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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For fiscal year ended January 31, 1996 Commission file number 001-07763
MET-PRO CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 23-1683282
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
160 CASSELL ROAD, BOX 144
Harleysville, Pennsylvania 19438
(Address of principle executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 723-6751
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- ----------------
Common Stock, par value $0.10 per share American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.10 per share
(Title of Class)
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 (or for such shorter period that the
Registrant 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 if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-K or any
amendment to this Form 10-K. _______
The number of shares outstanding of the Registrant's common stock is
4,638,465 (as of April 12, 1996). The aggregate market value of the voting stock
held by non-affiliates of the Registrant is $76,534,673 (as of April 12, 1996).
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the Registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes ___ No ___
DOCUMENTS INCORPORATED BY REFERENCE
FORM 10-K
Proxy Statement filed pursuant to Regulation 14A in PART NUMBER
connection with Registrant's Annual Meeting of Stockholders -----------
to be held on June 5, 1996. . . . . . . . . . . . . . . . . . III
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INDEX
PART I
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . 3
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . 6
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . 7
Item 4. Submission of Matters to a Vote of Security Holders . 7
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters . . . . . . . . . . . . . . . . . 7
Item 6. Selected Financial Data . . . . . . . . . . . . . . . 8
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . 8
Item 8. Financial Statements and Supplementary Data . . . . . 11
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . 25
PART III
Item 10. Directors and Executive Officers of the Registrant . 25
Item 11. Executive Compensation . . . . . . . . . . . . . . . 26
Item 12. Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . . . 26
Item 13. Certain Relationships and Related Transactions . . . 26
PART IV
Item 14.Exhibits, Financial Statement Schedules and Reports
on Form 8-K . . . . . . . . . . . . . . . . . . . . 27
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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PART I
ITEM 1. BUSINESS:
GENERAL:
There were no material changes in the nature of the business
conducted by Met-Pro Corporation during the fiscal year ended January 31,
1996. The Company manufactures and sells pollution control systems and allied
equipment for purification of air and liquids, and fluid handling equipment
for corrosive, abrasive and high temperature liquids.
The Company's net sales, operating profit and identifiable assets
for the pollution control and allied equipment and fluid handling business
segments are detailed in Item 8.
PRODUCTS, SERVICES AND MARKETS:
The Stiles-Kem Division is a leading manufacturer of specialty
chemicals for the control of lead and copper leaching, scale, and the
discoloration of drinking water caused by the presence of iron and manganese in
the source water. Our Aquadene (TM) products have been the benchmark in
this field for nearly 40 years. As the USEPA Lead and Copper Rule nears its
compliance deadline of June 1997, interest continues to grow in controlling
corrosion and reducing lead and copper in drinking water. Many municipalities,
including one of the largest cities in the United States, have entered into
contracts with Stiles-Kem to help them meet the requirements of the new
regulations. Stiles-Kem introduced a new marketing program in 1995 entitled
Quest (Qualified Users Experiencing Successful Treatment). This program features
an interactive computer disk which highlights actual case studies of successful
applications of our products. Quest, which is unique in the drinking water
industry, has aided us in developing new sales opportunities. Stiles-Kem
Division's products for drinking water treatment are food grade and are
certified to meet existing state, federal and ANSI/NSF standards for Health
Effects in drinking water. These products have been manufactured in our plants
in Zion, Illinois, and now in our new 22,000 square foot facility in Waukegan,
Illinois. These products are distributed through a network of dealers and
distributors located in the United States, Mexico and Canada.
The Sethco Division, located on Long Island, New York, designs,
manufactures and sells corrosion resistant pumps, filter chambers and filter
systems with flow rates to about 200 gallons per minute. These products are
used in wastewater treatment systems and fume scrubbers for pollution
control. They are also widely used in the metal finishing industry,
electronics industry and chemical processing industry. Sethco products are
sold through a network of non-exclusive distributors, as well as to original
equipment manufacturers and catalog houses. Sethco's international sales grew
substantially last year, up at least 35% over the previous year. Design work
has been completed to reduce the cost on certain models of a popular product
line and to increase the capacity of another line. We are also designing a
variation of another important product line to increase sales in Europe and
Asia. We expect all of these projects to be completed before the end of the
third quarter of this fiscal year.
The Mefiag(Registered Name) operations design and manufacture filter
systems utilizing horizontal disc technology for superior performance,
particularly in high efficiency and high-flow applications. Filter systems,
pumps and accessory equipment are manufactured in our Heerenveen, Holland and
Las Piedras, Puerto Rico locations. Mefiag(Registered Name) filters are used in
the toughest, most corrosive applications in the plating and metal finishing
industry. Worldwide sales are accomplished through qualified, market-based
distributors and original equipment manufacturers located throughout Europe, the
United States and other major markets. Sales and technical service support
personnel are maintained at Mefiag's (Reigistered Name) three locations, along
with stock of consumables and spare parts. Mefiag (Registered Name) is prepared
to meet the most urgent needs of its customers with same day shipments. Mefiag
(Registered Name) is recognized around the globe as the leading supplier of
high-quality horizontal disc filtration equipment. This year Mefiag (Registered
Name) expanded its flow range to 18,000 gallons per hour by utilizing newly
designed low profile disc assemblies.
The Systems Division, the original foundation on which Met-Pro
was built, remains a leader in the supply of custom designed and manufactured
air and water pollution control systems. Systems Division's air pollution
control capabilities include: carbon adsorption systems for the concentration
and recovery of volatile solvents, thermal and catalytic oxidation systems
and the supply of abatement catalysts. These systems are custom engineered
for clients in the automotive, aerospace and furniture industries. They also
have a variety of applications in the painting, pharmaceutical, chemical,
electronics, food processing and printing industries. Systems Division also
manufactures a full range of catalytic converters for stationary engines and
cogeneration plants to greatly reduce smog producing and toxic gases such as
NOx, CO and residual hydrocarbons, which are emitted from these sources.
Systems Division has developed and proven a new low temperature oxidation
catalyst. This new catalyst allows oxidizers to operate at temperatures up to
200 degrees F lower than standard catalysts. This results in significant fuel
and operating cost savings making both our catalyst and oxidizers more
attractive to potential customers. Other new and improved catalysts are
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currently in development or field testing stage. We supply physical chemical
and biological water pollution control systems for treating toxic leachate from
solid waste landfills. Systems Division also designs and manufactures systems
for a wide variety of industrial wastewater applications. We continue to
investigate new technologies to complement the existing product mix.
The Duall Division is a leading manufacturer of industrial and
municipal air pollution control equipment. Our major products include odor
control systems, fume and emergency gas scrubbers, stripping towers and exhaust
fans. Plating and process tanks were added to our product line this year. All
equipment is fabricated from corrosion resistant materials in our Owosso,
Michigan manufacturing facilities. Services include pilot studies, engineering,
installation and performance testing. Duall products are sold both domestically
and internationally to the metal finishing, wastewater treatment, composting,
food processing, chemical, printed circuit, semiconductor, pharmaceutical,
battery manufacturing and groundwater remediation markets. Over ninety factory
trained manufacturer's representatives sell our systems to industrial and
municipal clients.
The Keystone Filter Division is one of the premier custom pleaters
and cartridge manufacturers in the United States. We provide custom designed and
engineered products which are currently used in such diverse applications as the
nuclear power industry, as components in medical equipment and in indoor air
quality equipment. Keystone Filter's industrial product line continues to gain
acceptance by distributors and various industries. A new relationship with a
major OEM, who has incorporated certain cartridges into their product offerings,
has been a major factor in Keystone Filter's sales growth this year. We are also
a major supplier of home drinking water filters to the plumbing and heating
wholesale market. Our products can be found under the Keystone Filter name, as
well as various other well known brand names.
The Fybroc Division is the world leader in the manufacture of
fiberglass reinforced pumps. These pumps provide excellent corrosion resistance
for tough applications including pumping of acids, brines, caustics, bleaches
and a wide range of waste liquids. Fybroc pumps are sold to many markets
including the chemical, steel, pulp and paper, electric utility, aquaculture,
aquarium, and industrial and municipal waste treatment industries. A worldwide
distributor network provides outstanding levels of sales, engineering, and
customer service. During the past year, we introduced five sizes of horizontal
fiberglass pumps and related accessories designed to international standards for
applications in overseas markets. The remaining product line of vertical,
cantilever and self-priming pumps was also modified to conform to metric motors
and piping systems for easier market acceptance.
