-----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, BEzWXBqlJWYeLoCSV6W3i9OvhcpTt66YVmJhVJLzD7X6MJTOLzCdefknflZpIMPa eFEX8YuOG9NCvdAVzFCHaA== 0000950124-00-002358.txt : 20000421 0000950124-00-002358.hdr.sgml : 20000421 ACCESSION NUMBER: 0000950124-00-002358 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000420 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-Q SEC ACT: SEC FILE NUMBER: 001-06706 FILM NUMBER: 605784 BUSINESS ADDRESS: STREET 1: 4545 WEST BROWN DEER ROAD STREET 2: C/O CORPORATE SECRETARY CITY: MILWAUKEE STATE: WI ZIP: 53223-0099 BUSINESS PHONE: 4143715887 FORMER COMPANY: FORMER CONFORMED NAME: BADGER METER MANUFACTURING CO DATE OF NAME CHANGE: 19710729 10-Q 1 FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------------- ---------------- Commission File Number 1-6706 BADGER METER, INC. ---------------------------------------- (Exact name of registrant as specified in its charter) Wisconsin 39-0143280 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 4545 West Brown Deer Road, Milwaukee, Wisconsin 53223 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (414) 355-0400 None --------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at April 14, 2000 - --------------------------- ----------------------------- Common Stock, $1.00 par value 3,370,391 -1- 2 BADGER METER, INC. INDEX Page No. Part I. Financial Information: Item 1 Financial Statements: Consolidated Condensed Balance Sheets - - March 31, 2000 and December 31, 1999 3 Consolidated Condensed Statements of Operations - - Three Months Ended March 31, 2000 and 1999 4 Consolidated Condensed Statements of Cash Flows - - Three Months Ended March 31, 2000 and 1999 5 Notes to Consolidated Condensed Financial Statements 6 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Part II. Other Information: Item 6(a) Exhibits 9 Item 6(b) Reports on Form 8-K 9 Exhibit Index 11 -2- 3 Part I - Financial Information BADGER METER, INC. Item 1 Financial Statements CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands)
Assets March 31, December 31, ------ 2000 1999 ---- ---- Unaudited) Current assets: Cash $ 911 $ 3,752 Receivables 27,280 24,278 Inventories: Finished goods 5,099 4,077 Work in process 8,762 8,347 Raw materials and purchased parts 7,976 6,582 --------- --------- Total inventories 21,837 19,006 Prepaid expenses 1,167 943 --------- --------- Total current assets 51,195 47,979 Property, plant and equipment, at cost 89,167 87,733 Less accumulated depreciation (47,271) (45,617) --------- --------- 41,896 42,116 Intangible assets, at cost less accumulated amortization 1,065 1,095 Prepaid pension 5,648 5,791 Deferred income taxes 2,236 2,213 Other assets 3,721 3,892 --------- --------- Total assets $ 105,761 $ 103,086 ========= ========= Liabilities and Shareholders' Equity Current liabilities: Short-term debt $ 15,108 $ 11,702 Current portion of long-term debt 4,976 4,887 Payables 9,857 10,499 Accrued compensation and employee benefits 4,231 5,914 Other accrued liabilities 3,785 3,716 Income and other taxes 1,273 111 --------- --------- Total current liabilities 39,230 36,829 Accrued non-pension postretirement benefits 6,846 7,014 Other accrued employee benefits 4,741 4,741 Long-term debt 10,213 11,493 Shareholders' equity: Common Stock 4,584 4,531 Capital in excess of par value 14,051 13,382 Reinvested earnings 48,090 46,445 Less: Employee benefit stock (2,600) (2,600) Treasury stock, at cost (19,394) (18,749) --------- --------- Total shareholders' equity 44,731 43,009 --------- --------- Total liabilities and shareholders' equity $ 105,761 $ 103,086 ========= =========
See accompanying notes to consolidated condensed financial statements. -3- 4 BADGER METER, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Dollars in Thousands Except Share Amounts) (Unaudited)
Three Months Ended March 31, --------- 2000 1999 ---- ---- Net sales $ 36,907 $ 38,397 Cost of sales 22,618 23,623 ----------- ----------- Gross margin 14,289 14,774 Selling, engineering and administration 10,701 10,877 ----------- ----------- Operating earnings 3,588 3,897 Interest expense 515 260 Other expense (income), net (716) 139 ------------ ----------- Earnings before income taxes 3,789 3,498 Provision for income taxes 1,432 1,347 -------- ----------- Net earnings $ 2,357 $ 2,151 =========== =========== Per share amounts: * Earnings per share: Basic $ .71 $ .58 =========== =========== Diluted $ .67 $ .55 =========== =========== Dividends declared - Common Stock $ .22 $ .18 =========== =========== Dividends declared - Class B Common Stock $ .00 $ .16 =========== =========== Shares used in computation of: Basic 3,310,517 3,679,033 Impact of dilutive stock options 196,536 239,804 ----------- ----------- Diluted 3,507,053 3,918,837 =========== ===========
* Earnings per share is computed independently for each of the quarters presented. Therefore, the sum of the quarterly earnings per share does not necessarily equal the total for the year. All of the outstanding Class B Common Stock was converted to Common Stock on August 17, 1999. See accompanying notes to consolidated condensed financial statements. -4- 5 BADGER METER, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited)
