Badger Meter, Inc. 10-K Summary (Fiscal Year Ended Dec 31, 1996)
Business Context and Reporting Period
This Form 10-K covers the fiscal year ended December 31, 1996. Badger Meter, Inc. is a global marketer and manufacturer of flow measurement and control technology, operating as a single business segment. The company serves utility, industrial, and international markets with products including water meters, wastewater meters, industrial meters, and natural gas instrumentation. Principal manufacturing facilities are located in Milwaukee, Wisconsin, and Tulsa, Oklahoma, with additional assembly operations in Mexico and Germany.
Key Financial Metrics
Note: Specific revenue, net income, cash flow, and debt figures are incorporated by reference from the 1996 Annual Report to Shareholders and are not explicitly stated in the provided text.
- Research & Development: $3,851,000 for 1996 (compared to $3,858,000 in 1995).
- Backlog: Total unshipped orders were $21,262,000 at December 31, 1996.
- Stock Data: As of February 28, 1997, there were 1,213,904 shares of Common Stock and 562,785 shares of Class B Common Stock outstanding. A two-for-one stock split was scheduled for April 18, 1997.
- Allowance for Doubtful Accounts: Ended the year at $242,000.
- Warranty Reserve: Ended the year at $1,929,000.
Material Changes vs. Prior Period
- Backlog Growth: Total backlog increased significantly from $13,012,000 in 1995 to $21,262,000 in 1996. This increase is largely attributed to a large water meter project expected to be completed over several years, with $16,002,000 estimated to ship in 1997.
- R&D Stability: Research and development expenditures remained relatively flat, decreasing slightly by $7,000 from 1995 to 1996.
- Organizational Change: In January 1996, the company hired a Vice President - International to manage activities outside the U.S. and Canada.
- Union Contract: A new four-year collective bargaining agreement was negotiated effective November 1, 1996, covering 238 employees.
Outlook, Risks, and Contingencies
Legal Proceedings: In February 1997, the company was named as a defendant in a California lawsuit filed by the Natural Resources Defense Council. The suit alleges that bronze water meters sold in California violate Proposition 65 standards regarding lead leaching. Management disputes the claims, noting compliance with federal standards and the availability of plastic meter alternatives. The company does not believe the outcome will have a material adverse effect on operations.
Environmental: The company is resolving several Superfund site cases and a Proposition 65 action. Provisions have been made for known settlement costs, and future expenditures are not anticipated to be material.
Supply Chain Risks: The company relies on single suppliers for bronze castings and certain electronic subassemblies. While alternative sources exist, losing current suppliers could result in higher costs, delivery delays, and increased inventory.
Competition: Competition is moderate to intense, with major competitors including Sensus Technologies, Schlumberger Industries, and ABB-Kent Meters. Some competitors possess greater financial resources.
Investor Verification Checklist
- Verify the specific revenue, net income, and cash flow figures in the 1996 Annual Report to Shareholders (incorporated by reference).
- Monitor the status of the California Proposition 65 lawsuit regarding lead leaching in bronze meters.
- Assess the execution of the large water meter project driving the 1996 backlog increase.
- Review the impact of the two-for-one stock split on share count and per-share metrics.
- Confirm the stability of single-source suppliers for bronze castings and electronic subassemblies.