<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>c78641e10vq.txt
<DESCRIPTION>FORM 10-Q
<TEXT>
<PAGE>


                                 UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

       Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934

                  for the quarterly period ended JUNE 30, 2003



                               BADGER METER, INC.

                             4545 W. BROWN DEER ROAD
                           MILWAUKEE, WISCONSIN 53223
                                 (414) 355-0400
                             A Wisconsin Corporation
                   IRS Employer Identification No. 39-0143280
                           Commission File No. 1-6706







         The company 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, and
has been subject to such filing requirements for the past 90 days.

         The company is an accelerated filer (as defined in Rule 12b-2 of the
Exchange Act).

         As of July 25, 2003, there were 3,257,866 shares of Common Stock
outstanding with a par value of $1.00 per share.





                                       1




<PAGE>





                               BADGER METER, INC.

          QUARTERLY REPORT ON FORM 10-Q FOR PERIOD ENDED JUNE 30, 2003

                                      INDEX


<TABLE>
<CAPTION>
                                                                                                 Page No.
Part I.  Financial Information:

<S>            <C>                                                                             <C>
   Item 1       Financial Statements:

                Consolidated Condensed Balance Sheets --
                June 30, 2003 and December 31, 2002                                                   3

                Consolidated Condensed Statements of Operations --
                Three and Six Months Ended June 30, 2003 and 2002                                     4

                Consolidated Condensed Statements of Cash Flows --
                Six Months Ended June 30, 2003 and 2002                                               5

                Notes to Consolidated Condensed Financial Statements                                  6

   Item 2       Management's Discussion and Analysis of Financial
                Condition and Results of Operations                                                   9

   Item 3       Quantitative and Qualitative Disclosures about Market Risk                           11

   Item 4       Controls and Procedures                                                              11

Part II. Other Information:

   Item 4       Submission of Matters to a Vote of Security Holders                                  12

   Item 6(a)    Exhibits                                                                             13

   Item 6(b)    Reports on Form 8-K                                                                  13

Exhibit Index                                                                                        15
</TABLE>


                                       2


<PAGE>



                         Part I - Financial Information

Item 1   Financial Statements
                               BADGER METER, INC.
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                             (Dollars in Thousands)
<TABLE>
<CAPTION>


                                     Assets                               June 30,               December 31,
                                                                            2003                     2002
                                                                            ----                     ----
                                                                        (Unaudited)
<S>                                                                   <C>                    <C>
Current assets:
     Cash                                                            $     2,968                 $     3,779
     Receivables                                                          28,577                      22,139
     Inventories:
       Finished goods                                                      7,322                       7,569
       Work in process                                                     9,277                       8,308
       Raw materials                                                      12,368                       9,305
                                                                     -----------                 -----------
         Total inventories                                                28,967                      25,182
     Prepaid expenses                                                      1,640                       1,219
     Deferred income taxes                                                 3,523                       3,061
                                                                     -----------                 -----------
         Total current assets                                             65,675                      55,380
Property, plant and equipment, at cost                                   102,103                      98,796
     Less accumulated depreciation                                       (58,372)                    (55,328)
                                                                     -----------                 -----------
        Net property, plant and equipment                                 43,731                      43,468

Intangible assets, at cost less accumulated amortization                   1,080                       1,112
Prepaid pension                                                           16,392                      17,454
Other assets                                                               3,308                       3,352
Goodwill                                                                   6,745                       5,697
                                                                     -----------                 -----------
Total assets                                                         $   136,931                 $   126,463
                                                                     ===========                 ===========

                      Liabilities and Shareholders' Equity
Current liabilities:
     Short-term debt                                                 $    28,744                 $    20,355
     Current portion of long-term debt                                     3,428                       5,979
     Payables                                                             14,268                      11,040
     Accrued compensation and employee benefits                            5,227                       6,017
     Warranty and after-sale costs                                         3,694                       3,597
     Income and other taxes                                                2,804                       1,567
                                                                     -----------                 -----------
         Total current liabilities                                        58,165                      48,555

Deferred income taxes                                                      4,720                       4,710
Accrued non-pension postretirement benefits                                5,314                       5,512
Other accrued employee benefits                                            6,230                       6,545
Long-term debt                                                            11,096                      13,046
Commitments and contingencies
Shareholders' equity:
     Common Stock                                                          4,803                       4,762
     Capital in excess of par value                                       18,797                      18,169
     Reinvested earnings                                                  56,418                      54,776
     Accumulated other comprehensive income (loss)                         1,002                         (61)
     Less: Employee benefit stock                                         (1,285)                     (1,535)
           Treasury stock, at cost                                       (28,329)                    (28,016)
                                                                     -----------                 -----------
         Total shareholders' equity                                       51,406                      48,095
                                                                     -----------                 -----------
Total liabilities and shareholders' equity                           $   136,931                 $   126,463
                                                                     ===========                 ===========
</TABLE>


      See accompanying notes to consolidated condensed financial statements.



