<PAGE>
Filed pursuant to Rule
424(b)
File No. 333-13929
PROSPECTUS
195,920 Shares
Met-Pro Corporation
Common Stock
This Prospectus relates to 195,920 shares of Common Stock, par value $.10 per
share, of Met-Pro Corporation (the "Company") held by the Selling Shareholders
(as defined herein), which may be offered for sale from time to time by the
Selling Shareholders, or by their permitted pledgees, donees, transferees or
other successors in interest, to or through underwriters or directly to other
purchasers or through agents in one or more transactions at varying prices
determined at the time of sale or at negotiated prices. See "Plan of
Distribution". The Company will not receive any proceeds from the sale of shares
of Common Stock by the Selling Shareholders.
The Common Stock is quoted on the American Stock Exchange under the symbol
"MPR". On December 30, 1996, the closing price of the Common Stock, as reported
by the American Stock Exchange, was $13 5/8.
------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is December 31, 1996
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information concerning the Company filed with the Commission may be
inspected and copied at the public reference facilities maintained by the
Commission at its office at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, as well as at the Regional Offices of the Commission at 7 World Trade
Center, 13th Floor, New York, NY 10048. Copies of such material can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Common Stock is quoted on the
American Stock Exchange. Such reports, proxy and information statements and
other information can also be inspected and copied at the offices of the
American Stock Exchange, 86 Trinity Place, New York, NY 10006.
The Company has filed a registration statement on Form S-3 (herein, together
with all amendments and exhibits thereto, referred to as the "Registration
Statement"), under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the securities offered pursuant to this Prospectus. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is made to the
Registration Statement and the exhibits filed as a part thereof. Statements
contained herein concerning any document filed as an exhibit are not necessarily
complete and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement. Each such statement is
qualified in its entirety by such reference.
INCORPORATION OF INFORMATION BY REFERENCE
The following documents, filed with the Commission (File No. 001-07763) pursuant
to the Exchange Act, are hereby incorporated by reference in this Prospectus:
(i) Annual Report on Form 10-K of the Company for the fiscal year ended January
31, 1996; (ii) Quarterly Reports on Form 10-Q for the quarters ended April 30,
1996, July 31, 1996 and October 31, 1996; and (iii) Proxy Statement of the
Company relating to the annual meeting of shareholders held on June 5, 1996.
All other documents filed by the Company pursuant to Section 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Common Stock pursuant to this
Prospectus shall be deemed to be incorporated by reference and to be a part of
this Prospectus from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of this
Prospectus is delivered, upon oral or written request of any such person, a copy
of any or all of the documents incorporated herein by reference, other than the
exhibits to such documents (unless such exhibits are specifically incorporated
by reference in such documents). Requests should be directed to Met-Pro
Corporation, 160 Cassell Road, P.O. Box 144, Harleysville, PA 19438; Attn:
William Moffitt, Secretary, telephone (215) 723-6751.
2
<PAGE>
THE COMPANY
Met-Pro Corporation (the "Company") was organized in 1967 and has grown both
internally and through acquisitions. It designs, manufactures and distributes
products sold for pollution control and fluid handling. The Company operates
through seven divisions and three wholly-owned subsidiaries.
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.
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. The products are manufactured in the Company's plant
in Waukegan, Illinois and 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 waste water
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.
The Mefiag Division, operating through two wholly-owned subsidiaries, designs
and manufactures filter systems utilizing horizontal disc technology for
superior performance, particularly in high efficiency and high-flow applications
in the plating and metal finishing industries and elsewhere. Worldwide sales are
accomplished through qualified, market-based distributors and original equipment
manufacturers located throughout Europe, the United States, South America and
other major markets.
The Systems Division, located at the Company's principal executive offices in
Harleysville, PA, and the original foundation on which Met-Pro was built,
designs, manufactures and installs major 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. These products 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.
The Duall Division is a leading manufacturer of industrial and municipal air
pollution control equipment. Its major products include odor control systems,
fume and emergency gas scrubbers, stripping towers and exhaust fans and plating
3
<PAGE>
and process tanks. All equipment is fabricated from corrosion resistant
materials in the Company's 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,
waste water treatment, composting, food processing, chemical, printed circuit,
semiconductor, pharmaceutical, battery manufacturing and groundwater remediation
markets. Over ninety factory trained manufacturer's representatives sell Duall's
systems to industrial and municipal clients.
The Keystone Filter Division is an established custom pleater and cartridge
manufacturer in the United States. It provides 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. It also provides standard filters for water purification and
industrial applications.
The Fybroc Division is a 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. Sales, engineering, and
customer service are provided through a worldwide distributor network.
The Dean Pump Division designs and manufactures 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. The Company's manufacturing facility in Indianapolis,
Indiana produces pumps which are sold through an extensive network of
distributors.
The Strobic Division, acquired on September 12, 1996 (see "The Company - Recent
Events") is presently operating as a wholly-owned subsidiary corporation.
The Company's principal executive offices are located at 160 Cassell Road, P.O.
Box 144, Harleysville, PA 19438, and its telephone number is (215) 723-6751.
Recent Events
On June 5, 1996, the Company announced a 3-for-2 stock split, which was paid on
July 8, 1996 to holders of record on June 18, 1996.
On September 12, 1996, Met-Pro Corporation and Met-Pro Acquisition Corporation,
a wholly-owned subsidiary of Met-Pro Corporation (collectively, "Met-Pro"),
executed an Agreement and Plan of Merger (the "Agreement") with Strobic Air
4
<PAGE>
Corporation ("Strobic"), pursuant to which Strobic was merged with and into
Met-Pro Acquisition Corporation, which then changed its name to Strobic Air
Corporation.
The consideration paid by Met-Pro under the Agreement consisted of 195,920
shares of Met-Pro common stock, cash in the amount of approximately $2.15
million, and a promissory note for $250,000. Met-Pro also granted the former
Strobic shareholders certain registration rights under the Securities Act. Lynn
T. Secrest, one of Strobic's principal former shareholders and its former
president, deposited 40,816 shares of Common Stock of Met-Pro and the $250,000
note into escrow to fund indemnification obligations under the Agreement.
Met-Pro also entered into a three (3) year employment agreement with Mr. Lynn T.
Secrest to serve as vice president and the general manager of Strobic, and
obtained Mr. Secrest's covenant not to compete with Met-Pro for a four (4) year
period.
Met-Pro financed part of the purchase price and obligations of Strobic that were
paid at closing with a loan from Mellon Bank, N.A,. in the amount of $3.5
million.
Strobic designs, manufactures and holds patents on specialty blowers and
industrial fans for applications including laboratories, hospitals,
semi-conductor manufacturing clean rooms, pharmaceutical manufacturing and
chemical and petrol-chemical plants. Strobic conducts its operations in an
approximately 20,000 square foot manufacturing facility on a 2.3 acre parcel
that it owns in Bensalem, Pennsylvania, as well as in a contiguous approximately
16,000 square foot facility that it leases.
Met-Pro also entered into certain agreements with certain former Strobic
stockholders governing the disposition of their Shares (see "Plan of
Distribution").
USE OF PROCEEDS
The net proceeds from the sale of the Shares offered hereby will be received by
the Selling Shareholders. The Company will not receive any proceeds from any
sale of the Shares by the Selling Shareholders.
SELLING SHAREHOLDERS
The persons listed below received the Shares listed after their names in
connection with Met-Pro's acquisition of Strobic and propose to sell them from
time to time as set forth under the caption "Plan of Distribution" and subject
to the restrictions described in that section.
