<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY 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 the quarter ended: April 30, 1999 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, P.O. Box 144
Harleysville, Pennsylvania 19438
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 723-6751
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
The number of shares outstanding of the Registrant's common stock (par
value $0.10 per share) is 6,707,516 (as of April 30, 1999).
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<PAGE>
MET-PRO CORPORATION
INDEX
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item 1. Financial Statements
<S> <C> <C>
Condensed consolidated balance sheet as of
April 30, 1999 and January 31, 1999......................................................... 2
Condensed consolidated statement of operations for the three-month
periods ended April 30, 1999 and 1998....................................................... 3
Condensed consolidated statement of stockholders' equity for the
three-month periods ended April 30, 1999 and 1998........................................... 4
Condensed consolidated statement of cash flows for the three-month
periods ended April 30, 1999 and 1998....................................................... 5
Notes to condensed consolidated financial statements................................................. 6
Report of independent accountants.................................................................... 9
Item 2. Management's discussion and analysis of the financial condition
and results of operations................................................................... 10
PART II - OTHER INFORMATION
Item 6(b). Reports on Form 8-K......................................................................... 14
SIGNATURES.................................................................................................... 14
</TABLE>
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<PAGE>
MET-PRO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited)
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
April 30, January 31,
ASSETS 1999 1999
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 6,952,175 $ 7,446,369
Accounts receivable, net of allowance for doubtful
accounts of approximately $304,000 and
$261,000, respectively 14,615,426 14,492,082
Inventories - Note 4 14,811,575 14,973,169
Prepaid expenses, deposits and other current assets 985,540 827,824
Deferred income taxes 944,009 944,009
- ------------------------------------------------------------------------------------------------------------------------
Total current assets 38,308,725 38,683,453
Property, plant and equipment, net 13,762,184 13,931,276
Costs in excess of net assets of businesses acquired, net 19,143,955 19,260,591
Other assets 925,706 1,013,321
- ------------------------------------------------------------------------------------------------------------------------
Total assets $72,140,570 $72,888,641
========================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------------------------------------------------------------------------------------------
Current liabilities
Current portion of long-term debt $2,077,235 $2,125,093
Accounts payable 4,450,183 5,213,770
Accrued salaries, wages and expenses 7,907,027 5,804,235
Payroll and other taxes payable 165,464 216,822
Customers' advances 993,557 1,027,948
- ------------------------------------------------------------------------------------------------------------------------
Total current liabilities 15,593,466 14,387,868
Long-term debt 11,440,578 11,941,954
Other non-current liabilities 350,562 328,838
Deferred income taxes 297,639 304,874
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities 27,682,245 26,963,534
- ------------------------------------------------------------------------------------------------------------------------
Stockholders' equity
Common stock, $.10 par value; 18,000,000 shares
authorized, 7,182,843 and 7,138,625 shares issued,
of which 475,327 and 343,727 shares were reacquired
and held in treasury at the respective dates 718,284 713,862
Additional paid-in capital 7,908,475 7,508,748
Retained earnings 42,432,118 42,718,355
Accumulated other comprehensive loss (236,090) (85,103)
Treasury stock, at cost (6,364,462) (4,930,755)
- ------------------------------------------------------------------------------------------------------------------------
Net stockholders' equity 44,458,325 45,925,107
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $72,140,570 $72,888,641
========================================================================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-2-
<PAGE>
<TABLE>
<CAPTION>
MET-PRO CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
Three Months Ended
April 30,
1999 1998
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<S> <C> <C>
Net sales $20,828,028 $14,940,888
Cost of goods sold 13,726,315 9,237,989
- ----------------------------------------------------------------------------------------------------------------------------------
Gross profit 7,101,713 5,702,899
- ----------------------------------------------------------------------------------------------------------------------------------
Operating expenses
Selling 1,878,087 1,407,457
General and administrative 2,339,591 1,637,410
- ----------------------------------------------------------------------------------------------------------------------------------
4,217,678 3,044,867
- ----------------------------------------------------------------------------------------------------------------------------------
Income from operations 2,884,035 2,658,032
Other income, net 135,066 190,397
- ----------------------------------------------------------------------------------------------------------------------------------
Income before taxes 3,019,101 2,848,429
Provision for taxes 1,147,259 1,110,885
- ----------------------------------------------------------------------------------------------------------------------------------
Net income $1,871,842 $1,737,544
==================================================================================================================================
Earnings per share, basic (1) $ .28 $ .25
Earnings per share, diluted (2) $ .28 $ .25
Cash dividend per share - declared (3) $ .32 $ .30
Cash dividend per share - paid (3) $ .32 $ .30
==================================================================================================================================
</TABLE>
(1) Basic earnings per share are based upon the weighted average number of
common shares outstanding of 6,745,804 on April 30, 1999 and 7,009,023 on
April 30, 1998.
