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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, 2001 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 6,153,275 (as of July 31, 2001).
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MET-PRO CORPORATION
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated balance sheet as of
July 31, 2001 and January 31, 2001.......................................................... 2
Consolidated statement of operations for the six-month and three-month
periods ended July 31, 2001 and 2000........................................................ 3
Consolidated statement of stockholders' equity for the
six-month periods ended July 31, 2001 and 2000.............................................. 4
Consolidated statement of cash flows for the six-month
periods ended July 31, 2001 and 2000........................................................ 5
Notes to 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 8-K
(a) Exhibits Required by Item 601 of Regulation S-K......................................... 14
(b) Reports on Form 8-K..................................................................... 14
SIGNATURES................................................................................................... 15
-1-
MET-PRO CORPORATION
CONSOLIDATED BALANCE SHEET
(unaudited)
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
July 31, January 31,
ASSETS 2001 2001
- ----------------------------------------------------------------------------------------------------------------
Current assets
Cash and cash equivalents $8,609,876 $8,510,045
Accounts receivable, net of allowance for doubtful
accounts of approximately $269,000 and
$218,000, respectively 13,459,230 14,208,689
Inventories - Note 3 14,050,983 13,085,969
Prepaid expenses, deposits and other current assets 1,305,026 958,722
Deferred income taxes 648,834 648,834
- ----------------------------------------------------------------------------------------------------------------
Total current assets 38,073,949 37,412,259
Property, plant and equipment, net 13,211,051 13,009,247
Costs in excess of net assets of businesses acquired, net 18,028,619 18,276,472
Other assets 409,162 453,363
- ----------------------------------------------------------------------------------------------------------------
Total assets $69,722,781 $69,151,341
================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ----------------------------------------------------------------------------------------------------------------
Current liabilities
Current portion of long-term debt $1,424,985 $1,833,014
Accounts payable 4,281,157 4,284,687
Accrued salaries, wages and expenses 4,836,128 5,704,372
Payroll and other taxes payable 33,764 8,808
Dividend payable 523,010 517,669
Customers' advances 544,694 609,445
- ----------------------------------------------------------------------------------------------------------------
Total current liabilities 11,643,738 12,957,995
Long-term debt 7,500,000 8,100,000
Other non-current liabilities 543,601 499,395
Deferred income taxes 518,323 532,585
- ----------------------------------------------------------------------------------------------------------------
Total liabilities 20,205,662 22,089,975
- ----------------------------------------------------------------------------------------------------------------
Stockholders' equity
Common stock, $.10 par value; 18,000,000 shares
authorized, 7,213,068 and 7,206,583 shares issued,
of which 1,059,793 and 1,116,428 shares were reacquired
and held in treasury at the respective dates 721,307 720,658
Additional paid-in capital 7,808,481 8,139,799
Retained earnings 54,326,793 51,880,800
Accumulated other comprehensive loss (663,754) (491,163)
Treasury stock, at cost (12,675,708) (13,188,728)
- ----------------------------------------------------------------------------------------------------------------
Total stockholders' equity 49,517,119 47,061,366
- ----------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $69,722,781 $69,151,341
================================================================================================================
See accompanying notes to consolidated financial statements.
