10-K

UNITED STATES 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

 For fiscal year ended: January 31, 2007

or

[     ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-07763

MET-PRO CORPORATION

(Exact name of registrant as specified in its charter)

Pennsylvania	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 Shares, par value $0.10 per share	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

Common Shares, par value $0.10 per share

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [   ] No [ X ]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes [   ]  No [ X ]

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.[ X ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 under the Exchange Act. Large accelerated filer  [   ]  Accelerated filer  [ X ]  Non-accelerated filer  [   ]

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes []  No [ X ]

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average of the bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $144,539,043.

The number of Registrant’s outstanding Common Shares was 11,220,577 as of April 13, 2007.

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 Shareholders to be held on June 6, 2007	III

FORM 10-K

Index

	Page
PART I

Item 1.	Business	1
	Executive Officers of the Registrant	6
Item 1A.	Risk Factors	7
Item 1B.	Unresolved Staff Comments	9
Item 2.	Properties	10
Item 3.	Legal Proceedings	11
Item 4.	Submission of Matters to a Vote of Security Holders	11

Item 5.	Market for the Registrant’s Common Equity, Related Shareholder Matters and  Issuer Purchases of Equity Securities	12
Item 6.	Selected Financial Data	14
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
	Forward-Looking Statements; Factors That May Affect Future Results	22
Item 7A.	Quantitative and Qualitative Disclosure About Market Risks	23
Item 8.	Financial Statements and Supplementary Data	24
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	54
Item 9A.	Controls and Procedures	54
Item 9B.	Other Information	54

Item 10.	Directors, Executive Officers and Corporate Governance	55
Item 11.	Executive Compensation	55
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	55
Item 13.	Certain Relationships and Related Transactions, and Director Independence	55
Item 14.	Principal Accountant Fees and Services	55

Item 15. Exhibits and Financial Statement Schedules 56

SIGNATURES 60

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, perhaps for reasons described in “Risk Factors”, and perhaps for other unanticipated reasons. 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 Operations - Forward-Looking Statements; Factors That May Affect Future Results.” Readers should also carefully review the risk factors identified in this Annual Report and in 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 and reincorporated in the State of Pennsylvania on July 31, 2003, manufactures and sells product recovery and pollution control equipment for purification of air and liquids, and fluid handling equipment for corrosive, abrasive and high temperature liquids. The Company markets and sells its products through its own personnel, distributors, representatives and agents. 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 Shares began trading on the New York Stock Exchange, where it currently trades under the symbol “MPR”.

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. Our website address is www.met-pro.com.

Our Annual Report on Form 10-K and other reports filed pursuant to Section 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are made available free of charge on or through our website at www.met-pro.comas soon as reasonably practicable after such reports are filed with, or furnished to, the Securities and Exchange Commission (the “SEC”). Copies of our (i) Corporate Governance Guidelines, (ii) charters for the Audit Committee, Compensation and Stock Option Committee, and Corporate Governance and Nominating Committee, and (iii) Code of Business Conduct and Ethics are available at www.met-pro.com under the “Investor Relations - Corporate Governance” captions. Copies will also be provided to any shareholder upon written request to the Secretary, Met-Pro Corporation, 160 Cassell Road, P.O. Box 144, Harleysville, Pennsylvania 19438.

Except where otherwise indicated by the context used herein, references to the “Company”, “we”, “our” and “us” refer to Met-Pro Corporation, its divisions and its wholly-owned subsidiaries.

Products, Services and Markets:

The Company has identified six operating segments and has aggregated those operating segments into two reportable segments as follows: Product Recovery/Pollution Control Technologies and Fluid Handling Technologies, and one other segment (Filtration/Purification Technologies). The Filtration/Purification Technologies segment is comprised of four operating segments that do not meet the criteria for aggregation outlined in Statement of Financial Accounting Standards (“SFAS”) No. 131, but which can be combined due to certain quantitative thresholds listed in SFAS No. 131.

The following is a description of each segment:

Product Recovery/Pollution Control Technologies Reporting Segment:

This reportable segment consists of one operating segment that manufactures products for the purification of air or liquids. Many of these products are custom designed and engineered to solve a customer’s pollution control or product recovery issues. The products are sold worldwide through Company sales personnel and a network of manufacturer’s representatives. This reporting segment is comprised of the Duall, Systems, Flex-Kleen and Strobic Air business units.

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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 chemical and AroBIOS biological odor control systems, fume and emergency gas scrubbers, HydroLance wet particulate collectors, air strippers and degasifiers for contaminated groundwater treatment, ducting and exhaust fans. All equipment is fabricated from corrosion resistant materials. Duall’s support services include pilot studies, engineering, installation, preventative maintenance, and performance testing. Duall products are sold both domestically and internationally to the metal finishing, plating, wastewater treatment, composting, food processing, ethanol production, chemical, printed circuit, semiconductor, steel pickling, pharmaceutical, battery manufacturing and groundwater remediation markets. Market specific sales managers and factory trained manufacturer’s representatives sell Duall’s engineered systems to industrial and municipal clients.

Systems Division, located in Harleysville, 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, regenerative thermal oxidizers, enclosed flares and the supply of abatement catalysts. These systems are custom engineered for clients in the emerging ethanol industry as well as the automotive, aerospace and furniture industries. Additional applications include painting, pharmaceutical, petrochemical, chemical, electronics, food processing and printing industries. Systems Division’s in-depth engineering capabilities allow plant owners to satisfy strict air pollution regulations while minimizing fuel costs. Systems Division also offers a full range of catalyst products for the oxidation of pollutants, which include catalysts for the oxidation of chlorinated solvents and low temperature oxidation catalysts. Systems Division products are sold worldwide by a combination of in-house personnel and manufacturer’s representatives.

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 industrial and consumer goods, food products and pharmaceuticals. While some of Flex-Kleen’s products are used for nuisance collection of particulates to conform to environmental concerns, the larger portion of its sales activity is for product collection and is process driven. Flex-Kleen’s products are sold through manufacturer’s representatives located across the United States and Canada.

Strobic Air Corporation, located in Harleysville, Pennsylvania, a recognized technological leader in the air movement industry, designs and manufactures technologically advanced exhaust systems for laboratory fume hoods in university, public health, government, chemical, pharmaceutical, industrial and other process industries. With three decades of experience in addressing the needs of laboratory researchers and facility owners, Strobic Air has continued to develop and enhance its Tri-Stack™ roof exhaust systems to provide even greater flows, lower energy costs and decreased noise levels. Strobic Air Tri-Stack™ laboratory fume hood exhaust systems meet the requirements of ANSI Z9.5, American National Standard for Laboratory Ventilation. Heat recovery systems by Strobic Air provide energy conservation on laboratory fume hood exhaust systems. Unique glycol/water heat exchanger coil modules for Tri-Stack™ systems extract exhaust heat for heating or cooling conditioned makeup air. Strobic’s HEPA filtration system complies with ventilation standards for specialized care environments such as airborne infection isolation rooms. Sales, engineering and customer service are provided both internally and through a network of manufacturer’s representatives located in offices worldwide.

Fluid Handling Technologies Reporting Segment:

This reportable segment is comprised of one operating segment that manufactures high quality horizontal, vertical, and in-tank centrifugal pumps that handle corrosive, abrasive, and high temperature liquids. This combination of pump types and configurations provides products that excel in applications requiring corrosion resistance such as: the pumping of acids, brines, caustics, bleaches, seawater, a wide variety of waste liquids, and high temperature liquids used in many industrial and commercial applications. These products are sold worldwide through an extensive network of distributors. This reporting segment is comprised of the Dean Pump, Fybroc and Sethco business units.

Dean Pump Division, located in Indianapolis, Indiana, designs and manufactures high quality horizontal and vertical centrifugal pumps that handle a broad range of applications. Industrial markets served include the chemical, petrochemical, refinery, pharmaceutical, plastics, pulp and paper, and food processing industries. Commercial users include hospitals, universities, and laboratories. Both groups choose Dean Pump products for their quality and for their products’ suitability to handle difficult applications, particularly on high temperature liquid applications. The Division’s products are sold worldwide through an extensive network of distributors.

Fybroc Division, located in Telford, Pennsylvania, is the world leader in the manufacture of fiberglass reinforced plastic (“FRP”) centrifugal pumps. These pumps provide excellent corrosion resistance for tough applications including the 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%). Fybroc pumps are sold to many markets including the chemical, petrochemical, pharmaceutical, fertilizer, pesticides, steel, pulp and paper, electric utility, aquaculture, aquarium, commercial marine/navy, desalination/water reuse, and industrial and municipal waste treatment industries. The Division’s products are sold worldwide through an extensive network of distributors.

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Sethco Division, which was moved to our recently expanded Telford, Pennsylvania facility, designs, manufactures and sells a variety of horizontal and vertical corrosion resistant pumps with flow rates of up to approximately 250 gallons per minute. Primarily manufactured from polypropylene or Kynar (PVDF), Sethco’s products are used extensively in the metal finishing, electronics, chemical processing and waste water treatment industries. Sethco’s products are sold directly through Company regional sales managers and through a worldwide network of non-exclusive distributors, catalog houses, and original equipment manufacturers.

Filtration/Purification Technologies Segment:

This other segment consists of four operating segments that produce the following products: proprietary chemicals for the treatment of municipal drinking water systems and boiler and cooling tower systems; cartridges and filter housings; filtration products for difficult industrial air and liquid applications; and filter systems using horizontal disc technology. This other segment is comprised of the Keystone Filter, Pristine Water Solutions, Mefiag and Mefiag B.V. operating segments.

Keystone Filter Division, located in Hatfield, Pennsylvania, is an established custom pleater and filter cartridge manufacturer. 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 directly through Company regional sales managers and through a non-exclusive distributor network.

Pristine Water Solutions Inc. (“Pristine”), located in Waukegan, Illinois, is a leading manufacturer of safe and reliable water treatment compounds. Pristine is the consolidation of the Company’s Stiles-Kem Division and Pristine Hydrochemical Inc. businesses including product lines and operations into a wholly owned subsidiary of Met-Pro Corporation. This consolidation was effective as of February 1, 2006. Products sold by Pristine have been used in the public drinking water industry since 1955. Pristine’s Aquadene™ products are designed to eliminate problems created by high iron and manganese levels in municipal water systems. They also reduce scaling and general corrosion tendencies within water distribution piping systems as well as help municipalities meet soluble lead and copper limits in drinking water. These food grade products are NSF/ANSI approved for use in municipal drinking water supplies and are certified to meet or exceed existing state and federal guidelines. Pristine’s product line also includes coagulant and flocculent polymer products for both municipal and industrial applications which is used to improve water clarity and reduce sludge volume. Pristine also markets a chlorine dioxide treatment program for municipal drinking water disinfection which helps customers reduce trihalomethane formation as required by the EPA. In addition, Pristine markets and sells a line of Bio-Purge™ products for drinking well water remediation as well as boiler and cooling tower chemicals and services to industrial and commercial markets. This allows customers to maximize their heat transfer efficiency and save operating costs through energy conservation. Pristine’s products are sold directly through Company regional sales managers or agents and also through a network of distributors located in the United States and Canada. The company offers technical and laboratory customer support from the Waukegan facility.

Mefiag B.V., operating as the Company’s wholly-owned subsidiary, Mefiag B.V., located in Heerenveen, The Netherlands, and the Company’s indirect wholly-owned subsidiary, Mefiag (Guangzhou) Filter Systems Ltd., located in Guangzhou, the People’s Republic of China, designs, manufactures and sells filter systems utilizing horizontal disc technology for superior performance, particularly in high efficiency and high-flow applications. Mefiag® filters are used in tough, corrosive applications in the plating, metal finishing and printing industries. Worldwide sales are accomplished directly through Company regional sales managers, qualified market-based distributors and original equipment manufacturers located throughout Europe, Asia and other major markets around the world.

