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, 2006

                               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

     Indicate by check mark whether the Company (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the Company
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                 Yes [X] No [ ]

     Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

 Large accelerated filer [ ]   Accelerated filer [X]   Non-accelerated filer [ ]

     Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).

                                 Yes [ ] No [X]

     As of July 20, 2006, there were 14,073,936 shares of Common Stock
outstanding with a par value of $1 per share.



                               BADGER METER, INC.

          QUARTERLY REPORT ON FORM 10-Q FOR PERIOD ENDED JUNE 30, 2006

                                      INDEX



                                                                        Page No.
                                                                        --------
                                                                     
Part I. Financial Information:

   Item 1   Financial Statements:

            Consolidated Condensed Balance Sheets -- June 30, 2006
            and December 31, 2005                                           4

            Consolidated Condensed Statements of Operations -- Three
            and Six Months Ended June 30, 2006 and 2005                     5

            Consolidated Condensed Statements of Cash Flows -- Six
            Months Ended June 30, 2006 and 2005                             6

            Notes to Unaudited Consolidated Condensed Financial
            Statements                                                      7

   Item 2   Management's Discussion and Analysis of Financial
            Condition and Results of Operations                            12

   Item 3   Quantitative and Qualitative Disclosures about Market
            Risk                                                           15

   Item 4   Controls and Procedures                                        16

Part II. Other Information:

   Item 4   Submission of Matters to a Vote of Security Holders            16

   Item 6   Exhibits                                                       16

Signatures                                                                 17

Exhibit Index                                                              18



                                       2



SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

     Certain statements contained in this Form 10-Q, 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. All such forward looking statements are
based on the Company's then current views and assumptions and involve risks and
uncertainties that include, among other things:

     -    the continued shift in the Company's business from lower cost, local
          read meters toward more expensive, value-added automatic meter reading
          (AMR) systems;

     -    the success or failure of newer Company products, including the
          Orion(R) radio frequency mobile AMR system, the absolute digital
          encoder (ADE(TM)) and the Galaxy(R) fixed network AMR system;

     -    changes in competitive pricing and bids in both the domestic and
          foreign marketplaces, and particularly in continued intense price
          competition on government bid contracts for lower cost, local read
          meters;

     -    the actions (or lack thereof) of the Company's competitors;

     -    changes in the Company's relationships with its alliance partners,
          primarily its alliance partners that provide AMR connectivity
          solutions, and particularly those that sell products that do or may
          compete with the Company's products;

     -    changes in the general health of the United States and foreign
          economies, including housing starts in the United States and overall
          industrial activity;

     -    increases in the cost and/or availability of needed raw materials and
          parts, including recent increases in the cost of brass housings as a
          result of increases in the commodity prices for copper and zinc at the
          supplier level and resin as a result of increases in petroleum and
          natural gas prices;

     -    the ability to improve operating results for foreign markets that have
          experienced historical losses;

     -    changes in foreign economic conditions, particularly currency
          fluctuations between the United States dollar and the euro;

     -    the loss of certain single-source suppliers; and

     -    changes in laws and regulations, particularly laws dealing with the
          use of lead (which can be used in the manufacture of certain meters
          incorporating brass housings) and Federal Communications Commission
          rules affecting the use and/or licensing of radio frequencies
          necessary for AMR products.

     All of these factors are beyond the Company's control to varying degrees.
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 in this document are made only as of the date of this
document and the Company assumes no obligation, and disclaims any obligation, to
update any such forward looking statements to reflect subsequent events or
circumstances.


                                       3


                         PART I - FINANCIAL INFORMATION

ITEM 1 FINANCIAL STATEMENTS

                               BADGER METER, INC.
                      CONSOLIDATED CONDENSED BALANCE SHEETS



                                                  June 30,    December 31,
                                                    2006          2005
                                                -----------   ------------
                                                (Unaudited)
                                                       (In thousands)
                                                        
ASSETS
Current assets:
   Cash                                           $  3,509      $  4,403
   Receivables                                      38,255        30,450
   Inventories:
      Finished goods                                12,170        11,875
      Work in process                                8,688         9,048
      Raw materials                                 15,412        11,047
                                                  --------      --------
         Total inventories                          36,270        31,970
   Prepaid expenses                                  2,998         2,309
   Deferred income taxes                             3,466         3,432
                                                  --------      --------
         Total current assets                       84,498        72,564
Property, plant and equipment, at cost             114,519       109,810
   Less accumulated depreciation                   (68,009)      (65,940)
                                                  --------      --------
      Net property, plant and equipment             46,510        43,870
Intangible assets, at cost less accumulated
   amortization                                      1,108         1,026
Prepaid pension                                     16,822        17,726
Other assets                                         4,065         4,101
Goodwill                                             6,871         6,580
                                                  --------      --------
Total assets                                      $159,874      $145,867
                                                  ========      ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Short-term debt                                $ 20,858      $  8,847
   Current portion of long-term debt                 4,719         7,431
   Payables                                         14,872        11,484
   Accrued compensation and employee benefits        5,659         6,436
   Warranty and after-sale costs                     3,507         3,610
   Income and other taxes                            2,412         1,778
                                                  --------      --------
         Total current liabilities                  52,027        39,586
Other long term liabilities                            595           634
Deferred income taxes                                6,597         6,584
Accrued non-pension postretirement benefits          4,129         3,955
Other accrued employee benefits                      6,177         6,332
Long-term debt                                       6,966        15,360
Commitments and contingencies
Shareholders' equity:
   Common stock                                     20,469        20,112
   Capital in excess of par value                   15,168        13,320
   Reinvested earnings                              80,455        74,258
   Accumulated other comprehensive income              764             1
   Less: Employee benefit and nonvested stock         (795)       (1,357)
         Treasury stock, at cost                   (32,678)      (32,918)
                                                  --------      --------
      Total shareholders' equity                    83,383        73,416
                                                  --------      --------
Total liabilities and shareholders' equity        $159,874      $145,867
                                                  ========      ========


     See accompanying notes to consolidated condensed financial statements.