5
<PAGE>
The following individuals are the Selling Shareholders:
Name and Address Shares Owned Shares Offered
- ---------------- ------------ --------------
Eugene L. Dell 792 792
Shanta Kaushik Custodian for
Nalini Kaushik 792 792
Madlynne M. Pastor 396 396
Lynn T. Secrest 74,014(1)(2)(3) 74,014(1)(3)
Richard P. Secrest 55,411(2)(3) 55,411(3)
Ronald H. Secrest 24,539(2)(3) 24,539(3)
Frank J. Sobon, Jr. and
Anna B. Sobon, JT TEN 396 396
John W. Stone, III 39,580(3) 39,580(3)
- ---------------------------
(1) Includes Shares held in escrow under the terms of the Agreement. The
escrowed Shares may be replaced with the cash value equivalent of such
replaced Shares, valued at the average of the closing prices per share
as listed on the American Stock Exchange for the ten (10) trading days
prior to such replacement. Absent any such replacement, the escrowed
Shares may not be offered prior to September 11, 1998.
(2) The three Secrests are brothers; however, each of them disclaims
ownership of the Shares owned by the others.
(3) The sale of these Shares is subject to certain restrictions as set
forth in "Plan of Distribution."
In addition to their role as shareholders of Strobic, Messrs. Lynn Secrest,
Richard Secrest, Ronald Secrest and John Stone were formerly officers and
directors of Strobic. Mr. Lynn Secrest is currently employed by Met-Pro as the
Vice President and General Manager of the wholly-owned subsidiary of the Company
into which Strobic was merged. Except for the foregoing, none of the Selling
Shareholders listed above has held any position, office or other material
relationship within the past three years with the Company or any of its
predecessors or affiliates.
DESCRIPTION OF COMMON STOCK
The Company's certificate of incorporation authorizes the issuance of up to
10,000,000 shares of Common Stock, par value $.10 per share. The holders of
Common Stock (i) have equal rights to dividends from funds legally available
therefor, when, as and if declared by the Board of Directors of the Company;
(ii) are entitled to share ratably in all of the assets of the Company available
for distribution to holders of Common Stock upon liquidation, dissolution or
winding up of the affairs of the Company; (iii) do not have preemptive,
subscription or conversion rights, and there are no redemption or sinking fund
provisions applicable thereto; and (iv) are entitled to one vote per share on
all matters upon which shareholders may vote at all meetings of shareholders.
All shares of Common Stock now outstanding are fully paid and non-assessable.
The holders of shares of Common Stock do not have cumulative voting rights,
6
<PAGE>
which means that the holders of more than 50% of such outstanding shares, voting
for the election of directors, can elect all of the directors to be elected, if
they so choose. Directors are divided into three classes. Each year, one class
is elected to hold office for the next three years.
The transfer agent for the Company's Common Stock is Chemical Mellon Shareholder
Services, L.L.C., Overpark Center, 85 Challenger Road, Ridgefield Park, NJ
07660.
PLAN OF DISTRIBUTION
Any distribution of the Shares by the Selling Shareholders, or by permitted
pledgees, donee, transferees or other successors in interest, may be effected
from time to time in one or more of the following transactions: (a) to
underwriters who will acquire Shares for their own account and resell them in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale (any public
offering price and any discount or concessions allowed or re-allowed or paid to
dealers may be changed from time to time); (b) through brokers, acting as
principal or agent, in transactions (which may involve block transactions) on
the American Stock Exchange, or on one or more exchanges on which the Common
Stock is then listed, in special offerings, exchange distributions pursuant to
the rules of the applicable exchanges or in the over-the-counter market, or
otherwise, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices, at negotiated prices or at fixed prices; or (c)
directly or through brokers or agents in private sales at negotiated prices, or
by any other legally available means.
The Selling Shareholders and such underwriters, brokers, dealers or agents, upon
effecting a sale of Shares, may be considered "underwriters" as that term is
defined by the Securities Act.
Underwriters participating in any offering made pursuant to this Prospectus (as
amended or supplemented from time to time) may receive underwriting discounts
and commissions, and discounts or concessions may be allowed or re-allowed or
paid to dealers, and brokers or agents participating in such transaction may
receive brokerage or agent's commissions or fees.
At the time a particular offering of Shares is made, to the extent required, a
Prospectus Supplement will be distributed which will set forth the amount of
Shares, the offering price paid by an underwriter for Shares purchased from the
Selling Shareholders, any discounts, commissions and other items constituting
compensation from the Selling Shareholders and any discounts, commissions or
concessions allowed or re-allowed or paid to dealers.
Messrs. Lynn Secrest, Richard Secrest, Ronald Secrest and John Stone as a group
and on behalf of their permitted transferees have agreed to the following
restrictions on open market resale of the Shares through December 11, 1997: (i)
no more than 2,000 Shares may be offered and sold on any trading day, and (ii)
no more than a total of 15,000 Shares may be sold in any calendar month. They
may make unlimited private sales to persons who agree to abide by the above
restrictions. These restrictions do not apply to any sale of Shares in an
underwritten public offering of Shares.
7
<PAGE>
The Company has agreed to process to effectiveness a registration statement
under the Securities Act covering the resale of the Shares and to amend it from
time to time as required to incorporate current significant information until
all the Shares have been sold, but not later than September 11, 1999.
All costs, expenses and fees in connection with the registration statement and
amendments to it will be borne by the Company. Commissions and discounts, if
any, attributable to the sale of the Shares will be borne by the Selling
Shareholders. The Selling Shareholders may agree to indemnify any agent, dealer
or broker-dealer that participates in transactions involving sales of the Shares
against certain liabilities, including liabilities arising under the Securities
Act. The Company and the Selling Shareholders have agreed to indemnify each
other and certain other persons against certain liabilities in connection with
the offering of the Shares, including liabilities arising under the Securities
Act.
Whenever the Company proposes to file a registration statement under the
Securities Act at any time or from time to time prior to September 11, 1999
involving an underwritten public offering, the Company has agreed to include in
any such registration statement any of the Shares that are so requested by the
Selling Shareholders; provided however, that if in the written opinion of the
underwriter or managing underwriter the inclusion of any of such Shares would
materially and adversely affect such public offering, then the number of such
Shares to be included shall be proportionately reduced.
The Company has granted an option to the Selling Shareholders and their
permitted transferees to "put" all, or at the sole option of the Selling
Shareholders, less than all, unsold Shares to the Company on September 12, 1999
at a price of $12.25 per Share.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon for the Company by
Earl J. Wofsey, Esquire, corporate counsel of the Company. Earl J. Wofsey is the
beneficial owner of 195,714 shares of the Company's Common Stock and options to
purchase an additional 13,500 shares. Prior to June 5, 1996, he was a Director
of the Company.
EXPERTS
The financial statements and the related supplemental schedules of the Company
incorporated in this Prospectus by reference to the Annual Report on Form 10-K
for the year ended January 31, 1996 have been audited by Margolis & Company
P.C., independent accountants, as stated in its report, which is incorporated
herein by reference, and has been so incorporated in reliance upon the report of
such firm, given upon its authority as experts in accounting and auditing. The
financial statements of Strobic Air Corporation for the year ended October 31,
1995 and the nine months ended July 31, 1996 have been audited by Margolis &
Company P.C., and are included herein in reliance upon the report of such firm,
given upon its authority as experts in accounting and auditing.