-2-
MET-PRO CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
Six Months Ended Three Months Ended
July 31, July 31,
2001 2000 2001 2000
- -----------------------------------------------------------------------------------------------------------------------------
Net sales $37,927,825 $40,509,159 $20,371,781 $20,258,228
Cost of goods sold 24,581,365 26,589,021 13,442,979 13,115,646
- -----------------------------------------------------------------------------------------------------------------------------
Gross profit 13,346,460 13,920,138 6,928,802 7,142,582
Operating expenses
Selling 3,677,916 3,689,034 1,834,209 1,877,455
General and administrative 4,073,046 4,295,042 2,160,159 2,177,998
- -----------------------------------------------------------------------------------------------------------------------------
7,750,962 7,984,076 3,994,368 4,055,453
- -----------------------------------------------------------------------------------------------------------------------------
Income from operations 5,595,498 5,936,062 2,934,434 3,087,129
Interest expense (290,997) (360,681) (139,928) (175,850)
Other income, net 194,919 225,884 108,542 128,909
- -----------------------------------------------------------------------------------------------------------------------------
Income before taxes 5,499,420 5,801,265 2,903,048 3,040,188
Provision for taxes 2,007,286 2,117,462 1,046,629 1,109,669
- -----------------------------------------------------------------------------------------------------------------------------
Net income $3,492,134 $3,683,803 $1,856,419 $1,930,519
=============================================================================================================================
Earnings per share, basic (1) $.57 $.59 $.30 $.31
Earnings per share, diluted (2) $.57 $.59 $.30 $.31
Cash dividend per share - declared (3) $.17 $.16 $.085 $.08
Cash dividend per share - paid (3) $.17 $.16 $.085 $.08
=============================================================================================================================
(1) Basic earnings per share are based upon the weighted average number of
shares outstanding of 6,124,960 and 6,217,327 in the six-month periods
ended July 31, 2001 and 2000, respectively, and 6,118,371 and
6,248,061 in three-month periods ended July 31, 2001 and 2000,
respectively.
(2) Diluted earnings per share are based on the weighted average number of
shares outstanding of 6,174,866 and 6,230,215 in the six-month periods
ended July 31, 2001 and 2000, respectively, and 6,170,706 and
6,259,884 in the three-month periods ended July 31, 2001 and 2000,
respectively.
(3) The Board of Directors declared quarterly dividends of $.085 per share
payable on March 9, 2001, June 8, 2001 and September 10, 2001 to
stockholders of record as of February 23, 2001, May 25, 2001 and
August 31, 2001, respectively. Quarterly dividends of $.08 per share
were paid 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.
See accompanying notes to consolidated financial statements.
-3-
MET-PRO CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(unaudited)
Accumulated
Additional Other
Common Paid-in Retained Comprehensive Treasury
Stock Capital Earnings Income/(Loss) Stock Total
- ------------------------------------------------------------------------------------------------------------------------------------
Balances, January 31, 2001 $720,658 $8,139,799 $51,880,800 ($491,163) ($13,188,728) $47,061,366
Comprehensive income:
Net income 3,492,134
Foreign currency translation (172,591)
Total comprehensive income 3,319,543
Dividends paid, $.085 per share (523,131) (523,131)
Dividends declared, $.085 per share (523,010) (523,010)
Proceeds from issuance of
common stock under dividend
reinvestment plan (6,485
shares) 649 74,360 75,009
Stock option transactions (405,678) 1,497,931 1,092,253
Purchase of 69,390 shares of
treasury stock (984,911) (984,911)
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Balances, July 31, 2001 $721,307 $7,808,481 $54,326,793 ($663,754) ($12,675,708) $49,517,119
====================================================================================================================================
Accumulated
Additional Other
Common Paid-in Retained Comprehensive Treasury
Stock Capital Earnings Income/(Loss) Stock Total
- ------------------------------------------------------------------------------------------------------------------------------------
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
====================================================================================================================================
See accompanying notes to consolidated financial statements.
-4-
MET-PRO CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
Six Months Ended
July 31,
2001 2000
- --------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Cash flows from operating activities
Net Income $3,492,134 $3,683,803
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,022,172 1,109,145
Deferred income taxes (14,250) (14,249)
(Gain) loss on sale of property and equipment, net (9,254) 5,963
Allowance for doubtful accounts 50,946 (35,167)
(Increase) decrease in operating assets
Accounts receivable 633,640 (37,552)
Inventories (1,025,646) 113,833
Prepaid expenses and other current assets (275,073) 362,324
Other assets (4,344) 34,422
Increase (decrease) in operating liabilities
Accounts payable, accrued expenses and taxes (891,814) 37,843
Customers' advances (64,751) 539,278
Other non-current liabilities 44,206 41,832
- --------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 2,957,966 5,841,475
- --------------------------------------------------------------------------------------------------------------
Cash flows from investing activities
Proceeds from sales of property and equipment 66,171 2,000
Acquisitions of property and equipment (1,018,332) (408,949)
- --------------------------------------------------------------------------------------------------------------
Net cash (used in) investing activities (952,161) (406,949)
- --------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Reduction of debt (1,008,029) (1,003,317)
Exercise of stock options 1,092,253 --
Payment of dividends (965,791) (920,191)
Purchase of treasury shares (984,911) (2,978,555)
- --------------------------------------------------------------------------------------------------------------
Net cash (used in) financing activities (1,866,478) (4,902,063)
- --------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (39,496) (15,603)
- --------------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 99,831 516,860
Cash and cash equivalents at February 1 8,510,045 6,331,556
- --------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at July 31 $8,609,876 $6,848,416
==============================================================================================================
See accompanying notes to consolidated financial statements.
