<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended July 31, 1995 Commission file number 001-07763
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MET-PRO CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARIES
-----------------------------------------------------
DELAWARE 23-1683282
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. BOX 144, HARLEYSVILLE, PA 19438
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 215-723-6751
------------
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Former name, former address and former fiscal year,
if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
X Yes No
-------- --------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the close of the period covered by this report.
Class: COMMON, PAR VALUE $.10 PER SHARE OUTSTANDING at 7/31/95 4,672,040
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MET-PRO CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARIES
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
July 31, 1995
- -------------------------------------------------------------------------------
INDEX
Part I - Financial Information:
Condensed consolidated balance sheet as of
July 31, 1995 and January 31, 1995 2
Condensed consolidated statement of income for the
three-month and six-month periods ended
July 31, 1995 and 1994 3
Condensed consolidated statement of cash flows
for the six-month periods ended
July 31, 1995 and 1994 4
Notes to condensed consolidated financial statements 5
Management's discussion and analysis of
the financial condition and results
of operations 6 to 8
Report on Review by Independent Accountants 9
Part II - Other Information 10
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MET-PRO CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARIES
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CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JULY 31, JANUARY 31,
1995 1995
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 7,270,702 $ 6,648,380
Accounts receivable, net of allowance for doubtful
accounts of approximately $171,500 and $184,000,
respectively 8,624,401 8,107,243
Inventories 11,069,798 10,693,734
Prepaid expenses, deposits and other current assets 593,367 646,571
Deferred income taxes 500,000 500,000
----------- -----------
Total current assets 28,058,268 26,595,928
Property, plant and equipment, net 13,500,762 13,219,129
Costs in excess of net assets of businesses acquired, net 3,769,283 3,807,326
Other assets 1,388,676 1,546,161
----------- -----------
Total assets $46,716,989 $45,168,544
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 1,173,885 $ 1,170,821
Accounts payable 2,382,657 2,279,262
Accrued salaries, wages and expenses 6,231,773 5,777,565
Payroll and other taxes payable 4,777 6,266
Customers' advances 827,466 272,387
----------- -----------
Total current liabilities 10,620,558 9,506,301
----------- -----------
Long-term debt 2,289,661 2,877,386
----------- -----------
Other non-current liabilities 68,106 34,847
----------- -----------
Deferred income taxes 627,473 666,000
----------- -----------
Stockholders' equity:
Common stock, $.10 par value; 10,000,000 shares
authorized, 4,759,221 and 3,193,418 shares
issued, respectively, of which 87,181 and
98,128 shares, were reacquired and held in
treasury 475,922 319,342
Additional paid-in capital 7,553,647 7,401,641
Retained earnings 25,508,355 24,816,542
Cumulative translation adjustment 356,963 233,760
----------- -----------
33,894,887 32,771,285
Treasury stock, at cost ( 783,696) ( 687,275)
----------- -----------
Net stockholders' equity 33,111,191 32,084,010
----------- -----------
Total liabilities and stockholders' equity $46,716,989 $45,168,544
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</TABLE>
See accompanying notes to condensed consolidated financial statements.