The Dean Pump Division is recognized worldwide for high quality
pumps that handle a broad range of industrial applications. Users such as the
chemical, petrochemical, refinery, pharmaceutical, plastics, pulp and paper, and
food processing industries choose Dean Pump products particularly for their high
temperature applications. Our manufacturing facility in Indianapolis, Indiana
produces pumps which are sold through an extensive network of distributors.
These distributors also stock parts and provide local service to their
customers. Dean Pump maintains an excellent design engineering department and
continues to be a leader in the development of advanced pumping equipment to
meet the needs of industry. Three lines of pumps are now available to cover high
temperature pump applications up to 850 degrees F. Our high temperature pump
sales realized double digit growth during the past year. We received several
sizable orders from some of our best customers, including a large group of pumps
sold to one of the world's foremost chemical and fiber companies.
The Company markets its products through its own personnel,
distributors, representatives and agents based on the division involved. The
Company's products are sold worldwide primarily in industrial markets.
The following table sets forth certain data concerning total net
sales to customers by geographic area in the past three years:
Percentage of Total Net Sales
Fiscal Year End January 31,
1996 1995 1994
------------------------------------------
North America 87.6% 88.4% 91.6%
Foreign 12.4% 11.6% 8.4%
------------------------------------------
Total Net Sales 100.0% 100.0% 100.0%
==========================================
Over the past three years, no single customer accounted for more
than 10% of the total net sales of the Company in any year.
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COMPETITION:
The lines of business in which the Company is engaged are highly
competitive. There are numerous other manufacturers of pollution control and
allied equipment and fluid handling equipment, but no one competitor dominates
the market in either segment.
RESEARCH AND DEVELOPMENT:
The Company engages in research and development on a divisional
basis. Research is directed towards the development of new products related to
current product lines, and the improvement and enhancement of existing products.
The principal goals of the Company's research programs are
maintaining the Company as a technological leader in the production of pollution
control and allied equipment, and fluid handling equipment; developing new
products; and providing technological support to the manufacturing operations of
the Company.
Research and development expenses were $.6 million in 1996 and $.5
million in the years 1995 and 1994, respectively.
PATENTS AND TRADEMARKS:
The Company maintains a small number of patents and trademarks. The
Company considers these items important to the business, although it considers
no individual item material to its business.
REGULATORY MATTERS:
The Company is subject to environmental laws and regulations
concerning air emissions, discharges to water processing facilities, and the
generation, handling, storage and disposal of waste materials in all operations.
All of the Company's production and manufacturing facilities are controlled
under permits issued by state, federal and local regulatory agencies. The
Company believes it is presently in substantial compliance with these laws and
regulations.
BACKLOG:
There was a backlog of orders in the aggregate of $6,302,625 and
$5,746,429 as of January 31, 1996 and 1995, respectively.
RAW MATERIALS:
The Company procures its raw materials and supplies from various
sources and does not anticipate any difficulty in procurement during the coming
year or during the foreseeable future.
EMPLOYEES:
The Company employs approximately 378 persons, of whom 223 are
involved in manufacturing, and 155 are engaged in administration, sales,
engineering, supervision and clerical work. The Company has had no work
stoppages during the past 14 years and considers its employee relations to be
good.
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ITEM 2. PROPERTIES:
The Company owns and operates eleven manufacturing and production
facilities as described below:
<TABLE>
<CAPTION>
DIVISION STRUCTURE PROPERTY/LOCATION
<S> <C> <C>
Executive Offices, 73,000 square feet, cement 17 acres in Harleysville,
Systems Division, and building, with finestone facing, Pennsylvania
Mefiag Division built 1976
Sethco Division 30,000 square feet, cement 4 acres in Smithtown,
block with brick facing, Long Island, New York
built 1982
Fybroc Division 47,500 square feet, cement 8 acres in Telford,
building with brick facing, Pennsylvania
built 1991
Keystone Filter Division 31,000 square feet, cement 2.3 acres in Hatfield,
block, built 1978 Pennsylvania
Systems Catalytic 15,000 square feet, cement 2 acres in West Chester
Plant and Laboratory block, brick and composition Pennsylvania
facing, built 1984
Dean Pump Division 66,000 square feet, metal 17.1 acres in
building Indianapolis, Indiana
Duall Division 63,000 square feet, metal 7 acres in Owosso,
and masonry building; Michigan
34,166 square feet, metal 5.61 acres in Owosso,
masonry building Michigan
Stiles-Kem Division 20,000 square feet, cement 2.55 acres in
building, built 1996 Waukegan, Illinois
SUBSIDIARIES
Mefiag B.V. 17,200 square feet, metal 1.1 acres in
and masonry building Heerenveen, Holland
Mefiag of 10,000 square feet, metal 1.42 acres in
Puerto Rico, Inc. and masonry building Las Piedras, Puerto Rico
</TABLE>
Registrant also owns 2 acres in Indianapolis, Indiana, on which it
formerly maintained a foundry, and 3.5 acres in Forest City, North Carolina, on
which there is a 20,000 square foot metal building which formerly housed the
plant for its Duall Division (North Carolina operations). The facility located
in Forest City, North Carolina is under an agreement of sale with closing
expected by mid April 1996.
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ITEM 3. LEGAL PROCEEDINGS:
There are no material pending legal proceedings to which the Company
or any of its wholly-owned subsidiaries is a party as of the date of this Annual
Report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year ended January 31, 1996.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS:
The Company's Common Stock is traded on the American Stock
Exchange under the symbol MPR. The high and low sale prices of the Common
Stock for each quarterly period for the last two fiscal years, as reported on
the American Stock Exchange, are shown below. The price of Common Stock and
annual cash dividend were adjusted to reflect the 3-for-2 stock split on May
12, 1995.
<TABLE>
<CAPTION>
QUARTER ENDED
Year ended January 31, 1996 April July October January
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Price range of common stock:
High $12.88 $14.13 $14.63 $15.13
Low 11.50 12.50 13.50 12.63
Cash dividend paid .30 - - -
Year ended January 31, 1995 April July October January
- -----------------------------------------------------------------------------------------------------------------------------------
Price range of common stock:
High $10.09 $10.75 $11.92 $11.92
Low 8.67 8.92 9.00 10.33
Cash dividend paid .167 - - -
</TABLE>
There were approximately 741 registered stockholders at January 31,
1996.
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ITEM 6. SELECTED FINANCIAL DATA:
<TABLE>
<CAPTION>
Years ended January 31,
1996 1995 1994 1993 1992
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<S> <C> <C> <C> <C> <C>
SELECTED OPERATING STATEMENT DATA
Net sales $54,067,320 $50,005,577 $41,199,444 $38,318,138 $39,648,248
Income from operations 7,663,957 6,281,437 3,952,510 3,004,211 3,448,321
Net income 4,893,885 3,830,042 2,517,155 1,975,012 2,510,380
Earnings per share 1.04 .81 .53 .42 .53
SELECTED BALANCE SHEET DATA
Current assets $28,268,561 $26,595,928 $21,987,515 $21,268,454 $20,316,124
Current liabilities 10,250,506 9,506,301 7,177,206 5,876,660 5,380,883
Working capital 18,018,055 17,089,627 14,810,309 15,391,794 14,935,241
Current ratio 2.8 2.8 3.1 3.6 3.8
Total assets 47,626,587 45,168,544 40,917,481 35,551,151 34,616,222
Long-term obligations 1,692,962 2,877,386 4,048,119 1,890,400 2,471,827
Total stockholders' equity 35,012,578 32,084,010 29,187,306 27,574,624 26,374,942
Total capitalization 36,705,540 34,961,396 33,235,425 29,465,024 28,846,769
Return on average total assets, % 10.5 8.9 6.6 5.6 7.7
Return on average stockholders' equity, % 14.6 12.5 8.9 7.3 10.0
OTHER FINANCIAL DATA
Capital expenditures $2,436,419 $1,098,893 $2,415,385 $1,236,115 $3,473,658
Equity per share 7.55 6.91 6.22 5.88 5.62
Cash dividend per share .30 .167 .167 .167 -
Stock dividend per share, % - - - - 5.0
Average common shares, fully diluted 4,701,018 4,709,280 4,719,371 4,710,311 4,711,644
Shares of common stock outstanding 4,637,690 4,642,935 4,689,405 4,692,855 4,692,105
</TABLE>
(The cash dividend and earnings per share were adjusted to reflect the
3-for-2 stock split of May 12, 1995.)
