-----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, KIMwNXAo6/r/2jQ3sTvsoqv7Qoh+4idfLhIwx0OTuv486xYzII4Q1q3n71Udfj7m NCVDeOjoK2q3SMnaqgjH2Q== /in/edgar/work/20000622/0000950124-00-003840/0000950124-00-003840.txt : 20000920 0000950124-00-003840.hdr.sgml : 20000920 ACCESSION NUMBER: 0000950124-00-003840 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000622 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BADGER METER INC CENTRAL INDEX KEY: 0000009092 STANDARD INDUSTRIAL CLASSIFICATION: [3824 ] IRS NUMBER: 390143280 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-06706 FILM NUMBER: 658972 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 11-K 1 0001.txt FORM 11-K 1 FORM 11-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the fiscal year ended December 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to ------------------------- -------------------- Commission file number 1-6706 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: BADGER METER EMPLOYEE SAVINGS AND STOCK OWNERSHIP PLAN B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: Badger Meter, Inc. 4545 W. Brown Deer Road Milwaukee, WI 53223 2 REQUIRED INFORMATION 1. Not Applicable. 2. Not Applicable. 3. Not Applicable. 4. The Badger Meter Employee Savings and Stock Ownership Plan (the Plan) is subject to the requirements of the Employee Retirement Income Security Act of 1974 (ERISA). Attached hereto is a copy of the most recent financial statements and schedules of the Plan prepared in accordance with the financial reporting requirements of ERISA. Exhibits (23) Consent of Independent Auditors 2 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the Plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. Badger Meter Employee Savings and Stock Ownership Plan Date: June 22, 2000 By: /S/ Richard A. Meeusen ------------------------------------------ Vice President - Finance and Chief Financial Officer 3 4 Badger Meter Employee Savings and Stock Ownership Plan Financial Statements and Supplemental Schedules December 31, 1999 and 1998 and year ended December 31, 1999 CONTENTS Report of Independent Auditors............................................... 5 Financial Statements Statements of Net Assets Available for Benefits.............................. 7 Statement of Changes in Net Assets Available for Benefits.................... 8 Notes to Financial Statements................................................ 9 Supplemental Schedules Schedule H, Line 4i - Schedule of Assets Held for Investment Purposes at End of Year............................................................18 Schedule H, Line 4j - Schedule of Reportable Transactions....................19 4 5 Report of Independent Auditors Retirement Plans Investment Committee of the Board of Directors of Badger Meter, Inc. Badger Meter Employee Savings and Stock Ownership Plan We have audited the accompanying statements of net assets available for benefits of Badger Meter Employee Savings and Stock Ownership Plan as of December 31, 1999 and 1998, and the related statement of changes in net assets for the year ended December 31, 1999. These financial statements are the responsibility of the Plan'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 audit 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 net assets available for benefits of the Plan at December 31, 1999 and 1998, and the changes in its net assets available for benefits for the year ended December 31, 1999, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment purposes at end of year as of December 31, 1999, and reportable transactions for the year then ended, are presented for purposes of additional analysis and are not a required part of the financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the 5 6 Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole. ERNST & YOUNG LLP Milwaukee, Wisconsin May 5, 2000 6 7 Badger Meter Employee Savings and Stock Ownership Plan Statements of Net Assets Available for Benefits
DECEMBER 31 1999 1998 ----------- ----------- ASSETS Investments $40,620,653 $40,610,917 Company contribution receivable 447,896 88,779 Due from brokers -- 16,560 Interest receivable 3,485 416 ----------- ----------- Total assets 41,072,034 40,716,672 LIABILITY Notes payable 2,600,000 2,600,000 ----------- ----------- Net assets available for benefits $38,472,034 $38,116,672 =========== ===========
7 See accompanying notes. 8 Badger Meter Employee Savings and Stock Ownership Plan Statement of Changes in Net Assets Available for Benefits Year ended December 31, 1999 Additions: Investment income: Net realized and unrealized appreciation in fair value of investments $ 531,812 Interest and dividends 781,582 Investment expenses (3,069) Contributions: Company 452,488 Participants 2,514,949 ------------ 4,277,762 Deductions: Benefit payments to participants 3,838,503 Interest expense 83,897 ------------ Net increase 355,362 Net assets available for benefits at beginning of year 38,116,672 ------------ Net assets available for benefits at end of year $ 38,472,034 ============
