BMI 12.31.2013 11-K/A


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 11-K/A (Amendment No. 1)
 

x
ANNUAL REPORT PURSUANT TO SECTION 15-(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

OR

¨
TRANSITION REPORT PURSUANT TO SECTION 15-(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 

Commission file number 001-06706
 

A.
Full title of the Plan and the address of the Plan, if different from that of the issuer named below:

Badger Meter Employee Savings and Stock Ownership Plan

B.
Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

Badger Meter, Inc.
4545 W. Brown Deer Road
Milwaukee, WI 53223




EXPLANATORY NOTE

The Annual Report on Form 11-K of the Badger Meter Employee Savings and Stock Ownership Plan for the fiscal year ended December 31, 2013, filed on June 19, 2014 (the “Initial Report”), is amended by the filing of this Form 11-K/A Amendment No. 1 to the Initial Report for the sole purpose of adding Note 11 “Nonexempt Prohibited Transactions,” as well as the following supplemental schedules: Schedule H Item 4a - Schedule of Delinquent Participant Transactions; and, Schedule H Item 4d - Schedule of Nonexempt Transactions. For the convenience of the reader, this Form 11-K/A sets forth the Initial Report in its entirety.

Except as described above, no other amendments have been made to the Initial Report. This Form 11-K/A does not reflect events occurring after the filing of the Initial Report and does not modify or update the disclosures therein, except as specifically identified above.




REQUIRED INFORMATION

The Badger Meter Employee Savings and Stock Ownership Plan ("the Plan”) is subject to the requirements of the Employee Retirement Income Security Act of 1974 (ERISA). Attached hereto is a copy of the most recent financial statements and schedules of the Plan prepared in accordance with the financial reporting requirements of ERISA.



Badger Meter Employee Savings and Stock Ownership Plan

Financial Statements and Supplemental Schedule
December 31, 2013 and 2012
 

Table of Contents
 
 
Financial Statements
 
 
 
 
 
Supplemental Schedule
 
 
 
 
 
 
 


 


Report of Independent Registered Public Accounting Firm

Audit and Compliance Committee of the Board of Directors of Badger Meter, Inc.
Badger Meter Employee Savings and Stock Ownership Plan
Milwaukee, WI

We have audited the accompanying statements of net assets available for benefits of Badger Meter Employee Savings and Stock Ownership Plan (“the Plan”) as of December 31, 2013 and 2012, and the related statement of changes in net assets available for benefits for the year ended December 31, 2013. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform an audit of the Plan’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2013 and 2012, and the changes in net assets available for benefits for the year ended December 31, 2013 in conformity with accounting principles generally accepted in the United States.

Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of delinquent participant contributions, nonexempt transactions, and assets (held at end of year) are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedules are the responsibility of the Plan’s management. The supplemental schedules have been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole.


/s/ Wipfli LLP

August 11, 2014
Milwaukee, Wisconsin


1

Table of Contents

Badger Meter Employee Savings and Stock Ownership Plan

Statement of Net Assets Available for Benefits
December 31, 2013
 


 
Unallocated
 
Allocated
 
Total
Assets:
 
 
 
 
 
Investments, at fair value
$
4,605,836

 
$
98,353,993

 
$
102,959,829

Company contributions receivable

 
2,294,141

 
2,294,141

Interest and dividend receivable

 
9,200

 
9,200

Notes receivable from participants

 
1,396,237

 
1,396,237

Total assets
4,605,836

 
102,053,571

 
106,659,407

 
 
 
 
 
 
Liabilities:
 
 
 
 
 
Notes payable
(1,075,226
)
 

 
(1,075,226
)
Total liabilities
(1,075,226
)
 

 
(1,075,226
)
 
 
 
 
 
 
Net assets available for benefits, at fair value
3,530,610

 
102,053,571

 
105,584,181

Adjustment from fair value to contract value for interest in the fully benefit-responsive investment contract

 
(2,478,947
)
 
(2,478,947
)
Net assets available for benefits
$
3,530,610

 
$
99,574,624

 
$
103,105,234


See accompanying notes to financial statements.