-5-
MET-PRO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - PRINCIPLES OF CONSOLIDATION
The 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 financial statements
contain all adjustments necessary to present fairly the financial position as of
July 31, 2001 and the results of operations for the six-month and three-month
periods ended July 31, 2001 and 2000, 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, 2001 and 2000 are not
necessarily indicative of the results to be expected for the full year. These
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, 2001.
NOTE 3 - INVENTORIES
Inventories consisted of the following:
July 31, January 31,
2001 2001
------------- -------------
Raw materials $8,343,930 $7,770,874
Work in progress 1,689,860 1,573,802
Finished goods 4,017,193 3,741,293
------------- -------------
$14,050,983 $13,085,969
============= =============
NOTE 4 - SUPPLEMENTAL CASH FLOW INFORMATION
Net cash flow from operating activities reflect cash payments for interest and
income taxes as follows:
Six Months Ended July 31,
2001 2000
------------- -------------
Cash paid during the period for:
Interest $293,585 $230,042
Income taxes $1,958,655 $1,586,183
-6-
MET-PRO CORPORATION
NOTES TO 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:
Six Months Ended July 31,
2001 2000
---------------------------------
Net sales
Product recovery/pollution control equipment $24,204,834 $25,940,266
Fluid handling equipment 13,722,991 14,568,893
------------ ------------
$37,927,825 $40,509,159
============ ============
Income from operations
Product recovery/pollution control equipment $3,209,024 $3,257,483
Fluid handling equipment 2,386,474 2,678,579
----------- ------------
$5,595,498 $5,936,062
=========== ============
July 31, January 31,
2001 2000
---------------------------------
Identifiable assets
Product recovery/pollution control equipment $41,298,389 $40,274,449
Fluid handling equipment 18,903,957 18,785,577
------------ ------------
60,202,346 59,060,026
Corporate 9,520,435 10,091,315
------------ ------------
$69,722,781 $69,151,341
============ ============
NOTE 6 - NEW ACCOUNTING STANDARDS
In June 2001, the Financial Accounting Standards Board ("FASB") issued FASB No.
141, "Business Combinations", and FASB No. 142, "Goodwill and Other Intangible
Assets". FASB No. 141, which is effective for business combinations completed
after June 30, 2001, requires among other things, that (1) the purchase method
of accounting be used for all business combinations, (2) establishing specific
criteria for the recognition of intangible assets separately from goodwill and
(3) additional information about acquired intangible assets be provided. FASB
No. 142, which will become effective for the Company prospectively as of
February 1, 2002, primarily addresses the accounting for goodwill and intangible
assets subsequent to their acquisition. Among other things it requires that
goodwill not be amortized for financial statement purposes; instead, management
will be required to test goodwill for impairment at least annually. As a result,
amortization of existing goodwill will cease as of January 31, 2002.
