-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Vt/G++qjLfMRIkR+GjSIqZs5f2QqTvyEnfffUw+b6PUASvor7/mfJO/voOnYh2D7 YY5BeCcWV9GcPlizJkhsoA== 0000065201-01-500005.txt : 20010507 0000065201-01-500005.hdr.sgml : 20010507 ACCESSION NUMBER: 0000065201-01-500005 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 16 CONFORMED PERIOD OF REPORT: 20010131 FILED AS OF DATE: 20010504 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MET PRO CORP CENTRAL INDEX KEY: 0000065201 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL & COMMERCIAL FANS & BLOWERS & AIR PURIFYING EQUIP [3564] IRS NUMBER: 231683282 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-07763 FILM NUMBER: 1622543 BUSINESS ADDRESS: STREET 1: 160 CASSELL ROAD CITY: HARLEYSVILLE STATE: PA ZIP: 19438 BUSINESS PHONE: 2157236751 MAIL ADDRESS: STREET 1: 160 CASSELL ROAD STREET 2: BOX 144 CITY: HARLEYSVILLE STATE: PA ZIP: 19438 FORMER COMPANY: FORMER CONFORMED NAME: MET PRO WATER TREATMENT CORP DATE OF NAME CHANGE: 19740924 FORMER COMPANY: FORMER CONFORMED NAME: MET PRO INC DATE OF NAME CHANGE: 19661026 10-K 1 fye2001_10k.txt ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For fiscal year ended: January 31, 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 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered ------------------- ---------------- Common Stock, par value $0.10 per share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.10 per share (Title of Class) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-K or any amendment to this Form 10-K. ---- The number of shares outstanding of the Registrant's Common Stock was 6,099,364 as of April 30, 2001. The aggregate market value of the voting stock held by non-affiliates of the Registrant was $77,156,955 as of April 30, 2001. DOCUMENTS INCORPORATED BY REFERENCE Form 10-K Part Number ----------- Portions of Registrant's Definitive Proxy Statement filed pursuant to Regulation 14A in connection with Registrant's Annual Meeting of Stockholders to be held on June 20, 2001...................... III ================================================================================
INDEX PART I Item 1. Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Item 2. Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 7 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters . . . . . . . . . . . . . . . . . 8 Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . 10 Item 7A. Quantitative and Qualitative Disclosure About Market Risks. . . . . . . . . . . . . . . . . . . . . . . 13 Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. . . . . . . . . . 32 PART III Item 10. Directors and Executive Officers of the Registrant. . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Item 11. Executive Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Item 12. Security Ownership of Certain Beneficial Owners and Management. . . . . . . . . . . . . . . . . . . . . 32 Item 13. Certain Relationships and Related Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . 33 SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
- -------------------------------------------------------------------------------- FACTORS THAT MAY AFFECT FUTURE RESULTS Met-Pro's prospects are subject to certain uncertainties and risks. This Annual Report on Form 10-K also contains certain forward-looking statements within the meaning of the Federal securities laws. Met-Pro's future results may differ materially from its current results and actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors. Readers should pay particular attention to the considerations described in the section of this report entitled "Management's Discussion and Analysis of Financial Condition and Results of Operation - Factors that May Affect Future Results." Readers should also carefully review the risk factors described in the other documents Met-Pro files from time to time with the Securities and Exchange Commission. - -------------------------------------------------------------------------------- PART I Item 1. Business: General: Met-Pro Corporation ("Met-Pro" or the "Company"), incorporated in the State of Delaware on March 30, 1966, manufactures and sells product recovery/pollution control equipment for purification of air and liquids, and fluid handling equipment for corrosive, abrasive and high temperature liquids. The Company, which operates through ten divisions and three wholly-owned subsidiaries, markets and sells its products through its own personnel, distributors, representatives and agents based on the division or subsidiary involved. The Company's products are sold worldwide primarily in industrial markets. The Company was taken public on April 6, 1967 and traded on the American Stock Exchange from July 25, 1978 until June 18, 1998, at which time the Company's Common Stock began trading on the New York Stock Exchange. The Company's principal executive offices are located at 160 Cassell Road, Harleysville, Pennsylvania and the telephone number at that location is (215) 723-6751. Except where otherwise indicated by the context used herein, references to the "Company" means Met-Pro Corporation, its divisions and its wholly-owned subsidiaries. Products, Services and Markets: The Company operates in two segments, the Product Recovery/Pollution Control Equipment Segment and the Fluid Handling Equipment Segment. To better reflect the significant contribution that the Flex-Kleen Division has made to our sales, we have changed the name of the former "Pollution Control and Allied Equipment" segment of our business to "Product Recovery/Pollution Control Equipment". For financial information concerning the Company's industry segments, reference is made to "Consolidated Business Segment Data" contained within the Company's Consolidated Financial Statements that form a part of this Report on Form 10-K. A narrative description of the Company's operations within these two segments is as follows: Product Recovery/Pollution Control Equipment Segment This segment is composed of the following six divisions and subsidiaries of the Company: Flex-Kleen Division; Stiles-Kem Division; Sethco Division; Strobic Air Corporation; Duall Division; and Systems Division. Flex-Kleen Division, located in Itasca, Illinois, operating with the Company's wholly-owned subsidiary, Flex-Kleen Canada Inc., is a leading supplier of product recovery and dry particulate collectors that are used primarily in the process of manufacturing food products and pharmaceuticals. While some of Flex-Kleen's products are also used for nuisance collection of particulates to conform to environmental concerns, the overwhelming portion of its sales activity is for product collection and is process driven. At present, Flex-Kleen's products are sold through 72 manufacturer's representatives in 32 offices located across the United States and 12 manufacturer's representatives located in four offices throughout Canada. Stiles-Kem Division, located in Waukegan, Illinois, is a leading manufacturer of safe and reliable water treatment compounds which have been used in the public drinking water industry for more than 46 years. Stiles-Kem products are designed to eliminate problems created by high iron and manganese levels in municipal water systems and to reduce scaling and general corrosion tendencies within water distribution piping systems. These food grade products are NSF/ANSI approved for health considerations in municipal drinking water supplies and are certified to meet existing state and federal guidelines. The products are sold both directly through regional sales representatives and through a network of distributors located in the United States and Canada. Sethco Division, located on Long Island, New York, designs, manufactures and sells corrosion resistant pumps, filter chambers and filter systems with flow rates to about 200 gallons per minute. These products are used in wastewater treatment systems and fume scrubbers for pollution control. They are also widely used in the metal finishing, electronics and chemical processing industries. Sethco's products are sold through a network of non-exclusive distributors, as well as to catalog houses and original equipment manufacturers. Our products are sold internationally through Met-Pro's International Division and our Mefiag B.V. subsidiary. Strobic Air Corporation, located in Harleysville, Pennsylvania, designs, manufactures and holds patents on specialty blowers and industrial fans for industrial applications including university laboratories, hospitals, semiconductor manufacturers, government laboratories, pharmaceutical, chemical, petrochemical plants and other testing laboratory facilities. Sales, engineering and customer service are provided through a network of 225 manufacturer's representatives located throughout the United States and Canada. 1 Duall Division, located in Owosso, Michigan, is a leading manufacturer of industrial and municipal air and water quality control systems. The Division's major products include odor control systems, fume and emergency gas scrubbers, particulate collectors, air strippers, ducting and exhaust fans. All equipment is fabricated from corrosion resistant materials. Duall's support services include pilot studies, engineering, installation and performance testing. Duall products are sold both domestically and internationally to the metal finishing, wastewater treatment, composting, food processing, chemical, printed circuit, semiconductor, steel pickling, pharmaceutical, battery manufacturing and groundwater remediation markets. At present, 90 factory trained manufacturer's representatives sell Duall's engineered systems to industrial and municipal clients. Systems Division, located in West Chester, Pennsylvania, is a leader in the supply of custom designed and manufactured air and water pollution control equipment. Systems Division's air pollution control capabilities include: carbon adsorption systems for the concentration and recovery of volatile solvents, thermal and catalytic oxidation systems and the supply of abatement catalysts. These systems are custom engineered for clients in the automotive, aerospace and furniture industries. Additional applications include painting, pharmaceutical, chemical, electronics, food processing and printing industries. Systems Division also offers a full range of catalyst products for the oxidation of pollutants, which include catalysts for the oxidation of chlorinated solvents, low temperature oxidation catalysts and a catalyst specially designed for regenerative catalytic oxidizer applications. Fluid Handling Equipment Segment This segment is composed of the following six divisions and subsidiaries of the Company: Mefiag; Keystone Filter Division; Dean Pump Division; and Fybroc Division. Mefiag(R), operating with the Company's wholly-owned subsidiary, Mefiag B.V., located in Heerenveen, Holland, and the Mefiag Division, located in Harleysville, Pennsylvania, designs and manufactures filter systems utilizing horizontal disc technology for superior performance, particularly in high efficiency and high-flow applications. Mefiag(R) filters are used in tough, corrosive applications in the plating, metal finishing and printing industries. Worldwide sales are accomplished through qualified, market-based distributors and original equipment manufacturers located throughout Europe, United States, Asia and other major markets throughout the world. Keystone Filter Division, located in Hatfield, Pennsylvania, is an established custom pleater and cartridge manufacturer in the United States. The Division provides custom designed and engineered products which are currently used in a diversity of applications such as the nuclear power industry, components in medical equipment and in indoor air quality equipment. Keystone Filter also provides standard filters for water purification and industrial applications. Sales and customer service are provided through a non-exclusive distributor network. Dean Pump Division, located in Indianapolis, Indiana, designs and manufactures high quality pumps that handle a broad range of industrial applications. Users such as the chemical, petrochemical, refinery, pharmaceutical, plastics, pulp and paper, and food processing industries choose Dean Pump products particularly for their high temperature applications. The Division's products are sold worldwide through an extensive network of distributors. Fybroc Division, located in Telford, Pennsylvania, is a world leader in the manufacture of fiberglass reinforced plastic ("FRP") centrifugal pumps. These pumps provide excellent corrosion resistance for tough applications including pumping of acids, brines, caustics, bleaches, seawater and a wide variety of waste liquids. Fybroc's second generation epoxy resin, EY-2, allows the Company to offer the first corrosion resistant and high temperature FRP thermoset pumps suitable for solvent applications. The EY-2 material also expands Fybroc's pumping capabilities to include certain acid applications such as high concentration sulfuric acid (75-98%). During the year, Fybroc continued to expand the FRP centrifugal magnetic drive pump line which now offers two sizes available in both our standard vinyl ester resin and our EY-2 epoxy resin. Our ability to manufacture these pumps in EY-2 makes them the only FRP thermoset centrifugal magnetic drive pumps capable of handling corrosive liquids from acids to solvents. Fybroc pumps are sold to many markets including the chemical, steel, pulp and paper, electric utility, aquaculture, aquarium, and industrial and municipal waste treatment industries. Fybroc's EY-2 material is expected to allow it to enter new markets such as pharmaceutical, petrochemical, fertilizer and pesticides. A worldwide distributor network provides sales, engineering and customer service. 2 The following table sets forth certain data concerning total net sales to customers by geographic area in the past three years: Percentage of Net Sales Fiscal Year Ended January 31, 2001 2000 1999 ---------------------------------------------------- United States 79.5% 83.7% 83.4% Foreign 20.5% 16.3% 16.6% ---------------------------------------------------- Net Sales 100.0% 100.0% 100.0% ==================================================== Customers: During each of the past three fiscal years, no single customer accounted for 10% or more of the total net sales of the Company in any year. The Company does not believe that it would be materially adversely affected by the loss of any single customer. Seasonality: The Company does not consider its business to be seasonal in nature. Competition: The Company experiences competition from a variety of sources with respect to virtually all of its products. The Company knows of no single entity that competes with it across the full range of its products and systems. The lines of business in which the Company is engaged are highly competitive. Competition in the markets served is based on a number of considerations, which may include price, technology, applications experience, know-how, reputation, product warranties, service and distribution. With respect to the Fluid Handling Equipment segment, specifically the pump manufacturing operations, several companies, including Ingersoll-Dresser Pumps Co. (a subsidiary of Flowserve Corporation), Goulds Industrial Pumps, Inc. (a subsidiary of ITT Industries), and Durco Pumps, Inc. (a subsidiary of Flowserve Corporation), dominate the industry with several smaller companies, including Met-Pro, competing in selected product lines and niche markets. With respect to the Product Recovery/Pollution Control Equipment segment, there are numerous competitors of both comparable and larger size which may have greater resources than the Company, but there are no companies that dominate the market. The Company is unable to state with certainty its relative market position in all aspects of its businesses. Research and Development: The Company engages in research and development on an operational basis. Due to the wide range of the Company's products, the research and development effort is not centralized. Research is directed towards the development of new products related to current product lines, and the improvement and enhancement of existing products. The principal goals of the Company's research programs are maintaining the Company as a technological leader in the production of product recovery/pollution control equipment, and fluid handling equipment; developing new products; and providing technological support to the manufacturing operations. Research and development expenses were $0.8 million, for each of the years ended January 31, 2001, 2000 and 1999, respectively. Patents and Trademarks: The Company has a small number of patents and trademarks. The Company considers these rights important to its business, although it considers no individual right material to its business. 3 Regulatory Matters: The Company is subject to environmental laws and regulations concerning air emissions, discharges to water processing facilities, and the generation, handling, storage and disposal of waste materials in all operations. All of the Company's production and manufacturing facilities are controlled under permits issued by federal, state and local regulatory agencies. The Company believes it is presently in compliance in all material respects with these laws and regulations. To date, compliance with federal, state and local provisions relating to protection of the environment has had no material effect upon capital expenditures, earnings or the competitive position of the Company. Backlog: Generally, the Company's customers do not enter into long-term contracts, but rather issue purchase orders that are accepted by the Company. The rate of booking new orders varies from month to month. In addition, the orders have varying delivery schedules, and the Company's backlog as of any particular date may not be representative of actual revenues for any succeeding period. The dollar amount of the Company's backlog of orders, considered to be firm, totalled $9,529,541 and $11,660,840 as of January 31, 2001 and 2000, respectively. This does not include an additional $5,469,863 and $4,069,610 of orders in-house as of January 31, 2001 and 2000, respectively, which, according to our longstanding policy, are not included in the backlog until completed drawings have been approved. The Company expects that substantially all of the backlog that existed as of January 31, 2001 will be shipped during the ensuing fiscal year. Raw Materials: The Company procures its raw materials and supplies from various sources. The Company believes it could secure substitutes for the raw materials and supplies should they become unavailable, but there are no assurances that the substitutes would perform as well or be priced competitively. The Company has not experienced any significant difficulty in securing raw materials and supplies, and does not anticipate any significant difficulty in procurement in the coming year or foreseeable future. Employees: As of January 31, 2001, the Company employed 398 people, of whom 153 were involved in manufacturing, and 245 were engaged in administration, sales, engineering, supervision and clerical work. The Company has had no work stoppages during the past 19 years and considers its employee relations to be good. Foreign Operations: Most of the Company's operations and assets are located in the United States. The Company also owns a manufacturing operation in Heerenveen, Holland through its wholly-owned subsidiary, Mefiag B.V., and operates a sales office and warehouse in Markham, Ontario, Canada through its wholly-owned subsidiary, Flex-Kleen Canada Inc. Large export sales are typically made on the basis of confirmed irrevocable letters of credit or time drafts to selected customers in U.S. dollars. The Company believes that currency fluctuation and political and economic instability do not constitute substantial risks to its business. For information concerning foreign net sales on a segment basis, reference is made to the Consolidated Business Segment Data contained on page 20. 