2

Table of Contents

Badger Meter Employee Savings and Stock Ownership Plan

Statement of Net Assets Available for Benefits
December 31, 2012
 


 
Unallocated
 
Allocated
 
Total
Assets:
 
 
 
 
 
Investments, at fair value
$
4,488,754

 
$
73,517,494

 
$
78,006,248

Company contributions receivable

 
1,816,625

 
1,816,625

Interest and dividend receivable
2

 
8,746

 
8,748

Notes receivable from participants

 
1,102,469

 
1,102,469

Total assets
4,488,756

 
76,445,334

 
80,934,090

 
 
 
 
 
 
Liabilities:
 
 
 
 
 
Notes payable
(1,228,830
)
 

 
(1,228,830
)
Total Liabilities
(1,228,830
)
 

 
(1,228,830
)
 
 
 
 
 
 
Net assets available for benefits, at fair value
3,259,926

 
76,445,334

 
79,705,260

Adjustment from fair value to contract value for interest in the fully benefit-responsive investment contract

 
(3,024,366
)
 
(3,024,366
)
Net assets available for benefits
$
3,259,926

 
$
73,420,968

 
$
76,680,894


See accompanying notes to financial statements.


3

Table of Contents

Badger Meter Employee Savings and Stock Ownership Plan

Statement of Changes in Net Assets Available for Benefits
December 31, 2013
 


 
Unallocated
 
Allocated
 
Total
Additions:
 
 
 
 
 
Investment income:
 
 
 
 
 
Net appreciation in fair value of investments
$
591,599

 
$
12,401,937

 
$
12,993,536

Interest
3

 
594,707

 
594,710

Dividends
58,407

 
710,320

 
768,727

Total investment income
650,009

 
13,706,964

 
14,356,973

 
 
 
 
 
 
Contributions:
 
 
 
 
 
Company
153,616

 
2,540,632

 
2,694,248

Roll overs

 
403,007

 
403,007

Participants

 
3,606,705

 
3,606,705

Other

 
15,939

 
15,939

Total contributions
153,616

 
6,566,283

 
6,719,899

 
 
 
 
 
 
  Interest income from participant receivables

 
47,211

 
47,211

 
 
 
 
 
 
  Asset transfers into Plan (Note 6)

 
11,719,360

 
11,719,360

 
 
 
 
 
 
Total Additions
803,625

 
32,039,818

 
32,843,443

 
 
 
 
 
 
Deductions:
 
 
 
 
 
Benefits paid to participants

 
6,397,060

 
6,397,060

Interest expense
19,593

 

 
19,593

Loan fees

 
2,450

 
2,450

Total deductions
19,593

 
6,399,510

 
6,419,103

 
 
 
 
 
 
Allocation of shares and cash transfer
(513,348
)
 
513,348

 

 
 
 
 
 
 
Net increase
270,684

 
26,153,656

 
26,424,340

Net assets available for benefits:
 
 
 
 
 
Balance at beginning of year
3,259,926

 
73,420,968

 
76,680,894

Balance at end of year
$
3,530,610

 
$
99,574,624

 
$
103,105,234


See accompanying notes to financial statements.


4

Table of Contents

Badger Meter Employee Savings and Stock Ownership Plan

Note 1    Description of the Plan

General

The following description of Badger Meter Employee Savings and Stock Ownership Plan (“the Plan”) is for general information purposes only. Participants should refer to the summary plan description for a more complete description of the Plan. The Plan has three components: a 401(k) savings component, a leveraged employee stock ownership plan (ESOP) component, and a defined contribution component.

The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

The Plan purchased common shares of Badger Meter, Inc. (the “Company”) in the open market using proceeds from borrowings from the Company (Note 5).

Eligibility

Substantially all domestic employees of the Company are eligible to participate in the Plan.

Contributions

Participants may elect to contribute up to 20% of their eligible compensation to the Plan, subject to amounts allowable by the Internal Revenue Service Code (“the Code”). Participants do not contribute to the ESOP or defined contribution components of the Plan.

The Company may make a discretionary matching contribution to the 401(k) component of the Plan. In order to be eligible to receive a Company match, a participant must be employed as of the last day of the plan year, retired within the year, or terminated employment during the plan year having attained age 55 with 5 years of service. The Company made a matching contribution to participant accounts in 2013 equal to 25% of the first 7% of participants’ compensation, or 25% of the participant’s contribution, whichever is less.

The Company froze its pension plan for its non-union participants on December 31, 2010 and for its union participants on December 31, 2011 and included them in the defined contribution component within the Plan. Contributions of $2,294,141 for 2013 were accrued in 2013 and paid in early 2014 for participants in the defined contribution component. Contributions of $1,816,625 for 2012 were accrued in 2012 and paid in early 2013 for participants in the defined contribution component.

