-----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, Hkyj+9XJSbHC8krxzSM+40TRmdVuh4qe6dEB7Rhoyu3bZYqjJul7tWXJsqp5DULv TK7hcTGwDzndzdCgLlwl3w== 0000950124-96-004421.txt : 19961108 0000950124-96-004421.hdr.sgml : 19961108 ACCESSION NUMBER: 0000950124-96-004421 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961018 SROS: AMEX 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: 1934 Act SEC FILE NUMBER: 001-06706 FILM NUMBER: 96645235 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-Q 1 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, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------------- ---------------- Commission File Number 1-6706 BADGER METER, INC. ---------------------------------------- (Exact name of registrant as specified in its charter) Wisconsin 39-0143280 --------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 4545 West Brown Deer Road, Milwaukee, Wisconsin 53223 - - ----------------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (414) 355-0400 -------------- None --------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at October 17, 1996 - - ------------------------------------ ------------------------------- Common Stock, $1.00 par value 1,211,117 Class B Common Stock, $.10 par value 562,785 2 BADGER METER, INC. INDEX
Page No. -------- Part I.Financial Information: Item 1 Financial Statements: Consolidated Condensed Balance Sheets - - September 30, 1996 and December 31, 1995 3 Consolidated Condensed Statements of Operations - - Three and Nine Months Ended September 30, 1996 and 1995 4 Consolidated Condensed Statements of Cash Flows - - Nine Months Ended September 30, 1996 and 1995 5 Notes to Consolidated Condensed Financial Statements 6 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Part II. Other Information Item 6(a)Exhibits 8 Item 6(b)Reports on Form 8-K 8 Exhibit Index 10
-2- 3 Part I - Financial Information BADGER METER, INC. Item 1 Financial Statements CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands)
September 30, December 31, 1996 1995 ------------ ------------ Assets (Unaudited) Current assets: Cash $ 187 $ 1,177 Receivables 16,790 13,661 Inventories: Finished goods 3,198 3,403 Work in process 7,839 6,750 Raw materials and purchased parts 5,603 5,681 ------------ ------------ Total inventories 16,640 15,834 Prepaid expenses 689 745 ------------ ------------- Total current assets 34,306 31,417 Property, plant and equipment 55,436 55,101 Less accumulated depreciation (37,331) (37,714) ------------ ------------- 18,105 17,387 Intangible assets, at cost less accumulated amortization 962 1,217 Pension asset 6,079 5,821 Deferred income taxes 1,729 1,536 Deferred charges and other assets 3,243 3,149 ------------ ------------- Total assets $ 64,424 $ 60,527 ============ ============= Liabilities and Shareholders' Equity Current liabilities: Short-term debt $ 2,799 $ 5,515 Payables 7,330 4,922 Accrued liabilities 5,015 4,577 Income taxes 930 226 ------------ ------------- Total current liabilities 16,074 15,240 Accrued non-pension postretirement benefits 8,287 8,396 Other accrued employee benefits 3,810 3,728 Long-term debt 1,107 1,000 Shareholders' equity: Common Stock 1,569 1,552 Less: Treasury stock (358) (358) ------------ ------------- 1,211 1,194 Class B Common Stock 56 56 Capital in excess of par value 8,140 7,832 Reinvested earnings 27,159 24,552 Less: Employee benefit stock (1,051) (1,102) Pension liability adjustment (369) (369) ------------ ------------- Total shareholders' equity 35,146 32,163 ------------ ------------- Total liabilities and shareholders' equity $ 64,424 $ 60,527 ============ =============
See accompanying notes to consolidated condensed financial statements. -3- 4 BADGER METER, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Dollars in Thousands Except Per Share Amounts) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, ---------------------- --------------------- 1996 1995* 1996 1995* ---------- --------- --------- --------- Net sales $ 30,542 $ 25,856 $ 87,719 $ 82,363 Operating costs and expenses: Cost of sales 19,219 16,362 55,672 53,141 Marketing and administrative 7,236 6,091 20,876 18,913 Research and engineering 1,678 1,678 4,805 4,851 ---------- --------- --------- --------- 28,133 24,131 81,353 76,905 ---------- --------- --------- --------- Operating earnings 2,409 1,725 6,366 5,458 Interest expense 102 225 323 711 Other deductions 51 17 167 245 ---------- --------- --------- --------- Earnings before income taxes 2,256 1,483 5,876 4,502 Provision for income taxes 826 568 2,169 1,679 ---------- --------- --------- --------- Net earnings $ 1,430 $ 915 $ 3,707 $ 2,823 ========== ========= ========= ========= Per share amounts: Net earnings: Primary $ .78 $ .52 $ 2.02 $ 1.61 ========== ========= ========= ========= Fully Diluted $ .77 * $ 2.00 * ========== ========= ========= ========= Dividends declared - Common Stock $ .2200 $ .2000 $ .6400 $ .5815 ========== ========= ========= ========= Dividends declared - Class B Common Stock $ .200 $ .182 $ .582 $ .529 ========== ========= ========= ========= Shares used in computation: Primary 1,838,630 1,754,925 1,832,494 1,753,503 ========== ========= ========= ========= Fully Diluted 1,847,416 * 1,856,285 * ========== ========= ========= =========