                                       4



                               BADGER METER, INC.

                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS



                                    Three Months Ended           Six Months Ended
                                         June 30,                    June 30,
                                -------------------------   -------------------------
                                       (Unaudited)                 (Unaudited)
                                  (In thousands except share and per share amounts)
                                    2006          2005          2006          2005
                                -----------   -----------   -----------   -----------
                                                              
Net sales                       $    62,405   $    57,432   $   123,441   $   111,864
Cost of sales                        41,810        37,348        81,734        72,425
                                -----------   -----------   -----------   -----------
Gross margin                         20,595        20,084        41,707        39,439
Selling, engineering and
   administration                    12,900        12,585        26,329        25,454
                                -----------   -----------   -----------   -----------
Operating earnings                    7,695         7,499        15,378        13,985
Interest expense                        412           317           801           775
                                -----------   -----------   -----------   -----------
Earnings before income taxes          7,283         7,182        14,577        13,210
Provision for income taxes            3,234         3,023         6,297         5,495
                                -----------   -----------   -----------   -----------
Net earnings                    $     4,049   $     4,159   $     8,280   $     7,715
                                ===========   ===========   ===========   ===========
Per share amounts:
   Earnings per share:
      Basic                     $       .29   $       .31   $       .60   $       .57
      Diluted                   $       .28   $       .30   $       .58   $       .55
   Dividends declared:          $      .075   $      .070   $      .150   $      .140
Shares used in computation of
   earnings per share:
      Basic                      13,866,729    13,449,654    13,709,700    13,426,628
   Impact of stock-based
      compensation                  514,697       547,010       544,606       499,916
                                -----------   -----------   -----------   -----------
      Diluted                    14,381,426    13,996,664    14,254,306    13,926,544
                                ===========   ===========   ===========   ===========


     See accompanying notes to consolidated condensed financial statements.


                                       5


                               BADGER METER, INC.

                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS



                                                  Six Months Ended
                                                      June 30,
                                                -------------------
                                                    (Unaudited)
                                                   (In thousands)
                                                  2006       2005
                                                --------   --------
                                                     
Operating activities:
   Net earnings                                 $  8,280   $  7,715
   Adjustments to reconcile net
      earnings to net cash provided by (used
      for) operations:
      Depreciation                                 3,460      3,449
      Amortization                                   182        117
      Tax benefit on stock options                    --        550
      Deferred income taxes                          (16)       (31)
      Noncurrent employee benefits                 2,365      1,127
      Changes in:
         Receivables                              (7,369)    (8,412)
         Inventories                              (3,869)       349
         Prepaid expenses                           (713)      (786)
         Current liabilities other than debt      (1,534)     4,573
                                                --------   --------
   Total adjustments                              (7,494)       936
                                                --------   --------
Net cash provided by operations                      786      8,651
                                                --------   --------
Investing activities:
   Property, plant and equipment                  (5,540)    (2,302)
   Other - net                                      (123)      (409)
                                                --------   --------
Net cash used for investing activities            (5,663)    (2,711)
                                                --------   --------
Financing activities:
   Net increase (decrease) in short-term debt     11,581    (10,100)
   Issuance of long-term debt                         --     10,000
   Repayments of long-term debt                  (11,106)    (5,066)
   Dividends paid                                 (2,084)    (1,882)
   Proceeds from exercise of stock options         2,024        629
   Tax benefit on stock options                    3,567         --
   Treasury stock purchases                           --     (1,653)
   Issuance of treasury stock                        312        576
                                                --------   --------
Net cash provided by (used for)
   financing activities                            4,294     (7,496)
                                                --------   --------
Effect of exchange rate on cash                     (311)       865
                                                --------   --------
Increase (decrease) in cash                         (894)      (691)
Cash - beginning of period                         4,403      2,834
                                                --------   --------
Cash - end of period                            $  3,509   $  2,143
                                                ========   ========


     See accompanying notes to consolidated condensed financial statements.


                                        6



                               BADGER METER, INC.

         NOTES TO UNAUDITED 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 Company's consolidated condensed financial
     position at June 30, 2006, results of operations for the three- and
     six-month periods ended June 30, 2006 and 2005, and cash flows for the
     six-month periods ended June 30, 2006 and 2005. The results of operations
     for any interim period are not necessarily indicative of the results to be
     expected for the full year.

     The preparation of financial statements in conformity with U.S. generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the amounts reported in the financial statements
     and accompanying notes. Actual results could differ from those estimates.

     On April 28, 2006, the Board of Directors declared a 2-for-1 stock split on
     the Company's Common Stock effected in the form of a 100% stock dividend,
     payable on June 15, 2006 to shareholders of record at the close of business
     on June 1, 2006. In this report, all the per share amounts and numbers of
     shares have been restated to reflect this stock split. In addition, Common
     Stock and capital in excess of par value have been adjusted to reflect this
     split for all periods presented.