8
<PAGE>
STROBIC AIR CORPORATION
FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JULY 31, 1996
F-1
<PAGE>
STROBIC AIR CORPORATION
TABLE OF CONTENTS
FOR THE NINE MONTHS ENDED JULY 31, 1996
- -------------------------------------------------------------------------------
PAGE
NUMBER
------
Independent Auditor's Report 2
Financial Statements:
Balance sheet 3
Operations 4
Stockholders' equity 5
Cash flows 6
Notes to financial statements 7 to 11
F-2
<PAGE>
[LETTERHEAD OF MARGOLIS & COMPANY P.C.]
INDEPENDENT AUDITOR'S REPORT
September 4, 1996, except for Note 9
as to which the date is September 12,
1996
Officers and Directors
Strobic Air Corporation
Bensalem, Pennsylvania
We have audited the accompanying balance sheet of Strobic Air Corporation as of
July 31, 1996, and the related statements of operations, stockholders' equity
and cash flows for the nine months then ended. 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 audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Strobic Air Corporation as of
July 31, 1996, and the results of its operations and its cash flows for the nine
months then ended in conformity with generally accepted accounting principles.
/s/ Margolis & Company P.C.
Certified Public Accountants
F-3
<PAGE>
STROBIC AIR CORPORATION
BALANCE SHEET
JULY 31, 1996
- --------------------------------------------------------------------------------
ASSETS
Current assets:
Cash $ 75,012
Accounts receivable, net of allowance of $5,000 1,126,499
Inventories 860,210
Deferred tax asset 18,600
Prepaid expenses and other current assets 18,256
----------
Total current assets 2,098,577
Property, plant and equipment, net 610,462
Other assets 95,037
----------
$2,804,076
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable, bank line-of-credit $ 540,000
Demand note payable, individual 100,000
Current portion of long-term debt 75,167
Accounts payable 437,647
Accrued expenses 325,539
Accrued income taxes 179,336
----------
Total current liabilities 1,657,689
Long-term debt 101,858
Deferred tax liability 37,200
----------
Total liabilities 1,796,747
----------
Commitments
Stockholders' equity:
Common stock, no par value; 5,000 shares
authorized, 2,505 shares issued 75,614
Retained earnings 937,715
----------
1,013,329
Less treasury stock, at cost, 30 shares 6,000
----------
Net stockholders' equity 1,007,329
----------
$2,804,076
==========
The notes to financial statements are an integral part of the above statement.
F-4
<PAGE>
STROBIC AIR CORPORATION
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED JULY 31, 1996
- --------------------------------------------------------------------------------
Gross sales, net of discounts and
allowances of $37,000 $5,143,874
Less commissions 505,597
----------
Net sales 4,638,277
Cost of goods sold 3,355,345
----------
Gross profit 1,282,932
----------
Operating expenses:
Selling 241,891
General and administrative 515,905
Research and development 53,924
----------
811,720
----------
Income from operations 471,212
Interest expense 52,641
----------
Income before taxes on income 418,571
Provision for taxes on income 199,800
----------
Net income $ 218,771
==========
The notes to financial statements are an integral part of the above statement.
F-5
<PAGE>
STROBIC AIR CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED JULY 31, 1996
- --------------------------------------------------------------------------------
COMMON RETAINED TREASURY
STOCK EARNINGS STOCK TOTAL
------- --------- ------- ----------
Balance, October 31, 1995 $75,614 $ 723,894 ($6,000) $ 793,508
Net income 218,771 218,771
Dividends paid ( 4,950) ( 4,950)
------- --------- ------- ----------
Balance, July 31, 1996 $75,614 $ 937,715 ($6,000) $1,007,329
======= ========= ======= ==========
The notes to financial statements are an integral part of the above statement.
F-6
<PAGE>
STROBIC AIR CORPORATION
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED JULY 31, 1996
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH
Cash flows from operating activities:
Net income $218,771
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 80,231
Deferred income taxes ( 15,200)
Allowance for doubtful accounts ( 4,250)
(Increase) decrease in operating assets:
Accounts receivable 94,977
Inventories ( 61,882)
Prepaid expenses and other current assets 17,298
Increase (decrease) in operating liabilities:
Accounts payable 107,966
Accrued expenses (322,307)
Accrued income taxes 150,063
--------
Net cash provided by operating activities 265,667
--------
Cash flows from investing activities:
Acquisitions of property and equipment ( 117,983)
Increase in other assets ( 19,441)
--------
Net cash (used in) investing activities ( 137,424)
--------
Cash flows from financing activities:
Net borrowings under line-of-credit 20,000
Reduction of long-term debt ( 68,756)
Payment of dividends ( 4,950)
--------
Net cash (used in) financing activities ( 53,706)
--------
Net increase in cash 74,537
Cash at beginning of period 475
--------
Cash at end of period $ 75,012
========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 46,532
--------
Income taxes $ 63,359
--------
The notes to financial statements are an integral part of the above statement.
F-7
<PAGE>
STROBIC AIR CORPORATION
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED JULY 31, 1996
- --------------------------------------------------------------------------------
1. Nature of Business and Summary of Significant Accounting Policies
Nature of business - Strobic Air Corporation (the "Company") develops,
engineers and assembles air moving equipment and specializes in corrosive,
toxic and high temperature exhaust systems and clean room recirculation
systems. The Company's products are sold throughout the United States.
Inventories - Inventories are stated at the lower of cost (first-in,
first-out) or market.
Patents and trademarks - Patents and trademarks are amortized on a
straight-line basis over five years.
Property, plant and equipment - Property, plant and equipment is recorded
at cost. Depreciation is computed using straight-line and accelerated
methods over estimated useful lives. Expenditures for maintenance and
repairs are charged to expense as incurred. Renewals and betterments are
capitalized.
Revenue recognition - Revenues are recognized when products are shipped.
Advertising - Advertising costs are charged to operations in the period
incurred and amounted to $82,710 for the nine months ended July 31, 1996.
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.
2. Inventories
Inventories consisted of the following:
Finished goods $ 11,430
Work in process 106,116
Raw materials 742,664
-------
$860,210
========
F-8
<PAGE>
STROBIC AIR CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
FOR THE NINE MONTHS ENDED JULY 31, 1996
- --------------------------------------------------------------------------------
3. Property, Plant and Equipment
Property, plant and equipment consisted of the following:
Land $ 100,000
Building 350,000
Building improvements 113,358
Leasehold improvements 21,998
Machinery and equipment 869,663
Tooling 163,533
Automotive and delivery equipment 58,812
---------
1,677,364
Less accumulated depreciation 1,066,902
---------
$ 610,462
==========
Depreciation charged to operations amounted to $79,441.
4. Debt
Short-Term Debt
The Company has a $1,000,000 line-of-credit with CoreStates Bank, N.A.
pursuant to which $540,000 was outstanding at July 31, 1996. The rate of
interest on borrowings under the revolving credit loan is the bank's prime
lending rate which was at 8.25% on July 31, 1996. Total aggregate
borrowings under the revolving credit loan are limited to 80% of eligible
accounts receivable plus 40% of eligible inventory. The revolving credit
loan is payable upon demand and is collateralized by accounts receivable,
inventories and equipment.
On October 31, 1995, the Company executed a demand note in the amount of
$100,000 for consulting and other services rendered prior to that date. The
note accrues interest at the prime rate.
