-----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, QAnpixJd2UKc5CNtCTFdTWURfS9+k9qXQHwylv8bLtV5xrGkhrdBDo6RcplnZHsa QtARuVrTgV7QRQb8+XwlIQ== 0000950124-97-005558.txt : 19971029 0000950124-97-005558.hdr.sgml : 19971029 ACCESSION NUMBER: 0000950124-97-005558 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971028 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-Q SEC ACT: SEC FILE NUMBER: 001-06706 FILM NUMBER: 97701680 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 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, 1997 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, 1997 - --------------------------- ------------------------------- Common Stock, $1.00 par value 2,443,493 Class B Common Stock, $.10 par value 1,125,570 2 BADGER METER, INC. INDEX
Page No. -------- Part I. Financial Information: Item 1 Financial Statements: Consolidated Condensed Balance Sheets - - September 30, 1997 and December 31, 1996 3 Consolidated Condensed Statements of Operations - - Three and Nine Months Ended September 30, 1997 and 1996 4 Consolidated Condensed Statements of Cash Flows - - Nine Months Ended September 30, 1997 and 1996 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
3 Part I - Financial Information BADGER METER, INC. Item 1 Financial Statements CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands)
Assets September 30, December 31, ------ 1997 1996 -------- ------------ (Unaudited) Current assets: Cash $ 307 $ 1,123 Receivables 18,622 15,498 Inventories: Finished goods 4,011 3,577 Work in process 11,288 8,466 Raw materials and purchased parts 7,032 5,463 -------- -------- Total inventories 22,331 17,506 Prepaid expenses 791 918 -------- -------- Total current assets 42,051 35,045 Property, plant and equipment, at cost 61,285 57,111 Less accumulated depreciation (39,948) (37,751) -------- -------- 21,337 19,360 Intangible assets, at cost less accumulated amortization 707 878 Prepaid pension 6,844 7,102 Deferred income taxes 1,249 1,257 Deferred charges and other assets 3,119 2,491 -------- -------- Total assets $ 75,307 $ 66,133 =========== ============ Liabilities and Shareholders' Equity ------------------------------------ Current liabilities: Short-term debt $ 4,143 $ 2,634 Payables 9,157 7,102 Accrued compensation and employee benefits 4,759 4,763 Other accrued liabilities 3,301 1,929 Income and other taxes 1,702 972 -------- -------- Total current liabilities 23,062 17,400 Accrued non-pension postretirement benefits 7,952 8,106 Other accrued employee benefits 3,586 2,899 Long-term debt 946 1,091 Shareholders' equity: Common Stock 3,236 3,154 Class B Common Stock 112 112 Capital in excess of par value 7,591 6,803 Reinvested earnings 31,996 28,200 Less: Employee benefit stock (926) (1,053) Treasury stock, at cost (2,248) (579) -------- -------- Total shareholders' equity 39,761 36,637 -------- -------- Total liabilities and shareholders' equity $ 75,307 $ 66,133 =========== ============
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, ------------- ------------- 1997 1996 1997 1996 ---- ---- ---- ---- Net sales $ 33,207 $ 30,542 $ 99,013 $ 87,719 Operating costs and expenses: Cost of sales 20,727 19,219 62,431 55,672 Marketing and administrative 7,398 7,236 22,329 20,876 Research and engineering 2,046 1,678 5,846 4,805 ----------- ----------- ---------- ---------- 30,171 28,133 90,606 81,353 ----------- ----------- ---------- ---------- Operating earnings 3,036 2,409 8,407 6,366 Interest expense 74 102 272 323 Other deductions 72 51 150 167 ----------- ----------- ---------- ---------- Earnings before income taxes 2,890 2,256 7,985 5,876 Provision for income taxes 1,069 826 2,954 2,169 ----------- ----------- ---------- ---------- Net earnings $ 1,821 $ 1,430 $ 5,031 $ 3,707 =========== =========== ========== ========== Per share amounts: * Net earnings: Primary $ .46 $ .39 $ 1.28 $ 1.01 =========== =========== ========== ========== Fully Diluted $ .46 $ .39 $ 1.24 $ 1.00 =========== =========== ========== ========== Dividends declared - Common Stock $ .12 $ .11 $ .36 $ .32 =========== =========== ========== ========== Dividends declared - Class B Common Stock $ .11 $ .10 $ .33 $ .29 =========== =========== ========== ========== Shares used in computation: Primary 3,934,655 3,677,260 3,916,588 3,664,988 =========== =========== ========== ========== Fully Diluted 3,950,815 3,694,832 4,044,176 3,712,570 =========== =========== ========== ==========