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MET-PRO CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARIES
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CONDENSED CONSOLIDATED STATEMENT OF INCOME
(unaudited)
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<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
JULY 31, JULY 31,
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 26,746,957 $ 23,944,047 $ 13,615,141 $ 12,206,905
Cost of goods sold 17,654,872 15,831,165 9,011,505 8,059,772
------------ ------------ ------------ ------------
Gross profit 9,092,085 8,112,882 4,603,636 4,147,133
------------ ------------ ------------ ------------
Operating expenses:
Selling 2,303,616 2,020,903 1,177,888 1,004,629
General and administrative 3,252,374 3,221,442 1,606,789 1,631,480
------------ ------------ ------------ ------------
5,555,990 5,242,345 2,784,677 2,636,109
------------ ------------ ------------ ------------
Income from operations 3,536,095 2,870,537 1,818,959 1,511,024
Other income, net 261,717 116,666 128,503 60,991
------------ ------------ ------------ ------------
Income before taxes on income 3,797,812 2,987,203 1,947,462 1,572,015
Provisions for taxes on income 1,538,112 1,194,881 788,721 628,807
------------ ------------ ------------ ------------
Net income $ 2,259,700 $ 1,792,322 $ 1,158,741 $ 943,208
============ ============ ============ ============
Earnings per share* $ .48 $ .38 $ .25 $ .20
============ ============ ============ ============
Cash dividends per share** $ .30 $ .25 $ -- $ --
============ ============ ============ ============
</TABLE>
* Based on weighted average shares outstanding of 4,715,315 and 4,716,410 in
the six-month periods ended July 31, 1995 and 1994, respectively, and
4,715,698 and 4,716,072 in the three-month periods ended July 31, 1995 and
1994, respectively, fully diluted. The average shares outstanding were
adjusted for a 3-for-2 stock split which was completed by the Company on
May 12, 1995.
** The Company declared a 3-for-2 stock split and a cash dividend of $.30 per
share, both of which were paid on May 12, 1995 to stockholders of record on
April 7, 1995. The cash dividend was paid on all outstanding shares,
including those issued as a result of the stock split.
See accompanying notes to condensed consolidated financial statements.
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MET-PRO CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARIES
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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
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<TABLE>
<CAPTION>
SIX MONTHS ENDED
JULY 31,
1995 1994
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INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<S> <C> <C>
Net cash provided by operating activities $ 3,517,306 $ 2,114,932
----------- -----------
Net cash (used in) investing activities:
Acquisition of property, plant and equipment (net) ( 868,009) ( 704,042)
----------- -----------
Net cash provided by (used in) financing activities:
Reduction of debt ( 584,661) ( 581,846)
Payment of dividends (1,411,308) ( 780,070)
Exercise of stock options 299,990 4,000
Purchase of treasury shares (354,371) ( 125,335)
----------- -----------
( 2,050,350) ( 1,483,251)
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Effect of exchange rate changes on cash 23,375 17,448
----------- -----------
Net increase (decrease) in cash and cash equivalents 622,322 ( 54,913)
----------- -----------
Cash and cash equivalents:
February 1 6,648,380 4,425,347
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July 31 $ 7,270,702 $ 4,370,434
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 140,476 $ 141,031
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Income taxes $ 1,445,034 $ 1,089,182
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</TABLE>
See accompanying notes to condensed consolidated financial statements.
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MET-PRO CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARIES
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments necessary to
present fairly the financial position as of July 31, 1995 and the
results of operations for the three-month and six-month periods ended
July 31, 1995 and 1994 and the statement of cash flows for the
six-month periods then ended. The results of operations for the
three-month and six-month periods ended July 31, 1995 are not
necessarily indicative of the results to be expected for the full year.
2. Margolis & Company P.C., the Company's auditors, has performed a
limited review of the financial information included herein. Their
report on such review accompanies this filing.
3. Inventories were comprised of the following:
JULY 31, JANUARY 31,
1995 1995
--------- ------------
Raw material $ 4,535,380 $ 4,381,304
Work-in-progress 1,899,070 1,834,555
Finished goods 4,635,348 4,477,875
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$11,069,798 $10,693,734
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<PAGE>
MET-PRO CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARIES
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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Results of Operations
- ---------------------
Sales for the six-month period ended July 31, 1995 were $26,746,957 compared to
$23,944,047 for the six-month period ended July 31, 1994, an increase of
$2,802,910 or 11.7%. This increase was due to higher sales activity in both the
Fluid Handling and the Pollution Control Systems and Allied Equipment segments
of the business. The backlog at July 31, 1995 was 25.4% higher compared to the
backlog at the beginning of the fiscal year. Bookings of new orders were 7.3%
higher for the six-month period ended July 31, 1995 than for the six-month
period ended July 31, 1994. The length of time required to design, engineer,
manufacture and ship some of the pollution control systems combined with
contract requirements will cause shipments to vary from quarter to quarter.