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS:
LIQUIDITY:
The cash and short-term investment position was $7.4 million on
January 31, 1996 compared to $6.6 million on January 31, 1995, an increase of
$0.8 million. The improvement in the cash position is the result of cash flows
generated from operations.
Accounts receivable increased to $8.9 million at January 31, 1996
from $8.1 million at January 31, 1995. The size of orders, timing of shipments,
and retainage on contracts in both the Pollution Control Systems and Allied
Equipment and the Fluid Handling Equipment segments of the business, influence
accounts receivable balances at any point in time.
Inventories decreased approximately $0.4 million to $10.3 million at
January 31, 1996 from $10.7 million at January 31, 1995. Inventory balances will
fluctuate depending upon market demand, and the size and timing of orders in
both business segments, especially when long lead times are involved.
Current liabilities increased from $9.5 million at January 31, 1995
to $10.3 million at January 31, 1996 or $0.8 million. The increase is related to
accrued expenses on projects in the Pollution Control Systems and Allied
Equipment segment of the business, combined with the higher sales activity.
The Company has consistently maintained a high current ratio and has
not utilized either the domestic line of credit or the foreign line of credit
totalling $5.0 million, which are available for working capital purposes. The
Company's current ratio was 2.8 at both January 31, 1996 and January 31, 1995.
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CAPITAL RESOURCES AND REQUIREMENTS:
Cash flows provided by operating activities during the fiscal year
ended January 31, 1996 amounted to $6.3 million compared to $5.7 million during
the prior fiscal year. The increase is attributable to the higher sales level in
both business segments, the timing of the payment of current obligations, and
advances from customers on projects in progress.
Investing activities during the fiscal year ended January 31, 1996
amounted to $2.4 million compared to $1.1 million during the fiscal year ended
1995. The Company continues to invest in machinery and equipment, tooling,
patterns and molds to improve production efficiency and maintain our position as
leaders in the markets in which we serve. As part of the capital program, the
Company is constructing a 22,000 square foot facility in Waukegan, Illinois for
the Stiles-Kem Division at a cost of approximately $1.7 million. This facility,
which became operational in March 1996, will double production capacity and
replace two leased facilities. The Company also constructed an addition to its
Mefiag B.V. facility, a subsidiary located in Heerenveen, Holland.
Financing activities during the fiscal year ended January 31, 1996
utilized $3.1 million of available resources, compared to $2.4 million during
the prior fiscal year.
The Company paid $1.2 million of scheduled long-term debt during the
current fiscal year. The long-term debt to equity ratio at January 31, 1996 was
4.8% compared to 9.0% at January 31, 1995.
On February 27, 1995, the Board of Directors authorized a 3-for-2
stock split which was payable to shareholders of record on May 12, 1995. The
Board of Directors also declared a cash dividend of $.30 per share payable on
both the existing shares and the new shares resulting from the stock split. The
dividend paid on the Common Stock represented an approximate 80% increase,
amounting to $1.4 million or 36.8% of the prior year earnings.
On June 7, 1995, the Board of Directors announced a stock buyback
program to repurchase up to 75,000 shares of its outstanding Common Stock on the
open market. The Company repurchased approximately 61,000 shares of Common Stock
at a cost of $0.8 million under the stock buyback programs in effect during the
year ended January 31, 1996.
A total of 56,025 stock options were exercised during the year ended
January 31, 1996 which provided cash proceeds of approximately $0.3 million.
During the fiscal year ended January 31, 1996, the Company expended
approximately $0.6 million on research and development versus $0.5 million in
the prior fiscal year as part of our commitment to the future.
The Company will continue to invest in new product development to
maintain and enhance our market position as leaders in the industries in which
we participate. Capital expenditures also will be made to both support the
on-going operations and expand our capability to meet customer demand.
The Company expects to finance the majority of capital expenditures
in the coming year through cash flows from operations, and will utilize third
party financing, when deemed appropriate.
RESULTS OF OPERATIONS:
FYE 1996 vs FYE 1995:
Net sales for the year ended January 31, 1996 were $54.1 million, a
new record, exceeding net sales for the year ended January 31, 1995 by $4.1
million or 8.1%. Sales in the Pollution Control Systems and Allied Equipment
segment were $28.1 million, an increase of $2.3 million or 8.9% over the prior
fiscal year. The increase is primarily attributable to continued demand for our
Aquadene (TM) products manufactured to prevent lead and copper leaching
into drinking water, combined with improved results in the fume and odor control
product lines. Sales in the Fluid Handling Equipment segment of the business
totalled $26.0 million or 7.3% higher than the prior fiscal year, as a result of
the continuing demand for our specialty pump equipment and related products.
Foreign sales have increased to $6.7 million for the year ended
January 31, 1996 which is a 14.9% increase over the prior fiscal year. The
increase can be attributed to expanded sales and marketing efforts in both the
Pacific Rim region and the European Common Market. Foreign sales increased 32.9%
in the Pollution Control Systems and Allied Equipment segment, and 11.7% in the
Fluid Handling Equipment segment versus the prior year.
Net income of $4.9 million for the fiscal year ended January 31,
1996 was $1.1 million or 27.8% above the record earnings level for the prior
year. This is the second consecutive year of record earnings.
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The gross margin for the fiscal year ended January 31, 1996
increased to 34.1% versus 33.1% for the prior fiscal year. This is the fourth
consecutive year that the gross margin has increased. The improvement can be
attributed to a combination of factors including higher sales volume, product
mix, and production efficiencies.
Selling expense increased approximately $0.5 million or 11.2% over
the prior year due to the expansion of the sales force in both market segments
which was required to better position our diversified businesses for future
growth. Selling expense as a percentage of net sales was 8.3% for the fiscal
year ended January 31, 1996, virtually flat compared to the prior year.
General and administrative expense was $6.3 million or 11.6% as a
percentage of net sales for the fiscal year ended January 31, 1996. This
represents a 1.0% decline in general and administrative expense as a percentage
of net sales versus the prior year.
Other income of $0.6 million for the fiscal year ended January 31,
1996 consisted primarily of interest earned on short-term investments.
The effective tax rate for the year ended January 31, 1996 was 40.5%
compare to 41.0% for the prior year. Earnings per share for the fiscal year
ended January 31, 1996 increased by $.01, as a result of the decline in the
effective tax rate versus the prior year.
FYE 1995 vs FYE 1994:
Net sales for the year ended January 31, 1995 of $50.0 million were
a new record high, exceeding net sales for the year ended January 31, 1994 by
$8.8 million or 21.4%. Sales in the Fluid Handling Equipment segment of the
business were $4.7 million or 23.8% higher than the prior fiscal year due to the
full year impact of the Mefiag Filtration acquisition, which was acquired
effective June 30, 1993, coupled with higher demand for our products in existing
operations. Sales in the Pollution Control Systems and Allied Equipment segment
were $4.2 million or 19.2% higher versus the prior year. The increase in net
sales is due to the dynamic growth in the various Aquadene (TM) products
manufactured to prevent the leaching of lead into drinking water, and in the
fume and odor control market while other operations within this segment continue
to experience delays in securing orders caused by relaxed enforcement by
governmental agencies.
Foreign sales increased to $5.8 million for the year ended January
31, 1995, which is a 68.4% increase over the prior year. This increase was due
to a combination of a full year of the Mefiag Filtration operations, and
substantially higher sales in both the Caribbean and Pacific Rim regions.
Net income of $3.8 million for the year ended January 31, 1995 was
$1.3 million above the earnings level of $2.5 million for the year ended January
31, 1994, an increase of 52.2% and a new record for the Company.
The gross margin was 33.1% for the fiscal year ended January 31,
1995 versus 31.8% for the prior year ended January 31, 1994. The improvement in
the gross margin was due to significantly higher sales volume and product mix in
both business segments. This was the third consecutive year that the gross
profit margin improved.
Selling expense increased approximately $0.1 million or 3.5% over
the prior year. Selling expense as a percentage of net sales was 8.1% for the
fiscal year ended January 31, 1995 or 1.4% lower than the prior fiscal year.
General and administrative expense was $6.2 million for the fiscal
year ended January 31, 1995, versus $5.2 million in the prior fiscal year. The
Mefiag acquisition, included for a full year during fiscal year ended January
31, 1995, accounted for $0.4 million of the increase, combined with provisions
for self-insurance reserves, uncollectible accounts receivable and other general
cost increases. General and administrative expense as a percentage of net sales
was 12.4% for the fiscal year ended January 31, 1995, virtually flat when
compared to the prior year end.