                                       3

<PAGE>

                               BADGER METER, INC.
                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
           (Dollars in Thousands Except Share and Per Share Amounts)
                                  (Unaudited)

<TABLE>
<CAPTION>

                                             Three Months Ended                            Six Months Ended
                                                  June 30,                                     June 30,
                                                  -------                                      -------

                                           2003               2002                       2003             2002
                                           ----               ----                       ----             ----


<S>                                 <C>                <C>                        <C>              <C>
Net sales                           $    47,516        $    43,586                $    87,091      $    81,040

Cost of sales                            31,492             28,768                     58,124           53,462
                                     ----------        -----------                -----------      -----------

Gross margin                             16,024             14,818                     28,967           27,578

Selling, engineering and
     administration                      12,598             10,838                     23,872           20,782
                                     ----------        -----------                -----------      -----------

Operating earnings                        3,426              3,980                      5,095            6,796

Interest expense                            412                468                        968              840
Other income, net                        (1,179)               (57)                    (1,222)             (88)
                                     ----------        ------------               -----------      ------------

Earnings before income taxes              4,193              3,569                      5,349            6,044

Provision for income taxes                1,587              1,249                      2,037            2,117
                                     ----------        -----------                -----------      -----------

Net earnings                        $     2,606        $     2,320                $     3,312      $     3,927
                                     ==========        ===========                ===========      ===========

Per share amounts:  *

   Earnings per share:
     Basic                          $       .81        $       .73                $      1.03      $      1.24
                                     ==========        ===========                ===========      ===========

     Diluted                        $       .78        $       .70                $      1.00      $      1.20
                                     ==========        ===========                ===========      ===========

   Dividends declared:              $       .26        $       .25                $       .52      $       .50
                                     ==========        ===========                ===========      ===========

   Shares used in computation of:
     Basic                            3,221,003          3,156,771                  3,207,961        3,155,734
     Impact of dilutive stock
       options                          117,370            143,564                    118,970          128,466
                                     ----------        -----------                -----------      -----------
     Diluted                          3,338,373          3,300,335                  3,326,931        3,284,200
                                     ==========        ===========                ===========      ===========
</TABLE>




*Earnings per share is computed independently for each of the periods 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
<PAGE>



                               BADGER METER, INC.
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                             Six Months Ended
                                                                                 June 30,
                                                                                 --------


                                                                       2003                         2002
                                                                       ----                         ----
<S>                                                          <C>                         <C>
Operating activities:
   Net earnings                                                 $     3,312                  $     3,927
   Adjustments to reconcile net
     earnings to net cash provided
     by (used for) operations:
       Depreciation                                                   3,594                        3,742
       Amortization                                                      32                           37
       Tax benefit on stock options                                     264                          118
       Noncurrent employee benefits                                     799                          508
       Deferred income taxes                                           (452)                         (80)
       Changes in:
         Receivables                                                 (6,438)                      (4,140)
         Inventories                                                 (3,785)                          61
         Current liabilities other than debt                          3,015                        6,800
         Prepaid expenses and other                                    (421)                        (101)
                                                                ------------                 -----------
   Total adjustments                                                 (3,392)                       6,945
                                                                ------------                 -----------
Net cash provided by (used for) operations                              (80)                      10,872
                                                                ------------                 -----------

Investing activities:
   Property, plant and equipment                                     (3,857)                      (2,582)
   Acquisitions, net of cash acquired                                     0                       (8,277)
   Other - net                                                          816                         (277)
                                                                -----------                  -----------
Net cash used for investing activities                               (3,041)                     (11,136)
                                                                ------------                 -----------

Financing activities:
   Net increase in short-term debt                                    8,389                        3,080
   Repayments of long-term debt                                      (4,501)                      (1,626)
   Dividends                                                         (1,670)                      (1,579)
   Stock options and ESSOP                                              405                          867
   Treasury stock purchases                                            (555)                        (964)
   Issuance of treasury stock                                           242                            0
                                                                -----------                  -----------
Net cash provided by (used for)
   financing activities                                               2,310                         (222)
                                                                -----------                  -----------

Decrease in cash                                                       (811)                        (486)
Cash - beginning of period                                            3,779                        3,410
                                                                -----------                  -----------
Cash - end of period                                            $     2,968                  $     2,924
                                                                ===========                  ===========
</TABLE>





     See accompanying notes to consolidated condensed financial statements.