The Company may make additional discretionary contributions to the Plan. Other discretionary contributions are allocated equally to all participants’ accounts. No other additional discretionary contributions were made by the Company to the Plan in 2013.

Dividends on unallocated shares of the Company’s common stock within the ESOP component are allocated as an additional employer matching contribution to all participants’ accounts equally on an annual basis.

Fixed principal payments and interest payments are made by the Plan on the note payable to the Company (see Note 5). The unallocated shares of the Company’s common stock, which serve as collateral on the note payable, are released and allocated to participant accounts on an annual basis. The fair value of the Company’s common stock as of December 31 is used to determine the fair value of the allocated shares. The Company is obligated to contribute sufficient cash to the Plan to enable it to repay its loan principal and interest.





5

Table of Contents

Badger Meter Employee Savings and Stock Ownership Plan

Note 1    Description of the Plan (Continued)

Participant Accounts

Each participant’s account is credited with:
the participant’s contributions,
the Company’s matching contribution,
the Company’s defined contribution, if any,
an allocation of the Company’s discretionary contribution, if any,
dividends on the Company’s unallocated common stock shares, if any, and
the Plan earnings.

The Company’s discretionary contribution (excluding the matching contribution and dividends on unallocated shares) is based upon eligible participant compensation. Dividends on the Company’s unallocated common stock are allocated equally to all participants’ accounts. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s account.

Vesting

Participants are immediately fully vested in their contributions and related earnings in the 401(k) and ESOP components. There is a three-year cliff vesting requirement for Company contributions and related earnings in the defined contribution component of the Plan.

Payment of Benefits

Upon retirement, death, disability, or termination of employment, the participant’s account is distributed in a single lump sum. Distributions are generally made within the year following termination of service at the participant’s request. At the participant’s option in certain circumstances, distributions can be delayed. Final distributions from the ESOP component of the Plan can be made in shares of Company common stock plus cash in lieu of fractional shares or entirely in cash.

Withdrawals

A participant’s contribution may not be withdrawn prior to retirement, death, disability, termination of employment or termination of the Plan, except for financial hardship, a one-time distribution after age 59½ or in the form of loans to the participant. The Plan defines financial hardship as expenses related to secondary education, unreimbursed medical expense, purchase of the participant’s principal residence or other financial need as allowed under IRS regulations. All withdrawals are subject to approval by the Plan Administrator.

Forfeitures

In 2013, Company contributions made in 2014 were reduced by $65,504 of forfeitures. The 2012 Company contributions made in 2013 were reduced by $24,559 of forfeitures. Unallocated forfeitures were $65,504 and $24,559 as of December 31, 2013 and 2012, respectively.

Investment Options

The Plan provides for various investment options in mutual funds, common collective trusts, Company common stock and a general investment account with an insurance company. Participants can direct up to 50% of their contributions into the Badger Meter Company Stock Fund, which is a unitized fund comprised primarily of the Company’s common stock and a money market fund. Information about changes in nonparticipant directed investments is presented in the unallocated portion of the Statement of Changes in Net Assets Available for Benefits.



6

Table of Contents

Badger Meter Employee Savings and Stock Ownership Plan

Note 1    Description of the Plan (Continued)

Notes Receivable from Participants

Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their account balance subject to certain criteria. The notes are secured by the balance in the participant’s account and bear interest at rates that range from 3.25% to 4.25%, which are commensurate with local prevailing rates at the time of the loan origination as determined quarterly by the Plan Administrator. Principal and interest is repaid ratably through monthly payroll deductions.

Note maturities cannot exceed 60 months and are secured by the participant’s vested interests in the Plan. Amounts loaned to a participant do not share in Plan earnings (see Participant Accounts above), but are credited with the interest earned on the loan balance.

Note 2    Summary of Significant Accounting Policies

Basis of Accounting

The accompanying financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States. Investment contracts held by a defined-contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined-contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. The Statement of Net Assets Available for Benefits presents the fair value of the investment contracts as well as the adjustment of the fully benefit-responsive investment contracts from fair value to contract value. The Statement of Changes in Net Assets Available for Benefits is prepared on a contract value basis.

Investment Valuation and Income Recognition

The Plan’s investments are stated at fair value, as further defined in Note 3. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded on the ex-dividend date. Net investment income includes the Plan’s gains and losses on investments bought and sold as well as held during the year.