Other income of $0.2 million for the fiscal year ended January
31,1995 consisted of interest earned on short-term investments, offset by a
reserve for an idle operating facility.
The effective tax rate for the year ended January 31,1995 was 41.0%
compared to 40.7% for the prior year.
10
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:
Index to Consolidated Financial Statements and Supplementary Data:
Page
----
Consolidated Financial Statements:
Independent Auditor's Report . . . . . . . . . . . . . 11
Consolidated Balance Sheet . . . . . . . . . . . . . . 12
Consolidated Statement of Operations . . . . . . . . . 13
Statement of Consolidated Stockholder's Equity . . . . 13
Consolidated Statement of Cash Flows . . . . . . . . . 14
Consolidated Business Segment Data . . . . . . . . . . 15
Notes to Consolidated Financial Statements . . . . . . 16
Supplementary Data:
Quarterly Financial Data . . . . . . . . . . . . . . . 25
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
Met-Pro Corporation and its Wholly-Owned Subsidiaries
Harleysville, Pennsylvania
We have audited the accompanying consolidated balance sheet of Met-Pro
Corporation and its Wholly-Owned Subsidiaries as of January 31, 1996 and 1995,
and the related consolidated statements of operations, stockholders' equity, and
cash flows for each of the three years in the period ended January 31, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Met-Pro Corporation
and its Wholly-Owned Subsidiaries as of January 31, 1996 and 1995 and the
results of their operations and their cash flows for each of the three years in
the period ended January 31, 1996 in conformity with generally accepted
accounting principles.
/S/ MARGOLIS & COMPANY P.C.
----------------------------
Bala Cynwyd, Pennsylvania Certified Public Accountants
February 19, 1996, except for
Note 13, as to which the date
is February 26, 1996
11
<PAGE>
CONSOLIDATED BALANCE SHEET
Met-Pro Corporation
<TABLE>
<CAPTION>
January 31,
ASSETS 1996 1995
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets
Cash and cash equivalents - Note 3 $7,415,375 $6,648,380
Accounts receivable, net of allowance for
doubtful accounts of approximately $195,000
and $184,000, respectively 8,941,157 8,107,243
Notes receivable, ESOT - Note 4 400,000 --
Inventories - Note 5 10,302,844 10,693,734
Prepaid expenses, deposits and other current assets 559,238 646,571
Deferred income taxes - Note 8 649,947 500,000
- ------------------------------------------------------------------------------------------
Total current assets 28,268,561 26,595,928
Property, plant and equipment, net -
Notes 6 and 7 14,433,565 13,219,129
Costs in excess of net assets of businesses acquired, net 3,725,118 3,807,326
Other assets 1,199,343 1,546,161
- ------------------------------------------------------------------------------------------
TOTAL ASSETS $47,626,587 $45,168,544
==========================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt - Note 7 $1,178,177 $1,170,821
Accounts payable 2,307,034 2,279,262
Accrued salaries, wages and expenses - Note 10 6,347,912 5,777,565
Payroll and other taxes payable 5,974 6,266
Customers' advances 411,409 272,387
- ------------------------------------------------------------------------------------------
Total current liabilities 10,250,506 9,506,301
Long-term debt - Note 7 1,692,962 2,877,386
Other non-current liabilities 101,345 34,847
Deferred income taxes - Note 8 569,196 666,000
- ------------------------------------------------------------------------------------------
Total liabilities 12,614,009 13,084,534
- ------------------------------------------------------------------------------------------
Commitments - Notes 9 and 10
Stockholders' equity - Note 10
Common stock, $.10 par value; 10,000,000 shares
authorized, 4,759,221 and 3,193,418 shares issued,
respectively, of which 121,531 and 98,128 shares were
reacquired and held in treasury at the respective dates 475,922 319,342
Additional paid-in capital 7,442,810 7,401,641
Retained earnings 28,142,539 24,816,542
Cumulative translation adjustment 209,333 233,760
Treasury stock, at cost (1,258,026) (687,275)
- ------------------------------------------------------------------------------------------
Net stockholders' equity 35,012,578 32,084,010
- ------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $47,626,587 $45,168,544
==========================================================================================
</TABLE>
The notes to consolidated financial statements are an integral part of the
above statement.
12
<PAGE>
CONSOLIDATED STATEMENT OF OPERATIONS
Met-Pro Corporation
<TABLE>
<CAPTION>
Years ended January 31,
1996 1995 1994
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
NET SALES $54,067,320 $50,005,577 $41,199,444
Cost of goods sold 35,625,610 33,472,665 28,095,289
- ---------------------------------------------------------------------------------------------------------------------------------
Gross profit 18,441,710 16,532,912 13,104,155
- ---------------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Selling 4,489,905 4,037,676 3,901,905
General and administrative 6,287,848 6,213,799 5,249,740
- ---------------------------------------------------------------------------------------------------------------------------------
10,777,753 10,251,475 9,151,645
- ---------------------------------------------------------------------------------------------------------------------------------
Income from operations 7,663,957 6,281,437 3,952,510
Other income, net - Note 11 561,060 210,158 292,270
- ---------------------------------------------------------------------------------------------------------------------------------
Income before taxes on income 8,225,017 6,491,595 4,244,780
Provision for taxes on income - Note 8 3,331,132 2,661,553 1,727,625
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCOME $4,893,885 $3,830,042 $2,517,155
=================================================================================================================================
Earnings per share, primary and fully diluted (adjusted for stock split) $1.04 $.81 $.53
</TABLE>
STATEMENT OF CONSOLIDATED STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
ADDITIONAL CUMULATIVE
COMMON PAID-IN RETAINED TRANSLATION TREASURY
STOCK CAPITAL EARNINGS ADJUSTMENT STOCK TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balances, January 31, 1993 $319,342 $7,363,218 $20,031,555 $ - ($139,491) $27,574,624
Net income - - 2,517,155 - - 2,517,155
Dividends paid, $.167 per share - - (782,142) - - (782,142)
Exercise of stock options - Note 10 - 29,328 - - 15,335 44,663
Purchase of 7,800 shares of treasury stock - - - - (103,923) (103,923)
Cumulative translation adjustment - - - (63,071) - (63,071)
- ------------------------------------------------------------------------------------------------------------------------------------
Balances, January 31, 1994 319,342 7,392,546 21,766,568 (63,071) (228,079) 29,187,306
Net income - - 3,830,042 - - 3,830,042
Dividends paid, $.167 per share - - (780,068) - - (780,068)
Exercise of stock options - Note 10 9,095 - - 5,155 14,250
Purchase of 31,980 shares of treasury stock - - - - (464,351) (464,351)
Cumulative translation adjustment - - - 296,831 - 296,831
- ------------------------------------------------------------------------------------------------------------------------------------
Balances, January 31, 1995 319,342 7,401,641 24,816,542 233,760 (687,275) 32,084,010
Net income - - 4,893,885 - - 4,893,885
Dividends paid, $.30 per share - - (1,409,322) - - (1,409,322)
Stock split, 50% 156,580 - (156,580) - - -
Cash in lieu of fractional shares - - (1,986) - - (1,986)
Exercise of stock options - Note 10 41,169 - - 265,570 306,739
Purchase of 61,003 shares of treasury stock - - - - (836,321) (836,321)
Cumulative translation adjustment - - - (24,427) - (24,427)
- ------------------------------------------------------------------------------------------------------------------------------------
Balances, January 31, 1996 $475,922 $7,442,810 $28,142,539 $209,333 ($1,258,026) $35,012,578
====================================================================================================================================
</TABLE>
The notes to consolidated financial statements are an integral part of the
above statements.