                                       5



<PAGE>




                               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, 2003, the results of operations for the three and six-month
     periods ended June 30, 2003 and 2002, and the cash flows for the six-month
     periods ended June 30, 2003 and 2002. The results of operations for any
     interim period are not necessarily indicative of the results to be expected
     for the full year.

2.   The consolidated condensed balance sheet at December 31, 2002 was derived
     from amounts included in the Company's Annual Report on Form 10-K for the
     year ended December 31, 2002. Refer to the footnotes in that report 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 adjustments in the interim.

     Warranty and After-Sale Costs The Company estimates and records provisions
     for warranties and other after-sale costs in the period the sale is
     reported. After-sale costs represent a variety of activities outside of the
     written warranty policy, such as investigation of unanticipated problems
     after the customer has installed the product, or analysis of water quality
     issues. Changes in the Company's warranty and after-sale costs reserve for
     the six-month periods ended June 30, 2003 and 2002 are as follows:

<TABLE>
<CAPTION>

                          Balance at        Additions                                              Balance
                           beginning       charged to            Claims          Reserve                at
     (In thousands)          of year         earnings              paid         acquired           June 30
     -----------------------------------------------------------------------------------------------------
<S>                          <C>                <C>             <C>         <C>                   <C>
     2003                     $3,597             $690            $(593)      $    0                 $3,694
     2002                     $3,453             $632            $(760)      $  225(a)              $3,550
     =====================================================================================================
</TABLE>


     (a) In 2002, the reserve increased $30,000 and $195,000 related to the
         acquisition of Data Industrial Corporation and MecaPlus Equipements SA.
         Refer to Note 3 for a description of the acquisitions.

     Stock Option Plans The Company has six stock option plans which provide for
     the issuance of options to key employees and directors of the Company. Each
     plan authorizes the issuance of options to purchase up to an aggregate of
     200,000 shares of Common Stock, with vesting periods of up to ten years and
     maximum option terms of ten years. As of June 30, 2003, options to purchase
     134,235 shares are available for grant.

     As allowed by Financial Accounting Standards Board Statement No. 123,
     "Accounting for Stock-Based Compensation" (SFAS 123), and Statement No.
     148, "Accounting for Stock-based Compensation -- Transition and
     Disclosure", the Company has elected to continue to follow Accounting
     Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
     (APB 25), in accounting for its stock option plans. Under APB 25, the
     Company does not recognize compensation expense upon the issuance of its
     stock options because the option terms are fixed and the exercise price
     equals the market price of the underlying stock on the grant date.





                                       6




<PAGE>



     The following table illustrates the effect on net income and earnings per
     share if the Company had applied the fair value recognition provisions of
     SFAS 123 to stock options.

<TABLE>
<CAPTION>
                                                                    Three Months                          Six Months
                                                                   Ended June 30,                       Ended June 30,
                                                                   --------------                       --------------
     (In thousands except per share amounts)                    2003           2002                  2003           2002
     --------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>        <C>                     <C>            <C>
     Net income, as reported                                    $2,606    $   2,320                 $ 3,312      $ 3,927
     Deduct:  Total stock-based compensation
       determined under fair value based method
       for all awards since January 1, 1995,
       net of related tax effects                                   80           71                     163          142
     --------------------------------------------------------------------------------------------------------------------
     Pro forma net income                                       $2,526    $   2,249                 $ 3,149      $ 3,785
     Earnings per share:
       Basic, as reported                                       $  .81    $     .73                 $  1.03      $  1.24
       Basic, pro forma                                         $  .78    $     .71                 $   .98      $  1.20
       Diluted, as reported                                     $  .78    $     .70                 $  1.00      $  1.20
       Diluted, pro forma                                       $  .76    $     .68                 $   .95      $  1.15
     ====================================================================================================================
</TABLE>


3.   The Company acquired Data Industrial Corporation (DIC )  and MecaPlus
     Equipements SA (MPE) in May and June 2002, respectively. A description of
     the acquisitions is included in the Company's Annual  Report on Form 10-K
     for the year ended December 31, 2002 under Part II, Item 8 "Financial
     Statements and Supplementary Data." During the second quarter 2003, the
     Company finalized the allocation of the purchase price for both
     acquisitions.

     As of June 30, 2003, goodwill increased $757,000 from the December 31, 2002
     amount to reflect severances related to the termination of several MPE
     employees in connection with management's initial assessment at the date of
     acquisition. The amount of the severance cost was not estimable until the
     first quarter of 2003. Additionally, goodwill increased $291,000 due to
     currency translation adjustments for the six months ended June 30, 2003.