     Certain other reclassifications have been made to the 2005 consolidated
     condensed financial statements to conform to the 2006 presentation.

2.   The consolidated condensed balance sheet at December 31, 2005 was derived
     from amounts included in the Company's Annual Report on Form 10-K for the
     year ended December 31, 2005. Refer to the footnotes to the financial
     statements included in that report for a description of the Company's
     accounting policies and for 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.

     GOODWILL Goodwill increased from $6.6 million at December 31, 2005 to $6.9
     million at June 30, 2006 as a result of translation adjustments for
     goodwill denominated in foreign currencies.

     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, 2006 and 2005 are as follows:



                 Balance at   Net additions              Balance
                  beginning     charged to      Costs       at
(In thousands)     of year       earnings     incurred   June 30
                 ----------   -------------   --------   -------
                                             
2006               $3,610          $936       $(1,039)    $3,507
2005               $3,817          $803       $  (942)    $3,678


     STOCK-BASED COMPENSATION PLANS At June 30, 2006, the Company has two types
     of stock-based employee compensation plans, which are described more fully
     in Note 1 "Summary of Significant Accounting Policies" under the heading
     "Stock-Based Compensation Plans" and Note 5 "Stock Option Plans" in the
     Notes to Consolidated Financial Statements in Part II, Item 8 of the
     Company's 2005 Annual Report on Form 10-K.

     The Company recognizes the cost of share-based awards for the all of its
     stock-based compensation plans on a straight-line basis over the vesting
     period of the awards. Total stock compensation expense recognized by the
     Company for the three- and six-month periods ended June 30, 2006 was
     $292,000 and $510,000, respectively, compared to $74,000 and $106,000 for
     the same periods in 2005.


                                        7



     Stock Options:

     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 800,000 shares of
     Common Stock, with vesting periods of up to ten years and maximum option
     terms of ten years. As of June 30, 2006, options to purchase 546,576 shares
     remain available for grant under three of these plans.

     Prior to January 1, 2006, the Company accounted for stock compensation
     plans under the recognition and measurement provisions of Accounting
     Principles Board Opinion No. 25 (APB 25), "Accounting for Stock Issued to
     Employees," and related Interpretations, as permitted by Financial
     Accounting Standards Board (FASB) Statement No. 123 (SFAS 123), "Accounting
     for Stock-Based Compensation." No stock-based employee compensation cost
     was recognized for stock option awards in the Consolidated Statements of
     Operations for the periods prior to January 1, 2006 as all options granted
     under those plans had an exercise price equal to the market value of the
     underlying Common Stock on the date of grant.

     Effective January 1, 2006, the Company adopted the fair value recognition
     provisions of FASB Statement No. 123(R) (SFAS 123(R)), "Share-Based
     Payment," using the modified-prospective-transition method. Under this
     transition method, compensation cost recognized in the second quarter and
     first six months of 2006 includes compensation costs for all share-based
     payments granted prior to, but not yet vested as of January 1, 2006, based
     on the grant date fair value estimated in accordance with the original
     provisions of SFAS 123 and compensation cost for all share-based payments
     granted subsequent to January 1, 2006, based on the grant date fair value
     estimated in accordance with the provisions of SFAS 123(R). The Company
     estimated the fair value of its option awards granted prior to January 1,
     2006 using the Black-Scholes option-pricing formula, and continued to use
     this model. The Company records compensation expense for stock options
     ratably over the stock option plans' vesting period. Results for prior
     periods have not been restated.

     As a result of adopting SFAS 123(R) on January 1, 2006, the Company's
     earnings before income taxes and net earnings for the three-month period
     ended June 30, 2006 were $104,000 and $72,000 lower, respectively, than if
     the Company had continued to account for share-based compensation under APB
     25. For the six-month period ended June 30, 2006, earnings before income
     taxes and net earnings were $211,000 and $150,000 lower, respectively.

     Prior to the adoption of SFAS 123(R), the Company presented all tax
     benefits of deductions resulting from the exercise of stock options as
     operating cash flows in the Consolidated Condensed Statements of Cash
     Flows. SFAS 123(R) requires the cash flows resulting from the tax benefits
     of the tax deductions in excess of the compensation cost recognized for
     those options (excess tax benefits) to be classified as financing cash
     flows.

     The following table illustrates the effects on net earnings and earnings
     per share if the Company had applied the fair value recognition provisions
     of SFAS 123 to stock option plans during the three and six months ended
     June 30, 2005. These pro forma calculations only include the effects of
     stock-based compensation granted since January 1, 1995. The value of the
     options (net of forfeitures) is amortized to expense on a straight-line
     basis over their vesting periods.