NOTE 7 - 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-
MET-PRO CORPORATION
To the Board of Directors
Met-Pro Corporation
Harleysville, Pennsylvania
We have reviewed the accompanying consolidated balance sheet of Met-Pro
Corporation and its wholly-owned subsidiaries as of July 31, 2001 and the
related consolidated statements of operations, for the six-month and three-month
periods ended July 31, 2001 and 2000 and stockholders' equity and cash flows for
the six-month periods ended July 31, 2001 and 2000. 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 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, 2001 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 22,
2001, we expressed an unqualified opinion on those financial statements. In our
opinion, the information set forth in the accompanying consolidated balance
sheet as of January 31, 2001 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, 2001
-8-
MET-PRO CORPORATION
Item 2. Management's Discussion and Analysis of the Financial Condition and
Results of Operations
Results of Operations:
The following table sets forth, for the six and three-month periods indicated,
certain financial information derived from the Company's consolidated statement
of operations expressed as a percentage of net sales.
Six Months Ended Three Months Ended
July 31, July 31,
2001 2000 2001 2000
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Net sales 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 64.8% 65.6% 66.0% 64.7%
--------------------------------------------------------------------------------------------------------------
Gross profit 35.2% 34.4% 34.0% 35.3%
Selling 9.7% 9.1% 9.0% 9.3%
General and administrative 10.7% 10.6% 10.6% 10.7%
--------------------------------------------------------------------------------------------------------------
Income from operations 14.8% 14.7% 14.4% 15.3%
Interest expense (.8%) (.9%) (.7%) (.9%)
Other income, net .5% .5% .5% .6%
--------------------------------------------------------------------------------------------------------------
Income before taxes 14.5% 14.3% 14.2% 15.0%
Provision for taxes 5.3% 5.2% 5.1% 5.5%
--------------------------------------------------------------------------------------------------------------
Net income 9.2% 9.1% 9.1% 9.5%
==============================================================================================================
Six Months Ended July 31, 2001 vs Six Months Ended July 31, 2000
Net sales for the six-month period ended July 31, 2001 were $37,927,825 compared
to $40,509,159 for the six-month period ended July 31, 2000, a decrease of
$2,581,334 or 6.3%. Sales in the Product Recovery/Pollution Control Equipment
segment were $24,204,834 or $1,735,432 lower than the six-month period ended
July 31, 2000 due to lower demand for our product recovery equipment. Sales in
the Fluid Handling Equipment segment were $13,722,991 or $845,902 lower compared
to the six-month period ended July 31, 2000 due primarily to decreased demand
for our specialty pump equipment. We believe that the decreased demand in both
business segments is attributed to a slowing economy.
Backlog at July 31, 2001 totaled $9,947,194 compared to $14,268,534 for the
period ended July 31, 2000. In addition, at July 31, 2001, the Company had
$4,052,676 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, compared to $3,323,362 at the period ended July 31, 2000.
Net income for the six-month period ended July 31, 2001 was $3,492,134 compared
to $3,683,803 for the six-month period ended July 31, 2000, a decrease of
$191,669 or 5.2%. The decrease in net income is principally related to the lower
sales in both of the Company's business segments during the period.
The gross margin for the six-month period ended July 31, 2001 was 35.2% versus
34.4% for the same period in the prior year due to higher gross margins
experienced in the Product Recovery/Pollution Control Equipment segment.
Selling expense decreased $11,118 during the six-month period ended July 31,
2001 compared to the same period last year. Selling expense as a percentage of
net sales was 9.7% for the six-month period ended July 31, 2001 compared to 9.1%
for the six-month period ended July 31, 2000.
-9-
MET-PRO CORPORATION
Item 2. Management's Discussion and Analysis of the Financial Condition and
Results of Operations continued...
General and administrative expense was $4,073,046 for the six-month period ended
July 31, 2001 compared to $4,295,042 for the same period last year, a decrease
of $221,996. General and administrative expense as a percentage of net sales was
10.7% for the six-month period ended July 31, 2001 compared to 10.6% for the
same period last year.
Interest expense was $290,997 for the six-month period ended July 31, 2001
compared to $360,681 for the same period in the prior year, or a decrease of
$69,684. The reduction is the result of reduced borrowings.
Other income, net, decreased $30,965 for the six-month period ended July 31,
2001 compared to the six-month periods ended July 31, 2000.
The effective tax rate for the six-month periods ended July 31, 2000 and 2001
was 36.5%.