     The following unaudited pro forma information combines historical results,
     as if DIC and MPE had been owned by the Company for the following periods:


<TABLE>
<CAPTION>
     (In thousands except per share amounts)
     -----------------------------------------------------------------------------------------------------
                                              Three Months Ended                        Six Months Ended
                                                 June 30, 2002                            June 30, 2002
                                                 -------------                            -------------

<S>                                               <C>                                       <C>
     Net sales                                    $    48,710                               $    89,276
     Net earnings                                 $     2,308                               $     3,943
     Diluted earnings
       per share                                  $       .70                               $      1.20
     =====================================================================================================
</TABLE>


     The pro forma amounts include the results of the stand-alone operations of
     DIC and MPE, plus the impact of purchase accounting entries, which include
     amortization of the acquired intangibles, depreciation of the stepped up
     basis of the fixed assets, and interest expense on debt incurred to finance
     the purchases. The pro forma results are not necessarily indicative of what
     would have occurred if the acquisitions had been completed as of the
     beginning of 2002, nor are they necessarily indicative of future
     consolidated results.

4.   In order to better utilize existing capacity, a decision was made during
     the second quarter 2003 to move production of the non-magnetic impeller
     flow sensor systems product line from the Company's facility in
     Mattapoisett, Massachusetts to its facility in Tulsa, Oklahoma. The lease
     on the Massachusetts facility expires in early 2004 and it is expected that
     the move will be complete by the end of 2003. The affected employees were
     notified in early July 2003. The more significant expenses associated with
     this decision are severance costs and the disposal of leasehold
     improvements estimated to be $150,000 and $67,000, respectively. In
     accordance with Statement of Financial Accounting Standards No. 146
     "Accounting for Costs Associated with Exit or Disposal Activities," these
     costs will be recognized over the remainder of 2003.

5.   Other income, net increased $1.1 million for the three and six-month
     periods ended June 30, 2003 compared to the same periods in 2002 due mainly
     to favorable exchange gains ($0.8 million and $0.9 million, respectively)
     primarily related to the strengthening of the euro versus the U.S. dollar.
     Also included in other income, net for the three month period ended June
     30, 2003 was the gain from the sale of stock ($0.2 million)



                                       7


<PAGE>

     received when an insurance company from which the Company purchased life
     insurance policies converted from a mutual structure to a public structure.

6.   The Company guarantees the outstanding debt of the Badger Meter Employee
     Savings and Stock Ownership Plan (ESSOP) that is recorded in long-term
     debt, offset by a similar amount of unearned compensation that has been
     recorded as a reduction of shareholders' equity. The loan amount is
     collateralized by shares of the Company's Common Stock. A payment of
     $250,000 in the first quarter of 2003 reduced the loan from $1,535,000 at
     December 31, 2002 to $1,285,000 at June 30, 2003.

     The Company also guarantees the debt of the Badger Meter Officers Voting
     Trust (BMOVT), from which officers obtained loans from a bank in order to
     purchase shares of the Company's Common Stock. The officers' loan amounts
     are collateralized by the Company's shares that were purchased with the
     loans' proceeds. There have been no loans made to officers by the BMOVT
     since July 2002 due to restrictions as a result of legislation. The amount
     that the Company guaranteed was $1,988,000 and $2,380,000 at June 30, 2003
     and December 31, 2002, respectively. The current loan was renewed in June
     2003 with an expiration date of June 2004, at which time it will likely be
     renewed. The fair market value of this guarantee at June 30, 2003 and
     December 31, 2002 continues to be insignificant because the collateral
     value of the shares exceeded the loan amount.

7.   Total comprehensive income is comprised of net income and other
     comprehensive income, which includes foreign currency translation
     adjustments. Total comprehensive income was $3,017,000 and $2,320,000 for
     the three-month periods ended June 30, 2003 and 2002, respectively.
     Included in the three months of 2003 is $411,000 of other comprehensive
     income related to foreign currency translation adjustments. Total
     comprehensive income was $4,375,000 and $3,927,000 for the six-month
     periods ended June 30, 2003 and 2002, respectively. Included in the six
     months of 2003 is $1,063,000 of other comprehensive income related to
     foreign currency translation adjustments. Of the $1,063,000, $477,000
     relates to the effect of the Company's Czech Republic subsidiary changing
     its functional currency from the U.S. dollar to the euro, effective January
     1, 2003.

8.   In the normal course of business, the Company is named in legal
     proceedings. There are currently no material legal proceedings pending with
     respect to the Company, except as discussed below.

     The Company is subject to contingencies relative to environmental laws and
     regulations. Currently, the Company is in the process of resolving an issue
     relative to a landfill site. Provision has been made for all known
     settlement costs.