Income before taxes for the six-month period ended July 31, 1995 was $3,797,812
compared to $2,987,203 for the six-month period ended July 31, 1994, an increase
of $810,609 or 27.1%. The increase in income before taxes is related to a
combination of factors. The increase in sales of $2,802,910 for the six-month
period ended July 31, 1995 contributed $979,203 and the increase in other income
contributed $145,051, which was offset by increased operating expenses of
$313,645.
The gross profit margin for the six-month period ended July 31, 1995 was 34.0%,
virtually flat compared to the same period last year.
Selling expense increased $282,713 during the six-month period ended July 31,
1995 compared to the same period last year primarily due to an increase in
staffing levels. Selling expense as a percentage of sales was 8.6% for the
six-month period ended July 31, 1995, virtually flat compared to the six-month
period ended July 31, 1994.
General and administrative expense was $3,252,374 for the six-month period ended
July 31, 1995 compared to $3,221,442 for the same period last year. General and
administrative expense as a percentage of sales declined to 12.2% for the
six-month period ended July 31, 1995 from 13.5% for the same period last year.
Other income, net, increased $145,051 for the six-month period ended July 31,
1995 compared to the six-month period ended July 31, 1994. Other income, which
is comprised primarily of interest income, increased due to higher cash balances
combined with higher short-term interest rates.
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MET-PRO CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARIES
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED
Liquidity
- ---------
The Company's cash and cash equivalents amounted to $7,270,702 on July 31, 1995
and $6,648,380 on January 31, 1995, an increase of $622,322. This increase is
the result of positive cash flow provided by operating activities of $3,517,306
and proceeds received from the exercise of stock options of $299,990, offset by
payments of long-term debt totalling $584,661, the acquisition of property and
equipment amounting to $868,009, the acquisition of treasury shares of $354,371
and the payment of dividends of $1,411,308. The Board of Directors declared a
3-for-2 stock split and an annual cash dividend of $ .30 per share payable on
May 12, 1995, to shareholders of record on April 7, 1995. The dividend was paid
on all outstanding shares, including the additional shares issued as a result of
the stock split. This was an 80% increase in the cash dividend.
Accounts receivable (net) amounted to $8,624,401 on July 31, 1995 compared to
$8,107,243 on January 31, 1995, which represents an increase of $517,158. The
timing and size of shipments combined with retainage on contracts, especially in
the Pollution Control Systems and Allied Equipment segment, will influence
accounts receivable balances at any point in time.
Inventories were $11,069,798 on July 31, 1995 compared to $10,693,734 on January
31, 1995, an increase of $376,064. Inventory balances fluctuate depending upon
the business segment involved, the number of contracts in progress, and lead
times required.
Current liabilities amounted to $10,620,558 on July 31, 1995 compared to
$9,506,301 on January 31, 1995, an increase of $1,114,257. Accounts payable and
accrued expenses accounted for approximately $558,000 of the increase.
Approximately $555,000 of the increase is related to customers' advances on
projects in progress.
The Company has consistently maintained a high "current ratio" and has made
little use of its established lines of credit. Funds, in general, have exceeded
the current needs of the Company. The Company presently foresees no change in
this situation.
Capital Resources and Requirements
- ----------------------------------
Cash flows provided by operating activities during the six-month period ended
July 31, 1995 amounted to $3,517,306 compared with $2,114,932 in the six-month
period ended July 31, 1994, an increase of $1,402,374.
Net cash used in investing activities during the six-month period ended July 31,
1995 amounted to $868,009 compared with $704,042 for the six-month period ended
July 31, 1994. The Company's investing activities represent the acquisition of
property, plant, and equipment in the combined operations. During the six-month
period ended July 31, 1995, the Company purchased land in Waukegan, Illinois, at
a cost of $395,000 for the construction of a 22,000 square foot building for the
Stiles-Kem Division, and expanded the offices of Mefiag B.V., a subsidiary
located in Heerenveen, Holland.
