-----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, RFahF7J0sqk0+LMaYwIDUIx8fMvQUI99/DO+kVpmGQiCStbbrOi4eD4BXux6LEkx vlGa8ZYVGrCyWuOtV8D6BQ== 0000950137-97-002449.txt : 19970724 0000950137-97-002449.hdr.sgml : 19970724 ACCESSION NUMBER: 0000950137-97-002449 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970723 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: 97644141 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 June 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 July 18, 1997 - --------------------------- ---------------------------- Common Stock, $1.00 par value 2,426,904 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 - - June 30, 1997 and December 31, 1996 3 Consolidated Condensed Statements of Operations - - Three and Six Months Ended June 30, 1997 and 1996 4 Consolidated Condensed Statements of Cash Flows - - Six Months Ended June 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 4 Submission of Matters to a Vote of Security Holders 9 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 June 30, December 31, ------ 1997 1996 ---- ---- (Unaudited) Current assets: Cash $ 469 $ 1,123 Receivables 17,236 15,498 Inventories: Finished goods 3,507 3,577 Work in process 9,295 8,466 Raw materials and purchased parts 6,347 5,463 ---------- ----------- Total inventories 19,149 17,506 Prepaid expenses 855 918 ---------- ----------- Total current assets 37,709 35,045 Property, plant and equipment, at cost 59,373 57,111 Less accumulated depreciation (39,313) (37,751) ---------- ----------- 20,060 19,360 Intangible assets, at cost less accumulated amortization 764 878 Prepaid pension 6,930 7,102 Deferred income taxes 1,250 1,257 Deferred charges and other assets 3,252 2,491 ---------- ----------- Total assets $ 69,965 $ 66,133 ========== =========== Liabilities and Shareholders' Equity ------------------------------------ Current liabilities: Short-term debt $ 3,027 $ 2,634 Payables 8,048 7,102 Accrued compensation and employee benefits 4,242 4,763 Other accrued liabilities 2,711 1,929 Income and other taxes 1,067 972 ---------- ----------- Total current liabilities 19,095 17,400 Accrued non-pension postretirement benefits 8,042 8,106 Other accrued employee benefits 3,367 2,899 Long-term debt 961 1,091 Shareholders' equity: Common Stock 3,213 3,154 Class B Common Stock 112 112 Capital in excess of par value 7,370 6,803 Reinvested earnings 30,604 28,200 Less: Employee benefit stock (935) (1,053) Treasury stock, at cost (1,864) (579) ---------- ----------- Total shareholders' equity 38,500 36,637 ---------- ----------- Total liabilities and shareholders' equity $ 69,965 $ 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 Six Months Ended June 30, June 30, -------- -------- 1997 1996 1997 1996 ---- ---- ---- ---- Net sales $ 34,104 $ 30,542 $ 65,806 $ 57,177 Operating costs and expenses: Cost of sales 21,480 19,739 41,704 36,453 Marketing and administrative 7,497 6,841 14,931 13,640 Research and engineering 1,949 1,568 3,800 3,127 ----------- ----------- ---------- ---------- 30,926 28,148 60,435 53,220 ----------- ----------- ---------- ---------- Operating earnings 3,178 2,394 5,371 3,957 Interest expense 97 103 198 221 Other deductions 65 62 78 116 ----------- ----------- ---------- ---------- Earnings before income taxes 3,016 2,229 5,095 3,620 Provision for income taxes 1,116 840 1,885 1,343 ----------- ----------- ---------- ---------- Net earnings $ 1,900 $ 1,389 $ 3,210 $ 2,277 =========== =========== ========== ========== Per share amounts: * Net earnings: Primary $ .50 $ .38 $ .85 $ .63 =========== =========== ========== ========== Fully Diluted $ .49 $ .38 $ .83 $ .63 =========== =========== ========== ========== Dividends declared - Common Stock $ .12 $ .11 $ .23 $ .21 =========== =========== ========== ========== Dividends declared - Class B Common Stock $ .11 $ .10 $ .21 $ .19 =========== =========== ========== ========== Shares used in computation: Primary 3,794,858 3,649,442 3,798,949 3,647,720 =========== =========== ========== ========== Fully Diluted 3,839,051 3,649,966 3,852,595 3,656,140 =========== =========== ========== ==========
* 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)
Six Months Ended June 30, -------- 1997 1996 ---- ---- Operating activities: Net earnings $ 3,210 $ 2,277 Adjustments to reconcile net earnings to net cash provided by (used for) operations: Depreciation 1,993 1,927 Amortization 330 425 Noncurrent employee benefits 594 31 Deferred income taxes 7 9 Other 48 14 Changes in: Receivables (1,738) (2,754) Inventory (1,643) (1,259) Current liabilities other than short-term debt 1,588 2,439 Prepaid expenses 63 (11) ---------- ----------- Total adjustments 1,242 821 ---------- ----------- Net cash provided by (used for) operations 4,452 3,098 ---------- ----------- Investing activities: Property, plant and equipment (2,771) (2,013) Other - net (1,031) (388) ---------- ----------- Net cash provided by (used for) investing activities (3,802) (2,401) ---------- ----------- Financing activities: Bank borrowings (repayments) 393 (1,304) Dividends (806) (718) Stock options and ESSOP 394 302 Purchase of treasury stock (1,285) 5 ---------- ----------- Net cash provided by (used for) financing activities (1,304) (1,715) ---------- ----------- Increase (decrease) in cash (654) (1,018) Beginning of year 1,123 1,177 ---------- ----------- End of period $ 469 $ 159 ========== =========== Supplemental disclosures of cash flow information: Cash paid (refunded) during the period for: Income taxes $ 1,576 $ 1,174 ========== ============ Interest $ 192 $ 177 ========== ============