4 Executive Officers of the Registrant: The following table sets forth certain information regarding the executive officers of the Company: William L. Kacin, age 69, is Chairman of the Board of Directors, Chief Executive Officer and President of the Company. He was elected Chairman of the Board of Directors in June 1999 and Chief Executive Officer, President and Director in February 1993. Prior to that, he was Vice President and General Manager of the Company's Sethco Division for seventeen years. Raymond J. De Hont, age 47, is Chief Operating Officer of the Company, to which office he was elected in June 2000. Mr. De Hont has served as Vice President and General Manager of the Company's Fybroc Division since 1995. In October 1999, he also assumed the responsibilities of General Manager for the Company's Dean Pump Division. Prior to joining Met-Pro Corporation, Mr. De Hont's management position at Air and Water Technologies included Vice President and General Manager of Flex-Kleen Corporation, which is now a division of Met-Pro Corporation. Gary J. Morgan, CPA, age 46, is Vice President-Finance, Chief Financial Officer, Secretary, Treasurer and a Director of the Company. He was elected Vice President-Finance, Chief Financial Officer, Secretary and Treasurer in October 1997, and a Director of the Company in February 1998. Mr. Morgan joined the Company in 1980 and served as the Company's Corporate Controller immediately prior to October 1997. Mark A. Betchaver, age 51, is a Vice President of the Company and General Manager of the Sethco Division, to which office he was elected in June 1993. He joined the Company in 1972. James G. Board, age 47, is Vice President and General Manager of the Company's Dean Pump and Fybroc Divisions, to which office he was elected in December 2000. For more than five years prior thereto, Mr. Board was employed by Tuthill Energy Systems since September 1997, as Director of Sales and prior to joining Tuthill Energy Systems held the position as Salesman for Oliver and Laughten Equipment Company, Inc. since September 1982. Thomas V. Edwards, age 47, is a Vice President of the Company and General Manager of the Systems Division, to which office he was elected in December 1998. Mr. Edwards joined the Company in June 1995 and prior to his present position, held the position of Assistant to the President. For more than five years prior thereto, Mr. Edwards was employed by Lockheed Martin as Engineering Manager. Sonja M. Haggert, age 47, is a Vice President of the Company and General Manager of the Keystone Filter Division, to which office she was elected in February 1993. She joined the Company in 1978, and prior to her present position, held the position of Distributor Sales Manager of the Division. Hans J. D. Huizinga, age 50, is the Managing Director of Mefiag B.V., a wholly-owned subsidiary of the Company, located in Heerenveen, Holland, an office to which he was elected in August 1993. He was employed by Mefiag B.V. (formerly Systems Engineering and Manufacturing Corp. Nederland B.V.) for over five years as Managing Director prior to becoming an employee of the Company 's subsidiary on June 30, 1993, when Registrant acquired that company. Gregory C. Kimmer, age 46, is Vice President of the Company and General Manager of the Duall Division, to which office he was elected in October 1989. For more than five years prior thereto, Mr. Kimmer was employed by Duall Industries, Inc. in various capacities. William F. Mersch, age 47, is a Vice President of the Company and General Manager of the Stiles-Kem Division, to which office he was elected in October 1996. He joined the Company in June 1995 as National Sales Manager. For more than five years prior thereto, Mr. Mersch was employed by ANCO Corporation, in which his last position was Vice President Sales and Marketing. Robert P. Replogle, age 60, is Vice President of the Company and Director of the International Sales Division and the Mefiag Division, to which offices he was elected in December 1995. He joined the Company in December 1973 and prior to his present position, held the position of Director of the International Sales Division and the Mefiag Division. Paul A. Tetley, age 42, is a Vice President of the Company and General Manager of Strobic Air Corporation, to which office he was elected in December 1999. Mr. Tetley joined the Company in 1996 in connection with the Company's acquisition of Strobic Air Corporation and prior to his present position held the position of Director of Operations. For more than five years prior thereto, Mr. Tetley was employed by the predecessor entity as a Plant Manager. Richard J. Wilmoth, age 54, is a Vice President of the Company and General Manager of the Flex-Kleen Division, to which office he was elected in April 2001. For more than five years prior thereto, Mr. Wilmoth was employed by UOP LLC, as Managing Director of the UOPAsia joint venture. There is no family relationship between any of the Directors or executive officers of the Company. Each officer serves at the pleasure of the Board of Directors. 5 Item 2. Properties: The following manufacturing and production facilities were owned or leased by the Company at January 31, 2001:
Name Structure Property/Location Status Executive Offices, 73,000 square feet, cement 17 acres in Harleysville, Owned International Division, building, with finestone facing, Pennsylvania Mefiag Division and built 1976 Strobic Air Corporation Sethco Division 30,000 square feet, cement 4 acres in Hauppauge, Owned block with brick facing, Long Island, New York built 1982 Fybroc Division 47,500 square feet, cement 8 acres in Telford, Owned building with brick facing, Pennsylvania built 1991 Keystone Filter Division 31,000 square feet, cement 2.3 acres in Hatfield, Owned block, built 1978 Pennsylvania Systems Division 15,000 square feet, cement 2 acres in West Chester, Owned block, brick and composition Pennsylvania facing, built 1984 Dean Pump Division 66,000 square feet, metal 17.1 acres in Owned building Indianapolis, Indiana Duall Division 63,000 square feet, metal 7 acres in Owosso, Owned and masonry building Michigan Stiles-Kem Division 22,000 square feet, cement 2.55 acres in Owned block building, built 1996 Waukegan, Illinois Flex-Kleen Division 13,760 square feet, brick Itasca, Illinois Leased(1) building 37,320 square feet, metal Sharpsburg, North Carolina Leased(2) building Mefiag B.V. 17,200 square feet, metal 1.1 acres in Owned and masonry building Heerenveen, Holland Flex-Kleen Canada Inc. 5,880 square feet, masonry Markham, Ontario, Canada Leased(3) building
(1) Flex-Kleen Division's lease for the operation in Itasca, Illinois expires on November 30, 2002. The term of this lease may be renewed by Flex-Kleen Division for an additional five year period. (2) Flex-Kleen Division's lease for the warehouse in Sharpsburg, North Carolina expires on October 29, 2001. The term of this lease may be renewed by Flex-Kleen Division for an additional two year period. (3) Flex-Kleen Canada Inc.'s lease for the sales and warehouse facility in Markham, Ontario, Canada expires on March 31, 2003. 6 Item 3. Legal Proceedings: There are no material pending legal proceedings to which the Company is a party as of the date of this Annual Report. Item 4. Submission of Matters to a Vote of Security Holders: No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year ended January 31, 2001. 7 PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters: The Company's Common Stock is traded on the New York Stock Exchange under the symbol "MPR". The high and low selling prices of the Common Stock for each quarterly period for the last two fiscal years, as reported on the New York Stock Exchange, are shown below. Quarter ended Year ended January 31, 2001 April July October January - ------------------------------------------------------------------------------------------------------- Price range of common stock: High $10.19 $10.63 $10.45 $11.72 Low 8.75 8.38 9.56 9.75 Cash dividend paid .08 .08 .08 .08 Year ended January 31, 2000 April July October January - ------------------------------------------------------------------------------------------------------- Price range of common stock: High $12.25 $14.00 $12.69 $11.13 Low 9.88 11.69 10.00 9.75 Cash dividend paid .32 - .08 .08
There were 724 registered stockholders at January 31, 2001, and the Company estimates that there are approximately 2,000 additional stockholders with stock held in street name. The Board of Directors declared quarterly dividends of $.08 per share payable on March 10, 2000, June 9, 2000, September 11, 2000 and December 8, 2000 to stockholders of record as of February 25, 2000, May 26, 2000, August 28, 2000 and November 24, 2000. During the first quarter of fiscal year ended 2001, the Company completed the purchase of 350,000 shares of its Common Stock, which was authorized under a stock buyback program approved by the Board of Directors on May 11, 1999. On February 21, 2000, the Board of Directors authorized an additional 350,000 share stock buyback program. The Company repurchased an aggregate of 318,476 shares under the combined stock buyback programs during the year ended January 31, 2001. On December 15, 2000, the Board of Directors authorized an additional 300,000 share stock buyback program after the balance of the shares remaining from the Company's February 21, 2000 stock buyback program are purchased. 8 Item 6. Selected Financial Data:
Years ended January 31, 2001 2000 1999 1998 1997 - ---------------------------------------------------------------------------------------------------------------------------- Selected Operating Statement Data Net sales $81,203,550 $78,449,992 $67,390,488 $62,387,870 $60,853,278 Income from operations 12,513,886 11,410,679 11,199,867 11,021,314 9,457,301 Net income 7,773,720 7,072,642 7,151,052 7,116,481 6,096,002 EBITDA (a) 14,736,541 13,826,535 13,287,878 12,851,944 11,164,848 Earnings per share, basic 1.26 1.08 1.04 1.01 .87 Earnings per share, diluted 1.26 1.08 1.03 1.00 .86 Selected Balance Sheet Data Current assets $37,412,259 $35,722,971 $38,683,453 $36,067,260 $32,088,546 Current liabilities 12,957,995 13,681,578 14,387,868 11,267,545 11,374,115 Working capital 24,454,264 22,041,393 24,295,585 24,799,715 20,714,431 Current ratio 2.9 2.6 2.7 3.2 2.8 Total assets 69,151,341 68,641,983 72,888,641 57,984,240 56,079,391 Long-term obligations 8,100,000 9,933,014 11,941,954 2,242,047 3,683,419 Total stockholders' equity 47,061,366 44,206,333 45,925,107 43,840,829 40,352,926 Total capitalization 55,161,366 54,139,347 57,867,061 46,082,876 44,036,345 Return on average total assets, % 11.3 10.0 10.9 12.5 11.8 Return on average stockholders' equity, % 17.0 15.7 15.9 16.9 16.2 Other Financial Data Net cash flows from operating activities $10,047,845 $10,204,749 $7,990,115 $7,351,850 $7,203,258 Capital expenditures 1,023,682 1,193,559 1,191,616 1,356,065 1,811,833 Stockholders' equity per share 7.73 6.92 6.76 6.27 5.73 Cash dividends paid per share (b) .32 .48 .30 .27 .22 Average common shares, basic 6,152,325 6,542,210 6,907,654 7,053,071 6,989,717 Average common shares, diluted 6,173,437 6,576,820 6,955,892 7,144,931 7,096,214 Shares of common stock outstanding 6,090,155 6,391,242 6,794,898 6,993,473 7,043,436
(a) EBITDA represents income from operations before taxes, interest expense, interest income, and depreciation and amortization expenses. (b) Fiscal year ended January 31, 2000 included an annual dividend of $.32 per share payable on April 23, 1999 and quarterly dividends of $.08 per share payable on September 10, 1999 and December 10, 1999. 9 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations: The following discussion should be read in conjunction with the Company's Consolidated Financial Statements and Notes thereto included elsewhere in this Form 10-K together with "Factors that May Affect Future Results" elsewhere in the Management's Discussion and Analysis of Financial Condition and Result of Operations. General: The Company acquired substantially all of the operating assets of Flex-Kleen Corporation and Flex-Kleen Canada Limited (collectively "Flex-Kleen") effective as of October 1, 1998, pursuant to an Asset Purchase Agreement. The acquisition was accounted for as a purchase transaction. Accordingly, the consolidated financial data for the year ended January 31, 1999 incorporates Flex-Kleen's operations for a four-month period. Results of Operations: The following table sets forth for the periods indicated the percentage of total net sales that such items represent in the Consolidated Statement of Operations.
Years ended January 31, 2001 2000 1999 - ------------------------------------------------------------------------------------------------------------------- Net sales 100.0% 100.0% 100.0% Cost of goods sold 65.6% 65.8% 64.3% - ------------------------------------------------------------------------------------------------------------------- Gross profit 34.4% 34.2% 35.7% Selling, general and administrative expense 19.0% 19.6% 19.1% - ------------------------------------------------------------------------------------------------------------------- Income from operations 15.4% 14.6% 16.6% Interest expense (.8%) (1.1%) (.6%) Other income, net .6% .6% .9% - ------------------------------------------------------------------------------------------------------------------- Income before taxes 15.2% 14.1% 16.9% Provision for taxes 5.6% 5.1% 6.3% - ------------------------------------------------------------------------------------------------------------------- Net income 9.6% 9.0% 10.6% ===================================================================================================================
FYE 2001 vs FYE 2000: Net sales for the fiscal year ended January 31, 2001 set a new record of $81.2 million compared to $78.4 million for the fiscal year ended January 31, 2000, or an increase of $2.8 million. This is the eighth consecutive year that net sales have achieved a new record. Sales in the Product Recovery/Pollution Control Equipment segment decreased slightly to $51.7 million due primarily to decreased demand for our product recovery equipment. Sales in the Fluid Handling Equipment segment were $29.6 million or 11.2% higher than the prior fiscal year, due to an increased demand for our specialty pump equipment. Foreign sales increased to $16.6 million for the fiscal year ended January 31, 2001, which is 30.4% higher than the prior year. This increase was due to higher sales in Europe and Pacific Rim markets. Foreign sales increased 26.9% in the Fluid Handling Equipment segment from the prior fiscal year, and the Product Recovery/Pollution Control Equipment segment sales were 34.7% higher than the prior fiscal year due to higher demand for our fume and odor control equipment. Net income of $7.8 million for the fiscal year ended January 31, 2001 was the highest in the Company's history, or 9.9% higher than the earnings level of the prior year. The gross margin for the fiscal year ended January 31, 2001 increased to 34.4% versus 34.2% for the prior year. This increase can be attributed to higher gross margins experienced in the Fluid Handling Equipment segment. Selling expense was $7.0 million for the fiscal year ended January 31, 2001 or a slight decrease from the prior fiscal year. Selling expense as a percentage of net sales was 8.7% compared to 9.1% for the prior fiscal year. 10 General and administrative expense was $8.4 million for the fiscal year ended January 31, 2001 compared to $8.3 million in the prior fiscal year. General and administrative expense as a percentage of net sales was 10.3% for the fiscal year ended January 31, 2001 compared to 10.5% for the prior fiscal year. Interest expense was $0.7 million for the fiscal year ended January 31, 2001 compared to $0.8 million in the prior fiscal year. During the fiscal year ended January 31, 2001, the Company reduced its long-term debt by $2.0 million. Other income was $0.5 million for each fiscal year ended January 31, 2001 and 2000. Other income consisted primarily of interest income on short-term investments in both years. The effective tax rate increased to 37.0% for the fiscal year ended January 31, 2001 from 36.1% for the prior year. FYE 2000 vs FYE 1999: Net sales for the year ended January 31, 2000 were $78.4 million, a new record, exceeding net sales for the year ended January 31, 1999 by $11.0 million, an increase of 16.4%. This was the seventh consecutive year that net sales achieved a new record. Sales in the Product Recovery/Pollution Control Equipment segment were $51.9 million or 29.3% higher than the prior fiscal year 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 $26.6 million or $0.7 million lower compared to the prior year due primarily to decreased demand for our specialty pump equipment. Foreign sales increased to $12.8 million for the fiscal year ended January 31, 2000, which was 14.3% higher than the prior year. This increase was due to higher sales in Canada and Europe. Foreign sales increased 2.0% in the Fluid Handling Equipment segment from the prior fiscal year, and the Product Recovery/Pollution Control Equipment segment sales were 33.7% higher than the prior fiscal year due to the impact of the Flex-Kleen acquisition and higher demand for our fume and odor control equipment. Net income of $7.1 million for the fiscal year ended January 31, 2000 was slightly lower than the earnings level of the prior year. The gross margin for the fiscal year ended January 31, 2000 decreased to 34.2% from 35.7% for the prior year due to lower gross margins experienced in the Product Recovery/Pollution Control Equipment segment. Selling expense increased approximately $1.2 million or 21.2% over the prior fiscal year. The increase in selling expense is attributed to the inclusion of Flex-Kleen operations for the year ended January 31, 2000, which in the previous year only included four months for the comparative period. Selling expense as a percentage of net sales was 9.1% for the fiscal year ended January 31, 2000, which was slightly higher than the prior fiscal year. General and administrative expense was $8.3 million for the fiscal year ended January 31, 2000 compared to $7.0 million in the prior fiscal year. The $1.3 million increase was due to amortization and other administrative expenses connected with the inclusion of Flex-Kleen, which in the previous year only included four months for the comparative period. General and administrative expense as a percentage of net sales was 10.5% for the fiscal year ended January 31, 2000 compared to 10.4% for the prior fiscal year. Interest expense was $0.8 million for the fiscal year ended January 31, 2000 compared to $0.4 million in the prior fiscal year. The increase can be attributed to the $12.0 million borrowing having a ten-year term with a fixed interest rate swap of 5.98% made in connection with the acquisition of certain assets of Flex-Kleen. Other income was $0.5 million for the fiscal year ended January 31, 2000 compared to $0.6 million in the prior fiscal year. Other income consisted primarily of interest income on short-term investments in both years. The effective tax rate for the fiscal year ended January 31, 2000 was 36.1% compared to 37.4% for the prior year. Liquidity: Cash and cash equivalents were $8.5 million on January 31, 2001, an increase of $2.2 million over the previous year. This increase is the net result of positive cash flows provided by operating activities of $10.0 million, offset by the payment of cash dividends amounting to $1.8 million (net of $0.2 million of dividends returned to the Company in the form of stock purchases under the Company's Dividend Reinvestment Plan), payments of scheduled debt totalling $2.0 million, purchase of treasury stock amounting to $3.0 million and investment in property and equipment amounting to $1.0 million. 11 Accounts receivable were $14.2 million at January 31, 2001, an increase of $0.5 million compared to the prior year. The size of orders, the timing of shipments to meet customer requirements and retainage on contracts will influence accounts receivable balances at any point in time. Inventories totalled $13.1 million at January 31, 2001, a decrease of $0.7 million compared to the prior year. Inventory balances will fluctuate depending on the size and timing of orders and market demand, especially when major systems and contracts are involved. Current liabilities decreased from $13.7 million at January 31, 2000 to $13.0 million at January 31, 2001, or $0.7 million. 