Mefiag Division, located in Owosso, Michigan, designs, manufactures and sells horizontial disc, cartridge, bag, carbon, and oil adsorbing filter products for use in tough, corrosive applications in the plating, metal finishing and printing industries. Sales in the Americas are generated directly through Company regional sales managers, qualified market-based distributors and original equipment manufacturers.

United States Sales versus Foreign Sales:

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,
	2007		2006		2005
United States	74.7	%	75.3	%	78.6	%
Foreign	25.3	%	24.7	%	21.4	%
Net Sales	100.0	%	100.0	%	100.0	%

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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, as a whole, to be seasonal in nature, although a limited number of its product lines are 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 Technologies reporting 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 select product lines and niche markets.

With respect to the Product Recovery/Pollution Control Technologies reporting segment, we compete with numerous smaller as well as larger competitors, but there are no companies that dominate the markets in which we participate.

With respect to the Filtration/Purification Technologies segment, we compete with numerous smaller as well as larger competitors, but there are no companies that dominate the markets in which we participate.

The Company is unable to state with certainty its relative positions in its various markets, but believes that it is a leading and respected competitor in each of its niche markets.

Research and Development:

Due in part to the diversity of the Company’s products, research and development activities have been typically initiated and conducted on an operating segment basis.  Effective February 1, 2007, the Company created the position of Technical Director who will be responsible for coordinating the Company's research and development activities on a corporate-wide basis. 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’s technological capabilities 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 $2.3 million, $2.0 million and $2.2 million for the years ended January 31, 2007, 2006 and 2005, respectively.

Patents and Trademarks:

The Company has a number of patents and trademarks. The Company considers these rights important to certain of its businesses, although it considers no individual right material to its business as a whole.

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

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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 which are subject to negotiation and acceptance by the Company, at which point the Company considers the order to be “booked” and to be in backlog. Certain orders may be subject to customer approvals, most typically, approval of engineering drawings. The rate of the Company’s bookings of new orders varies from month to month. Orders have varying delivery schedules, and as of any particular date, the Company’s backlog may not be predictive of actual revenues for any succeeding specific period, in part due to potential customer requested delays in delivery the extent and duration of which may vary widely from period to period. Additionally, the Company’s customers typically have the right to cancel a given order, although the Company has historically experienced a very low rate of cancellation.

The dollar amount of the Company’s backlog of orders totaled $28,638,162 and $17,709,684 as of January 31, 2007 and 2006, respectively. The Company expects that substantially all of the backlog that existed as of January 31, 2007 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 as 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, 2007, the Company employed 365 people, of whom 147 were involved in manufacturing, and 218 were engaged in administration, sales, engineering, supervision and clerical work. The Company has had no work stoppages during the past five 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, The Netherlands, through its wholly-owned subsidiary, Mefiag B.V., and operates a sales office and warehouse in Barrie, Ontario, Canada through its wholly-owned subsidiary, Flex-Kleen Canada Inc. In the fiscal year ended January 31, 2006, the Company established an indirect wholly-owned subsidiary in the People’s Republic of China, Mefiag (Guangzhou) Filter Systems Ltd., to assemble the Mefiag line of products initially for sale to China’s domestic plating and metal-finishing industry.

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 reporting segment basis, reference is made to the Consolidated Business Segment Data contained on page 32.

New York Stock Exchange and Securities and Exchange Commission Certifications:

During the fiscal year ended January 31, 2007, the Company submitted to the New York Stock Exchange (the "NYSE") the certification of the Chief Executive Officer that he was not aware of any violation by Met-Pro Corporation of the NYSE's corporate governance listing standards as required by Section 303A.12(a) of the New York Stock Exchange Listed Company Manual. In addition, the Company has filed with the SEC, as exhibits to this Form 10-K for the fiscal year ended January 31, 2007, the Chief Executive Officer's and Chief Financial Officer's certifications regarding the quality of the Company's public disclosure, disclosure controls and procedures, and internal controls over financial reporting as required by Section 302 of the Sarbanes-Oxley Act of 2002 and related SEC rules.

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Executive Officers of the Registrant:

The following table sets forth certain information regarding the Executive Officers of the Registrant:

Raymond J. De Hont, age 53, is Chairman of the Board, Chief Executive Officer and President of the Company. Mr. De Hont was elected Chairman of the Board in September 2003. He was elected President and Chief Executive Officer in March 2003 and a Director of the Company in February 2003. Mr. De Hont served as the Chief Operating Officer of the Company from June 2000 to March 2003. From June 1995 to December 2000, Mr. De Hont was Vice President and General Manager of the Company’s Fybroc Division, during which time, starting in October 1999, he also served as General Manager for the Company’s Dean Pump Division. Prior to joining Met-Pro Corporation, Mr. De Hont was employed by Air and Water Technologies, where among other positions he was Vice President and General Manager of Flex-Kleen Corporation, the business of which is now owned by the Company.

Gary J. Morgan, CPA, age 52, is Senior Vice President-Finance, Chief Financial Officer, Secretary, Treasurer and a Director of the Company. He was appointed Vice President-Finance, Chief Financial Officer, Secretary and Treasurer in October 1997, and became 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.

James G. Board, age 53, is Executive Vice President of the Company and the General Manager of Dean Pump, Fybroc and Sethco Divisions. Mr. Board joined the Company in December 2000 as Vice President of the Company and General Manager of Dean Pump and Fybroc Divisions and served in these positions until March 2006, at which time he was appointed to his present position. In February 2006, he assumed the additional responsibilities for the management of the Company’s Sethco Division. For more than five years prior to joining the Company, Mr. Board was employed by Tuthill Energy Systems as Director of Sales.

Paul A. Tetley, age 48, is Executive Vice President of the Company, a position to which he was appointed in March 2006, with responsibilities for Duall, Flex-Kleen, Systems and the International Sales Divisions, as well as for Strobic Air Corporation where he continues to serve as General Manager, a position he has held since December 1999. Mr. Tetley joined the Company in 1996 in connection with the Company’s acquisition of the business now conducted by Strobic Air Corporation, where he had worked as the Engineering/Production Manager.

Robert P. Replogle, age 66, is Vice President of the Company and in February 2006 became Assistant to the President. Mr. Replogle served as General Manager of the Company’s Sethco Division from August 2003 until February 2006, and as General Manager of Mefiag Division from July 1993 until February 2006. Prior to July 1993, Mr. Replogle served as Director of the International Sales Division.

Gregory C. Kimmer, age 52, is Vice President of the Company and General Manager of the Duall Division, to which offices he was appointed in October 1989. For more than five years prior thereto, Mr. Kimmer was employed by the company whose business is now operated as the Duall Division.

Lewis E. Osterhoudt, age 56, is Vice President of the Company and General Manager of the Keystone Filter Division, to which offices he was appointed in June 2004. Mr. Osterhoudt joined the Company in March 2004, initially serving as Assistant to the President. For more than five years prior thereto, Mr. Osterhoudt was employed by Hardy Machine and Design Inc. and I.O. Gold Systems Inc., most recently as Operations Manager and President, respectively.

Vincent J. Verdone, age 59, is Vice President of the Company and General Manager of the Company’s Pristine Water Solutions Inc. subsidiary. Mr. Verdone joined the Company in January 2005. For more than five years prior thereto, Mr. Verdone was employed by Ashland Inc., in which his last position was North American Corporate Sales Manager.

There are no family relationships between any of the Directors or Executive Officers of the Registrant. Each officer serves at the pleasure of the Board of Directors, subject, however, to agreements the Company has with certain officers providing for compensation in the event of termination of employment following a change in control of the Company. See “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” referenced in Item 12 of this Report.

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Item 1A.  Risk Factors:

Any of the events discussed as risk factors below may occur. If they do, our business, financial condition, results of operations and cash flows could be materially adversely affected. Additional risks and uncertainties not identified in this or other SEC filings, or that we currently deem immaterial, may also impair our business operations.

We sell our products in highly competitive markets, which puts pressure on our profit margins and limits our ability to maintain or increase the market share of our products.

The markets for our products are fragmented and highly competitive. We compete against a very diverse number of companies across our many markets. Depending upon the market, our competitors include large and well-established national and global companies; regional and local companies; low cost replicators of spare parts; and in-house maintenance departments of our end user customers. We compete based on price, technical expertise, timeliness of delivery, previous installation history and reputation for quality and reliability, with price competition tending to be more significant for sales to original equipment manufacturers. Some of our customers are attempting to reduce the number of vendors from which they purchase in order to reduce the size and diversity of their inventory. To remain competitive, we will need to invest continuously in manufacturing, marketing, customer service and support, and our distribution networks. No assurances can be made that we will have sufficient resources to continue to make the investment required to maintain or increase our market share or that our investments will be successful. If we do not compete successfully, our business, our financial condition, results of operations and cash flows could be adversely affected.

If we fail to comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, our business prospects and stock valuation could be adversely affected.

Section 404 of the Sarbanes-Oxley Act of 2002 requires our management to report on, and our independent registered public accounting firm to attest to, the effectiveness of our internal control over financial reporting. We have expended significant resources to comply with our obligations under Section 404 with respect to the fiscal years ended January 31, 2007, 2006 and 2005. If we are unable to comply with our obligations under Section 404 in the future or experience delays in future reports of our management and outside auditors on our internal control over financial reporting, or if we fail to respond timely to any changes in the Section 404 requirements, we may be unable to timely file with the SEC our periodic reports and may be subject to, among other things, regulatory or enforcement actions by the SEC and the NYSE, including delisting from the NYSE, securities litigation, events of default under our credit facilities, debt rating agency downgrades or rating withdrawals and a general loss of investor confidence, any one of which could adversely affect our business prospects and the valuation of our Common Shares.

We are party to asbestos-containing product litigation that could adversely affect our financial condition, results of operations and cash flows.

Beginning in 2002, the Company and/or one of its divisions began to be named as one of many defendants in asbestos-related lawsuits filed predominantly in Mississippi on a mass basis by large numbers of plaintiffs against a large number of industrial companies including in particular those in the pump and fluid handling industries. More recently, the Company and/or this division have been named as one of many pump and fluid handling defendants in asbestos-related lawsuits filed in New York and Maryland by individual plaintiffs, sometimes husband and wife. To a lesser extent, the Company and/or this division have also been named together with many other pump and fluid handling defendants in these type of cases in other states as well. The complaints filed against the Company and/or this division have been vague, general and speculative, alleging that the Company, and/or the division, along with the numerous other defendants, sold unidentified asbestos-containing products and engaged in other related actions which caused injuries and loss to the plaintiffs. The Company believes that it and/or the division have meritorious defenses to the cases which have been filed and that none of its and/or the division's products were a cause of any injury or loss to any of the plaintiffs. The Company’s insurers have hired attorneys who together with the Company are vigorously defending these cases. The Company and/or the division have been dismissed from or settled a number of these cases. The sum total of payments made through January 31, 2007 to settle these cases is $305,000, all of which has been paid by the Company’s insurers including legal expenses, except for corporate counsel expenses, with an average cost per settled claim, excluding legal fees, of approximately $28,000. As of January 31, 2007, there were a total of 37 cases pending against the Company, as compared to 51 cases that were pending as of January 31, 2006. During the fiscal year ended January 31, 2007, 20 new cases were filed against the Company, and the Company was dismissed from or settled 34 cases. Most of the pending cases have not advanced beyond the early stages of discovery, although several cases are on schedules leading to trial. The Company presently believes that none of the pending cases will have a material adverse impact upon the Company’s results of operations, liquidity or financial condition.