* In 1995, dilution was less than 3%. 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, 1996 1995 ---- ---- Operating activities: Net earnings $ 3,707 $ 2,823 Adjustments to reconcile net earnings to net cash provided by (used for) operations: Depreciation 2,799 2,714 Amortization 598 593 Noncurrent employee benefits (243) (172) Deferred income taxes (193) (232) Other 26 111 Changes in: Receivables (3,129) (1,759) Inventory (806) 287 Current liabilities 3,470 626 Prepaid expenses 56 131 ---------- ---------- Total adjustments 2,578 2,299 ---------- ---------- Net cash provided by (used for) operations 6,285 5,122 ---------- ---------- Investing activities: Property, plant and equipment (3,378) (3,001) Other - net (416) (158) ---------- ---------- Net cash provided by (used for) investing activities (3,794) (3,159) ---------- ---------- Financing activities: Bank borrowings (repayments) (2,716) (1,182) Treasury stock 5 -- Dividends (1,100) (990) Exercised stock options 330 66 ---------- ---------- Net cash provided by (used for) financing activities (3,481) (2,106) ---------- ---------- Increase (decrease) in cash (990) (143) Beginning of year 1,177 365 ---------- ---------- End of period $ 187 $ 222 ========== ========== Supplemental disclosures of cash flow information: Cash paid (refunded) during the period for: Income taxes $ 1,658 $ 1,481 ========== ========== Interest $ 281 $ 694 ========== ==========
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 contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the consolidated condensed financial position at September 30, 1996 and the results of operations for the three and nine-month periods ended September 30, 1996 and 1995 and the cash flows for the nine-month periods ended September 30, 1996 and 1995. The results of operations for the nine-month period ended September 30, 1996 are not necessarily indicative of the results to be expected for the full year. The consolidated condensed balance sheet at December 31, 1995 was derived from amounts included in the Annual Report to Shareholders which was incorporated by reference in the Company's annual report on Form 10-K for the year ended December 31, 1995. 2. In October, 1995, the Financial Accounting Standards Board issued Financial Accounting Standard No. 123 "Accounting for Stock-Based Compensation" (FAS 123), effective for fiscal years beginning after December 15, 1995. As allowed by FAS 123, the company intends to use prior standards (APB 25) for determining annual compensation charges and will disclose the impact of fair value. -6- 7 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Condition Record sales caused receivables to increase 23%, or $3,129,000, from the seasonally low December 31, 1995 balance. Inventories increased 5%, or $806,000, primarily to support future sales needs. Payables increased 49%, or $2,408,000, due to increased inventory purchases, reserves for after-sale costs and other trade payables since December 31, 1995. Reduced cash balances of $990,000, combined with funds generated by net earnings, were used to pay down short-term debt by $2,716,000 and also to fund the net working capital requirements. Capitalized computer equipment leases increased long-term debt by $107,000 and accrued liabilities by $59,000. As of September 30, 1996, the company had approximately $27,000,000 of credit lines with domestic and foreign banks of which $2,799,000 was in use. This compares to $9,255,000 in use at September 30, 1995 and $5,515,000 at December 31,1995. The company believes that the present lines of credit are adequate to meet operating requirements. Results of Operations Net sales for the third quarter of 1996 of $30,542,000 reflect an 18% increase over sales of $25,856,000 for the same period in 1995. The increase was primarily related to higher unit volumes and favorable pricing. For the first nine months of 1996, sales were $87,719,000, a 6.5% increase over sales of $82,363,000 for the same period in 1995, due primarily to pricing and product mix. The gross profit margin improved from 36.7% for the third quarter of 1995 to 37.1% for the third quarter of 1996. It also improved from 35.5% for the first nine months of 1995 to 36.5% for the same period in 1996. These increases were due primarily to increased manufacturing efficiencies and favorable pricing. Marketing and administrative costs increased 18.8% for the quarter and 10.4% for the nine months ended September 30, 1996 as compared to the same periods of 1995. The increase was primarily due to the development of an international group, various incentive accruals and the provision for a new long-term compensation plan. Research and engineering expenses