                                                Three months ended   Six months ended
(In thousands except per share amounts)            June 30, 2005       June 30, 2005
                                                ------------------   ----------------
                                                               
Net earnings, as reported                             $4,159              $7,715
Deduct:  Incremental stock-based compensation
   determined under fair value based method
   for all awards since January 1, 1995,
   net of related tax effects                            (62)               (138)
                                                      ------              ------
Pro forma net earnings                                $4,097              $7,577
                                                      ======              ======
Earnings per share:
   Basic, as reported                                 $  .31              $  .57
   Basic, pro forma                                   $  .31              $  .57
   Diluted, as reported                               $  .30              $  .55
   Diluted, pro forma                                 $  .29              $  .54



                                        8


     The following table summarizes the stock option transactions for the
     six-month periods ended June 30:



                                                 2006                 2005
                                          ------------------   ------------------
                                                    Weighted             Weighted
                                                     average              average
                                                    exercise             exercise
(In thousands except per share amounts)   Options     price    Options     price
                                          -------   --------   -------   --------
                                                             
Options outstanding at January 1           1,290     $ 7.35     1,618     $ 7.01
Options granted                               28     $31.41        37     $18.33
Options exercised                           (310)    $ 7.03      (171)    $ 6.72
Options forfeited/cancelled                   --         --       (38)    $ 7.89
                                           -----                -----
Options outstanding at June 30             1,008     $ 8.12     1,446     $ 7.31
                                           =====                =====
Exercisable at June 30                       664     $ 7.05       899     $ 7.20
                                           =====                =====


     The following assumptions were used for options granted in the six-month
periods ended June 30:



                                                             2006     2005
                                                            ------   -----
                                                               
Per share fair value of options granted during the period   $11.62   $5.76
Risk-free interest rate                                        5.0%    3.9%
Dividend yield                                                 .96%   1.42%
Volatility factor                                             34.0%   30.0%
Weighted-average expected life (in years)                     5.39     6.1


     The following table summarizes the aggregate intrinsic value related to
     options exercised, outstanding and exercisable as of and for the six-month
     periods ended June 30:



(In thousands)     2006      2005
                 -------   -------
                     
Exercised        $ 6,606   $ 1,580
Outstanding      $19,028   $15,349
Exercisable      $13,247   $ 9,636


     Stock options outstanding at June 30, 2006 are as follows (options in
     thousands):



                        Weighted              Weighted
                        average                average
                      contractual             exercise
Price Range               life      Options     price
-----------           -----------   -------   --------
                                     
$3.70 - $ 5.75            3.3          335     $ 5.67
$6.03 - $ 7.13            6.1          378     $ 7.05
$7.50 - $31.42            4.9          295     $12.28
                          ---        -----
Options outstanding       5.1        1,008     $ 8.12
                          ===        =====
Options exercisable       4.5          664     $ 7.05
                          ===        =====


     As of June 30, 2006, the unrecognized compensation cost related to stock
     options is approximately $675,000 ($431,000 on an after tax basis) which
     will be recognized over a weighted average period of 35 months.

     Nonvested Stock:

     Director Stock Grant Plan: Non-employee directors receive an annual award
     of 1,200 shares of Common Stock under the shareholder-approved 2002
     Director Stock Grant Plan. The Company records compensation expense for
     this plan ratably over the annual service period beginning May 1. Director
     stock compensation expense recognized by the Company for the three- and
     six-month periods ended June 30, 2006 was $49,000 and $113,000,
     respectively, compared to $42,000 and $74,000 of compensation expense
     recognized for the same periods in 2005. As of June 30, 2006, the
     unrecognized compensation cost related to the nonvested director stock
     award that is expected to be recognized over the remaining ten months is
     estimated to be approximately $162,000 ($99,000 on an after tax basis).

     Restricted Stock: On April 28, 2005, a restricted stock plan was approved
     which provides for the issuance of nonvested Common Stock to certain
     eligible employees. The Company records compensation expense for this plan
     ratably over the vesting period. The plan authorizes the issuance of up to
     an aggregate of 100,000


                                        9



     shares of Common Stock, of which a net of 31,000 were issued in the second
     quarter of 2005 and 48,000 were issued in the second quarter of 2006.
     Restricted stock awards have a three-year cliff vesting period contingent
     on employment. Restricted stock compensation expense recognized by the
     Company for the three- and six-month periods ended June 30, 2006 was
     $139,000 and $186,000, respectively, compared to $32,000 for the three-
     and six-month periods in 2005.

     The fair value of nonvested shares is determined based on the market price
     of the Company's shares on the grant date.



                                                   Fair value
(In thousands except per share amounts)   Shares    per share
                                          ------   ----------
                                             
Nonvested at January 1                      31       $18.33
Granted                                     48       $31.41
Vested                                      (1)      $18.33
Forfeited                                   --           --
                                           ---       ------
Nonvested at June 30, 2006                  78       $26.40
                                           ===       ======


     As of June 30, 2006, there was $1.7 million ($1.0 million on an after tax
     basis) of unrecognized compensation cost related to non-vested restricted
     stock that is expected to be recognized over a weighted average period of
     2.6 years.

3.   The Company maintains a non-contributory defined benefit pension plan for
     its domestic employees and a non-contributory postretirement plan that
     provides medical benefits for certain domestic retirees and eligible
     dependents. The following table sets forth the components of net periodic
     benefit cost for the three months ended June 30, 2006 and 2005 based on a
     September 30 measurement date:



                                                             Other
                                                        postretirement
                                     Pension benefits      benefits
                                     ----------------   --------------
(In thousands)                         2006    2005      2006    2005
                                      -----   -----      ----    ----
                                                     
Service cost                          $ 485   $ 457      $ 56    $ 44
Interest cost                           595     625       122     125
Expected return on plan assets         (918)   (910)       --      --
Amortization of prior service cost      (28)    (29)       (9)    (45)
Amortization of net loss                318     248        59      40
                                      -----   -----      ----    ----
Net periodic benefit cost             $ 452   $ 391      $228    $164
                                      =====   =====      ====    ====