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If we are unable to obtain raw materials at favorable prices, our operating margins and results of operations will be adversely affected.

We purchase substantially all electric power and other raw materials we use in the manufacturing of our products from outside sources. The costs of these raw materials have been volatile historically and are influenced by factors that are outside our control. In recent years, the prices for energy, metal alloys and certain other of our raw materials have increased, with the prices for energy currently exceeding historical averages. If we are unable to pass increases in the costs of our raw materials to our customers, our operating margins and results of operations will be adversely affected.

Significant changes in pension fund investment performance or assumptions relating to pension costs may have a material effect on the valuation of our obligations under our defined benefit pension plans, the funded status of these plans and our pension expense.

We maintain defined benefit pension plans that we must fund. In these plans’ fiscal years ended October 31, 2006, we contributed approximately $0.1 million to these plans. As of January 31, 2007, our unfunded pension liability was approximately $3.3 million. The amount of this pension liability is materially affected by the discount rate used to measure our pension obligations and, in the case of the plans such as ours that are required to be funded, the level of plan assets available to fund those obligations and the expected long-term rate of return on plan assets. A change in the discount rate can result in a significant increase or decrease in the valuation of pension obligations, affecting the reported status of our pension plans and our pension expense. Significant changes in investment performance or a change in the portfolio mix of invested assets can result in increases and decreases in the valuation of plan assets or in a change of the expected rate of return on plan assets. Changes in the expected return on plan assets assumption can result in significant changes in our pension expense. During the third quarter ended October 31, 2006, the Company amended its defined benefit pension plans to freeze the accrual of future benefits for all its salaried and non-union hourly employees, effective on December 31, 2006.

We may incur material costs as a result of product liability and warranty claims, which could adversely affect our financial condition, results of operations and cash flows.

We may be exposed to product liability and warranty claims in the event that the use of our products results, or is alleged to result, in bodily injury and/or property damage or our products actually or allegedly fail to perform as expected. While we maintain insurance coverage with respect to certain product liability claims, we may not be able to obtain such insurance on acceptable terms in the future, if at all, and any such insurance may not provide adequate coverage against product liability claims. In addition, product liability claims can be expensive to defend and can divert the attention of management and other personnel for significant periods of time, regardless of the ultimate outcome. An unsuccessful defense of a product liability claim could have an adverse affect on our business, results of operations and financial condition and cash flows. Even if we are successful in defending against a claim relating to our products, claims of this nature could cause our customers to lose confidence in our products and our company. Warranty claims are not covered by insurance, and we may incur significant warranty costs in the future for which we would not be reimbursed.

Natural or man-made disasters could negatively affect our business.

Future disasters caused by earthquakes, hurricanes, floods, terrorist attacks or other events, and any potential response by the U.S. government or military, could have a significant adverse effect on the general economic, market and political conditions, which in turn could have a material adverse effect on our business.

We plan to expand the international distribution and manufacturing of our products, which will subject us to additional business risks.

As part of our business strategy, we intend to increase our international sales, although we cannot assure you that we will be able to do so. In the fiscal year ended January 31, 2006, through an indirectly wholly-owned subsidiary we established manufacturing operations for our Mefiag business in the People’s Republic of China, in addition to our long-standing Mefiag manufacturing operations in The Netherlands. Conducting business outside of the United States subjects us to significant additional risks, including:

· export and import restrictions, tax consequences and other trade barriers,

· currency fluctuations,

· greater difficulty in accounts receivable collections,

· economic and political instability,

· foreign exchange controls that prohibit payment in U.S. dollars, and

· increased complexity and costs of managing and staffing international operations.

8

Our products could infringe the intellectual property rights of others and we may be exposed to costly litigation.

The products we sell are continually changing as a result of improved technology. Although we and our suppliers attempt to avoid infringing known proprietary rights of third parties in our products, we may be subject to legal proceedings and claims for alleged infringement by us, our suppliers or our distributors, of third parties’ patents, trade secrets, trademarks or copyrights.

Any claims relating to the infringement of third-party proprietary rights, even if not meritorious, could result in costly litigation, divert management's attention and resources, or require us to either enter into royalty or license agreements which are not advantageous to us, or pay material amounts of damages. In addition, parties making these claims may be able to obtain an injunction, which could prevent us from selling our products. We may increasingly be subject to infringement claims as we expand our product offerings.

Our ability to operate our Company effectively could be impaired if we fail to attract and retain key personnel.

Our ability to operate our businesses and implement our strategies depends, in part, on the efforts of our executive officers and other key employees. In addition, our future success will depend on, among other factors, our ability to attract and retain qualified personnel, particularly research professionals, technical sales professionals and engineers. The loss of the services of any key employee or the failure to attract or retain other qualified personnel could have a material adverse effect on our business or business prospects.

If our goodwill or indefinite-lived intangible assets become impaired, we may be required to record a significant charge to earnings.

We carry approximately $20.8 million of goodwill on our balance sheet, or approximately 21% of our total assets. Approximately $11.1 million of the $20.8 million relates to our Flex-Kleen Division. Under United States generally accepted accounting principles, goodwill and indefinite-lived intangible assets are not amortized but are reviewed for impairment on an annual basis or more frequently whenever events or changes in circumstances indicate that their carrying value may not be recoverable. The Flex-Kleen Division, which initially performed well after being acquired by Met-Pro, thereafter had several years of declining performance which we attributed primarily to a general weakness in its served markets, followed by improved performance in the fiscal years ended January 31, 2007, 2006 and 2005. We have also made management changes at Flex-Kleen which we believe are helping to improve Flex-Kleen’s performance. During the fiscal year ended January 31, 2007, we performed an impairment analysis of the $11.1 million of goodwill that the Company carries for Flex-Kleen and concluded that no impairment has occurred. Flex-Kleen’s performance needs to continue to improve in order for us not to be required to write-off some or all of its goodwill. If in the future we determine that there has been an impairment of Flex-Kleen’s goodwill, we will be required to record a charge to earnings, to the extent of the impairment, during the period in which any impairment of our goodwill or indefinite-lived intangible assets is determined, which would produce an adverse impact upon our results of operations. For the fiscal year ended January 31, 2007, the actual net sales and operating profit for our Flex-Kleen business unit have exceeded the projections used in our annual impairment model, and in addition the backlog as of January 31, 2007 for the Flex-Kleen business unit totaled $4.1 million, or an increase of 14.1% over same period last year. Please refer to page 21 “Critical Accounting Policies and Estimates” for additional information concerning goodwill impairment.

Changes in accounting may affect our reported earnings.

For many aspects of our business, United States generally accepted accounting principles, including pronouncements, implementation guidelines, and interpretations, are highly complex and require subjective judgments. Additionally, changes in these accounting principles, including their interpretation and application, could significantly change our reported earnings, adding significant volatility to our reported results without a comparable underlying change in our cash flows.

Additional Risks to the Company.

The Company is subject to various risks occurring in the normal course of business. The Forward-Looking Statements; Factors That May Affect Future Results in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of this Report sets forth a list of risks, including those identified above, that may adversely affect the Company and is incorporated herein by reference.

Item 1B.  Unresolved Staff Comments:

None

9

Item 2.  Properties:

The following manufacturing and production facilities were owned or leased by the Company as of the date of filing this report:

Name	Structure	Property/Location	Status
Executive Offices,	73,000 square foot, cement	17 acres in Harleysville,	Owned
International Division,	building, with finestone facing	Pennsylvania
Systems Division and
Strobic Air Corporation
Keystone Filter Division	31,000 square foot, cement	2.3 acres in Hatfield,	Owned
	block building	Pennsylvania
Sethco and Fybroc Divisions	93,500 square foot, cement	8 acres in Telford,	Owned(1)
	building with brick facing	Pennsylvania
Dean Pump Division	66,000 square foot, metal	17.1 acres in	Owned
	building	Indianapolis, Indiana
Duall Division	63,000 square foot, metal	7 acres in Owosso,	Owned
and Mefiag Division	and masonry building	Michigan
Flex-Kleen Division	13,760 square foot, brick	Itasca, Illinois	Leased(2)
	building
	37,320 square foot, metal	Sharpsburg, North Carolina	Leased(3)
	building
Flex-Kleen Canada Inc.	3,187 square foot, masonry	Barrie, Ontario, Canada	Leased(4)
	building
Pristine Water Solutions Inc.	22,000 square foot, cement	2.55 acres in	Owned
	block building	Waukegan, Illinois
	600 square foot	Minot, North Dakota	Leased(5)
	warehouse facility
Mefiag B.V.	34,000 square foot, metal	1.1 acres in	Owned
	and masonry building	Heerenveen, The Netherlands
	Vacant land	3 acres in	Owned
		Heerenveen, The Netherlands
Mefiag (Guangzhou) Filter	11,000 square foot cement	Guangzhou, People’s Republic	Leased(6)
Systems Ltd.	building	of China

(1)	We completed a 47,000 square foot addition to this facility; the reference to 93,500 square feet includes this addition.
(2)	Flex-Kleen Division’s lease for the operation in Itasca, Illinois expires on December 31, 2007.
(3)	Flex-Kleen Division’s lease for the warehouse in Sharpsburg, North Carolina is on a month to month basis.
(4)	Flex-Kleen Canada Inc.’s lease for the sales and warehouse facility in Barrie, Ontario, Canada expires on February 29, 2008.
(5)	Pristine Water Solutions Inc.’s lease for the warehouse in Minot, North Dakota is on a month to month basis.
(6)	Mefiag (Guangzhou) Filter Systems Ltd.’s lease for the operation in Guangzhou, People’s Republic of China expires on July 31, 2010.

In addition, the Company owns a 30,000 square foot building located on 4 acres in Hauppauge, Long Island, New York. During the second quarter ended July 31, 2006, the Company listed for sale this 30,000 square foot building at an asking price of $5.0 million. The net book value of the land and building amounted to $0.8 million as of January 31, 2007, and is included in the property, plant and equipment, net, section of the consolidated balance sheet.

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Item 3.  Legal Proceedings:

Certain of the statements made in this Item 3 (and elsewhere in this Report) are “forward-looking” statements which are subject to the considerations set forth in “Forward-Looking Statements; Factors That May Affect Future Results” located in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of this Report, and we refer you to these considerations.

Beginning in 2002, the Company and/or one of its divisions began to be named as one of many defendants in asbestos-related lawsuits filed predominantly in Mississippi on a mass basis by large numbers of plaintiffs against a large number of industrial companies including in particular those in the pump and fluid handling industries. More recently, the Company and/or this division have been named as one of many pump and fluid handling defendants in asbestos-related lawsuits filed in New York and Maryland by individual plaintiffs, sometimes husband and wife. To a lesser extent, the Company and/or this division have also been named together with many other pump and fluid handling defendants in these type of cases in other states as well. The complaints filed against the Company and/or this division have been vague, general and speculative, alleging that the Company, and/or the division, along with the numerous other defendants, sold unidentified asbestos-containing products and engaged in other related actions which caused injuries and loss to the plaintiffs. The Company believes that it and/or the division have meritorious defenses to the cases which have been filed and that none of its and/or the division's products were a cause of any injury or loss to any of the plaintiffs. The Company’s insurers have hired attorneys who together with the Company are vigorously defending these cases. The Company and/or the division have been dismissed from or settled a number of these cases. The sum total of payments made through January 31, 2007 to settle these cases is $305,000, all of which has been paid by the Company’s insurers including legal expenses, except for corporate counsel expenses, with an average cost per settled claim, excluding legal fees, of approximately $28,000. As of January 31, 2007, there were a total of 37 cases pending against the Company, as compared to 51 cases that were pending as of January 31, 2006. During the fiscal year ended January 31, 2007, 20 new cases were filed against the Company, and the Company was dismissed from or settled 34 cases. Most of the pending cases have not advanced beyond the early stages of discovery, although several cases are on schedules leading to trial. The Company presently believes that none of the pending cases will have a material adverse impact upon the Company’s results of operations, liquidity or financial condition.