8 See accompanying notes. 9 Badger Meter Employee Savings and Stock Ownership Plan Notes to Financial Statements December 31, 1999 1. SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The accompanying financial statements of Badger Meter Employee Savings and Stock Ownership Plan (the Plan) are prepared on the accrual basis. INVESTMENT VALUATION The investment in the guaranteed income group annuity insurance contract is valued at contract value as reported by Massachusetts Mutual Life Insurance Company (Mass Mutual). Contract value represents contributions made under the contract, plus interest at the contract rate, less funds used to pay benefits and the insurance company's administrative expenses. The Mass Mutual contract is a "fully benefit-responsive" investment contract, as defined in Statement of Position (SOP) 94-4, "Reporting of Investment Contracts Held by Health and Welfare Benefit Plans and Defined Contribution Pension Plans." As such, this contract is stated at contract value as reported by the insurance company. Crediting interest rates are adjusted annually on January 1. The investments in the Heartland U.S. Government Fund and mutual funds, are valued at the redemption price established by the fund's trustee based upon the quoted prices of the underlying assets. Common trust funds are valued at the redemption price established by the trustee. The investment in Badger Meter, Inc. (the Company) Common Stock, which is traded on the American Stock Exchange, is valued at the last reported sales price on the last business day of the Plan year. The money market fund is valued at fair value based on quoted market or redemption price on the last business day of the plan year. Notes receivable from participants are reported at their unpaid principal balance, which approximates fair value. 9 10 Badger Meter Employee Savings and Stock Ownership Plan Notes to Financial Statements (continued) 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. EXPENSES Expenses related to the administration of the Plan are borne by the Company. Investment expenses are payable by the Plan and reimbursed by the Company at its discretion. RECLASSIFICATION Certain 1998 amounts have been reclassified to conform to the 1999 presentation. 2. DESCRIPTION OF THE PLAN GENERAL The following description of the Plan is for general information purposes only. Participants should refer to the Plan document for more complete information. The Plan is a defined contribution plan adopted under Section 401(k) of the Internal Revenue Code ("IRC" or the "Code"). The Plan was established as of January 1, 1991 to consolidate the Badger Meter Savings Plan, the Badger Meter Payroll-Based Employee Stock Ownership Plan and the Badger Meter Employee Stock Ownership Plan into a single plan (See Note 5). Substantially all domestic employees of the Company are eligible to participate in the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). CONTRIBUTIONS Participant contributions may be made to a maximum of 15% of their compensation on a pre-tax basis, not to exceed the amount allowed by the IRC. Company contributions are 10 11 Badger Meter Employee Savings and Stock Ownership Plan Notes to Financial Statements (continued) 2. DESCRIPTION OF THE PLAN (CONTINUED) made at a rate of 25% of the participant contributions, with the Company contribution percentage applying to a maximum of 7% of the participant's compensation for the year ended December 31, 1999. The Company may also contribute additional amounts over and above the required contribution at the discretion of the Company's Board of Directors. No such contributions were made in 1999. Participant contributions are directed into one, or a combination, of seven investments, at the participant's discretion. Company contributions are made in cash and are used by the Plan to repay principal on the note payable (see Note 5). As principal and interest payments are made on the note payable, unallocated shares of Badger Meter, Inc. Common Stock, which serve as collateral for the note payable, are released to Plan participants and provide the Company matching contribution at current market values. Participant contributions may be temporarily invested in a money market common trust fund before being invested in the aforementioned investments. All contributions are excluded from the participant's current wages for federal income tax purposes. No federal income tax is paid for the pre-tax contributions and growth thereon until the participant withdraws them from the Plan. PARTICIPANT'S ACCOUNTS Each participant's account is credited with the participant's contribution, the Company's matching contribution, an allocation of the Company's discretionary contribution, if any, and Plan earnings. The Company's discretionary contribution is allocated equally to all participants. Plan earnings are allocated based on the participant's account balances in relation to total participant account balances. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. VESTING Participants are fully vested in all amounts in their accounts. 