Three Months Ended March 31, --------- 2000 1999 ---- ---- Operating activities: Net earnings $ 2,357 $ 2,151 Adjustments to reconcile net earnings to net cash provided by (used for) operations: Depreciation 1,654 1,548 Amortization 30 49 Noncurrent employee benefits (25) 96 Deferred income taxes (23) (17) Changes in: Receivables (3,002) (554) Inventory (2,831) 1,819 Current liabilities other than debt (1,094) (592) Prepaid expenses and other (224) (101) ------------ ----------- Total adjustments (5,515) 2,248 ------------ ----------- Net cash provided by (used for) operations (3,158) 4,399 ------------ ----------- Investing activities: Property, plant and equipment (1,434) (3,025) Other - net 171 (134) ----------- ------------ Net cash provided by (used for) investing activities (1,263) (3,159) ----------- ------------ Financing activities: Net increase (decrease) short-term debt 3,406 (2,178) Repayments of long-term debt (1,191) 0 Dividends (712) (621) Stock options and ESSOP 722 500 Treasury stock transactions (645) (215) ------------ ------------ Net cash provided by (used for) financing activities 1,580 (2,514) ----------- ----------- Increase (decrease) in cash (2,841) (1,274) Beginning of year 3,752 2,371 ----------- ----------- End of period $ 911 $ 1,097 =========== =========== Supplemental disclosures of cash flow information: Cash paid (refunded) during the period for: Income taxes $ 156 $ 182 =========== ============ Interest $ 523 $ 252 =========== ============
See accompanying notes to consolidated condensed financial statements. -5- 6 BADGER METER, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. In the opinion of management, the accompanying unaudited consolidated condensed financial statements of Badger Meter, Inc. (the "Company") contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the consolidated condensed financial position at March 31, 2000 and the results of operations for the three month periods ended March 31, 2000 and 1999 and the cash flows for the three-month periods ended March 31, 2000 and 1999. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year. Certain reclassifications have been made to the 1999 data to conform to the 2000 presentation. 2. The consolidated condensed balance sheet at December 31, 1999, was derived from amounts included in the Annual Report to Shareholders, which was incorporated by reference in the Company's annual report on Form 10-K for the year ended December 31, 1999. Refer to the footnotes in those reports for a description of the accounting policies, which have been continued without change, and additional details of the Company's financial condition. The details in those notes have not changed except as discussed below and as a result of normal transactions in the interim. 3. Other expense (income), net includes foreign currency gains and losses, which are recognized as incurred. The Company's functional currency for all of its foreign subsidiaries is the U.S. dollar. Other income for the first quarter of 2000 also includes $750,000 of business interruption insurance proceeds related to lost sales and margins as a result of a fire at a vendor's facility during 1999. 4. In the ordinary course of business, the Company enters into various material purchase agreements with its vendors, some of which contain minimum purchase quantity commitments extending beyond one year. Future purchase commitments are not expected to exceed normal usage requirements. -6- 7 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Condition Receivables as of March 31, 2000 increased 12.4%, or $3,002,000, from the December 31, 1999 balance primarily due to extended terms offered to domestic distributors and certain customers in Mexico. Inventories increased 14.9% as the company increased stocking levels of certain long-lead electronic items. Property, plant and equipment (at cost) increased $1,434,000 due to normal equipment purchases during the quarter. Prepaid pension decreased $143,000 since December 31, 1999, due to the recording of normal pension expense with no funding payments required due to the overfunded status of the plan. Since December 31, 1999, short-term debt increased $3,406,000 to fund increased working capital, fixed asset additions and repayment of long-term debt. Payables decreased $642,000 due to regular timing of payment processing. Accrued compensation and employee benefits decreased $1,683,000 due primarily to payment of 1999 incentives during the first quarter of 2000. Income and other taxes payable increased $1,162,000 due to the timing of estimated tax payments. Changes in accrued non-pension postretirement benefits and other accrued employee benefits since December 31, 1999, were primarily due to the timing of benefit payments. Long-term debt and the current maturities of long-term debt decreased $1,191,000 due to regular monthly debt repayments. Since December 31, 1999, common stock and capital in excess of par value both increased due to new shares issued in connection with stock options exercised and ESSOP purchases. Treasury stock increased due to shares repurchased during the quarter. As of March 31, 2000, the Company had approximately $54,200,000 of credit facilities with domestic and foreign banks of which $30,297,000 was in use. This compares to $14,737,000 in use at March 31, 1999 and $28,082,000 at December 31, 1999. The Company believes that the present lines of credit are adequate to meet operating requirements and future capital needs. Results of Operations Net sales for the first quarter of 2000 of $36,907,000 reflect a 3.9% decrease over the first quarter of 1999. This decrease was primarily due to lower sales of certain utility products due to several