     The Company is also a defendant in five multi-party asbestos suits as a
     result of its membership in certain trade organizations. The cases are
     pending in state court in Mississippi. The Company does not believe the
     ultimate resolution of these issues will have a material adverse effect on
     the Company's financial position or results of operations, either from a
     cash flow perspective or on the financial statements as a whole.

     The Company enters into various material purchase agreements with its
     vendors, some of which contain minimum purchase quantity commitments
     extending beyond one year. Future purchase commitments are not expected to
     exceed normal usage requirements.

9.   In the quarter ended June 30, 2003, the Financial Accounting Standards
     Board (FASB) issued two new Statements of Financial Accounting Standards:
     No. 149 "Amendment of Statement 133 on Derivative Instruments and Hedging
     Activities" and No. 150 "Accounting for Certain Financial Instruments with
     Characteristics of both Liabilities and Equity." The Company does not
     believe either of these recently issued Statements will have a material
     effect on the Company's financial position or results of operations, either
     from a cash flow perspective or on the financial statements as a whole.


                                       8


<PAGE>

Item 2   Management's Discussion and Analysis of Financial Condition and
         Results of Operations


Results of Operations - Three Months Ended June 30

         Net sales for the three-months ended June 30, 2003 increased $3.9
million, or 9.0%, over the same period in 2002. The results in the second
quarter included $6.0 million and $2.5 million of net sales related to the two
acquired businesses, Data Industrial Corporation (DIC) and MecaPlus Equipements
SA (MPE), which were acquired in the second quarter of 2002. The increase in
sales related to the acquired companies is due to the timing of the acquisitions
in the second quarter of 2002. Without the acquisitions, net sales would have
increased $0.4 million, or 1.0%, over the same period in 2002.

         The slight increase in net sales without acquisitions was the effect of
increased residential and commercial water meter sales of $100,000 and increased
industrial product sales of $300,000. The slight increase in sales of
residential and commercial products was the net result of a $1.2 million
increase in residential water meter sales and a $1.1 million decrease in
commercial water meter sales. Typically, residential and commercial water meter
sales track in similar directions. The change in the second quarter 2003 is
primarily a function of the nature and timing of orders.

         Residential sales in the second quarter of 2003 increased over the same
period in 2002 due to higher sales of products with automated meter reading
(AMR) technologies mitigated somewhat by lower sales of local or manual read
water meters. Sales of AMR products carry a higher selling price than local or
manual read products. The decrease in commercial water meter sales was driven
principally by lower volumes which appear to be due to the continuing softness
in the general economy.

         Net sales of industrial products, excluding sales from the
acquisitions, continued to be affected by the soft economy, increasing only
$300,000 in the second quarter over the prior year's second quarter. The
industrial net sales increase was the result of modestly higher revenues for
automotive fluid meters, small precision valves and electromagnetic meters
offset by decreases in other industrial products.

         Gross margins for the second quarter of 2003 were 33.7% compared to
34.0% in the second quarter 2002. The decrease was principally the result of
decreased manual read water meter volumes which impacted overhead absorption,
offset somewhat by higher prices associated with AMR sales.

         Selling, engineering and administration costs increased nearly $1.8
million, or 16.2%, for the second quarter 2003 compared to the same period in
2002. The increase included the affect of the acquisitions discussed above ($0.8
million). Without the effects of the acquisitions, these expenses would have
increased approximately $1 million due to higher expenses associated with
incentive compensation programs, professional fees and advertising as well as
normal inflationary increases. Interest expense for the second quarter 2003 was
$56,000 lower than the same period in the prior year primarily due to favorable
interest rates.

         Other income, net increased $1.1 million for the second quarter 2003
compared to the same period in 2002 due to favorable exchange gains ($0.8
million) primarily as a result of the strengthening of the euro versus the U.S.
dollar. Also included in other income, net was the gain from the sale of stock
($0.2 million) received when an insurance company from which the Company
purchased life insurance policies converted from a mutual structure to a public
structure.

         As a result of the above, net earnings for the second quarter of 2003
were $2,606,000 compared to net earnings in the second quarter of 2002 of
$2,320,000. On a diluted earnings per share basis, this equates to $0.78 per
share for the second quarter of 2003 compared to $0.70 for the same period in
2002.

Results of Operations - Six Months Ended June 30

         Net sales for the six months ended June 30, 2003 increased nearly $6.1
million, or 7.5%, over the same period in 2002. The totals include $11.4 million
and $2.5 million of sales related to the two acquired businesses, DIC and MPE,
which were acquired in the second quarter of 2002. Without the acquisitions, net
sales would have decreased nearly $2.9 million, or 3.7%, over the same period in
2002.