were comparable between the periods. Interest expense decreased $123,000 for the quarter and $388,000 for the nine months ended September 30, 1996 as compared to the same periods of 1995, due to lower interest rates and lower debt balances outstanding. Other deductions decreased for the nine months ended September 30, 1996 as compared to the same period of 1995 due primarily to favorable foreign exchange transactions. The effective tax rate for the third quarter of 1996 was estimated to be 36.6%, which is lower than the 38.3% used for the third quarter of 1995, due to changes in estimated deductions and tax credits for 1996. These same factors caused the 1996 year-to-date tax rate of 36.9% to decrease from the 37.3% rate used for the same period of 1995. Earnings for the third quarter of 1996 of $1,430,000 have increased 56% over third quarter 1995 earnings of $915,000, due primarily to the higher sales, improved margins and lower interest costs. The 1996 year-to-date earnings of $3,707,000 increased 31% over the same period of 1995 earnings of $2,823,000 due to the same factors. Earnings per share percentage increases were slightly lower for both periods due to the impact of dilutive options in 1996. -7- 8 Other On October 16, 1996, the company received a letter from a not-for-profit environmental organization indicating that it believes the company may be in violation of California's Proposition 65. The letter states that certain meters manufactured and sold by the company may be contributing to unacceptable levels of lead in a source of drinking water and that the company may not have provided adequate public notice of lead exposure. The organization states that it is prepared to start civil enforcement action as permitted under Proposition 65, but has offered to begin negotiations toward a settlement. Management does not believe that meters sold by the company in California violate Proposition 65 and, as such, management does not anticipate any material liability arising from this action. Management has not yet responded to this letter. 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. Part II - Other Information Item 6 Exhibits and Reports on Form 8-K (a) Exhibits: (11.0) Computation of fully diluted earnings per share (27.0) Financial Data Schedule (b) Reports on Form 8-K: There were no reports on Form 8-K filed for the three months ended September 30, 1996. -8- 9 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BADGER METER, INC. Dated: October 17, 1996 By /S/ Richard A. Meeusen -------------------------- Richard A. Meeusen Vice President - Finance and Treasurer Chief Financial Officer By /S/ William J. Shinners -------------------------- William J. Shinners Vice President - Controller -9- 10 EXHIBIT INDEX Page Number (11.0) Computation of fully diluted earnings per share 11 (27.0) Financial Data Schedule -10- EX-11 2 COMPUTATION OF EARNINGS/SHARE 1 EXHIBIT (11.0) BADGER METER, INC. COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE (Dollars in thousands except per share amounts)
Three Months Ended Nine Months Ended September 30, September 30, ------------------------- ------------------------- 1996 1995 1996 1995 --------- --------- --------- --------- (1)(3) (2) (1)(3) (2) PRIMARY Shares Average shares outstanding 1,773,707 1,754,925 1,768,182 1,753,503 Shares issuable upon exercise of stock options 64,923 43,455 64,312 36,116 --------- --------- --------- --------- Total 1,838,630 1,798,380 1,832,494 1,789,619 ========= ========= ========= ========= Earnings Net earnings applicable to adjusted common shares $ 1,430 $ 915 $ 3,707 $ 2,823 ========= ========= ========= ========= Per share amounts Net earnings per share (3) $ .78 $ .51 $ 2.02 $ 1.58 ========= ========= ========= ========= FULLY DILUTED Shares Average shares outstanding 1,773,707 1,754,925 1,768,182 1,753,503 Shares issuable upon exercise of stock options 73,709 46,642 88,103 46,642 --------- --------- --------- --------- Total 1,847,416 1,801,567 1,856,285 1,800,145 ========= ========= ========= ========= Earnings Earnings applicable to adjusted common shares $ 1,430 $ 915 $ 3,707 $ 2,823 ========= ========= ========= ========= Per share amounts Net earnings per share (3) $ .77 $ .51 $ 2.00 $ 1.57 ========= ========= ========= ========= Percentage dilution (1) 4.0% 2.5% 4.7% 2.6% ========= ========= ========= =========
(1) In 1996, earnings per share for financial statement purposes includes Common stock equivalents since dilution is 3%. (2) In 1995, earnings per share for financial statement purposes does not include Common stock equivalents since dilution is less than 3%. (3) 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. -11- EX-27 3 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. 9-MOS DEC-31-1996 SEP-30-1996 187 0 16,790 0 16,640 34,306 55,436 (37,331) 64,424 16,074 0 0 0 1,267 33,879 64,424 87,719 87,719 55,672 81,353 167 0 323 5,876 2,169 3,707 0 0 0 3,707 2.02 2.00
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