(2) Diluted earnings per share are based upon the weighted average number of
common shares outstanding of 6,779,524 on April 30, 1999 and 7,071,478 on
April 30, 1998.
(3) On February 22, 1999, the Company declared a $.32 per share cash dividend
payable on April 23, 1999 to shareholders of record on April 9, 1999. On
February 23, 1998, the Company declared a cash dividend of $.30 per share
payable on April 24, 1998 to shareholders of record on April 10, 1998.
See accompanying notes to condensed consolidated financial statements.
-3-
<PAGE>
<TABLE>
<CAPTION>
MET-PRO CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(unaudited)
Accumulated
Additional Other
Common Paid-in Retained Comprehensive Treasury
Stock Capital Earnings (Loss) Stock Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balances, January 31, 1999 $713,862 $7,508,748 $42,718,355 ($85,103) ($4,930,755) $45,925,107
Comprehensive income:
Net income 1,871,842
Foreign currency translation (150,987)
Total comprehensive income 1,720,855
Dividends paid, $.32 per share (2,158,079) (2,158,079)
Proceeds from issuance of
common stock under dividend
reinvestment plan (44,218
shares) 4,422 426,907 431,329
Stock option transactions (27,180) 42,180 15,000
Purchase of 134,600 shares of
treasury stock (1,475,887) (1,475,887)
- ------------------------------------------------------------------------------------------------------------------------------------
Balances, April 30, 1999 $718,284 $7,908,475 $42,432,118 ($236,090) ($6,364,462) $44,458,325
====================================================================================================================================
Accumulated
Additional Other
Common Paid-in Retained Comprehensive Treasury
Stock Capital Earnings Income/(Loss) Stock Total
- ------------------------------------------------------------------------------------------------------------------------------------
Balances, January 31, 1998 $713,862 $7,868,357 $37,667,872 ($219,015) ($2,190,247) $43,840,829
Comprehensive income:
Net income 1,737,544
Foreign currency translation 40,733
Total comprehensive income 1,778,277
Dividends paid, $.30 per share (2,100,569) (2,100,569)
Stock option transactions (358,995) 720,315 361,320
Purchase of 44,800 shares of
treasury stock (694,456) (694,456)
- ------------------------------------------------------------------------------------------------------------------------------------
Balances, April 30, 1998 $713,862 $7,509,362 $37,304,847 ($178,282) ($2,164,388) $43,185,401
====================================================================================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-4-
<PAGE>
<TABLE>
<CAPTION>
MET-PRO CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
Three Months Ended
April 30,
1999 1998
- ------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<S> <C> <C>
Net cash provided by operating activities $3,511,643 $2,231,312
- ------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities
Proceeds from sale of property and equipment 8,000 --
Acquisitions of property and equipment (252,237) (321,994)
Acquisitions of other intangibles (7,281) (404,998)
- ------------------------------------------------------------------------------------------------------------------------
Net cash (used in) investing activities (251,518) (726,992)
- ------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Reduction of debt (549,234) (547,266)
Exercise of stock options 15,000 361,320
Payment of dividends (1,726,750) (2,100,569)
Purchase of treasury shares (1,475,887) (694,456)
- ------------------------------------------------------------------------------------------------------------------------
Net cash (used in) financing activities (3,736,871) (2,980,971)
- ------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (17,448) 3,836
- ------------------------------------------------------------------------------------------------------------------------
Net (decrease) in cash and cash equivalents (494,194) (1,472,815)
Cash and cash equivalents at February 1 7,446,369 11,253,380
- ------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at April 30 $6,952,175 $9,780,565
========================================================================================================================
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for:
Interest $219,401 $83,748
Income taxes $190,396 $422,640
========================================================================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-5-
<PAGE>
MET-PRO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - PRINCIPLES OF CONSOLIDATION
The condensed consolidated financial statements include the accounts of Met-Pro
Corporation and its wholly owned subsidiaries Strobic Air Corporation,
Flex-Kleen Canada Inc., and Mefiag B.V. (collectively "Met-Pro" or the
"Company"). All significant intercompany accounts and transactions have been
eliminated in consolidation.