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. As of January 31, 2001 and January 31, 2000, working capital was $24.5 million and $22.0 million, respectively, and the current ratio was 2.9 and 2.6, respectively. Capital Resources and Requirements: Cash flows provided by operating activities during the fiscal year ended January 31, 2001 amounted to $10.0 million compared to $10.2 million during the prior fiscal year. This slight decrease from the record high cash flows provided by operating activities for last year was due to a $0.5 million increase in accounts receivable during the fiscal year ended January 31, 2001 compared to a $0.7 million decrease in accounts receivable in the fiscal year ended January 31, 2000. Per share, our cash flows from operating activities increased to a record high $1.63 per share compared to $1.55 per share for the prior year. Cash flows used in investing activities during the fiscal year ended January 31, 2001 amounted to $1.0 million compared to $1.2 million during the fiscal year ended January 31, 2000. The Company's investing activities for the fiscal year ended January 31, 2001, principally represent the acquisition of property, plant and equipment in the two operating segments. The Company continues to invest in machinery and equipment, tooling, patterns and molds to improve efficiency and maintain our position as leaders in the markets that we serve. Financing activities during the fiscal year ended January 31, 2001 used $6.8 million of available resources compared to $10.1 million during the prior fiscal year. The $3.3 million decrease in cash flows used in financing activities is primarily due to a $2.3 million reduction in stock repurchases and a $.9 million decrease in dividend payments to stockholders. As a result of changing from an annual dividend to a quarterly dividend effective September 1999, stockholders received a total of $.32 and $.48 per share in the fiscal years ended January 31, 2001 and 2000, respectively. The Company paid $2.0 million of scheduled debt during the current fiscal year. The percentage of long-term debt to equity at January 31, 2001 decreased to 17.2% compared to 22.5% at January 31, 2000. During the fiscal year ended 2001, the Company continued to repurchase shares outstanding on the open market at prevailing prices under the 350,000 share stock repurchase program authorized on May 11, 1999 which was completed on April 12, 2000, following which the Company began to make additional purchases under an additional stock repurchase program authorized on February 21, 2000. For the fiscal year ended January 31, 2001, the Company repurchased 318,476 shares, 253,501 shares under the plan effective February 21, 2000 and 64,975 shares under the plan effective May 11, 1999. The Company announced an additional 300,000 share stock repurchase program on December 15, 2000, which will begin after the Company's February 21, 2000 stock repurchase program is complete. The Board of Directors declared dividends of $.08 per share payable on March 10, 2000, June 9, 2000, September 11, 2000 and December 8, 2000 to stockholders of record at the close of business on February 25, 2000, May 26, 2000, August 28, 2000 and November 24, 2000, respectively. On December 15, 2000, the Board of Directors declared a quarterly dividend of $.085 per share, or an increase of 6%, which was paid on March 9, 2001 to stockholders of record at the close of business on February 23, 2001. As part of our commitment to the future, the Company expended $0.8 million on research and development for each of the fiscal years ended January 31, 2001 and 2000. The Company will continue to invest in new product development to maintain and enhance our market position as leaders in the markets in which we participate. Capital expenditures will be made to support operations and expand our capacity to meet market demands. The Company intends to finance capital expenditures in the coming year through cash flows from operations and will secure third party financing, when deemed appropriate. 12 Recent Accounting Pronouncements: In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", which will be effective for the fiscal years beginning after June 15, 2000. This standard requires that all derivative instruments be recorded on the balance sheet at their fair value. Changes in fair value of derivatives will be recorded each period in current earnings or comprehensive income. The adoption of this pronouncement will have no significant impact on Met-Pro's consolidated results of operations, financial position, or cash flows. Factors that May Affect Future Results: Met-Pro's prospects are subject to certain uncertainties and risk. This Annual Report on Form 10-K also contains certain forward-looking statements within the meaning of the Federal securities laws. Met-Pro's results may differ material from its current results and actual could differ materially from those suggested in the forward-looking statements as a result of certain risk factors, including but not limited to those set forth below, other important factors disclosed previously and from time to time in Met-Pro's Other filings with the Securities and Exchange Commission. The following important factors, along with those discussed elsewhere in this Annual Report, 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 failure in execution of aquisition strategy; o losses related to international sales; o changes in our accounting rules promulgated by regulatory agencies, including the SEC, 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. Item 7A. Quantitative and Qualitative Disclosure About Market Risks: Not Applicable 13 Item 8. Financial Statements and Supplementary Data: Index to Consolidated Financial Statements and Supplementary Data:
Consolidated Financial Statements: Page ---- Independent Auditor's Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Consolidated Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Consolidated Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Consolidated Statement of Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Consolidated Business Segment Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Supplementary Data: Quarterly Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
INDEPENDENT AUDITOR'S REPORT To the Board of Directors and Stockholders Met-Pro Corporation Harleysville, Pennsylvania We have audited the accompanying consolidated balance sheet of Met-Pro Corporation and its wholly-owned subsidiaries as of January 31, 2001 and 2000, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended January 31, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Met-Pro Corporation and its wholly-owned subsidiaries as of January 31, 2001 and 2000 and the results of their operations and their cash flows for each of the three years in the period ended January 31, 2001 in conformity with generally accepted accounting principles. /s/ Margolis & Company P.C. --------------------------- Bala Cynwyd, Pennsylvania February 22, 2001 14 This Page is intentionally left blank 15
MET-PRO CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS Years ended January 31, 2001 2000 1999 - ------------------------------------------------------------------------------------------------------------------------------------ Net sales $81,203,550 $78,449,992 $67,390,488 Cost of goods sold 53,242,396 51,645,593 43,316,656 - ------------------------------------------------------------------------------------------------------------------------------------ Gross profit 27,961,154 26,804,399 24,073,832 - ------------------------------------------------------------------------------------------------------------------------------------ Operating expenses Selling 7,043,540 7,128,258 5,880,080 General and administrative 8,403,728 8,265,462 6,993,885 - ------------------------------------------------------------------------------------------------------------------------------------ 15,447,268 15,393,720 12,873,965 - ------------------------------------------------------------------------------------------------------------------------------------ Income from operations 12,513,886 11,410,679 11,199,867 Interest expense (694,112) (815,805) (398,051) Other income, net 524,729 471,008 618,707 - ------------------------------------------------------------------------------------------------------------------------------------ Income before taxes 12,344,503 11,065,882 11,420,523 Provision for taxes 4,570,783 3,993,240 4,269,471 - ------------------------------------------------------------------------------------------------------------------------------------ Net income $7,773,720 $7,072,642 $7,151,052 ==================================================================================================================================== Earnings per share Basic $1.26 $1.08 $1.04 Diluted $1.26 $1.08 $1.03 ==================================================================================================================================== Average number of common and common equivalent shares outstanding Basic 6,152,325 6,542,210 6,907,654 Diluted 6,173,437 6,576,820 6,955,892 ====================================================================================================================================
The notes to consolidated financial statements are an integral part of the above statement. 16 MET-PRO CORPORATION CONSOLIDATED BALANCE SHEET
January 31, ASSETS 2001 2000 - --------------------------------------------------------------------------------------------------------------- Current assets Cash and cash equivalents $8,510,045 $6,331,556 Accounts receivable, net of allowance for doubtful accounts of approximately $218,000 and $225,000, respectively 14,208,689 13,733,256 Inventories 13,085,969 13,744,142 Prepaid expenses, deposits and other current assets 958,722 1,135,443 Deferred income taxes 648,834 778,574 - --------------------------------------------------------------------------------------------------------------- Total current assets 37,412,259 35,722,971 Property, plant and equipment, net 13,009,247 13,473,299 Costs in excess of net assets of businesses acquired, net 18,276,472 18,772,176 Other assets 453,363 673,537 - --------------------------------------------------------------------------------------------------------------- Total assets $69,151,341 $68,641,983 =============================================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY - --------------------------------------------------------------------------------------------------------------- Current liabilities Current portion of long-term debt $1,833,014 $2,008,940 Accounts payable 4,284,687 4,989,810 Accrued salaries, wages and expenses 5,704,372 5,108,552 Payroll and other taxes payable 8,808 182,545 Dividend payable 517,669 511,299 Customers' advances 609,445 880,432 - --------------------------------------------------------------------------------------------------------------- Total current liabilities 12,957,995 13,681,578 Long-term debt 8,100,000 9,933,014 Other non-current liabilities 499,395 415,731 Deferred income taxes 532,585 405,327 - --------------------------------------------------------------------------------------------------------------- Total liabilities 22,089,975 24,435,650 - --------------------------------------------------------------------------------------------------------------- Commitments Stockholders' equity Common stock, $.10 par value; 18,000,000 shares 720,658 718,919 Authorized, 7,206,583 and 7,189,194 shares issued, of which 1,116,428 and 797,952 shares were reacquired and held in treasury, at the respective dates Additional paid-in capital 8,139,799 7,973,873 Retained earnings 51,880,800 46,087,476 Accumulated other comprehensive loss (491,163) (403,993) Treasury stock, at cost (13,188,728) (10,169,942) - --------------------------------------------------------------------------------------------------------------- Total stockholders' equity 47,061,366 44,206,333 - --------------------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $69,151,341 $68,641,983 ===============================================================================================================
The notes to consolidated financial statements are an integral part of the above statement. 17 MET-PRO CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS
Years ended January 31, 2001 2000 1999 - ------------------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS Cash flows from operating activities Net income $7,773,720 $7,072,642 $7,151,052 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,222,655 2,415,856 2,088,011 Deferred income taxes 256,998 266,073 (9,185) (Gain) loss on sale of property and equipment, net 12,656 (1,096) (6,590) Allowance for doubtful accounts (6,576) (36,524) (18,827) (Increase) decrease in operating assets, net of acquisitions Accounts receivable (515,006) 681,168 (492,274) Notes receivable, ESOT - - 200,000 Inventories 631,810 1,131,608 (1,007,069) Prepaid expenses and other current assets 92,357 (320,752) 9,494 Other assets (52,309) (24,187) 10,346 Increase (decrease) in operating liabilities, net of acquisitions Accounts payable, accrued expenses and taxes (181,137) (918,189) (244,547) Customers' advances (270,987) (148,743) 229,903 Other non-current liabilities 83,664 86,893 79,801 - ------------------------------------------------------------------------------------------------------------ Net cash provided by operating activities 10,047,845 10,204,749 7,990,115 - ------------------------------------------------------------------------------------------------------------ Cash flows from investing activities Proceeds from sale of property and equipment 2,000 14,690 6,600 Acquisitions of property and equipment (1,023,682) (1,193,559) (1,191,616) Payment for purchase of acquisitions, net of cash acquired - (7,281) (15,811,625) - ----------------------------------------------------------------------------------------------------------- Net cash (used in) investing activities (1,021,682) (1,186,150) (16,996,641) - ----------------------------------------------------------------------------------------------------------- Cash flows from financing activities Proceeds from new borrowings - - 12,000,000 Reduction of debt (2,008,940) (2,125,093) (1,616,964) Exercise of stock options - 15,000 362,229 Payment of dividends (1,806,361) (2,694,860) (2,100,569) Purchase of treasury shares (3,018,786) (5,281,367) (3,462,346) - ----------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities (6,834,087) (10,086,320) 5,182,350 - ----------------------------------------------------------------------------------------------------------- Effect of exchange rate changes on cash (13,587) (47,092) 17,165 - ----------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 2,178,489 (1,114,813) (3,807,011) Cash and cash equivalents at beginning of year 6,331,556 7,446,369 11,253,380 - ----------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of year $8,510,045 $6,331,556 $7,446,369 ===========================================================================================================
The notes to consolidated financial statements are an integral part of the above statement. 18
MET-PRO CORPORATION CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY 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 - - 7,151,052 - - Cumulative translation adjustment - - - 133,912 - Total comprehensive income 7,284,964 Dividends paid, $.30 per share - - (2,100,569) - - (2,100,569) Stock option transactions - (359,609) - - 721,838 362,229 Purchase of 246,300 shares of treasury stock - - - - (3,462,346) (3,462,346) - ------------------------------------------------------------------------------------------------------------------------------------ Balances, January 31, 1999 713,862 7,508,748 42,718,355 (85,103) (4,930,755) 45,925,107 Comprehensive income: Net income - - 7,072,642 - - Cumulative translation adjustment - - - (318,890) - Total comprehensive income 6,753,752 Dividends paid, $.48 per share - - (3,192,222) - - (3,192,222) Dividend declared, $.08 per share - - (511,299) - - (511,299) Proceeds from issuance of common stock under dividend reinvestment plan (50,569 shares) 5,057 492,305 - - - 497,362 Stock option transactions - (27,180) - - 42,180 15,000 Purchase of 457,225 shares of treasury stock - - - - (5,281,367) (5,281,367) - ------------------------------------------------------------------------------------------------------------------------------------ Balances, January 31, 2000 718,919 7,973,873 46,087,476 (403,993) (10,169,942) 44,206,333 Comprehensive income: Net income - - 7,773,720 - - Cumulative translation adjustment - - - (87,170) - Total comprehensive income 7,686,550 Dividends paid, $.32 per share - - (1,462,727) - - (1,462,727) Dividend declared, $.085 per share - - (517,669) - - (517,669) Proceeds from issuance of common stock under dividend reinvestment plan (17,389 shares) 1,739 165,926 - - - 167,665 Purchase of 318,476 shares of treasury stock - - - - (3,018,786) (3,018,786) - ------------------------------------------------------------------------------------------------------------------------------------ Balances, January 31, 2001 $720,658 $8,139,799 $51,880,800 ($491,163) ($13,188,728) $47,061,366 ====================================================================================================================================
The notes to consolidated financial statements are an integral part of the above statement. 19 MET-PRO CORPORATION CONSOLIDATED BUSINESS SEGMENT DATA
Years ended January 31, 2001 2000 1999 - ----------------------------------------------------------------------------------------------- Net sales to unaffiliated customers Product recovery/pollution control equipment $51,650,730 $51,883,604 $40,128,412 Fluid handling equipment 29,552,820 26,566,388 27,262,076 - ----------------------------------------------------------------------------------------------- $81,203,550 $78,449,992 $67,390,488 - ----------------------------------------------------------------------------------------------- Includes foreign sales of: Product recovery/pollution control equipment $7,787,437 $5,780,112 $4,323,506 Fluid handling equipment 8,846,889 6,971,799 6,837,293 - ----------------------------------------------------------------------------------------------- $16,634,326 $12,751,911 $11,160,799 =============================================================================================== Income from operations Product recovery/pollution control equipment $7,066,793 $7,431,748 $6,818,554 Fluid handling equipment 5,447,093 3,978,931 4,381,313 - ----------------------------------------------------------------------------------------------- $12,513,886 $11,410,679 $11,199,867 =============================================================================================== Depreciation and amortization expense Product recovery/pollution control equipment $1,450,025 $1,633,097 $1,250,163 Fluid handling equipment 772,630 782,759 837,848 - ----------------------------------------------------------------------------------------------- $2,222,655 $2,415,856 $2,088,011 =============================================================================================== Capital expenditures Product recovery/pollution control equipment $442,662 $571,629 $893,003 Fluid handling equipment 448,685 531,435 269,585 - ----------------------------------------------------------------------------------------------- 891,347 1,103,064 1,162,588 Corporate 132,335 90,495 29,028 - ----------------------------------------------------------------------------------------------- $1,023,682 $1,193,559 $1,191,616 =============================================================================================== Identifiable assets at January 31 Product recovery/pollution control equipment $40,274,449 $42,803,505 $44,137,192 Fluid handling equipment 18,785,577 18,662,280 20,321,860 - ----------------------------------------------------------------------------------------------- 59,060,026 61,465,785 64,459,052 Corporate 10,091,315 7,176,198 8,429,589 - ----------------------------------------------------------------------------------------------- $69,151,341 $68,641,983 $72,888,641 ===============================================================================================
