-----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, PuPQBK6XokBCyW7Hh8K8tTuhnAGVMppcKGVzgNoPyxt6uLB55eq8cCL5nxeWWAnX 5PYk7c1AP5Lit68rEOh8KA== 0000950134-03-006751.txt : 20030430 0000950134-03-006751.hdr.sgml : 20030430 20030430114819 ACCESSION NUMBER: 0000950134-03-006751 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20030331 FILED AS OF DATE: 20030430 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: 1934 Act SEC FILE NUMBER: 001-06706 FILM NUMBER: 03671445 BUSINESS ADDRESS: STREET 1: 4545 WEST BROWN DEER ROAD CITY: MILWAUKEE STATE: WI ZIP: 53223 BUSINESS PHONE: 4143715702 MAIL ADDRESS: STREET 1: 4545 W BROWN DEER RD CITY: MILWAUKEE STATE: WI ZIP: 53223 FORMER COMPANY: FORMER CONFORMED NAME: BADGER METER MANUFACTURING CO DATE OF NAME CHANGE: 19710729 10-Q 1 c76545e10vq.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended MARCH 31, 2003 BADGER METER, INC. 4545 W. BROWN DEER ROAD MILWAUKEE, WISCONSIN 53223 (414) 355-0400 A Wisconsin Corporation IRS Employer Identification No. 39-0143280 Commission File No. 1-6706 The company has the following classes of securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of class: on which registered: Common Stock American Stock Exchange Common Share Purchase Rights American Stock Exchange The company does not have any securities registered pursuant to Section 12(g) of the Act. The company 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, and has been subject to such filing requirements for the past 90 days. The company is an accelerated filer (as defined in Rule 12b-2 of the Act). As of April 11, 2003, there were 3,241,536 shares of Common Stock outstanding with a par value of $1.00 per share. -1- BADGER METER, INC. INDEX
Page No. -------- Part I. Financial Information: Item 1 Financial Statements: Consolidated Condensed Balance Sheets - - March 31, 2003 and December 31, 2002 3 Consolidated Condensed Statements of Operations - - Three Months Ended March 31, 2003 and 2002 4 Consolidated Condensed Statements of Cash Flows - - Three Months Ended March 31, 2003 and 2002 5 Notes to Consolidated Condensed Financial Statements 6 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Item 3 Quantitative and Qualitative Disclosures about Market Risk 10 Item 4 Controls and Procedures 10 Part II. Other Information: Item 6(a) Exhibits 11 Item 6(b) Reports on Form 8-K 11 Exhibit Index 15
-2- Part I - Financial Information BADGER METER, INC. Item 1 Financial Statements CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands)
Assets March 31, December 31, 2003 2002 -------------- -------------- (Unaudited) Current assets: Cash $ 1,158 $ 3,779 Receivables 22,942 22,139 Inventories: Finished goods 7,224 7,569 Work in process 8,822 8,308 Raw materials 11,496 9,305 -------------- -------------- Total inventories 27,542 25,182 Prepaid expenses 1,408 1,219 Deferred income taxes 3,316 3,061 -------------- -------------- Total current assets 56,366 55,380 Property, plant and equipment, at cost 100,394 98,796 Less accumulated depreciation (56,898) (55,328) -------------- -------------- Net property, plant and equipment 43,496 43,468 Intangible assets, at cost less accumulated amortization 1,096 1,112 Prepaid pension 17,274 17,454 Other assets 3,125 3,352 Goodwill 6,526 5,697 -------------- -------------- Total assets $ 127,883 $ 126,463 ============== ============== Liabilities and Shareholders' Equity Current liabilities: Short-term debt $ 26,411 $ 20,355 Current portion of long-term debt 3,405 5,979 Payables 11,387 11,040 Accrued compensation and employee benefits 4,274 6,017 Warranty and after-sale costs 3,603 3,597 Income and other taxes 1,297 1,567 -------------- -------------- Total current liabilities 50,377 48,555 Deferred income taxes 4,718 4,710 Accrued non-pension postretirement benefits 5,443 5,512 Other accrued employee benefits 6,371 6,545 Long-term debt 11,940 13,046 Commitments and contingencies Shareholders' equity: Common Stock 4,783 4,762 Capital in excess of par value 18,562 18,169 Reinvested earnings 54,650 54,776 Accumulated other comprehensive income (loss) 591 (61) Less: Employee benefit stock (1,285) (1,535) Treasury stock, at cost (28,267) (28,016) -------------- -------------- Total shareholders' equity 49,034 48,095 -------------- -------------- Total liabilities and shareholders' equity $ 127,883 $ 126,463 ============== ==============
See accompanying notes to consolidated condensed financial statements. -3- BADGER METER, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Dollars in Thousands Except Share and Per Share Amounts) (Unaudited)