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 June 30, 1997 and the results of operations for the three and six-month periods ended June 30, 1997 and 1996 and the cash flows for the six-month periods ended June 30, 1997 and 1996. The results of operations for the six-month period ended June 30, 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. 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 June 30, 1997 from $.50 to $.53 per share and an increase for the six months ended June 30, 1997 from $.85 to $.90 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 Record sales caused receivables to increase 11%, or $1,738,000, from the seasonally low December 31, 1996 balance. Inventories increased 9%, or $1,643,000, primarily to support future sales needs. Deferred charges and other assets increased 31%, or $761,000, due to payments made to fund employee benefits plans and deposits made in connection with alliance programs. Payables increased 13%, or $946,000, due to increased inventory purchases and other trade payables since December 31, 1996. Accrued compensation decreased 11%, or $521,000, due primarily to payment of 1996 incentives during the first quarter of 1997, partially offset by additional accruals for 1997 incentives. Other accrued liabilities increased 41%, or $782,000, due to additional reserves for after-sale costs. Income and other taxes payable increased $95,000 due to accruals related to increased profits, partially offset by increased estimated tax payments. Short-term debt increased $393,000 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 $2,771,000, and treasury stock repurchases of $1,285,000. These cash requirements also resulted in a net reduction in cash of $654,000 during the first six months of 1997. As of June 30, 1997, the company had approximately $27,000,000 of credit lines with domestic and foreign banks of which $2,967,000 was in use. This compares to $4,211,000 in use at June 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 second quarter of 1997 of $34,104,000 reflect a 12% increase over sales of $30,542,000 for the same period in 1996. The increase was primarily related to higher unit sales of residential, commercial and industrial water meters and control valves. Gross profit margins increased due to improved manufacturing efficiencies. For the first six months of 1997, sales increased 15%, or $8,629,000, over the same period in 1996. This increase was primarily related to higher unit sales of residential, commercial and industrial water meters, as well as increased sales of lubrication meters. Gross profit margins remained relatively stable between the periods as improved manufacturing efficiencies were offset by changes in product mix. In addition to the above factors, strong sales of the TRACE radio-frequency automated meter reading system continued to contribute significantly to the company's revenues for both the quarter and year-to-date periods. Marketing and administrative costs increased 10% for the quarter and 9% for the six-month period ended June 30, 1997, as compared to the same periods of 1996 due to general wage and personnel increases. Research and engineering expenses increased 24% for the quarter and 22% for the six-month period ended June 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 second quarter of 1997 and for the first six months of 1997 were estimated to be 37.0%, which are approximately the same rates for the same periods in 1996. -7- 8 Earnings for the second quarter of 1997 were $1,900,000, an increase of 37% over second quarter 1996 earnings of $1,389,000, due primarily to the higher sales, improved margins and general cost controls. The 1997 year-to-date earnings of $3,210,000 increased 41% over the same period of 1996 earnings of $2,277,000 due primarily to higher sales and general cost controls. The percentage increases in earnings per share were slightly 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 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. In June of 1997, the company announced plans for a 52,000 square foot addition to its facility in Brown Deer, Wisconsin. The addition is estimated to cost $8 million and is expected to begin in August of 1997, with completion scheduled for early 1999. -8- 9 Part II - Other Information Item 4 Submission of Matters to a Vote of Security Holders (a) The Annual Meeting of Shareholders was held April 25, 1997. (b) Proxies were solicited for the election of ten directors. There was no solicitation in opposition to management's nominees and all nominees were re-elected. As of the record date, February 28, 1997, the total number of votes represented by shares of Common Stock and Class B Common Stock was 6,841,754. (c) 1. The Badger Meter, Inc. 1997 Stock Option Plan ("Option Plan") was approved. The Option Plan provides for the grant of options representing up to an aggregate of 200,000 shares (post-split) of Common Stock to approximately 250 employees eligible to participate in the Option Plan. The option price will be fixed by the Management Review Committee of the Board of Directors, but Incentive Stock Options will not be less than 100% of fair market value on the date of grant.