         The decrease in sales without acquisitions was due to lower sales of
residential and commercial water meters offset by higher sales of industrial
products. Residential and commercial water meter sales declined $3.5 million in
the first six months of 2003 compared to the first six months of 2002. The sales
decline was the result of lower volumes of water meters (both manual read and
automated) offset somewhat by higher prices. The decline in volumes appears to
be due to the soft economy and geopolitical and terrorism concerns, particularly


                                       9


<PAGE>


early in 2003. Many local governments are struggling with reduced budgets and
the Company experienced longer sales cycles for purchases by water utilities.

         Net sales of industrial products, excluding sales from acquisitions,
continued to be affected by the soft economy, increasing only $0.6 million in
the first six months of 2003. This increase is the net result of increased
automotive fluid meters, electromagnetic meters, and research and control valves
offset by declines in other industrial products.

         Gross margins for the six months ended June 30, 2003 were 33.3%
compared to 34.0% for the same period in 2002. The decrease was principally the
result of decreased water meter volumes which impacted absorption, offset
somewhat by higher prices due to product mix. The gross margins were also
affected by a manufacturing problem during the first quarter 2003 that resulted
in an after-tax expense of approximately $150,000 or $0.05 per diluted share.
The problem was discovered and resolved at the plant.

         Selling, engineering and administration costs increased nearly $3.1
million, or 14.9%, for the first six months of 2003 compared to the same period
in 2002. The increase included the affect of the acquisitions discussed above
($2.5 million). Without the effects of the acquisitions, these expenses would
have increased approximately $0.6 million due to increased incentive
compensation, advertising and normal inflationary increases. Interest expense
for the period was $128,000 higher than the same period in the prior year
primarily due to the increased debt associated with the acquisitions, which
weren't completed until the second quarter of 2002, offset somewhat by favorable
interest rates.

         Other income, net increased $1.1 million for the first six months of
2003 compared to the same period in 2002 due to favorable exchange gains ($0.9
million) primarily as a result of the strengthening of the euro versus the U.S.
dollar. Also included in other income, net was the gain from the sale of stock
($0.2 million) received when an insurance company from which the Company
purchased life insurance policies converted from a mutual structure to a public
structure.

         As a result of the above, net earnings for the six month period ending
June 30, 2003 were $3,312,000 compared to net earnings of $3,927,000 for the
same period in 2002. On a diluted earnings per share basis, this equates to
$1.00 per share for the first six months of 2003 compared to $1.20 for the same
period in 2002.


Liquidity and Capital Resources

         The main sources of liquidity for the Company typically are cash from
operations and borrowing capacity. For the first six months of 2003,
approximately $100,000 of cash was used for operations, as the increases in
inventories and receivables balances were offset by the increase in current
liabilities other than debt and net earnings adjusted for non-cash expenses.

         The change in the receivables balance from $22.1 million at December
31, 2002 to $28.6 million at June 30, 2003 is due to increased sales. The
receivable balance at December 31, 2002 was lower due to weaker sales near
year-end and normal cyclical trends.

         Inventories at June 30, 2003 increased $3.8 million, or 15.0%. This
increase in inventories was due to a build up of certain longer lead-time
electronic materials as well as second quarter manufacturing of product expected
to be shipped in the third quarter of 2003. Capital expenditures for the first
six months of 2003 were $3.9 million, exceeding depreciation expense by
$263,000, which accounted for the change in net property, plant and equipment
from the net amount shown at December 31, 2002.

         Prepaid pension declined from $17.5 million at December 31, 2002 to
$16.4 million at June 30, 2003. The Company received a refund of $0.7 million in
the second quarter 2003 from the pension plan related to contributions made in
2002 in excess of the minimum funding levels. The remainder of the difference is
normal pension amortization. Goodwill increased $1.0 million as the Company
continued to finalize the allocation of the purchase price of MPE during the
first quarter 2003, and the effects of foreign currency translation adjustments.

         Short-term debt and the current portion of long-term debt at June 30,
2003 increased to $32.2 million versus a balance at the end of 2002 of $26.3
million. This increase was caused by the need for cash for operations, capital
expenditures, repayments of long-term debt and dividends. The long-term debt
amounts declined as a result of regularly scheduled payments, plus a prepayment
to take advantage of lower short-term rates.

                                       10


<PAGE>

         Payables increased to $14.3 million from $11.0 million at December 31,
2002 primarily as a result of the timing of payments. Accrued compensation and
employee benefits decreased to $5.2 million from $6.0 million at December 31,
2002 due principally to the first quarter payments of various incentive
compensation programs earned in 2002 as a result of the performance in that
year. Income and other taxes increased to $2.8 million from nearly $1.6 million
at December 31, 2002 as a result of the timing of tax payments.

