Badger Meter provides a table of contents for an analysis of the company. Key sections include relative valuation comparisons to industry averages, a DCF summary projecting revenues and cash flows through 2013, a Porter's Five Forces analysis of the water meter industry, a SWOT analysis, and discussions of management, recent surveys of water utilities, municipal bond issues, competitors, and various financial statements.

1. Badger Meter, Inc. Marquette University
Appendix
Table of Contents
Relative Valuation 2
DCF Summary 2
Porter’s Five Forces Analysis 3
SWOT Analysis 3
Management Discussion 4
Marquette Proprietary Survey, January 2009 5
Marquette Proprietary Survey, February 2009 6
Recent Municipal Happenings 7
Competitors 7
Water Meter Market Share 8
Water Utilities by Percent of total US Water Connections 8
Water AMR Market Share 8
Utility Segment Revenue Computation 8
Financial Statements:
Income Statement 9
Balance Sheet 10
Statement of Cash Flows 11
BMI Price History 12
Spot Copper Price History 12

2. 2
Relative Valuation
BMI 2009E Five Year Industry Average Price Target
Price/Earnings 19.28x 19.63x $23.58
Price/Book 2.93x 3.04x $24.02
Price/Sales 1.43x 1.98x $31.94
EV/EBITDA 9.23x 10.23x $26.57
DCF Summary
2008 2009 2010 2011 2012 2013
Revenue $279,552 $258,192 $259,283 $306,801 $322,517 $338,610
y/y Change 19.05% -7.64% 0.42% 18.33% 5.12% 4.99%
Operating Profit $40,902 $32,274 $32,410 $41,418 $45,152 $49,099
% Margin 14.63% 12.50% 12.50% 13.50% 14.00% 14.50%
Taxes $14,471 $11,557 $11,905 $15,333 $16,734 $18,214
Net Income $25,084 $19,261 $19,482 $25,556 $27,890 $30,356
Less: W/C Change $10,213 ($11,804) $4,064 $12,918 $2,986 $3,058
Less: CapEx $13,237 $10,328 $10,371 $12,272 $12,901 $13,544
Add: Depreciation/ Amortization $9,042 $9,231 $9,368 $9,755 $10,174 $10,624
Net Cash Flow $10,676 $29,951 $14,775 $10,121 $22,177 $24,378
PV Factor 1.08 1.17 1.27 1.37 1.48
PV Cash Flow $27,689 $12,627 $7,997 $16,199 $16,461
Valuation WACC Calculation
Terminal EBITDA Multiple 7.5x Cost Of Equity:
Projected EBITDA, 2013 $59,722 Risk-Free Rate 4.50%
Terminal Value $447,917 Expected Market Return 10%
Discounted TV $302,457 x Beta 1.10
k: 10.55%
Sum Of PV FCF $80,972 Cost Of Debt:
PV Of Terminal Value $302,457 Expected Future Cost: 6.00%
Net Debt $18,957 Tax Rate: 37.50%
Value Of Equity $364,472 After-Tax Cost of Debt: 3.75%
Shares Outstanding (Ths) 14,808 Cost Of Capital:
Target Price $24.61 Debt 35% 3.75%
Current Price $28.92 Equity 65% 10.55%
Implied Return -14.89% WACC: 8.17%