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MET-PRO CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARIES
=====================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED
- -------------------------------------------------------------------------------
Financing activities during the six-month period ended July 31, 1995 required
the use of cash of $2,050,350 compared to a use of cash of $1,483,251 for the
six-month period ended July 31, 1994. Cash used for the six-month period ended
July 31, 1995 include the payment of dividends of $1,411,308, the reduction of
debt of $584,661, the acquisition of treasury shares of $354,371, offset by
proceeds from the exercise of stock options amounting to $299,990.
On June 12, 1995, Met-Pro's Board of Directors announced a stock repurchase plan
to buyback up to 75,000 shares of its outstanding common stock. The Company has
purchased 25,700 shares under the program as of July 31, 1995.
Consistent with past practices, the Company will continue to invest in new
product development programs, and will make capital expenditures to support the
on-going operations during the coming year. The Company expects to finance all
capital expenditures requirements through cash flows generated from operations.
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<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Met-Pro Corporation and its
Wholly-Owned Subsidiaries
Harleysville, Pennsylvania
We have reviewed the accompanying condensed consolidated balance sheet of
Met-Pro Corporation and its Wholly-Owned Subsidiaries as of July 31, 1995 and
the related condensed consolidated statements of income for the three-month and
six-month periods ended July 31, 1995 and 1994 and of cash flows for the
six-month periods ended July 31, 1995 and 1994. These financial statements are
the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated financial statements for them
to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet as of January 31, 1995 and the related statements
of operations, stockholders' equity, and cash flows for the year then ended (not
presented herein); and in our report dated February 23, 1995, we expressed an
unqualified opinion on those financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of January 31, 1995 is fairly stated, in all material respects, in relation
to the balance sheet from which it has been derived.
/s/ Margolis & Company, P.C.
Certified Public Accountants
Bala Cynwyd, Pennsylvania
August 17, 1995
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MET-PRO CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARIES
=====================================================
PART II - OTHER INFORMATION
- -------------------------------------------------------------------------------
Item 6(b) - Exhibits and Reports on Form 8-K:
- ---------------------------------------------
Reports on Form 8-K - There were no reports on Form 8-K filed for the six-month
period ended July 31, 1995.
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.
MET-PRO CORPORATION
AND ITS WHOLLY-OWNED
SUBSIDIARIES
----------------------------
(REGISTRANT)
DATE August 30, 1995
-------------------------
/s/ William L. Kacin
----------------------------
WILLIAM L. KACIN,
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
/s/ William F. Moffitt
----------------------------
WILLIAM F. MOFFITT,
VICE PRESIDENT, FINANCE,
CHIEF FINANCIAL OFFICER,
SECRETARY AND TREASURER
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<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-END> JUL-31-1995
<CASH> 7,270,702
<SECURITIES> 0
<RECEIVABLES> 8,795,901
<ALLOWANCES> 171,500
<INVENTORY> 11,069,798
<CURRENT-ASSETS> 28,058,268
<PP&E> 25,538,679
<DEPRECIATION> 12,037,917
<TOTAL-ASSETS> 46,716,989
<CURRENT-LIABILITIES> 10,620,558
<BONDS> 2,289,661
<COMMON> 475,922
0
0
<OTHER-SE> 32,635,269
<TOTAL-LIABILITY-AND-EQUITY> 46,716,989
<SALES> 26,746,957
<TOTAL-REVENUES> 26,746,957
<CGS> 17,654,872
<TOTAL-COSTS> 17,654,872
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 140,230
<INCOME-PRETAX> 3,797,812
<INCOME-TAX> 1,538,112
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,259,700
<EPS-PRIMARY> 0.48
<EPS-DILUTED> 0.48
</TABLE>