Long-Term Debt
Mortgage payable, CoreStates Bank, N.A. due in
monthly installments of $3,000 including interest at
9%, maturing in August, 1999, collateralized by real
estate located in Bensalem, PA $ 95,475
Note payable, CoreStates Bank, N.A., due in monthly
installments of $3,883, plus interest at 7.5%,
maturing in April, 1998, collateralized by equipment,
inventories, accounts receivable and real estate 81,550
--------
177,025
Less current portion 75,167
--------
$101,858
========
F-9
<PAGE>
STROBIC AIR CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
FOR THE NINE MONTHS ENDED JULY 31, 1996
- --------------------------------------------------------------------------------
4. Debt - Continued
Long-Term Debt - Continued
Maturities of long-term debt are as follows:
NINE MONTHS ENDED JULY 31,
1997 $ 75,167
1998 66,196
1999 34,177
2000 1,485
--------
$177,025
========
Interest expense was $52,641 for the nine months ended July 31, 1996.
5. Related Party Transactions
The Company's related party transactions with S.A.C. Sales Corp., which is
affiliated to common ownership by a shareholder of Strobic Air Corporation,
for the nine months ended July 31, 1996, were as follows:
Commissions earned by affiliate $136,907
========
Administrative fees charged to affiliate $ 5,400
========
Product sales to affiliate $297,632
========
Purchases from affiliate $113,910
========
Amounts due from or to this affiliate were as follows:
Accounts receivable $ 21,558
========
Commissions payable $ 11,875
========
6. Income Taxes
The provision for income taxes consisted of the following:
Current:
Federal $161,000
State 54,000
--------
215,000
Deferred ( 15,200)
--------
$199,800
========
F-10
<PAGE>
STROBIC AIR CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
FOR THE NINE MONTHS ENDED JULY 31, 1996
- --------------------------------------------------------------------------------
6. Income Taxes - Continued
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. The
Company's net deferred tax liability consisted of the following:
Deferred tax asset:
Inventory cost capitalization $14,900
Other 3,700
--------
18,600
Deferred tax liability:
Accelerated depreciation ( 37,200)
--------
($18,600)
========
7. Commitments and Contingencies
Leases
The Company has a monthly lease for a production facility in Bensalem,
Pennsylvania requiring monthly payments of $4,000, plus real estate taxes,
through October, 1997.
The Company has various equipment and automobile leases. The future
minimum rental payments under these noncancellable leases are as follows:
TWELVE MONTHS ENDED
JULY 31,
-------------------
1997 $53,403
1998 12,394
Rental expense under all operating leases was $32,470.
Purchases
As of July 31, 1996, the Company had outstanding purchase commitments
totaling $50,000.
F-11
<PAGE>
STROBIC AIR CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
FOR THE NINE MONTHS ENDED JULY 31, 1996
- --------------------------------------------------------------------------------
8. Financial Instruments
Concentrations of credit risk:
Financial instruments which subject the Company to concentrations of credit
risk consist of cash and accounts receivable. The Company's cash is
maintained in a high quality financial institution. Concentrations of
credit risk related to accounts receivable are limited due to the large
number of customers and their dispersion among different industries and
geographic regions.
Fair value of financial instruments:
The carrying amounts and related fair value of the Company's financial
instruments are as follows:
CARRYING FAIR
AMOUNT VALUE
-------- --------
Assets:
Cash $ 75,012 $ 75,012
Liabilities:
Note payable, bank 540,000 540,000
Note payable, individual 100,000 100,000
Long-term debt 177,025 177,025
The following methods and assumptions were used to estimate the fair value
of each financial instrument:
Cash - The carrying amount approximates fair value because of the short
maturity of this instrument.
Note payable, bank line-of-credit; note payable, individual; and long-term
debt - The fair value is based on the present value of expected future
payments discounted at rates available to the Company under similiar
borrowing arrangements.
9. Subsequent Event
On September 12, 1996, the Company entered into an agreement and plan of
merger whereby it agreed to be merged with and into Met-Pro Acquisition
Corporation, a wholly-owned subsidiary of Met-Pro Corporation, as part of a
tax-free reorganization.
F-12
<PAGE>
STROBIC AIR CORPORATION
FINANCIAL STATEMENTS
FOR THE YEAR ENDED OCTOBER 31, 1995
F-13
<PAGE>
STROBIC AIR CORPORATION
TABLE OF CONTENTS
FOR THE YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
PAGE
NUMBER
------
Independent Auditor's Report 2
Financial Statements:
Balance sheet 3
Operations 4
Stockholders' equity 5
Cash flows 6
Notes to financial statements 7 to 11
F-14
<PAGE>
[LETTERHEAD OF MARGOLIS & COMPANY P.C.]
INDEPENDENT AUDITOR'S REPORT
September 4, 1996, except for Note 9
as to which the date is September 12,
1996
Officers and Directors
Strobic Air Corporation
Bensalem, Pennsylvania
We have audited the accompanying balance sheet of Strobic Air Corporation as of
October 31, 1995, and the related statements of operations, stockholders'
equity, and cash flows for the year then ended. 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 audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Strobic Air Corporation as of
October 31, 1995, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
/s/ Margolis & Company P.C.
Certified Public Accountants
F-15
<PAGE>
STROBIC AIR CORPORATION
BALANCE SHEET
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
ASSETS
Current assets:
Cash $ 475
Accounts receivable, net of allowance for
doubtful accounts of $5,000 1,217,226
Inventories 798,328
Deferred tax asset 16,000
Prepaid expenses and other current assets 35,554
----------
Total current assets 2,067,583
Property, plant and equipment, net 571,920
Other assets 76,386
----------
$2,715,889
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable, bank line-of-credit $ 520,000
Demand note payable, individual 100,000
Current portion of long-term debt 87,309
Accounts payable 329,681
Accrued expenses 647,846
Accrued income taxes 29,273
----------
Total current liabilities 1,714,109
Long-term debt 158,472
Deferred tax liability 49,800
----------
Total liabilities 1,922,381
----------
Commitments
Stockholders' equity:
Common stock, no par value; 5,000 shares
authorized, 2,505 shares issued 75,614
Retained earnings 723,894
----------
799,508
Less treasury stock, at cost, 30 shares 6,000
----------
Net stockholders' equity 793,508
----------
$2,715,889
==========
The notes to financial statements are an integral part of the above statement.
F-16
<PAGE>
STROBIC AIR CORPORATION
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
Gross sales, net of discounts and
allowances of $30,000 $6,225,488
Less commissions 671,568
----------
Net sales 5,553,920
Cost of goods sold 3,893,099
----------
Gross profit 1,660,821
----------
Operating expenses:
Selling 395,868
General and administrative 748,081
Research and development 150,486
----------
1,294,435
----------
Income from operations 366,386
Other expense 214,009
----------
Income before taxes on income 152,377
Provision for taxes on income 59,000
----------
Net income $ 93,377
==========
The notes to financial statements are an integral part of the above statement.
F-17
<PAGE>
STROBIC AIR CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------
COMMON RETAINED TREASURY
STOCK EARNINGS STOCK TOTAL
------ -------- -------- -----
Balance, October 31, 1994 $75,614 $632,992 ($6,000) $702,606
Net income 93,377 93,377
Dividends paid (2,475) (2,475)
------- -------- ------- --------
Balance, October 31, 1995 $75,614 $723,894 ($6,000) $793,508
======= ======== ======= ========
The notes to financial statements are an integral part of the above statement.