3. 3
Porter’s Five Forces Analysis
Threat of New Entrants:
High
• Regulated by AWWA
• Extremely accurate measurement
technology and strong sealant.
• Capital-intensive manufacturing due
to the quality testing process.
• Oligopoly (4 major manufacturers)
Rivalry: Buyer Power:
Supplier Power:
Moderately Competitive Medium
Low
• •
• Meters are a commodity product Customers are water utilities.
Price-takers in the commodity
markets. • •
Competitive bidding process to win Sales contracts create sticky
• new contracts/maintain expiring buying practices.
Major inputs: copper (80% of a basic
agreements.
meter), lead and plastic • Reluctance to switch meters
•
• Union labor WI facility. • AMR/AMI technology vs
Rivals could undercut price, but
• basic manual-read meters.
historically has not occurred.
Continual transfer of jobs to Nogales,
Mexico facility.
Threat of Substitute Products:
Low
• No alternate way to measure usage.
• Only substitute is to not meter
• Once building is metered, does not
make sense to stop replacement
• Encourages water conservation by
improving consumption-based
billing
SWOT Analysis
Strengths Weaknesses
•Strong reputation for high quality meters and service •Exposure to commodity prices
· Hydraulic flow lab • Low growth, slow adoption market
• Consistent 1st/2nd place water meter market share(20-25%) • Late entrance to the AMI market
• Solid 34% gross margin (5-yr average) • Meter pricing final determinant for utility orders
• Pit Sealant Technology • Low free cash flow conversion
• Proprietary ORION and GALAXY advanced metering systems technology
Opportunities Threats
•Water Shortages - 36 states face shortage in next 5 years •Utility funding
· Decreased operating budgets
•Conversion to AMR/AMI - $5.4B opportunity
· Challenging capital markets fundraising environment
•Unmetered Housing Units (13 million) - $1.95B opportunity
•Completion of ORION deployment - $650M unbooked backlog • Utilities able to length meter replacement cycles
•Replace Remaining Trace Customers - $100M opportunity • Delayed AMR/AMI technology adoption
• Macroeconomic weakness

4. 4
Company Management Review
Key Executives Age Years at BMI
Richard A. Meeusen 54 13
Ronald H. Dix 64 27
Richard E. Johnson 54 8
Mr. Meeusen has served as CEO since 2002. Before coming to Badger Meter, Mr. Meeusen worked in public
accounting, focusing on audit. Mr. Johnson has served as CFO for more than 5 years. He previously served in
an executive role for the Wisconsin Electric Power Company. Mr. Dix has served in his current position since
2003, and is also a member of the board of directors.
There are eight members of the board of directors, each elected to three year terms. Six of the eight directors
are considered independent—insiders are Mr. Meeusen and Mr. Dix. The remaining board members are all
male executives of Milwaukee, WI-based firms, which may lead to shortsightedness in decision-making and
preparing for the future. In June of 2008, the directors adopted a set of Principles of Corporate Governance,
to complement the already existing Code of Conduct. Each director serves on two of the three committees,
except for Mr. Dix and Mr. Meeusen. The board has been recognized by Socrates Corporate Social Ratings
for prudent compensation of executives. Combined, directors and executives hold 7.8% of Badger Meter’s
common stock, including 1.4% held by Meeusen and 1.5% held by Dix.
Through listening to conference calls, attending an investor presentation, and touring BMI’s Brown Deer, WI
facility, we were impressed with management’s knowledge and experience in the water meter industry. Mr.
Johnson and Mr. Meeusen are lifelong friends, which has created a great working relationship but they may
also hesitate to challenge each other. Management is very shareholder-friendly, carefully guarding their
contact with analysts as they believe giving detailed guidance is not in the best interest of long-term
stockholders. Management has also had a disciplined acquisition strategy, designed to prevent overpayment
and create value for shareholders. BMI’s Corporate Governance Quotient (CGQ®) exceeds that of 79.8% of
Russell 3000 companies.

5. 5
Marquette Proprietary Survey, January 2009
Hello,
I am a Marquette University senior participating in the Chartered Financial Analyst (CFA) Institute Global
Investment Research Challenge. As a part of the Challenge, I am researching Badger Meter and the water
meter industry and would greatly appreciate your response to a few questions below:
Who supplies your water meters?
What is the most influential factor in who supplies your water meters (price, service, quality, location, etc.)?
How do you read your water meters: manually, AMR (drive-by radio), fixed network AMI, or a combination?
If you read them via AMR or AMI, who supplies your radios?
Are you considering switching to reading your meters differently? Which method of reading the meters are
you considering and why?
Are you planning on ordering new water meters in the next year? If so, how are you planning on funding your
water meters (budget, bond offering, etc.)?
Thank you in advance for your response.
Survey Responses
• Varying meter replacement cycles – 15-30
years
How do you fund your purchases of
• AMR payback period – 12 years
water meters?
• Case Study: Springfield, MO
Municipal
∙ Meter purchases Operating Bonds
∙ 2008 – 2,000 meters budget 43%
57%
∙ 2009 – expect 1,000 meters
∙ AMR pilot program budget
∙ 2008 – $100,000
∙ 2009 - $0
∙ 2010/2011 - $15,000
Which other means of reading your
How do you read the majority of
water meters would you consider?
your water meters?
No
50% interest
AMI
40% 32%
54%
30%
20%
10%
0% AMR
14%
Manually AMR AMI