Three Months Ended March 31, -------------------------------- 2003 2002 -------------- -------------- Net sales $ 39,575 $ 37,454 Cost of sales 26,632 24,694 -------------- -------------- Gross margin 12,943 12,760 Selling, engineering and administration 11,274 9,944 -------------- -------------- Operating earnings 1,669 2,816 Interest expense 556 372 Other expense (income), net (43) (31) -------------- -------------- Earnings before income taxes 1,156 2,475 Provision for income taxes 450 868 -------------- -------------- Net earnings $ 706 $ 1,607 ============== ============== Per share amounts: Earnings per share: Basic $ .22 $ .51 ============== ============== Diluted $ .21 $ .49 ============== ============== Dividends declared: $ .26 $ .25 ============== ============== Shares used in computation of: Basic 3,204,840 3,154,686 Impact of dilutive stock options 121,592 131,765 -------------- -------------- Diluted 3,326,432 3,286,451 ============== ==============
See accompanying notes to consolidated condensed financial statements. -4- BADGER METER, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited)
Three Months Ended March 31, 2003 2002 ------------ ------------ Operating activities: Net earnings $ 706 $ 1,607 Adjustments to reconcile net earnings to net cash provided by (used for) operations: Depreciation 1,785 1,701 Amortization 16 14 Tax benefit on stock options 119 70 Noncurrent employee benefits 187 436 Deferred income taxes (247) 0 Changes in: Receivables (803) (1,138) Inventories (2,360) 409 Current liabilities other than debt (2,417) 3,176 Prepaid expenses and other (189) (294) ------------ ------------ Total adjustments (3,909) 4,374 ------------ ------------ Net cash provided by (used for) operations (3,203) 5,981 ------------ ------------ Investing activities: Property, plant and equipment (1,813) (1,306) Other - net 807 123 ------------ ------------ Net cash used for investing activities (1,006) (1,183) ------------ ------------ Financing activities: Net increase (decrease) in short-term debt 6,056 (1,743) Repayments of long-term debt (3,680) (32) Dividends (832) (790) Stock options and ESSOP 295 410 Treasury stock purchases (375) (316) Issuance of treasury stock 124 0 ------------ ------------ Net cash provided by (used for) financing activities 1,588 (2,471) ------------ ------------ Increase (decrease) in cash (2,621) 2,327 Cash - beginning of period 3,779 3,410 ------------ ------------ Cash - end of period $ 1,158 $ 5,737 ============ ============
See accompanying notes to consolidated condensed financial statements. -5- 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, 2003, the results of operations for the three-month periods ended March 31, 2003 and 2002, and the cash flows for the three-month periods ended March 31, 2003 and 2002. 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, 2002, was derived from amounts included in the Company's Annual Report to Shareholders on Form 10-K for the year ended December 31, 2002. Refer to the footnotes in that report 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 adjustments in the interim. WARRANTY AND AFTER-SALE COSTS The Company estimates and records provisions for warranties and other after-sale costs in the period the sale is reported. After-sale costs represent a variety of activities outside of the written warranty policy, such as investigation of unanticipated problems after the customer has installed the product, or analysis of water quality issues. Changes in the Company's warranty and after-sale costs reserve for the quarters ended March 31, 2003 and 2002 are as follows:
Balance at Additions Balance beginning charged to Claims at (In thousands) of year earnings paid March 31 - -------------------- -------------- -------------- -------------- -------------- 2003 $ 3,597 $ 294 $ (288) $ 3,603 2002 $ 3,453 $ 296 $ (305) $ 3,444 ==================== ============== ============== ============== ==============
STOCK OPTION PLANS The Company has five stock option plans which provide for the issuance of options to key employees and directors of the Company. Each plan authorizes the issuance of options to purchase up to an aggregate of 200,000 shares of Common Stock, with vesting periods of up to ten years and maximum option terms of ten years. As of March 31, 2003, options to purchase 19,963 shares are available for grant. As allowed by Financial Accounting Standards Board Statement No. 123, "Accounting for Stock-Based Compensation" (SFAS 123), and Statement No. 148, "Accounting for Stock-based Compensation - Transition and Disclosure", the Company has elected to continue to follow Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25), in accounting for its stock option plans. Under APB 25, the Company does not recognize compensation expense upon the issuance of its stock options because the option terms are fixed and the exercise price equals the market price of the underlying stock on the grant date. -6- The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS 123 to stock options.
