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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: July 31, 2000 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 $.10 per share) is 6,085,609 (as of July 31, 2000).
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<PAGE>
MET-PRO CORPORATION
INDEX
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item 1. Financial Statements
<S> <C>
Condensed consolidated balance sheet as of
July 31, 2000 and January 31, 2000................................................................. 2
Condensed consolidated statement of operations for the six-month and three-month
periods ended July 31, 2000 and 1999............................................................... 3
Condensed consolidated statement of stockholders' equity for the
six-month periods ended July 31, 2000 and 1999..................................................... 4
Condensed consolidated statement of cash flows for the six-month
periods ended July 31, 2000 and 1999............................................................... 5
Notes to condensed consolidated financial statements................................................... 6
Report of independent accountants...................................................................... 8
Item 2. Management's discussion and analysis of the financial condition
and results of operations................................................................... 9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings............................................................................... 13
Item 2. Changes in Securities and Use of Proceeds....................................................... 13
Item 3. Defaults Upon Senior Securities................................................................. 13
Item 4. Submissions of Matters to a Vote of Security Holders............................................ 13
Item 5. Other Information............................................................................... 14
Item 6. Exhibits and Reports on Form S-K
(a) Exhibits Required by Item 601 of Regulation S-K............................................. 14
(b) Reports on Form 8-K......................................................................... 14
SIGNATURES...................................................................................................... 15
</TABLE>
-1-
<PAGE>
MET-PRO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited)
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
July 31, January 31,
ASSETS 2000 2000
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 6,848,416 $ 6,331,556
Accounts receivable, net of allowance for doubtful
accounts of approximately $277,000 and
$225,000, respectively 13,750,537 13,733,256
Inventories - Note 3 13,594,533 13,744,142
Prepaid expenses, deposits and other current assets 768,381 1,135,443
Deferred income taxes 778,574 778,574
----------------------------------------------------------------------------------------------------------------------
Total current assets 35,740,441 35,722,971
Property, plant and equipment, net 13,172,370 13,473,299
Costs in excess of net assets of businesses acquired, net 18,524,323 18,772,176
Other assets 456,544 673,537
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Total assets $67,893,678 $68,641,983
======================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
----------------------------------------------------------------------------------------------------------------------
Current liabilities
Current portion of long-term debt $ 2,013,652 $ 2,008,940
Accounts payable 4,221,461 4,989,810
Accrued salaries, wages and expenses 6,026,925 5,108,552
Payroll and other taxes payable 39,440 182,545
Dividend payable 486,849 511,299
Customers' advances 1,419,710 880,432
----------------------------------------------------------------------------------------------------------------------
Total current liabilities 14,208,037 13,681,578
Long-term debt 8,924,985 9,933,014
Other non-current liabilities 457,563 415,731
Deferred income taxes 391,043 405,327
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Total liabilities 23,981,628 24,435,650
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Stockholders' equity
Common stock, $.10 par value; 18,000,000 shares
authorized, 7,197,973 and 7,189,194 shares issued,
of which 1,112,364 and 797,952 shares were reacquired
and held in treasury at the respective dates 719,797 718,919
Additional paid-in capital 8,053,103 7,973,873
Retained earnings 48,795,430 46,087,476
Accumulated other comprehensive loss (507,783) (403,993)
Treasury stock, at cost (13,148,497) (10,169,942)
----------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 43,912,050 44,206,333
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Total liabilities and stockholders' equity $67,893,678 $68,641,983
======================================================================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-2-