11 12 Badger Meter Employee Savings and Stock Ownership Plan Notes to Financial Statements (continued) 2. DESCRIPTION OF THE PLAN (CONTINUED) PAYMENT OF BENEFITS Upon retirement, death, disability, or termination of employment, the participant's account shall generally be distributed in a single lump sum. Final distributions will be made either in shares of Company Common Stock plus cash in lieu of fractional shares, or entirely in cash. WITHDRAWALS A participant's contribution may not be withdrawn prior to retirement, death, disability, termination of employment, or termination of the Plan, except for financial hardship or in the form of loans to participants. The Plan defines financial hardship as expenses related to college education, uninsured major medical expenses, purchase of the participant's principal residence, or other financial need which cannot be met from other resources of the participant. All withdrawals are subject to approval by the Plan administrator. LOANS TO PARTICIPANTS Participants are allowed to borrow from their separate account balance. The amount of a loan shall not be less than $1,000 or more than $50,000 and shall not exceed 50% of the participant's account balance. Loan maturities cannot exceed sixty months and are secured by the participants' vested interests in the Plan. Amounts loaned to a participant do not share in the allocations of Plan earnings (see Participant's Accounts, above), but are credited with the interest earned on the loan balance payable by the participant charged at a reasonable rate as determined by the Plan administrator. 3. INVESTMENTS The Plan has entered into two unallocated insurance contracts with Mass Mutual. 12 13 Badger Meter Employee Savings and Stock Ownership Plan Notes to Financial Statements (continued) 3. INVESTMENTS (CONTINUED) GUARANTEED INCOME GROUP ANNUITY CONTRACT NO. IG 4178 This contract is credited at least annually for interest earned. Interest rates for 1999 and 1998 were 6.25% and 7.00%, respectively. Mass Mutual determines the annual guaranteed interest rate each January 1. The average yields for 1999 and 1998 were 6.02% and 6.63%, respectively. BADGER METER, INC. COMMON STOCK The Plan's investment in Badger Meter, Inc. stock consists of 488,114 shares and 503,897 shares as of December 31, 1999 and 1998, respectively. At December 31, 1999 and 1998, the fair value of the Plan's investment in Badger Meter, Inc. Common Stock, as determined by quoted market price, was $14,704,434 and $17,951,331, respectively. During 1999, the Plan's investments (including investments purchased, sold, as well as held during the year) appreciated (depreciated) in fair value as determined by quoted market prices, as follows:
Net Realized and Unrealized Appreciation (Depreciation) in Fair Value During Year --------------------------- Badger Meter, Inc. Common Stock $(2,355,972) Common trust funds 2,489,874 Shares of registered investment companies 397,910 ----------- $ 531,812 ===========
13 14 Badger Meter Employee Savings and Stock Ownership Plan Notes to Financial Statements (continued) 3. INVESTMENTS (CONTINUED) Investments that represent 5% or more of fair value of the Plan's net assets are as follows:
DECEMBER 31 1999 1998 ----------- ----------- Badger Meter Stock Fund* $14,704,434 $17,951,331 M&I Growth Balanced Portfolio 4,630,757 4,038,291 M&I Diversified Stock Portfolio 7,824,687 5,940,656 Mass Mutual Guaranteed Income Contract 8,195,791 7,526,254 Heartland Value Plus Fund 1,912,738 2,331,252
*Nonparticipant-directed 4. NONPARTICIPANT-DIRECTED INVESTMENTS Information about the investments and the significant components of changes in investments related to the nonparticipant-directed investments are as follows:
DECEMBER 31 1999 1998 ----------- ----------- Investments, at fair value: Badger Meter Stock Fund $10,895,580 $13,039,961 Badger Meter, Inc., Unreleased Common Stock 3,808,854 4,504,247 Badger Meter, Inc., Released Common Stock -- 407,123 ----------- ----------- $14,704,434 $17,951,331 =========== ===========
YEAR ENDED DECEMBER 31 1999 ----------- Change in investments: Net realized and unrealized depreciation in fair value $(2,355,972) Interest and dividends, net 89,542 Investment expenses (497) Contributions 406,685 Benefit payments to participants (1,233,733) Interest expense (83,897) Transfers between funds (69,025) ----------- $(3,246,897) ===========
14 15 Badger Meter Employee Savings and Stock Ownership Plan Notes to Financial Statements (continued) 5. NOTE PAYABLE In connection with the formation of the Plan (see Note 2), the Plan assumed a note payable to a bank with a balance of $2,000,000 at January 1, 1991. The note was repaid in equal annual principal payments of $200,000 through February 1995, with the remaining $1,000,000 refinanced on December 1, 1995, due December 1, 2001. The principal amount due on the loan was $700,000 at December 1, 1998. In December 1998, the Plan refinanced the loan and increased it by $1,900,000 to the December 31, 1999 and 1998 balance of $2,600,000. The terms of the loan allow variable payments of principal with the final principal and interest payment due December 31, 2005. Interest is payable at the prime interest rate (prime was 8.5% at December 31, 1999) or at the LIBOR rate plus 1.50% (LIBOR was 6.12% at December 31, 1999). The Plan has the option of designating the outstanding balance as a prime rate loan or a Eurodollar loan. The