Three months Ended March 31, ---------------------------- (In thousands except per share amounts) 2003 2002 - ------------------------------------------------------ ------------ ------------ Net income, as reported $ 706 $ 1,607 Deduct: Total stock-based compensation determined under fair value based method for all awards since January 1, 1995, net of related tax effects (84) (71) ------------ ------------ Pro forma net income $ 622 $ 1,536 Earnings per share: Basic, as reported $ .22 $ .51 Basic, pro forma $ .19 $ .49 Diluted, as reported $ .21 $ .49 Diluted, pro forma $ .19 $ .47 ============ ============
3. The Company acquired Data Industrial Corporation (DIC) and MecaPlus Equipements SA (MPE) in May and June 2002, respectively. A description of the acquisitions is included in the Company's Annual Report on Form 10-K under Part II, Item 8 "Financial Statements and Supplementary Data." As of March 31, 2003, the Company had not finalized the allocation of the purchase price of either acquisition. At March 31, 2003, goodwill increased $757,000 from the December 31, 2002 amount to reflect severances related to the termination of several MPE employees in connection with management's initial assessment at the date of acquisition. The amount of the severance cost was not estimable until the first quarter of 2003. All amounts are anticipated to be paid by June 30, 2003. Additionally, goodwill increased $76,000 for the quarter due to currency translation adjustments. The following pro forma information combines historical results, as if DIC and MPE had been owned by the Company for the three months ended March 31, 2002.
(In thousands except per share amounts) - --------------------------------------- Net sales $ 42,566 Net earnings $ 1,635 Diluted earnings per share $ .50 ============
The pro forma amounts include the results of the stand-alone operations of DIC and MPE, plus the impact of purchase accounting entries, which include amortization of the acquired intangibles, depreciation of the stepped up basis of the fixed assets, and interest expense on debt incurred to finance the purchases. The pro forma results are not necessarily indicative of what would have occurred if the acquisitions had been completed as of the beginning of 2002, nor are they necessarily indicative of future consolidated results. 4. The Company guarantees the outstanding debt of the Badger Meter Employee Savings and Stock Ownership Plan (ESSOP) that is recorded in long-term debt, offset by a similar amount of unearned compensation that has been recorded as a reduction of shareholders' equity. The loan amount is collateralized by shares of the Company's Common Stock. A payment of $250,000 in the first quarter of 2003 reduced the loan from $1,535,000 at December 31, 2002 to $1,285,000 at March 31, 2003. The Company also guarantees the present and future debt of the Badger Meter Officers Voting Trust (BMOVT), from which officers obtained loans from a bank in order to purchase shares of the Company's Common Stock. The officers' loan amounts are collateralized by the Company's shares that were purchased with the loans' proceeds. There have been no loans made to officers by the BMOVT since July 2002 due to restrictions as a result of new legislation. The amount that the Company guaranteed was $2,281,000 and $2,380,000 at March 31, 2003 and December 31, 2002, respectively. The current loan expires in April 2003 when it will likely be renewed. The fair market value of this guarantee at March 31, 2003 and December 31, 2002 continued to be zero because the collateral value of the shares exceeded the loan amount. -7- 5. Total comprehensive income was $1,358,000 and $1,607,000 for the three-month periods ended March 31, 2003 and 2002, respectively. Total comprehensive income is comprised of net income and other comprehensive income, which includes foreign currency translation adjustments. Included in the first quarter 2003 amount is $652,000 of other comprehensive income, which included $477,000 relating to the effect of the Company's Czech Republic subsidiary changing its functional currency from the U.S. dollar to the euro, effective January 1, 2003. 6. In the normal course of business, the Company is named in legal proceedings. There are currently no material legal proceedings pending with respect to the Company, except as discussed below. The Company is subject to contingencies relative to environmental laws and regulations. Currently, the Company is in the process of resolving an issue relative to a landfill site. Provision has been made for all known settlement costs. The Company is also a defendant in five multi-party asbestos suits as a result of its membership in certain trade organizations. The cases are pending in state court in Mississippi. The Company does not believe the ultimate resolution of these issues will have a material adverse effect on the Company's financial position or results of operations, either from a cash flow perspective or on the financial statements as a whole. 