<PAGE>
MET-PRO CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
July 31, July 31,
2000 1999 2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $40,509,159 $41,366,235 $20,258,228 $20,538,207
Cost of goods sold 26,589,021 27,286,699 13,115,646 13,565,922
------------------------------------------------------------------------------------------------------------------------------------
Gross profit 13,920,138 14,079,536 7,142,582 6,972,285
------------------------------------------------------------------------------------------------------------------------------------
Operating expenses
Selling 3,689,034 3,749,153 1,877,455 1,871,066
General and administrative 4,295,042 4,126,022 2,177,998 1,993,347
------------------------------------------------------------------------------------------------------------------------------------
7,984,076 7,875,175 4,055,453 3,864,413
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Income from operations 5,936,062 6,204,361 3,087,129 3,107,872
Interest expense (360,681) (429,009) (175,850) (216,554)
Other income, net 225,884 271,386 128,909 136,319
------------------------------------------------------------------------------------------------------------------------------------
Income before taxes 5,801,265 6,046,738 3,040,188 3,027,637
Provision for taxes 2,117,462 2,297,760 1,109,669 1,150,501
------------------------------------------------------------------------------------------------------------------------------------
Net income $ 3,683,803 $ 3,748,978 $ 1,930,519 $ 1,877,136
====================================================================================================================================
Earnings per share, basic (1) $ .59 $ .56 $ .31 $ .28
Earnings per share, diluted (2) $ .59 $ .56 $ .31 $ .28
Cash dividend per share - declared (3) $ .16 $ .40 $ .08 $ .08
Cash dividend per share - paid (3) $ .16 $ .32 $ .08 $ .00
====================================================================================================================================
</TABLE>
(1) Basic earnings per share are based upon the weighted average
number of shares outstanding of 6,217,327 and 6,669,627 in the
six-month periods ended July 31, 2000 and 1999, respectively, and
6,248,061 and 6,693,898 in three-month periods ended July 31,
2000 and 1999, respectively.
(2) Diluted earnings per share are based on the weighted average
number of shares outstanding of 6,230,215 and 6,711,457 in the
six-month periods ended July 31, 2000 and 1999, respectively, and
6,259,884 and 6,734,268 in the three-month periods ended July 31,
2000 and 1999, respectively.
(3) Effective during the second quarter of the fiscal year ended
January 31, 2000, the Company altered its historic practice of
paying annual dividends to the expected payment of quarterly
dividends. The Board of Directors declared quarterly dividends of
$.08 per share payable on March 10, 2000, June 9, 2000 and
September 11, 2000 to stockholders of record as of February 25,
2000, May 26, 2000 and August 28, 2000, respectively. On February
22, 1999, the Company declared a $.32 per share annual cash
dividend payable on April 23, 1999 to stockholders of record on
April 9, 1999. On June 2, 1999, the Company declared a quarterly
$.08 per share cash dividend payable on September 10, 1999 to
stockholders of record on August 20, 1999.
See accompanying notes to condensed consolidated financial statements.
-3-
<PAGE>
MET-PRO CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(unaudited)
<TABLE>
<CAPTION>
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, 2000 $718,919 $7,973,873 $46,087,476 ($403,993) ($10,169,942) $44,206,333
Comprehensive income:
Net income 3,683,803
Foreign currency translation (103,790)
Total comprehensive income 3,580,013
Dividends paid, $.08 per share (489,000) (489,000)
Dividends declared, $.08 per share (486,849) (486,849)
Proceeds from issuance of
common stock under dividend
reinvestment plan (8,779
shares) 878 79,230 80,108
Purchase of 314,412 shares of
treasury stock (2,978,555) (2,978,555)
----------------------------------------------------------------------------------------------------------------------------
Balances, July 31, 2000 $719,797 $8,053,103 $48,795,430 ($507,783) ($13,148,497) $43,912,050
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Accumulated
Additional Other
Common Paid-in Retained Comprehensive Treasury
Stock Capital Earnings (Loss) Stock Total
----------------------------------------------------------------------------------------------------------------------------
Balances, January 31, 1999 $713,862 $7,508,748 $42,718,355 ($85,103) ($4,930,755) $45,925,107
Comprehensive income:
Net income 3,748,978
Foreign currency translation (125,427)
Total comprehensive income 3,623,551
Dividends paid, $.32 per share (2,158,079) (2,158,079)
Dividend declared, $.08 per share (527,681) (527,681)
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 293,400 shares of
