation 1,928,000 1,960,000 Prepaid pension 2,328,000 1,987,000 Deferred charges 47,000 123,000 Other 15,000 20,000 - ---------------------------------------------------------------------------------------------------- Total deferred tax liabilities 4,381,000 4,142,000 - ---------------------------------------------------------------------------------------------------- Net deferred tax asset included in balance sheet $1,536,000 $1,327,000 ====================================================================================================
-13- 18 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS An operating loss at a Mexican subsidiary may be carried forward for ten years and there is no limitation on the carryforward of an operating loss at a German subsidiary. The provision for income tax differs from the amount which would be provided by applying the statutory U.S. corporate income tax rate of 34% in each year due to the following items:
1995 1994 1993 - ---------------------------------------------------------------- Provision at statutory rates $2,010,000 $1,691,000 $1,124,000 State income taxes, net of federal tax benefit 216,000 212,000 106,000 Foreign income taxes (7,000) 5,000 20,000 Tax benefit of FSC (119,000) (243,000) (39,000) Other 92,000 93,000 (69,000) - ---------------------------------------------------------------- Actual provision $2,192,000 $1,758,000 $1,142,000 ================================================================
No provision for federal income taxes is made on the earnings of foreign subsidiaries that are considered permanently invested or would be offset by foreign tax credits upon distribution. Such undistributed earnings at December 31, 1995, were $340,000. 9 FAIR VALUE OF FINANCIAL INSTRUMENTS Statements of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments" (FAS 107) and No. 119, "Disclosure about Derivative Financial Instruments and Fair Value of Financial Instruments" (FAS 119) became effective for the company as of December 31, 1995. These statements require a disaggregated disclosure of financial instruments with either on-balance sheet or off-balance sheet risk. Cash, accounts receivable, accounts payable and other accrued liabilities are reflected in the financial statements at fair value. Short-term debt is comprised of notes payable drawn against the company's lines of credit and commercial paper. Because of the short-term nature of these instruments the carrying value reflects the fair value. The only long-term debt relates to the company's guarantee of The ESSOP debt, which is offset by a similar value in shareholders' equity. The company has an interest rate swap agreement with a financial institution based on an amount of $5,000,000 to protect itself from increases in interest rates. The term of the agreement is from June 23, 1994, to December 23, 1998. During this period, the company will make quarterly interest payments at a fixed interest rate of 5.65% on the $5,000,000. At the same time, the company will receive quarterly interest income on the $5,000,000 at a rate based on the one-month weighted average commercial paper rate (5.81% at December 31, 1995). No funds were actually borrowed or are to be repaid. During 1995 and 1994, the net cost (income) of this agreement of ($17,000) and $19,000 was recorded. Of the net unrealized gain (loss) as of December 31, 1995 and 1994, a net loss of ($30,000) and a net gain of $380,000, respectively, has not been reflected in the financial statements. The company utilizes letters of credit to back certain insurance policies and, in Europe, to guarantee performance. The letters of credit reflect fair value as a condition of their underlying purpose. The value of these letters of credit was approximately $300,000 at December 31, 1995. -14- 19 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 10 INDUSTRY SEGMENTS The company operates in one industry segment as a marketer and manufacturer of various flow measurement products.