Notes Receivable from Participants

Notes receivable from participants are recorded at their unpaid principal balance plus any accrued but unpaid interest. Delinquent participant loans are reclassified as distributions based upon the terms of the Plan document.

Use of Estimates in Preparation of Financial Statements

The preparation of the accompanying financial statements in conformity with U.S. generally accepted accounting principles requires the Plan Administrator to make estimates and assumptions that directly affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results may differ from these estimates and are subject to change in the near term.


7

Table of Contents

Badger Meter Employee Savings and Stock Ownership Plan

Note 2    Summary of Significant Accounting Policies (Continued)

Expenses

Expenses related to the administration of the Plan are paid by the Company. Investment expenses are paid by the Plan and reimbursed by the Company at its discretion. Loan fees are charged to the participant’s account requesting the loan. Investment related expenses are included in net appreciation of fair value of investments, as they are paid through revenue sharing.

Payment of Benefits

Benefits are recorded when paid.

Risk and Uncertainties

The Plan’s investments are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investments, it is at least reasonably possible that changes in the value of investments will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the Statements of Net Assets Available for Benefits and the Statement of Changes in Net Assets Available for Benefits.

Subsequent Events

Subsequent events have been evaluated through August 11, 2014, the date the financial statements were available to be issued.



8

Table of Contents

Badger Meter Employee Savings and Stock Ownership Plan

Note 3    Fair Value Measurements

Accounting Standards Codification 820, “Fair Value Measurements and Disclosures,” establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad levels: Level 1 inputs consist of unadjusted quoted prices in active markets for identical assets and have the highest priority. Level 2 inputs consist of inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for determining the fair value of assets or liabilities that reflect assumptions that market participants would use in pricing assets or liabilities.

Shares of mutual funds are valued at quoted market prices, which represent the net asset value (“NAV”) of shares. Shares of the Badger Meter, Inc. common stock are valued at quoted market prices. The Badger Meter, Inc. Stock Fund (Stock Fund”) is a unitized fund. The Stock Fund consists of Badger Meter, Inc. common stock and short-term cash equivalents which provide liquidity for trading. The common stock is valued at the quoted market price from an active market and the short-term cash equivalents are valued at cost, which approximate fair value. Common collective trust funds are valued at NAV as determined by the issuer of the common collective trust funds based on the fair value of the underlying investments. The fair value of the general investment account is calculated by discounting the related cash flows based on current yields of similar investments with comparable durations.

The following summarizes the Plan’s investments, set forth by level within the fair value hierarchy, on a recurring basis as of December 31:
 
 
 
Fair Value
 
 
 
Measurements Using:
December 31, 2013
Fair Value
 
Level 1
 
Level 2
 
Level 3
Mutual funds:
 
 
 
 
 
 
 
  Small cap equity funds
$
9,479,830

 
$
9,479,830

 
$

 
$

  Mid cap equity funds
5,805,138

 
5,805,138

 

 

  Large cap equity funds
7,785,460

 
7,785,460

 

 

  International equity funds
3,298,284

 
3,298,284

 

 

  Other equity funds
3,430,497

 
3,430,497

 

 

  Fixed income securities
5,215,366

 
5,215,366

 

 

Common collective trusts
15,666,271

 

 
15,666,271

 

Company common stock
4,547,426

 
4,547,426

 
 
 
 
Stock fund: common stock
24,273,039

 
24,273,039

 

 
 
Stock fund: money market
58,425

 
58,425

 

 
 
General investment account
23,400,093

 

 

 
23,400,093

Total
$
102,959,829

 
$
63,893,465

 
$
15,666,271

 
$
23,400,093



9

Table of Contents

Badger Meter Employee Savings and Stock Ownership Plan

Note 3    Fair Value Measurements (Continued)

 
 
 
Fair Value
 
 
 
Measurements Using:
December 31, 2012
Fair Value
 
Level 1
 
Level 2
 
Level 3
Mutual funds:
 
 
 
 
 
 
 
  Small cap equity funds
$
6,732,278

 
$
6,732,278

 
$

 
$

  Mid cap equity funds
3,249,945

 
3,249,945

 

 

  Large cap equity funds
3,689,061

 
3,689,061

 

 

  International equity funds
2,171,295

 
2,171,295

 

 

  Other equity funds
1,842,130

 
1,842,130

 

 

