-----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, IRlNNYGkr7GnYKEKggjdjdTY3zIYGQoscM1eGZS8v8BLaV1fiIvxF5+S63fWbH9q 42lvOk2Ii7Nxf9Vm1B9y+w== /in/edgar/work/0000950124-00-006139/0000950124-00-006139.txt : 20001020 0000950124-00-006139.hdr.sgml : 20001020 ACCESSION NUMBER: 0000950124-00-006139 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001019 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: 10-Q SEC ACT: SEC FILE NUMBER: 001-06706 FILM NUMBER: 742685 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 c57945e10-q.txt 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 September 30, 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 October 13, 2000 - ----------------------------- ------------------------------- Common Stock, $1.00 par value 3,367,016 -1- 2 BADGER METER, INC. INDEX
Page No. -------- Part I. Financial Information: Item 1 Financial Statements: Consolidated Condensed Balance Sheets - - September 30, 2000 and December 31, 1999 3 Consolidated Condensed Statements of Operations - - Three and Nine Months Ended September 30, 2000 and 1999 4 Consolidated Condensed Statements of Cash Flows - - Nine Months Ended September 30, 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 September 30, December 31, ------ 2000 1999 ---- ---- (Unaudited) Current assets: Cash $ 1,262 $ 3,752 Receivables 26,573 24,278 Inventories: Finished goods 5,196 4,077 Work in process 9,466 8,347 Raw materials and purchased parts 9,301 6,582 ----------- ----------- Total inventories 23,963 19,006 Prepaid expenses 1,522 943 ----------- ----------- Total current assets 53,320 47,979 Property, plant and equipment, at cost 89,522 87,733 Less accumulated depreciation (46,836) (45,617) ------------ ----------- 42,686 42,116 Intangible assets, at cost less accumulated amortization 992 1,095 Prepaid pension 5,363 5,791 Deferred income taxes 2,232 2,213 Other assets 3,647 3,892 ----------- ----------- Total assets $ 108,240 $ 103,086 =========== =========== Liabilities and Shareholders' Equity ------------------------------------ Current liabilities: Short-term debt $ 17,752 $ 11,702 Current portion of long-term debt 5,156 4,887 Payables 9,287 10,499 Accrued compensation and employee benefits 4,141 5,914 Other accrued liabilities 3,863 3,716 Income and other taxes 2,289 111 ----------- ----------- Total current liabilities 42,488 36,829 Accrued non-pension postretirement benefits 6,664 7,014 Other accrued employee benefits 5,074 4,741 Long-term debt 7,292 11,493 Shareholders' equity: Common Stock 4,594 4,531 Capital in excess of par value 14,167 13,382 Reinvested earnings 50,142 46,445 Less: Employee benefit stock (2,300) (2,600) Treasury stock, at cost (19,881) (18,749) ------------ ----------- Total shareholders' equity 46,722 43,009 ----------- ----------- Total liabilities and shareholders' equity $ 108,240 $ 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 Nine Months Ended September 30, September 30, ------------ ------------ 2000 1999 2000 1999 ---- ---- ---- ---- Net sales $ 39,508 $ 37,551 $ 112,260 $ 114,460 Cost of sales 25,029 22,660 71,498 69,325 ----------- ----------- ----------- ----------- Gross margin 14,479 14,891 40,762 45,135 Selling, engineering and administration 10,693 10,509 31,917 31,916 ----------- ----------- ----------- ----------- Operating earnings 3,786 4,382 8,845 13,219 Interest expense 572 354 1,652 842 Other expense (income), net 123 93 (2,123) 337 ----------- ----------- ----------- ----------- Earnings before income taxes 3,091 3,935 9,316 12,040 Provision for income taxes 1,143 1,515 3,477 4,635 ----------- ----------- ----------- ----------- Net earnings $ 1,948 $ 2,420 $ 5,839 $ 7,405 =========== =========== =========== =========== Per share amounts: * Earnings per share: Basic $ .59 $ .70 $ 1.76 $ 2.08 =========== =========== =========== =========== Diluted $ .56 $ .65 $ 1.67 $ 1.95 =========== =========== =========== =========== Dividends declared - Common Stock $ .22 $ .18 $ .65 $ .54 =========== =========== =========== =========== Shares used in computation of: Basic 3,323,071 3,471,997 3,319,026 3,562,166 Impact of dilutive stock options 156,410 236,278 175,764 238,271 ----------- ----------- ----------- ----------- Diluted 3,479,481 3,708,275 3,494,790 3,800,437 =========== =========== =========== ===========
* 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. See accompanying notes to consolidated condensed financial statements. -4- 5 BADGER METER, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited)
Nine Months Ended September 30, ------------- 2000 1999 ---- ---- Operating activities: Net earnings $ 5,839 $ 7,405 Adjustments to reconcile net earnings to net cash provided by (used for) operations: Depreciation 4,477 4,418 Amortization 103 140 Noncurrent employee benefits 711 430 Deferred income taxes (19) 3 Changes in: Receivables (2,295) (2,899) Inventory (4,957) 1,748 Current liabilities other than debt (660) 1,124 Prepaid expenses and other (579) (266) ------------ ------------ Total adjustments (3,219) 4,698 ------------ ------------ Net cash provided by (used for) operations 2,620 12,103 ----------- ------------ Investing activities: Property, plant and equipment (5,047) (8,253) Other - net 245 (1,049) ----------- ------------ Net cash provided by (used for) investing activities (4,802) (9,302) ------------ ------------ Financing activities: Net increase (decrease) in short-term debt 6,050 (5,533) Issuance of long-term debt 0 15,211 Repayments of long-term debt (3,932) 0 Dividends (2,142) (1,845) Stock options and ESSOP 848 1,017 Treasury stock transactions (1,132) (13,104) ------------ ------------ Net cash provided by (used for) financing activities (308) (4,254) ------------ ------------ Increase (decrease) in cash (2,490) (1,453) Beginning of year 3,752 2,371 ----------- ------------ End of period $ 1,262 $ 918 =========== ============ Supplemental disclosures of cash flow information: Cash paid (refunded) during the period for: Income taxes $ 1,304 $ 4,189 =========== ============ Interest $ 1,675 $ 819 =========== ============