* All per share amounts and number of shares data have been restated to reflect the 2-for-1 stock split paid April 18, 1997. 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, -------------------------------- 1997 1996 ---- ---- Operating activities: Net earnings $ 5,031 $ 3,707 Adjustments to reconcile net earnings to net cash provided by (used for) operations: Depreciation 2,918 2,799 Amortization 533 598 Noncurrent employee benefits 818 (243) Deferred income taxes 8 (193) Other 58 26 Changes in: Receivables (3,124) (3,129) Inventory (4,825) (806) Current liabilities other than short-term debt 4,471 3,470 Prepaid expenses 127 56 ---------- ----------- Total adjustments 984 2,578 ---------- ----------- Net cash provided by (used for) operations 6,015 6,285 ---------- ----------- Investing activities: Property, plant and equipment (4,997) (3,378) Other - net (1,078) (416) ---------- ----------- Net cash provided by (used for) investing activities (6,075) (3,794) ---------- ----------- Financing activities: Bank borrowings (repayments) 1,509 (2,716) Dividends (1,235) (1,100) Stock options and ESSOP 639 330 Treasury stock transactions (1,669) 5 ---------- ----------- Net cash provided by (used for) financing activities (756) (3,481) ---------- ----------- Increase (decrease) in cash (816) (990) Beginning of year 1,123 1,177 ---------- ----------- End of period $ 307 $ 187 ========== ============ Supplemental disclosures of cash flow information: Cash paid (refunded) during the period for: Income taxes $ 2,149 $ 1,658 ========== ============ Interest $ 284 $ 281 ========== ============
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, 1997 and the results of operations for the three- and nine-month periods ended September 30, 1997 and 1996 and the cash flows for the nine-month periods ended September 30, 1997 and 1996. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year. 2. The consolidated condensed balance sheet at December 31, 1996, 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, 1996. 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 a result of normal transactions in the interim. 3. During the nine months ended September 30, 1997, the Company repurchased 65,780 shares of common stock for an aggregate purchase price of $1,669,000. 4. In February 1997, the Financial Accounting Standards Board issued Statement No. 128, "Earnings per Share", which is required to be adopted on December 31, 1997. At that time, the company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Among other provisions, the dilutive effect of stock options must be excluded under the new requirements for calculating basic earnings per share, which will replace primary earnings per share. The impact is expected to result in an increase in basic earnings per share from primary earnings per share for the quarter ended September 30, 1997 from $.46 to $.51 per share and an increase for the nine months ended September 30, 1997 from $1.28 to $1.41 per share. The impact of Statement No. 128 on the calculation of diluted earnings per share is not expected to be material. -6- 7 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Condition Strong sales caused receivables to increase 20%, or $3,124,000, from the seasonally low December 31, 1996 balance. Inventories increased 28%, or $4,825,000, primarily to support future product demand. Deferred charges and other assets increased 25%, or $628,000, due to payments made to fund employee benefits plans and deposits made in connection with alliance partner programs. Intangible assets decreased $171,000 due to regular patent amortization. Payables increased 29%, or $2,055,000, due to increased inventory purchases and other trade payables since December 31, 1996. Other accrued liabilities increased 71%, or $1,372,000, due primarily to additional reserves for after-sale costs. Income and other taxes payable increased $730,000 due to tax accruals related to increased profits, partially offset by increased estimated tax payments. Short-term debt increased $1,509,000 since December 31, 1996. These borrowings, along with funds generated by net earnings, were used to fund the net working capital requirements, capital additions of $4,997,000, and treasury stock repurchases of $1,669,000. These cash requirements also resulted in a net reduction in cash of $816,000 during the first nine months of 1997. Prepaid pensions decreased $258,000 and other accrued employee benefits increased $687,000 since December 31, 1996, as normal pension and benefit accruals exceeded funding requirements. Accrued non-pension postretirement benefits decreased $154,000 as benefit payments exceeded required accruals. As of September 30, 1997, the company had approximately $27,000,000 of credit lines with domestic and foreign banks of which $4,143,000 was in use. This compares to $2,799,000 in use at September 30, 1996 and $2,574,000 at December 31, 1996. 