         Common stock and capital in excess of par value have increased slightly
since December 31, 2002 due to new shares issued in connection with the exercise
of stock options and purchases by the Employee Savings and Stock Ownership Plan
(ESSOP). Treasury stock increased due to shares repurchased during the period.
Employee benefit stock decreased $250,000 due to the regular payment of the
ESSOP debt during the first quarter 2003 and the related release of shares.

         As of June 30, 2003, the Company had approximately $44.5 million of
short-term credit facilities with domestic and foreign banks of which $28.7
million was in use. The Company continues to take advantage of favorable
interest rates for short term borrowing instruments, principally commercial
paper. The Company believes that the present lines of credit are adequate to
meet operating requirements and future capital needs. The Company also believes
it would have no difficulty securing additional term debt.

Other Matters

         The Company is subject to contingencies relative to environmental laws
and regulations. Currently, the Company is in the process of resolving an issue
relative to a landfill site. Provision has been made for all known settlement
costs.

         The Company is also a defendant in five multi-party asbestos suits as a
result of its membership in certain trade organizations. The cases are pending
in state court in Mississippi. The Company does not believe the ultimate
resolution of these issues will have a material adverse effect on the Company's
financial position or results of operations, either from a cash flow perspective
or on the financial statements as a whole.

         In order to better utilize existing capacity, a decision was made
during the second quarter 2003 to move production of the non-magnetic impeller
flow sensor systems product line from the Company's facility in Mattapoisett,
Massachusetts to its facility in Tulsa, Oklahoma. The lease on the Massachusetts
facility expires in early 2004 and it is expected that the move will be complete
by the end of 2003. The affected employees were notified in early July 2003. The
more significant expenses associated with this decision are severance costs and
the disposal of leasehold improvements estimated to be $150,000 and $67,000,
respectively. In accordance with Statement of Financial Accounting Standards No.
146 "Accounting for Costs Associated with Exit or Disposal Activities," these
costs will be recognized over the remainder of 2003.

         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.

Item 3   Quantitative and Qualitative Disclosures about Market Risk

         The Company's quantitative and qualitative disclosures about market
risk are included in Part II Item 7 "Management's Discussion and Analysis of
Financial Condition and Results of Operations" under the heading "Market Risk"
in the Company's Annual Report on Form 10-K for the year ended December 31,
2002, and have not materially changed since that report was filed.

Item 4   Controls and Procedures

         In accordance with Rule 13a-15(b) of the Securities Exchange Act of
1934 (the "Exchange Act"), as of the end of the second quarter 2003, an
evaluation was carried out under the supervision and with the participation of
the Company's management, including the Company's President and Chief Executive
Officer and the Company's Senior Vice President -- Finance, Chief Financial
Officer and Treasurer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures (as defined in the rules
promulgated under the Exchange Act). Based upon their evaluation of these
disclosure controls and procedures, the Company's President and Chief Executive
Officer and the Company's Senior Vice President -- Finance, Chief Financial
Officer and Treasurer concluded that the Company's disclosure controls and
procedures were effective as of the date of such evaluation to ensure that
material information relating to the Company, including its consolidated
subsidiaries, was made known to them by others within those entities,
particularly during the period in which this Quarterly Report on Form 10-Q was
being prepared.

                                       11




<PAGE>

         There was no change in the Company's internal control over financial
reporting that occurred during the second quarter 2003 that has materially
affected, or is reasonably likely to materially affect, the Company's internal
control over financial reporting.

Forward Looking Statements

         Certain statements contained in this document, as well as other
information provided from time to time by the Company or its employees, may
contain forward looking statements that involve risks and uncertainties that
could cause actual results to differ materially from those in the forward
looking statements. The words "anticipate," "believe," "estimate," "expect,"
"think," "should" and "objective" or similar expressions are intended to
identify forward looking statements. The forward looking statements are based on
the Company's current views and assumptions and involve risks and uncertainties
that include, among other things:

       o the success or failure of new product offerings and acquisitions
       o the actions and financial condition of competitors and alliance
         partners
       o changes in competitive pricing and bids in the marketplace
       o changes in domestic conditions, including housing starts
       o changes in foreign economic conditions, including currency fluctuations
       o changes in laws and regulations
       o changes in customer demand and fluctuations in the prices of and
         availability of purchased raw materials and parts.