     The following table sets forth the components of net periodic benefit cost
     for the six months ended June 30, 2006 and 2005 based on a September 30
     measurement date:



                                                              Other
                                                         postretirement
                                      Pension benefits      benefits
                                     -----------------   --------------
(In thousands)                         2006      2005     2006   2005
                                     -------   -------    ----   ----
                                                     
Service cost                         $   970   $   914    $113   $ 88
Interest cost                          1,190     1,250     243    250
Expected return on plan assets        (1,836)   (1,820)     --     --
Amortization of prior service cost       (56)      (58)    (18)   (90)
Amortization of net loss                 636       496     119     80
                                     -------   -------    ----   ----
Net periodic benefit cost            $   904   $   782    $457   $328
                                     =======   =======    ====   ====


     The Company previously disclosed in its financial statements for the year
     ended December 31, 2005 that it did not expect to contribute funds to its
     pension plan in 2006. While the Company believes that it will not be
     required to make a contribution in 2006, such belief is based upon the
     estimated return on assets as of the annual measurement date of September
     30, 2006.

     The Company also disclosed in its financial statements for the year ended
     December 31, 2005 that it estimated it would pay $1.0 million in other
     postretirement benefits in 2006. As of June 30, 2006, $506,000 of such
     benefits were paid. The Company continues to believe that its estimated
     payments for the full year are reasonable. Note that the amount of benefits
     paid in calendar year 2006 will not impact the expense for postretirement
     benefits for the current year.


                                       10



4.   The Company guarantees the debt of the Badger Meter Officers' Voting Trust
     ("BMOVT"), from which the BMOVT obtained loans from a bank on behalf of the
     officers of the Company 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. The Company has
     guaranteed $0.5 million and $1.1 million of the BMOVT's debt at June 30,
     2006 and December 31, 2005, respectively. The current loan matures in April
     2007, at which time it is expected to be renewed. The fair market value of
     this guarantee at June 30, 2006 continues to be insignificant because the
     collateral value of the shares exceeds the loan amount. It is the Company's
     intention to eliminate the BMOVT by December 31, 2010, because it no longer
     fulfills its original purpose of providing officers with loans to purchase
     Common Stock. The Company has no other off-balance sheet arrangements.

     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
     $120,000 in the first quarter of 2006 reduced the loan from $0.9 million at
     December 31, 2005 to $0.8 million at June 30, 2006.

5.   Total comprehensive income was $4.6 million and $3.2 million for the
     three-month periods ended June 30, 2006 and 2005, respectively. Included in
     the three-month periods ended June 30, 2006 and 2005 was a $0.5 million
     gain and a $0.9 million loss, respectively, of other comprehensive income
     related to foreign currency translation adjustments. Total comprehensive
     income was $9.0 million and $6.1 million for the six-month periods ended
     June 30, 2006 and 2005, respectively. Included in the six-month periods
     ended June 30, 2006 and 2005 was a $0.8 million gain and a $1.7 million
     loss, respectively, of other comprehensive income related to foreign
     currency translation adjustments.

6.   In the normal course of business, the Company is named in legal proceedings
     from time to time. There are currently no material legal proceedings
     pending with respect to the Company. The more significant legal proceedings
     are as follows.

     The Company is subject to contingencies relative to environmental laws and
     regulations. Currently, the Company is in the process of resolving matters
     relative to two landfill sites. Provision has been made for all known
     settlement costs, which are not material.

     The Company is also a defendant in numerous multi-party asbestos lawsuits
     pending in various states. These lawsuits assert claims alleging that
     certain industrial products were manufactured by the defendants and were
     the cause of injury and harm. The Company is vigorously defending itself
     against these claims. Although it is not possible to predict the ultimate
     outcome of these matters, 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 has evaluated its worldwide operations to determine whether any
     risks and uncertainties exist that could severely impact its operations in
     the near term. The Company does not believe that there are any significant
     risks. However, the Company relies on single suppliers for certain castings
     and components in several of its product lines. Although alternate sources
     of supply exist for these items, loss of certain suppliers could
     temporarily disrupt operations in the short term. The Company attempts to
     mitigate these risks by working closely with key suppliers, purchasing
     minimal amounts from alternative suppliers and by purchasing business
     interruption insurance where appropriate.

     The Company reevaluates its exposures on a periodic basis and makes
     adjustments to reserves as appropriate.

7.   In June 2006, the FASB issued Financial Interpretation No. (FIN) 48,
     "Accounting for Uncertainty in Income Taxes," which clarifies the
     accounting for uncertainty in income taxes recognized in a company's
     financial statements in accordance with FASB Statement No. 109, "Accounting
     for Income Taxes." The interpretation prescribes a recognition threshold
     and measurement attribute criteria for the financial statement recognition
     and measurement of a tax position taken or expected to be taken in a tax
     return. The interpretation also provides guidance on derecognition,
     classification, interest and penalties, accounting in interim periods,
     disclosure and transition. The Company is required to adopt FIN 48 on
     January 1, 2007 and is currently evaluating the impact that the adoption of
     FIN 48 will have on its consolidated financial condition, results of
     operations and cash flows.