treasury stock (3,546,273) (3,546,273)
----------------------------------------------------------------------------------------------------------------------------
Balances, July 31, 1999 $718,284 $7,908,475 $43,781,573 ($210,530) ($8,434,848) $43,762,954
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-4-
<PAGE>
MET-PRO CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
July 31,
2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Net cash provided by operating activities $5,841,475 $6,431,201
------------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities
Proceeds from sale of property and equipment 2,000 8,000
Acquisitions of property and equipment (408,949) (526,868)
Acquisitions of other intangibles -- (7,281)
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Net cash (used in) investing activities (406,949) (526,149)
------------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Reduction of debt (1,003,317) (1,123,987)
Exercise of stock options -- 15,000
Payment of dividends (920,191) (1,726,750)
Purchase of treasury shares (2,978,555) (3,546,273)
------------------------------------------------------------------------------------------------------------------------------------
Net cash (used in) financing activities (4,902,063) (6,382,010)
------------------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (15,603) (13,580)
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 516,860 (490,538)
Cash and cash equivalents at February 1 6,331,556 7,446,369
------------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at July 31 $6,848,416 $6,955,831
====================================================================================================================================
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 230,042 $ 429,045
Income taxes $1,586,183 $1,816,716
====================================================================================================================================
</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 July 31, 2000 and the results of operations for the six-month and
three-month periods ended July 31, 2000 and 1999, and changes in stockholders'
equity and cash flows for the six-month periods then ended. The results of
operations for the six-month and three-month periods ended July 31, 2000 and
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, 2000.
NOTE 3 - INVENTORIES
Inventories consisted of the following:
July 31, January 31,
2000 2000
-------------- -------------
Raw materials $ 6,682,404 $ 6,755,944
Work in progress 1,994,661 2,016,612
Finished goods 4,917,468 4,971,586
-------------- -------------
$13,594,533 $13,744,142
============== =============
NOTE 4 - RECLASSIFICATIONS
Certain reclassifications have been made to the financial statements for the
six-month and three-month periods ended July 31, 1999 to conform to the
presentation of the financial statements for the six-month and three-month
periods ended July 31, 2000.
-6-
<PAGE>
MET-PRO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - BUSINESS SEGMENT DATA
The Company's operations are conducted in two business segments as follows: the
manufacture and sale of product recovery/pollution control 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.
<TABLE>
<CAPTION>
Six Months Ended July 31,
2000 1999
--------------------------------------
<S> <C> <C>
Net sales
Product recovery/pollution control equipment $25,940,266 $28,077,235
Fluid handling equipment 14,568,893 13,289,000
------------ ------------
$40,509,159 $41,366,235
============ ============
Income from operations
Product recovery/pollution control equipment $ 3,257,483 $ 4,289,567
Fluid handling equipment 2,678,579 1,914,794
------------ ------------
$ 5,936,062 $ 6,204,361
============ ============
July 31,
2000 1999
--------------------------------------
Identifiable assets
Product recovery/pollution control equipment $41,413,269 $42,240,578
Fluid handling equipment 18,422,881 19,213,025
------------- ------------
59,836,150 61,453,603
Corporate 8,057,528 7,957,896
------------- ------------
$67,893,678 $69,411,499
============ ============
</TABLE>
NOTE 6 - ACCOUNTANTS' 10-Q REVIEW
Margolis & Company P.C., the Company's independent accountants, has performed a
limited review of the financial information included herein. Their report on
such review accompanies this filing.
-7-
<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 July 31, 2000 and
the related condensed consolidated statements of operations, for the six-month
and three-month periods ended July 31, 2000 and 1999 and stockholders' equity
and cash flows for the six-month periods ended July 31, 2000 and 1999. 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, 2000 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,
2000, 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, 2000 is fairly stated, in all material respects,
in relation to the balance sheet from which it has been derived.
/s/ Margolis & Company P.C.