6. 6
Follow-up Survey Question, February 2009
Dear Mr. xxx,
Thank you for your response to the water meter survey I sent out in early January. With your help, Marquette
University has advanced to the America's Region of the CFA Global Investment Research Challenge. We are
grateful for your first response and would greatly appreciate your response to one additional question below:
Since the early January survey, the American Recovery and Reinvestment Act of 2009 has been passed. Do
you anticipate the passing of the act will change your purchases of water meters or meter reading technology
for 2009 and 2010? If so, how do you expect it to change your purchases?
Thank you in advance for your response.
Follow-up Responses
• Additional funding will accelerate the adoption of advanced metering systems according to
∙ Raleigh, NC
∙ San Antonio, TX
∙ Topeka, KS
• Water conservation efforts drive the adoption of advanced metering systems
Do you anticipate the passing of the act will change your purchases of water meters or meter reading
technology for 2009 and 2010?
Yes
19%
No
81%

7. 7
Recent Municipal Happenings – Bloomberg News, March 13, 2009
Legislation
House of Representative lawmakers are drafting legislation to support municipal bond
issuances.
This legislation may include:
o Optional federal backstops or guarantees of new bond issues.
o Issuers buying private bond insurance can pay ―a little extra‖ to get federal backing.
Recent Municipal Turmoil
Municipalities drawing from debt reserve account or unable to pay full interest since March
1st
o 3 government sponsored entities
o 2 counties and 2 cities
Competitors
Water, gas, heat, electric meters (83% revenue)
Sensus Private
AMR/AMI
Industrial Technology Segment of Roper Industries, Inc.
Neptune NYSE: ROP
Water Revenue (16% revenue)
Water, gas, heat, electric meters, AMR technology
Itron NASDAQ: ITRI
AMR radios also sold under contract by Badger Meter, Inc.
Residential/bulk meters
Elster Private
AMR metering systems
AMR technology
Hexagram Private
Industry leader due to long history in utility AMR

8. 8
Water Meter Market Share Water AMR Market Share
Other
HexagramOther
8% Badger
3%
3%
Elster 28% Badger
Master
14% 20%
11%
Elster
5%
Sensus
Itron
Neptune 15%
14%
Sensus
30%
20% Neptune
29%
Water Utilities by Percent of Total U.S. Water Connections
4,800 Smallest
Utilities
20% US 400 Largest
Water Utilities
Connections 40% US
Water
Connections
40% US
Water
Connections
4,000 Medium
Utilities
Utility Segment Revenue Computation
Total Metered Connections 75 million units
BMI Market Share 28%
BMI Metered Connections 21 million units
BMI 2007 Meters Sold 2.1 million units
Utility Segment Revenue $183,750 100%
% of Shipments w/Radios 50%
Water Meters $52,500 28.57% Meter + Radio 1.05 million units
AMR/AMI $131,250 71.43% Price $150
Orion $82,571 44.94% Radio Revenue $157,500
% Utitlity Revenue 86%
Itron $41,286 22.47%
+
Galaxy $9,323 5.07%
% of Meter-Only Shipments 50%
Source: BMI Data/ Team F Estimates (revenue in $000)
Meter Only 1.05 million units
Price $25
Meter Revenue $26,250
% Utility Revenue 14%
2007 Utility Revenue $183,750
% Total Revenue 78.2%
Source: BMI Data/ Team Estimates (revenue in $000)