The Company is also party to a small number of other legal proceedings arising in the ordinary course of business. Although the ultimate outcome of any legal matter cannot be predicted with certainty, based upon the present information, including the Company’s assessment of the facts of each particular claim as well as accruals, the Company believes that no pending proceeding will have a material adverse impact upon the Company’s results of operations, liquidity, or financial condition.

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, 2007.

11

PART II

Item 5.  Market for the Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities:

 (a) Market Information. The Company’s Common Shares are traded on the New York Stock Exchange under the symbol “MPR”. The high and low selling prices of the Common Shares for each quarterly period for the last two fiscal years, as reported on the New York Stock Exchange, are shown below (adjusted for four-for-three stock split paid on November 15, 2005).

		Quarter ended
Year ended January 31, 2007	April	July	October	January
Price range of common shares:
High	$15.38	$16.25	$13.70	$15.38
Low	12.67	12.10	12.29	13.23
Cash dividend paid	.0625	.0625	.0625	.0675
Year ended January 31, 2006	April	July	October	January
Price range of common shares:
High	$10.49	$11.48	$11.95	$13.10
Low	9.75	9.76	10.59	11.60
Cash dividend paid	.0581	.0581	.0581	.0625

(b) Holders. There were 450 registered shareholders on January 31, 2007, and the Company estimates that there are approximately 2,000 additional shareholders with shares held in street name.

(c) Stock Split. On October 10, 2005, the Board of Directors declared a four-for-three stock split which was paid on November 15, 2005 to shareholders of record on November 1, 2005. All references to per share amounts, number of shares outstanding, and number of shares covered by stock option and other plans have been restated to reflect the effect of the stock split.

(d) Dividends. The Board of Directors declared quarterly dividends of $.0625 per share payable on March 9, 2006, June 7, 2006, and September 6, 2006 to shareholders of record at the close of business on February 24, 2006, May 26, 2006 and August 24, 2006, respectively. The Board of Directors declared quarterly dividends of $.0675 per share payable on December 14, 2006 and March 14, 2007 to shareholders of record as of November 30, 2006 and February 28, 2007, respectively.

We expect to continue to pay comparable dividends during at least the next fiscal year.

(e) Securities Authorized For Issuance Under Equity Compensation Plans. Set forth below is information aggregated as of January 31, 2007 with respect to three equity compensation plans previously approved by the Company’s shareholders, being the 1997 Stock Option Plan, the 2001 Equity Incentive Plan and the 2005 Equity Incentive Plan. Also included in the table below is information with respect to the Company’s Year 2000 Employee Stock Purchase Plan.

			Number of Securities
			Remaining Available
	Number of Securities		For Future Issuance
	to be Issued Upon	Weighted-Average	Under Equity
	Exercise of	Exercise Price of	Compensation Plans
	Outstanding Options,	Outstanding Options,	(Excluding Securities
Plan Category	Warrants and Rights	Warrants and Rights	Reflected in Column (A))
	(A)	(B)	(C)

Equity compensation plans approved by
security holders	956,941	$10.69	862,070
Equity compensation plans not approved
by security holders	-	-	-

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(f) Stock Repurchases. During the fiscal year ended January 31, 2007, the Company did not repurchase any shares pursuant to a 533,333 (adjusted for stock splits) share stock repurchase program authorized by the Company’s Board of Directors on December 15, 2000. As of January 31, 2007, an aggregate of 262,415 shares have been repurchased through such repurchase program.

The following table summarizes Met-Pro’s purchases of its Common Shares during the fiscal year ended January 31, 2007:

Issuer Purchases of

Equity Securities

Period	Total Number of Shares Purchased	Average Price Paid Per Share	Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs	Maximum Number of Shares That May Yet Be Purchased Under the Plan or Programs	(1)
February 1-28, 2006	0	$       -	0	270,918
March 1-31, 2006	0	-	0	270,918
April 1-30, 2006	0	-	0	270,918
May 1-31, 2006	0	-	0	270,918
June 1-30, 2006	0	-	0	270,918
July 1-31, 2006	0	-	0	270,918
August 1-31, 2006	0	-	0	270,918
September 1-30, 2006	0	-	0	270,918
October 1-31, 2006	0	-	0	270,918
November 1-30, 2006	0	-	0	270,918
December 1-31, 2006	0	-	0	270,918
January 1-31, 2007	0	-	0	270,918
Total	0	-	0	270,918

(1) On December 15, 2000, our Board of Directors authorized a Common Share repurchase program that was publicly announced on December 19, 2000, for up to 533,333 (adjusted for stock splits) shares. The program has no fixed expiration date.

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Item 6.  Selected Financial Data:

	Years ended January 31,
	2007	2006	2005	2004	2003
Selected Operating Statement Data
Net sales	$91,411,114	$85,116,100	$72,116,289	$75,058,929	$69,619,382
Income from operations	10,151,142	9,662,604	7,384,115	9,850,090	9,160,234
Net income	7,190,829	7,313,284	4,814,679	6,346,579	5,888,379
Earnings per share, basic (a)	.64	.65	.43	.57	.54
Earnings per share, diluted (a)	.63	.65	.43	.57	.53
Selected Balance Sheet Data
Current assets (b)	$59,228,282	$53,413,413	$50,034,033	$47,569,003	$40,000,524
Current liabilities (b)	14,525,297	14,361,953	12,916,500	11,429,817	8,047,935
Working capital (b)	44,702,985	39,051,460	37,117,533	36,139,186	31,952,589
Current ratio (b)	4.1	3.7	3.9	4.2	5.0
Total assets (b)	97,166,586	89,071,391	82,687,604	80,531,131	73,123,450
Long-term obligations	5,417,990	2,723,586	4,039,068	5,447,869	7,111,995
Total shareholders’ equity	72,577,157	67,538,238	63,165,191	60,270,734	56,045,885
Total capitalization	77,995,147	70,261,824	67,204,259	65,718,603	63,157,880
Return on average total assets, % (b)	7.7	8.5	5.9	8.2	8.3
Return on average shareholders’ equity, %	10.3	11.2	7.8	10.9	11.1
Other Financial Data
Net cash flows from operating activities	$3,900,152	$4,441,414	$8,545,521	$8,232,851	$5,831,186
Capital expenditures	4,398,910	4,151,253	1,193,767	952,812	752,125
Shareholders’ equity per share (a)	6.47	6.03	5.66	5.43	5.07
Cash dividend paid per share (a)	.255	.237	.221	.206	.194
Average common shares, basic (a)	11,207,381	11,188,657	11,145,843	11,063,557	10,985,988
Average common shares, diluted (a)	11,403,759	11,333,612	11,284,007	11,197,675	11,060,437
Common shares outstanding (a)	11,215,244	11,197,110	11,157,389	11,097,703	11,051,323

(a) All references to per share amounts, average common shares and shares outstanding have been restated to reflect the effect of the four-for-three stock split effective November 15, 2005.

(b) The Company reclassified the non-current portion of pension liabilities from current liabilities to other non-current liabilities and the deferred income taxes related to these pension liabilities in accordance FASB No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans” for the fiscal years ended January 31, 2006, 2005, 2004 and 2003.

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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 “Forward-Looking Statements; Factors That May Affect Future Results” located in the Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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,
	2007		2006		2005
Net sales	100.0	%	100.0	%	100.0	%
Cost of goods sold	68.8	%	68.7	%	68.6	%
Gross profit	31.2	%	31.3	%	31.4	%
Selling, general and administrative expense	19.8	%	20.0	%	21.0	%
Loss on the curtailment of pension benefits	.3	%	-		-
Patent litigation	-		-		.2	%
Income from operations	11.1	%	11.3	%	10.2	%
Interest expense	(.4	%)	(.3	%)	(.5	%)
Other income, net	1.0	%	.8	%	.4	%
Income before taxes	11.7	%	11.8	%	10.1	%
Provision for taxes	3.8	%	3.2	%	3.4	%
Net income	7.9	%	8.6	%	6.7	%

FYE 2007 vs FYE 2006:

Net sales for the fiscal year ended January 31, 2007 were $91.4 million compared with $85.1 million for the fiscal year ended January 31, 2006, an increase of $6.3 million or 7.4%. Sales in the Product Recovery/Pollution Control Technologies reporting segment were $46.7 million, or $4.1 million higher than the $42.6 million of sales for the fiscal year ended January 31, 2006, an increase of 9.7%. The sales increase in the Product Recovery/Pollution Control Technologies reporting segment was due primarily to increased demand for our thermal oxidizer, odor control and particulate collection equipment. Sales in the Fluid Handling Technologies reporting segment totaled $25.9 million, or $2.4 million higher than the $23.5 million of sales for the fiscal year ended January 31, 2006, an increase of 9.9%. The sales increase in the Fluid Handling Technologies reporting segment was due primarily to increased demand for our centrifugal pumps that handle a broad range of industrial applications. Sales in the Filtration/Purification Technologies segment were $18.8 million, or $0.2 million lower than the $19.0 million of sales for the fiscal year ended January 31, 2006, a decrease of 1.0%. This slight decrease was due to lower demand for our horizontal disc filter systems, which are utilized in the metal finishing and plating industry.

Foreign sales increased to $23.2 million for the fiscal year ended January 31, 2007, compared with $21.0 million for the same period last year, a 10.3% increase. Compared to the prior fiscal year, foreign sales increased 20.5% in the Product Recovery/Pollution Control Technologies reporting segment, increased 20.6% in the Fluid Handling Technologies reporting segment and decreased 7.9% in the Filtration/Purification Technologies segment.

Income from operations for the fiscal year ended January 31, 2007 was $10.2 million compared with $9.7 million for the fiscal year ended January 31, 2006, an increase of $0.5 million or 5.1%.

Income from operations in the Product Recovery/Pollution Control Technologies reporting segment was $4.7 million, or $0.6 million higher than the $4.1 million for the fiscal year ended January 31, 2006, an increase of 14.9%. The increase in income from

15

operations in the Product Recovery/Pollution Control Technologies reporting segment was principally related to (i) higher net sales and (ii) higher gross margins earned during the six-month period ended January 31, 2007, partially offset by (i) a loss on one large Product Recovery/Pollution Control Technologies reporting segment project in the second quarter which reduced the Company’s income from operations by approximately $0.4 million, (ii) lower gross margins due to product mix and higher material cost during the six-month period ended July 31, 2006, (iii) the allocation of a non-cash charge for stock options, and (iv) the allocation of a one time loss on the curtailment of pension benefits in the third quarter.