----------------------------
Certified Public Accountants
Bala Cynwyd, Pennsylvania
August 16, 2000
-8-
<PAGE>
MET-PRO CORPORATION
Item 2. Management's Discussion and Analysis of the Financial Condition and
Results of Operations
Results of Operations:
Six Months Ended July 31, 2000 vs Six Months Ended July 31, 1999
Net sales for the six-month period ended July 31, 2000 were $40,509,159 compared
to $41,366,235 for the six-month period ended July 31, 1999, a decrease of
$857,076 or 2.1%. Sales in the Product Recovery/Pollution Control Equipment
segment were $25,940,266 or 7.6% lower than the six-month period July 31, 1999
due to lower demand for our product recovery equipment. Sales in the Fluid
Handling Equipment segment were $14,568,893 or 9.6% higher compared to the
six-month period ended July 31, 1999 due primarily to increased demand for our
specialty pump equipment.
Backlog at July 31, 2000 totaled $14,268,534 or 64.4% higher than the backlog of
orders on hand at July 31, 1999. In addition, the Company had $3,323,362 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 six-month period ended July 31, 2000 was $3,683,803 compared
to $3,748,978 for the six-month period ended July 31, 1999, a decrease of
$65,175 or 1.7%. The decrease in net income is related to the lower gross
margins in the Product Recovery/Pollution Control Equipment segment plus the
aforementioned lower sales during this period.
The gross margin for the six-month period ended July 31, 2000 was 34.4% versus
34.0 % for the same period in the prior year due to higher gross margins
experienced in the Fluid Handling Equipment segment.
Selling expense decreased $60,119 during the six-month period ended July 31,
2000 compared to the same period last year. Selling expense as a percentage of
net sales was 9.1% for the six-month period ended July 31, 2000, which was equal
to the same period last year.
General and administrative expense was $4,295,042 for the six-month period ended
July 31, 2000 compared to $4,126,022 for the same period last year, an increase
of $169,020. General and administrative expense as a percentage of net sales was
10.6% for the six-month period ended July 31, 2000 compared to 10.0% for the
same period last year.
Interest expense was $360,681 for the six-month period ended July 31, 2000
compared to $429,009 for the same period in the prior year, or a decrease of
$68,328.
Other income, net, decreased $45,502 for the six-month period ended July 31,
2000 compared to the six-month period ended July 31, 1999.
The effective tax rate for the six-month period ended July 31, 2000 was 36.5%
compared to 38% for the six-month period ended July 31, 1999.
Three Months Ended July 31, 2000 vs Three Months Ended July 31, 1999
Net sales for the three-month period ended July 31, 2000 were 20,258,228
compared to 20,538,207 for the three-month period ended July 31, 1999, a
decrease of $279,979 or 1.4%. The sales decrease can be attributed to lower
sales in the Product Recovery/Pollution Control Equipment segment.
Net income for the three-month period ended July 31, 2000 was $1,930,519
compared to $1,877,136 for the three-month period ended July 31, 1999, an
increase of $53,383 or 2.8%. The increase in net income is related to the higher
sales volume in the Fluid Handling Equipment segment for the three-month period
ended July 31, 2000 plus higher gross margins for this segment during the
period.
The gross margin for the three-month period ended July 31, 2000 was 35.3%
compared to 33.9% for the same period last year. The increase is due to higher
gross margins experienced in the Fluid Handling Equipment segment.
-9-
<PAGE>
MET-PRO CORPORATION
Item 2. Management's Discussion and Analysis of the Financial Condition and
Results of Operations continued...
Selling expenses increased $6,389 during the three-month period ended July 31,
2000 compared to the same period last year. As a percentage of net sales,
selling expense increased to 9.3% for the three-month period ended July 31, 2000
from 9.1% for the three-month period ended July 31, 1999.
General and administrative expense was $2,177,998 during the three-month period
ended July 31, 2000 compared to $1,993,347 during the three-month period ended
July 31, 1999, an increase of $184,651. General and administrative expense for
the three-month period ended July 31, 2000 was 10.8% of net sales, compared to
9.7% of net sales for the same period last year.
