-----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, MpC8lrFWSG4zg4GOhJLpk2uQ7sYNKvFFvgZcVlRvS13UBJaJckb4YYxrtcr0P523 Q2UHn3zXu/2ChpQB1fNlgw== 0000950137-97-001499.txt : 19970414 0000950137-97-001499.hdr.sgml : 19970414 ACCESSION NUMBER: 0000950137-97-001499 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970411 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: 1934 Act SEC FILE NUMBER: 001-06706 FILM NUMBER: 97578691 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 March 31, 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 April 11, 1997 * - ------------------------------------ ------------------------------- Common Stock, $1.00 par value 2,428,408 Class B Common Stock, $.10 par value 1,125,570 *All share amounts and number of shares data have been restated to reflect the 2-for-1 stock split payable April 18, 1997. 2 BADGER METER, INC. INDEX
Page No. -------- Part I. Financial Information: Item 1 Financial Statements: Consolidated Condensed Balance Sheets - - March 31, 1997 and December 31, 1996 3 Consolidated Condensed Statements of Operations - - Three Months Ended March 31, 1997 and 1996 4 Consolidated Condensed Statements of Cash Flows - - Three Months Ended March 31, 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 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)
March 31, December 31, 1997 1996 ---- ---- Assets (Unaudited) ------ Current assets: Cash $ 537 $ 1,123 Receivables 19,851 15,498 Inventories: Finished goods 2,973 3,577 Work in process 8,859 8,466 Raw materials and purchased parts 6,314 5,463 --------- -------- Total inventories 18,146 17,506 Prepaid expenses 1,091 918 --------- -------- Total current assets 39,625 35,045 Property, plant and equipment, at cost 58,240 57,111 Less accumulated depreciation (38,702) (37,751) --------- -------- 19,538 19,360 Intangible assets, at cost less accumulated amortization 821 878 Prepaid pension 7,041 7,102 Deferred income taxes 1,252 1,257 Deferred charges and other assets 2,555 2,491 --------- -------- Total assets $ 70,832 $ 66,133 ========= ======== Liabilities and Shareholders' Equity ------------------------------------ Current liabilities: Short-term debt $6,003 $2,634 Payables 7,543 7,102 Accrued compensation and employee benefits 3,713 4,763 Other accrued liabilities 2,387 1,929 Income and other taxes 1,604 972 ------- ------- Total current liabilities 21,250 17,400 Accrued non-pension postretirement benefits 8,043 8,106 Other accrued employee benefits 3,122 2,899 Long-term debt 1,076 1,091 Shareholders' equity: Common Stock 3,185 3,154 Class B Common Stock 112 112 Capital in excess of par value 7,124 6,803 Reinvested earnings 29,130 28,200 Less:Employee benefit stock (1,044) (1,053) Treasury stock, at cost (1,166) (579) ------- ------- Total shareholders' equity 37,341 36,637 ------- ------- Total liabilities and shareholders' equity $70,832 $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 March 31, 1997 1996 --------- --------- Net sales $ 31,702 $ 26,635 Operating costs and expenses: Cost of sales 20,224 16,714 Marketing and administrative 7,434 6,799 Research and engineering 1,851 1,559 --------- --------- 29,509 25,072 --------- --------- Operating earnings 2,193 1,563 Interest expense 101 118 Other deductions 13 54 --------- --------- Earnings before income taxes 2,079 1,391 Provision for income taxes 769 503 --------- --------- Net earnings $ 1,310 $ 888 ========= ========= Per share amounts:* Net earnings: Primary $ .35 $ .25 ========= ========= Fully Diluted $ .35 $ .25 ========= ========= Dividends declared - Common Stock $ .11 $ .10 ========= ========= Dividends declared - Class B Common Stock $ .10 $ .09 ========= ========= Shares used in computation: Primary 3,762,719 3,624,130 ========= ========= Fully Diluted 3,784,576 3,625,362 ========= =========
* All per share amounts and number of shares data have been restated to reflect the 2-for-1 stock split payable 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)
Three Months Ended March 31, 1997 1996 ------- ------- Operating activities: Net earnings $ 1,310 $ 888 Adjustments to reconcile net earnings to net cash provided by (used for) operations: Depreciation 960 964 Amortization 177 208 Noncurrent employee benefits 230 82 Deferred income taxes 5 (88) Other 34 14 Changes in: Receivables (4,353) (1,140) Inventory (640) (1,445) Current liabilities other than short-term debt 481 927 Prepaid expenses (173) 9 ------- ------- Total adjustments (3,279) (469) ------- ------- Net cash provided by (used for) operations (1,969) 419 ------- ------- Investing activities: Property, plant and equipment (1,188) (775) Other - net (183) (6) ------- ------- Net cash provided by (used for) investing activities (1,371) (781) ------- ------- Financing activities: Bank borrowings (repayments) 3,369 (211) Dividends (380) (343) Stock options and ESSOP 352 115 Purchase of treasury stock (587) 0 ------- ------- Net cash provided by (used for) financing activities 2,754 (439) ------- ------- Increase (decrease) in cash (586) (801) Beginning of year 1,123 1,177 ------- ------- End of period $ 537 $ 376 ======= ======= Supplemental disclosures of cash flow information: Cash paid (refunded) during the period for: Income taxes $ 61 $ 57 ======= ======= Interest $ 96 $ 106 ======= =======