9. 9
Financial Statements
Income Statement
Actual Projected
US GAAP
Thousands Of USD FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013
12/31/03 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13
Revenue 183,989 205,010 203,637 229,754 234,816 279,552 258,192 259,283 306,801 322,517 338,610
Cost Of Goods Sold (123,470) (137,532) (130,218) (153,126) (153,418) (181,094) (166,534) (167,238) (196,352) (206,411) (216,711)
Gross Profit 60,519 67,478 73,419 76,628 81,398 98,458 91,658 92,045 110,448 116,106 121,900
Selling, General & Administrative (46,419) (47,281) (46,263) (47,840) (50,782) (57,556) (59,384) (59,635) (69,030) (70,954) (72,801)
Operating Income 14,100 20,197 27,156 28,788 30,616 40,902 32,274 32,410 41,418 45,152 49,099
Interest Expense (1,737) (1,607) (1,492) (1,299) (1,291) (1,347) (1,457) (662) (529) (529) (529)
Other Expense (Income), Net 988 (610) 0 0 0 0 0 0 0 0 0
Earning From Operations, Before Tax 13,351 17,980 25,664 27,489 29,325 39,555 30,817 31,748 40,889 44,623 48,569
Income Taxes (5,774) (8,347) (9,500) (10,921) (10,939) (14,471) (11,557) (11,905) (15,333) (16,734) (18,214)
Earning From Operations 7,577 9,633 16,164 16,568 18,386 25,084 19,261 19,482 25,556 27,890 30,356
Loss From Discontinued Ops 0 0 (2,911) (9,020) (1,929) 0 0 0 0 0 0
Net Income 7,577 9,633 13,253 7,548 16,457 25,084 19,261 19,482 25,556 27,890 30,356
Shares Outstanding 12,900 13,190 13,490 13,870 14,211 14,808 14,808 14,808 14,808 14,808 14,808
EPS From Continuing Operations $0.59 $0.73 $0.98 $1.19 $1.29 $1.69 $1.30 $1.34 $1.73 $1.88 $2.05
Consensus EPS $1.54 $1.58 $1.65
Revenue Growth 19.05% -7.64% 0.42% 18.33% 5.12% 4.99%
EPS Growth 30.93% -23.21% 3.02% 28.79% 9.13% 8.84%
EPS Growth
Common Size:
Revenue 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Cost Of Goods Sold -67.11% -67.09% -63.95% -66.65% -65.34% -64.78% -64.50% -64.50% -64.00% -64.00% -64.00%
Gross Profit 32.89% 32.91% 36.05% 33.35% 34.66% 35.22% 35.50% -35.50% -36.00% -36.00% 36.00%
Selling, General & Administrative -25.23% -23.06% -22.72% -20.82% -21.63% -20.59% -23.00% -23.00% -22.50% -22.00% -21.50%
Operating Income 7.66% 9.85% 13.34% 12.53% 13.04% 14.63% 12.50% 12.50% 13.50% 14.00% 14.50%
Interest Expense -0.94% -0.78% -0.73% -0.57% -0.55% -0.48% -0.56% -0.26% -0.17% -0.16% -0.16%
Other Expense (Income), Net 0.54% -0.30% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Earning From Operations, Before Tax 7.26% 8.77% 12.60% 11.96% 12.49% 14.15% 11.94% 12.24% 13.33% 13.84% 14.34%
Tax Rate -43.25% -46.42% -37.02% -39.73% -37.30% -36.82% -37.50% -37.50% -37.50% -37.50% -37.50%
Tax (As A % Of Sales) -3.14% -4.07% -4.67% -4.75% -4.66% -4.99% -4.48% -4.59% -5.00% -5.19% -5.38%
Earning From Operations 4.12% 4.70% 7.94% 7.21% 7.83% 8.97% 7.46% 7.51% 8.33% 8.65% 8.96%
Loss From Discontinued Ops 0.00% 0.00% -1.43% -3.93% -0.82% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Net Income 4.12% 4.70% 6.51% 3.29% 7.01% 8.97% 7.46% 7.51% 8.33% 8.65% 8.96%
Interest Expense 1,737 1,607 1,492 1,299 1,291 1,333 1,457 662 529 529 529
Total Debt 39,634 36,103 32,911 29,687 19,239 25,174 27,513 12,513 9,995 9,995 9,995
Interest Expense % Of Total Debt 4.38% 4.45% 4.53% 4.38% 6.71% 5.30% 5.30% 5.29% 5.29% 5.29% 5.29%