  Fixed income securities
3,955,556

 
3,955,556

 

 

Common collective trusts
7,858,449

 

 
7,858,449

 

Company common stock
4,426,055

 
4,426,055

 

 
 
Stock fund: common stock
23,198,898

 
23,198,898

 

 
 
Stock fund: money market
374,308

 
374,308

 

 
 
General investment account
20,508,273

 

 

 
20,508,273

Total
$
78,006,248

 
$
49,639,526

 
$
7,858,449

 
$
20,508,273


A summary of changes in the fair value of the Plan’s Level 3 assets is as follows:
 
General Investment Account
Year Ended December 31, 2013
Beginning balance
$
20,508,273

Realized gains

Unrealized loss
(545,419
)
Purchases
9,567,175

Sales
(6,129,936
)
Ending balance
$
23,400,093


Fair value of the general investment account is based on the Barclays market value formula. The fair value factor applied to the Barclays market value formula was 111.849% and 117.298% as of December 31, 2013 and 2012, respectively.

Note 4    Investments

Investment Contract with Insurance Company

The Plan entered into a fully benefit-responsive investment contract with Massachusetts Mutual Life Insurance Company (“Mass Mutual”). Mass Mutual maintains the contributions in a general account. The account is credited with earnings on the underlying investments and charged for participant withdrawals and administrative expenses. The general investment account issuer is contractually obligated to repay the principal and a specified interest rate that is guaranteed to the Plan.



10

Table of Contents

Badger Meter Employee Savings and Stock Ownership Plan

Note 4    Investments (Continued)

Because the general investment account is fully benefit-responsive, contract value is the relevant measurement attribute for that portion of the net assets available for benefits attributable to the guaranteed investment contract. Contract value, as reported to the Plan by Mass Mutual, represents contributions made under the contract, plus earnings, less participant withdrawals and administrative expenses. Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value. There are no reserves against contract value for credit risk of the contract issuer or otherwise.

This contract is an unallocated insurance contract, which is credited each January 1 and July 1 for interest earned. The average yields for 2013 and 2012 were 3.00%. The interest rates earned as of December 31, 2013 and 2012 were 3.00%.

Certain events limit the ability of the Plan to transact at contract value with the issuer. These events include, but are not limited to, the following: (1) amendments to the Plan documents, (2) bankruptcy of the Plan Administrator or other Plan Administrator events which cause a significant withdrawal from the Plan or (3) the failure of the Plan to qualify for exemption from federal income taxes or any required prohibited transaction exemption under ERISA. The Plan believes that the occurrence of any event limiting the Plan’s ability to transact at contract value with members is not probable.

Investments

During 2013, the Plan’s investments (including investments purchased, sold or held during the year) appreciated in fair value as follows:
 
2013
Badger Meter, Inc. common stock fund
$
3,660,562

Badger Meter, Inc. common stock
251,133

Common trust funds
2,772,544

Mutual funds
6,309,297

Net appreciation in fair value of investments
$
12,993,536


Investments that represent 5% or more of the fair value of the Plan's net assets as of December 31 are as follows:

 
2013
 
2012
 
 
 
 
Badger Meter, Inc. common stock fund
$
24,273,039

 
$
23,510,408

Badger Meter, Inc. common stock
**

 
4,426,055

BMO Growth Balanced Portfolio
7,859,875

 
4,078,499

Massachusetts Mutual general investment account*
20,921,146

 
17,483,907

Heartland Value Plus Fund
6,656,687

 
5,059,162

Total
$
59,710,747

 
$
54,558,031


*Investments in fully benefit-responsive contracts are reported at contract value and other investments are reported at fair value.

**Investment is less than 5.0% of the Plans’ net assets at December 31, 2013.


11

Table of Contents

Badger Meter Employee Savings and Stock Ownership Plan

Note 4    Investments (Continued)

The following table sets forth additional disclosures of the Plan’s investments whose fair value is provided by the trustee using net asset value per share as of December 31, 2013 and 2012:
 
2013
Fair Value
 
2012
Fair Value
 
Underfunded Commitment
 
Redemption Frequency
 
Redemption Notice Period
 
Investment
Common collective trusts:
 
 
 
 
 
 
 
 
 
BMO Growth Balanced Portfolio (a)
$
7,859,875

 
$
4,078,498

 

 
Continuously
 
N/A
BMO Diversified Stock Portfolio (b)
4,884,040

 
3,766,807

 

 
Continuously
 
N/A
BMO Aggressive Balanced Portfolio (c)
2,780,001

 
13,144

 

 
Continuously
 
N/A
BMO Moderate Balanced Fund (d)
142,355

 

 

 
Continuously
 
N/A
Total
$
15,666,271

 
$
7,858,449

 
 
 
 
 
 

(a)
The BMO Growth Balanced Portfolio seeks to achieve total investment return from income and capital appreciation. The fund allocates between 50% and 70% of its assets to equity and between 30% and 50% of its assets to fixed income securities.