13
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
Met-Pro Corporation
<TABLE>
<CAPTION>
Years ended January 31,
1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $4,893,885 $3,830,042 $2,517,155
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,613,391 1,619,098 1,418,181
Deferred income taxes (222,131) (354,198) (102,462)
(Gain)/loss on sale of property and equipment (4,217) 85,726 (28,923)
Non-cash compensation expensed on
exercise of stock options - 3,500 2,563
Allowance for doubtful accounts 10,528 93,444 (38,000)
(Increase) decrease in operating assets,
net of acquisition of Mefiag Filtration operations:
Accounts receivable (833,030) (557,147) 941,204
Notes receivable, ESOT (400,000) 75,000 125,000
Inventories 400,946 (1,258,406) (247,716)
Prepaid expenses and other current assets 89,169 - (32,477)
Other assets (38,929) (165,656) (9,487)
Increase (decrease) in operating liabilities,
net of acquisition of Mefiag Filtration operations:
Accounts payable, accrued expenses and taxes 596,986 2,107,095 (1,170)
Customers' advances 139,022 171,009 (247,580)
Other non-current liabilities 66,498 17,997 2,196
- -----------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 6,312,118 5,667,504 4,298,484
- -----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property and equipment 4,881 4,274 37,586
Acquisitions of property and equipment (2,436,419) (1,098,893) (690,593)
Payment for purchase of Mefiag Filtration operations,
net of cash acquired - - (6,169,923)
- -----------------------------------------------------------------------------------------------------------------------
Net cash (used in) investing activities (2,431,538) (1,094,619) (6,822,930)
- -----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from new borrowings - - 4,000,000
Reduction of debt (1,177,068) (1,165,012) (1,093,609)
Exercise of stock options 306,739 10,750 42,100
Payment of dividends (1,409,322) (780,068) (782,142)
Cash in lieu of fractional shares (1,986) - -
Purchase of treasury shares (836,321) (464,351) (103,923)
- -----------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (3,117,958) (2,398,681) 2,062,426
- -----------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash 4,373 48,829 (63,071)
- -----------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 766,995 2,223,033 (525,091)
Cash and cash equivalents at beginning of year 6,648,380 4,425,347 4,950,438
- -----------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $7,415,375 $6,648,380 $4,425,347
======================================================================================================================
</TABLE>
The notes to consolidated financial statements are an integral part of the
above statement.
14
<PAGE>
CONSOLIDATED BUSINESS SEGMENT DATA
Met-Pro Corporation
<TABLE>
<CAPTION>
Years ended January 31,
1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET SALES TO UNAFFILIATED CUSTOMERS
Pollution control systems and allied equipment $28,090,728 $25,802,405 $21,651,790 $21,729,285 $23,460,068
Fluid handling equipment 25,976,592 24,203,172 19,547,654 16,588,853 16,188,180
- ------------------------------------------------------------------------------------------------------------------------------------
$54,067,320 $50,005,577 $41,199,444 $38,318,138 $39,648,248
====================================================================================================================================
INCLUDES FOREIGN SALES OF:
Pollution control systems and allied equipment $1,164,509 $875,966 $718,835 $438,986 $743,219
Fluid handling equipment 5,521,619 4,945,125 2,737,856 1,424,286 1,357,457
- ------------------------------------------------------------------------------------------------------------------------------------
$6,686,128 $5,821,091 $3,456,691 $1,863,272 $2,100,676
====================================================================================================================================
INCOME FROM OPERATIONS
Pollution control systems and allied equipment $4,269,701 $3,489,710 $2,256,548 $1,911,085 $2,313,524
Fluid handling equipment 3,394,256 2,791,727 1,695,962 1,093,126 1,134,797
- ------------------------------------------------------------------------------------------------------------------------------------
$7,663,957 $6,281,437 $3,952,510 $3,004,211 $3,448,321
====================================================================================================================================
DEPRECIATION EXPENSE
Pollution control systems and allied equipment $468,251 $462,637 $459,422 $480,755 $454,691
Fluid handling equipment 692,466 694,846 637,505 578,154 468,401
- ------------------------------------------------------------------------------------------------------------------------------------
$1,160,717 $1,157,483 $1,096,927 $1,058,909 $923,092
====================================================================================================================================
CAPITAL EXPENDITURES
Pollution control systems and allied equipment $1,693,342 $319,468 $233,319 $246,747 $121,283
Fluid handling equipment 660,377 678,316 2,138,985 861,841 3,248,386
- ------------------------------------------------------------------------------------------------------------------------------------
2,353,719 997,784 2,372,304 1,108,588 3,369,669
Corporate 82,700 101,109 43,081 127,527 103,989
- ------------------------------------------------------------------------------------------------------------------------------------
$2,436,419 $1,098,893 $2,415,385 $1,236,115 $3,473,658
====================================================================================================================================
IDENTIFIABLE ASSETS AT JANUARY 31
Pollution control systems and allied equipment $16,370,893 $16,466,133 $16,218,486 $16,398,107 $15,921,857
Fluid handling equipment 21,726,465 21,046,118 19,880,073 13,318,952 13,652,528
- ------------------------------------------------------------------------------------------------------------------------------------
38,097,358 37,512,251 36,098,559 29,717,059 29,574,385
Corporate 9,529,229 7,656,293 4,818,922 5,838,092 5,041,837
- ------------------------------------------------------------------------------------------------------------------------------------
$47,626,587 $45,168,544 $40,917,481 $35,555,151 $34,616,222
====================================================================================================================================
</TABLE>
The Company follows the practice of allocating general corporate expenses,
including depreciation, among the operating segments of the Company.
15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 1996, 1995 AND 1994
Met-Pro Corporation
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements include Met-Pro Corporation and
its wholly-owned subsidiaries, Mefiag B.V. and Mefiag of Puerto Rico,
Inc. (formerly Baker Brothers of Puerto Rico, Inc.). All significant
intercompany accounts and transactions have been eliminated in
consolidation.
INVENTORIES:
Inventories in general are stated at the lower of cost (principally
first-in, first-out) or market except for the inventory at the Dean Pump
Division which is determined on the last-in, first-out basis (see Note
5).
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment is recorded at cost. Depreciation is
computed principally by use of the straight-line method based upon the
estimated useful lives of the various classes of assets. Expenditures
for maintenance and repairs are charged to expense as incurred. Renewals
and betterments are capitalized. (See Note 6).
COSTS IN EXCESS OF NET ASSETS OF BUSINESSES ACQUIRED:
Costs in excess of net assets of businesses acquired prior to November
1, 1970, amounting to $582,513, are not being amortized because
management believes that there has been no impairment in value. Costs in
excess of net assets of businesses acquired subsequent to October 31,
1970, amounting to $3,533,109, are being amortized over a period of 40
years. The Company's policy is to continually monitor the recoverability
of goodwill using a fair value approach.
NON-COMPETE AGREEMENT:
In connection with the acquisition of the Mefiag Filtration operations
from Systems Engineering and Manufacturing Corp. on August 9, 1993, the
Company entered into a non-compete agreement in the amount of $1,000,000
which is being amortized over three years.
REVENUE RECOGNITION:
Revenues are recognized when products are shipped.
ADVERTISING:
Advertising costs are charged to operations in the year incurred and
amounted to $767,507, $709,977 and $676,770 for the years ended January
31, 1996, 1995 and 1994, respectively.
RESEARCH AND DEVELOPMENT:
Research and development costs are charged to expense in the year
incurred. The amounts charged were $584,191, $506,139 and $507,612, in
the years ending in 1996, 1995 and 1994, respectively.
FOREIGN CURRENCY TRANSLATION:
Assets and liabilities of Mefiag B.V. are translated at the rate of
exchange in effect on the balance sheet date; income and expenses are
translated at the average rates of exchange prevailing during the year.
The related cumulative translation adjustments are reflected as an
adjustment to stockholders' equity.
16
<PAGE>
EARNINGS PER SHARE:
Earnings per share is computed based on the weighted average number of
shares of common stock and common stock equivalents outstanding during
each year (adjusted for stock splits and dividends). The weighted
average number of common shares outstanding was 4,701,018, 4,709,280 and
4,719,371 during each of the years ending in 1996, 1995 and 1994,
respectively.
STOCK SPLIT:
On May 12, 1995, the Company issued 1,565,803 shares of Common Stock in
connection with the 3-for-2 stock split effected in the form of a 50%
stock dividend. Per share figures and other information included in the
financial statements and notes are based on the increased number of
shares of Common Stock after giving effect to the stock split.
CASH EQUIVALENTS:
The Company considers short-term investments which are highly liquid,
readily convertible into cash, and having original maturities of less
than three months to be cash equivalents.
CONCENTRATIONS OF CREDIT RISK:
Concentrations of credit risk are limited due to the large number of
customers and their dispersion among the different business segments and
geographic regions. The Company had no significant concentrations of
credit risk as of January 31, 1996 and 1995.
Accounts receivable at January 31, 1996 and 1995 included retainage of
$528,000 and $783,000, respectively.