NOTE 2 - BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited condensed financial
statements contain all adjustments necessary to present fairly the financial
position as of April 30, 1999 and the results of operations, changes in
stockholders' equity and cash flows for the three-month periods ended April 30,
1999 and 1998. The results of operations for the three-month period ended April
30, 1999 are not necessarily indicative of the results to be expected for the
full year. These condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
contained in the Company's Annual Report on Form 10-K for the year ended January
31, 1999.
NOTE 3 - ACQUISITION OF BUSINESS
On October 29, 1998, the Company, pursuant to an Asset Purchase Agreement,
purchased all of the operating assets of Flex-Kleen Corporation and Flex-Kleen
Canada Limited (collectively "Flex-Kleen") for a purchase price of approximately
$15,000,000 plus the assumption of ordinary business liabilities. The
acquisition was accounted for as a purchase transaction. Flex-Kleen is a
manufacturer of dry particulate collectors that are used primarily in the
process of manufacturing food products and pharmaceuticals. The condensed
consolidated statement of operations for the three months ended April 30, 1999
includes the operations of Flex-Kleen.
The acquisition was completed by a cash payment of approximately $15,000,000,
plus acquisition costs, which resulted in approximately $12,150,000 of goodwill.
A bank loan totalling $12,000,000 having a ten-year term with a fixed interest
rate swap of 5.98% was used to finance the acquisition. Payments of principal
and interest are payable on a quarterly basis.
On a pro-forma basis, consolidated results of operations for the three-month
period ended April 30, 1998 would have been as follows, if the acquisition had
been made as of February 1, 1998:
Net sales $19,210,888
Income before taxes on income 3,051,250
Net Income 1,861,265
Earnings per share, basic $.27
Earnings per share, diluted $.26
-6-
<PAGE>
MET-PRO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - INVENTORIES
Inventories consisted of the following:
April 30, January 31,
1999 1999
----------- -----------
Raw material $7,168,174 $7,246,379
Work in progress 2,409,068 2,435,351
Finished goods 5,234,333 5,291,439
----------- -----------
$14,811,575 $14,973,169
=========== ===========
NOTE 5 - BUSINESS SEGMENT DATA
The Company's operations are conducted in two business segments as follows: the
manufacture and sale of pollution control systems and allied equipment, and the
manufacture and sale of fluid handling equipment.
No significant intercompany revenue is realized by either business segment.
Interest income and expense are not included in the measure of segment profit
reviewed by management. Income taxes are also not included in the measure of
segment operating profit reviewed by management.
Financial information by business segment is shown below.
Three Months Ended April 30,
1999 1998
----------------------------
Net sales
Pollution control systems and allied equipment $14,266,646 $8,160,536
Fluid handling equipment 6,561,382 6,780,352
----------- -----------
$20,828,028 $14,940,888
=========== ===========
Income from operations
Pollution control systems and allied equipment $1,999,725 $1,532,873
Fluid handling equipment 884,310 1,125,159
---------- ----------
$2,884,035 $2,658,032
========== ==========
Identifiable assets
Pollution control systems and allied equipment $44,913,862 $24,861,889
Fluid handling equipment 19,553,875 20,856,730
----------- -----------
64,467,737 45,718,619
Corporate 7,672,833 11,448,901
----------- -----------
$72,140,570 $57,167,520
=========== ===========
NOTE 6 - EMPLOYEE BENEFIT PLAN
Effective April 1, 1999, the Company implemented a 401(k) profit sharing plan.
Substantially all employees of the Company in the United States are eligible to
participate in the plan following their completion of one year of service and
attaining age 21. Pursuant to this plan, employees can contribute up to 15% of
their compensation to the plan. The Company will match up to 50% of the employee
contribution up to 4% of compensation in the form of Met-Pro common stock.
-7-
<PAGE>
MET-PRO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 - RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities". This pronouncement is effective for the fiscal year
ending January 31, 2000. The adoption of this pronouncement will have no impact
on Met-Pro's consolidated results of operations, financial position or cash
flows.