Income from operations in the Fluid Handling Technologies reporting segment totaled $4.4 million, or $0.9 million higher than the $3.5 million for the fiscal year ended January 31, 2006, an increase of 23.2%. The increase in income from operations in the Fluid Handling Technologies reporting segment was principally related to higher net sales and gross margins, partially offset by (i) non-recurring and non-capitalized expenses incurred in the first quarter resulting from the relocation of the Company’s Sethco business unit and the expansion of the Company’s Telford, Pennsylvania facility, which reduced income from operations by approximately $0.3 million, (ii) the allocation of a non-cash charge for stock options, and (iii) the allocation of a one time loss on the curtailment of pension benefits in the third quarter.

Income from operations in the Filtration/Purification Technologies segment was $1.1 million, or $0.9 million lower than the $2.0 million for the fiscal year ended January 31, 2006, a decrease of 47.3%. This decrease was principally related to (i) lower net sales, (ii) reduced gross margins due to product mix, (iii) increase in expenses relating to the expansion of the sales organization, (iv) non-recurring and non-capitalized expenses incurred in the first quarter from the relocation of the Company’s Mefiag business unit and the expansion of the Company’s Netherlands facility, which reduced income from operations by approximately $0.1 million, (v) the allocation of a non-cash charge for stock options, and (vi) the allocation of a one time loss on the curtailment of pension benefits in the third quarter.

Net income for the fiscal year ended January 31, 2007 was $7.2 million compared with $7.3 million for the fiscal year ended January 31, 2006, a decrease of $0.1 million or 1.7%. This decrease in net income was principally related to the impact of (i) product mix and higher material costs in the Product Recovery/Pollution Control Technologies and Fluid Handling Technologies reporting segments for the six-month period ended July 31, 2006, (ii) a loss on one large Product Recovery/Pollution Control Technologies reporting segment project in the second quarter which reduced Company net income by approximately $0.3 million, (iii) non-recurring and non-capitalized expenses incurred in the first quarter resulting from the relocation of the Company’s Sethco and Mefiag business units and the expansion of the Company’s Netherlands and Telford, Pennsylvania facilities, which reduced net income in the Fluid Handling Technologies reporting segment and Filtration/Purification Technologies segment by approximately $0.2 million and $0.1 million, respectively, (iv) a one time loss on the curtailment of pension benefits in the third quarter which reduced net income by approximately $0.2 million, (v) a non-cash charge for stock options which reduced Company net income by approximately $0.2 million in the fiscal year ended January 31, 2007, and (vi) an increase in the effective tax rate primarily related to a reduction in the tax benefit provided by the research and development tax credit which had amounted to $0.6 million in the fiscal year ended January 31, 2006, of which $0.5 million related to the three-year period ended January 31, 2005, offset by higher net sales.

The gross margin for the fiscal year ended January 31, 2007 was 31.2% compared with 31.3% for the same period in the prior year. This slight decrease in gross margin was due to (i) product mix and higher material costs in the Product Recovery/Pollution Control Technologies and Fluid Handling Technologies reporting segments for the six-month period ended July 31, 2006 and (ii) a loss on one large Product Recovery/Pollution Control Technologies reporting segment project previously mentioned, offset by higher gross margins in the Product Recovery/Pollution Control Technologies reporting segment during the six-month period ended January 31, 2007. Procedures have been implemented to mitigate profit erosion on all larger projects. To offset higher material costs, the Company has taken certain strategic measures to increase gross margins including selected sales price increases and improved purchasing practices. The relocation of the Company’s Sethco and Mefiag business units and the expansion of the Company’s Netherlands and Telford, Pennsylvania facilities are complete and are expected to promote improved operational results.

Selling expense was $8.3 million for the fiscal year ended January 31, 2007, an increase of $0.4 million over the prior year. Selling expense as a percentage of net sales was 9.0% compared with 9.2% for the prior fiscal year. The increase in absolute dollars was due primarily to the hiring of additional personnel and related costs.

General and administrative expense was $9.9 million for the fiscal year ended January 31, 2007, compared with $9.1 million in the prior fiscal year. General and administrative expense as a percentage of net sales was 10.8% for the fiscal year ended January 31, 2007 compared with 10.7% for the prior fiscal year. This increase was in part related to non-recurring and non-capitalized expenses resulting from the relocation of our Company’s Sethco and Mefiag business units and the expansion of the Company's Netherlands and Telford, Pennsylvania facilities which occurred during the fiscal quarter ended April 30, 2006, combined with the impact of expensing stock options, and higher legal and personnel acquisition expenses.

In the fiscal year ended January 31, 2007, the Company incurred a one time loss on the curtailment of pension benefits totaling $0.2 million. This expense was related to freezing the Company’s defined-benefit plans for all salaried and non-union hourly employees effective December 31, 2006. Future accrual benefits for these defined-benefit plans were replaced with an enhanced defined-contribution plan. The Company expects to reduce subsequent fiscal years’ pension expense, net of the increase in the defined

16

contribution expense, by approximately $0.5 million ($0.3 million after tax) on an annual basis, assuming there are no material changes in any of the numerous variables affecting pension expense.

Interest expense was approximately $0.4 million for the fiscal year ended January 31, 2007 compared with $0.3 million for the prior year. This increase was due principally to an increase in long-term debt related to previously mentioned plant expansions.

Other income, net, was $0.9 million for the fiscal year ended January 31, 2007 compared with $0.6 million in the prior year. This change is related to higher interest income earned on cash on hand.

The effective tax rate was 33.0% for the fiscal year ended January 31, 2007 compared with 27.0% for the fiscal year ended January 31, 2006. The increase in the effective tax rate to 33.0% was primarily due to a reduction in the tax benefit provided by the research and development tax credit which had amounted to $0.6 million in the fiscal year ended January 31, 2006, of which $0.5 million related to the three-year period ended January 31, 2005.

FYE 2006 vs FYE 2005:

Net sales for the fiscal year ended January 31, 2006 were $85.1 million compared with $72.1 million for the fiscal year ended January 31, 2005, an increase of $13.0 million or 18.0%. Sales in the Product Recovery/Pollution Control Technologies reporting segment were $42.6 million, or $11.2 million higher than the $31.4 million of sales for the fiscal year ended January 31, 2005, an increase of 35.6%. The sales increase in the Product Recovery/Pollution Control Technologies reporting segment was due primarily to increased demand for our fume hood exhaust systems, specialty blowers, thermal oxidizer equipment and particulate collection equipment. Sales in the Fluid Handling Technologies reporting segment totaled $23.5 million, or $0.6 million higher than the $22.9 million of sales for the fiscal year ended January 31, 2005, an increase of 2.8%. The sales increase in the Fluid Handling Technologies reporting segment was due primarily to increased demand for our centrifugal pumps that handle a broad range of industrial applications. Sales in the Filtration/Purification Technologies segment were $19.0 million, or $1.2 million higher than the $17.8 million of sales for the fiscal year ended January 31, 2005, an increase of 6.6%. This increase was due to higher demand for our horizontal disc filter systems, which are utilized in the metal finishing and plating industry.

Foreign sales increased to $21.0 million for the fiscal year ended January 31, 2006, compared with $15.5 million for the same period last year, a 36.0% increase. Compared to the prior fiscal year, foreign sales increased 71.9% in the Product Recovery/Pollution Control Technologies reporting segment, 19.8% in the Fluid Handling Technologies reporting segment, and 22.9% in the Filtration/Purification Technologies segment.

Income from operations for the fiscal year ended January 31, 2006 was $9.7 million compared with $7.4 million for the fiscal year ended January 31, 2005, an increase of $2.3 million or 30.9%. Income from operations in the Product Recovery/Pollution Control Technologies reporting segment was $4.1 million, or $2.5 million higher than the $1.6 million for the fiscal year ended January 31, 2005, an increase of 153.2%. The increase in income from operations in the Product Recovery/Pollution Control Technologies reporting segment was principally related to (i) higher net sales and (ii) higher gross margins due to product mix and lower material costs, partially offset by (i) higher management incentive program expenses and (ii) higher general and administrative payroll expenses. Income from operations in the Fluid Handling Technologies reporting segment totaled $3.5 million, or $0.1 million higher than the $3.4 million for the fiscal year ended January 31, 2005, an increase of 5.4%. The increase in income from operations in the Fluid Handling Technologies reporting segment was principally related to (i) higher net sales and (ii) higher gross margins due to product mix and lower material costs, partially offset by (i) severance costs related to the relocation of our Sethco business unit, (ii) higher management incentive program expenses and (iii) higher general and administrative payroll expenses. Income from operations in the Filtration/Purification Technologies segment was $2.0 million, or $0.4 million lower than the $2.4 million for the fiscal year ended January 31, 2005, a decrease of 16.5%. This decrease was principally related to (i) lower gross margins due to product mix and higher material costs, (ii) higher general and administrative payroll expenses, and (iii) higher management incentive program expenses, all partially offset by higher net sales.

Net income for the fiscal year ended January 31, 2006 was $7.3 million compared with $4.8 million for the fiscal year ended January 31, 2005, an increase of $2.5 million or 51.9%. The increase in net income was principally related to higher sales volumes in the two reporting segments and the one other segment, and to a lesser extent, a reduction in the effective tax rate relating to research and development tax credits, of which $0.5 million related to the three-year period ended January 31, 2005.

The gross margin for the fiscal year ended January 31, 2006 was 31.3% compared with 31.4% for the same period in the prior year.

Selling expense was $7.9 million for the fiscal year ended January 31, 2006, an increase of $0.3 million over the prior year. Selling expense as a percentage of net sales was 9.2% compared with 10.4% for the prior fiscal year.

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General and administrative expense was $9.1 million for the fiscal year ended January 31, 2006 compared with $7.6 million in the prior fiscal year. General and administrative expense as a percentage of net sales was 10.7% for the fiscal year ended January 31, 2006 compared with 10.6% for the prior fiscal year. This increase is principally related to higher management incentive program expenses, payroll and health care costs, combined with severance costs related to the relocation of our Sethco business unit and consulting fees relating to an analysis of the Company’s research and development activities over the four-year period ended January 31, 2006.

Interest expense was approximately $0.3 million for the fiscal year ended January 31, 2006 compared with $0.4 million for the prior year. This decrease was due principally to a reduction of existing long-term debt.

Other income, net, was $0.6 million for the fiscal year ended January 31, 2006 compared with $0.3 million in the prior year. This change is related to higher interest income earned on cash on hand.

The effective tax rate was 27.0% for the fiscal year ended January 31, 2006 compared with 34.0% for the fiscal year ended January 31, 2005. This decrease was primarily due to federal and state tax benefits for research and development credits for the current fiscal year ended January 31, 2006 and the prior three fiscal years ended January 31, 2005. During the fiscal year ended January 31, 2006, the Company undertook a comprehensive review, for income tax purposes, of its classification of research and development activities, which resulted in research and development tax credit benefits amounting to $0.6 million, of which $0.1 million related to the fiscal year ended January 31, 2006 and $0.5 million related to the three-year period ended January 31, 2005.

Liquidity:

The Company’s cash and cash equivalents were $17.3 million on January 31, 2007 compared with $17.7 million on January 31, 2006, a decrease of $0.4 million. This decrease is the net result of the positive cash flows provided by operating activities of $3.9 million, the proceeds from new borrowings (as discussed in the Capital Resources and Requirements section below) amounting to $4.3 million, the exercise of stock options amounting to $0.1 million and proceeds from the sale of equipment amounting to $14,310, offset by payment of the quarterly cash dividends amounting to $2.9 million, payments on long-term debt totaling $1.5 million, investment in property and equipment amounting to $4.4 million and the increase in securities available for sale totaling $21,820. The Company’s cash flows from operating activities are influenced, in part, by the timing of shipments and negotiated standard payment terms, including retention associated with major projects, as well as other factors including changes in inventories and accounts receivable balances.