USE OF ESTIMATES:
The presentation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
SUPPLEMENTAL CASH FLOW INFORMATION:
1996 1995 1994
-------------------------------------------------------------------------
Cash paid during the year for:
Interest $258,297 $287,112 $225,139
-------------------------------------------------------------------------
Income taxes $3,148,038 $2,443,099 $1,767,473
-------------------------------------------------------------------------
NOTE 2: ACQUISITION OF BUSINESS
On August 9, 1993, the Company acquired the stock and assets of the
Mefiag Filtration operations ("Mefiag") from Systems Engineering and
Manufacturing Corp. for $6,210,689. Mefiag was comprised of a
Netherlands corporation (Mefiag B.V.), a Massachusetts corporation
(Baker Brothers of Puerto Rico, Inc.) and a sales organization operating
in the United States. Mefiag designs, manufactures and markets high
performance disc filters in various sizes and configurations, utilizing
a wide variety of filter media.
The acquisition was accounted for as a purchase and was accomplished by
financing $4,000,000 with unsecured bank loans, paying the balance with
internal funds. The bank loans consist of two separate $2,000,000 notes,
one with a floating interest rate and one with a fixed interest rate
(see Note 7).
17
<PAGE>
The following unaudited pro forma summary presents the consolidated
results of operations as if the Company had acquired Mefiag at the start
of the year in which the acquisition occurred and the immediately
preceding year:
1994 1993
------------------------------------------------------------------------
Net sales $43,172,690 $42,854,549
Income before taxes on income 4,306,095 3,461,838
Net Income 2,553,515 2,077,103
Earnings per share
(adjusted for stock split) $.55 $.44
Net assets for Mefiag B.V., located in Heerenveen, Holland, amounted to
$3,598,128 and $3,421,954 as of January 31, 1996 and 1995, respectively.
NOTE 3: FAIR VALUE OF FINANCIAL INSTRUMENTS
CASH AND CASH EQUIVALENTS:
Short-term investments at January 31, 1996 and 1995 were valued at cost
(approximating market) and amounted to $6,955,338 and $6,191,983,
respectively. Short-term investments consist principally of commercial
paper and money market funds, which are considered to be cash
equivalents. The Company continually evaluates the creditworthiness of
the financial institutions and financial instruments in which it
invests.
DEBT:
The fair value and carrying amount of long-term debt was as follows:
January 31,
1996 1995
---------------------------------------------------------------
Fair value $2,905,748 $3,927,979
Carrying amount 2,871,139 4,048,207
Valuations for long-term debt are determined based on borrowing rates
currently available to the Company for loans with similar terms and
maturities.
NOTE 4: NOTES RECEIVABLE, ESOT
The Company has advanced a total of $400,000 to the Employee Stock
Ownership Trust to acquire shares of the Company's stock. The advances
are evidenced by five demand notes bearing interest with rates ranging
from 5.15% to 5.64% per annum.
18
<PAGE>
NOTE 5: INVENTORIES
Inventories were comprised of the following:
January 31,
1996 1995
----------------------------------------------------------------------
Raw material $4,277,065 $4,381,304
Work in process 2,053,626 1,834,555
Finished goods 3,972,153 4,477,875
----------------------------------------------------------------------
$10,302,844 $10,693,734
======================================================================
At January 31, 1996 and 1995, inventories valued at the last-in,
first-out method (LIFO) amounted to $2,921,430 and $2,542,196,
respectively. The LIFO value of inventories was lower than replacement
cost by $719,000 and $639,000 at January 31, 1996 and 1995,
respectively.
The book basis of LIFO inventories exceeded the tax basis by
approximately $1,026,000 at both January 31, 1996 and 1995, as a result
of applying the provisions of Accounting Principles Board Opinion No. 16
to the acquisition of Dean Brothers Pumps, Inc.
NOTE 6: PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment was comprised of the following:
January 31,
1996 1995
-----------------------------------------------------------------------
Land $2,028,934 $1,687,390
Buildings and improvements 12,456,649 11,162,405
Machinery and equipment 9,094,165 8,711,974
Furniture and fixtures 2,321,768 2,188,799
Automotive equipment 877,124 801,260
Leasehold improvements - 54,106
-----------------------------------------------------------------------
26,778,640 24,605,934
Less accumulated depreciation 12,345,075 11,386,805
-----------------------------------------------------------------------
$14,433,565 $13,219,129
=======================================================================
Depreciation and amortization of property, plant and equipment charged
to operations amounted to $1,160,717, $1,157,483 and $1,096,927 for the
years ended in 1996, 1995 and 1994, respectively.
NOTE 7: DEBT
SHORT-TERM DEBT:
The Company has a domestic unsecured line of credit and a foreign
unsecured line of credit with a bank amounting to $5,000,000 and
$3,800,000 as of January 31, 1996 and 1995, respectively. The lines of
credit were not used during either year.
19
<PAGE>
LONG-TERM DEBT:
Long-term debt was comprised of the following:
<TABLE>
<CAPTION>
January 31,
1996 1995
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
Note payable, bank, in connection with the
Mefiag acquisition, payable in equal
quarterly installments of $100,000,
plus interest at a fixed rate of 6.15%
(see Note 2). $1,000,000 $1,400,000
Note payable, bank, in connection with the
Mefiag acquisition, payable in equal
quarterly installments of $100,000,
plus interest, charged at a rate which
approximates the bank's money market
loan rate, LIBOR rate, or the bank's
certificate of deposit rate. The Company
selects the applicable rate at predetermined
intervals. Effective interest rate was 6.094%
and 7.5% at January 31, 1996 and
1995, respectively (see Note 2). 1,000,000 1,400,000
Mortgage note, payable in equal monthly
installments of $25,000, plus interest,
charged at a rate which approximates
the bank's money market loan rate,
LIBOR rate, or the bank's certificate of
deposit rate. The Company selects the
applicable rate at predetermined intervals.
Effective interest rate was 6.05% and
7.5% at January 31, 1996 and 1995,
respectively. 300,000 600,000
8.5% mortgage note, payable in equal
monthly installments of $10,267,
including principal and interest, through
February, 2001. 571,139 648,207
-----------------------------------------------------------------------------------------------------
2,871,139 4,048,207
Less current portion 1,178,177 1,170,821
-----------------------------------------------------------------------------------------------------
$1,692,962 $2,877,386
====================================================================================================
</TABLE>
Interest expense was $266,113, $285,710, and $228,669 in each of the
years ending in 1996, 1995 and 1994, respectively.
The mortgages are collateralized by the properties to which they relate.
Maturities of long-term debt are as follows:
Year Ending
January 31,
----------------------------------------------
1997 $1,178,177
1998 885,087
1999 492,608
2000 100,794
2001 109,703
Thereafter 104,770
----------------------------------------------
$2,871,139
==============================================
20
<PAGE>
NOTE 8: INCOME TAXES
The provision for income taxes was comprised of the following:
1996 1995 1994
------------------------------------------------------------------------
Current
Federal $2,545,999 $2,037,642 $1,344,070
State 824,518 818,781 426,336
Foreign 207,366 127,130 59,681
------------------------------------------------------------------------
3,577,883 2,983,553 1,830,087
Deferred (246,751) (322,000) (102,462)
------------------------------------------------------------------------
$3,331,132 $2,661,553 $1,727,625
========================================================================
Deferred income taxes reflect the net tax effect of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. Significant components of the Company's net deferred tax
liability were as follows:
<TABLE>
<CAPTION>
1996 1995
----------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets
Inventory cost capitalization $191,927 $211,000
Pension cost 748,488 699,000
Non-compete agreement 275,557 168,900
Write-down of property, plant and equipment 36,000 36,000
Warranty 120,000 -
----------------------------------------------------------------------------------------
Total deferred tax assets 1,371,972 1,114,900
----------------------------------------------------------------------------------------
Deferred tax liabilities
Accelerated depreciation 535,085 514,000
Inventory--Dean Pump Division 410,468 410,000
Excess of book over tax basis of
property acquired in Mefiag transaction 309,732 334,900
Goodwill 35,936 22,000
----------------------------------------------------------------------------------------
Total deferred tax liabilities 1,291,221 1,280,900
----------------------------------------------------------------------------------------
Net deferred tax assets/(liabilities) $80,751 ($166,000)
=======================================================================================
</TABLE>
A reconciliation of the federal statutory rate and the Company's
effective tax rate is presented as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Computed expected
tax expense
(federal) $2,796,506 34.0% $2,207,142 34.0% $1,443,225 34.0%
State income taxes,
net of federal
income tax benefit 544,180 6.6 540,395 8.3 314,735 7.4
Foreign tax differential (5,500) (.1) (39,951) (.6) (8,685) (.2)
Foreign tax credit (3,861) - (11,427) (.2) - -
Other (193) - (34,606) (.5) (21,650) (.5)
-------------------------------------------------------------------------------------------------
Effective income taxes $3,331,132 40.5% $2,661,553 41.0% $1,727,625 40.7%
=================================================================================================
</TABLE>
NOTE 9: LEASES AND OTHER COMMITMENTS
The Company leases a manufacturing facility for one of its Divisions
under an agreement which expired on December 31, 1995. Currently, the
Company is leasing this facility on a month to month basis, and is not
obligated to pay future minimum rental payments. The Company plans to
relocate the operations into a new 22,000 square foot facility in
Waukegan, Illinois in March 1996.