DECEMBER 31, -------------------- 1995 1994 1993 - ---------------------------------------------------------------------------------- Exports to non-affiliated companies to consolidated net sales 11% 11% 4% Net sales by foreign subsidiaries to consolidated net sales 7% 7% 6% Assets of foreign subsidiaries to consolidated assets 7% 7% 5% Operating profits (loss) for foreign subsidiaries ($000) $244 $(63) $(237) ==================================================================================
11 QUARTERLY RESULTS OF OPERATIONS (UNAUDITED), COMMON STOCK PRICE AND DIVIDENDS
QUARTER ENDED ------------------------------------------------------- MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 - ---------------------------------------------------------------------------------- (THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA) 1995 Net sales $27,928 $28,579 $25,856 $26,281 Gross profit $ 9,737 $ 9,991 $ 9,494 $ 9,922 Net earnings $ 857 $ 1,051 $ 915 $ 896 Per share: Net earnings $ .49 $ .60 $ .52 $ .51 Dividends declared $ .1815 $ .20 $ .20 $ .20 Stock price: High $24.125 $26.375 $26.750 $27.000 Low $22.125 $23.000 $23.125 $22.875 Quarter-end close $23.375 $23.625 $26.250 $26.500 1994 Net sales $20,942 $25,847 $25,870 $26,496 Gross profit $ 8,084 $ 9,534 $ 9,375 $ 9,355 Net earnings $ 580 $ 923 $ 893 $ 820 Per share: Net earnings $ .34 $ .54 $ .51 $ .47 Dividends declared $ .1650 $ .1815 $ .1815 $ .1815 Stock price: High $24.500 $23.250 $27.250 $28.000 Low $19.000 $19.375 $22.000 $21.750 Quarter-end close $21.625 $22.375 $26.000 $23.875
Badger Meter, Inc. Common Stock is listed on the American Stock Exchange under the symbol BMI. There is no market for Badger Meter Class B Common Stock due to transfer restrictions. Class B Common Stock is equivalent in value to Common Stock. A Class B Common Stock cash dividend of $.1650 per share was declared for the 1st quarter of 1995 and a $.1820 cash dividend per share was declared for the 2nd, 3rd and 4th quarters of 1995. -15- 20 (Page 27 of Annual Report to Shareholders) REPORT OF INDEPENDENT AUDITORS REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS The Board of Directors and Shareholders Badger Meter, Inc. We have audited the accompanying consolidated balance sheets of Badger Meter, Inc. as of December 31, 1995 and 1994, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Badger Meter, Inc. at December 31, 1995 and 1994, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. Ernst & Young LLP Milwaukee, Wisconsin January 31, 1996 21 (Page 28 of Annual Report to Shareholders) TEN YEAR SUMMARY OF SELECTED DATA
Badger Meter, Inc. Years ended December 31 (Thousands of dollars except per share data) ==================================================================================================================================== 1995 1994 1993 1992 1991 1990 1989 - ------------------------------------------------------------------------------------------------------------------------------------ OPERATING RESULTS Net sales $ 108,644 99,155 84,497 82,106 78,417 77,100 72,266 Research and development $ 3,858 3,278 3,642 4,119 4,046 3,863 3,614 Earnings before income taxes $ 5,911 4,974 3,306 1,160 2,419 3,507 3,798 Earnings before changes in accounting $ 3,719 3,216 2,164 802 1,648 2,332 2,375 Cumulative effect of changes in accounting -- -- -- (4,684) -- -- -- Net earnings (loss) $ 3,719 3,216 2,164 (3,882) 1,648 2,332 2,375 Earnings to sales * 3.4% 3.2% 2.6% 1.0% 2.1% 3.0% 3.3% - ------------------------------------------------------------------------------------------------------------------------------------ PER COMMON SHARE Earnings before changes in accounting $ 2.12 1.86 1.27 .47 .97 1.45 1.54 Cumulative effect of changes in accounting -- -- -- (2.75) -- -- -- Net earnings (loss) $ 2.12 1.86 1.27 (2.28) .97 1.45 1.54 Cash dividends declared: Common Stock $ .7815 .7095 .64625 .605 .605 .605 .5775 Class B Common Stock $ .7110 .6450 .5875 .55 .55 .55 .525 Price range $ 27-22 1/8 28-19 22-17 3/4 17 3/4-14 3/4 18-13 5/8 19 7/8-13 22 7/8-16 Closing price $ 26 1/2 23 7/8 19 1/8 17 1/2 15 3/8 13 7/8 19 5/8 Book value $ 18.31 16.76 15.31 14.61 17.21 16.57 16.78 - ------------------------------------------------------------------------------------------------------------------------------------ SHARES OUTSTANDING Common Stock 1,193,607 1,188,607 1,140,304 1,141,004 1,139,804 1,137,204 969,157 Class B Common Stock 562,785 562,785 562,785 562,785 562,785 562,785 574,385 - ------------------------------------------------------------------------------------------------------------------------------------ FINANCIAL POSITION Working capital $ 16,178 14,569 12,010 9,876 9,842 18,365 13,803 Current ratio 2.1 to 1 1.7 to 