The Company follows the practice of allocating general corporate expenses, including depreciation and amortization expense, among the segments. 20 MET-PRO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 2001, 2000 AND 1999 NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of operations: The Company manufactures and sells product recovery/pollution control equipment for purification of air and liquids, and fluid handling equipment for corrosive, abrasive and high temperature liquids. Basis of presentation: The consolidated financial statements include the accounts of Met-Pro Corporation ("Met-Pro" or the "Company") and its wholly-owned subsidiaries, Mefiag B.V., Flex-Kleen Canada Inc. and Strobic Air Corporation ("Strobic Air"). Significant intercompany accounts and transactions have been eliminated. Accounts denominated in foreign currencies have been remeasured into the functional currency in accordance with Statement of Financial Accounting Standards ("SFAS") No. 52, "Foreign Currency Translation," using the U. S. dollar as the functional currency. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Inventories: Inventories generally are stated at the lower of cost (principally first-in, first-out) or market except for the inventory at the Dean Pump Division which is determined on the last-in, first-out basis (see Note 3). Property, plant and equipment: Property, plant and equipment are stated at cost. Depreciation is computed principally by the straight-line method over estimated useful lives. Expenditures for maintenance and repairs are charged to expense as incurred. Renewals and betterments are capitalized (see Note 4). Costs in excess of net assets of businesses acquired: Costs in excess of net assets of businesses acquired prior to November 1, 1970, totalling $582,513, are not being amortized because management believes that there has been no impairment in value. Costs in excess of net assets of businesses acquired subsequent to October 31, 1970, totalling $17,693,959, are being amortized over 40 years. The Company monitors the recoverability of goodwill using a fair value approach. Revenue recognition: Revenues are generally recognized when products are shipped. Advertising: Advertising costs are charged to operations in the year incurred and were $1,344,231, $1,289,803 and $1,151,535 for the years ended January 31, 2001, 2000 and 1999, respectively. Research and development: Research and development costs are charged to operations in the year incurred and were $788,777, $798,507 and $752,648 for the years ended January 31, 2001, 2000 and 1999, respectively. 21 MET-PRO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 2001, 2000 AND 1999 (Continued) Earnings per share: Basic earnings per share are computed based on the weighted average number of common shares actually outstanding during each year. Diluted earnings per share are computed based on the weighted average number of shares actually outstanding plus all potential dilutive common shares outstanding (stock options) during each year. Dividends: On December 15, 2000, the Board of Directors declared an $.085 per share quarterly cash dividend payable on March 9, 2001 to stockholders of record on February 23, 2001, amounting to $517,669. Concentrations of credit risk: The Company believes concentrations of credit risk are limited due to the number of customers, and dispersion among the business segments and geographic areas. The Company had no significant concentrations of credit risk as of January 31, 2001 and 2000. Supplemental cash flow information: 2001 2000 1999 ----------------------------------------------------------------------- Cash paid during the year for: Interest $819,054 $826,635 $415,893 Income taxes $3,689,100 $3,885,098 $4,691,163 ======================================================================= Recent accounting pronouncements: In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", which will be effective for the fiscal years beginning after June 15, 2000. This standard requires that all derivative instruments be recorded on the balance sheet at their fair value. Changes in fair value of derivatives will be recorded each period in current earnings or comprehensive income. The adoption of this pronouncement will have no significant impact on Met-Pro's consolidated results of operations, financial position, or cash flows for the fiscal year ended January 31, 2002. 22 MET-PRO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 2001, 2000 AND 1999 (Continued) NOTE 2: FAIR VALUE OF FINANCIAL INSTRUMENTS Cash and cash equivalents: Short-term investments at January 31, 2001 and 2000 were valued at cost (approximating market) and amounted to $6,480,666 and $4,186,461, respectively. Short-term investments consist principally of commercial paper with an original maturity of three months or less, and money market funds, both of which are considered to be cash equivalents. The Company evaluates the creditworthiness of the financial institutions and financial instruments in which it invests. Debt: The fair value and carrying amount of long-term debt was as follows: January 31, 2001 2000 ------------------------------------------------------------------------ Fair value $9,764,997 $11,261,578 Carrying amount 9,933,014 11,941,954 Valuations for long-term debt are determined based on borrowing rates currently available to the Company for loans with similar terms and maturities. The Company uses an interest rate swap (see Note 5) to minimize its exposure to fluctuations in interest rates. The interest rate differential to be paid or received under this agreement is recognized over the term of the loan and is included in interest expense. The Company's financial instruments are not held for trading purposes. NOTE 3: INVENTORIES Inventories consisted of the following: January 31, 2001 2000 ------------------------------------------------------------------------ Raw materials $7,770,874 $6,755,944 Work in process 1,573,802 2,016,612 Finished goods 3,741,293 4,971,586 ------------------------------------------------------------------------ $13,085,969 $13,744,142 ======================================================================== At January 31, 2001 and 2000, inventories valued at the last-in, first-out method ("LIFO") were $2,284,381 and $2,389,238, respectively. The LIFO value of inventories was lower than replacement cost by $899,223 and $875,558 at January 31, 2001 and 2000, respectively. The book basis of LIFO inventories exceeded the tax basis by approximately $1,026,000 at both January 31, 2001 and 2000 as a result of applying the provisions of Accounting Principles Board Opinion ("APB") No. 16, "Business Combinations", to an acquisition completed in a prior year. 23 MET-PRO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 2001, 2000 AND 1999 (Continued) NOTE 4: PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of the following: January 31, 2001 2000 ------------------------------------------------------------- Land $1,794,088 $1,793,795 Buildings and improvements 11,378,228 11,353,232 Machinery and equipment 11,605,401 11,207,542 Furniture and fixtures 3,158,346 3,062,990 Automotive equipment 985,818 1,023,219 Construction in progress 154,266 15,448 ------------------------------------------------------------- 29,076,147 28,456,226 Less accumulated depreciation 16,066,900 14,982,927 ------------------------------------------------------------- $13,009,247 $13,473,299 ============================================================= Depreciation of property, plant and equipment charged to operations amounted to $1,454,467, $1,556,191 and $1,443,458 for the years ended in 2001, 2000 and 1999, respectively. 24 MET-PRO CORPORATION NOTES TO Consolidated FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 2001, 2000 AND 1999 (Continued) NOTE 5: DEBT Short-term debt: The Company has available both domestic and foreign unsecured lines of credit totalling $5,000,000 which can be used for working capital. The lines of credit were not used during either year. Long-term debt: Long-term debt consisted of the following:
January 31, 2001 2000 ----------------------------------------------------------------------------- Note payable, bank, payable in quarterly installments of $300,000, plus interest at a fixed rate swap of 5.98%, maturing October, 2008 $9,300,000 $10,500,000 Notes payable, bank, payable in quarterly installments of $87,500, plus interest at a fixed rate of 7.51%, maturing September, 2001 262,500 612,500 Notes payable, bank, payable in quarterly installments of $87,500, plus interest at a variable rate ranging from 6.87% to 7.33%, maturing September, 2001 262,500 612,500 Mortgage note payable, collateralized by property, payable $10,267 monthly (including principal and interest), at a fixed interest rate of 8.5%, maturing January, 2002 108,014 216,954 ----------------------------------------------------------------------------- 9,933,014 11,941,954 Less current portion 1,833,014 2,008,940 ----------------------------------------------------------------------------- $8,100,000 $9,933,014 =============================================================================
These notes are subject to certain covenants, including maintenance of prescribed amounts of leverage and fixed charge coverage ratios. 25 MET-PRO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 2001, 2000 AND 1999 (Continued) Maturities of long-term debt are as follows: Year Ending January 31, --------------------------------------------------------------- 2002 $1,833,014 2003 1,200,000 2004 1,200,000 2005 1,200,000 2006 1,200,000 Thereafter 3,300,000 --------------------------------------------------------------- $9,933,014 =============================================================== Interest expense was $694,112, $815,805 and $398,051 for the years ended in 2001, 2000 and 1999, respectively. NOTE 6: STOCKHOLDERS' EQUITY On February 21, 2000 the Company announced a 350,000 share stock repurchase program, which began after the Company's May 11, 1999 stock repurchase program was completed. In addition, the Company announced an additional 300,000 share stock repurchase program on December 15, 2000, which will begin after the Company's February 21, 2000 stock repurchase program is completed. During the fiscal year ended January 31, 2001, the Company repurchased 318,476 shares of its Common Stock at a cost of $3.0 million. At January 31, 2001, the Company had the authority to repurchase 96,499 shares under the February 21, 2000 stock repurchase program and 300,000 shares under the December 15, 2000 stock repurchase program. The Company has a Shareholder's Rights Plan, under which the Company's Board of Directors declared a dividend of one Right for each share of Company common stock owned. The Plan provides, under certain conditions involving acquisition of the Company's common stock, that holders of Rights, except for the acquiring entity, would be entitled to purchase shares of common stock of the Company, or acquiring company, having a value of twice the Rights' exercise price. The Rights under the Plan expire in 2010. NOTE 7: INCOME TAXES The provision for income taxes was comprised of the following: 2001 2000 1999 ----------------------------------------------------------------------- Current Federal $3,408,005 $2,859,285 $3,216,200 State 662,757 556,607 878,903 Foreign 243,023 311,275 183,553 ----------------------------------------------------------------------- 4,313,785 3,727,167 4,278,656 Deferred 256,998 266,073 (9,185) ----------------------------------------------------------------------- $4,570,783 $3,993,240 $4,269,471 ======================================================================= 26 MET-PRO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 2001, 2000 AND 1999 (Continued) Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the net deferred tax assets were as follows: 2001 2000 ------------------------------------------------------------------------ Deferred tax assets Inventory cost capitalization $169,848 $215,686 Pension cost 757,001 911,611 Non-compete agreements 525,952 498,980 Other 127,333 51,479 ------------------------------------------------------------------------ Total deferred tax assets 1,580,134 1,677,756 ------------------------------------------------------------------------ Deferred tax liabilities Accelerated depreciation 493,256 512,407 Inventory - Dean Pump Division 400,257 400,202 Excess of book over tax basis of property acquired in acquisitions 37,582 66,678 Goodwill 532,790 325,222 ------------------------------------------------------------------------ Total deferred tax liabilities 1,463,885 1,304,509 ------------------------------------------------------------------------ Net deferred tax assets $116,249 $373,247 ======================================================================== A reconciliation of the federal statutory rate and the Company's effective tax rate is presented as follows:
2001 2000 1999 ---------------------------------------------------------------------------------------------------------------------- Computed expected tax expense (federal) $4,197,131 34.0% $3,762,400 34.0% $3,882,978 34.0% State income taxes, net of federal income tax benefit 403,528 3.2 367,361 3.3 580,076 5.1 Foreign tax differential (7,293) - (30,703) (.3) (5,277) - Foreign tax credit (11,831) (.1) (5,606) - (10,924) (.1) Other (10,752) (.1) (100,212) (.9) (177,382) (1.6) ---------------------------------------------------------------------------------------------------------------------- Effective income taxes $4,570,783 37.0% $3,993,240 36.1% $4,269,471 37.4% ======================================================================================================================
NOTE 8: LEASES AND OTHER COMMITMENTS The Company has various real estate operating leases for warehouse space and office space for sales, general and administrative purposes. Future minimum lease payments under these non-cancelable operating leases at January 31, 2001 were as follows: 2002 $339,373 2003 265,204 2004 10,938 Rental expense for the above operating leases during the years ended in 2001, 2000 and 1999, was $411,929, $408,487 and $153,711, respectively. 27 MET-PRO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 2001, 2000 AND 1999 (Continued) NOTE 9: EMPLOYEE BENEFIT PLANS Pension Plans: The Company has several defined benefit pension plans covering eligible employees in the United States. The Company contributes amounts to the plans equal to the amounts that are tax deductible. Net periodic pension cost (income) included the following components:
2001 2000 1999 ---------------------------------------------------------------------------------- Service cost - benefits earned during the period $583,387 $597,400 $527,196 Interest cost on projected benefit obligation 788,141 750,170 708,083 Return on assets (765,117) (2,009,740) (1,707,281) Amortization (515,449) (210,591) (195,466) Deferred gain/(loss) on investments (393,568) 840,679 769,701 ---------------------------------------------------------------------------------- ($302,606) ($32,082) $102,233 ==================================================================================
The following table sets forth the plans' change in benefit obligations, change in plan assets and amounts recognized in the Company's balance sheet at January 31, 2001 and 2000:
2001 2000 ------------------------------------------------------------------------------------ Change in benefit obligation: Benefit obligation at beginning of year $9,625,064 $10,334,600 Service cost 583,387 597,400 Interest cost 788,141 750,170 Actuarial (gain) (145,217) (1,457,537) Benefits paid (594,139) (599,569) Other 274,852 - ------------------------------------------------------------------------------------ Benefit obligation at end of year $10,532,088 $9,625,064 ------------------------------------------------------------------------------------ Change in plan assets: Fair value of plan assets at beginning of year $14,702,989 $13,171,597 Actual return on plan assets 765,117 2,009,740 Employer contribution 129,360 121,221 Benefits paid (594,139) (599,569) ------------------------------------------------------------------------------------ Fair value of plan assets at end of year $15,003,327 $14,702,989 ------------------------------------------------------------------------------------ Funded status $4,471,239 $5,077,925 Unrecognized actuarial (gain) (6,894,792) (7,465,147) Unrecognized transition (asset) (133,950) (144,465) Unrecognized prior service costs 410,966 180,855 Unrecognized net loss 190,508 - Contribution after measurement date, prior year 15,000 - ------------------------------------------------------------------------------------ Net amount recognized ($1,941,029) ($2,350,832) ------------------------------------------------------------------------------------ Amounts recognized in the balance sheet consist of: Accrued benefit liability ($1,941,029) ($2,350,832) ====================================================================================
28 MET-PRO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 2001, 2000 AND 1999 (Continued) Assumptions used in the accounting for pension cost were: 2001 2000 1999 ----------------------------------------------------------------------- Discount rate 7.75% 7.00% 7.00% Rate of increase in compensation levels (where applicable) 4.50% 4.50% 4.50% Expected long-term rate of return on assets 8.00% 9.00% 8.00% Directors' Benefit Plan: The Company also provides a non-qualified pension plan for Directors which is unfunded. The plan is designed to provide pension benefits based on the category of the Director and length of service. The aggregate benefit obligation payable in the future under the terms of the plan was $659,997 and $598,064 at January 31, 2001 and 2000, respectively. The amounts applicable are included in the tables above. This plan was discontinued in December 1999 as to non-vested Directors. Defined Contribution 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 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, in the form of Met-Pro common stock, up to 50% of the employee's contribution up to 4% of compensation. Defined Contribution 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 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, in the form of Met-Pro common stock, up to 50% of the employee's contribution up to 4% of compensation. Employees' Stock Ownership Trust: The Company sponsors an employee stock ownership plan under which it makes discretionary contributions to the trust either in cash or in stock of the Company for salaried employees in the United States eligible to participate in the plan. The Company provided for cash contributions to the Employees' Stock Ownership Trust of $0, $0, and $225,000 in the years ended in 2001, 2000 and 1999, respectively. All shares are considered to be allocated to participants or to be released for allocation to participants, and are included in the earnings per share computations. Stock Option Plans: The Company accounts for stock options in accordance with APB No. 25, "Accounting for Stock Issued to Employees", and related Interpretations. The pro forma disclosures required by SFAS No. 123, "Accounting for Stock-Based Compensation", are not presented since the impact on the Company's financial statements for the periods presented is de minimis. In 1991, the Board of Directors of the Company approved a stock option plan covering 100,000 shares (increased to 225,000 shares after giving effect to stock splits and stock dividends), that was approved by the Company's stockholders at the 1992 meeting of stockholders (the "1992 Plan"). In 1997, the Board of Directors of the Company approved a stock option plan covering 350,000 shares that was approved by the Company's stockholders at the 1997 meeting of stockholders (the "1997 Plan"). Both of these plans contain anti-dilution provisions that apply to stock splits and stock dividends declared by the Company. 29 MET-PRO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 2001, 2000 AND 1999 (Continued)