Rental expense under all operating leases was $60,335, $74,161 and
$67,387 during the years ended in 1996, 1995 and 1994, respectively.
21
<PAGE>
NOTE 10:EMPLOYEE BENEFIT PLANS
PENSION PLANS:
The Company has several defined benefit pension plans covering
substantially all employees. The Company makes annual contributions to
the plans equal to the amounts that are tax deductible.
Net periodic pension cost included the following components:
<TABLE>
<CAPTION>
1996 1995 1994
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned
during the period $414,100 $458,500 $392,000
Interest cost on projected
benefit obligation 562,387 487,152 446,954
Return on assets (1,499,590) (56,541) (987,560)
Amortization of transition asset (31,546) (47,428) (72,259)
Deferred gain/(loss)
on investments 962,487 (489,546) 507,964
------------------------------------------------------------------------------------------
$407,838 $352,137 $287,099
==========================================================================================
</TABLE>
Assumptions used in the accounting for pension cost were:
1996 1995 1994
-------------------------------------------------------------
Discount rate 7.50% 7.75% 7.00%
Rate of increase in
compensation levels
(where applicable) 6.00% 6.00% 6.00%
Expected long-term rate of
return on assets 8.00% 8.00% 8.00%
The following table sets forth the Plans' funded status and amounts
recognized in the Company's balance sheet at January 31, 1996 and 1995:
<TABLE>
<CAPTION>
1996 1995
-------------------------------------------------------------------------------------------------------------
Overfunded Underfunded Overfunded Underfunded
Plan Plans Plan Plans
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actuarial present value of
benefit obligations:
Vested $4,344,000 $2,073,300 $3,804,000 $1,828,700
Non-vested 142,000 94,100 79,000 70,100
-------------------------------------------------------------------------------------------------------------
Accumulated benefit
obligation $4,486,000 $2,167,400 $3,883,000 $1,898,800
=============================================================================================================
Projected benefit
obligation $5,867,000 $2,167,400 $5,079,000 $1,898,800
Plan assets at fair value 6,505,476 1,571,989 5,496,837 1,266,040
-------------------------------------------------------------------------------------------------------------
Plan assets in excess of
(less than) projected
benefit obligation 638,476 (595,411) 417,837 (632,760)
Unrecognized net gain (1,989,709) (224,557) (1,523,937) (128,291)
Unrecognized transition
(obligation) asset (413,788) 244,700 (445,618) 267,952
Unrecognized prior
service cost 63,707 264,174 64,286 232,903
-------------------------------------------------------------------------------------------------------------
Accrued pension expense
included in accounts
payable and accrued
expenses ($1,701,314) ($311,094) ($1,487,432) ($260,196)
=============================================================================================================
</TABLE>
22
<PAGE>
DIRECTORS' BENEFIT PLAN:
The Company's benefit plans were expanded during the year ended in 1995
to include the Directors of the Company. The amounts applicable to the
Plan are included in the 1996 and 1995 Underfunded Plans data in the
above table.
EMPLOYEES' STOCK OWNERSHIP TRUST:
The Company sponsors an employee stock ownership plan under which it
makes discretionary contributions to the trust either in cash or in
stock of the Company. All U.S. salaried employees who work at least
1,000 hours per year and have attained the age of 21 are eligible to
participate in the Plan. The Company provided for contributions to the
Employees' Stock Ownership Trust of $200,000, $150,000 and $150,000 in
the years ended in 1996, 1995 and 1994, respectively. All shares are
considered to be allocated to participants or released for allocation to
participants and are included as outstanding shares in the earnings per
share computations.
INCENTIVE STOCK OPTION PLANS:
During 1987 ("the 1987 Plan"), the Company adopted an incentive stock
option plan under which 100,000 shares (plus an undeterminable number of
shares required by the anti-dilution provisions of the Plan) of the
Company's Common Stock were reserved for sale to such employees as
selected by the Board of Directors. At the Company's annual meeting held
June 3, 1992, a similar resolution for an additional 100,000 shares
("the 1992 Plan"), as adopted by the Board of Directors on October 10,
1991, was approved.
The status of these Plans is as follows:
<TABLE>
<CAPTION>
Options Options Options Options
Granted Granted Granted Granted
Stock @ $5.08 @ $5.33 @ $9.00 @ $10.76
Reserved Per Share Per Share Per Share Per Share
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1987 PLAN - reserved 100,000
Year ended 1/31/90
stock split 3 for 2 50,000
Year ended 1/31/92
stock dividend 5% 7,500
Year ended 1/31/96
stock split 3 for 2 78,750
Options granted:
Year ended 1/31/88 (159,675) 159,675
Year ended 1/31/92 (8,250) 3,000 5,250
Year ended 1/31/94 (22,500) 22,500
Year ended 1/31/96 (18,000) 18,000
Options exercised:
Year ended 1/31/91 (78,750)
Year ended 1/31/92 (28,950) (750)
Year ended 1/31/93 (750)
Year ended 1/31/94 (7,500) (750)
Year ended 1/31/95 (750)
Year ended 1/31/96 (35,025) (15,000)
----------------------------------------------------------------------------------------------------------------
Balance reserved -
1/31/96 27,825
==========================================
Balances granted and
unexercised - 1/31/96 9,450 7,500 18,000 5,250
================================================================================================================
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
Options Options Options Options
Granted Granted Granted Granted
Stock @ $7.50 @ $7.92 @ $9.00 @ $13.625
Reserved Per Share Per Share Per Share Per Share
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1992 PLAN - reserved 100,000
Year ended 1/31/96
stock split 3 for 2 50,000
Options granted:
Year ended 1/31/94 (30,000) 30,000
Year ended 1/31/95 (19,500) 15,000 4,500
Year ended 1/31/96 (89,000) 89,000
Options exercised:
Year ended 1/31/95 (750)
Year ended 1/31/96 (750) (3,750) (1,500)
-------------------------------------------------------------------------------------------------------------------
Balance reserved -
1/31/96 11,500
=========================================
Balances granted and
unexercised - 1/31/96 14,250 26,250 2,250 89,000
==================================================================================================================
</TABLE>
NOTE 11: OTHER INCOME, NET
Other income, net, was comprised of the following:
<TABLE>
<CAPTION>
1996 1995 1994
---------------------------------------------------------------------------------
<S> <C> <C> <C>
Gain/(loss) on sale of property
and equipment $4,217 ($85,726) $28,923
Other, primarily interest income 556,843 295,884 263,347
---------------------------------------------------------------------------------
$561,060 $210,158 $292,270
=================================================================================
</TABLE>
NOTE 12: BUSINESS SEGMENT DATA
The Company's operations are conducted in two basic business segments as
follows: the manufacture and sale of pollution control systems and
allied equipment, and the manufacture and sale of fluid handling
equipment.
Financial information by business segment is shown on page 15.
NOTE 13: SUBSEQUENT EVENT
On February 26, 1996, the Board of Directors declared a $.33 per share
annual cash dividend payable on April 26, 1996 to stockholders of record
on April 12, 1996.
24
<PAGE>
QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
Year ended January 31, 1996 April July October January
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $13,131,816 $13,615,141 $14,089,960 $13,230,403
Gross profit 4,488,449 4,603,636 4,826,286 4,523,339
Net income 1,100,959 1,158,741 1,268,331 1,365,854
Earnings per share .23 .25 .27 .29
Year ended January 31, 1995 April July October January
- ----------------------------------------------------------------------------------------------------------
Net sales $11,737,142 $12,206,905 $13,177,397 $12,884,133
Gross profit 3,965,749 4,147,133 4,128,778 4,291,252
Net income 849,114 943,208 971,720 1,066,000
Earnings per share .18 .20 .21 .22
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE:
There has been no change in accountants and no disagreements on
accounting and financial disclosures.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:
Information concerning the Directors and certain executive
officers of the Corporation required by this item is incorporated by the
reference to the material appearing under the heading "Election of Directors"
in the Company's Proxy Statement for the 1996 Annual Meeting of its
Stockholders.