(b)
The BMO Diversified Stock Portfolio seeks to achieve investment return primarily from capital appreciation and secondarily from income. The portfolio allocates between 90% and 100% of its assets to equity securities and between 0% and 10% of its assets to fixed income securities.

(c)
The BMO Aggressive Balanced Portfolio seeks to achieve total investment return from income and capital appreciation. The portfolio allocates between 70% and 90% of its assets to equity securities and between 10% and 30% of its assets to fixed income securities.

(d)
The BMO Moderate Balanced Fund seeks to achieve total investment return from income and capital appreciation. The portfolio allocates between 30% and 50% of its assets to equity securities and between 50% and 70% of its assets to fixed income securities.

Note 5    Note Payable – Related Party

At December 31, 2013 and 2012, the outstanding balances on the note payable to the Company were $1,075,226 and $1,228,830, respectively. The terms on the note payable require the Plan to make annual principal payments of $153,604 through 2020. In January 2013, the Plan made a $126,386 payment that consisted of $33,188 remaining on the 2012 Plan year required payment and a partial prepayment of the 2013 required payment in the amount of $93,198. In December 2013, the Plan paid $60,406 for the remaining payment for the 2013 Plan year. Interest is payable annually and is based on the one-month LIBOR rate plus 1.50% (effective rate of 1.6825% at December 31, 2013). The note payable is secured by the unallocated shares of Badger Meter, Inc. common stock held by the Plan. The Company is obligated to contribute sufficient cash to the Plan to enable it to repay the principal and interest.

The note agreement contains certain restrictions and covenants, including a limitation on additional borrowings.

The pledged unallocated shares of Badger Meter, Inc. common stock are released as principal and interest payments are made on the note payable. The shares released are allocated to the participants’ accounts when authorized by the Company.


12

Table of Contents

Badger Meter Employee Savings and Stock Ownership Plan

Note 5    Note Payable – Related Party (Continued)

At December 31, the Plan’s investment in allocated and unallocated shares of Badger Meter, Inc. common stock was as follows:

 
2013
 
Shares
 
Cost
 
Fair Value
Allocated
438,038

 
$
5,854,184

 
$
23,873,071

Unallocated
83,439

 
1,091,683

 
4,547,426

Total
521,477

 
$
6,945,867

 
$
28,420,497

Per share
 
 
 
 
$
54.50


 
2012
 
Shares
 
Cost
 
Fair Value
Allocated
489,325

 
$
5,685,429

 
$
23,198,898

Unallocated
93,357

 
1,221,447

 
4,426,055

Total
582,682

 
$
6,906,876

 
$
27,624,953

Per share
 
 
 
 
$
47.41


In 2014, 11,077 shares of the Company’s common stock with a fair value of $603,697 were released and allocated to satisfy the Company’s 2013 matching contribution obligation. In 2013, 9,918 shares of the Company’s common stock with a fair value of $470,212 were released and allocated to satisfy the Company’s 2012 matching contribution obligation.

Note 6    Asset Transfers into the Plan

On January 1, 2013, Racine Federated, Inc. employees who were participants in their 401(k) and profit sharing plan were transferred into Badger Meter’s Plan. At the same time, the entire Racine Federated, Inc. 401(k) (RFI) Plan assets of $11,719,360 were transferred into Badger Meter’s Plan, and the Racine Federated, Inc. 401(k) ceased to exist. According to the Plan document of the RFI Plan, the sponsor can authorize a discretionary profit sharing allocation. During the 2012 plan year, the sponsor authorized a discretionary profit sharing allocation of $289,653, which was contributed to the participants of the RFI Plan during 2013. Since the RFI Plan was terminated effective December 31, 2012, the contribution was contributed into the Plan during 2013.