10. 10
Balance Sheet
Actual
US GAAP
Thousands Of USD FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008
12/31/03 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08
Current Assets
Cash 2,089 2,834 4,403 3,002 8,670 6,217
Receivables 26,304 26,879 30,450 29,276 30,638 35,767
Total Inventory 29,654 35,646 31,970 33,290 34,094 39,315
Finished Goods 8,010 14,121 11,875 9,122 8,225 13,484
Work in Process 8,494 9,054 9,048 10,302 10,660 10,990
Raw Materials 13,150 12,471 11,047 13,866 15,209 14,841
Prepaid Expense & Other Current Assets 1,193 2,016 2,309 3,179 3,450 2,316
Deferred Tax Assets 3,758 4,007 3,432 3,737 3,082 2,914
Assets of Discontinued Operations 0 0 0 6,875 0 0
Total Current Assets 62,998 71,382 72,564 79,359 79,934 86,529
Property, Plant, & Equipment (At Cost) 104,081 107,295 109,810 113,249 125,678 133,934
Land & Improvements 3,360 3,487 7,416 6,337 7,177 7,097
Buildings & Improvements 28,069 28,252 27,867 29,922 39,448 45,522
Machinery & Equipment 72,652 75,556 74,527 76,990 79,053 81,315
Less Accumulated Depreciation (61,243) (65,279) (65,940) (68,540) (71,100) (72,111)
Net PP&E 42,838 42,016 43,870 44,709 54,578 61,823
Intangible Assets (At Cost, Net Amortization) 1,336 1,160 1,026 636 477 25,030
Other Assets 16,236 4,009 4,101 4,211 4,919 5,713
Deferred Tax Assets 3,354 0 0 3,510 3,435 9,305
Prepaid Pension 0 17,290 17,726 0 0 0
Goodwill 7,089 7,104 6,580 6,958 6,958 6,958
Total Assets 133,851 142,961 145,867 139,383 150,301 195,358
Current Liabilities
Short-Term Debt 3,543 17,539 8,847 15,093 10,844 9,995
Current Portion Of Long-Term Debt 5,645 5,348 7,431 1,944 2,738 9,675
Accounts Payable 14,895 11,069 11,484 10,597 11,363 13,230
Accrued Compensation & Benefits 6,619 6,166 6,436 6,181 5,988 8,714
Warranty & After-Sale Costs 3,767 3,817 3,610 2,954 1,917 1,327
Income & Other Taxes Payable 2,583 982 1,778 621 8,359 7,848
Liabilities Of Discontinued Operations 0 0 0 8,321 0 0
Total Current Liabilities 37,052 44,921 39,586 45,711 41,209 50,789
Other Long-Term Liabilities 0 326 634 557 627 1,059
Deferred Tax Liabilities 5,699 7,437 6,584 199 244 133
Accrued Nonpension Retirement Benefits 5,069 4,490 3,955 6,903 6,083 5,585
Other Accrued Employee Benefits 6,410 6,902 6,332 8,266 7,040 21,625
Long-Term Debt 24,450 14,819 15,360 5,928 3,129 5,504
Commitments & Contingencies 0 0 0 0 0 0
Total Long-Term Liabilities 41,628 33,974 32,865 21,853 17,123 33,906
Total Liabilities 78,680 78,895 72,451 67,564 58,332 84,695
Shareholder's Equity
Common Stock 4,846 9,872 10,056 20,553 20,902 21,074
Class B Common Stock 0 0 0 0 0 0
Capital In Excess Of Par Value 20,079 18,313 23,376 19,428 24,655 31,563
Reinvested Earnings 58,928 64,928 74,258 77,479 89,061 107,887
Accum. Other Comprehensive Loss (Income) 1,280 2,024 1 (12,041) (9,191) (16,672)
Employee Benefits & Restricted Stock (1,285) (1,065) (1,357) (744) (682) (659)
Treasury Stock (28,677) (30,006) (32,918) (32,856) (32,776) (32,170)
Total Shareholder's Equity 55,171 64,066 73,416 71,819 91,969 111,023
Total Liabilities & Shareholder's Equity 133,851 142,961 145,867 139,383 150,301 195,358