1 1.6 to 1 1.6 to 1 1.6 to 1 3.3 to 1 2.1 to 1 Net cash provided by operations $ 12,026 6,342 2,969 3,833 5,410 5,132 3,342 Capital expenditures $ 4,493 3,553 3,121 3,496 3,335 4,901 4,376 Total assets $ 60,527 61,993 57,627 53,895 51,199 50,670 46,672 Long-term debt $ 1,000 1,200 1,400 1,700 1,900 10,400 5,183 Shareholders' equity $ 32,163 29,351 26,074 24,894 29,303 28,168 25,897 Debt to total capitalization 16.8% 28.4% 34.9% 34.2% 28.7% 30.5% 29.2% Return on shareholders' equity * 11.6% 11.0% 8.3% 3.2% 5.6% 8.3% 9.2% Price/earnings ratio * 12.5 12.8 15.1 37.2 15.9 9.6 12.7 - ------------------------------------------------------------------------------------------------------------------------------------ ============================================================= 1988 1987 1986 - ------------------------------------------------------------- OPERATING RESULTS Net sales 71,150 66,737 60,947 Research and development 3,077 2,896 3,429 Earnings before income taxes 3,359 3,072 1,289 Earnings before changes in accounting 2,071 1,799 1,172 Cumulative effect of changes in accounting -- -- -- Net earnings (loss) 2,071 1,799 1,172 Earnings to sales * 2.9% 2.7% 1.9% - ------------------------------------------------------------ PER COMMON SHARE Earnings before changes in accounting 1.38 1.21 .80 Cumulative effect of changes in accounting -- -- -- Net earnings (loss) 1.38 1.21 .80 Cash dividends declared: Common Stock .55 .55 .475 Class B Common Stock .50 .50 -- Price range 20 1/4 -12 24 1/4-10 5/8 19 5/8-12 Closing price 18 1/8 12 5/8 14 1/8 Book value 15.77 14.89 14.06 - ------------------------------------------------------------ SHARES OUTSTANDING Common Stock 932,657 868,085 848,559 Class B Common Stock 587,385 617,385 622,885 - ------------------------------------------------------------ FINANCIAL POSITION Working capital 13,599 14,186 12,441 Current ratio 2.4 to 1 2.5 to 1 2.2 to 1 Net cash provided by operations 5,846 3,631 4 Capital expenditures 2,904 1,545 3,997 Total assets 41,787 41,454 40,109 Long-term debt 5,267 7,050 7,455 Shareholders' equity 23,975 22,118 20,688 Debt to total capitalization 25.9% 32.9% 36.2% Return on shareholders' equity * 8.6% 8.1% 5.7% Price/earnings ratio * 13.1 10.4 17.7 - ------------------------------------------------------------ *Prior to accounting changes
EX-21 8 SUBSIDIARIES 1 Exhibit (21.0) BADGER METER, INC. SUBSIDIARIES OF THE REGISTRANT The Company's subsidiaries are listed below. All of the subsidiaries of the Company listed below are included in the consolidated financial statements. Percentage State or Country Name of ownership in which organized ---- ------------ ------------------ Precision Measurement Incorporated 100% Texas Badger Meter Europe, GmbH 100% Federal Republic of Germany Badger Meter International Sales, Inc. (a DISC) 100% Delaware Badger Meter de Mexico, S.A. de C.V. 100% Mexico Badger Meter Limited 100% U.K. Badger Meter de Las Americas, S.A. de C.V. 100% Mexico Badger Meter Export, Inc. 100% Virgin Islands (a large FSC) (U.S.)
EX-23 9 CONSENT OF ERNST & YOUNG 1 Exhibit (23.0) CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in this Annual Report on Form 10-K of Badger Meter, Inc., of our report dated January 31, 1996, included in the 1995 Annual Report to Shareholders of Badger Meter, Inc. Our audits also included the financial statement schedule of Badger Meter, Inc. listed in Item 14(a). This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects, the information set forth therein. We also consent to the incorporation by reference in the Registration Statements on Form S-8 (File Nos. 33-27649, 33-27650, 33-65618, 33-62239 and 33-62241) pertaining to the Badger Meter, Inc. 1989 Stock Option Plan, Badger Meter, Inc. Restricted Stock Plan, Badger Meter, Inc. 1993 Stock Option Plan, Badger Meter, Inc. 1995 Stock Option Plan and Badger Meter, Inc. Employee Savings and Stock Ownership Plan of our report dated January 31, 1996, with respect to the consolidated financial statements and schedule of Badger Meter, Inc. included or incorporated by reference in the Annual Report (Form 10-K) for the year ended December 31, 1995. Ernst & Young LLP Milwaukee, Wisconsin March 25, 1996 EX-27 10 FDS
5 This schedule contains summary financial information from the Company's Annual Report to Shareholders for the year ended December 31, 1995 incorporated by reference in the Annual Report on Form 10K and is qualified in its entirety by reference to such 10K. 1,000 12-MOS DEC-31-1995 DEC-31-1995 1,177 0 13,661 0 15,834 31,417 55,101 (37,714) 60,527 15,240 0 0 0 1,250 30,913 60,527 108,644 108,644 69,500 101,623 390 0 721 5,911 2,192 3,719 0 0 0 3,719 2.12 2.12
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