NOTE 8 - ACCOUNTANTS' 10-Q REVIEW
Margolis & Company P.C., the Company's auditors, has performed a limited review
of the financial information included herein. Their report on such review
accompanies this filing.
-8-
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Met-Pro Corporation
Harleysville, Pennsylvania
We have reviewed the accompanying condensed consolidated balance sheet of
Met-Pro Corporation and its wholly owned subsidiaries as of April 30, 1999 and
the related condensed consolidated statements of operations, stockholders'
equity and cash flows for the three-month periods ended April 30, 1999 and 1998.
These financial statements are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated financial statements for them
to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of January 31, 1999 and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the year then ended (not presented herein); and in our report dated February 25,
1999, we expressed an unqualified opinion on those financial statements. In our
opinion, the information set forth in the accompanying condensed consolidated
balance sheet as of January 31, 1999 is fairly stated, in all material respects,
in relation to the balance sheet from which it has been derived.
/s/ Margolis & Company P.C.
---------------------------
Certified Public Accountants
Bala Cynwyd, Pennsylvania
May 14, 1999
-9-
<PAGE>
MET-PRO CORPORATION
Item 2. Management's Discussion and Analysis of the Financial Condition and
Results of Operations
Results of Operations:
Three Months Ended April 30, 1999 vs Three Months Ended April 30, 1998
Net sales for the three-month period ended April 30, 1999 were $20,828,028
compared to $14,940,888 for the three-month period ended April 30, 1998, an
increase of $5,887,140 or 39.4%. Sales in the Pollution Control Systems and
Allied Equipment segment were $14,266,646 or 74.8% higher than the three-month
period ended April 30, 1998 due to the acquisition of Flex-Kleen Corporation and
Flex-Kleen Canada Limited (collectively "Flex-Kleen"), effective as of October
1, 1998, coupled with higher demand primarily for our fume and odor control
equipment. Sales in the Fluid Handling Equipment segment were $6,561,382 or 3.2%
lower compared to the three-month period ended April 30, 1998 due primarily to
decreased demand for our specialty pump equipment.
Backlog at April 30, 1999 totaled $11,004,683 or 93% higher than the backlog of
orders on hand at April 30, 1998. In addition, the Company had an additional
$4,630,878 of orders which are not included in our backlog due to the Company's
long-standing policy of not including these orders in backlog until engineering
drawings are approved.
Net income for the three-month period ended April 30, 1999 was $1,871,842
compared to $1,737,544 for the three-month period ended April 30, 1998, an
increase of $134,298 or 7.7%. The increase in net income is related to the
higher sales volume and continuing cost controls for the three-month period
ended April 30, 1999.
The gross margin for the three-month period ended April 30, 1999 was 34.1%
versus 38.2% for the same period in the prior year due to lower gross margins
experienced in the Pollution Control Systems and Allied Equipment segment.
Selling expense increased $470,630 during the three-month period ended April 30,
1999 compared to the same period last year. Selling expense as a percentage of
net sales was 9.0% for the three-month period ended April 30, 1999, a slight
decrease compared to the three-month period ended April 30, 1998.
General and administrative expense was $2,339,591 for the three-month period
ended April 30, 1999 compared to $1,637,410 for the same period last year, an
increase of $702,181. The increase was due mainly to amortization, interest, and
other administrative expenses connected with the inclusion of Flex-Kleen.
General and administrative expense as a percentage of net sales increased to
11.2% for the three-month period ended April 30, 1999 from 11.0% for the same
period last year.
Other income, net, decreased $55,331 for the three-month period ended April 30,
1999 compared to the three-month period ended April 30, 1998, due to less
interest earned on lower cash balances.
The effective tax rate for the three-month period ended April 30, 1999 was 38%
compared to 39% for the three-month period ended April 30, 1998.
-10-
<PAGE>
MET-PRO CORPORATION
Item 2. Management's Discussion and Analysis of the Financial Condition and
Results of Operations continued...
Liquidity:
The Company's cash and cash equivalents were $6,952,175 on April 30, 1999
compared to $7,446,369 on January 31, 1999, a decrease of $494,194. This
decrease is the net result of the payment of the annual cash dividend amounting
to $1,726,750 (net of $431,329 of dividends untilized for stock purchased under
the Dividend Reinvestment Plan), payments on long-term debt totalling $549,234,
purchase of treasury stock amounting to $1,475,887, acquisition of other
intangibles amounting to $7,281 and investment in property and equipment
amounting to $252,237, offset by positive cash flow provided by operating
activities of $3,511,643, proceeds received from the exercise of stock options
of $15,000, and proceeds received from the sale of property and equipment
amounting to $8,000. The Company's cash flows from operating activities are
influenced by the timing of shipments and negotiated standard payment terms,
including retention associated with major projects.