The status of the plans was as follows: 1992 Plan 2001 2000 1999 ----------------------------------------------------------------------------------------- Options outstanding at February 1 121,025 135,525 183,250 Grants - - - Exercises - 3,000 47,725 Cancellations - 11,500 - Options outstanding at January 31 121,025 121,025 135,525 Options price range at January 31 $5.00 $5.00 $5.00 to to to $13.13 $13.13 $13.13 Options exercisable at January 31 121,025 121,025 131,025 ----------------------------------------------------------------------------------------- Options available for grant at January 31 0 0 0 ========================================================================================= 1997 Plan 2001 2000 1999 ----------------------------------------------------------------------------------------- Options outstanding at February 1 134,950 33,500 20,000 Grants 1,325 118,450 23,500 Exercises - - - Cancellations 4,200 17,000 10,000 Options outstanding at January 31 132,075 134,950 33,500 Options price range at January 31 $9.75 $9.98 $12.00 to to to $15.50 $15.50 $15.50 Options exercisable at January 31 95,324 55,151 22,500 ----------------------------------------------------------------------------------------- Options available for grant at January 31 186,725 188,050 306,500 ========================================================================================= The weighted average exercise prices of the Company's stock option plans were as follows: 2001 2000 1999 ----------------------------------------------------------------------------------------- Options outstanding at February 1 $9.76 $9.68 $8.84 Grants $9.75 $10.12 $13.69 Exercises - $5.00 $7.59 Cancellations $9.88 $11.31 $12.00 Options outstanding at January 31 $9.75 $9.76 $9.68
30 MET-PRO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 2001, 2000 AND 1999 (Continued) NOTE 10: OTHER INCOME, NET Other income, net, was comprised of the following: 2001 2000 1999 ------------------------------------------------------------------ Gain/(loss) on sale of property and equipment ($12,656) $1,096 $6,590 Other, primarily interest income 537,385 469,912 612,117 ------------------------------------------------------------------ $524,729 $471,008 $618,707 ================================================================== NOTE 11: 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 on page 20. NOTE 12: GEOGRAPHIC INFORMATION Transfers between geographic areas are accounted for at cost and consistent with rules and regulations of governing tax authorities. Such transfers are eliminated in the consolidated financial statements. Income from operations by geographic segment includes an allocation of general corporate expenses. Identifiable assets are those that can be directly associated with the geographic area. Geographic information for the three years ended January 31 is presented in the following table:
2001 2000 1999 --------------------------------------------------------------------------------------------------- Net sales: United States $64,569,224 $65,698,081 $56,229,689 Foreign 16,634,326 12,751,911 11,160,799 --------------------------------------------------------------------------------------------------- $81,203,550 $78,449,992 $67,390,488 =================================================================================================== Income from operations: United States $10,822,911 $10,144,373 $10,017,987 Foreign 1,690,975 1,266,306 1,181,880 --------------------------------------------------------------------------------------------------- $12,513,886 $11,410,679 $11,199,867 =================================================================================================== Total assets: United States $64,620,734 $63,774,777 $68,284,881 Foreign 4,530,607 4,867,206 4,603,760 --------------------------------------------------------------------------------------------------- $69,151,341 $68,641,983 $72,888,641 ===================================================================================================
31 QUARTERLY FINANCIAL DATA (Unaudited)
Earnings Earnings Per Share, Per Share, 2000 Net Sales Gross Profit Net Income Basic Diluted - ----------------------------------------------------------------------------------------------------------------------- First Quarter $20,828,028 $7,101,713 $1,871,842 $.28 $.28 Second Quarter 20,538,207 6,967,618 1,877,136 .28 .28 Third Quarter 17,846,269 6,318,206 1,701,663 .26 .26 Fourth Quarter 19,237,488 6,416,862 1,622,001 .25 .25 Earnings Earnings Per Share, Per Share, 2001 Net Sales Gross Profit Net Income Basic Diluted - ----------------------------------------------------------------------------------------------------------------------- First Quarter $20,250,931 $6,777,556 $1,753,284 $.28 $.28 Second Quarter 20,258,228 7,142,582 1,930,519 .31 .31 Third Quarter 21,258,013 7,192,598 2,016,979 .33 .33 Fourth Quarter 19,436,378 6,848,418 2,072,938 .34 .34
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure: During the fiscal year ended January 31, 2001, there has been no change in accountants and no disagreements on accounting and financial disclosure. PART III Item 10. Directors and Executive Officers of the Registrant: The information required by this Item (except for the information set forth on page 5 with respect to Executive Officers of the Registrant) is hereby incorporated by reference to the information set forth under the captions "Election of Directors" and "Security Ownership of Certain Beneficial Owners and Management" contained in the Company's definitive Proxy Statement for its 2001 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company's fiscal year. Item 11. Executive Compensation: The information required by this Item is hereby incorporated by reference to the information set forth under the caption "Executive Compensation and Other Information" contained in the Company's definitive Proxy Statement for its 2001 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company's fiscal year. Item 12. Security Ownership of Certain Beneficial Owners and Management: The information required by this Item is hereby incorporated by reference to the information set forth under the caption "Security Ownership of Certain Beneficial Owners and Management" contained in the Company's definitive Proxy Statement for its 2001 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company's fiscal year. Item 13. Certain Relationships and Related Transactions: The information required by this Item is hereby incorporated by reference to the information set forth under the captions "Election of Directors" and "Certain Business Relationships" contained in the Company's definitive Proxy Statement for its 2001 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company's fiscal year. 32 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K: A. Financial statements: Financial statements filed as part of this report are listed in the Index to Consolidated Financial Statements and Supplementary Data on page 14. B. Exhibits: The following exhibits are filed herewith or incorporated by reference: (2)(a) Agreement and Plan of Merger dated September 12, 1996 by and between Met-Pro Corporation, Met-Pro Acquisition Corporation, Strobic Air Corporation, Lynn T. Secrest, Ronald H. Secrest, Richard P. Secrest and John W. Stone, III. Incorpora ted by reference to Registrant's Registration Statement on Form S-3 (File No. 333-13929), declared effective December 31, 1996. (2)(b) Asset Purchase Agreement dated October 29, 1998 among Flex-Kleen Corporation, Flex-Kleen Canada Limited, Aqua Alliance, Inc., AWT Air Company Inc., 1321249 Ontario Limited and Met-Pro Corporation. Incorporated by reference to Company's R egistration Statement on Form 8-K filed on November 13, 1998 and amended on January 12, 1999. (3)(a) Restated Certificate of Incorporation, incorporated by reference to Company's Registration Statement on Form 8-A filed June 12, 1998. (3)(b) Certificate of Amendment of Certificate of Incorporation, incorporated by reference to Company's annual report on Form 10-K filed April 24, 1998. (3)(c) By-Laws as amended through February 7, 1968, incorporated by reference to Company's Registration Statement No. 2-26979, declared effective October 15, 1968. (3)(d) Amendments to By-Laws adopted June 3, 1987, July 18, 1978 and June 15, 1977, incorporated by reference to Company's Registration Statement on Form 8-A filed June 12, 1998. (3)(e) Amendments to By-Laws adopted February 21, 2000, incorporated by reference to the Company's annual report on Form 10-K filed April 27, 2000. (4) Stockholders' Rights Plan, incorporated by reference to Company's Current Report on Form 8-K filed on January 6, 2000. (10)(a) The 1992 Stock Option Plan*, incorporated by reference to Company's Registration Statement on Form S-8 filed June 13, 2000. (10)(b) The 1997 Stock Option Plan*, incorporated by reference to Company's Registration Statement on Form S-8 filed January 16, 1998. (10)(c) Amendment No. 1 to the 1992 Stock Option Plan.* (10)(d) Amendment No. 1 to the 1997 Stock Option Plan.* (10)(e) Key Employee Severance Agreement between Met-Pro Corporation and William L. Kacin.* (10)(f) Key Employee Severance Agreement between Met-Pro Corporation and Gary J. Morgan.* (10)(g) Key Employee Severance Agreement between Met-Pro Corporation and Raymond J. De Hont.* (10)(h) Amendment to Key Employee Severance Agreement between Met-Pro Corporation and William L. Kacin.* (10)(i) Amendment to Key Employee Severance Agreement between Met-Pro Corporation and Gary J. Morgan.* 33 (10)(j) The Company's Director's Pension Plan.* (10)(k) Amendment 1 of the Company's Director's Pension Plan.* (10)(l) Amendment 2 of the Company's Director's Pension Plan.* (10)(m) Restoration Plan, effective February 1, 2000.* (10)(n) Amendment 1 of the Company's Restoration Plan.* (10)(o) Additional 1% Supplemental Executive Retirement Plan, effective February 1, 2000.* (11) Statement Re-computation of Per Share Earnings. See page 16 of Item 8. (21) List of Subsidiaries of Registrant:
Corporate Jurisdiction of Name under which Business Name Incorporation is Conducted --------- --------------- ------------------------- Mefiag B.V. The Netherlands Mefiag B.V., a wholly- owned subsidiary of Met-Pro Corporation Flex-Kleen Canada Inc. Ontario, Canada Flex-Kleen Canada Inc., a wholly-owned subsidiary of Met-Pro Corporation Strobic Air Corporation Delaware Strobic Air Corporation, a wholly-owned subsidiary of Met-Pro Corporation
(23) Consent of Independent Public Accountants. (27) Financial Data Schedule. The following exhibits required under Item 601 of Regulation S-K promulgated by the Securities & Exchange Commission have been omitted because they are either inapplicable or non-existent: (9) Voting trust agreements. (12) Statements re computation of ratios. (13) Annual report to security holders. (16) Letter re change in certifying accountant. (18) Letter re change in accounting principles. (22) Published report regarding matters submitted to vote of security holders. (24) Power of attorney. (99) Additional exhibits. - Notes - * Indicates management contract or compensatory plan or arrangement. C. Reports on Form 8-K: No reports on Form 8-K were filed during the three month period ended January 31, 2001. 34 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MET-PRO CORPORATION May 4, 2001 By: /s/ William L. Kacin - ---------------- ------------------------------- Date William L. Kacin Chairman, Chief Executive Officer and President Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date --------- ----- --------- /s/ William L. Kacin Chairman, Chief May 4, 2001 - ---------------------------- Executive Officer William L. Kacin and President /s/ Gary J. Morgan Vice President-Finance, May 4, 2001 - ---------------------------- Secretary, Treasurer, Gary J. Morgan Chief Financial Officer, Chief Accounting Officer and Director /s/ Thomas F. Hayes Director May 4, 2001 - ---------------------------- Thomas F. Hayes /s/ Alan Lawley Director May 4, 2001 - ---------------------------- Alan Lawley /s/ Nicholas DeBenedictis Director May 4, 2001 - ---------------------------- Nicholas DeBenedictis /s/ Jeffrey H. Nicholas Director May 4, 2001 - ---------------------------- Jeffrey H. Nicholas /s/ Michael J. Morris Director May 4, 2001 - ---------------------------- Michael J. Morris
35 (LOGO OMITTED) EX-10.C 2 exhibit10c.txt EXHIBIT 10.C Exhibit 10(c) AMENDMENT NO. 1 TO THE MET-PRO CORPORATION 1992 STOCK OPTION PLAN This amendment to the Met-Pro Corporation 1992 Stock Option Plan (the "Plan") is made and approved this 4th day of April, 2001. WHEREAS, the Board of Directors has adopted the Plan, and the Plan was thereafter approved by the stockholders. WHEREAS, Section 15 of the Plan authorizes the Board of Directors to amend the Plan. WHEREAS, the Board desires to amend the Plan to permit the Board to determine the manner in which payment of the exercise price of options granted under the Plan shall be made. NOW, THEREFORE, the Plan is hereby amended in the following manner: 1. The second sentence of Section 11 (b) of the Plan is hereby deleted. 2. A new second sentence of Section 11 (b) of the Plan is hereby added to the Plan as follows: "Such notice shall be accompanied by payment of the full option price of such shares in the form of a check payable to the order of the Company, or by payment of the full option price of such shares in such other form as the Board may from time to time determine." Except as expressly provided for herein, the Plan as amended remains in force and effect, unamended and unmodified. IN WITNESS WHEREOF, the Company has caused its authorized officer to execute this Amendment on behalf of the Company. WITNESS MET-PRO CORPORATION By: /s/ William L. Kacin - -------------------------------- --------------------------------- William L. Kacin Chief Executive Officer EX-10.D 3 exhibit10d.txt EXHIBIT 10.D Exhibit 10(d) AMENDMENT NO. 1 TO THE MET-PRO CORPORATION 1997 STOCK OPTION PLAN This amendment to the Met-Pro Corporation 1997 Stock Option Plan (the "Plan") is made and approved this 4th day of April, 2001. WHEREAS, the Board of Directors has adopted the Plan, and the Plan was thereafter approved by the stockholders on June 4, 1997. WHEREAS, Section 15 of the Plan authorizes the Board of Directors to amend the Plan. WHEREAS, the Board of Directors has previously amended the Plan by action of the Board to provide for an extended exercise date for certain non-qualified stock options following the retirement of certain non-employee Directors. WHEREAS, the Board now desires to amend the Plan generally to provide the Board with the authority to determine the expiration date of non-qualified stock options following the cessation of services by optionholders under the Plan, as well as to grant the Board with the authority to determine the manner in which payment of the exercise price may be made. NOW, THEREFORE, the Plan is hereby amended in the following manner: 1. The Board ratifies action previously taken by the Board with regard to an extended expiration date of certain non-qualified stock options granted to certain non-employee Directors following their retirement from the Board. 2. Section 7(c) of the Plan is hereby deleted. 3. A new Section 7(c) is hereby added to the Plan as follows: "(c) A Nonstatutory Stock Option granted under the Plan may be of such duration, not longer than ten (10) years, as shall be determined by the Committee, and shall be subject to such earlier termination as determined from time to time by the Board." 4. The provisions of Section 10 shall not be deemed to apply to non-statutory stock options, and shall be deemed to apply only to incentive stock options. Any references in Section 10 to non-employee Directors shall be deemed stricken and shall be of no effect. 5. Section 11 (b) (ii) is amended to delete the word "or" at the end thereof; Section 11 (b) (iii) is amended to substitute the period with which it ends with a semicolon, and to add the word "or" following such semicolon; and a new Section 11 (b)(iv) is added as follows: "(iv) By such other means of payment as the Board may from time to time determine." Except as expressly provided for herein, the Plan as amended remains in force and effect, unamended and unmodified. IN WITNESS WHEREOF, the Company has caused its authorized officer to execute this Amendment on behalf of the Company. WITNESS MET-PRO CORPORATION By: /s/ William L. Kacin - --------------------------- -------------------------------- William L. Kacin Chief Executive Officer EX-10.E 4 exhibit10e.txt EXHIBIT 10.E Exhibit 10(e) KEY EMPLOYEE SEVERANCE PAY AGREEMENT This agreement is made effective as of October 12th, 1995, between MET-PRO CORPORATION, a Delaware corporation with principal offices at 160 Cassell Road, Box 144, Harleysville, Pennsylvania, (hereinafter referred to as the "Corporation") and WILLIAM L. KACIN, of 451 Country Club Drive, Lansdale, PA 19446 (hereinafter referred to as the "Employee"). RECITALS A. Employee has been employed by the Corporation since November 17, 1975. During the period of his employment, and particularly in his present capacity, he has performed his duties ably, demonstrating loyalty to the Corporation and greatly benefiting it. B. In recognition of Employee's status as a key employee and to provide the Employee with a deserved measure of security in the event of a change in control of the Corporation, the Corporation is willing to enter into this Agreement. C. The Employee and the Corporation believe that the benefits conferred by this Agreement will encourage the Employee to continue his high level of performance of his duties during the period of instability which could result if hostile attempts to take control of the Corporation should occur. NOW, THEREFORE, the parties hereto hereby agree as follows: 1. Definitions. (a) Change in Control. A change in control shall be deemed to have occurred as of the date on which either of the following events occurs: (i) Any "person" or "group of persons acting in concert", who are not part of the present Management, becomes the "beneficial owner, directly or indirectly, of securities of the Corporation representing thirty-five (35%) or more of the combined voting power of the Corporation's then outstanding securities; or (ii) There shall be a change in the composition of the Corporation's Board of Directors so that a majority of the Directors in office on the effective date of this Agreement no longer constitute a majority thereof; provided, however, that any Director elected upon the recommendation of the present majority shall be considered to be a part of the present majority. (b) Person. A "Person" shall be as defined in the Securities Exchange Act of 1934, as amended. (c) Beneficial Owner of Securities. A "Beneficial Owner of Securities" shall be as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended. (d) Management. "Management" shall mean the officers of the Corporation in office at the effective date of this Agreement or their successors elected by a majority of the present Directors. (e) Compensation. "Compensation" shall mean the annual salary (exclusive of bonuses, sick leave, vacation pay or other extra compensation or benefits) being paid to the Employee at the time when a Change in Control occurs or thereafter, whichever is higher. -1- (f) Involuntary Termination of Employment. "Involuntary Termination of Employment" shall mean (i) Termination of employment without cause; or (ii) Termination of employment by the Employee as a result of a reduction in his status, or duties, or responsibilities, or rate of compensation, or the imposition of intolerable working conditions. (g) Cause. "Cause" for the purposes of Section 1(f)(i) shall mean conviction for a felony, commission of any act constituting common law fraud, habitual drunkenness or drug abuse, significant malfeasance or nonfeasance of duty or disloyalty to the Corporation. 2. Severance Pay. In the event of a change in control of the Corporation and the involuntary termination of Employee's employment within eighteen (18) months thereafter, the Employee shall be entitled to receive severance pay equal to two years' compensation, as defined herein. Such severance pay shall be due and payable in full at the time of Employee's receipt of final payment of his regular compensation. 