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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, 2002

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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

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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 August 5 , 2002

----------------------------- ------------------------------

Common Stock, $1.00 par value 3,193,068

BADGER METER, INC.
INDEX

Page No.

--------


Part I. Financial Information:


Item 1 Financial Statements:
Consolidated Condensed Balance Sheets - -

June 30, 2002 and December 31, 2001 3
Consolidated Condensed Statements of Operations - -

Three and Six Months Ended June 30, 2002 and 2001 4
Consolidated Condensed Statements of Cash Flows - -

Six Months Ended June 30, 2002 and 2001 5
Notes to Consolidated Condensed Financial Statements 6


Item 2 Management's Discussion and Analysis of Financial

Condition and Results of Operations 8


Item 3 Quantitative and Qualitative Disclosures about Market Risk 10


Item 4 Submission of Matters to a Vote of Security Holders 11


Item 5 Market for Registrant's Common Equity and Related Stockholder Matters 11


Part II. Other Information:


Item 6(a) Exhibits 12


Item 6(b) Reports on Form 8-K 12
Exhibit Index 14

-2-

Part I - Financial Information

BADGER METER, INC.
Item 1 Financial Statements
CONSOLIDATED CONDENSED BALANCE SHEETS

(Dollars in Thousands)

Assets June 30, December 31,

2002 2001

------- -----------

(Unaudited)
Current assets:

Cash and cash equivalents $ 2,924 $ 3,410

Receivables 27,742 18,700

Inventories:

Finished goods 9,134 5,260

Work in process 6,422 8,190

Raw materials 9,057 8,037

----------- -----------

Total inventories 24,613 21,487

Prepaid expenses 968 767

Deferred income tax 2,457 2,588

----------- -----------
Total current assets 58,704 46,952

Property, plant and equipment, at cost 96,656 91,443

Less accumulated depreciation (52,396) (50,319)

----------- -----------

Net property, plant and equipment 44,260 41,124
Intangible assets, at cost less accumulated amortization 1,153 227

Prepaid pension 8,364 8,965

Other assets 3,566 3,561

Goodwill 5,143 546

----------- -----------

Total assets $ 121,190 $ 101,375

=========== ===========
Liabilities and Shareholders' Equity
Current liabilities:

Short-term debt $ 8,209 $ 5,129

Current portion of long-term debt 4,996 3,135

Payables 15,737 8,887

Accrued compensation and employee benefits 5,152 2,992

Other accrued liabilities 3,550 3,453

Income and other taxes 2,179 186

----------- -----------

Total current liabilities 39,823 23,782

Deferred income tax 2,539 2,539

Accrued non-pension postretirement benefits 5,733 6,093

Other accrued employee benefits 5,363 5,461

Long-term debt 21,996 20,498

Shareholders' equity:

Common Stock 4,727 4,677

Capital in excess of par value 17,103 16,168

Reinvested earnings 53,084 50,736

Less: Employee benefit stock (1,535) (1,900)

Treasury stock, at cost (27,643) (26,679)

----------- -----------

Total shareholders' equity 45,736 43,002

----------- -----------

Total liabilities and shareholders' equity $ 121,190 $ 101,375

=========== ===========

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 Six Months Ended

June 30, June 30,

------- -------

2002 2001 2002 2001

---- ---- ---- ----
Net sales $ 43,586 $ 33,949 $ 81,040 $ 69,403
Cost of sales 28,768 23,007 53,462 46,434

----------- ----------- ----------- -----------
Gross margin 14,818 10,942 27,578 22,969

Selling, engineering and

administration 10,838 9,890 20,782 20,096

----------- ----------- ----------- -----------
Operating earnings 3,980 1,052 6,796 2,873
Interest expense 468 394 840 850

Other expense (income), net (57) (171) (88) (221)

----------- ------------ ----------- ------------
Earnings before income taxes 3,569 829 6,044 2,244
Provision for income taxes 1,249 300 2,117 781

----------- ----------- ----------- -----------
Net earnings $ 2,320 $ 529 $ 3,927 $ 1,463

=========== =========== =========== ===========
Per share amounts: *
Earnings per share:

Basic $ .73 $ .17 $ 1.24 $ .46

=========== =========== =========== ===========

Diluted $ .70 $ .16 $ 1.20 $ .44

=========== =========== =========== ===========
Dividends declared: $ .25 $ .25 $ .50 $ .50

=========== =========== =========== ===========
Shares used in computation of:

Basic 3,156,771 3,170,236 3,155,734 3,171,144

Impact of dilutive stock

options 143,564 139,101 128,466 128,180

----------- ----------- ----------- -----------

Diluted 3,300,335 3,309,337 3,284,200 3,299,324

=========== =========== =========== ===========


*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-

BADGER METER, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)


Six Months Ended

June 30,

--------
2002 2001

---- ----
Operating activities:

Net earnings $ 3,927 $ 1,463

Adjustments to reconcile net

earnings to net cash provided

by (used for) operations:

Depreciation 3,742 3,276

Amortization 37 90

Tax benefit on stock options 118 248

Noncurrent employee benefits 508 738

Changes in:

Receivables (4,140) (3,323)

Inventory 61 (1,982)

Current liabilities other than short-term debt 6,800 4,978

Prepaid expenses and other (181) (480)

------------ -----------

Total adjustments 6,945 3,545

----------- -----------

Net cash provided by (used for) operations 10,872 5,008

----------- -----------
Investing activities:

Property, plant and equipment (2,582) (2,772)

Acquisitions, net of cash acquired (8,277) 0

Other - net (277) 10

------------ -----------

Net cash provided by (used for) investing activities (11,136) (2,762)

------------ -----------
Financing activities:

Net increase (decrease) in short-term debt 3,080 7,029

Repayments of long-term debt (1,626) (9,192)

Dividends (1,579) (1,573)

Stock options and ESSOP 867 434

Treasury stock transactions (964) (1,397)

------------ -----------

Net cash provided by (used for)

financing activities (222) (4,699)

------------ -----------
Increase (decrease) in cash (486) (2,453)

Beginning of year 3,410 4,237

----------- -----------

End of period $ 2,924 $ 1,784

=========== ===========


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 June 30, 2002 and the results of operations for the three and six-month

periods ended June 30, 2002 and 2001 and the cash flows for the six-month

periods ended June 30, 2002 and 2001. The results of operations for any

interim period are not necessarily indicative of the results to be expected

for the full year. Certain reclassifications have been made to the 2001

data to conform to the 2002 presentation.
2. The consolidated condensed balance sheet at December 31, 2001, 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, 2001. Refer to the footnotes in those reports

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 transactions in the interim.
3. In January 2002, the Company borrowed $20 million of long-term, unsecured

debt from a local bank. The purpose of the loan was to replace short-term

borrowings. As a result of obtaining the loan, $20 million of commercial

paper was reclassified to long-term debt for financial statement

presentation at December 31, 2001. The debt bears interest at 6.73% and is

due in quarterly installments through January 2007.
4. Other expense (income), net includes foreign currency gains and losses,

which are recognized as incurred. The Company's functional currency for its

significant foreign subsidiaries is the U.S. dollar.
5. On May 1, 2002, the Company acquired 100% of the outstanding common stock

of Data Industrial Corporation (DIC) of Mattapoisett, Massachusetts, for

$5.1 million net of cash acquired. This amount included direct acquisition

costs. DIC manufactures and markets a line of insertion flow meters that

are sold to commercial and industrial markets.
The Company has not finalized the allocation of the purchase price as of

June 30, 2002. An estimation of this allocation was prepared and is

included as part of these financial statements. The purchase price has been

allocated as follows: $722,000 to receivables, $927,000 to inventory,

$800,000 to property, plant and equipment, $250,000 to intangibles,

$2,911,000 to goodwill, $492,000 to accounts payable, and other assets and

liabilities.
On June 1, 2002, the Company acquired 100% of the outstanding common stock

of MecaPlus Equipements SA (MPE) of Nancy, France, for $3.2 million net of

cash acquired. This amount included direct acquisition costs. MPE purchases

lubrication meters, oil tanks, hoses, reels and other equipment for

assembly into lubrication systems for use in measuring and dispensing

automotive fluids such as oil, grease and transmission fluid. The

acquisition of MPE brings the Company closer to its European automotive

customers by offering a full line of lubrication systems in addition to the

current metering products.
The Company has not finalized the allocation of the purchase price of MPE

as of June 30, 2002. An estimation of this allocation was prepared and is

included as part of these financial statements. The purchase price has been

allocated as follows: $4,180,000 to receivables, $2,260,000 to inventory,

$3,497,000 to property, plant and equipment, $391,000 to intangibles,

$1,686,000 to goodwill, $3,531,000 to accounts payable, $4,984,000 of

assumed debt, and other assets and liabilities.
The acquisitions of DIC and MPE were accounted for under the purchase

method and the results of both have been included in the Company's

consolidated results from the date of acquisition. Both acquisitions were

funded through a combination of internally generated funds and commercial

paper. These acquisitions are part of the Company's strategy to broaden its

line of meters for commercial

-6-

and niche industrial markets. To date, the net results of the acquisitions

have been minimally accretive.
The following preliminary, unaudited proforma information combines

historical results, as if DIC and MPE had been owned by the Company for the

periods presented.


Thousands, except per share amounts

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Three Months Ended Six Months Ended

June 30, June 30,

------- -------

2002 2001 2002 2001

---- ---- ---- ----
Net sales $ 46,710 $ 39,760 $ 89,276 $ 80,511

Net earnings $ 2,288 $ 691 $ 3,923 $ 1,701

Diluted earnings

per share $ .69 $ .21 $ 1.19 $ .52
The proforma results include amortization of the intangibles mentioned

above and interest expense on debt incurred to finance the purchases. The

proforma results are not necessarily indicative of what would have occurred

if the acquisitions had been completed as of the beginning of each fiscal
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