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 September 30, 2000 and the results of operations for the three and nine-month periods ended September 30, 2000 and 1999 and the cash flows for the nine-month periods ended September 30, 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 nine months of 2000 also includes $2,230,000 of business interruption insurance proceeds related to lost sales and margins as a result of a fire at a vendor's facility during 1999. The insurance claim was fully settled during the second quarter of 2000. 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 September 30, 2000 increased 9.5%, or $2,295,000, from the December 31, 1999 balance primarily due to an 8.5% increase in sales for the third quarter of 2000 compared to the fourth quarter of 1999. Inventories increased 26.1% as the company increased stocking levels of certain long-lead electronic items. Property, plant and equipment (at cost) increased $1,789,000 due to normal equipment purchases partially offset by asset retirements. Prepaid expenses increased $579,000 due to timing of annual payments such as insurance premiums. Prepaid pension decreased $428,000 since December 31, 1999, due to the recording of normal pension expense with no funding payments required as a result of the overfunded status of the plan. Since December 31, 1999, short-term debt increased $6,050,000 to fund increased working capital, fixed asset additions and repayment of long-term debt. Accrued compensation and employee benefits decreased $1,773,000 due primarily to payment of 1999 incentives during the first quarter of 2000. Income and other taxes payable increased $2,178,000 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 $3,932,000 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 period. Employee benefit stock decreased $300,000 due to the regular repayment of the ESSOP debt. As of September 30, 2000, the Company had approximately $51,205,000 of credit facilities with domestic and foreign banks of which $30,048,000 was in use. This compares to $26,247,000 in use at September 30, 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 third quarter of 2000 of $39,508,000 reflect a 5.2% increase from the third quarter of 1999. This increase was primarily due to increased sales of water meters to utilities, partially offset by lower sales of industrial products. For the nine-month period ended September 30, 2000, sales of $112,260,000 represented a 1.9% decrease from the first nine months of 1999. This decrease was primarily due to lower sales of both utility and industrial 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 half 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 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 continues to create confusion in the market place and impact sales opportunities for products that were under development with that partner. Competitive market pressures and the stronger dollar had a negative impact on sales of certain industrial products, particularly in Europe. Increased sales of water meters to commercial/industrial and submetering customers only partially offset these negative factors. Also, a one-time manufacturing problem resulted in increased scrap levels and reduced margins during the second quarter of 2000. This problem was identified by the company and corrected during the second quarter, but certain deliveries of product were delayed while the problem was being addressed. -7- 8 Gross margins decreased from 39.7% in the third quarter of 1999 to 36.6% in the third quarter of 2000 due primarily to a higher mix of international sales of water meters with lower margins than domestic meter sales. The nine-month margins for 2000 were 36.3%, down from 39.4% for the first nine months of 1999 due to the increased international water meter sales and a one-time manufacturing problem during the second quarter of 2000. Also, both the quarter and year-to-date margins were affected by the higher capacity levels in 2000 compared to 1999, which resulted in less favorable manufacturing variances. Selling, engineering and administrative costs were up 1.8% for the third quarter of 2000 compared to the same quarter in 1999, and were relatively flat for the nine-month period, due to lower incentive accruals and cost controls offsetting personnel and expense increases. Interest expense increased between the periods due to higher interest rates and higher debt balances, including new long-term debt associated with an August 1999 stock repurchase. Other expense (income), net, for the first nine months of 2000 included $2,230,000 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 claim was fully settled during the second quarter and, as such, no proceeds are included in the third quarter results. The effective tax rate was 37.0% for the third quarter of 2000 and 37.3% for the nine-month period, down from 38.5% for both the third quarter and nine-month period in 1999 due primarily to the favorable settlement of a tax audit in late 1999 and certain foreign tax credits. Earnings for the third quarter of 2000 were $1,948,000, a decrease of 19.5% over third quarter 1999 earnings of $2,420,000 primarily due to lower margins. Earnings for the nine-month period decreased 21.1% due to lower sales and margins. 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. 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 September 30, 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: October 19, 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 c57945ex27.txt 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 9-MOS DEC-31-2000 SEP-30-2000 1,262 0 26,573 0 23,963 53,320 89,522 (46,836) 108,240 42,488 0 0 0 4,594 42,128 108,240 112,260 112,260 71,498 103,415 (2,123) 0 1,652 9,316 3,477 5,839 0 0 0 5,839 1.76 1.67
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