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. -8- Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Net sales for the three-months ended March 31, 2003, increased $2.1 million or 5.7% over the same period in 2002. The first quarter's results included $5.4 million of net sales related to two acquisitions, Data Industrial Corporation (DIC) and MecaPlus Equipements SA (MPE), which were acquired in the second quarter of 2002. Without the acquisitions, net sales would have decreased $3.3 million or 8.8% over the same period in 2002. The principal reason for the decline in net sales without acquisitions was due to lower sales of residential and commercial water meters offset slightly by higher sales in industrial products. Residential and commercial water meter net sales decreased $3.7 million over the same period in 2002. This sales decline was the result of lower volumes of water meters (with and without automation) offset somewhat by higher prices. The decline in volumes appears to be due to the continuing soft economy, and geopolitical and terrorism concerns. Many local governments struggled with reduced budgets, and the Company experienced longer sales cycles for purchases by water utilities as they evaluated the requirements and costs of increased security. Net sales of industrial products, excluding sales from the acquisitions, continued to be affected by the economic recession, increasing only $400,000 in the first quarter over the prior year's first quarter. The industrial net sales increase was the result of modestly higher revenues for automotive fluid meters, small precision valves and electromagnetic meters offset by decreases in other industrial products. Gross margins for the first quarter of 2003 were 32.7% compared to 34.1% in the first quarter of 2002. The decrease was principally the result of decreased water meter volumes which impacted overhead absorption, offset somewhat by price increases to customers. The gross margins for the first quarter were also affected by a manufacturing problem that resulted in an after-tax expense of approximately $150,000 or $0.05 per diluted share. The problem was discovered and resolved at the plant. Selling, engineering and administration costs increased $1.3 million or 13.4% for the first quarter of 2003 compared to the same period in 2002. The increase included the affect of the acquisitions discussed above ($1.7 million). Without the effects of the acquisitions, these expenses would have declined approximately $400,000, which was the net impact of lower incentives and administrative costs offset by higher marketing and product development costs and normal inflationary increases. Interest expense for the quarter was $184,000 higher than the same period in the prior year primarily due to the higher level of debt. As a result of the above, earnings for the first quarter of 2003 were $706,000 compared to earnings in the first quarter of 2002 of $1,607,000. On a diluted earnings per share basis, this equates to $0.21 per share for the first quarter of 2003 compared to $0.49 for the same period in 2002. Liquidity and Capital Resources The main sources of liquidity for the Company are cash from operations and borrowing capacity. In the first quarter of 2003, $3.4 million of cash was used for operations, principally due to the increase in inventory balances and a reduction in current liabilities other than debt, as incentive payments based upon prior year results were paid in the first quarter of 2003. These uses of cash exceeded the cash provided by earnings. The change in accounts receivable balances from December 31, 2002 to March 31, 2003 is a function of timing of actual cash receipts. Inventories at March 31, 2003 increased nearly $2.4 million or 9.4%. This increase in inventory was due to a build up of certain longer lead-time materials for expected sales that did not materialize in the first quarter. Capital expenditures for the first quarter of 2003 were $1.6 million, which is nearly the same amount as the depreciation expense resulting in virtually no change from the net amount shown at December 31, 2002. Goodwill increased $829,000 due mainly to the Company continuing to finalize the allocation of the purchase price of MPE, and the effects of foreign currency translation adjustments. -9- Short-term debt and the current portion of long-term debt at March 31, 2003 increased to $29.8 million versus a balance at the end of 2002 of $26.3 million. This increase was caused by the need for cash for operations, capital expenditures, repayments of long-term debt and dividends. The long-term debt amounts declined as a result of regularly