Accounts receivable, net were $20.8 million on January 31, 2007, an increase of $2.9 million compared with the prior fiscal year. In addition to changes in sales volume, the timing and size of shipments and retainage on contracts, especially in the Product Recovery/Pollution Control Technologies reporting segment, will, among other factors, influence accounts receivable balances at any given point in time.

Inventories totaled $19.3 million on January 31, 2007, an increase of $2.9 million compared with the prior fiscal year. This increase is primarily attributable to inventory purchased in the fiscal year ended January 31, 2007 for projects which are expected to ship in the next six to nine-month period. Inventory balances fluctuate depending on market demand and the timing and size of shipments, especially when major systems and contracts are involved.

Current liabilities amounted to $14.5 million on January 31, 2007 compared with $14.4 million on January 31, 2006, an increase of $0.1 million. This increase is due to a increase in the current portion of long-term debt, accounts payable and dividend payable, offset by a decrease in customer advances payable.

The Company has consistently maintained a high current ratio and it and its subsidiaries maintain domestic and foreign lines of credit totaling $5.0 million, all of which are available for working capital purposes, except for $0.4 outstanding as of January 31, 2007 borrowed by the Company’s Mefiag B.V. subsidiary to partially finance an expansion and renovation of its facility located in The Netherlands. Cash flows, in general, have exceeded the current needs of the Company. The Company presently foresees no change in this situation in the immediate future. As of January 31, 2007 and 2006, working capital was $44.7 million and $39.1 million, respectively, and the current ratio was 4.1 and 3.7, respectively.

Capital Resources and Requirements:

Cash flows provided by operating activities during the fiscal year ended January 31, 2007 amounted to $3.9 million compared with $4.4 million in the fiscal year ended January 31, 2006, a decrease of $0.5 million. This decrease in cash flows from operating activities was due principally to the decrease in customers’ advances and other non-current liabilities, offset by an increase in accounts receivable and a decrease in other assets.

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Cash flows used in investing activities during the fiscal year ended January 31, 2007 amounted to $4.4 million compared with $4.1 million during the fiscal year ended January 31, 2006. The increase in investing activities is partially due to capital expenses incurred in connection with the expansion of the Company’s Telford, Pennsylvania facility, for which the Company incurred costs of $1.9 million for the fiscal year ended January 31, 2007. This expansion was required to accommodate the relocation of the Sethco business unit from Hauppauge, New York to the Telford, Pennsylvania facility. In addition, the increase in investing activities was partially due to an expansion and renovation of our Mefiag B.V. facility in the Netherlands, for which the Company has incurred costs of $1.1 million in the fiscal year ended January 31, 2007. This expansion was required in order to accommodate the projected growth of Mefiag B.V. The balance of the increase was due to the Company’s capital expenditures in the two reporting segments and one other segment, and in its corporate headquarters.

During the second quarter, the Company listed for sale, its 30,000 square foot building located on four acres in Hauppauge, Long Island, New York, previously occupied by the Sethco business unit at an asking price of $5.0 million. The net book value of the land and building amounted to $0.8 million as of January 31, 2007, and is included in the property, plant and equipment, net, section of the consolidated balance sheet. The Company is investigating the possible purchase of a property to be occupied by one of its business units utilizing a Section 1031 tax free exchange.

Financing activities during the fiscal year ended January 31, 2007 provided $0.1 million of available resources, compared with $3.5 million utilized during the fiscal year ended January 31, 2006. The fiscal year 2007 activity is the result of the proceeds from new borrowings of $4.3 million and the exercise of stock options totaling $0.1 million, offset by the reduction of debt totaling $1.5 million, and the payment of dividends amounting to $2.9 million. During the fiscal year ended January 31, 2007, the Company borrowed $3.5 million in an industrial revenue bond for a term of fifteen years, at a fixed interest rate swap of 4.71% in order to finance the expansion of the Telford, Pennsylvania facility. In addition, during the fiscal year ended January 31, 2007, the Company’s Mefiag B.V. business unit borrowed $0.9 million (0.7 million Euro) from a bank for a term of ten years, at a fixed interest rate of 3.82% for the expansion of its facility in the Netherlands.

The Company paid $1.5 million of scheduled debt during the current fiscal year. The percentage of long-term debt to equity at January 31, 2007 increased to 7.5% compared with 4.0% at January 31, 2006, as a result of the debt incurred from the previously mentioned facility expansions.

During the fiscal year ended January 31, 2007, the Company did not repurchase any shares pursuant to a 533,333 (adjusted for stock splits) share stock repurchase program authorized by the Company’s Board of Directors on December 15, 2000. As of January 31, 2007, an aggregate of 262,415 shares have been repurchased through such repurchase program.

The Board of Directors declared quarterly dividends of $.0625 per share payable on March 9, 2006, June 7, 2006 and September 6, 2006 to shareholders of record at the close of business on February 24, 2006, May 26, 2006 and August 24, 2006, respectively, and quarterly dividends of $.0675 per share payable on December 14, 2006 and March 14, 2007 to shareholders of record at the close of business on November 30, 2006 and February 28, 2007, respectively.

On October 10, 2005, the Board of Directors declared a four-for-three stock split which was paid on November 15, 2005 to shareholders of record on November 1, 2005. All references in the financial statements to per share amounts, number of shares outstanding, and number of shares covered by stock option and similar plans have been restated to reflect the effect of the stock split.

The Company accounts for its defined benefit plans in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R)”. SFAS No. 158 requires that we recognize the overfunded or underfunded status of our pension plans (the Plans) as an asset or liability in the fiscal year ended January 31, 2007 consolidated balance sheet, with changes in the funded status recognized through other comprehensive income in the year in which they occur. SFAS No. 158 also requires us to measure the funded status of the Plans as of the year end consolidated balance sheet date not later than December 31, 2008. The impact of adopting SFAS No. 158 resulted in an increase in pension liabilities and an increase in accumulated other comprehensive loss of approximately $0.3 million, prior to any deferred tax adjustment.

As part of our commitment to the future, the Company expended $2.3 million and $2.0 million on research and development in the fiscal years ended January 31, 2007 and 2006, respectively.

The Company will continue to invest in new product development to maintain and enhance its competitive position 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.

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Off-Balance Sheet Arrangements:

We have no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital resources or capital expenditures that is material to investors.

Contractual Obligations:

The following table summarizes the Company's contractual cash obligations by required payment periods:

Payments Due By Period	Long-Term Debt	Purchase  Obligations	Operating Leases	Interest    Expense	Pension      Contributions	Total         Contractual    Cash          Obligations
Less than 1 Year	$1,955,202	$9,294,163	$171,961	$265,331	$99,300	$11,785,957
1 - 3 Years	1,928,364	-	80,119	425,329	197,322	2,631,134
3 - 5 Years	728,364	-	19,691	311,409	187,930	1,247,394
More than 5 Years	2,684,397	-	-	611,602	392,476	3,688,475
Total	$7,296,327	$9,294,163	$271,771	$1,613,671	$877,028	$19,352,960

Future expected obligations under the Company's pension plans are included in the contractual cash obligations table above.  The Company's pension plan policy allows it to fund an amount, which could be in excess of the pension cost expensed, subject to the limitations imposed by current tax regulations.  The Company currently projects that it will be required to contribute approximately $99,300 to its pension and defined contribution plans during the fiscal year ended January 31, 2008.

Recent Accounting Pronouncements:

 In March 2005, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation (“FIN”) No. 47, “Accounting for Conditional Asset Retirement Obligations”. FIN No. 47 requires an entity to recognize a liability for a conditional asset retirement obligation when incurred if the liability can be reasonably estimated. The Interpretation also clarifies that the term Conditional Asset Retirement Obligation refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. FIN No. 47 also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. FIN No. 47 was effective for the Company with its fiscal year ended January 31, 2006. FIN No. 47 has not had a material impact on our financial position, results of operations or cash flows.

In May 2005, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 154, “Accounting Changes and Error Corrections”, which replaces APB No. 20, “Accounting Changes,” and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements”. SFAS No. 154 changes the requirements for accounting and reporting a change in accounting principle, and applies to all voluntary changes in accounting principles, as well as changes required by an accounting pronouncement in the unusual instance it does not include specific transition provisions. Specifically, SFAS No. 154 requires retrospective application to prior periods’ financial statements, unless it is impracticable to determine the period specific effects or the cumulative effect of the change. When it is impracticable to determine the effects of the change, the new accounting principle must be applied to the balances of assets and liabilities as of the beginning of the earliest period for which retrospective application is practicable and a corresponding adjustment must be made to the opening balance of retained earnings for that period rather than being reported in an income statement. When it is impracticable to determine the cumulative effect of the change, the new principle must be applied as if it were adopted prospectively from the earliest date practicable. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. SFAS No. 154 does not change the transition provisions of any existing pronouncements. SFAS No. 154 has not had a material impact on our financial position, results of operations or cash flows.

In June 2006, the FASB issued FIN No. 48, “Accounting for Uncertainty in Income Taxes - An Interpretation of SFAS No. 109”. FIN No. 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes.” FIN No. 48 also prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In addition, FIN No. 48 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The provisions of FIN No. 48 are to be applied to all tax positions upon initial adoption of this standard. Only tax positions that meet the more-likely-than-not recognition threshold at the effective date may be recognized or continue to be recognized as an adjustment to the opening balance of retained earnings (or other appropriate components of equity) for that fiscal year. The provisions of FIN No. 48 are effective for fiscal years beginning after December 15, 2006. The Company is evaluating the

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impact of the adoption of FIN No. 48 but does not currently expect the adoption of this new standard to have a material impact on our position condition, results of operations or cash flows.

In September 2006, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin (“SAB”) 108, to address diversity in practice in quantifying financial statement misstatements. SAB 108 requires that the Company quantify misstatements based on their impact on each of its financial statements and related disclosures. SAB 108 is to become effective for fiscal years ending after November 15, 2006. The Company has adopted SAB 108 effective as of January 31, 2007. The adoption of this bulletin did not have a material impact on our financial position, results of operations or cash flows.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. SFAS No. 157 provides guidance for using fair value to measure assets and liabilities. It also responds to investors’ requests for expanded information about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. SFAS No. 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value, and does not expand the use of fair value in any new circumstances. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and is required to be adopted by the Company in the first quarter of fiscal year 2009. The Company is currently evaluating the effect that the adoption of SFAS No. 157 will have on our financial position, results of operations or cash flows.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R)”. SFAS No. 158 requires that we recognize the overfunded or underfunded status of our pension plans (the Plans) as an asset or liability in the fiscal year ended January 31, 2007 consolidated balance sheet, with changes in the funded status recognized through other comprehensive income in the year in which they occur. SFAS No. 158 also requires us to measure the funded status of the Plans as of the year end consolidated balance sheet date not later than December 31, 2008. The impact of adopting SFAS No. 158 resulted in an increase in pension liabilities and an increase in accumulated other comprehensive loss of approximately $0.3 million, prior to any deferred tax adjustment.

Critical Accounting Policies and Estimates:

Management’s Discussion and Analysis of its Financial Position and Results of Operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. The significant accounting policies which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following:

The Company recognizes revenues from product sales or services provided when the following revenue recognition criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the selling price is fixed or determinable and collectibility is reasonably assured. The Securities and Exchange Commission’s Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition”, provides guidance on the application of generally accepted accounting principles to selected revenue recognition issues. The Company has concluded that its revenue recognition policy is appropriate and in accordance with generally accepted accounting principles and SAB No. 104.