The executive officers of Registrant, other than the Chairman of
the Board, President and Vice President-Finance, are as follows.
Carl W. Dean, age 49, is a Vice President of Registrant and
General Manager of the Dean Pump Division, to which office he was elected in
February, 1987. He was employed by Dean Brothers Pumps, Inc. in 1972 and
became an employee of Registrant when that entity was acquired by Registrant
in July, 1984. He previously held the position of Sales Manager of the
Division.
Sonja M. Haggert, age 42, is a Vice President of Registrant and
General Manager of the Keystone Filter Division, to which office she was
elected in February, 1993. She joined the Registrant in 1978 and previously
held the position of Distributor Sales Manager of the Division.
Raymond J. De Hont, age 42, is a Vice President of Registrant and
General Manager of the Fybroc Division, to which office he was elected in
June, 1995. He joined the Registrant in June, 1995. For more than five years
prior thereto, Mr. De Hont was employed by Air and Water Technologies and
served in various capacities. His last position was Executive Vice President
of their Service Group.
Mark A. Betchaver, age 46, is a Vice President of Registrant and
General Manager of the Sethco Division, to which he was elected in June,
1993. He joined the Registrant in 1972 and was most recently Sales Manager of
the Division and was elected a Vice President in June, 1993.
25
<PAGE>
John B. Lechner, age 60, is a Vice President of Registrant and
General Manager of the Stiles-Kem Division, to which he was elected in 1980.
He was employed in 1977 as Sales Manager of the Division and elected a Vice
President in 1981.
Gregory C. Kimmer, age 41, is Vice President and General Manager
of the Duall Division, to which office he was elected in October, 1989. For
more than five years prior thereto, Mr. Kimmer was employed by Duall
Industries, Inc. in various capacities.
Hans J. D. Huizinga, age 45, is the Managing Director of Mefiag
B.V., a wholly-owned subsidiary of Registrant, located in Heerenveen,
Holland, an office to which he was elected in August, 1993. He was employed
by Mefiag B.V. (formerly Systems Engineering and Manufacturing Corp.
Nederland B.V.) for over five years as Managing Director prior to becoming an
employee of the Registrant's subsidiary on June 30, 1993, when Registrant
acquired that company.
Robert A. Ayala, age 61, is the General Manager of Mefiag of
Puerto Rico, Inc., an office to which he was elected in August, 1993. He was
employed by Mefiag of Puerto Rico, Inc. (formerly Baker Brothers of Puerto
Rico, Inc.), a wholly-owned subsidiary of Registrant, over five years as
Managing Director prior to June 30, 1993, when Registrant acquired that
company.
Robert P. Replogle, age 55, is Vice President and Director of the
International Sales Division and the Mefiag Division, to which office he was
elected in December, 1995. He joined the Registrant in December, 1973 and
previously held the position of Director of the International Sales Division
and the Mefiag Division.
A Form 5 was filed by Mr. Thomas F. Hayes, Director, for 6,000
shares of Common Stock transferred to an Irrevocable Crummey Trust, as a gift
to children, on December 28, 1995. The Form 5 was filed on February 15, 1996.
Form 5's were also filed for Messrs. Kacin and Lechner for ESOT shares
distributed under the Internal Revenue Code's diversification rules on April 4,
1995, for 417 shares and 137 shares, respectively. The Form 5's were filed on
April 4, 1996.
There is no family relationship between any of the Directors or
executive officers of Registrant. The term of office for each officer lasts
for one year and will expire on June 5, 1996, the date of Registrant's
forthcoming Annual Meeting of Stockholders.
ITEM 11. EXECUTIVE COMPENSATION:
Information required by this item is incorporated by reference to
the material appearing under the heading "Executive Compensation and Other
Information" in the Company's Proxy Statement for the 1996 Annual Meeting of
its Stockholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:
Information required by this item is incorporated by reference to
the material appearing under the heading "Principal Security Holders" in the
Company's Proxy Statement for the 1996 Annual Meeting of its Stockholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:
Information required by this item is incorporated by reference to
the material appearing under the headings "Election of Directors" and
"Certain Transactions" in the Company's Proxy Statement for the 1996 Annual
Meeting of its Stockholders.
26
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K:
A. FINANCIAL STATEMENTS:
Financial statements filed as part of this report are listed in the
index to Consolidated Financial Statements and Supplementary Data on
page 11.
B. EXHIBITS:
The following exhibits are incorporated by reference:
(3) Articles of Incorporation and By-laws. See Registration Statement
#2-26979, effective October 15, 1968.
(11) Statement re Computation of Per Share Earnings. See page 13 of
Item 8.
(21) List of Subsidiaries of Registrant:
CORPORATE JURISDICTION OF NAME UNDER WHICH BUSINESS
--------- --------------- -------------------------
NAME INCORPORATION IS CONDUCTED
---- ------------- ------------
Mefiag B.V. The Netherlands Mefiag B.V., a wholly-owned
subsidiary of
Met-Pro Corporation
Mefiag of Puerto Mefiag of Puerto Rico, Inc.,
Rico, Inc. Delaware a wholly-owned subsidiary of
Met-Pro Corporation
(27) Financial Data Schedule
The following exhibits required under Item 601 of Regulation S-K
promulgated by the Securities & Exchange Commission have been omitted
because they are either inapplicable or non-existent.
(4) Instruments defining the rights of security holders.
(9) Voting trust agreements.
(10) Material contracts.
(12) Statements re computation of ratios.
(13) Annual report to security holders.
(16) Letter re change in certifying accountant.
(18) Letter re change in accounting principles.
(22) Published report regarding matters submitted to vote of security
holders.
(23) Consent of experts and counsel.
(24) Power of attorney.
(28) Information from reports furnished to state insurance regulatory
authorities.
(99) Additional exhibits.
C. REPORTS ON FORM 8-K:
No reports on Form 8-K were filed during the three month period ended
January 31, 1996.
27
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
April 19, 1996 By: /S/ William L. Kacin
- ----------------------- ----------------------------
Date William L. Kacin
President, Chief Executive Officer
and Director
Pursuant to the requirement of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/S/ William L. Kacin President, Chief Executive
- --------------------------- Officer and Director April 19, 1996
William L. Kacin
Vice President-Finance
Secretary and Treasurer
Chief Financial Officer
Chief Accounting Officer
/S/ William F. Moffitt Director April 19, 1996
- ---------------------------
William F. Moffitt
/S/ Walter A. Everett Director, Chairman April 19, 1996
- ---------------------------
Walter A. Everett
/S/ Thomas F. Hayes Director April 19, 1996
- ---------------------------
Thomas F. Hayes
/S/ Richard P. Klopp Director April 19, 1996
- ---------------------------
Richard P. Klopp
/S/ Alan Lawley Director April 19, 1996
- ---------------------------
Alan Lawley
/S/ Earl J. Wofsey Director, Vice Chairman April 19, 1996
- ---------------------------
Earl J. Wofsey
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> JAN-31-1996 JAN-31-1995
<PERIOD-END> JAN-31-1996 JAN-31-1995
<CASH> 7,415,735 6,648,380
<SECURITIES> 0 0
<RECEIVABLES> 8,941,157 8,107,243
<ALLOWANCES> (194,972) (184,444)
<INVENTORY> 10,302,844 10,693,734
<CURRENT-ASSETS> 28,268,561 26,595,928
<PP&E> 26,778,640 24,605,934
<DEPRECIATION> (12,345,075) (11,386,805)
<TOTAL-ASSETS> 47,626,587 45,168,544
<CURRENT-LIABILITIES> 10,250,506 9,506,301
<BONDS> 2,871,139 4,048,207
0 0
0 0
<COMMON> 475,922 319,342
<OTHER-SE> 34,536,656 31,764,668
<TOTAL-LIABILITY-AND-EQUITY> 47,626,587 45,168,544
<SALES> 54,067,320 50,005,577
<TOTAL-REVENUES> 54,067,320 50,005,577
<CGS> 35,625,610 33,472,665
<TOTAL-COSTS> 46,403,363 43,724,140
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 266,113 285,710
<INCOME-PRETAX> 8,225,017 6,491,595
<INCOME-TAX> 3,331,132 2,661,553
<INCOME-CONTINUING> 4,893,885 3,830,042
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 4,893,885 3,830,042
<EPS-PRIMARY> 1.04 .81
<EPS-DILUTED> 1.04 .81
</TABLE>