scheduled payments, plus a prepayment to take advantage of lower short-term rates. Accounts payable increased to $11.6 million from $11.0 million at December 31, 2002 as a result of the timing of payments. Accrued compensation and employee benefits decreased to $4.3 million from $6.0 million at December 31, 2002 due principally to the first quarter payments of various incentives earned in 2002 as a result of the performance in that year. Income and other taxes decreased to $1.3 million from nearly $1.6 million at December 31, 2002 as a result of the timing of tax payments and lower taxable income. Common stock and capital in excess of par value have increased slightly since December 31, 2002 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 $250,000 due to the regular payment of the ESSOP debt and the related release of shares. As of March 31, 2003, the Company had approximately $38.5 million of short-term credit facilities with domestic and foreign banks of which $26.4 million was in use. Subsequent to the end of the quarter, the Company increased its existing short-term credit facilities by $5 million. The Company believes that the present lines of credit are adequate to meet operating requirements and future capital needs. The Company also believes it would have no difficulty securing additional term debt. 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. Provision has been made for all known settlement costs. The Company is also a defendant in five multi-party asbestos suits as a result of its membership in certain trade organizations. The cases are pending in state court in Mississippi. The Company does not believe the ultimate resolution of these issues will have a material adverse effect on the Company's financial position or results of operations, either from a cash flow perspective or on the financial statements as a whole. 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. Item 3 Quantitative and Qualitative Disclosures about Market Risk The Company's quantitative and qualitative disclosures about market risk are included in Part II Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" under the heading "Market Risk" in the Company's Annual Report on Form 10-K for the year ended December 31, 2002, and have not materially changed since that report was filed. Item 4 Controls and Procedures In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934 (the "Exchange Act"), within 90 days prior to the filing date of this Quarterly Report on Form 10-Q, an evaluation was carried out under the supervision and with the participation of the Company's management, including the Company's President and Chief Executive Officer and the Company's Vice President - Finance, Chief Financial Officer and Treasurer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rule 13a-14(c) under the Exchange Act). Based upon their evaluation of these disclosure controls and procedures, the Company's President and Chief Executive Officer and the Company's Vice President - Finance, Chief Financial Officer and Treasurer concluded that the Company's disclosure controls and procedures were effective as of the date of such evaluation to ensure that material information relating to the Company, including its consolidated subsidiaries, was made known to them by others within those entities, particularly during the period in which this Quarterly Report on Form 10-Q was being prepared. -10- Forward Looking Statements Certain statements contained in this document, 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: o the success or failure of new product offerings and acquisitions o the actions and financial condition of competitors and alliance partners o changes in competitive pricing and bids in the marketplace o changes in domestic conditions, including housing starts o changes in foreign economic conditions, including currency fluctuations o changes in laws and regulations o 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. Part II - Other Information Item 6 Exhibits and Reports on Form 8-K (a) Exhibits: (99.1) Written Statement of the Chief Executive Officer (99.2) Written Statement of the Chief Financial Officer (99.3) Code of Business Ethics for Financial Executives (b) Reports on Form 8-K: There were no reports on Form 8-K filed for the three months ended March 31, 2003. -11- 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 24, 2003 By /S/ Richard A. Meeusen ------------------------ Richard A. Meeusen President and Chief Executive Officer By /S/ Richard E. Johnson ------------------------ Richard E. Johnson Vice President - Finance, Treasurer and Chief Financial Officer By /S/ Beverly L.P. Smiley ------------------------- Beverly L.P. Smiley Vice President - Corporate Controller CERTIFICATION I, Richard A. Meeusen, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Badger Meter, Inc. (the registrant); 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and -12- c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: April 24, 2003 By /S/ Richard A. Meeusen ----------------------- Richard A. Meeusen President and Chief Executive Officer CERTIFICATION I, Richard E. Johnson, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Badger Meter, Inc. (the registrant); 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; -13- 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: April 24, 2003 By /S/ Richard E. Johnson ----------------------- Richard E. Johnson Vice President - Finance, Treasurer and Chief Financial Officer -14-