Three Months Ended July 31, 2001 vs Three Months Ended July 31, 2000
Net sales for the three-month period ended July 31, 2001 were $20,371,781
compared to $20,258,228 for the three-month period ended July 31, 2000, an
increase of $113,553. Sales in the Product Recovery/Pollution Control Equipment
segment were $13,843,124 or $952,241 higher than the three-month period ended
July 31, 2000. Sales in the Fluid Handling Equipment segment were $6,528,657 or
$838,688 lower compared to the three-month period ended July 31, 2000.
Net income for the three-month period ended July 31, 2001 was $1,856,419
compared to $1,930,519 for the three-month period ended July 31, 2000, a
decrease of $74,100 or 3.8%. The decrease in net income is related to the lower
sales volume in the Fluid Handling Equipment segment for the three-month period
ended July 31, 2001.
The gross margin for the three-month period ended July 31, 2001 was 34.0%
compared to 35.3% for the same period last year. The decrease is due to lower
sales experienced in the Fluid Handling Equipment segment.
Selling expenses decreased $43,246 during the three-month period ended July 31,
2001 compared to the same period last year. As a percentage of net sales,
selling expense decreased to 9.0% for the three-month period ended July 31, 2001
from 9.3% for the three-month period ended July 31, 2000.
General and administrative expense was $2,160,159 for the three-month period
ended July 31, 2001 compared to $2,177,998 for the three-month period ended July
31, 2000, a decrease of $17,839. General and administrative expense for the
three-month period ended July 31, 2001 was 10.6% of net sales, compared to 10.7%
of net sales for the same period last year.
Interest expense was $139,928 for the three-month period ended July 31, 2001
compared to $175,850 for the same period in the prior year, or a decrease of
20.4%.
Other income, net, decreased $20,367 for the three-month period ended July 31,
2001 compared to the three-month period ended July 31, 2000.
The effective tax rate for the three-month period ended July 31, 2001 was 36.1%
compared to 36.5% for the three-month period ended July 31, 2000.
Liquidity:
The Company's cash and cash equivalents were $8,609,876 on July 31, 2001
compared to $8,510,045 on January 31, 2001, an increase of $99,831. This
increase is the net result of the following occurring during this six-month
-10-
MET-PRO CORPORATION
Item 2. Management's Discussion and Analysis of the Financial Condition and
Results of Operations continued...
period: cash flows provided by operating activities of $2,957,966, proceeds
received from the exercise of stock options totaling $1,092,253 and proceeds
received from the sale of equipment amounting to $66,171, offset by the payment
of quarterly cash dividends amounting to $965,791 (net of $75,009 of dividends
utilized by stockholders for stock purchases under the Dividend Reinvestment
Plan), payments on long-term debt totalling $1,008,029, purchases of treasury
stock amounting to $984,911, investment in property and equipment amounting to
$1,018,332 and exchange rate changes of $39,496. 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 $13,459,230 on July 31, 2001 compared to
$14,208,689 on January 31, 2001, which represents a decrease of $749,459. 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 $14,050,983 on July 31, 2001 compared to $13,085,969 on January
31, 2001, an increase of $965,014. Inventory balances fluctuate depending upon
market demand, the size and timing of orders, and varying lead times required.
Current liabilities amounted to $11,643,738 on July 31, 2001 compared to
$12,957,995 on January 31, 2001, a decrease of $1,314,257. A reduction in
accrued expenses, current portion of long-term debt and customer advances
accounted for the decrease.
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 for the six-month period ended July
31, 2001 amounted to $2,957,966, compared with $5,841,475 for the six-month
period ended July 31, 2000, a decrease of $2,883,509. This decrease in cash
flows from operating activities was due principally to the increase in
inventories and prepaid expenses and a decrease in accrued expenses for the
period ended July 31, 2001.
Cash flows used in investing activities for the six-month period ended July 31,
2001 amounted to $952,161, compared with $406,949 for the six-month period ended
July 31, 2000. The Company's investing activities principally consist of the
acquisitions of property, plant and equipment in the two operating segments.