3. Continued Performance by Employee. In consideration of the granting of benefits to him by this Agreement, Employee agrees: (a) That he will continue to use his best efforts to perform his duties as assigned by the Corporation; and (b) That, in the event a Change in Control is pending or threatened, he will not voluntarily terminate his employment by the Corporation prior to an actual Change in Control, but will continue to perform his duties in the same manner as with the same effort as he had employed prior to the occurrence of such events. 4. Rights to Terminate Employment. This Agreement is not an employment agreement. Nothing contained herein shall be deemed to preclude the present management of the Corporation or the Employee from terminating Employee's employment, with or without cause, at any time. 5. No Obligation to Maintain Reserves. Nothing in this Agreement shall obligate the Corporation to set aside or earmark any of its assets to fund the obligation hereunder. 6. Binding Effect. This Agreement shall be binding upon and enure to the benefit of the parties hereto, their heirs, executors, administrators, successors and assigns. 7. Applicable Law. This Agreement shall be interpreted under and governed by the laws of the State of Delaware. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. MET-PRO CORPORATION /s/ William L. Kacin By: /s/ Walter A. Everett - --------------------------- ------------------------- Chairman Employee [Corporation] -2- EX-10.F 5 exhibit10f.txt EXHIBIT 10.F Exhibit 10(f) KEY EMPLOYEE SEVERANCE PAY AGREEMENT This Agreement is made effective as of July 6th, 1999, between MET-PRO CORPORATION, a Delaware corporation with principal offices 160 Cassell Road, Box 144, Harleysville, Pennsylvania (hereinafter referred to as the "Corporation"), and GARY J. MORGAN, of 109 Arrow Lane, Harleysville, PA 19438 (hereinafter referred to as the "Employee"). RECITALS A. Employee has been employed by the Corporation since March 15, 1980. During the period of his employment, and particularly in his present capacity, he has performed his duties ably, demonstrating loyalty to the Corporation and greatly benefiting it. B. In recognition of Employee's status as a key employee and to provide the Employee with a deserved measure of security in the event of a change in control of the Corporation, the Corporation is willing to enter into this Agreement. C. The Employee and the Corporation believe that the benefits conferred by this Agreement will encourage the Employee to continue his high level of performance of his duties during the period of instability which could result if hostile attempts to take control of the Corporation should occur. NOW, THEREFORE, the parties hereto hereby agree as follows: 1. Definitions. (a) Change in Control. A change in control shall be deemed to have occurred as of the date on which either of the following events occur: (i) Any "person" or "group of persons acting in concert", who are not part of the present Management, becomes the "beneficial owner", directly or indirectly, of securities of the Corporation representing thirty-five percent (35%) or more of the combined voting power of the Corporation's then outstanding securities; or (ii) There shall be a change in the composition of the Corporation's Board of Directors so that a majority of the Directors in office on the effective date of this Agreement no longer constitute a majority thereof; provided, however, that any Director elected upon the recommendation of the present majority shall be considered to be a part of the present majority. (b) Person. A "Person" shall be as defined in the Securities Exchange Act of 1934, as amended. (c) Beneficial Owner of Securities. A "Beneficial Owner of Securities" shall be as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended. (d) Management. "Management" shall mean the officers of the Corporation in office at the effective date of this Agreement or their successors elected by a majority of the present Directors. (e) Compensation. "Compensation" shall mean the annual salary (exclusive of bonuses, sick leave, vacation pay, or other extra compensation or benefits) being paid to the Employee at the time when a Change in Control occurs or thereafter, whichever is higher. -1- (f) Involuntary Termination of Employment. "Involuntary Termination of Employment" shall mean (i) Termination of Employment without cause; or (ii) Termination of employment of the Employee as a result of a reduction in his status, or duties, or responsibilities, or rate of compensation, or the imposition of intolerable working conditions. (g) Cause. "Cause" for the purposes of Section 1(f)(i) shall mean conviction for a felony, commission of any act constituting common law fraud, habitual drunkenness or drug abuse, significant malfeasance of nonfeasance of duty, or disloyalty to the Corporation. 2. Severance Pay. In the event of a change in control of the Corporation and the involuntary termination of Employee's employment within eighteen (18) months thereafter the Employee shall be entitled to receive severance pay equal to eighteen (18) months of compensation, as defined herein. Such severance pay shall be due and payable in full at the time of Employee's receipt of final payment of his regular compensation. 3. Continued Performance by Employee. In consideration of granting of benefits to him by this Agreement, Employee agrees: (a) That he will continue to use his best efforts to perform his duties as assigned by the Corporation; and (b) That, in the event a Change in Control is pending or threatened, he will not voluntarily terminate his employment by the Corporation prior to an actual Change in Control, but will continue to perform his duties in the same manner and with the same effort as he had employed prior to the occurrence of such events. 4. Rights to Terminate Employment. This Agreement is not an employment agreement. Nothing contained herein shall be deemed to preclude the present management of the Corporation or the Employee from terminating the Employee's employment, with or without cause, at any time. 5. No Obligation to Maintain Reserves. Nothing in this Agreement shall obligate the Corporation to set aside or earmark any of its assets to fund the obligation hereunder. 6. Binding Effect. This Agreement shall be binding upon and enure to the benefit of the parties hereto, their heirs, executors, administrators, successors and assigns. 7. Applicable Law. This Agreement shall be interpreted under and governed by the laws of the State of Delaware. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. MET-PRO CORPORATION /s/ Gary J. Morgan By: /s/ William L. Kacin - ------------------------------ ------------------------------- Gary J. Morgan, Employee William L. Kacin, President -2- EX-10.G 6 exhibit10g.txt EXHIBIT 10.G Exhibit 10(g) KEY EMPLOYEE SEVERANCE PAY AGREEMENT This Agreement is made effective as of April 4, 2001, between MET-PRO CORPORATION, a Delaware corporation with principal offices 160 Cassell Road, Harleysville, Pennsylvania (hereinafter referred to as the "Corporation"), and RAYMOND J. DE HONT, of 505 Bow Lane, Gilbertsville, PA 19525 (hereinafter referred to as the "Employee"). RECITALS A. Employee has been employed by the Corporation since June 5, 1995. On June 18, 2000, Employee was appointed to the position of Chief Operating Officer of the Corporation. During the period of his employment, he has performed his duties ably, demonstrating loyalty to the Corporation and greatly benefiting it. B. In recognition of Employee's status as a key employee and to provide the Employee with a deserved measure of security in the event of a change in control of the Corporation, the Corporation is willing to enter into this Agreement. C. The Employee and the Corporation believe that the benefits conferred by this Agreement will encourage the Employee to continue his high level of performance of his duties during the period of instability which could result if hostile attempts to take control of the Corporation should occur. NOW, THEREFORE, the parties hereto hereby agree as follows: 1. Definitions. (a) Change in Control. A "Change in Control" shall be deemed to have occurred as of the date on which either of the following events occur: (i) If any "person" or "group of persons", which person or group of persons are not part of present Management and are acting in concert (as the term "person" is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Act")) becomes the "beneficial owner" (as defined in Rule 13d-3 promulgated under the Act) directly or indirectly of securities of the Corporation representing thirty (30%) percent or more of the combined voting power of the Corporation's then outstanding securities; or, (ii) If at any time there shall be a change in the composition of the Corporation's Board of Directors resulting in a majority of such Directors as of the date hereof no longer constituting such a majority; -1- provided, however, that in making any such determination as to change in composition, there shall be excluded any change where the new Director was elected by or upon the recommendation of such present majority; or (iii) If the approval by the stockholders of the Corporation of a reorganization, merger or consolidation, in each case, with respect to which persons who were stockholders of the Corporation immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than fifty (50%) percent of the combined voting power of the reorganized, merged or consolidated Corporation's then outstanding securities entitled to vote generally in the election of directors or with respect to a liquidation or dissolution of the Corporation or the sale of all or substantially all of the Corporation's assets; or (iv) There shall be a Change of Control as defined by any other agreement or plan to which the Corporation is party. (b) Person. A "Person" shall be as defined in the Securities Exchange Act of 1934, as amended. (c) Beneficial Owner of Securities. A "Beneficial Owner of Securities" shall be as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended. (d) Management. "Management" shall mean the officers of the Corporation in office at the effective date of this Agreement or their successors elected by a majority of the present Directors. (e) Compensation. "Compensation" shall mean the annual salary (exclusive of bonuses, sick leave, vacation pay, or other extra compensation or benefits) being paid to the Employee at the time when a Change in Control occurs or thereafter, whichever is higher. (f) Involuntary Termination of Employment. "Involuntary Termination of Employment" shall mean (i) Termination of employment without cause; or (ii) Termination of employment by the Employee as a result of a reduction in his status, or duties, or responsibilities, or rate of compensation, or the imposition of intolerable working conditions. (g) Cause. "Cause" for the purposes of Section 1 (f)(i) shall mean conviction for a felony, commission of any act constituting common law fraud, habitual drunkenness or drug abuse, significant malfeasance or nonfeasance of duty, or disloyalty to the Corporation. -2- 2. Severance Pay. In the event of a Change in Control of the Corporation and the Involuntary Termination of Employee's Employment within eighteen (18) months thereafter, the Employee shall be entitled to receive severance pay equal to eighteen (18) months' Compensation, as defined herein. Such severance pay shall be due and payable in full at the time of Employee's receipt of final payment of his regular compensation. 3. Continued Performance by Employee. In consideration of the granting of the benefits to him provided for by this Agreement, Employee agrees: (a) That he will continue to use his best efforts to perform his duties as assigned by the Corporation; and (b) That, in the event a Change in Control is pending or threatened, he will not voluntarily terminate his employment by the Corporation prior to an actual Change in Control, but will continue to perform his duties in the same manner and with the same effort as he had employed prior to the occurrence of such events. 4. Rights to Terminate Employment. This Agreement is not an employment agreement. Nothing contained herein shall be deemed to preclude the present management of the Corporation or the Employee from terminating Employee's employment, with or without cause, at any time. 5. No Obligation to Maintain Reserves. Nothing in this Agreement shall obligate the Corporation to set aside or earmark any of its assets to fund the obligation hereunder. 6. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto, their heirs, executors, administrators, successors and assigns. 7. Applicable Law. This Agreement shall be interpreted under and governed by the laws of the State of Delaware. -3- IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. MET-PRO CORPORATION /s/ Raymond J. De Hont By: /s/ William L. Kacin - ------------------------------------ ------------------------------ Raymond J. De Hont, Employee William L. Kacin, President -4- EX-10.H 7 exhibit10h.txt EXHIBIT 10.H Exhibit 10(h) June 26, 2000 Mr. William L. Kacin c/o Met-Pro Corporation 160 Cassell Road Harleysville, PA 19438 Dear Mr. Kacin: Reference is made to the definition of "Change of Control" found in Section 1(a) of the Key Employee Severance Agreement that you executed on October 12, 1995 with Met-Pro Corporation. With this letter agreement, we hereby amend this Key Employee Severance Agreement by deleting Section 1(a) thereof and replacing it with the following: "(a) Change of Control. For purposes of this Agreement, a "Change of Control" shall be deemed to have occurred: (i) If any "person" or "group of persons", which person or group of persons are not part of present Management and are acting in concert (as the term "person" is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Act") becomes the "beneficial owner" (as defined in Rule 13d-3 promulgated under the Act) directly or indirectly of securities of the Corporation representing thirty (30%) percent or more of the combined voting power of the Corporation's then outstanding securities; or, (ii) Of at any time there shall be a change in the composition of the Corporation's Board of Directors resulting in a majority of such Directors as of the date hereof no longer constituting such a majority; provided, however, that in making any such determination as to change in composition, there shall be excluded any change where the new Director was elected by or upon the recommendation of such present majority; or (iii) If the approval by the stockholders of the Corporation of a reorganization, merger or consolidation, in each case, with respect to which persons who were stockholders of the Corporation immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than fifty (50%) percent of the combined voting power of the reorganized, merged or consolidated Corporation's then outstanding securities entitled to vote generally in the election of directors or with respect to a liquidation or dissolution of the Corporation or the sale of all or substantially all of the Corporation's assets; or, (iv) There shall be a Change of Control as defined by any other agreement or plan to which the Corporation is party." Except as set forth in this letter agreement, there are no other changes or amendments to the Key Employee Severance Agreement, which remains in full force and effect. Very truly yours, MET-PRO CORPORATION By: /s/ Gary J. Morgan ------------------------------- Gary J. Morgan Vice President - Finance ACCEPTED AND AGREED: /s/ William L. Kacin - -------------------------- William L. Kacin EX-10.I 8 exhibit10i.txt EXHIBIT 10.I Exhibit 10(i) June 26, 2000 Mr. Gary J. Morgan c/o Met-Pro Corporation 160 Cassell Road Harleysville, PA 19438 Dear Mr. Morgan: Reference is made to the definition of "Change of Control" found in Section 1(a) of the Key Employee Severance Agreement that you executed on July 6, 1999 with Met-Pro Corporation. With this letter agreement, we hereby amend this Key Employee Severance Agreement by deleting Section 1(a) thereof and replacing it with the following: "(a) Change of Control. For purposes of this Agreement, a "Change of Control" shall be deemed to have occurred: (i) If any "person" or "group of persons", which person or group of persons are not part of present Management and are acting in concert (as the term "person" is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Act") becomes the "beneficial owner" (as defined in Rule 13d-3 promulgated under the Act) directly or indirectly of securities of the Corporation representing thirty (30%) percent or more of the combined voting power of the Corporation's then outstanding securities; or, (ii) Of at any time there shall be a change in the composition of the Corporation's Board of Directors resulting in a majority of such Directors as of the date hereof no longer constituting such a majority; provided, however, that in making any such determination as to change in composition, there shall be excluded any change where the new Director was elected by or upon the recommendation of such present majority; or (iii) If the approval by the stockholders of the Corporation of a reorganization, merger or consolidation, in each case, with respect to which persons who were stockholders of the Corporation immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than fifty (50%) percent of the combined voting power of the reorganized, merged or consolidated Corporation's then outstanding securities entitled to vote generally in the election of directors or with respect to a liquidation or dissolution of the Corporation or the sale of all or substantially all of the Corporation's assets; or, (iv) There shall be a Change of Control as defined by any other agreement or plan to which the Corporation is party." Except as set forth in this letter agreement, there are no other changes or amendments to the Key Employee Severance Agreement, which remains in full force and effect. Very truly yours, MET-PRO CORPORATION By: /s/ William L. Kacin ---------------------------- William L. Kacin Chairman and President ACCEPTED AND AGREED: /s/ Gary J. Morgan - ----------------------------------- Gary J. Morgan EX-10.J 9 exhibit10j.txt EXHIBIT 10.J Exhibit 10(j) MET-PRO CORPORATION DIRECTOR'S RETIREMENT PLAN 1. PURPOSE OF THE PLAN. The Company recognizes that the Directors have performed all duties ably and well, to the satisfaction and benefit of inducement to the present Directors to continue to serve the Company, and in order to attract competent individuals as eventual replacements, the Company believes that it is in its best interests to provide the Directors with additional compensation pursuant to this Director's Retirement Plan (the "Plan"). 2. CONTINUED SERVICE OF DIRECTOR - DIRECTOR'S FEES. The Company will continue to pay each Director for such person's services Director's fees and/or salaries at the rates and times mutually agreed upon between each Director and the Company, as approved by the Board of Directors of the Company. 3. ELIGIBILITY. A Director shall be eligible to participate in the Plan upon completing six (6) years of service as a Director. At the time a Director becomes eligible to participate in the Plan, the Director shall automatically acquire a vested right to not less than the amount and number of annual payments (the "Retirement Payments") for which such Director is then eligible under Section 4, subject, however, to the provisions of Section 5. Such right may not thereafter be reduced or curtailed excepting as provided elsewhere in the Plan, and shall be increased thereafter from year to year pursuant to the Plan or modifications thereof. 