Property, plant and equipment, intangible and certain other long-lived assets are depreciated and amortized over their useful lives. Useful lives are based on management’s estimates of the period that the assets will generate revenue. Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets”, which supersedes APB Opinion No. 17, “Intangible Assets”, effective February 1, 2002, the Company’s unamortized goodwill balance is being assessed, at least annually, for impairment. The Company performs its annual impairment test for each reporting unit using a fair value approach. The test for goodwill impairment involves significant judgment in estimating projections of fair value generated through future performance of each of the reporting units, which comprise our operating segments. In calculating the fair value of the reporting units using the present value of estimated future cash flows method, we rely on a number of assumptions including sales and related gross margin projections, operating margins, anticipated working capital requirements and market rate of returns used in discounting projected cash flows. These assumptions were based upon market and industries outlooks, our business plans and historical data. Inherent uncertainties exist in determining and applying such factors. The discount rate used in the projection of fair value represents a weighted average cost of capital applicable to the Company.

During the fiscal year ended January 31, 2007, we performed an impairment analysis on each of the Company’s reporting units that carry goodwill on their balance sheets. In each case, except for the Flex-Kleen reporting unit which represents 53.5% of the total company-wide goodwill, the fair value of the reporting unit exceeded the carrying amount, including goodwill, by a significant

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amount. For the Flex-Kleen reporting unit, the carrying value, including goodwill of $11.1 million, as of January 31, 2007 and 2006, amounted to $12.9 million and $12.6 million, respectively. The fair value of the Flex-Kleen reporting unit as of January 31, 2007 and 2006 totaled $17.5 million and $14.8 million, respectively. As a result, the fair value exceeded the carrying amount, including goodwill, by $4.6 million and $2.2 million in the fiscal years ended January 31, 2007 and 2006, respectively. Therefore, as of January 31, 2007, the Flex-Kleen reporting unit’s goodwill was not impaired.

Our Flex-Kleen reporting unit, which initially performed well after being acquired in 1998, thereafter had several years of declining performance which we attributed primarily to a general weakness in its served markets, followed by improved performance in the fiscal years ended January 31, 2007, 2006 and 2005. In the fiscal years ended January 31, 2007, 2006 and 2005, the actual results exceeded the projected results used in the impairment model.

Because of market conditions and/or potential changes in strategy and product portfolio, it is possible that forecasts used to support asset carrying values may change in the future, which could result in non-cash charges that would adversely affect our results of operations and financial condition. Based on current projections, a one percent decrease in revenue growth, a one percent decrease in gross margin or a one percent increase in the weighted average cost of capital would reduce the fair value for the Flex-Kleen reporting unit by $2.6 million, $1.5 million and $1.1 million, respectively. Additionally, the Company cannot predict the occurrence of unknown events that might adversely affect the reportable value of costs in excess of net assets of businesses acquired.

The determination of our obligation and expense for pension benefits is dependent on our selection of certain assumptions used by actuaries in calculating such amounts. Those assumptions are described in Note 11 to the consolidated financial statements and include, among others, the discount rate and the expected long-term rate of return on plan assets. In accordance with generally accepted accounting principles, actual results that differ from our assumptions are accumulated and amortized over future periods and therefore, generally affect our recognized expense and recorded obligation in such future periods. While we believe that our assumptions are appropriate, significant differences in our actual experience or significant changes in our assumptions may materially affect our pension obligations and our future expense.

Forward-Looking Statements; Factors That May Affect Future Results:

Our 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. These forward-looking statements may be identified by words describing our belief or expectation, such as where we say that we “believe”, “expect” or “anticipate”, or where we characterize something in a manner in which there is an express or implicit reference to the future, such as “non-recurring” or “unusual,” or where we express that our view is based upon the “current status” of a given matter, or upon facts as we know them as of the date of the statement. The content and/or context of other statements that we make may indicate that the statement is “forward-looking”. We claim the “safe harbor” provided by The Private Securities Reform Act of 1995 for all forward-looking statements.

Results may differ materially from our current results and actual results 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 one time events, 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 on Form 10-K, could affect our future financial condition and results of operations, and could cause our future financial condition and results of operations to differ materially from those expressed in our SEC filings and in our forward-looking statements:

· the write-down of costs in excess of net assets of businesses acquired (goodwill), as a result of the determination that the acquired business is impaired. Our Flex-Kleen business unit, which initially performed well after being acquired by Met-Pro, thereafter had several years of declining performance which we attributed primarily to a general weakness in its served markets, followed by improved performance in the fiscal years ended January 31, 2007, 2006 and 2005. During the fiscal year ended January 31, 2007, we performed an impairment analysis of the $11.1 million of goodwill that the Company carries for Flex-Kleen and concluded that no impairment had occurred. For the fiscal year ended January 31, 2007, the actual net sales and operating profit for our Flex-Kleen business unit have exceeded the projections used in our annual impairment model, and in addition the backlog as of January 31, 2007 for the Flex-Kleen business unit totaled $4.1 million or an increase of 14.1% over the same period last year;

· materially adverse changes in economic conditions in the markets served by us or in significant customers of ours;

· material changes in available technology;

· adverse developments in the asbestos cases that have been filed against the Company, including without limitation the exhaustion of insurance coverage, the imposition of punitive damages or other adverse developments in the availability of insurance coverage;

· changes in accounting rules promulgated by regulatory agencies, including the SEC, which could result in an impact on earnings;

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· the cost of compliance with Sarbanes-Oxley and other applicable legal and listing requirements, and the unanticipated possibility that Met-Pro may not meet these requirements;

· unexpected results in our product development activities;

· loss of key customers;

· changes in product mix and the cost of materials, with effect on margins;

· changes in our existing management;

· exchange rate fluctuations;

· changes in federal laws, state laws and regulations;

· lower than anticipated return on investments in the Company’s defined benefit plans, which could affect the amount of the Company’s pension liabilities;

· the assertion of litigation claims that the Company’s products, including products produced by companies acquired by the Company, infringe third party patents or have caused injury, loss or damage;

· the effect of acquisitions and other strategic ventures;

· failure to properly quote and/or execute customer orders, including misspecifications, design, engineering or production errors;

· the cancellation or delay of purchase orders or shipments;

· losses related to international sales; and

· failure in execution of acquisition strategy.

Item 7A.  Quantitative and Qualitative Disclosure About Market Risks:

We are exposed to certain market risks, primarily changes in interest rates.  Market risk is the potential loss arising from adverse changes in market rates and prices, such as foreign currency exchange and interest rates.  For Met-Pro Corporation, these exposures are primarily related to changes in interest rates.  We do not currently hold any derivatives or other financial instruments purely for trading or speculative purposes.

The fair value of the Company’s total long-term debt and current maturities of long-term debt, at January 31, 2007 was $7.4 million. Market risk was estimated as the potential decrease (increase) in future earnings and cash flows resulting from a hypothetical 10% increase (decrease) in the Company’s estimated weighted average borrowing rate at January 31, 2007.  Although most of the interest on the Company’s debt is indexed to either the LIBOR or EURIBOR market rates, there would be no material effect on the future earnings or cash flows related to the Company’s total debt for such a hypothetical change.

The Company has only a limited involvement with derivative financial instruments. The Company has two separate interest rate swap agreements to hedge against the potential impact on earnings from increases in market interest rates. Effective October 29, 1998, the Company entered into a ten-year interest rate swap agreement for a notional amount equal to the balance on the note payable maturing October 2008. The Company swapped the ninety day LIBOR for a fixed rate of 5.23%. As a result, the effective fixed interest rate is 5.98%. Effective April 3, 2006, the Company entered into a fifteen-year interest rate swap agreement for a notional amount equal to the balance on the bond payable maturing April 2021. The Company swapped the ninety day LIBOR for a fixed rate of 4.87%. As a result, the effective fixed interest rate is 4.71%. These interest rate swap agreements are accounted for as fair value hedges that qualify for treatment under the short-cut method of measuring effectiveness in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” as amended by SFAS 138, “Accounting for Certain Derivative Instruments and Hedging Activities - an Amendment to FASB Statement No. 133”. There was no hedge ineffectiveness as of January 31, 2007. The fair value of the interest rate swap agreements resulted in a decrease in equity of $48,425 (net of tax) at January 31, 2007 and a decrease in equity of $12,385 (net of tax) at January 31, 2006. These results are recorded in the accumulated other comprehensive loss section of shareholders’ equity. See Note 5, “Debt,” in the Notes to Consolidated Financial Statements for additional information.

The Company has wholly-owned subsidiaries located in The Netherlands, Canada and China. In the past, we have not hedged our foreign currency exposure, and fluctuations in exchange rates have not materially affected our operating results. Future changes in exchange rates may positively or negatively impact our revenues, operating expenses and earnings. Due to the limited size of our foreign operations, however, we do not anticipate that exposure to foreign currency rate fluctuations will be material in the fiscal year ended January 31, 2008.

All of our marketable securities are classified as available-for-sale. Available-for-sale securities are carried at fair value, with the unrealized gains and losses, net of any related tax effect, reported in accumulated other comprehensive income/(loss) in shareholders’ equity in the accompanying consolidated financial statements. At January 31, 2007 the Company's marketable securities had a fair market value of $24,090, which includes an unrealized gain of $2,270. The marketable securities are composed of 547 shares of Armstrong World Industries, Inc. (“AWI”) distributed to Met-Pro as part of a Chapter 11 reorganization settlement in October of 2006. The potential loss in fair value resulting from a 10% adverse change in the equity prices of these marketable securities would be negligible to the Company overall.

23

Item 8.   Financial Statements and Supplementary Data:

Index to Consolidated Financial Statements and Supplementary Data:

		Page
Consolidated Financial Statements:
	Management’s Report on Internal Control Over Financial Reporting	25
	Reports of Independent Registered Public Accounting Firm	26
	Consolidated Statement of Operations	28
	Consolidated Balance Sheet	29
	Consolidated Statement of Cash Flows	30
	Consolidated Statement of Shareholders’ Equity	31
	Consolidated Business Segment Data	32
	Notes to Consolidated Financial Statements	33
Supplementary Data:
	Quarterly Financial Data	54

24

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of Met-Pro Corporation (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Chief Executive and Chief Financial Officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States.

As of January 31, 2007, management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the framework established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has determined that the Company’s internal control over financial reporting as of January 31, 2007 is effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States.

Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States, and that receipts and expenditures are being made only in accordance with authorizations of management; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on our financial statements.

Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of January 31, 2007, has been audited by Margolis & Company P.C., an independent registered public accounting firm, as stated in their report appearing herein, which expresses unqualified opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial reporting as of January 31, 2007.

The Company’s management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our internal control over financial reporting will prevent or detect all errors and all frauds. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based, in part, on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

/s/ Raymond J. De Hont

Raymond J. De Hont

President and Chief Executive Officer

/s/ Gary J. Morgan

Gary J. Morgan

Chief Financial Officer

Harleysville, Pennsylvania

February 23, 2007

25

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders

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, 2007 and 2006, and the related consolidated statements of operations, shareholders’ equity and cash flows for each of the years in the three-year period ended January 31, 2007. 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 the standards of the Public Company Accounting Oversight Board (United States). 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, 2007 and 2006, and the results of their operations and their cash flows for each of the years in the three-year period ended January 31, 2007, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Met-Pro Corporation’s internal control over financial reporting as of January 31, 2007, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 23, 2007 expressed an unqualified opinion on management’s assessment of internal control over financial reporting and an unqualified opinion on the effectiveness of internal control over financial reporting.