F-18
<PAGE>
STROBIC AIR CORPORATION
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH
Cash flows from operating activities:
Net income $ 93,377
Adjustments to reconcile net income to net cash
(used in) operating activities:
Depreciation and amortization 111,981
Deferred income taxes 3,000
Loss on sale of equipment 33,669
(Increase) decrease in operating assets:
Accounts receivable ( 161,159)
Inventories 113,198
Prepaid expenses and other current assets ( 3,668)
Increase (decrease) in operating liabilities:
Accounts payable ( 251,044)
Accrued expenses 43,745
Accrued income taxes 29,168
--------
Net cash (used in) operating activities ( 12,267)
--------
Cash flows from investing activities:
Proceeds from sale of property and equipment 13,300
Acquisitions of property and equipment ( 61,473)
Increase in other assets ( 14,387)
--------
Net cash (used in) investing activities ( 62,560)
--------
Cash flows from financing activities:
Net borrowings under line-of-credit 45,000
Reduction of long-term debt ( 99,018)
Payment of dividends ( 2,475)
--------
Net cash (used in) financing activities ( 56,493)
--------
Net (decrease) in cash ( 106,786)
Cash at beginning of year 107,261
--------
Cash at end of year $ 475
========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 77,624
--------
Income taxes $ 24,336
--------
The notes to financial statements are an integral part of the above statement.
F-19
<PAGE>
STROBIC AIR CORPORATION
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
1. Nature of Business and Summary of Significant Accounting Policies
Nature of business - Strobic Air Corporation (the "Company") develops,
engineers and assembles air moving equipment and specializes in corrosive,
toxic and high temperature exhaust systems and clean room recirculation
systems. The Company's products are sold throughout the United States.
Inventories - Inventories are stated at the lower of cost (first-in,
first-out) or market.
Patents and trademarks - Patents and trademarks are amortized on a
straight-line basis over five years.
Property, plant and equipment - Property, plant and equipment is recorded
at cost. Depreciation is computed using straight-line and accelerated
methods over estimated useful lives. Expenditures for maintenance and
repairs are charged to expense as incurred. Renewals and betterments are
capitalized.
Revenue recognition - Revenues are recognized when products are shipped.
Advertising - Advertising costs are charged to operations in the year
incurred and amounted to $165,888 for the year ended October 31, 1995.
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.
2. Inventories
Inventories consisted of the following:
Work in process $ 86,415
Raw materials 711,913
-------
$798,328
========
F-20
<PAGE>
STROBIC AIR CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
FOR THE YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
3. Property, Plant and Equipment
Property, plant and equipment consisted of the following:
Land $ 100,000
Building 350,000
Building improvements 113,358
Machinery and equipment 801,686
Tooling 135,525
Automotive and delivery equipment 58,812
----------
1,559,381
Less accumulated depreciation 987,461
----------
$ 571,920
==========
Depreciation charged to operations amounted to $111,251.
4. Debt
Short-Term Debt
The Company has a $1,000,000 line-of-credit with CoreStates Bank, N.A.
pursuant to which $520,000 was outstanding at October 31, 1995. The rate of
interest on borrowings under the revolving credit loan is the bank's prime
lending rate which was 8.75% on October 31, 1995. Total aggregate
borrowings under the revolving credit loan are limited to 80% of eligible
accounts receivable plus 40% of eligible inventory. The revolving credit
loan is payable upon demand and is collateralized by accounts receivable,
inventories and equipment. The revolving credit loan is subject to certain
covenants, including maintenance of prescribed amounts of net worth ratios.
On October 31, 1995, the Company executed a demand note in the amount of
$100,000 for consulting and other services rendered prior to that date. The
note accrues interest at the prime rate.
Long-Term Debt
Mortgage payable, CoreStates Bank, N.A. due in
monthly installments of $3,000 including interest at
9%, maturing in August, 1999, collateralized by
real estate located in Bensalem, PA $115,281
Note payable, CoreStates Bank, N.A., due in monthly
installments of $3,883, plus interest at 7.5%,
maturing in April, 1998, collateralized by furniture
and fixtures, equipment, inventories, accounts
receivable and real estate
116,500
Note payable, CoreStates Bank, N.A., due in monthly
installments of $2,333, plus interest at 7.95%,
maturing in April, 1996, collateralized by,
equipment, inventories,
accounts receivable and real estate 14,000
--------
245,781
Less current portion 87,309
--------
$158,472
========
F-21
<PAGE>
STROBIC AIR CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
FOR THE YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
4. Debt - Continued
Long-Term Debt - Continued
Maturities of long-term debt are as follows:
YEAR ENDED OCTOBER 31,
1996 $ 87,309
1997 75,814
1998 55,255
1999 27,403
--------
$245,781
========
5. Related Party Transactions
The Company's related party transactions with S.A.C. Sales Corp., which is
affiliated to common ownership by a shareholder of Strobic Air Corporation,
for the year ended October 31, 1995, were as follows:
Commissions earned by affiliate $157,329
========
Warranty fees earned by affiliate $ 3,200
========
Administrative fees charged to affiliate $ 7,200
========
Product sales to affiliate $527,545
========
Purchases from affiliate $ 48,326
========
Amounts due from or to this affiliate were as follows:
Accounts receivable $ 97,176
========
Commissions payable $ 2,540
========
F-22
<PAGE>
STROBIC AIR CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
FOR THE YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
6. Income Taxes
The provision for income taxes consisted of the following:
Current:
Federal $36,000
State 20,000
-------
56,000
Deferred 3,000
-------
$59,000
=======
The Company utilized approximately $4,000 of research and development
credits to reduce its current federal income tax expense.
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. The
Company's net deferred tax liability consisted of the following:
Deferred tax asset:
Inventory cost capitalization $16,000
Deferred tax liability:
Accelerated depreciation ( 49,800)
--------
($33,800)
========
7. Commitments and Contingencies
Leases
The Company has various equipment and automobile leases. The future minimum
rental payments under these noncancellable leases are as follows:
1996 $9,272
1997 4,294
Rental expense under all operating leases was $32,727.
8. Other Expense
Other expense consisted of the following:
Interest expense $ 77,215
Loss on sale of equipment 33,669
Litigation settlements (see Note 9) 103,125
-------
$214,009
========
F-23
<PAGE>
STROBIC AIR CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
FOR THE YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
9. Litigation Settlements
Included in other expenses (see Note 8) are the settlements in 1995 of two
disputes. The first involved a former customer and was settled with the
assistance of the American Arbitration Association. The total cost of this
settlement was $23,125. The second suit involved a sales agent who had been
terminated by the Company. The total cost of this settlement as $80,000.
10. Financial Instruments
Concentrations of credit risk:
Financial instruments which subject the Company to concentrations of
credit risk consist of cash and accounts receivable. The Company's cash is
maintained in a high quality financial institution. Concentrations of
credit risk related to accounts receivable are limited due to the large
number of customers and their dispersion among different industries and
geographic regions.
Fair value of financial instruments:
The carrying amounts and related fair value of the Company's financial
instruments are as follows:
CARRYING FAIR
AMOUNT VALUE
-------- -----
Assets:
Cash $ 475 $ 475
Liabilities:
Note payable, bank 520,000 520,000
Note payable, individual 100,000 100,000
Long-term debt 245,781 245,781
The following methods and assumptions were used to estimate the fair value
of each financial instrument:
Cash and note payable, individual - The carrying amount approximates fair
value because of the short maturity of these instruments.
Note payable, bank and long-term debt - The fair value is based on the
present value of expected future payments discounted at rates available to
the Company under similar borrowing arrangements.
11. Subsequent Event
On September 12, 1996, the Company entered into an agreement and plan of
merger whereby it agreed to be merged with and into Met-Pro Acquisition
Corporation, a wholly-owned subsidiary of Met-Pro Corporation, as part of
a tax-free reorganization.