                                       11



ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

BUSINESS DESCRIPTION AND OVERVIEW

     The Company is a leading marketer and manufacturer of products using flow
measurement and control technologies developed both internally and with other
technology companies. Its products are used to measure and control the flow of
liquids in a variety of applications. The Company's product lines fall into two
general categories, utility and industrial. The utility category is comprised of
two product lines, residential and commercial water meters (with various
automatic meter reading (AMR) technology systems), which are generally sold to
water utilities and constitute a majority of the Company's sales. Industrial
product line sales comprise the remainder of the Company's sales and include
automotive fluid meters and systems, small precision valves, electromagnetic
meters, impeller flow meters and industrial process meters (all with related
accessories and instrumentation).

     Residential and commercial water meters and related systems are classified
as local (or manual) read meters or AMR products. Local read meters consist of a
water meter and a register. With AMR meters, the register digitally encodes the
mechanical reading and its radio frequency transmitter communicates the data to
a computerized system that collects the data and sends it to specific utility
computerized programs. Net sales and the corresponding net earnings depend on
unit volume and mix of products, with the Company generally earning higher
margins on residential AMR products (the impact of AMR on commercial products is
not as significant given the higher sales prices of commercial meters). The
Company sells AMR products of other companies as well as its own proprietary
product, Orion(R), which has higher margins than the other AMR products. Net
sales and the corresponding net earnings are therefore also dependent on the mix
of AMR products between proprietary and non-proprietary products. Orion(R) is
currently being sold as a walk-by/drive-by system, but also has the ability to
connect with a variety of other technologies, such as power line carrier,
broadband over power line, municipal WI-FI and radio frequency systems to allow
for remote reading of the data.

     There is a base level of annual business for utility products driven by
replacement units and, to a lesser extent, housing starts. Sales above the base
level depend on conversions to AMR away from manual read meters. The Company
believes that conversion from local read meters to AMR products can accelerate
replacements of meters and result in growth, because it is estimated that only
15-20% of the water meter market has been converted to AMR. Badger Meter's
strategy is to solve customers' metering needs with its proprietary meter
reading systems or other systems available through alliances within the
marketplace.

     The industrial products generally serve niche markets and have in the past
utilized technology derived from utility products to serve industrial uses. As
these markets evolve, these products are becoming more specialized to meet
industrial flow measurement and communication protocol requirements. Serving
these markets allows the Company to expand its technologies into other areas of
flow measurement and control, as well as utilize existing capacity and spread
fixed costs over a larger sales base.

BUSINESS TRENDS

     As noted above, the Company sells AMR products of other companies as well
as its own proprietary product, Orion(R). The Company currently has a
distribution agreement under which it resells products produced by Itron, Inc.
Prior to the Company's introduction of its own proprietary Orion(R) products,
Itron water utility related products were a significant contributor to the
Company's results. The Company's Orion(R) products directly compete with Itron
water AMR products and, in recent years, many of the Company's customers have
selected Orion(R) products. As a result, the Company's 2005 sales of Itron
products decreased approximately 12%, while Orion(R) sales doubled compared to
2004. This trend continued as sales of Itron products decreased approximately 6%
and 13% in the first and second quarters of 2006 respectively, while Orion(R)
sales increased 43% and 20% compared to the corresponding periods of 2005. The
Company expects this trend to continue, although it also believes that Itron
products will remain a significant component of utility sales. Decreases in
sales of Itron products have been offset by increases in sales of Orion(R)
products, which produce a higher gross margin than the Itron products. As a
result, the Company does not expect this trend to have a material negative
impact on the Company's financial position or results of operations.


                                       12



RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 2006

     Net sales for the three-month period ended June 30, 2006 increased $5.0
million, or 8.7%, over the same period in 2005. The overall sales increase was
driven by increased sales in both local read and AMR meters as well as
significant increases in commercial meters, all caused by volume increases, and
by higher industrial sales.

     Residential and commercial water meter sales represented 75.8% of total
sales in the second quarter of 2006 compared to 75.0% in the second quarter of
2005. These sales increased $4.2 million to $47.3 million compared to $43.1
million in the same period in 2005 due to increased sales of local (or manual)
read water meter units, units utilizing AMR technologies and commercial meters.
Most notable in the increase of AMR technologies was the increase in sales of
the Company's proprietary AMR product, Orion(R), which increased approximately
20.0% over the amount sold in the second quarter of 2005. The increase in
Orion(R) sales was somewhat offset by sales decreases in other AMR technologies.

     Industrial sales were affected by economic conditions, domestically and
internationally, in each of the markets served by the various product lines. In
total, industrial products represented 24.2% of total sales for the three months
ended June 30, 2006 compared to 25.0% for the same period in 2005. Industrial
sales increased $0.8 million to $15.1 million in the second quarter of 2006
compared to $14.3 million in the second quarter of 2005. The increase in sales
was driven primarily by higher sales of electromagnetic meters.

     Gross margins in total for the second quarter of 2006 were 33.0% compared
to 35.0% in the second quarter of 2005. The decrease in gross margin was due to
the Company experiencing considerable cost increases on purchased castings due
to increased prices of raw material metals, particularly copper, which is a main
component in purchased brass castings. The Company was unable to recoup these
increases in the second quarter. The Company has announced price increases for
the third quarter of 2006 which are intended to recover the increased cost of
materials. Gross margins were also negatively affected by the net impact of
lower margins on automotive fluid meters and related systems due to competition,
offset somewhat by higher residential meter margins due to the higher mix of AMR
products, particularly the Orion(R) product, which carries higher margins.

