<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 October 31, 1995 Commission file number 001-07763
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MET-PRO CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARIES
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DELAWARE 23-1683282
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. BOX 144, HARLEYSVILLE, PA 19438
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(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 10/31/95 4,655,040
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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
October 31, 1995
INDEX
Part I - Financial Information:
Condensed consolidated balance sheet as of
October 31, 1995 and January 31, 1995 2
Condensed consolidated statement of income for the
three-month and nine-month periods ended
October 31, 1995 and 1994 3
Condensed consolidated statement of cash flows
for the nine-month periods ended
October 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)
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<TABLE>
<CAPTION>
OCTOBER 31, JANUARY 31,
1995 1995
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 7,194,985 $ 6,648,380
Accounts receivable, net of allowance for doubtful
accounts of approximately $202,000 and $184,000,
respectively 9,239,326 8,107,243
Notes Receivable-ESOT 300,000 --
Inventories 11,394,952 10,693,734
Prepaid expenses, deposits and other current assets 790,566 646,571
Deferred income taxes 500,000 500,000
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Total current assets 29,419,829 26,595,928
Property, plant and equipment, net 13,782,922 13,219,129
Costs in excess of net assets of businesses acquired, net 3,747,200 3,807,326
Other assets 1,303,947 1,546,161
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Total assets $48,253,898 $45,168,544
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 1,175,466 $ 1,170,821
Accounts payable 3,021,896 2,279,262
Accrued salaries, wages and expenses 6,932,184 5,777,565
Payroll and other taxes payable 6,473 6,266
Customers' advances 422,797 272,387
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Total current liabilities 11,558,816 9,506,301
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Long-term debt 1,989,144 2,877,386
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Other non-current liabilities 84,735 34,847
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Deferred income taxes 620,262 666,000
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Stockholders' equity:
Common stock, $.10 par value; 10,000,000 shares authorized, 4,759,221
and 3,193,418 shares issued, respectively, of which 104,181 and
98,128 shares, were reacquired and held in treasury 475,922 319,342
Additional paid-in capital 7,443,680 7,401,641
Retained earnings 26,776,685 24,816,542
Cumulative translation adjustment 323,727 233,760
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35,020,014 32,771,285
Treasury stock, at cost (1,019,073) (687,275)
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Net stockholders' equity 34,000,941 32,084,010
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Total liabilities and stockholders' equity $48,253,898 $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)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
OCTOBER 31, OCTOBER 31,
1995 1994 1995 1994
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<S> <C> <C> <C> <C>
Net sales $40,836,917 $ 37,121,444 $14,089,960 $13,177,397
Cost of goods sold 26,918,546 24,879,784 9,263,674 9,048,619
----------- ------------ ----------- -----------
Gross profit 13,918,371 12,241,660 4,826,286 4,128,778
----------- ------------ ----------- -----------
Operating expenses:
Selling 3,500,128 3,077,667 1,196,512 1,056,764
General and administrative 4,879,692 4,734,858 1,627,318 1,513,416
----------- ------------ ----------- -----------
8,379,820 7,812,525 2,823,830 2,570,180
----------- ------------ ----------- -----------
Income from operations 5,538,551 4,429,135 2,002,456 1,558,598
Other income, net 390,918 177,602 129,201 60,936
----------- ------------ ----------- -----------
Income before taxes on income 5,929,469 4,606,737 2,131,657 1,619,534
Provision for taxes on income 2,401,438 1,842,695 863,326 647,814
----------- ------------ ----------- -----------
Net income $ 3,528,031 $ 2,764,042 $ 1,268,331 $ 971,720
=========== ============ =========== ===========
Earnings per share* $ .75 $ .59 $ .27 $ .21
=========== ============ =========== ===========
Cash dividends per share** $ .30 $ .25 $ - $ -
=========== ============ =========== ===========
</TABLE>
* Based on weighted average shares outstanding of 4,705,580 and 4,711,504 in
the nine-month periods ended October 31, 1995 and 1994, respectively, and
4,686,110 and 4,716,072 in the three-month periods ended October 31, 1995
and 1994, respectively, fully diluted. The average shares outstanding were
adjusted for the 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)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
OCTOBER 31,
1995 1994
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INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<S> <C> <C>
Net cash provided by operating activities $ 4,570,266 $ 3,782,123
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Net cash (used in) investing activities:
Acquisition of property, plant and equipment (net) (1,454,864) ( 858,631)
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Net cash provided by (used in) financing activities:
Reduction of debt ( 883,597) ( 873,282)
Payment of dividends ( 1,411,308) ( 780,070)
Exercise of stock options 299,990 4,000
Purchase of treasury shares ( 589,748) ( 315,050)
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( 2,584,663) ( 1,964,402)
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Effect of exchange rate changes on cash 15,866 48,675
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Net increase in cash and cash equivalents 546,605 1,007,765
Cash and cash equivalents:
February 1 6,648,380 4,425,347
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October 31 $ 7,194,985 $ 5,433,112
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SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 203,893 $ 215,780
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Income taxes $ 2,235,889 $ 1,664,601
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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 October 31, 1995 and the
results of operations for the three-month and nine-month periods ended
October 31, 1995 and 1994 and the statement of cash flows for the
nine-month periods then ended. The results of operations for the
three-month and nine-month periods ended October 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:
OCTOBER 31, JANUARY 31,
1995 1995
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Raw material $ 4,668,597 $ 4,381,304
Work-in-progress 1,954,852 1,834,555
Finished goods 4,771,503 4,477,875
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$11,394,952 $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
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Sales for the nine-month period ended October 31, 1995 were $40,836,917 compared
to $37,121,444 for the nine-month period ended October 31, 1994, an increase of
$3,715,473 or 10.0%. 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 October 31, 1995 was 11.6% higher compared to
the backlog at the beginning of the fiscal year. Bookings of new orders were
6.5% higher for the nine-month period ended October 31, 1995 than for the
nine-month period ended October 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 nine-month period ended October 31, 1995 was
$5,929,469 compared to $4,606,737 for the nine-month period ended October 31,
1994, an increase of $1,322,732 or 28.7%. The increase in income before taxes is
related to a combination of factors. The increase in sales of $3,715,473 for the
nine-month period ended October 31, 1995 contributed $1,676,711 and the increase
in other income contributed $213,316, which was offset by increased operating
expenses of $567,295.