Votes Votes Votes Broker FOR AGAINST ABSTAIN Non-Votes --- ------- ------- --------- STOCK OPTION PLAN 5,796,120 708,379 7,854 132,496
(c) 2. The following table represents the aggregate votes related to the election of directors:
Votes Votes NAME FOR WITHHELD Not Voted - ---- --- -------- --------- James L.Forbes 6,079,463 565,386 196,905 Robert M. Hoffer 6,078,627 566,222 196,905 Charles F. James, Jr. 6,079,463 565,386 196,905 Kenneth P. Manning 6,079,263 565,586 196,905 Andrew J. Policano 6,079,163 565,686 196,905 Donald J. Schuenke 6,078,962 565,887 196,905 John J. Stollenwerk 6,079,463 565,386 196,905 Pamela B. Strobel 6,079,263 565,586 196,905 James O. Wright 6,079,413 565,436 196,905 James O. Wright, Jr. 6,079,463 565,386 196,905
(d) Not applicable. Item 6 Exhibits and Reports on Form 8-K (a) Exhibits: (10.0) The Badger Meter, Inc. 1997 Stock Option Plan (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 June 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: July 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 (10.0) The Badger Meter, Inc. 1997 Stock Option Plan 12 (11.0) Computation of fully diluted earnings per share 17 (27.0) Financial Data Schedule -11- EX-10 2 1997 STOCK OPTION PLAN 1 Exhibit (10.0) BADGER METER, INC. 1997 STOCK OPTION PLAN 1. PURPOSE The purpose of the Badger Meter, Inc. 1997 Stock Option Plan (the "Plan") is to promote the best interests of Badger Meter, Inc. (the "Company") and its shareholders by encouraging directors and key employees of the Company and its subsidiaries to secure or increase on reasonable terms their stock ownership in the Company. The Board of Directors of the Company believes the Plan will promote continuity of management, increased incentive and personal interest in the welfare of the Company by those who are primarily responsible for shaping and carrying out the long-range plans of the Company and its subsidiaries and securing their continued growth and financial success. It is intended that certain of the options issued under the Plan may constitute incentive stock options within the meaning of Section 422 of the Internal Revenue Code ("Incentive Stock Options") and the remainder of the options issued under the Plan will constitute non-qualified stock options ("Non-qualified Stock Options"). 2. EFFECTIVE DATE The Plan shall become effective on the date of adoption by the Board of Directors of the Company (the "Board"), subject to the approval and ratification of the Plan by the shareholders of the Company within twelve (12) months of the date of adoption by the Board, and all options granted prior to such shareholder approval shall be subject to such approval. 3. ADMINISTRATION (a) The Plan shall be administered by the Management Review Committee of the Board (the "Committee") as such Committee may be constituted from time to time. The Committee shall consist of not less than two members of the Board selected by the Board, each of whom shall qualify as a non-employee director within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934 ("Exchange Act"), or any successor rule or regulation thereto. A majority of the members of the Committee shall constitute a quorum. All determinations of the Committee shall be made by a majority of its members. Any decision or determination reduced to writing and signed by all of the members of the Committee shall be fully effective as if it had been made by a majority vote at a meeting duly called and held. If at any time the Committee shall not be in existence or not consist of directors who are qualified as "non-employee directors" as defined above, the Board shall administer the Plan. To the extent permitted by applicable law, the Board may, in its discretion, delegate to another committee of the Board or to one or more senior officers of the Company any or all of the authority and responsibility of the Committee with respect to options to participants other than participants who are subject to the provisions of Section 16 of the Exchange Act. To the extent that the Board has delegated to such other committee or one or more officers the authority and responsibility of the Committee, all references to the Committee herein shall include such other committee or one or more officers. (b) Subject to the express provisions of the Plan, the Committee shall have complete authority to select the key employees to whom options shall be granted, to determine the number of shares subject to each option, the time at which the option is to be granted, the type of option, the option period, the option price and the manner in which options become exercisable, and shall establish such other terms and conditions of the options as the Committee may deem necessary or desirable. In making such determinations, the Committee may take into account the nature of the services rendered by the respective