4. RETIREMENT PAYMENTS. (a) An eligible retired Director shall be entitled to an annual Retirement Payment of One Thousand Dollars ($1,000) times the number of full years of service as a Director, up to a maximum of Ten Thousand Dollars ($10,000). Such Retirement Payments shall continue for a period of years equal to such person's full years of service, up to a maximum of fifteen (15) Retirement Payments, subject, however to the provisions of Subsection 4(d) and Section 5 hereof. (b) A Director who has served as Chief Executive Officer of the Company ("CEO") for at least six (6) years shall receive additional Retirement Payments of One Thousand Dollars ($1,000) times the number of full years such person has served as an Officer and/or a Director, up to a maximum of Twenty Thousand Dollars ($20,000). Such Retirement Payments shall be made for a period of full years equal to such person's full years of service as an Officer and/or Director, but not for more than twenty (20) years. However, such payments shall terminate sooner upon such person's death or the death of such person's spouse, whichever last occurs, subject to the provisions of Subsection 4(d) and Section 5 hereof. (c) The Retirement Payments shall be paid in equal monthly installments on the first day of the month, commencing with the month immediately following the date such participant ceases to be a Director or reaches age 70, whichever last occurs. (d) If a retired Director dies prior to payment of all the Retirement Payments to which such Director is entitled, the surviving spouse or, if there is no surviving spouse, to the Director's estate. For the purposes of this Section 4(d), "Director's estate" may include a living trust of which -1- the Director was a founder, if such trust is designated as the recipient by the Director in writing filed with the Company. If payment is made to the Director's estate, the unpaid Retirement Payments shall be paid in a lump sum within sixty (60) days after death. Such lump sum Retirement Payment shall be equal to ten annual Retirement Payments due pursuant to Subsection 4(a) and ten annual Retirement Payments under Section 4(b), if applicable, less the aggregate of Retirement Payments previously made to such Director under each applicable Subsection. If more than ten (10) annual Retirement Payments have been made under Subsection 4(a) and, if applicable, under Section 4(b) as well, no lump sum payment shall be due. 5. TERMINATION OF DIRECTOR SERVICES. (a) Nothing in this Plan shall confer upon anyone the right to be nominated, elected or re-elected as a Director or an Officer upon expiration of such person's term. Nothing in this Plan is meant to preclude the eight of a majority of the Board of Directors or the shareholders of the Company from terminating the services of a Director or an Officer for cause or otherwise. (b) If, before a Director's term expires, such Director is removed or resigns because of physical or mental incapacity, such Director shall be deemed to have completed the term for the purposes of Sections 3 and 4 hereof. In that case, years of service shall be computed to the date on which such person ceases to be a Director. In the case of a Director who is CEO but is removed or resigns because of mental or physical incapacity prior to completion of six years of service as CEO, he shall be entitled to the additional Retirement Payments provided in Section 4(b), based on the number of years of service as CEO. In such case, service for six (6) months or more during the final year shall be considered a full year of service. (c) If the Company should terminate the services of any Director by discharging such Director for malfeasance, dishonesty or such other similar bona fide cause as a majority of the Board of Directors deems sufficient, the Company shall have no future obligation to make any Retirement Payments whatsoever under this Plan. (d) In the event a Director who is a CEO is discharged or requested to resign by the Board of Directors for reasons other than those set forth in Subsections 5(b) or 5(c), such person shall have only the rights to Retirement Payments provided for in Section 4(a) hereof. (e) If a Director's services are terminated at or after a Change in Control (as defined in Section 6 hereof), the Director shall be entitled to an immediate lump sum payment of the Retirement Payments then applicable to such person's status pursuant to Subsection 4(a) and, if applicable, Subsection 4(b). A former Director who has retired prior to a Change in Control (or such Director's spouse, if such Director has died) shall be entitled to an immediate lump sum payment of all Retirement Payments to which such Director was entitled under Section 4 hereof and which have not yet been paid. 6. CHANGE IN CONTROL. For the purposes of this Plan, "Change of Control" shall be deemed to have occurred if: (a) Any "person" or "group of persons", which person or group of persons are not part of present Management and are acting on concert (as the term "person" is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Act")) becomes the "beneficial owner (as defined in Rule 13d-3 promulgated under the Act) directly or indirectly of securities of the Company representing thirty (30%) percent or more of the combined voting power of the Company's then outstanding securities; or, -2- (b) At any time there shall be a change in the composition of the Company's Board of Directors resulting in a majority of such Directors as of the date hereof no longer constituting such a majority; provided, however, that in making any such determination as to change in composition, there shall be excluded any change where the new Director was elected by or upon the recommendation of such present majority; or (c) The approval by the stockholders of the Company of a reorganization, merger or consolidation, in each case, with respect to which persons who were stockholders of the Company immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than fifty (50%) percent of the combined voting power of the reorganized, merged or consolidated Company's then outstanding securities entitled to vote generally in the election of directors or with respect to a liquidation or dissolution of the Company or the sale of all or substantially all or the Company's assets. 7. NO OBLIGATION TO MAINTAIN RESERVES. The Company intends to execute an agreement with a Trustee (the "Trust Agreement") to hold, invest and disburse funds set aside for payments required under the Plan. However, contributions to the Trust by the Company shall be in the discretion of the Board of Directors. Nothing in this Plan shall create an obligation on the Company's part to set aside or earmark any monies or other assets specifically for the purposes of this Plan or to pay any specified amount to the Trust. To the extent that assets of the Trust are in sufficient to meet the Company's obligations under the Plan, such obligations will be paid out of the general funds of the Company. 8. UNSECURED CREDITOR'S STATUS AS TO PLAN ASSETS. All assets held in the Trust created with respect to this Plan shall be and remain subject to the claims of unsecured general creditors of the Company under federal and state law in the event of insolvency of the Company, as defined in Section 3(a) of the Trust Agreement. 9. ADMINISTRATION AND INTERPRETATION OF THE PLAN. (a) This document, the Trust Agreement executed by the Company, all agreements and awards executed by the Company and all amendments to such documents shall be deemed Plan Documents. (b) The Board of Directors shall administer the Plan, including without limitation: (i) Determination of amounts and duration of payments; (ii) Construing the Plan Documents and (iii) Determining procedures of implementing and administering the Plan. (c) The Plan Documents shall be interpreted and administered under and governed by the laws of the Commonwealth of Pennsylvania. -3- EX-10.K 10 exhibit10k.txt EXHIBIT 10.K Exhibit 10(k) AMENDMENT NO. 1 TO THE MET-PRO CORPORATION DIRECTORS' RETIREMENT PLAN This Amendment to the Met-Pro Corporation Directors' Retirement Plan (the "Plan") is made effective this 16th day of December, 1999. WHEREAS, Met-Pro Corporation (the "Company") previously adopted the Plan and now wishes to amend the Plan as herein stated. NOW, THEREFORE, the Plan is hereby amended in the following manner: 1. A new Section 10 is added as follows: "10. Termination, Suspension or Amendment. The Board of Directors in its sole discretion may terminate, suspend or amend this Plan at any time or from time to time, in whole or in part, provided, however, that no such termination, suspension or amendment shall adversely affect the accrued benefit of a Director, their surviving spouse or other beneficiary who is then entitled to or receiving a benefit." 2. Section 3 is hereby amended by adding the following at the end of the existing Section 3: "Notwithstanding anything in this Plan to the contrary, effective as of December 16, 1999, the following persons shall not be eligible to participate in the Plan: (i) any person who is not a Director of the Company as of December 16, 1999 ("Future Directors"); and (ii) any person who is a Director of the Company as of December 16, 1999 and who has not completed six years of service as a Director and who is not therefore eligible as of December 16, 1999 to participate in the Plan (meaning Messrs. DeBenedictis, Morgan, Morris, and Nicholas)(collectively hereafter referred to as "Ineligible Directors"), subject to the grant to such persons (with the exception of Mr. Morgan) of stock options equal to the present value of the accrued retirement benefit, and subject as to Mr. Morgan to the establishment of a "Restoration SERP", with compensation for such Ineligible Directors for future service as a Director of the Company to be on such terms as the Board may from time to time determine. In addition, effective as of December 16, 1999, existing non-employee Directors who have completed six years of service and who are therefore eligible as of December 16, 1999 to participate in the Plan (meaning Messrs. Hayes and Lawley) may elect to be compensated for future service as a Director of the Company in part either by participation in the Plan or on such terms as the Board may from time to time determine, and, in the event of such latter election, the amount and number or years of the Retirement Payments payable under Section 4 of the Plan shall be determined and fixed as of December 16, 1999. Any such election shall be made by such persons prior to January 16, 2000. In addition, effective as of December 16, 1999, existing employee Directors who have completed six years of service and who are therefore eligible as of December 16, 1999 to participate in the Plan (meaning Mr. Kacin) shall be compensated for future service as a Director of the Company in part by participation in the Plan and on such other basis as the Board may from time to time determine. -1- This amendment to Section 3 shall effect no change for former Directors currently receiving Retirement Payments under the Plan." IN WITNESS WHEREOF, the Company has caused its authorized officer to execute this Amendment on behalf of the Company. WITNESS MET-PRO CORPORATION /s/ William L. Kacin By: /s/ Gary J. Morgan - --------------------------- ------------------------------- William L. Kacin Gary J. Morgan Vice President - Finance EX-10.L 11 exhibit10l.txt EXHIBIT 10.L Exhibit 10(l) AMENDMENT NO. 2 TO THE MET-PRO CORPORATION DIRECTORS' RETIREMENT PLAN This Amendment to the Met-Pro Corporation Directors' Retirement Plan (the "Plan") is made and effective this 17th day of August, 2000. WHEREAS, Met-Pro Corporation (the "Company") previously adopted the Plan and now wishes to further amend the Plan to modify the definition of a change in control. NOW, THEREFORE, the Plan is hereby amended in the following manner: 1. Section 6 is amended by adding a new subsection (d) as follows: (d) At any time that the Corporation's Board of Directors, in its sole discretion determines that a change in control has occurred, regardless of whether such determination relates to any of the aforementioned event. IN WITNESS WHEREOF, the Company has caused its authorized officers to execute this Amendment on behalf of the Company. WITNESS MET-PRO CORPORATION /s/ William L. Kacin By: /s/ Gary J. Morgan - ---------------------------- ------------------------------- William L. Kacin Gary J. Morgan Vice President - Finance EX-10.M 12 exhibit10m.txt EXHIBIT 10.M Exhibit 10(m) MET-PRO CORPORATION PENSION RESTORATION PLAN (As Established Effective February 1, 2000) This Met-Pro Corporation Pension Restoration Plan (the "Restoration Plan") is established effective February 1, 2000 by Met-Pro Corporation (the "Company"), a Delaware corporation, for Eligible Executives who participate in the Met-Pro Corporation Salaried Pension Plan Amended and Restated Effective September 1, 1989 (the "Pension Plan") which Pension Plan is intended to satisfy the requirements of the Internal Revenue Code of 1986, as amended (the "Code"). 1. Purpose. The Restoration Plan shall provide for the payment of supplementary benefits primarily to compensate William L. Kacin and Gary J. Morgan (the "Eligible Executives") for the amount of the reduction, if any, in his benefits under the Pension Plan on account of the application of Section 401(a)(17) or Section 415 of the Code. 2. Plan Benefits. The monthly benefit payable from the Restoration Plan to the participant, surviving spouse, or other beneficiary will be equal to the excess, if any, of (a) over (b), where: (a) equals the benefit that would be payable to the individual under the Pension Plan except that the amount determined under (a) shall be determined as follows: (i) the amount will be determined without regard to the limits of Section 401(a)(17) or Section 415 of the Code, (ii) Average Monthly Compensation shall be averaged over the sixty (60) consecutive months which produce the highest monthly average compensation within the last ten (10) calendar years of employment. If the participant has less than sixty (60) months of employment, his Average -1- Exhibit 10(m) MET-PRO CORPORATION PENSION RESTORATION PLAN Monthly Compensation will be based on all his completed months of service, (iii) Average Monthly Compensation shall include the five (5) highest bonuses paid in the last ten (10) year period of employment, (iv) William L. Kacin's date of hire of November 17, 1975 will be reflected in the determination of his years of service for benefit calculation purposes, and (b) equals the amount of benefit actually payable under the Pension Plan. Except for benefits payable as a result of a "Change in Control," as defined in Section 7, the benefit payable under this Restoration Plan will be payable to the same individual as the benefit payable under the Pension Plan, will be payable under the same form of pension as the benefit payable under the Pension Plan, will be determined based on the same actuarial assumptions under the Pension Plan (other than the actuarial assumptions used to compute lump sum payments) and will commence at the same date as the benefit payable under the Pension Plan. A schedule of the benefits payable under this Restoration Plan will be delivered to each Eligible Executive as soon as practicable before benefits commence. Terms will be as defined in this Restoration Plan, or otherwise as defined in the Pension Plan. 3. Source of Benefits. The benefits payable under the Restoration Plan shall be paid exclusively from the Company's general assets. In this regard, the -2- Exhibit 10(m) MET-PRO CORPORATION PENSION RESTORATION PLAN Company may create a grantor trust (within the meaning of section 671 of the Code) in connection with the Restoration Plan to which it may from time to time contribute amounts to accumulate a reserve against its obligations hereunder. Such trust and any assets held by such trust to assist the Company in meeting its obligations under the Restoration Plan shall conform to the terms of the model trust as described in Internal Revenue Service Procedure 92-64 (I.R.B. 1992-33). Notwithstanding the creation of such trust, the benefits hereunder shall be a general obligation of the Company. Payment of benefits from such trust shall, to that extent, discharge the Company's obligations under this Restoration Plan. Eligible Executives shall have only a contractual right as general creditors of the Company to the amounts, if any, payable hereunder and such right shall not be secured by any assets of the Company. 4. Construction. The Company intends the Restoration Plan to be a benefit plan which is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees, within the meaning of Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and any ambiguities in construction shall be resolved in favor of interpretations which will effectuate such intention. The Restoration Plan shall be governed by and construed in accordance with the laws of Pennsylvania to the extent such laws are not preempted by ERISA. 5. Administration of the Restoration Plan. The Restoration Plan shall be administered by the Compensation Committee of the Board of Directors of the Company (the "Committee"), subject to the oversight of the Board of Directors of the Company (the "Board"). The Board shall have authority to make, amend, interpret and enforce all appropriate rules and regulations for the administration of the Restoration Plan and decide or resolve any and all -3- Exhibit 10(m) MET-PRO CORPORATION PENSION RESTORATION PLAN questions including interpretations of the Restoration Plan as may arise in connection with the Restoration Plan. The Board shall designate from time to time those eligible for inclusion in the Restoration Plan. The Board may employ agents and delegate to them such administrative duties as it sees fit and may consult with counsel who may be counsel to the Company. The decision or action of the Board in respect of any question arising out of or in connection with the administration, interpretation and application of the Restoration Plan and the rules and regulations thereunder shall be final and conclusive and binding upon all persons having any interest therein subject to the claim and arbitration procedures contained in Section 9 hereof. 6. Termination, Suspension or Amendment. The Board in its sole discretion may terminate, suspend or amend the Restoration Plan at any time or from time to time, in whole or in part, provided, however, that no such termination, suspension or amendment shall adversely affect the accrued benefit of any Eligible Executive of the Company, their surviving spouses or other beneficiaries who are then entitled to or receiving a benefit. 7. Acceleration of Payments. In the event a "Change of Control" of the Company (as hereinafter defined) shall be deemed to occur (whenever such shall occur, and whether or not the Eligible Executives are then employed by the Company or shall be alive), all payments due to the Eligible Executives, their surviving spouses or other beneficiaries under this Restoration Plan shall be accelerated and immediately paid in a lump sum payment in an amount determined in accordance with the provisions of this Restoration Plan. The aggregate amount of all such lump sum payments shall be paid by the Company to such Eligible Executives immediately upon the occurrence of a change in control, to the extent not paid from a grantor trust (referred to in Section 3 hereof) established by the Company. The lump sum payment to each participant -4- Exhibit 10(m) MET-PRO CORPORATION PENSION RESTORATION PLAN and each other individual entitled to a benefit under this Restoration Plan shall be equal to the lump sum present value of the amount of the participant's or other individual's monthly benefit under the Restoration Plan, determined as of the date of the Change of Control, in accordance with the methodology set forth in the Pension Plan, except that the actuarial factors used to calculate the lump sum present value will be the factors used under the Pension Plan to calculate actuarial equivalence or to calculate the value of a lump sum, whichever results in a greater benefit. The Company and, to the extent such benefit is funded under the trust, the trustee shall issue to each participant and each other individual entitled to a benefit the amount of lump sum payment calculated on their behalf immediately upon the Change of Control. In addition to the lump sum payment described above, the Company shall reimburse each Eligible Executive, their surviving spouses or other beneficiaries who receives such a lump sum payment for any excise tax (and any excise tax due with respect to such reimbursement) imposed on such lump sum payments in connection with a change of control of the Company pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended. For purposes of the Restoration Plan, a "Change of Control" shall be deemed to occur; (a) If any "person" or "group of persons", which person or group of persons are not part of present management and are acting in concert (as the term "person" is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Act")) becomes the "beneficial owner" (as defined in Rule 13d-3 promulgated under the Act) directly or indirectly of securities -5- Exhibit 10(m) MET-PRO CORPORATION PENSION RESTORATION PLAN of the Corporation representing thirty (30%) percent or more of the combined voting power of the Corporation's then outstanding securities; or (b) If at any time there shall be a change in the composition of the Corporation's Board of Directors resulting in a majority of such Directors as of the date hereof no longer constituting such a majority; provided, however, that in making any such determination as to change in composition, there shall be excluded any change where the new Director was elected by or upon recommendation of such present majority; (c) If the approval by the stockholders of the Corporation of a reorganization, merger or consolidation, in each case, with respect to which persons who were stockholders of the Corporation immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than fifty (50%) percent of the combined voting power of the reorganized, merged or consolidated Corporation's then outstanding securities entitled to vote generally in the election of Directors or with respect to a liquidation or dissolution of the Corporation or the sale of all or substantially all of the Corporation's assets; or (d) At any time that the Corporation's Board of Directors, in its sole discretion, determines that a Change in Control has occurred, regardless of whether such determination relates to any of the aforementioned events. 