     Selling, engineering and administration costs for the second quarter of
2006 were 20.7% as a percent of net sales compared to 21.9% for the same period
in 2005. The decrease in selling, engineering and administration costs as a
percent of net sales is the result of cost containment efforts and higher sales
levels, offset by normal inflationary pressures. In addition, the second quarter
of 2006 includes $104,000 of additional compensation expense due to expensing
stock options to comply with SFAS 123(R), "Share-Based Payment".

     Interest expense for the second quarter of 2006 was less than $0.1 million
higher than the same period in the prior year primarily due to higher interest
rates.

     The effective tax rate for the second quarter of 2006 was 44.4% compared to
42.1% in the same period in the prior year. The effective tax rate for both
periods exceeds normal statutory tax rates primarily as a result of the Company
recognizing a full valuation reserve for the operating losses of the Company's
French subsidiary. The French operation continues to generate losses and the
Company is exploring options for the future of this business.

     As a result of the above-mentioned items, net earnings for the second
quarter of 2006 were $4.0 million compared to net earnings in the second quarter
of 2005 of $4.2 million. On a diluted earnings per share basis, this equated to
$0.28 per share for the second quarter of 2006 compared to $0.30 for the same
period in 2005.

RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 2006

     Net sales for the six-month period ended June 30, 2006 increased $11.6
million, or 10.3%, over the same period in 2005. The overall sales increase was
driven by increased sales in both local read and AMR meters as well as
significant increases in commercial meters, all caused by volume increases,
offset by slightly lower industrial sales.

     Residential and commercial water meter sales represented 76.6% of total
sales for the first six months of 2006 compared to 74.1% for the same period in
2005. These sales increased $11.6 million to $94.5 million compared to $82.9
million in the same period in 2005 due to increased sales of local (or manual)
read water meter units, units utilizing AMR technologies and commercial meters.
Most notable in the increase of AMR


                                       13


technologies was the increase in sales of the Company's proprietary AMR product,
Orion(R), which increased 30.8% over the amount sold in the first six months of
2005. This was mitigated somewhat by sales decreases in other AMR technologies.

     Industrial sales were affected by economic conditions, domestically and
internationally, in each of the markets served by the various product lines. In
total, industrial products represented 23.4% of total sales for the six months
ended June 30, 2006 compared to 25.9% for the same period in 2005. Industrial
sales decreased less than $0.1 million to $28.9 million for the first six months
2006 compared to $29.0 million for the same period in 2005. This was driven
primarily by decreases in automotive systems products sold by the Company's
French subsidiary offset by higher sales of electromagnetic meters and
industrial products.

     Gross margins in total for the six months ending June 30, 2006 were 33.8%
compared to 35.3% in the same period in 2005. The decrease in gross margin was
due to the Company experiencing considerable cost increases on purchased
castings due to increased prices of raw material metals, particularly copper,
which is a main component in purchased brass castings. The Company was unable to
recoup these increases in the first half of 2006. The Company has announced
price increases for the third quarter of 2006 which are intended to recover the
increased costs of materials. Gross margins were also negatively affected by the
net impact of lower margins on automotive fluid meters and related systems due
to competition, offset somewhat by higher residential meter margins due to the
higher mix of AMR products, particularly the Orion(R) product, which carries
higher margins, and higher margins on commercial meters due to increased volume.

     Selling, engineering and administration costs for the six months ending
June 30, 2006 were 21.3% as a percent of net sales compared to 22.8% for the
same period in 2005. The decrease in selling, engineering and administration
costs as a percent of net sales is the result of cost containment efforts and
higher sales levels, offset by normal inflationary pressures. In addition, this
six-month period of 2006 includes $211,000 of additional compensation expense
due to expensing stock options to comply with SFAS 123(R), "Share-Based
Payment".

     Interest expense for the first six months of 2006 was less than $0.1
million higher than the same period in the prior year primarily due to higher
interest rates.

     The effective tax rate for the first six months of 2006 was 43.2% compared
to 41.6% in the same period in the prior year. The effective tax rate for both
periods exceeds normal statutory tax rates primarily as a result of the Company
recognizing a full valuation reserve for the operating losses of the Company's
French subsidiary. The French operation continues to generate losses and the
Company is exploring options for the future of this business.

     As a result of the above-mentioned items, net earnings for the six months
ended June 30, 2006 were $8.3 million compared to net earnings for the same
period in 2005 of $7.7 million. On a diluted earnings per share basis, this
equated to $0.58 per share for the first six months of 2006 compared to $0.55
for the same period in 2005.

LIQUIDITY AND CAPITAL RESOURCES

     The main sources of liquidity for the Company typically are cash provided
by operations and borrowing capacity. For the first six months of 2006, $0.8
million of cash was provided by operations, primarily as the net result of
increased earnings adjusted for depreciation and amortization, offset by
increased inventory and receivables.

     The change in the receivables balance from $30.5 million at December 31,
2005 to $38.3 million at June 30, 2006 was primarily due to increased sales and
the timing of certain customer payments.

     Inventories at June 30, 2006 have increased $4.3 million to $36.3 million
from the December 31, 2005 balance of $32.0 million due primarily to increased
sales and higher material costs, particularly on brass castings.

     Property, plant and equipment increased $2.6 million since December 31,
2005. This is the net result of $5.5 million of capital expenditures and $3.5
million of depreciation expense including the effects of currency adjustments.