Financing activities for the six-month period ended July 31, 2001 utilized
$1,866,478 of available resources compared to $4,902,063 for the six-month
period ended July 31, 2000. The 2001 activity is the result of the payment of
quarterly cash dividends amounting to $965,791 (net of $75,009 of dividends
utilized for stock purchases under the Dividend Reinvestment Plan), reduction of
long-term debt totaling $1,008,029, and the purchase of treasury stock totaling
$984,911, offset by proceeds received by the exercise of stock options amounting
to $1,092,253.
The Company paid $1,008,029 of scheduled debt during the six-month period ended
July 31, 2001. The percentage of long-term debt to equity at July 31, 2001
decreased to 15.1% compared to 17.2% at January 31, 2001.
The Board of Directors declared quarterly dividends of $.085 per share payable
on March 9, 2001, June 8, 2001, and September 10, 2001 to stockholders of record
as of February 23, 2001, May 25, 2001, and August 31, 2001, respectively.
-11-
MET-PRO CORPORATION
Item 2. Management's Discussion and Analysis of the Financial Condition and
Results of Operations continued...
During the six-month period ended July 31, 2001 the Company repurchased a total
of 69,390 shares under the 350,000 share repurchase program authorized on
February 21, 2000, at a cost of $984,911, which was charged to stockholders'
equity.
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.
Cautionary Statement Concerning Forward-Looking Statements:
In this Management's Discussion and Analysis, and elsewhere in this Quarterly
Report, we have made forward-looking statements. These statements are based on
our estimates and assumptions and are subject to risk and uncertainties.
Forward-looking statements include the information concerning our possible or
assumed future results of operations. Forward-looking statements also include
those preceded or followed by the words "anticipates", "believes", "estimates",
"hopes" or other similar expressions. For those statements, we claim protection
of the safe harbor for all forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995.
The following important factors, along with those discussed elsewhere in our
filings with the Securities and Exchange Commission including without limitation
our Annual Report on Form 10-K for the year ended January 31, 2001, could affect
future results and could cause those results to differ materially from those
expressed in the forward-looking statements:
o materially adverse changes in economic conditions in the markets served by
us or in significant customers of ours;
o material changes in available technology;
o changes in our accounting rules promulgated by regulatory agencies,
including the Securities and Exchange Commission, which could result in an
impact on earnings;
o unexpected results in our product development activities;
o changes in our existing management;
o unexpected changes in our execution of customers orders; and
o changes in federal or state laws.
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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 20, 2001. 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 William L.
Kacin and Nicholas DeBenedictis being the nominees) to serve until the 2004
Annual Meeting of Stockholders. Proposal 2 was to approve the adoption of the
Met-Pro Corporation Year 2001 Equity Incentive 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, 2002.
At the close of business on the record date for the meeting (which was April 30,
2001), there were 6,099,365 shares of common stock outstanding and entitled to
be voted at the meeting. Holders of 5,731,333 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:
Number of Votes
Proposals For Against Abstain Unvoted
- -------------------------------------------------------------------------------------------------------------------------------
Proposal 1 - Election of Directors
William L. Kacin 5,416,897 314,436 -- --
Nicholas DeBenedictis 5,515,431 215,902 -- --
- -------------------------------------------------------------------------------------------------------------------------------
Proposal 2 - Adoption of Met-Pro Corporation Year 2001
Equity Incentive Plan 3,167,293 467,861 156,241 1,939,938
- -------------------------------------------------------------------------------------------------------------------------------
Proposal 3 - Selection of Margolis
& Company P.C. 5,626,528 40,780 20,972 43,053
- -------------------------------------------------------------------------------------------------------------------------------
Consequently, all proposals were adopted by the stockholders.
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MET-PRO CORPORATION
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-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, 2001.
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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)
August 30, 2001 /s/ William L. Kacin
--------------------------------------------
William L. Kacin,
Chairman, President and
Chief Executive Officer
August 30, 2001 /s/ Gary J. Morgan
--------------------------------------------
Gary J. Morgan,
Vice President of Finance,
Secretary and Treasurer, Chief
Financial Officer, Chief Accounting
Officer and Director
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