employees, their present and potential contribution to the success of their respective organizations and such other factors as the Committee in its discretion shall deem relevant. Subject to the express provisions of the Plan, the Committee shall also have complete authority to interpret the Plan, to prescribe, amend and rescind the rules and regulations relating to it, to waive any conditions or restriction with respect to any options, and to make all other determinations necessary or advisable for the administration of the Plan. The determinations of the Committee on the matters referred to in this paragraph 3 shall be conclusive. -12- 2 4. ELIGIBILITY Any non-employee director ("Director") or key employee ("Employee") of the Company or its present and future subsidiaries, as defined in Section 424(f) of the Internal Revenue Code ("Subsidiaries"), whose judgment, initiative and efforts contribute materially to the successful performance of the Company or its Subsidiaries, shall be eligible to receive options under the Plan. 5. SHARES SUBJECT TO THE PLAN The shares which may be issued pursuant to options under the Plan shall be shares of the Company's Common Stock, $1.00 par value ("Stock"), and may be either authorized and unissued or treasury shares. The total number of shares for which options may be granted and which may be purchased pursuant to options under the Plan shall not exceed an aggregate of 200,000 shares (adjusted to reflect the 2-for-1 stock split payable April 18, 1997), subject to adjustment as provided in the following sentence and in paragraph 12 hereof. If an option granted under the Plan expires, is canceled or terminates unexercised as to any shares of Stock subject thereto, or if shares of Stock are used to satisfy the Company's withholding tax obligations, such shares shall again be available for the granting of additional options under the Plan. 6. OPTION PRICE The option price per share of Stock shall be fixed by the Committee, but shall be not less than 100% in the case of Incentive Stock Options of the fair market value of the Stock on the date the option is granted. Unless otherwise determined by the Committee, the "fair market value" of Stock on the date of grant shall be the closing price for a share of Stock on such date, or, if such date is not a trading date, the next preceding trading date as quoted on the American Stock Exchange Transaction Reporting System. 7. GRANT OF OPTIONS (a) Subject to the terms and conditions of the Plan, the Committee may, from time to time, grant to Employees options to purchase such number of shares of Stock and on such terms and conditions as the Committee may determine. More than one option may be granted to the same Employee. The day on which the Committee approves the granting of an option shall be considered as the date on which such option is granted. (b) Notwithstanding the foregoing, each Director of the Company who is not an employee of the Company or any subsidiary or affiliate thereof, and who first became or becomes a Director after April 24, 1997, shall, upon approval of the Plan by the shareholders of the Company, or at the time of their first election to the Board, subject to adjustments as provided in paragraph 12, automatically receive an option to purchase 6,000 shares of Stock on that date. Any date on which a Director receives an option shall be referred to as a "Grant Date". Such options shall be Non-qualified Stock Options with an expiration date ten (10) years after the Grant Date. The option price per share shall be the closing price for a share of Stock on the Grant Date, or if such day is not a trading day, the next preceding trading day as quoted on the American Stock Exchange Transaction Reporting System. (c) Notwithstanding the foregoing, each Director or future Director of the Company who is not an employee of the Company or any subsidiary or affiliate thereof shall upon approval of the Plan by the shareholders of the Company, or at the time of their first election to the Board, be entitled to receive an option to purchase 2,000 shares of Stock on that date in order to increase the Directors' stake in the future of the Company. Any date on which a Director receives an option shall be referred to as a Grant Date. Such options shall be Non-qualified Stock Options with an expiration date ten (10) years after the Grant Date. The option price per share shall be the closing price for a share of Stock on the Grant Date, or if such day is not a trading day, the next preceding trading day as quoted on the American Stock Exchange Transaction Reporting System. -13- 3 8. OPTION PERIOD Except as set forth in paragraph 7, the Committee shall determine the expiration date of each option, but in the case of Incentive Stock Options such expiration date shall be not later than ten (10) years after the date such option is granted. 