Interest expense was $175,850 for the three-month period ended July 31, 2000
compared to $216,554 for the same period in the prior year, or a decrease of
$40,704.
Other income, net, decreased $7,410 for the three-month period ended July 31,
2000 compared to the three-month period ended July 31, 1999.
The effective tax rate for the three-month period ended July 31, 2000 was 36.5%
compared to 38% for the three-month period ended July 31, 1999.
Liquidity:
The Company's cash and cash equivalents were $6,848,416 on July 31, 2000
compared to $6,331,556 on January 31, 2000, an increase of $516,860. This
increase is the net result of the following occurring during the six-month
period: the payment of quarterly cash dividends amounting to $920,191 (net of
$80,108 of dividends utilized by stockholders for stock purchases under the
Dividend Reinvestment Plan), payments on long-term debt totalling $1,003,317,
purchases of treasury stock amounting to $2,978,555, and investment in property
and equipment amounting to $408,949, offset by positive cash flow provided by
operating activities of $5,841,475, and proceeds received from the sale of
property and equipment amounting to $2,000. 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 $13,750,537 on July 31, 2000 compared to
$13,733,256 on January 31, 2000, which represents an increase of $17,281. The
timing and size of shipments and retainage on contracts, especially in the
Product Recovery/Pollution Control Equipment segment, will influence accounts
receivable balances at any point in time.
Inventories were $13,594,533 on July 31, 2000 compared to $13,744,142 on January
31, 2000, a decrease of $149,609. Inventory balances fluctuate depending upon
market demand, the size and timing of orders, and varying lead times required.
Current liabilities amounted to $14,208,037 on July 31, 2000 compared to
$13,681,578 on January 31, 2000, an increase of $526,459. Accrued expenses and
customer advances, offset by a reduction in accounts payable, 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.
-10-
<PAGE>
MET-PRO CORPORATION
Item 2. Management's Discussion and Analysis of the Financial Condition and
Results of Operations continued...
Capital Resources and Requirements:
Cash flows provided by operating activities during the six-month period ended
July 31, 2000, amounted to $5,841,475, compared with $6,431,201 during the
six-month period ended July 31, 1999, a decrease of $589,726. This decrease in
cash flows from operating activities was due principally to the increase in the
accounts receivable balance combined with a decrease in accounts payable for the
period ended July 31, 2000.
Cash flows used in investing activities during the six-month period ended July
31, 2000 amounted to $406,949, compared with $526,149 for the six-month period
ended July 31, 1999. The Company's investing activities principally consist of
the acquisitions of property, plant and equipment in the two operating segments.
Financing activities during the six-month period ended July 31, 2000 utilized
$4,902,063 of available resources compared to $6,382,010 for the six-month
period ended July 31, 1999. The 2000 activity is the result of the payment of
quarterly cash dividends amounting to $920,191 (net of $80,108 of dividends
utilized by shareholders for stock purchases under the Dividend Reinvestment
Plan), reduction of long-term debt totalling $1,003,317, plus the purchase of
treasury stock totalling $2,978,555.
On May 11, 1999, the Company announced the initiation of a 350,000 share stock
repurchase program ("1999 Stock Repurchase Program"). The Company completed this
stock repurchase program during the six-month period ended July 31, 2000. On
February 21, 2000 the Company announced a new stock repurchase program (the
"2000 Stock Repurchase Program") for an additional 350,000 shares or
approximately 6% of the Company's outstanding stock, to commence after all
shares have been repurchased under the 1999 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 may 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. For the
six-month period ended July 31, 2000, the Company had repurchased a total of
314,412 shares consisting of 249,437 shares under the 2000 Stock Repurchase
Program and 64,975 shares under the 1999 Stock Repurchase Program, at a cost of
$2,978,555, or 5% of the outstanding shares, which was charged to stockholders'
equity.