8. General Conditions. No interest of any person and no benefit payable hereunder shall be assigned as security for a loan and any such purported -6- Exhibit 10(m) MET-PRO CORPORATION PENSION RESTORATION PLAN assignment shall be null, void and of no effect. No such interest or benefit shall be subject in any manner, either voluntarily or involuntarily, to anticipation, sale, transfer, assignment or encumbrance by or through any person and any such purported action shall be null, void and of no effect. No Eligible Executive and no other person shall have any legal or equitable right or interest in the Restoration Plan which is not expressly granted hereunder. Participation hereunder does not give any person any right to be retained in the service of the Company or to continue in its employ, and the right and power of the Company to dismiss or discharge any executive is expressly reserved; provided that no such termination, dismissal, discharge or severance shall affect any right of the Eligible Executives to the benefits hereunder. 9. Claim and Arbitration Procedures. Claims for benefits under this Restoration Plan will be adjudicated in accordance with the benefit claims procedures contained in the Pension Plan. By accepting participation in this Restoration Plan, each Eligible Executive agrees that any dispute not resolved under the benefit claims procedures will be submitted to final and binding arbitration with the American Arbitration Association in Philadelphia, PA in accordance with the rules of the American Arbitration Association. In the event that an Eligible Employee prevails on any part of his disputed claim, the Company will reimburse or pay all the Eligible Employee's costs of arbitration, including attorney's fees. 10. Effective Date. The effective date of this Restoration Plan is February 1, 2000. -7- Exhibit 10(m) MET-PRO CORPORATION PENSION RESTORATION PLAN Executed this 17th day of August 2000. By: /s/ Gary J. Morgan ------------------------------- Gary J. Morgan Vice President - Finance Attest: /s/ Marian Berkey ------------------------------- Marian Berkey -8- EX-10.N 13 exhibit10n.txt EXHIBIT 10.N Exhibit 10(n) AMENDMENT NO. 1 TO THE MET-PRO CORPORATION PENSION RESTORATION PLAN This amendment to the Met-Pro Corporation Pension Restoration Plan (the "Restoration Plan") is made and effective this 4th day of April, 2001. WHEREAS, the Board of Directors has adopted the Restoration Plan and the Restoration Plan was thereafter approved by the Board of Directors on August 17, 2000. WHEREAS, Section 6 of the Plan authorizes the Board of Directors to amend the Restoration Plan. WHEREAS, the Board of Directors desires to amend the Restoration Plan in the following manner: 1. Section 1 of the Restoration Plan is hereby deleted. 2. A new Section 1 is hereby added to the Plan as follows: "1. Purposes. The Restoration Plan shall provide for the payment of supplementary benefits primarily to compensate William L. Kacin, Raymond J. De Hont and Gary J. Morgan (the "Eligible Executives") for the amount of the reduction, if any, in any such person's respective benefits under the Pension Plan on account of the application of Section 401(a)(17) or Section 415 of the Code.." Except as expressly provided herein, the Restoration Plan as amended remains in force and effect, unamended and unmodified. IN WITNESS WHEREOF, the Company has caused its authorized officer to execute this Amendment on behalf of the Company. WITNESS: MET-PRO CORPORATION By: /s/ William L. Kacin - ------------------------------ --------------------------- William L. Kacin Chief Executive Officer EX-10.O 14 exhibit10o.txt EXHIBIT 10.O Exhibit 10(o) MET-PRO CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (As Established Effective February 1, 2000) This Met-Pro Corporation Supplemental Executive Retirement Plan (the "Supplemental Plan") is established effective February 1, 2000 by Met-Pro Corporation (the "Company"), a Delaware corporation. 1. Purpose. The Supplemental Plan shall provide for the payment of supplementary retirement benefits to William L. Kacin (the "Eligible Executive"). 2. Participation. As used in the Supplemental Plan, the term "Eligible Executive" shall mean William L. Kacin. 3. Plan Benefits. The monthly benefit payable from this Supplemental Plan to the participant, his surviving spouse, or other beneficiary will be equal to the excess of (a) over (b), multiplied by the Vested Percentage defined herein, where: (a) equals the monthly benefit that would be payable to Eligible Executive under the Met-Pro Corporation Salaried Pension Plan Amended and Restated Effective September 1, 1989 (the "Pension Plan"), except that the amount under (a) shall be determined as follows: (i) the amount will be determined without regard to the limits of Section 401(a)(17) or Section 415 of the Internal Revenue Code of 1986, as amended (the "Code"), (ii) the "one percent" in paragraph (d) of Section 5.2 of the Pension Plan describing the benefit formula will be replaced with "two percent" subject to a maximum benefit -1- Exhibit 10(o) MET-PRO CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN of fifty (50%) percent of Average Monthly Compensation and the "two percent" will be applied without the Actuarial Equivalent increase included in Section 5.3 of the Pension Plan, (iii) Average Monthly Compensation shall be averaged over the sixty (60) consecutive months which produce the highest monthly average compensation within the last ten (10) calendar ___ years of employment, (iv) Average Monthly Compensation shall include the five (5) highest bonuses paid in last ten (10) year period of employment, and (v) Eligible Executive's date of hire November 17, 1975 will be reflected in the determination of his years of service for benefit calculation purposes, and (b) equals the sum of the following amounts for each month: (i) The amount of benefit payable under the Pension Plan, (ii) The amount of benefit payable under the Met-Pro Corporation Pension Restoration Plan, (iii) The amount of Director benefit payable under the Met-Pro Corporation Directors' Retirement Plan, (iv) The amount of Chief Executive Officer benefit payable under the Met-Pro Corporation Directors' Retirement Plan, -2- Exhibit 10(o) MET-PRO CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (v) The amount of Social Security retirement benefit payable, but not including any additional benefit payable to the Eligible Executive's spouse during his lifetime, and determined under the Social Security Act in effect at the date of the Eligible Executive's retirement (i.e. not reflecting any cost of living increases subsequent to the Eligible Executive's retirement). The Vested Percentage in Section 3 hereof shall be determined as follows: Continued Employment until: Vested Percentage --------------------------- ----------------- January 31, 2001 25% January 31, 2002 50% January 31, 2003 75% January 31, 2004 100% Notwithstanding the above, the Vested Percentage shall be accelerated to 100% upon the Disability (as defined in Section 4 hereof) or death of the Eligible Executive during his status as an Employee of Met-Pro Corporation. In addition, upon a Change of Control (as defined in Section 9 hereof) occurring during the Eligible Executive's period of employment with Met-Pro Corporation, the Vested Percentage shall be accelerated to 100%. Except for benefits payable as a result of a "Change in Control," as defined in Section 9 hereof, the benefit payable under this Supplemental Plan will be payable to the same individual as the benefit payable under the Pension Plan, will be payable under the same form of pension as the benefit payable under the Pension Plan, will be determined based on the same actuarial assumptions used under the Pension Plan (other than the actuarial assumptions used to compute lump sum payments) and will commence at the same date as the benefit payable under the Pension Plan. A schedule of benefits payable under this Supplemental Plan will be delivered to each Eligible Executive as soon as practicable before benefits commence. Terms will be as defined in this Supplemental Plan, or otherwise as defined in the Pension Plan. -3- Exhibit 10(o) MET-PRO CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN 4. Disability. For purposes of the Supplemental Plan "Disability" shall mean the Eligible Executive's inability to perform the usual duties required in his position as Chief Executive Officer of Met-Pro Corporation as determined by a physician selected by the Board of Directors of the Company with the consent of the Eligible Executive which consent will not be unreasonably withheld. 5. Source of Benefits. The benefits payable under the Supplemental Plan shall be paid exclusively from the Company's general assets. In this regard, the Company may create a grantor trust (within the meaning of section 671 of the Code) in connection with the Supplemental Plan to which it may from time to time contribute amounts to accumulate a reserve against its obligations hereunder. Such trust and any assets held by such trust to assist the Company in meeting its obligations under the Supplemental Plan shall conform to the terms of the model trust as described in Internal Revenue Service Procedure 92-64 (I.R.B. 1992-33). Notwithstanding the creation of such trust, the benefits hereunder shall be a general obligation of the Company. Payment of benefits from such trust shall, to that extent, discharge the Company's obligations under this Supplemental Plan. The Eligible Executive shall have only a contractual right as general creditor of the Company to the amounts, if any, payable hereunder and such right shall not be secured by any assets of the Company. 6. Construction. The Company intends the Supplemental Plan to be a benefit plan which is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees, within the meaning of Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and any ambiguities in construction -4- Exhibit 10(o) MET-PRO CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN shall be resolved in favor of interpretations which will effectuate such intention. The Supplemental Plan shall be governed by and construed in accordance with the laws of Pennsylvania to the extent such laws are not preempted by ERISA. 7. Administration of the Supplemental Plan. The Supplemental Plan shall be administered by the Compensation Committee of the Board of Directors of the Company (the "Committee"), subject to the oversight of the Board of Directors of the Company (the "Board"). The Board shall have authority to make, amend, interpret and enforce all appropriate rules and regulations for the administration of the Supplemental Plan and decide or resolve any and all questions including interpretations of the Supplemental Plan as may arise in connection with the Supplemental Plan. The Board may employ agents and delegate to them such administrative duties as it sees fit and may consult with counsel who may be counsel to the Company. The decision or action of the Board in respect of any question arising out of or in connection with the administration, interpretation and application of the Supplemental Plan and the rules and regulations thereunder shall be final and conclusive and binding upon all persons having any interest therein subject to the claim and arbitration procedures contained in Section 11 hereof. 8. Termination, Suspension or Amendment. The Board in its sole discretion may terminate, suspend or amend the Supplemental Plan at any time or from time to time, in whole or in part, provided, however, that no such termination, suspension or amendment shall adversely affect the accrued benefit of the Eligible Executive of the Company, their surviving spouses or other beneficiaries to the extent of the Vested Percentage or the benefit of any individual who is then vested and/or entitled to or receiving a benefit. -5- Exhibit 10(o) MET-PRO CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN 9. Acceleration of Payments. In the event a "Change of Control" of the Company (as hereinafter defined) shall be deemed to occur (whenever such shall occur, and whether or not the Eligible Executive is then employed by the Company or shall be alive), all payments due to the Eligible Executive, his surviving spouse or other beneficiary under this Supplemental Plan shall be accelerated and immediately paid in a lump sum payment in an amount determined in accordance with the provisions of this Supplemental Plan. At the time of a Change of Control the Eligible Executives shall be deemed to be 100% vested. The aggregate amount of all such lump sum payments shall be paid by the Company to the Eligible Executive, to the extent not paid from a grantor trust (referred to in Section 5 hereof) established by the Company. The lump sum payment to each participant and each other individual entitled to a benefit under this Supplemental Plan shall be equal to the lump sum present value of the amount of the participant's or other individual's monthly benefit under the Supplemental Plan, determined as of the date of the Change of Control, in accordance with the methodology set forth in the Pension Plan, except that the actuarial factors used to calculate the lump sum present value will be the factors used under the Pension Plan to calculate actuarial equivalence or to calculate the value of a lump sum, whichever results in a greater benefit. The Company, and to the extent such benefit is funded under the trust, the trustee shall issue to each participant and each other individual entitled to a benefit the amount of lump sum payment calculated on his behalf immediately upon the Change of Control. In addition to the lump sum payment described above, the Company shall reimburse Eligible Executive, surviving spouses or other beneficiaries who receives such a lump sum payment for any excise tax (and any excise tax due with respect to such reimbursement) imposed on such lump sum payments in connection -6- Exhibit 10(o) MET-PRO CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN with a Change of Control of the Company pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended. For purposes of this Supplemental Plan, a "Change of Control" shall be deemed to occur: (a) If any "person" or "group of persons", which person or group of persons are not part of present management and are acting in concert (as the term "person" is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Act")) becomes the "beneficial owner" (as defined in Rule 13d-3 promulgated under the Act) directly or indirectly of securities of the Corporation representing thirty (30%) percent or more of the combined voting power of the Corporation's then outstanding securities; or (b) If at any time there shall be a change in the composition of the Corporation's Board of Directors resulting in a majority of such Directors as of the date hereof no longer constituting such a majority; provided, however, that in making any such determination as to change in composition, there shall be excluded any change where the new Director was elected by or upon recommendation of such present majority; (c) If the approval by the stockholders of the Corporation of a reorganization, merger or consolidation, in each case, with respect to which persons who were stockholders of the Corporation immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than fifty (50%) percent of the -7- Exhibit 10(o) MET-PRO CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN combined voting power of the reorganized, merged or consolidated Corporation's then outstanding securities entitled to vote generally in the election of Directors or with respect to a liquidation or dissolution of the Corporation or the sale of all or substantially all of the Corporation's assets; or (d) At any time that the Corporation's Board of Directors, in its sole discretion, determines that a Change in Control has occurred, regardless of whether such determination relates to any of the aforementioned events. 10. General Conditions. No interest of any person and no benefit payable hereunder shall be assigned as security for a loan and any such purported assignment shall be null, void and of no effect. No such interest or benefit shall be subject in any manner, either voluntarily or involuntarily, to anticipation, sale, transfer, assignment or encumbrance by or through any person and any such purported action shall be null, void and of no effect. The Eligible Executive or any other person shall have no legal or equitable right or interest in the Supplemental Plan which is not expressly granted hereunder. Participation hereunder does not give the Eligible Executive any right to be retained in the service of the Company or to continue in its employ, and the right and power of the Company to dismiss or discharge the Eligible Executive is expressly reserved; provided that no such termination, dismissal, discharge or severance shall affect any right of the Eligible Executive to the benefits hereunder. 11. Claim and Arbitration Procedures. Claims for benefits under this Supplemental Plan will be adjudicated in accordance with the benefit claims procedures contained in the Pension Plan. By accepting participation in this Supplemental Plan, each Eligible Executive agrees that any dispute not resolved -8- Exhibit 10(o) MET-PRO CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN under the benefit claim procedures will be submitted to final and binding arbitration with the American Arbitration Association in Philadelphia, PA in accordance with the rules of the American Arbitration Association. In the event that an Eligible Employee prevails on any part of his disputed claim, the Company will reimburse or pay all of the Eligible Employee's costs of arbitration, including attorney's fees. 12. Effective Date. The effective date of this Supplemental Plan is February 1, 2000. Executed this 17th day of August 2000. By: /s/ Gary J. Morgan ------------------------------- Gary J. Morgan Vice President - Finance Attest: /s/ Marian Berkey ----------------------- Marian Berkey EX-23 15 exhibit23.txt Exhibit 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report dated February 22, 2001 included or incorporated by reference in this annual report on Form 10-K for Met-Pro Corporation for the year ended January 31, 2001. /s/ MARGOLIS & COMPANY P.C. --------------------------- Certified Public Accountants Bala Cynwyd, PA 19004 March 30, 2001 EX-27 16 exhibit27.txt FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 12-MOS JAN-31-2001 JAN-31-2001 8,510,045 0 14,208,689 218,365 13,085,969 37,412,259 29,076,147 16,066,900 69,151,341 12,957,995 9,933,014 720,658 0 0 46,340,708 69,151,341 81,203,550 81,203,550 53,242,396 68,689,664 0 0 694,112 12,344,503 4,570,783 7,773,720 0 0 0 7,773,720 1.26 1.26
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