Some or all of these factors are beyond the Company's control. Shareholders,
potential investors and other readers are urged to consider these factors
carefully in evaluating the forward looking statements and are cautioned not to
place undue reliance on such forward looking statements. The forward looking
statements made herein are made only as of the date of this document and the
Company undertakes no obligation to publicly update such forward looking
statements to reflect subsequent events or circumstances.

                           Part II - Other Information

Item 4   Submission of Matters to a Vote of Security Holders


(a)      The Annual Meeting of Shareholders was held May 2, 2003.

(b)      The following tables describe the election of directors at the 2003
         Annual Meeting:
<TABLE>
<CAPTION>

        NAME                                                          Votes           Votes
                                                                       FOR           WITHHELD       Not Voted
                                                                      -----          ---------      ---------
<S>                                                                <C>           <C>             <C>
        DIRECTORS ELECTED TO THREE-YEAR
        TERMS EXPIRING AT THE 2006 ANNUAL
        MEETING
        Ulice Payne, Jr.                                            2,591,716         4,206          638,789
        Andrew J. Policano                                          2,591,716         4,206          638,789
        Steven J. Smith                                             2,591,794         4,128          638,789

        DIRECTOR ELECTED TO A TWO-YEAR
        TERM EXPIRING AT THE 2005 ANNUAL MEETING
        Thomas J. Fischer                                           2,591,684         4,238          638,789
</TABLE>

         DIRECTORS CONTINUING IN OFFICE WITH TERMS EXPIRING AT THE 2005 ANNUAL
         MEETING
         James L. Forbes
         Richard A. Meeusen

         DIRECTORS CONTINUING IN OFFICE WITH TERMS EXPIRING AT THE 2004 ANNUAL
         MEETING
         Kenneth P. Manning
         John J. Stollenwerk



                                       12


<PAGE>

(c)      Proxies were solicited for the adoption of the Badger Meter, Inc. 2003
         Stock Option Plan. There were no solicitations in opposition to the
         proposed adoption of the Plan, and the Plan was adopted with 92% of the
         votes being cast in favor of its adoption. The following table
         describes the results of the vote of the shareholders with respect to
         the adoption of the 2003 Stock Option Plan:

                                    Votes      Votes     Votes      Broker
                                     FOR      AGAINST   ABSTAIN   Non-votes
                                     ---      -------   -------   ---------

                                  1,643,215   128,050    26,369    798,288


(d)      Not applicable.


Item 6   Exhibits and Reports on Form 8-K

(a)  Exhibits:

     Exhibit No.  Description

     4            Loan Agreement between Bank One, NA and the Badger Meter
                  Employee Savings and Stock Ownership Plan and Trust

     10           Badger Meter, Inc. 2003  Stock Option Plan

     31.1         Certification by the Chief Executive Officer pursuant to
                  Section 302 of the Sarbanes-Oxley Act of 2002.

     31.2         Certification by the Chief Financial Officer pursuant to
                  Section 302 of the Sarbanes-Oxley Act of 2002.

     32           Certification of Periodic Financial Report by the Chief
                  Executive Officer and Chief Financial Officer pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002.

     99           Additional Exhibits

(b)  Reports on Form 8-K:

     A Form 8-K was filed on July 16, 2003 to disclose the full contents of the
Company's press release that reported the results of the three and six-month
periods ended June 30, 2003.





                                       13


<PAGE>



                                    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 31, 2003                 By /S/  Richard A. Meeusen
                                        -----------------------
                                        Richard A. Meeusen
                                        President and Chief Executive Officer



                                     By /S/  Richard E. Johnson
                                        -----------------------
                                        Richard E. Johnson
                                        Senior Vice President - Finance, Chief
                                        Financial Officer and Treasurer



                                     By /S/  Beverly L.P. Smiley
                                        ------------------------
                                        Beverly L.P. Smiley
                                        Vice President - Corporate Controller







                                       14




<PAGE>


                               BADGER METER, INC.

          QUARTERLY REPORT ON FORM 10-Q FOR PERIOD ENDED JUNE 30, 2003

                                  EXHIBIT INDEX



     Exhibit No.  Description

     4            Loan Agreement between Bank One, NA and the Badger Meter
                  Employee Savings and Stock Ownership Plan and Trust

     10           Badger Meter, Inc. 2003 Stock Option Plan

     31.1         Certification by the Chief Executive Officer pursuant to
                  Section 302 of the Sarbanes-Oxley Act of 2002.

     31.2         Certification by the Chief Financial Officer pursuant to
                  Section 302 of the Sarbanes-Oxley Act of 2002.

     32           Certification of Periodic Financial Report by the Chief
                  Executive Officer and Chief Financial Officer pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002.

     99           Additional Exhibits






                                       15







</TEXT>
</DOCUMENT>