9. MAXIMUM PER PARTICIPANT The aggregate fair market value (determined at the time the option is granted pursuant to paragraph 7) of the Stock with respect to which any Incentive Stock Options are exercisable for the first time by a Director or Employee during any calendar year under the Plan or any other such plan of the Company or any Subsidiary shall not exceed $100,000. 10. EXERCISE OF OPTIONS An option may be exercised, subject to its terms and conditions and the terms and conditions of the Plan, in full at any time or in part from time to time by delivery to the Company at its principal office of a written notice of exercise specifying the number of shares with respect to which the option is being exercised. Any notice of exercise shall be accompanied by full payment of the option price of the shares being purchased (a) in cash or its equivalent; or (b) with the consent of the Committee, by delivering to the Company shares of Stock (valued at their fair market value as of the date of exercise, as determined by the Committee consistent with the method of valuation set forth in paragraphs 6 and 7); (c) with the consent of the Committee, by any combination of (a) and (b); or (d) by delivering (including by fax) to the Company or its designated agent an executed irrevocable option exercise form together with irrevocable instructions to a broker/dealer to sell or margin a sufficient portion of the shares of Stock and delivering the sale or margin loan proceeds directly to the Company to pay for the option price. 11. TRANSFERABILITY No option shall be assignable or transferable by a Director or an Employee other than by will or the laws of descent and distribution, and may be exercised during the life of the Director or Employee only by the Director or Employee or his guardian or legal representative, except that an Employee may, to the extent allowed by the Committee and in a manner specified by the Committee, (a) designate in writing a beneficiary to exercise the option after the Employee's death and (b) transfer any option. 12. CAPITAL ADJUSTMENTS AFFECTING COMMON STOCK In the event of a capital adjustment resulting from a stock dividend, stock split, reorganization, recapitalization, merger, consolidation, combination or exchange of shares or the like, the number of shares of Stock subject to the Plan and the aggregate number and class of shares under option in outstanding option agreements shall be adjusted in a manner consistent with such capital adjustment; provided, however, that no such adjustment shall require the Company to sell any fractional shares. The determination of the Committee as to any adjustment shall be final. Notwithstanding the foregoing, options subject to grant or previously granted to Directors under the Plan at the time of any capital adjustments shall be subject only to such adjustments as shall be necessary to maintain the relative proportionate interest of each Director and preserve, without exceeding, the value of such options. 13. CORPORATE MERGERS AND OTHER CONSOLIDATIONS The Committee may also grant options having terms and provisions which vary from those specified in the Plan provided that any options granted pursuant to this paragraph are granted in substitution for, or in connection with the assumption of, existing options granted by another company and assumed or otherwise agreed to be provided for by the Company pursuant to or by reason of a transaction involving a corporate merger, consolidation, acquisition or other reorganization to which the Company is a party. -14- 4 14. OPTION AGREEMENTS All options granted under the Plan shall be evidenced by written agreement (which need not be identical) in such form as the Committee shall determine. Each option agreement shall specify whether the option granted thereunder is intended to constitute an Incentive Stock Option or a Non-qualified Stock Option. 15. TRANSFER RESTRICTIONS Shares of Stock purchased under the Plan and held by any person who is an officer or Director of the Company, or who directly or indirectly controls the Company, may not be sold or otherwise disposed of except pursuant to an effective registration statement under the Securities Act of 1933 or except in a transaction in compliance with Rule 144 under such Act or other transaction which, in the opinion of counsel for the Company, is exempt from registration under such Act. The Committee may waive the foregoing restrictions in whole or in part in any particular case or cases, or may terminate such restrictions, whenever the Committee determines that such restrictions afford no substantial benefit to the Company. 