11. 11
Statement of Cash Flows
Actual
US GAAP
Thousands Of USD FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008
12/31/03 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08
CFs From Operating
Net Income 7,577 9,633 13,253 7,548 16,457 25,084
Changes In Working Capital:
Receivables (3,846) (823) (4,335) 1,373 301 (6,028)
Inventories (4,152) (5,622) 2,691 (1,531) 241 (5,577)
Prepaid Expenses & Other Current Assets 26 (862) (343) 302 (58) 371
Current Liabilities 3,719 (6,697) (1,341) (1,384) 2,142 2,142
Total Change In Working Capital (4,253) (14,004) (3,328) (1,240) 2,626 2,142
Depreciation 7,683 7,033 6,164 6,589 6,308 5,954
Amortization 149 212 195 418 159 1,097
Tax Benefit On Stock Options 585 877 1,370 2,935 1,997 3,988
Deferred Income Taxes 323 1,483 (318) (2,081) (1,149) (1,489)
Long-Lived Asset Impairment 0 0 0 1,369 0 0
Gain on Disposal Of Long-Term Assets 0 0 0 0 (495) (994)
Noncurrent Employee Benefits 1,317 2,264 2,758 3,116 3,167 3,398
Contributions To Pension Plan 702 (2,000) (2,000) 0 0 0
Stock-Based Compensation Expense 0 0 267 1,031 1,202 1,272
Total Non-Working Capital Adjustments: 10,759 9,869 8,436 13,377 11,189 9,238
Net Cash From Operations 14,083 5,498 18,361 19,685 30,272 27,052
Free Cash Flow 7,030 (74) 9,273 8,625 14,301 10,676
EBITDA 15,409 16,878 19,612 14,555 22,924 49,944
CF's From Investing
CapEx For Property, Plant, & Equipment (7,053) (5,572) (9,088) (11,060) (15,971) (13,237)
Capex As A % Of Sales -3.83% -2.72% -4.46% -4.81% -6.80% -4.74%
Proceeds On Disposal Of Long-Lived Assets 0 0 0 0 3,194 1,632
Acquisition Of Intangible Assets 0 0 0 0 0 (25,650)
Other (Net) (301) (655) (271) (516) (341) (909)
Net Cash From Investing (7,354) (6,227) (9,359) (11,576) (13,118) (38,164)
CF's From Financing
Net Increase (Decrease) In Short-Term Debt (16,812) 13,996 (8,230) 8,971 (7,957) (755)
Issuance Of Long-Term Debt 27,970 0 10,000 0 0 1,500
Repayment Of Long-Term Debt (16,900) (9,943) (7,376) (14,919) (1,943) (5,688)
Dividends Paid (3,425) (3,633) (3,923) (4,327) (4,866) (5,851)
Proceeds From The Exercise Of Stock Options 1,207 1,949 2,434 3,057 1,517 2,045
Tax Benefit On Stock Options 0 0 0 2,935 1,997 3,988
Treasury Stock Purchases (1,066) (1,711) (3,323) 0 0 0
Issuance Of Treasury Stock 607 816 1,286 579 170 176
Net Cash From Financing (8,419) 1,474 (9,132) (3,704) (11,082) 8,915
Net Change In Cash Balance (1,690) 745 (130) 4,045 6,072 (2,453)

12. 12
BMI Price History
BMI
$70
$60
$50
$40
$30
$20
$10
$0
1/2/2004
7/2/2004
1/2/2005
7/2/2005
1/2/2006
7/2/2006
1/2/2007
7/2/2007
1/2/2008
7/2/2008
1/2/2009
Quarterly Spot Copper Prices Per Metric Ton
$10,000
$9,000
$8,000
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0