Badger Meter, Inc. 10-K Summary (Fiscal Year Ended December 31, 1995)
Business Context and Reporting Period
This Form 10-K covers the fiscal year ended December 31, 1995, for Badger Meter, Inc., a marketer and manufacturer of flow measurement and control technology. The company operates in a single industry segment serving industrial and utility markets worldwide. Key products include water meters, wastewater meters, industrial meters, small valves, and natural gas instrumentation. The company is organized into two primary divisions: the Utility Division (water meters and systems) and the Industrial Division (energy, food, chemical, and process water products). Beginning in 1997, the company planned to expand into three operating units by adding an International Division.
Key Financial Metrics
The filing incorporates detailed financial statements by reference to the 1995 Annual Report to Shareholders; specific revenue, profit, and cash flow figures are not explicitly stated in the provided text. However, the following metrics are disclosed:
- Backlog: Total backlog of unshipped orders was $13,012,000 at December 31, 1995, compared to $16,513,000 at December 31, 1994.
- Division Backlog: Industrial Division backlog was $5,570,000 (up from $4,584,000 in 1994). Utility Division backlog was $7,442,000 (down from $11,929,000 in 1994).
- Research and Development (R&D): Expenditures totaled $3,858,000 in 1995, an increase from $3,278,000 in 1994.
- Allowance for Doubtful Receivables: Ended the year at $216,000, with $137,000 charged to earnings during the period.
- Employees: 904 persons employed as of December 31, 1995.
- Stock Outstanding: As of February 29, 1996, there were 1,199,507 shares of Common Stock and 562,785 shares of Class B Common Stock outstanding.
Material Changes Versus Prior Period
- Backlog Decline: Total backlog decreased by approximately $3.5 million year-over-year. The Utility Division backlog dropped significantly, largely due to the shipment of a large Mexican order (approx. $4 million) in 1995 that was included in the 1994 year-end backlog.
- Industrial Growth: The Industrial Division backlog increased by approximately $1 million, reflecting stronger order intake in that segment.
- R&D Increase: R&D spending increased by roughly 18% compared to 1994.
- Product Mix: Sales of water meters and meter reading devices (Utility Division) accounted for 66% of total sales in 1995, up from 62% in 1994 and 58% in 1993.
Outlook, Risks, and Contingencies
Outlook and Strategy: The company expects all 1995 backlog to be shipped in 1996. Strategic changes include the creation of an International Division in 1997 to manage global sales outside the U.S. and Canada, supported by the hiring of a Vice President of International in early 1996.
Risks and Contingencies:
- Supplier Dependency: The Utility Division purchases bronze castings from a single supplier. While alternative sources exist, losing the current supplier could result in higher costs, inventory increases, and higher quality control costs.
- Competition: Competition varies from moderate to intense, with some competitors possessing greater financial resources. Major competitors include Sensus Technologies, Schlumberger Industries, and ABB-Kent Meters.
- Environmental: The company is resolving several cases related to Superfund sites. Provisions have been made for known settlement costs, and 1995 compliance expenditures were not material.
- Legal: No material legal proceedings were pending as of the filing date.
Investor Verification Checklist
- Verify the specific revenue, net income, and cash flow figures in the 1995 Annual Report to Shareholders (incorporated by reference), as they are not detailed in this 10-K text.
- Confirm the status of the large Mexican order shipments and their impact on 1996 Utility Division revenue projections.
- Review the 1995 Annual Report for details on foreign operations and export sales (referenced on page 26 of that report).
- Monitor the transition to the three-division structure (Utility, Industrial, International) scheduled for 1997.
- Assess the potential cost impact of the single-source dependency for bronze castings in the Utility Division.