Accounts receivable (net) amounted to $14,615,426 on April 30, 1999 compared to
$14,492,082 on January 31, 1999, which represents an increase of $123,344. The
timing and size of shipments and retainage on contracts, especially in the
Pollution Control Systems and Allied Equipment segment, will influence accounts
receivable balances at any point in time.
Inventories were $14,811,575 on April 30, 1999 compared to $14,973,169 on
January 31, 1999, a decrease of $161,594. Inventory balances fluctuate depending
upon market demand, the size and timing of orders and varying lead times
required.
Current liabilities amounted to $15,593,466 on April 30, 1999 compared to
$14,387,868 on January 31, 1999, an increase of $1,205,598. Accrued expenses,
offset by the reduction in the current portion of long-term debt and other
current liabilities, accounted for the increase.
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. Cash
flows, in general, have exceeded the current needs of the Company. The Company
presently foresees no change in this situation, in the immediate future.
Capital Resources and Requirements:
Cash flows provided by operating activities during the three-month period ended
April 30, 1999 amounted to $3,511,643 compared with $2,231,312 in the
three-month period ended April 30, 1998, an increase of $1,280,331.
Cash flows used in investing activities during the three-month period ended
April 30, 1999 amounted to $251,518 compared with $726,992 for the three-month
period ended April 30, 1998. The Company's investing activities principally
represent the acquisitions of property, plant and equipment in the two operating
segments. During the three-month period ended April 30, 1998, the Company
acquired certain assets of a distributor of its Stiles-Kem products, located in
the Southeastern United States, for a purchase price of approximately $400,000.
The purchase price was allocated to customer lists, covenants not to compete and
goodwill.
Financing activities during the three-month period ended April 30, 1999 utilized
$3,736,871 of available resources compared to $2,980,971 for the three-month
period ended April 30, 1998. The 1999 activity is the result of the payment of
the annual cash dividend amounting to $1,726,750 (net of $431,329 of dividends
utilized for stock purchased under the Dividend Reinvestment Plan), reduction of
long-term debt totalling $549,234, plus the purchase of treasury stock totalling
$1,475,887, offset by proceeds provided by the exercise of stock options
totalling $15,000.
-11-
<PAGE>
MET-PRO CORPORATION
Item 2. Management's Discussion and Analysis of the Financial Condition and
Results of Operations continued...
On June 3, 1998, the Company announced the initiation of a 350,000 share stock
repurchase program. For the three-month period ended April 30, 1999, the Company
had repurchased 134,600 shares under this stock repurchase program. As of April
30, 1999, the Company had 37,600 shares remaining under the 1998 stock
repurchase program.
On October 29, 1998, the Company acquired all of the operating assets of
Flex-Kleen Corporation and Flex-Kleen Canada Limited from Aqua Alliance, Inc.
Flex-Kleen is a manufacturer of dry particulate collectors that are used
primarily in the process of manufacturing food products and pharmaceuticals. The
Company paid approximately $15,000,000 in the transaction through the
utilization of $3,000,000 from available resources and $12,000,000 from new
borrowings of long-term debt from Mellon Bank, N.A., exclusive of assumed
liabilities.
On February 22, 1999, the Board of Directors declared a $.32 per share annual
cash dividend (compared to the $.30 per share cash dividend paid on April 24,
1998) payable on April 23, 1999 to stockholders of record on April 9, 1999. The
dividend paid April 23, 1999 in cash and 44,218 of newly issued shares purchased
by stockholders through our dividend reinvestment program represented 30.1% of
the prior fiscal year earnings.
On May 12, 1999, the Company announced a new stock repurchase program for an
additional 350,000 shares or approximately 5% of the Company's outstanding
stock, to commence after all shares have been repurchaed under the 1998 stock
repurchase program. The new program was initiated, because in management's view,
the current stock price does not reflect the true stock value. Purchases will be
made from time to time in open market transactions at the prevailing prices and
in accordance with applicable rules. The Company may discontinue the program at
any time.