note payable is secured by the unallocated shares of Badger Meter, Inc. Common Stock held by the Plan (see summary below). In addition, the Company has guaranteed the note payable and is obligated to contribute sufficient cash to the Plan to enable it to repay the loan principal and interest in the event the Plan is unable to settle its obligation. The pledged unallocated shares of Badger Meter, Inc. Common Stock are released as principal payments are made on the note payable. The shares released less any shares that are distributed as benefit payments are considered available, and are allocated to the participants' accounts as of the Plan year end just prior to each annual principal due date on the note payable. At December 31, 1999 and 1998, the breakdown between allocated and unallocated shares were as follows: 15 16 Badger Meter Employee Savings and Stock Ownership Plan Notes to Financial Statements (continued) 5. NOTE PAYABLE (CONTINUED)
Shares Available For Benefits Cost Fair Value ------------ ----------- ----------- December 31, 1999: Allocated 361,679 $ 4,391,706 $10,895,580 Unallocated 126,435 2,550,825 3,808,854 ----------------------------------- 488,114 $ 6,942,531 $14,704,434 =================================== Per share $ 30.12 =========== December 31, 1998: Allocated 377,462 $ 4,164,681 $13,447,084 Unallocated 126,435 2,550,825 4,504,247 ----------------------------------- 503,897 $ 6,715,506 $17,951,331 =================================== Per share $ 35.63 ===========
The loan agreement contains certain restrictions and covenants, including a limitation on additional borrowings. The Company contributions are used to make principal payments on the note payable and will release unallocated shares with a value in excess of the principal payments made due to appreciation of the Company's stock. 16 17 Badger Meter Employee Savings and Stock Ownership Plan Notes to Financial Statements (continued) 6. PLAN TERMINATION Although it has not expressed any intent to do so, the Company has the right to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. 7. INCOME TAX STATUS The Plan has received a determination letter from the Internal Revenue Service dated August 3, 1995, stating that the Plan is qualified under Section 401(a) and 401(k) of the Code and, therefore, the related trust is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The Plan Administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan is qualified and the related trust is tax exempt. 8. TRANSACTIONS WITH RELATED PARTIES During 1999, the Plan received $89,385 in common stock dividends from the Company. 17 18 Supplemental Schedules 19 Badger Meter Employee Savings and Stock Ownership Plan Employer Identification Number 39-0143280 Plan Number 009 Schedule H, Line 4i -Schedule of Assets Held for Investment Purposes at End of Year December 31, 1999
DESCRIPTION OF INVESTMENT, INCLUDING COST/ IDENTITY OF ISSUE, BORROWER, MATURITY DATE, RATE OF INTEREST, CONTRACT CURRENT VALUE/ LESSOR OR SIMILAR PARTY PAR OR MATURITY VALUE VALUE CONTRACT VALUE - --------------------------------------------------------------------------------------------------------- *Badger Meter, Inc. 488,114 shares of common stock $6,942,531 $14,704,434 Massachusetts Mutual Life Guaranteed Income Contract Insurance Company No. IG 4178 8,195,791 Heartland U.S. Government Fund, Inc. 77,160 fund shares 702,926 Heartland Value Plus Fund 140,953 fund shares 1,912,738 *Marshall International Stock Fund 80,431 fund shares 1,459,013 *M&I Growth Balanced Portfolio 218,314 fund shares 4,630,757 *M&I Diversified Stock Portfolio 276,123 fund shares 7,824,687 *Marshall Money Market Fund 119,362 units 119,362 Participant loans Various interest rates and maturity dates 1,070,945 ------------------ $40,620,653 ==================
* Indicates party-in-interest 18 20 Badger Meter Employee Savings and Stock Ownership Plan Employer Identification Number 39-0143280 Plan Number 009 Schedule H, Line 4j -Schedule of Reportable Transactions Year ended December 31, 1999
CURRENT VALUE OF ASSET ON PURCHASE SELLING COST OF TRANSACTION NET IDENTITY OF PARTY INVOLVED DESCRIPTION OF ASSET PRICE PRICE ASSET DATE GAIN/(LOSS) - ---------------------------------------------------------------------------------------------------------------------------- Category (iii)--series of transactions in excess of 5 percent of net assets Badger Meter, Inc. Common Stock $1,656,002 $ - $1,656,002 $1,656,002 $ - Badger Meter, Inc. Common Stock - 2,237,754 2,294,280 2,237,754 (56,526)
19 There were no category (i), (ii) or (iv) transactions during 1999. 21 EXHIBIT INDEX
EXHIBIT NO. PAGE NO. - ----------- -------- (23) Consent of Ernst & Young LLP, Independent Auditors 21
20 EX-23 2 0002.txt CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS 1 EXHIBIT (23) CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-62241) pertaining to the Badger Meter Employee Savings and Stock Ownership Plan, with respect to the financial statements and schedules of the Plan included in this Annual Report Form 11-K for the year ended December 31, 1999. ERNST & YOUNG LLP Milwaukee, Wisconsin June 22, 2000 21 -----END PRIVACY-ENHANCED MESSAGE-----