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 1997 increased 9%, or $2,665,000, over sales for the third quarter of 1996. For the first nine months of 1997, sales increased 13%, or $11,294,000, over the same period in 1996. These increases were primarily related to higher unit sales of residential, commercial and industrial water meters, and lubrication meters. Both periods were favorably affected by increased unit sales of the TRACE(R) radio-frequency automated meter reading system, particularly to the Mexican market. Gross profit margins for both the quarter and the nine-month periods remained relatively stable compared to the same periods in 1996, as improved manufacturing efficiencies were offset by changes in product mix. Marketing and administrative costs increased 2% for the quarter and 7% for the nine-month period ended September 30, 1997, as compared to the same periods of 1996 due to general wage and cost increases. Research and engineering expenses increased 22% for both the quarter and the nine-month periods ended September 30, 1997, as compared to the same periods of 1996, due to costs associated with continued product development initiatives. The effective tax rates for the third quarter of 1997 and for the first nine months of 1997 were estimated to be 37.0%, which are approximately equal to the rates for the same periods in 1996. -7- 8 Earnings for the third quarter of 1997 were $1,821,000, an increase of 27% over third quarter 1996 earnings of $1,430,000. The 1997 year-to-date earnings of $5,031,000 increased 36% over the same period of 1996 earnings of $3,707,000. Increases for both periods were primarily due to increased sales, while fixed costs increased at significantly lower rates. The percentage increases in earnings per share were lower for both periods due to the impact of dilutive options in 1997. Other Matters The company is subject to contingencies relative to environmental laws and regulations. Currently, the company is in the process of resolving a suit alleging violation of California's Proposition 65. The company does not believe the ultimate resolution of this suit will have a material adverse effect on the company's financial position or results of operations. Provision has been made for estimated 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. -8- 9 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, 1997. -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 22, 1997 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 Corporate Controller -10- 11 EXHIBIT INDEX Page Number (11.0) Computation of fully diluted earnings per share 12 (27.0) Financial Data Schedule -11- EX-11 2 COMPUTATION OF EARNINGS PER 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, ------------- ------------- 1997 1996 1997 1996 ---- ---- ---- ---- PRIMARY - ------- Shares Average shares outstanding 3,573,882 3,547,414 3,599,694 3,536,364 Shares issuable upon exercise of stock options 360,773 129,846 316,894 128,624 ----------- ----------- ---------- ---------- Total 3,934,655 3,677,260 3,916,588 3,664,988 =========== =========== ========== ========== Earnings Net earnings applicable to adjusted common shares $ 1,821 $ 1,430 $ 5,031 $ 3,707 =========== =========== ========== ========== Per share amounts Net earnings per share $ .46 $ .39 $ 1.28 $ 1.01 =========== =========== ========== ========== FULLY DILUTED - ------------- Shares Average shares outstanding 3,573,882 3,547,414 3,599,694 3,536,364 Shares issuable upon exercise of stock options 376,933 147,418 444,482 176,206 ----------- ----------- ---------- ---------- Total 3,950,815 3,694,832 4,044,176 3,712,570 =========== =========== ========== ========== Earnings Earnings applicable to adjusted common shares $ 1,821 $ 1,430 $ 5,031 $ 3,707 =========== =========== ========== ========== Per share amounts $ .46 $ .39 $ 1.24 $ 1.00 =========== =========== ========== ==========
*All per share amounts and number of shares data have been restated to reflect the 2-for-1 stock split paid April 18, 1997. 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. -12- EX-27 3 FDS
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-31-1997 SEP-30-1997 307 0 18,622 0 22,331 42,051 61,285 (39,948) 75,307 23,062 0 0 0 3,348 36,413 75,307 99,013 99,013 62,431 90,606 150 0 272 7,985 2,954 5,031 0 0 0 5,031 1.28 1.24
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