factors. A September 1999 fire at the facility of one of the company's principal vendors continued to negatively impact sales in the first quarter of 2000, although the impact of those lost sales on net income was offset by business interruption insurance proceeds. The six-month Federal Communications Commission freeze, which ended in December 1999, continued to have an impact on first quarter sales of certain automatic meter reading products due to the disruption of the sales cycle. In addition, a major automated meter reading systems alliance partner filed bankruptcy during the first quarter of 2000, which created confusion in the market place and impacted sales opportunities for products that were under development with that partner. Finally, competitive market pressures had a negative impact on sales of certain industrial flow meters. Management expects that these factors will continue to impact the Company for an indefinite period of time. Gross margins remained relatively flat, at 38.7% for the first quarter of 2000 compared to 38.5% for the first quarter of 1999. Selling, engineering and administrative costs decreased 1.6% for the first quarter of 2000 compared to the same quarter in 1999 due primarily to lower environmental accruals. Interest expense increased between the periods due to higher debt balances, primarily the long-term debt issued in August 1999 to repurchase stock. Other expense (income), net, for the first quarter of 2000 included $750,000 of business interruption insurance proceeds related to lost sales and margins as a result of a fire at a vendor's facility in 1999. The effective tax rate for the first quarter of 2000 was 37.8%, down from 38.5% in 1999 due primarily to the favorable settlement of a tax audit in late 1999. -7- 8 Earnings for the first quarter of 2000 were $2,357,000, an increase of 9.6% over first quarter 1999 earnings of $2,151,000. The impacts of lower sales and higher interest expense were offset by the insurance proceeds, and marketing and administrative expenses for the quarter. Basic and diluted earnings per share increased 22.4% and 21.8%, respectively, for the first quarter of 2000 compared to the same quarter of 1999. These higher increases (when compared to the 9.6% increase in net earnings) were due to the reduction in shares outstanding as a result of stock repurchases. Other Matters The Company is subject to contingencies relative to environmental laws and regulations. Currently, the Company is in the process of resolving issues relative to two landfill sites. Also, the Company is in the process of settling a suit alleging violation of Proposition 65, California's environmental regulation. The Company does not believe the ultimate resolution of these claims will have a material adverse effect on the Company's financial position or results of operations. Provision has been made for all known settlement costs. No other risks or uncertainties were identified that could have a material impact on operations and no long-lived assets have become permanently impaired in value. Forward Looking Statements Certain statements in this report, as well as other information provided from time to time by the Company or its employees, may contain forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements. The words "anticipate," "believe," "estimate," "expect," "think," "should" and "objective" or similar expressions are intended to identify forward looking statements. The forward looking statements are based on the Company's current views and assumptions and involve risks and uncertainties that include, among other things: the success or failure of new product offerings; the actions and financial condition of competitors and alliance partners; changes in domestic conditions, including housing starts; changes in foreign economic conditions, including currency fluctuations; changes in laws and regulations; changes in customer demand and fluctuations in the prices of and availability of purchased raw materials and parts. Some or all of these factors are beyond the Company's control. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward looking statements and are cautioned not to place undue reliance on such forward looking statements. The forward looking statements made herein are made only as of the date of this document and the Company undertakes no obligation to publicly update such forward looking statements to reflect subsequent events or circumstances. -8- 9 Part II - Other Information Item 6 Exhibits and Reports on Form 8-K (a) Exhibits: (27.0) Financial Data Schedule (b) Reports on Form 8-K: There were no reports on Form 8-K filed for the three months ended March 31, 2000. -9- 10 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BADGER METER, INC. Dated: April 20, 2000 By /S/ Richard A. Meeusen ----------------------- Richard A. Meeusen Vice President - Finance and Treasurer Chief Financial Officer By /S/ Beverly L.P. Smiley ------------------------ Beverly L.P. Smiley Vice President - Controller -10- 11 EXHIBIT INDEX Page Number (27.0) Financial Data Schedule -11- EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE COMPANY'S QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-Q. 1,000 3-MOS DEC-31-2000 MAR-31-2000 911 0 27,280 0 21,837 51,195 89,167 (47,271) 105,761 39,230 0 0 0 4,584 40,147 105,761 36,907 36,907 22,618 33,319 (716) 0 515 3,789 1,432 2,357 0 0 0 2,357 .71 .67
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