Note 7    Plan Termination

Although it has not expressed any intent to do so, the Company reserves the right to terminate the Plan at any time, subject to Plan provisions. Upon such termination of the Plan, the interest of each participant in the trust fund will be distributed to such participant or his or her beneficiary at the time prescribed by the Plan terms and the Code. Upon termination of the Plan, the Employee Benefits Administration Committee should direct the Trustee to pay all liabilities and expenses of the trust fund and to sell shares of financed common stock held in the loan suspense account to the extent it determines such sale to be necessary in order to repay the loan. In the event that the Plan is terminated, participants would become 100% vested in their accounts.



13

Table of Contents

Badger Meter Employee Savings and Stock Ownership Plan

Note 8    Income Tax Status

The Plan has received a determination letter from the Internal Revenue Service dated September 13, 2013, stating that the Plan was qualified under Section 401(a) and 401(k) of the Code and, therefore, the related trust is exempt from taxation. The Plan Administrator believes the Plan is currently designed and is being operated in compliance with the applicable requirements of the Code and, therefore, believes the Plan is qualified and the related trust is tax-exempt. The financial statement effects of a tax position are recognized when the position is more likely than not, based on the technical merits, to be sustained upon examination by the Internal Revenue Service. The Plan Administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2013, there were no uncertain positions taken or expected to be taken. The Plan has recognized no interest or penalties related to uncertain income tax positions. The Plan is subject to routine audits by taxing jurisdictions and there are currently no audits in progress. The Plan Administrator believes the Plan is no longer subject to income tax examinations for the years prior to 2010.

Note 9    Related Party Transactions

The Plan holds Badger Meter, Inc. common stock. The Company is the employer and Plan Administrator. Transactions in the Company’s common stock are party-in-interest transactions.

The plan earned dividends of $424,045 on the Company stock in 2013. In 2013, the Plan purchased Company shares with a cost of $2,466,899, received proceeds from the sale of Company shares of $5,480,025, and realized a gain of $2,612,142 on these sales. The purchases and sales were participant directed transactions.

Certain Plan investments are units of common collective trust and mutual funds managed by the Plan’s Trustee. These investments, the Company’s common stock and notes receivable from participants are party-in-interest transactions. The Plan Trustee charged $2,450 in participant loan fees in 2013.

Note 10    Voting Rights

Each participant is entitled to exercise voting rights attributable to the shares allocated to his or her account. Unallocated shares are voted by the Plan Administrator on behalf of the collective best interest of Plan participants and beneficiaries.

Note 11    Nonexempt Prohibited Transactions

During 2012, the RFI Plan had accumulated unallocated forfeitures of $35,892 that were used to reduce the Company’s RFI matching contribution during the fourth quarter of 2012. These forfeitures were derived from RFI participant accounts that were unvested in their respective RFI profit sharing contributions. Under the terms of the RFI Plan, however, forfeitures should have been used to reduce the Company’s profit sharing contribution to the RFI Plan. As a result, it was determined under ERISA that the Company obtained an interest-free loan from the RFI Plan which is considered a nonexempt prohibited transaction since the $35,892 of forfeitures were used to reduce the RFI matching contribution rather than reducing the profit sharing contribution. The Company repaid this loan to the Plan during January 2013, which was after the merger took place as discussed in Note 6.

In addition, in January 2013, the Company failed to remit participant contributions totaling $121 to the Plan custodian within the period prescribed by the Department of Labor regulations. Delays in remitting participant contributions are nonexempt prohibited transactions. These late remittances for employee deferrals were contributed during February 2013. The Company made contributions in September 2013 to the affected participant accounts to compensate for potential lost income of $2.



14



Supplemental Schedule




15

Table of Contents

Badger Meter Employee Savings and Stock Ownership Plan

Schedule H Item 4a - Schedule of Delinquent Participant Contributions
EIN: 39-0143280 Plan Number: 009
Year Ended December 31, 2013
 

 
Total that Constitute Nonexempt Prohibited Transactions
 
Participant Contributions Transferred Late to Plan
Contributions Not Corrected
Contributions Corrected Outside VFCP
Contributions Pending Correction in VFCP
Total Fully Corrected Under VFCP and PTE 2002-51
Check here if Late Participant Loan Repayments are included: __
$0
$121
$0
$0

During 2013, the Company failed to timely remit a portion of the participant contributions for one pay period. The delinquent contributions were paid to the Plan in 2013.

See report of independent registered public accounting firm.