F-24
<PAGE>
MET-PRO CORPORATION
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL CONDITION (UNAUDITED)
JANUARY 31, 1996
(NOTE 1)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
PRO FORMA
MET-PRO STROBIC AIR -------------------------------
CORPORATION CORPORATION TOTAL ADJUSTMENTS CONSOLIDATED
------------ ------------- ---------- -------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and short-term investments $7,415,375 $113,726 $7,529,101 ($208,730)(H) $6,479,695
(840,676)(L)
Accounts receivable, net of
allowance for doubtful accounts 8,941,157 1,178,783 10,119,940 10,119,940
Notes receivable, ESOT 400,000 400,000 400,000
Inventories 10,302,844 850,938 11,153,782 11,153,782
Prepaid expenses, deposits and
other current assets 559,238 14,867 574,105 574,105
Deferred income taxes 649,947 649,947 649,947
------------ ----------- ------------ ----------- -------------
Total current assets 28,268,561 2,158,314 30,426,875 (1,049,406) 29,377,469
Property, plant and equipment, at
cost, net 14,433,565 556,421 14,989,986 150,000 (I) 15,139,986
Costs in excess of net assets of
businesses acquired 3,725,118 3,725,118 3,973,537 (K) 7,758,655
60,000 (J)
Other assets 1,199,343 76,165 1,275,508 1,000,000 (D) 2,284,258
8,750 (G)
------------ ----------- ------------ ----------- -------------
Total assets $47,626,587 $2,790,900 $50,417,487 $4,142,881 $54,560,368
============ =========== ============ =========== =============
</TABLE>
See accompanying explanatory notes to pro forma consolidated
condensed financial statements.
F-25
<PAGE>
MET-PRO CORPORATION
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL CONDITION
(UNAUDITED) - CONTINUED
JANUARY 31, 1996
(NOTE 1)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRO FORMA
MET-PRO STROBIC AIR -------------------------------
CORPORATION CORPORATION TOTAL ADJUSTMENTS CONSOLIDATED
------------ ------------- ---------- -------------- ------------
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $620,000 $620,000 ($620,000)(L) $0
Notes payable - stockholders 140,000 140,000 140,000
Current portion of long-term debt $1,178,177 80,914 1,259,091 700,000 (F) 1,878,177
(80,914)(L)
Accounts payable 2,307,034 403,384 2,710,418 2,710,418
Accrued salaries, wages and expenses 6,353,886 427,812 6,781,698 6,781,698
Customers' advances 411,409 411,409 411,409
Accrued income taxes 68,765 68,765 68,765
------------ ----------- ------------ ----------- ------------
Total current liabilities 10,250,506 1,740,875 11,991,381 (914) 11,990,467
Long-term debt 1,692,962 139,762 1,832,724 2,800,000 (F) 4,742,962
250,000 (A)
(139,762)(L)
Other non-current liabilities 101,345 101,345 101,345
Deferred income taxes 569,196 33,800 602,996 60,000 (J) 662,996
------------ ----------- ------------ ----------- ------------
Total liabilities 12,614,009 1,914,437 14,528,446 2,969,324 17,497,770
------------ ----------- ------------ ----------- ------------
Stockholders' equity:
Common stock, Met-Pro Corporation 475,922 475,922 19,592 (C) 495,514
Common stock, Strobic Air Corporation 75,614 75,614 (75,614) 0
Additional paid-in capital 7,442,810 7,442,810 2,380,428 (C) 9,823,238
Retained earnings 28,142,539 806,849 28,949,388 (806,849) 27,792,539
(350,000)(E)
Foreign currency adjustment 209,333 209,333 209,333
------------ ----------- ------------ ----------- ------------
36,270,604 882,463 37,153,067 1,167,557 38,320,624
Less: treasury stock, at cost 1,258,026 6,000 1,264,026 (6,000) 1,258,026
------------ ----------- ------------ ----------- ------------
Net stockholders' equity 35,012,578 876,463 35,889,041 1,173,557 37,062,598
------------ ----------- ------------ ----------- ------------
Total liabilities and stockholders'
equity $47,626,587 $2,790,900 $50,417,487 $4,142,881 $54,560,368
=========== =========== ============ ========== ===========
</TABLE>
See accompanying explanatory notes to pro forma consolidated
condensed financial statements.
F-26
<PAGE>
MET-PRO CORPORATION
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED JANUARY 31, 1996
(NOTE 2)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
PRO FORMA
MET-PRO STROBIC AIR -------------------------------
CORPORATION CORPORATION TOTAL ADJUSTMENTS CONSOLIDATED
----------- ----------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Net sales $54,067,320 $5,553,920 $59,621,240 $59,621,240
Cost of goods sold 35,625,610 3,893,099 39,518,709 ($288,000)(M) 39,230,709
------------- ------------ ------------ ------------ ------------
Gross profit 18,441,710 1,660,821 20,102,531 288,000 20,390,531
------------- ------------ ------------ ------------ ------------
Operating expenses:
Selling 4,489,905 395,868 4,885,773 64,000 (N) 4,949,773
General and administrative 6,287,848 975,782 7,263,630 7,500 (O) 7,240,607
250,000 (P)
263,863 (R)
99,338 (S)
(100,000)(T)
(58,000)(V)
(222,000)(W)
(127,840)(X)
(33,669)(Y)
(25,000)(Z)
(77,215)(AA)
------------- ------------ ------------ ------------ ------------
10,777,753 1,371,650 12,149,403 40,977 12,190,380
------------- ------------ ------------ ------------ ------------
Income from operations 7,663,957 289,171 7,953,128 247,023 8,200,151
Other income (expenses), net 561,060 (136,794) 424,266 (41,000)(Q) 486,391
103,125 (U)
------------- ------------ ------------ ------------ ------------
Income before taxes on income 8,225,017 152,377 8,377,394 309,148 8,686,542
Provision for taxes on income 3,331,132 59,000 3,390,132 123,659 (AB) 3,513,791
------------- ------------ ------------ ------------ ------------
Net income $4,893,885 $93,377 $4,987,262 $185,489 $5,172,751
============= ============ ============ ============ ============
Net income per share, fully diluted $0.69 $0.71
============= ============
Weighted average number of common
shares outstanding after giving
effect to 3-for-2 stock split
on July 8, 1996 7,051,527 195,920 (B) 7,247,447
============= ============ ============
</TABLE>
See accompanying explanatory notes to pro forma consolidated
condensed financial statements.
F-27
<PAGE>
MET-PRO CORPORATION
Explanatory Notes to Pro Forma Consolidated Condensed Financial Statements
For the Year Ended January 31, 1996
1. The pro forma consolidated condensed balance sheet is based on the
individual balance sheets of Met-Pro Corporation and Strobic Air
Corporation to reflect the acquisition of Strobic Air Corporation by
Met-Pro Corporation (which took place on September 12, 1996) as if it
had taken place on January 31, 1996, after giving effect to pro forma
adjustments to reflect the following:
Met-Pro Corporation paid $2,399,980 for 100% of the common stock of
Strobic Air Corporation of which $2,149,980 was paid on the date of the
transaction and $250,000 (A) was in the form of a promissory note
payable on April 2, 1998. Interest is payable on the promissory note at
the rate of 5.9% per annum. In addition, Met-Pro Corporation exchanged
195,920 (B) shares of its common stock having an aggregate value of
$2,400,020 (C).
As part of the transaction, Met-Pro Corporation entered into a
non-compete transaction with one of the stockholders of Strobic Air
Corporation for which he was paid $1,000,000 (D). In addition, a
sign-on bonus of $350,000 (E) was paid to this stockholder.
Total cash required at settlement amounted to $3,499,980. Met-Pro
Corporation financed this transaction with a bank on an unsecured
basis. The bank financing, in the aggregate amount of $3,500,000 (F),
is comprised of two notes, one with a floating interest rate and one
with a fixed interest rate, in the amount of $1,750,000 each. Each loan
is payable in equal quarterly installments aggregating $175,000,
commencing on December 31, 1996. Met-Pro Corporation incurred financing
fees of $8,750 (G) related to this financing.