Due to strong cash flows generated from operating activities in 1999, the
Company announced the change from an annual dividend, which was traditionally
paid during the month of April, to an expected quarterly dividend. Payment of
future dividends will depend on future earnings and capital requirements of the
Company and is at the discretion of the Board of Directors.
The Board of Directors declared quarterly dividends of $.08 per share payable on
March 10, 2000, June 9, 2000, and September 11, 2000 to stockholders of record
as of February 25, 2000, May 26, 2000, and August 28, 2000, respectively.
Consistent with past practices, the Company intends to continue to invest in new
product development programs and to make capital expenditures to support the
ongoing operations during the coming year. The Company expects to finance all
capital expenditure requirements through cash flows generated from operations.
-11-
<PAGE>
MET-PRO CORPORATION
Item 2. Management's Discussion and Analysis of the Financial Condition and
Results of Operations continued...
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 "anticipates", "believes",
"designed to", "estimates", "expects", "foreseeable future", "goal", "intends",
"projects", "projection", "plans", "scheduled", "should", 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, the effectiveness of the Company's cost control programs,
the availability of suitable acquisition opportunities 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 conducts business. As a participant in the product
recovery/pollution control and fluid handling industries, the Company operates
in a rapidly changing and highly competitive environment. The Company sells both
custom 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.
-12-
<PAGE>
MET-PRO CORPORATION
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submissions of Matters to a Vote of Security Holders
The annual meeting of the Company's stockholders was held on June 7, 2000. At
that meeting, three proposals were submitted to a vote of the Company's
stockholders. Proposal 1 was a proposal to elect two Directors (with Alan Lawley
and Gary J. Morgan being the nominees) to serve until the 2003 Annual Meeting of
Stockholders and one Director (with Michael J. Morris being the nominee) to
serve until the 2002 Annual Meeting of Stockholders. Proposal 2 was to approve
the adoption of the Met-Pro Corporation Year 2000 Employee Stock Purchase Plan.
Proposal 3 was to ratify the selection of Margolis & Company P.C. as independent
certified public accountants for the Company's fiscal year ending January 31,
2001.
At the close of business on the record date for the meeting (which was April 13,
2000), there were 6,324,005 shares of common stock outstanding and entitled to
be voted at the meeting. Holders of 6,046,404 shares of common stock
(representing a like number of votes) were present at the meeting, either in
person or by proxy.
The following table sets forth the results of the voting on each of the
proposals:
<TABLE>
<CAPTION>
Number of Votes
Proposals For Against Abstain
-------------------------------------------------------------------------------------------------------
Proposal 1 - Election of Directors:
<S> <C> <C> <C>
Alan Lawley 5,857,985 188,419 --
Gary J. Morgan 5,856,475 189,929 --
Michael J. Morris 5,857,985 188,419 --
-------------------------------------------------------------------------------------------------------
Proposal 2 - Adoption of Met-Pro Corporation Year 2000
Employee Stock Purchase Plan 5,649,062 312,801 84,541
-------------------------------------------------------------------------------------------------------
Proposal 3 - Selection of Margolis
& Company P.C. 5,896,789 135,919 13,696
-------------------------------------------------------------------------------------------------------
</TABLE>
Consequently, all proposals were passed by the stockholders.
-13-
<PAGE>
MET-PRO CORPORATION
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form S-K
(a) Exhibits Required by Item 601 of Regulation S-K
None
(b) Reports on Form 8-K
There were no Reports on Form 8-K filed during the six-month period
ended July 31, 2000.
-14-
<PAGE>
MET-PRO CORPORATION
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)
September 6, 2000 /s/ William L. Kacin
-----------------------------------
William L. Kacin,
Chairman, President and
Chief Executive Officer
September 6, 2000 /s/ Gary J. Morgan
-----------------------------------
Gary J. Morgan,
Vice President of Finance,
Secretary and Treasurer, Chief
Financial Officer, Chief Accounting
Officer and Director
-15-