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 March 31, 1997 and the results of operations for the three-month periods ended March 31, 1997 and 1996 and the cash flows for the three-month periods ended March 31, 1997 and 1996. The results of operations for the three-month period ended March 31, 1997, are not necessarily indicative of the results to be expected for the full year. 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. 2. 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. Under the new requirements for calculating primary earnings per share, the dilutive effect of stock options will be excluded. The impact is expected to result in an increase in primary earnings per share for the quarter ended March 31, 1997 from $.35 to $.37 per share. The impact of Statement No. 128 on the calculation of fully diluted earnings per share for the quarter is not expected to be material. -6- 7 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Condition Record sales caused receivables to increase 28%, or $4,353,000, from the seasonally low December 31, 1996 balance. Inventories increased 4%, or $640,000, primarily to support future sales needs. Payables increased 6%, or $441,000, due to increased inventory purchases and other trade payables since December 31, 1996. Accrued compensation decreased 22%, or $1,050,000, due primarily to payment of 1996 incentives during the first quarter of 1997. Other accrued liabilities increased 24%, or $458,000, due to additional reserves for after-sale costs. Income and other taxes payable increased $632,000 due to accruals related to increased profits and timing of estimated tax payments. Short-term debt increased $3,369,000 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 $1,188,000, and treasury stock repurchases of $587,000. These cash requirements also resulted in a net reduction in cash of $586,000 during the first quarter of 1997. As of March 31, 1997, the company had approximately $27,000,000 of credit lines with domestic and foreign banks of which $5,943,000 was in use. This compares to $5,304,000 in use at March 31, 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 first quarter of 1997 of $31,702,000 reflect a 19% increase over sales of $26,635,000 for the same period in 1996. The increase was primarily related to higher unit sales of lubrication meters and of residential, commercial and industrial water meters and related systems. Gross profit margins declined from 37.2% for the first quarter of 1996 to 36.2% for the first quarter of 1997, due primarily to changes in product mix. Marketing and administrative costs increased 9% for the quarter ended March 31, 1997 as compared to the same period of 1996 due to general wage and cost increases. Research and engineering expenses increased 19% between the periods due to costs associated with continued product development initiatives. Interest expense decreased 14% due to lower average debt balances outstanding between the periods. Other deductions decreased $41,000 primarily due to gains on asset disposals and foreign currency transactions. The effective tax rate for the first quarter of 1997 was estimated to be 37.0%, which is higher than the 36.2% used for the first quarter of 1996, due to changes in estimated deductions and tax credits for 1997. Earnings for the first quarter of 1997 of $1,310,000 have increased 48% over first quarter 1996 earnings of $888,000, due primarily to the higher sales. Earnings per share increased 40%, which was slightly lower than the percentage increase in earnings 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 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. -7- 8 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 March 31, 1997. -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: April 11, 1997 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 1 Exhibit (11.0) BADGER METER, INC. COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE * (Dollars in thousands except per share amounts)
Three Months Ended -------------------- March 31, --------- 1997 1996 --------- --------- PRIMARY Shares Average shares outstanding 3,557,737 3,521,568 Shares issuable upon exercise of stock options 204,982 102,562 --------- --------- Total 3,762,719 3,624,130 ========= ========= Earnings Net earnings applicable to adjusted common shares $ 1,310 $ 888 ========= ========= Per share amounts Net earnings per share ** $ .35 $ .25 ========= ========= FULLY DILUTED Shares Average shares outstanding 3,557,737 3,521,568 Shares issuable upon exercise of stock options 226,839 103,794 --------- --------- Total 3,784,576 3,625,362 ========= ========= Earnings Earnings applicable to adjusted common shares $ 1,310 $ 888 ========= ========= Per share amounts Net earnings per share ** $ .35 $ .25 ========= =========
*All per share amounts and number of shares data have been restated to reflect the 2-for-1 stock split payable 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. -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. 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 537 0 19,851 0 18,146 39,625 58,240 (38,702) 70,832 21,250 0 0 0 2,131 35,210 70,832 31,702 31,702 20,224 29,509 13 0 101 2,079 769 1,310 0 0 0 1,310 .35 .35
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