Met-Pro Corporation incurred approximately $200,000 (H) in costs
associated with the transaction, which was funded internally.
For purposes of the pro forma financial statements, Strobic Air
Corporation's building was written up by $150,000 (I) to estimated fair
value.
The increase in deferred taxes of $60,000 (J) included on the pro forma
balance sheet is the result of differences between the book basis and
tax basis of the assets acquired, in compliance with Financial
Accounting Standards Board Statement No. 109, Accounting for Income
Taxes.
As a result of this acquisition, Met-Pro Corporation has increased the
costs in excess of net assets of businesses acquired by $3,973,537 (K)
as of January 31, 1996.
In connection with the acquisition, Met-Pro Corporation repaid all of
the outstanding debt of Strobic Air Corporation, which at January 31,
1996 amounted to $840,676 (L).
F-28
<PAGE>
MET-PRO CORPORATION
Explanatory Notes to Pro Forma Consolidated Condensed Financial Statements
For the Year Ended January 31, 1996
2. The pro forma consolidated condensed statement of operations is based
on the individual statements of Met-Pro Corporation for the year ended
January 31, 1996 and Strobic Air Corporation for the year ended October
31, 1995, after giving effect to the pro forma adjustments necessary to
reflect the acquisition described in Note 1, as if it had taken place
on February 1, 1995.
The pro forma adjustments are as follows:
(M) Increase of $288,000 in gross margins for sales of inventory
to affiliate owned by stockholder of Strobic Air Corporation.
(N) Increase in commissions of $64,000 related to gross margins
described in (M) above.
(O) Additional depreciation on the write-up of Strobic Air
Corporation's building amounting to $7,500.
(P) Amortization of covenant not to compete of $250,000.
(Q) Reduction in interest income by $41,000 due to the cash outlay
by Met-Pro Corporation to acquire Strobic Air Corporation and
repay its debt.
(R) Interest expense increase of $263,863 as a result of bank
financing of $3,500,000 and $250,000 note payable to Strobic
Air Corporation stockholder.
(S) Amortization of costs in excess of net assets of businesses
acquired over 40 years amounting to $99,338.
(T) Reduction in salary of Strobic Air Corporation stockholder of
$100,000.
(U) During the year ended October 31, 1995, Strobic Air
Corporation settled two litigation matters totaling $103,125,
which for purposes of this pro forma are considered to be
non-recurring.
(V) Legal fees relating to litigation described in (U) above and
other non-recurring professional fees amounting to $58,000 in
the aggregate.
F-29
<PAGE>
MET-PRO CORPORATION
Explanatory Notes to Pro Forma Consolidated Condensed Financial Statements
For the Year Ended January 31, 1996
(W) Non-recurring expenses of Strobic Air Corporation stockholders
amounting to $222,000.
(X) Non-recurring royalty payments amounting to $127,840.
(Y) Reduction in general and administrative expenses for loss on
sale of equipment amounting to $33,669 not considered to be a
recurring charge.
(Z) Reduction in insurance expense of $25,000 based on estimated
savings from duplicate coverages between the two companies.
(AA) Reduction in interest expense of $77,215 resulting from
repayment of Strobic Air Corporation's debt by Met-Pro
Corporation.
(AB) Tax effect of the above adjustments to result in an assumed
effective consolidated income tax rate of 40%.
F-30
<PAGE>
MET-PRO CORPORATION
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL CONDITION (UNAUDITED)
JULY 31, 1996
(NOTE 1)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
PRO FORMA
MET-PRO STROBIC AIR -------------------------------
CORPORATION CORPORATION TOTAL ADJUSTMENTS CONSOLIDATED
------------ ------------- ---------- -------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and short-term investments $5,678,113 $ 75,012 $5,753,125 ($208,730)(H) $4,727,370
(817,025)(L)
Accounts receivable, net of
allowance for doubtful accounts 11,549,755 1,126,499 12,676,254 12,676,254
Notes receivable, ESOT 400,000 400,000 400,000
Inventories 11,348,811 860,210 12,209,021 12,209,021
Prepaid expenses, deposits and
other current assets 417,139 18,256 435,395 435,395
Deferred income taxes 649,947 18,600 668,547 668,547
------------ ----------- ------------ ----------- -------------
Total current assets 30,043,765 2,098,577 32,142,342 (1,025,755) 31,116,587
Property, plant and equipment, at
cost, net 15,106,290 610,462 15,716,752 150,000 (I) 15,866,752
Costs in excess of net assets of
businesses acquired 3,680,953 3,680,953 3,842,671 (K) 7,583,624
60,000 (J)
Other assets 947,671 95,037 1,042,708 1,000,000 (D) 2,051,458
8,750 (G)
------------ ----------- ------------ ----------- -------------
Total assets $49,778,679 $2,804,076 $52,582,755 $4,035,666 $56,618,421
============ =========== ============ =========== =============
</TABLE>
See accompanying explanatory notes to pro forma consolidated
condensed financial statements.
F-31
<PAGE>
MET-PRO CORPORATION
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL CONDITION
(UNAUDITED) - CONTINUED
JULY 31, 1996
(NOTE 1)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRO FORMA
MET-PRO STROBIC AIR -------------------------------
CORPORATION CORPORATION TOTAL ADJUSTMENTS CONSOLIDATED
------------ ------------- ---------- -------------- ------------
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $640,000 $640,000 ($640,000)(L) $0
Current portion of long-term debt $1,031,559 75,167 1,106,726 700,000 (F) 1,731,559
(75,167)(L)
Accounts payable 3,020,498 437,647 3,458,145 3,458,145
Accrued salaries, wages and expenses 7,603,303 325,539 7,928,842 7,928,842
Customers' advances 673,084 673,084 673,084
Accrued income taxes 179,336 179,336 179,336
------------ ----------- ------------ ----------- ------------
Total current liabilities 12,328,444 1,657,689 13,986,133 (15,167) 13,970,966
Long-term debt 1,251,589 101,858 1,353,447 2,800,000 (F) 4,301,589
250,000 (A)
(101,858)(L)
Other non-current liabilities 137,140 37,200 174,340 174,340
Deferred income taxes 552,552 552,552 60,000 (J) 612,552
------------ ----------- ------------ ----------- ------------
Total liabilities 14,269,725 1,796,747 16,066,472 2,992,975 19,059,447
------------ ----------- ------------ ----------- ------------
Stockholders' equity:
Common stock, Met-Pro Corporation 713,863 713,863 19,592 (C) 733,455
Common stock, Strobic Air Corporation 75,614 75,614 (75,614) 0
Additional paid-in capital 7,397,662 7,397,662 2,380,428 (C) 9,778,090
Retained earnings 29,249,679 937,715 30,187,394 (937,715) 28,899,679
(350,000)(E)
Foreign currency adjustment 229,053 229,053 229,053
------------ ----------- ------------ ----------- ------------
37,590,257 1,013,329 38,603,586 1,036,691 39,640,277
Less: treasury stock, at cost 2,081,303 6,000 2,087,303 (6,000) 2,081,303
------------ ----------- ------------ ----------- ------------
Net stockholders' equity 35,508,954 1,007,329 36,516,283 1,042,691 37,558,974
------------ ----------- ------------ ----------- ------------
Total liabilities and stockholders'
equity $49,778,679 $2,804,076 $52,582,755 $4,035,666 $56,618,421
=========== =========== ============ ========== ===========
</TABLE>
See accompanying explanatory notes to pro forma consolidated
condensed financial statements.