     Short-term debt and the current portion of long-term debt at June 30, 2006
increased $9.3 million to a combined $25.6 million versus a balance at December
31, 2005 of $16.3 million. Long-term debt decreased to $7.0 million at June 30,
2006 from $15.4 million at December 31, 2005. Overall, the Company's total debt
position has increased slightly due to changes in working capital accounts.
Total debt is 28.1% of total


                                       14



capitalization (debt and equity) at June 30, 2006 compared to 30.1% at December
31, 2005. At June 30, 2006, none of the Company's debt carried financial
covenants or required collateral.

     Payables increased to $14.9 million at June 30, 2006 from $11.5 million at
December 31, 2005 primarily as a result of the timing of payments and increased
inventory levels. Accrued compensation and employee benefits decreased $0.8
million since December 31, 2005 to $5.7 million due to the first quarter 2006
payments of amounts accrued at December 31, 2005, offset somewhat by costs
accrued for 2006 expenses to date.

     Common stock and capital in excess of par value have increased from
December 31, 2005 due to new shares issued in connection with the exercise of
stock options. Employee benefit stock decreased as a result of a payment made on
the ESSOP loan during the first quarter of 2006, amortization of nonvested stock
expense and the adoption of SFAS 123(R), which required the reclassification of
amounts from employee benefit stock to capital in excess of par value.

     Badger Meter's financial condition remains strong. The Company believes
that its operating cash flows, available borrowing capacity, including $32.9
million of unused credit lines, and its ability to raise additional capital
provide adequate resources to fund ongoing operating requirements, future
capital requirements and the development of new products.

OTHER MATTERS

     There are currently no material legal proceedings pending with respect to
the Company. The more significant legal proceedings are as follows.

     The Company is subject to contingencies relative to environmental laws and
regulations. Currently, the Company is in the process of resolving matters
relative to two landfill sites. Provision has been made for all known settlement
costs, which are not material.

     The Company is also a defendant in numerous multi-party asbestos lawsuits
pending in various states. These lawsuits assert claims alleging that certain
industrial products were manufactured by the defendants and were the cause of
injury and harm. The Company is vigorously defending itself against these
claims. Although it is not possible to predict the ultimate outcome of these
matters, 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.

     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.

ACCOUNTING CHANGE

     The Company began expensing the cost of stock options on January 1, 2006
when it adopted SFAS 123(R), "Share-Based Payment". See Note 2 to the Notes to
Unaudited Consolidated Condensed Financial Statements in this Form 10-Q for
information regarding this accounting change.

OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

     The Company's off-balance sheet arrangements and contractual obligations
are discussed in Part II, Item 7 "Management's Discussion and Analysis of
Financial Condition and Results of Operations" under the headings "Off-Balance
Sheet Arrangements" and "Contractual Obligations" in the Company's Annual Report
on Form 10-K for the year ended December 31, 2005, and have not materially
changed since that report was filed.

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 Risks" in the
Company's Annual Report on Form 10-K for the year ended December 31, 2005, and
have not materially changed since that report was filed.


                                       15



ITEM 4 CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

     In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934
(the "Exchange Act"), the Company's management evaluated, with the participation
of the Company's Chairman, President and Chief Executive Officer and the
Company's Senior Vice President - Finance, Chief Financial Officer and
Treasurer, the effectiveness of the design and operation of the Company's
disclosure controls and procedures (as defined in Rule 13a-15(e) under the
Exchange Act) as of the end of the quarter ended June 30, 2006. Based upon their
evaluation of these disclosure controls and procedures, the Company's Chairman,
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 end of the quarter
ended June 30, 2006 to ensure that material information relating to the Company,
including its consolidated subsidiaries, was made known to management by others
within those entities as appropriate to allow timely decisions regarding
disclosure, particularly during the period in which this Quarterly Report on
Form 10-Q was being prepared.

Changes in Internal Control over Financial Reporting

     There was no change in the Company's internal control over financial
reporting that occurred during the quarter ended June 30, 2006, that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.

                           PART II - OTHER INFORMATION

ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     At the Company's Annual Meeting of Shareholders held on April 28, 2006, the
following individuals were elected to the Board of Directors:



                                              Votes       Votes
NAME                                           FOR      WITHHELD   Not Voted
----                                        ---------   --------   ---------
                                                          
Directors elected to three-year terms
   expiring at the 2009 Annual Meeting:
Ulice Payne, Jr.                            6,157,489    45,829     717,832
Andrew J. Policano                          6,178,066    25,252     717,832
Steven J. Smith                             6,165,378    37,939     717,833

Directors continuing in office with terms
   expiring at the 2007 Annual Meeting:
Kenneth P. Manning
John J. Stollenwerk

Directors continuing in office with terms
   expiring at the 2008 Annual Meeting:
Ronald H. Dix
Thomas J. Fischer
Richard A. Meeusen


ITEM 6 EXHIBITS



EXHIBIT NO.   DESCRIPTION
-----------   -----------
           
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.



                                       16



                                   SIGNATURES

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: August 3, 2006                   By /s/ Richard A. Meeusen
                                           -------------------------------------
                                           Richard A. Meeusen
                                           Chairman, 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 - Controller


                                       17



                               BADGER METER, INC.

          QUARTERLY REPORT ON FORM 10-Q FOR PERIOD ENDED JUNE 30, 2006

                                  EXHIBIT INDEX



EXHIBIT NO.   DESCRIPTION
-----------   -----------
           
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.



                                       18