16

Table of Contents

Badger Meter Employee Savings and Stock Ownership Plan

Schedule H Item 4d - Schedule of Nonexempt Transactions
EIN: 39-0143280 Plan Number: 009
Year Ended December 31, 2013
 

(a )
Identity of party involved

(b)
Relationship to plan, employer, or other party-in-interest
(c)
Description of transaction including maturity date, rate of interest, collateral, par or maturity value
(d)
Purchase Price
(f) Lease rental
(g) Transaction expenses
(h) Cost of asset
(i) Current value of asset
(j)
Net gain (or loss) on each transaction
Racine Federated Inc
Subsidiary
Loan to employer due to forfeitures used to reduce contributions
$
$
$35,892
$
$
$

See report of independent registered public accounting firm.



17

Table of Contents

Badger Meter Employee Savings and Stock Ownership Plan

Schedule H Item 4i- Schedule of Assets (Held at End of Year)
EIN: 39-0143280 Plan Number: 009
Year Ended December 31, 2013
 

(a)
(b) Identity of Issue
 
(c) Description of Investment
 
(d) Cost
 
(e) Current Value
*
Badger Meter, Inc. Common Stock
 
Common Stock
 
$1,091,683
 
$
4,547,426

*
Badger Meter, Inc. Common Stock Fund
 
Common Stock
 
 
 
24,273,039

 
Massachusetts Mutual Life Insurance Company Insurance Contract
 
 General Investment Account
 
 **
 
23,400,093

 
Heartland Value Plus Fund
 
 Mutual Fund
 
 **
 
6,656,687

*
BMO Small Cap Growth Fund
 
 Mutual Fund
 
 **
 
2,823,143

*
BMO Government Income Fund
 
 Mutual Fund
 
 **
 
2,854,948

 
Harbor International Fund
 
 Mutual Fund
 
 **
 
2,000,606

 
Manning & Napier Fund, Inc.
 
 Mutual Fund
 
 **
 
1,297,678

*
BMO Growth Balanced Portfolio
 
 Common Collective Trust
 
 **
 
7,859,875

*
BMO Aggressive Balanced Portfolio
 
 Common Collective Trust
 
 
 
2,780,001

*
BMO Diversified Stock Portfolio
 
 Common Collective Trust
 
 **
 
4,884,040

 
Artisan Mid Cap Value Fund
 
 Mutual Fund
 
 **
 
1,926,081

 
Wells Fargo Advantage Discovery
 
 Mutual Fund
 
 **
 
3,879,057

 
T Rowe Price Growth
 
 Mutual Fund
 
 **
 
3,375,979

 
T Rowe Equity Income
 
 Mutual Fund
 
 
 
3,266,464

 
Vanguard 500 Index Fund
 
 Mutual Fund
 
 **
 
1,143,016

 
Fidelity Freedom 2040
 
 Mutual Fund
 
 **
 
709,985

 
Fidelity Freedom 2050
 
 Mutual Fund
 
 **
 
437,557

 
Fidelity Freedom 2010
 
 Mutual Fund
 
 **
 
230,003

 
Fidelity Freedom 2020
 
 Mutual Fund
 
 **
 
973,425

 
Fidelity Freedom 2030
 
 Mutual Fund
 
 **
 
1,079,526

 
Pimco Total Return Fund
 
 Mutual Fund
 
 **
 
2,360,419

*
BMO Moderate Balanced Fund
 
Common Collective Trust
 
 **
 
142,355

*
Marshall Prime Money Market
 
 Cash Equivalent
 
 **
 
58,426

*
Notes Receivable from participants-interest rate range from 3.25% to 4.25%
 
 Participant loans
 
 **
 
1,396,237

 
Total Assets (Held at End of Year)
 
 
 
 
 
$
104,356,066

*Party-in-interest
**Cost information not required for participant-directed investments
See report of independent registered public accounting firm.


18


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the Plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

 
Badger Meter
 
Employee Savings and Stock Ownership Plan
 
 
 
Dated: August 11, 2014
By:
/s/ Richard A. Meeusen
 
 
 
Richard A. Meeusen
 
 
 
Administrative Committee Member
 
 
 
 
By:
/s/ Richard E. Johnson
 
 
 
Richard E. Johnson
 
 
 
Administrative Committee Member



19


EXHIBIT INDEX

EXHIBIT NO.
 
DESCRIPTION
23
 
Consent of Wipfli LLP, Independent Registered Public Accounting Firm


20