16. AMENDMENT OF PLAN Shareholder approval of any amendment of the Plan shall be obtained if otherwise required by: (i) the rules and/or regulations promulgated under Section 16 of the Exchange Act (in order for the Plan to remain qualified under Rule 16b-3); (ii) the Internal Revenue Code of 1986, as amended, or any rules promulgated thereunder (in order to allow for Incentive Stock Options to be granted under the Plan); or (iii) the listing requirements of the American Stock Exchange or any principal securities exchange or market on which the Stock is then traded (in order to maintain the quotation or listing of the Stock thereon). The provisions of paragraphs 7(b) and 7(c) cannot be amended more than once every six (6) months other than to comport with changes in the Internal Revenue Code of 1986, as amended, the Employee Retirement Income Security Act of 1974, as amended, or the rules and regulations thereunder. 17. TERMINATION OF PLAN The Board shall have the right to suspend or terminate the Plan at any time; provided, however, that no Incentive Stock Options may be granted after the tenth (10th) anniversary of the effective date of the Plan as described in paragraph 2 hereof. Termination of the Plan shall not affect the rights of Employees or Directors under options previously granted to them, and all unexpired options shall continue in force and operation after termination of the Plan except as they may lapse or be terminated by their own terms and conditions. 18. TAX WITHHOLDING (a) The Company may deduct and withhold from any cash otherwise payable to an Employee such amount as may be required for the purpose of satisfying the Company's obligation to withhold federal, state or local taxes as the result of the exercise of an option. In the event the amount so withheld is insufficient for such purpose, the Company may require that the Employee pay to the Company upon its demand or otherwise make arrangements satisfactory to the Company for payment of such amount as may be requested by the Company in order to satisfy its obligation to withhold any such taxes. (b) An Employee may be permitted to satisfy the Company's withholding tax requirements by electing to have the Company withhold shares of Stock otherwise issuable to the Employee or to deliver to the Company shares of Stock having a fair market value on the date income is recognized pursuant to the exercise of an option equal to the amount required to be withheld. The election shall be made in writing and shall be made according to such rules and procedures as the Committee may determine. -15- 5 19. RIGHTS AS A SHAREHOLDER A Director or an Employee shall have no rights as a shareholder with respect to any shares subject to any option until the date the options shall have been exercised, the shares shall have been fully paid and a stock certificate shall have been issued. 20. MISCELLANEOUS The grant of any option under the Plan may also be subject to other provisions as the Committee determines appropriate, including, without limitation, provisions for (a) one or more means to enable Employees to defer recognition of taxable income relating to options; (b) the purchase of Stock under options in installments; and (c) compliance with federal or state securities laws and stock exchange requirements. -16- EX-11 3 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 Six Months Ended ------------------ June 30, June 30, -------- -------- 1997 1996 1997 1996 ---- ---- ---- ---- PRIMARY - ------- Shares - ------ Average shares outstanding 3,567,471 3,538,978 3,584,438 3,530,276 Shares issuable upon exercise of stock options 227,387 110,464 214,511 117,444 ----------- ----------- ---------- ----------- Total 3,794,858 3,649,442 3,798,949 3,647,720 =========== =========== ========== =========== Earnings - -------- Net earnings applicable to adjusted common shares $ 1,900 $ 1,389 $ 3,210 $ 2,277 =========== =========== ========== =========== Per share amounts - ----------------- Net earnings per share $ .50 $ .38 $ .85 $ .63 =========== =========== ========== =========== FULLY DILUTED - ------------- Shares - ------ Average shares outstanding 3,567,471 3,538,978 3,584,438 3,530,276 Shares issuable upon exercise of stock options 271,580 110,988 268,157 125,864 ----------- ----------- ---------- ----------- Total 3,839,051 3,649,966 3,852,595 3,656,140 =========== =========== ========== =========== Earnings - -------- Earnings applicable to adjusted common shares $ 1,900 $ 1,389 $ 3,210 $ 2,277 =========== =========== ========== =========== Per share amounts - ----------------- Net earnings per share $ .49 $ .38 $ .83 $ .63 =========== =========== ========== ===========
*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. -17- EX-27 4 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 6-MOS DEC-31-1997 JUN-30-1997 469 0 17,236 0 19,149 37,709 59,373 (39,313) 69,965 19,095 0 0 0 1,461 37,039 69,965 65,806 65,806 41,704 60,435 78 0 198 5,095 1,885 3,210 0 0 0 3,210 .85 .83
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