EXHIBIT INDEX Page Number (99.1) Written Statement of the Chief Executive Officer 16 (99.2) Written Statement of the Chief Financial Officer 17 (99.3) Code of Business Ethics for Financial Executives 18
-15- EX-99.1 3 c76545exv99w1.txt WRITTEN STATEMENT OF THE CHIEF EXECUTIVE OFFICER EXHIBIT (99.1) WRITTEN STATEMENT OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 Solely for the purpose of complying with 18 U.S.C. Section 1350, I, the undersigned Chief Executive Officer of Badger Meter, Inc., (the "Company), hereby certify, based on my knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2003 (the "Report") fully complies with the requirements of Section 13 (a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. BADGER METER, INC. Dated: April 24, 2003 By /S/ Richard A. Meeusen ---------------------- Richard A. Meeusen President and Chief Executive Officer EX-99.2 4 c76545exv99w2.txt WRITTEN STATEMENT OF THE CHIEF FINANCIAL OFFICER EXHIBIT (99.2) WRITTEN STATEMENT OF THE CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 Solely for the purpose of complying with 18 U.S.C. Section 1350, I, the undersigned Chief Financial Officer of Badger Meter, Inc., (the "Company), hereby certify, based on my knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2003 (the "Report") fully complies with the requirements of Section 13 (a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. BADGER METER, INC. Dated: April 24, 2003 By /S/ Richard E. Johnson ---------------------- Richard E. Johnson Vice President-Finance, Treasurer and Chief Financial Officer EX-99.3 5 c76545exv99w3.txt CODE OF BUSINESS ETHICS FOR FINANCIAL EXECUTIVES EXHIBIT (99.3) BADGER METER, INC. CODE OF BUSINESS ETHICS FOR FINANCIAL EXECUTIVES I acknowledge that I have received a copy of the Badger Meter, Inc. Code of Business Conduct and that I have been given a chance to inquire about any provisions that required further explanation. I have read and understand the provisions of the Code of Business Conduct, and I acknowledge and accept that my continued employment is dependent upon my compliance with the Company's rules and policies as set forth in the Code of Business Conduct. As a financial executive of Badger Meter, Inc., I acknowledge that my continued employment is also dependent on my compliance with the following specific duties imposed upon me and I hereby agree that I will: o Act with honesty and integrity, avoiding actual or apparent conflicts of interest in personal and professional relationships and promptly disclosing to the chairman of the Audit Committee any transaction or relationship that might give rise to such a conflict o Provide constituents, including the SEC and the public, with information that is accurate, complete, objective, relevant, timely and understandable o Comply with rules and regulations of federal, state, provincial and local governments, and other applicable private and public regulatory agencies o Act in good faith, responsibly, with due care, competence and diligence, without misrepresenting material facts or allowing my independent judgment to be subordinated o Respect the confidentiality of information acquired in the course of my work except when authorized or otherwise legally obligated to disclose such information and not to use such information for personal advantage o Share knowledge and maintain skills important and relevant to my constituents' needs o Proactively promote ethical behavior in my interactions among peers, in the work environment and the community o Achieve responsible use of and control over all assets and resources employed or entrusted to me by Badger Meter, Inc. o Promptly report any material violations of this Code or Badger's Code of Business Conduct to the chairman of the Audit Committee. /s/ Richard A. Meeusen - ---------------------- Richard A. Meeusen President and Chief Executive Officer April 24, 2003 /s/ Richard E. Johnson - ---------------------- Richard E. Johnson VP - Finance, Chief Financial Officer and Treasurer April 24, 2003 /s/ Beverly L.P. Smiley - ----------------------- Beverly L.P. Smiley VP - Corporate Controller April 24, 2003 -----END PRIVACY-ENHANCED MESSAGE-----