The gross profit margin for the nine-month period ended October 31, 1995 was
34.1%, compared to 33.0% the same period last year. The increase in gross profit
of 1.1% can be attributed to a combination of product mix within both the Fluid
Handling and the Pollution Control and Allied Equipment segments, combined with
effective cost control measures.
Selling expense increased $422,461 during the nine-month period ended October
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
nine-month period ended October 31, 1995, compared with 8.3% for the nine-month
period ended October 31, 1994.
General and administrative expense was $4,879,692 for the nine-month period
ended October 31, 1995 compared to $4,734,858 for the same period last year.
General and administrative expense as a percentage of sales declined to 11.9%
for the nine-month period ended October 31, 1995 from 12.8% for the same period
last year.
Other income, net, increased $213,316 for the nine-month period ended October
31, 1995 compared to the nine-month period ended October 31, 1994. Other income,
which is comprised primarily of interest income, increased due to higher cash
balances combined with slightly 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
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Liquidity
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The Company's cash and cash equivalents amounted to $7,194,985 on October 31,
1995 and $6,648,380 on January 31, 1995, an increase of $546,605. This increase
is the result of positive cash flow provided by operating activities of
$4,570,266 and proceeds received from the exercise of stock options of $299,990,
offset by payments of long-term debt totalling $883,597, the acquisition of
property and equipment amounting to $1,454,864, the acquisition of treasury
shares of $589,748 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 constituted an 80% increase in the
cash dividend compared to the previous year.
Accounts receivable (net) amounted to $9,239,326 on October 31, 1995 compared to
$8,107,243 on January 31, 1995, which represents an increase of $1,132,083. 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.
In August, 1995, loans of $300,000 were authorized to be made to the Employee
Stock Ownership Trust to enable the Trust to acquire shares of the Company's
stock to be used against future contributions.
Inventories were $11,394,952 on October 31, 1995 compared to $10,693,734 on
January 31, 1995, an increase of $701,218. Inventory balances fluctuate
depending upon the business segment involved, the number of contracts in
progress, and lead times required.
Current liabilities amounted to $11,558,816 on October 31, 1995 compared to
$9,506,301 on January 31, 1995, an increase of $2,052,515. Accounts payable and
accrued expenses accounted for $1,897,460 of the increase. The balance amounting
to $150,410 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 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 nine-month period ended
October 31, 1995 amounted to $4,570,266 compared with $3,782,123 in the
nine-month period ended October 31, 1994, an increase of $788,143.
Net cash used in investing activities during the nine-month period ended October
31, 1995 amounted to $1,454,864 compared with $858,631 for the nine-month period
ended October 31, 1994. The Company's investing activities represent the
acquisition of property, plant, and equipment in the combined operations. During
the nine-month period ended October 31, 1995, the Company purchased land in
Waukegan, Illinois and commenced construction of a 22,000 square foot building
for the Stiles-Kem Division. In addition, the Company expanded the business
offices of Mefiag B.V., a subsidiary located in Heerenveen, Holland.
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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
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Financing activities during the nine-month period ended October 31, 1995
required the use of cash of $2,584,663 compared to a use of cash of $1,964,402
for the nine-month period ended October 31, 1994. Cash used for the nine-month
period ended October 31, 1995 includes the payment of dividends of $1,411,308,
the reduction of debt of $883,597, the acquisition of treasury shares of
$589,748, 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 42,700 shares under the program as of October 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 October 31, 1995 and
the related condensed consolidated statements of income for the three-month and
nine-month periods ended October 31, 1995 and 1994 and of cash flows for the
nine-month periods ended October 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.
Certified Public Accountants
Bala Cynwyd, Pennsylvania
November 16, 1995
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MET-PRO CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARIES
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PART II - OTHER INFORMATION
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Item 6(b) - Exhibits and Reports on Form 8-K:
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Reports on Form 8-K - There were no reports on Form 8-K filed for the nine-month
period ended October 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
----------------
/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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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-END> OCT-31-1995
<CASH> 7,194,985
<SECURITIES> 0
<RECEIVABLES> 9,239,326
<ALLOWANCES> 202,000
<INVENTORY> 11,394,952
<CURRENT-ASSETS> 29,419,829
<PP&E> 25,987,105
<DEPRECIATION> 12,204,183
<TOTAL-ASSETS> 48,253,898
<CURRENT-LIABILITIES> 11,558,816
<BONDS> 1,989,144
<COMMON> 475,922
0
0
<OTHER-SE> 34,000,941
<TOTAL-LIABILITY-AND-EQUITY> 48,253,898
<SALES> 40,836,917
<TOTAL-REVENUES> 40,836,917
<CGS> 26,918,546
<TOTAL-COSTS> 26,918,546
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 182,621
<INCOME-PRETAX> 5,929,469
<INCOME-TAX> 2,401,438
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,528,031
<EPS-PRIMARY> .75
<EPS-DILUTED> .75
</TABLE>