Consistent with past practices, the Company intends to continue to invest in new
product development programs, and to make capital expenditures to support the
on-going operations during the coming year. The Company expects to finance all
capital expenditure requirements through cash flows generated from operations.
Year 2000 Compliance:
The "Year 2000" issue refers to computer systems and other equipment operating
on software that uses only two digits to represent the year, rather than four
digits. As a result, these systems and equipment may not process information or
otherwise function properly when using the year "2000", since that year will be
indistinguishable from the year "1900".
The Company initiated a Year 2000 program to assess and develop plans to resolve
the issue both internally and externally. During 1997, the Company began
developing a plan to upgrade its business and operating systems to Year 2000
compliant software. Implementation of the upgrade began in 1998 with the initial
testing of the system on a limited basis prior to converting all of the
Company's locations. As of May 1998, the Company had completed implementation
and testing of its business and operating systems at all of the Company's
facilities.
In order to identify potential Year 2000 problems at key suppliers, the Company
has initiated external surveys to assess their level of compliance. The Company
expects to complete its assessment of outside parties and develop the
appropriate actions to be taken by the end of May 1999.
The Company is also in the process of reviewing embedded software in its
equipment and facilities to identify potential Year 2000 issues. Equipment
manufacturers are being requested to certify their compliance and assist the
Company in developing solutions where they are currently non-compliant. The
Company expects to complete the assessment and testing process by August 1999.
-12-
<PAGE>
MET-PRO CORPORATION
Item 2. Management's Discussion and Analysis of the Financial Condition and
Results of Operations continued...
While reasonable actions have been taken to address the Year 2000 problem and
will continue to be taken in the future to mitigate such disruption, the
magnitude of all Year 2000 disturbances cannot be predicted. Management believes
that past or expected future capital requirements related to Year 2000
compliance issues will not have a material impact on the Company's consolidated
financial position or results of operations.
The information above contains forward-looking statements including, without
limitation, statements relating to the Company's plans, strategies, objectives,
expectations, intentions, and adequate resources that are made pursuant to the
"Safe Harbor" provisions of the Private Securities Litigation Reform Act of
1995. Readers are cautioned that forward-looking statements about the Year 2000
should be read in conjunction with the Company's disclosures under the heading:
Cautionary Statement Regarding Forward Looking Statements.
Cautionary Statement Regarding Forward Looking Statements:
As a cautionary note to investors, the Company and its representatives may make
oral or written statements from time to time that are "forward-looking
statements". This would include information concerning possible or assumed
future activities, plans, results of operations of the Company and statements
preceded by, followed by or that include the words "believes", "expects",
"anticipates", "intends" or similar expressions. For those statements, the
Company claims the protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995.
There are a number of important factors which could cause actual results to
differ materially from those anticipated. The Company believes that its future
operating results will continue to be subject to quarterly variations based upon
a wide variety of factors including the cyclical nature of both the business
segments and the markets addressed by the Company's products, price erosion,
competitive factors, the timing of new product introductions, changes in product
mix, the availability and extent of utilization of manufacturing capacity,
product obsolescence and the ability to develop and implement new technologies.
The Company's operating results could also be impacted by sudden fluctuations in
customer requirements, currency exchange rate fluctuations and other economic
conditions affecting customer demand and the cost of operations in one or more
of the global markets in which the Company does business. As a participant in
the pollution control and fluid handling industries, the Company operates in a
rapidly changing and highly competitive environment. The Company sells both
custom products to customers, and industrial products; accordingly, changes in
the conditions or composition of any of the Company's customers may have an
impact on the Company. While the Company cannot predict what effect these
various factors may have on its financial results, the aggregate effect of these
and other factors could result in volatility in the Company's future performance
and stock price.
-13-
<PAGE>
MET-PRO CORPORATION
PART II - OTHER INFORMATION
Item 6(b). Reports on Form 8-K
There were no reports on Form 8-K filed for the three-month period ended
April 30, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Met-Pro Corporation
-------------------------------------------
(Registrant)
May 25, 1999 /s/ William L. Kacin
-------------------------------------------
William L. Kacin,
President,
Chief Executive Officer and Director
May 25, 1999 /s/ Gary J. Morgan
-------------------------------------------
Gary J. Morgan,
Vice President of Finance,
Secretary and Treasurer, Chief
Financial Officer, Chief Accounting Officer
and Director
-14-
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