F-32
<PAGE>
MET-PRO CORPORATION
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JULY 31, 1996
(NOTE 1)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
PRO FORMA
MET-PRO STROBIC AIR -------------------------------
CORPORATION CORPORATION TOTAL ADJUSTMENTS CONSOLIDATED
------------ ------------- ---------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Net sales $28,491,576 $3,207,137 $31,698,713 $31,698,713
Cost of goods sold 18,515,559 2,304,363 20,819,922 ($175,000)(M) 20,644,922
------------- ------------ ------------ ------------ ------------
Gross profit 9,976,017 902,774 10,878,791 175,000 11,053,791
------------- ------------ ------------ ------------ ------------
Operating expenses:
Selling 2,506,250 157,440 2,663,690 74,000 (N) 2,737,690
General and administrative 2,951,178 473,268 3,424,446 3,750 (O) 3,525,588
125,000 (P)
131,500 (R)
48,033 (S)
13,000 (T)
(90,000)(U)
(65,000)(V)
(12,500)(W)
(52,641)(X)
------------- ------------ ------------ ------------ ------------
5,457,428 630,708 6,088,136 175,142 6,263,278
------------- ------------ ------------ ------------ ------------
Income from operations 4,518,589 272,066 4,790,655 (142) 4,790,513
Other income (expenses), net 239,193 0 239,193 (20,500)(Q) 218,693
------------- ------------ ------------ ------------ ------------
Income before taxes on income 4,757,782 272,066 5,029,848 (20,642) 5,009,206
Provision for taxes on income 1,879,324 141,200 2,020,524 (8,257)(Y) 2,012,267
------------- ------------ ------------ ------------ ------------
Net income $2,878,458 $130,866 $3,009,324 $(12,385) $2,996,939
============= ============ ============ ============ ============
Net income per share, fully diluted $0.41 $0.41
============= ============
Weighted average number of common
shares outstanding 7,036,522 195,920 (B) 7,232,442
============= ============ ============
</TABLE>
See accompanying explanatory notes to pro forma consolidated
condensed financial statements.
F-33
<PAGE>
MET-PRO CORPORATION
Explanatory Notes to Pro Forma Consolidated Condensed Financial Statements
For the Six Months Ended July 31, 1996
1. The pro forma consolidated condensed balance sheet is based on the
individual balance sheets of Met-Pro Corporation and Strobic Air
Corporation to reflect the acquisition of Strobic Air Corporation by
Met-Pro Corporation (which took place on September 12, 1996) as if it
had taken place on July 31, 1996, after giving effect to pro forma
adjustments to reflect the following:
Met-Pro Corporation paid $2,399,980 for 100% of the common stock of
Strobic Air Corporation of which $2,149,980 was paid on the date of the
transaction and $250,000 (A) was in the form of a promissory note
payable on April 2, 1998. Interest is payable on the promissory note at
the rate of 5.9% per annum. In addition, Met-Pro Corporation exchanged
195,920 (B) shares of its common stock having an aggregate value of
$2,400,020 (C).
As part of the transaction, Met-Pro Corporation entered into a
non-compete transaction with one of the stockholders of Strobic Air
Corporation for which he was paid $1,000,000 (D). In addition, a
sign-on bonus of $350,000 (E) was paid to this stockholder.
Total cash required at settlement amounted to $3,499,980. Met-Pro
Corporation financed this transaction with a bank on an unsecured
basis. The bank financing, in the aggregate amount of $3,500,000 (F),
is comprised of two notes, one with a floating interest rate and one
with a fixed interest rate, in the amount of $1,750,000 each. Each loan
is payable in equal quarterly installments aggregating $175,000,
commencing on December 31, 1996. Met-Pro Corporation incurred financing
fees of $8,750 (G) related to this financing.
Met-Pro Corporation incurred approximately $200,000 (H) in costs
associated with the transaction which was funded internally.
For purposes of the pro forma financial statements, Strobic Air
Corporation's building was written up by $150,000 (I) to estimated fair
value.
The increase in deferred taxes of $60,000 (J) included on the pro forma
balance sheet is the result of differences between the book basis and
tax basis of the assets acquired, in compliance with Financial
Accounting Standards Board Statement No. 109, Accounting for Income
Taxes.
As a result of this acquisition, Met-Pro Corporation has increased the
costs in excess of net assets of businesses acquired by $3,842,671 (K)
as of July 31, 1996.
In connection with the acquisition, Met-Pro Corporation repaid all of
the outstanding debt of Strobic Air Corporation, which amounted to
$817,025 (L) at July 31, 1996.
F-34
<PAGE>
MET-PRO CORPORATION
Explanatory Notes to Pro Forma Consolidated Condensed Financial Statements
For the Six Months Ended July 31, 1996
2. The pro forma consolidated condensed statement of operations is based
on the individual statements of Met-Pro Corporation and Strobic Air
Corporation for the six months ended July 31, 1996, after giving effect
to the pro forma adjustments necessary to reflect the acquisition
described in Note 1, as if had taken place on February 1, 1996.
The pro forma adjustments are as follows:
(M) Increase of $175,000 in gross margins for sales of inventory
to affiliate owned by stockholder of Strobic Air Corporation.
(N) Increase in commissions of $74,000 related to gross margins
described in (M) above.
(O) Additional depreciation on the write-up of Strobic Air
Corporation's building amounting to $3,750.
(P) Amortization of covenant not to compete of $125,000.
(Q) Reduction in interest income by $20,500 due to the cash outlay
by Met-Pro Corporation to acquire Strobic Air Corporation and
repay its debt.
(R) Interest expense increase of $131,500 as a result of bank
financing of $3,500,000 and $250,000 note payable to Strobic
Air Corporation stockholder.
(S) Amortization of costs in excess of net assets of businesses
acquired over 40 years amounting to $48,033.
(T) Increase in salary of Strobic Air Corporation stockholder of
$13,000.
(U) Non-recurring professional fees relating to sale of Strobic
Air Corporation amounting to $90,000.
(V) Non-recurring expenses of Strobic Air Corporation stockholders
amounting to $65,000.
(W) Reduction in insurance expense of $12,500 based on estimated
savings from duplicate coverages between the two companies.
F-35
<PAGE>
MET-PRO CORPORATION
Explanatory Notes to Pro Forma Consolidated Condensed Financial Statements
For the Six Months Ended July 31, 1996
(X) Reduction in interest expense of $52,641 resulting from
repayment of Strobic Air Corporation's debt by Met-Pro
Corporation.
(Y) Tax effect of the above adjustments to result in an assumed
effective consolidated income tax rate of 40%.
F-36
<PAGE>
No dealer, salesman or other person has been authorized to give any information
or to make any representation not contained in or incorporated by reference in
this Prospectus and, if given or made, such information or representation must
not be relied upon as having been authorized by the Company, the Selling
Shareholders or any underwriter. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any of the securities offered hereby
in any jurisdiction to any person to whom it is unlawful to make such an offer
in such jurisdiction. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that the
information herein is correct as of any time subsequent to the date hereof or
that there has been no change in the affairs of the Company since such date.
December 31, 1996
MET-PRO CORPORATION
195,920 shares
Common Stock
($.10 par value)
PROSPECTUS
-----------------
TABLE OF CONTENTS
Page
Available Information 2
Incorporation of Certain Documents by Reference 2
The Company 3
Use of Proceeds 5
Selling Shareholders 5
Description of Common Stock 6
Plan of Distribution 7
Legal Matters 8
Experts 8