/s/ Margolis & Company P.C.

Bala Cynwyd, Pennsylvania

February 23, 2007

26

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders

Met-Pro Corporation

Harleysville, Pennsylvania

We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, that Met-Pro Corporation and its wholly-owned subsidiaries (the “Company”) maintained effective internal control over financial reporting as of January 31, 2007, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that the Company maintained effective internal control over financial reporting as of January 31, 2007 is fairly stated, in all material respects, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2007, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the accompanying consolidated balance sheets of the Company as of January 31, 2007 and 2006 and the related statements of operations, shareholders’ equity and cash flows for each of the years in the three-year period ended January 31, 2007, and our report dated February 23, 2007 expressed an unqualified opinion.

/s/ Margolis & Company P.C.

Bala Cynwyd, Pennsylvania

February 23, 2007

27

MET-PRO CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS

	Years ended January 31,
	2007		2006		2005
Net sales	$91,411,114		$85,116,100		$72,116,289
Cost of goods sold	62,901,830		58,441,441		49,441,456
Gross profit	28,509,284		26,674,659		22,674,833
Operating expenses
Selling	8,258,379		7,864,833		7,537,508
General and administrative	9,865,583		9,147,222		7,617,918
Loss on the curtailment of pension benefits	234,180		-		-
Patent litigation	-		-		135,292
	18,358,142		17,012,055		15,290,718
Income from operations	10,151,142		9,662,604		7,384,115
Interest expense	(351,152	)	(269,488	)	(371,345	)
Other income, net	932,590		629,035		282,200
Income before taxes	10,732,580		10,022,151		7,294,970
Provision for taxes	3,541,751		2,708,867		2,480,291
Net income	$7,190,829		$7,313,284		$4,814,679
Earnings per share
Basic (adjusted for stock split)	$.64		$.65		$.43
Diluted (adjusted for stock split)	$.63		$.65		$.43
Average number of common and
common equivalent shares outstanding
Basic (adjusted for stock split)	11,207,381		11,188,657		11,145,843
Diluted (adjusted for stock split)	11,403,759		11,333,612		11,284,007

The notes to consolidated financial statements are an integral part of the above statement.

28

MET-PRO CORPORATION

CONSOLIDATED BALANCE SHEET

January 31,

ASSETS	2007	2006
Current assets
Cash and cash equivalents	$17,322,194	$17,683,305
Marketable securities	24,090	-
Accounts receivable, net of allowance for
doubtful accounts of approximately
$133,000 and $247,000, respectively	20,837,589	17,909,727
Inventories	19,296,279	16,438,481
Prepaid expenses, deposits and other current assets	1,748,130	1,381,900
Total current assets	59,228,282	53,413,413
Property, plant and equipment, net	16,832,988	13,838,221
Costs in excess of net assets of businesses acquired, net	20,798,913	20,798,913
Other assets	306,403	1,020,844
Total assets	$97,166,586	$89,071,391

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Current portion of long-term debt	$1,955,202		$1,689,413
Accounts payable	6,450,813		5,900,281
Accrued salaries, wages and expenses	4,135,342		4,143,300
Dividend payable	757,029		699,819
Customers’ advances	981,680		1,703,092
Deferred income taxes	245,231		226,048
Total current liabilities	14,525,297		14,361,953
Long-term debt	5,417,990		2,723,586
Other non-current liabilities	3,276,551		3,050,053
Deferred income taxes	1,369,591		1,397,561
Total liabilities	24,589,429		21,533,153
Commitments
Shareholders’ equity
Common shares, $.10 par value; 18,000,000 shares
authorized, 12,846,608 shares issued,
of which 1,631,364 and 1,649,498 shares were reacquired
and held in treasury at the respective dates	1,284,661		1,284,661
Additional paid-in capital	7,910,708		7,564,180
Retained earnings	74,921,913		70,645,717
Accumulated other comprehensive (loss)	(33,471	)	(321,821	)
Treasury shares, at cost	(11,506,654	)	(11,634,499	)
Total shareholders’ equity	72,577,157		67,538,238
Total liabilities and shareholders’ equity	$97,166,586		$89,071,391

The notes to consolidated financial statements are an integral part of the above statement.

29

MET-PRO CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

Years ended January 31,
2007	2006	2005

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

Cash flows from operating activities
Net income	$7,190,829		$7,313,284		$4,814,679
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization	1,602,138		1,486,340		1,491,894
Deferred income taxes	26,203		610,593		511,225
(Gain) loss on sales of property and equipment, net	13,310		13,131		(6,358	)
Stock-based compensation	327,200		-		-
Allowance for doubtful accounts	(114,238	)	34,002		4,823
(Increase) decrease in operating assets:
Accounts receivable	(2,681,106	)	(4,428,817	)	3,080,432
Inventories	(2,736,540	)	(2,657,517	)	(1,008,533	)
Prepaid expenses and deposits	2,872		(141,097	)	(31,363	)
Other assets	332,466		(484,162	)	48,833
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses	416,812		228,250		683,543
Customers’ advances	(721,878	)	409,760		813,818
Other non-current liabilities	242,084		2,057,647		(1,857,472	)
Net cash provided by operating activities	3,900,152		4,441,414		8,545,521
Cash flows from investing activities
Proceeds from sale of property and equipment	14,310		31,565		18,965
Acquisitions of property and equipment	(4,398,910	)	(4,151,253	)	(1,193,767	)
Securities available for sale	(21,820	)	-		-
Net cash (used in) investing activities	(4,406,420	)	(4,119,688	)	(1,174,802	)
Cash flows from financing activities
Proceeds from new borrowings	4,312,293		793,947		-
Reduction of debt	(1,492,699	)	(1,800,910	)	(1,233,866	)
Exercise of stock options	147,174		324,281		698,685
Payment of dividends	(2,857,423	)	(2,648,576	)	(2,464,033	)
Purchase of treasury shares	-		(140,135	)	(538,499	)
Payment of cash in lieu of fractional shares	-		(1,914	)	-
Net cash provided by (used in) financing activities	109,345		(3,473,307	)	(3,537,713	)
Effect of exchange rate changes on cash	35,812		(54,590	)	60,217
Net increase (decrease) in cash and cash equivalents	(361,111	)	(3,206,171	)	3,893,223
Cash and cash equivalents at beginning of year	17,683,305		20,889,476		16,996,253
Cash and cash equivalents at end of year	$17,322,194		$17,683,305		$20,889,476

The notes to consolidated financial statements are an integral part of the above statement.
 

30

MET-PRO CORPORATION

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

						Accumulated
		Additional				Other
	Common	Paid-in		Retained		Comprehensive		Treasury
	Shares	Capital		Earnings		Income/(Loss)		Shares		Total
Balances, January 31, 2004	$963,496	$7,955,459		$63,727,425		($328,616	)	($12,047,030	)	$60,270,734
Comprehensive income:
Net income	-	-		4,814,679		-		-
Foreign currency translation adjustment	-	-		-		224,890		-
Interest rate swap, net of tax of ($70,683)	-	-		-		137,208		-
Minimum pension liability adjustment,
net of tax of ($34,594)	-	-		-		67,153		-
Total comprehensive income										5,243,930
Dividends paid, $.1631 per share	-	-		(1,861,277	)	-		-		(1,861,277	)
Dividend declared, $.0581 per share	-	-		(648,381	)	-		-		(648,381	)
Stock option transactions	-	(24,813	)	-		-		723,498		698,685
Purchase of 43,841 treasury shares	-	-		-		-		(538,500	)	(538,500	)
Balances, January 31, 2005	963,496	7,930,646		66,032,446		100,635		(11,862,032	)	63,165,191
Comprehensive income:
Net income	-	-		7,313,284		-		-
Foreign currency translation adjustment	-	-		-		(168,362	)	-
Interest rate swap, net of tax of ($40,614)	-	-		-		79,400		-
Minimum pension liability adjustment,
net of tax of $188,347	-	-		-		(333,494	)	-
Total comprehensive income										6,890,828
Stock split four-for-three	321,165	(321,165	)	-		-		-		-
Cash in lieu of fractional shares	-	(1,914	)	-		-		-		(1,914	)
Dividends paid, $.1788 per share	-	-		(2,000,194	)	-		-		(2,000,194	)
Dividend declared, $.0625 per share	-	-		(699,819	)	-		-		(699,819	)
Stock option transactions	-	(43,387	)	-		-		367,668		324,281
Purchase of 12,548 treasury shares	-	-		-		-		(140,135	)	(140,135	)
Balances, January 31, 2006	1,284,661	7,564,180		70,645,717		(321,821	)	(11,634,499	)	67,538,238
Comprehensive income:
Net income	-	-		7,190,829		-		-
Foreign currency translation adjustment	-	-		-		291,299		-
Interest rate swap, net of tax of $21,772	-	-		-		(36,040	)	-
Securities available for sale,
net of tax of ($840)	-	-		-		1,430		-
Minimum pension liability adjustment,
net of tax of $16,075	-	-		-		31,661		-
Total comprehensive income										7,479,179
Dividends paid, $.1925 per share	-	-		(2,157,604	)	-		-		(2,157,604	)
Dividend declared, $.0675 per share	-	-		(757,029	)	-		-		(757,029	)
Stock-based compensation	-	327,200		-		-		-		327,200
Stock option transactions	-	19,328		-		-		127,845		147,173
Balances, January 31, 2007	$1,284,661	$7,910,708		$74,921,913		($33,471	)	($11,506,654	)	$72,577,157

The notes to consolidated financial statements are an integral part of the above statement.

31

MET-PRO CORPORATION

CONSOLIDATED BUSINESS SEGMENT DATA

          Years ended January 31,

	2007	2006	2005
Net sales to unaffiliated customers
Product recovery/pollution control technologies	$46,712,811	$42,563,591	$31,380,986
Fluid handling technologies	25,868,798	23,533,933	22,892,843
Filtration/purification technologies	18,829,505	19,018,576	17,842,460
	$91,411,114	$85,116,100	$72,116,289
Includes foreign sales of:
Product recovery/pollution control technologies	$9,163,071	$7,601,248	$4,420,913
Fluid handling technologies	6,989,789	5,794,645	4,834,934
Filtration/purification technologies	7,012,071	7,614,056	6,196,282
	$23,164,931	$21,009,949	$15,452,129
Income from operations
Product recovery/pollution control technologies	$4,733,862	$4,119,242	$1,626,727
Fluid handling technologies	4,362,276	3,540,428	3,357,645
Filtration/purification technologies	1,055,004	2,002,934	2,399,743
	$10,151,142	$9,662,604	$7,384,115
Depreciation and amortization expense
Product recovery/pollution control technologies	$473,354	$480,173	$486,214
Fluid handling technologies	632,464	578,861	586,272
Filtration/purification technologies	496,320	427,306	419,408
	$1,602,138	$1,486,340	$1,491,894
Capital expenditures
Product recovery/pollution control technologies	$252,777	$250,327	$315,644
Fluid handling equipment technologies	2,237,574	1,446,380	313,287
Filtration/purification technologies	1,571,101	349,443	431,848
	4,061,452	2,046,150	1,060,779
Corporate	337,458	2,105,103	132,988
	$4,398,910	$4,151,253	$1,193,767
Identifiable assets at January 31
Product recovery/pollution control technologies	$35,332,252	$34,173,031	$30,361,707
Fluid handling technologies	21,667,719	17,008,765	15,358,949
Filtration/purification technologies	20,514,339	17,653,316	15,618,157
	77,514,310	68,835,112	61,338,813
Corporate	19,652,276	20,236,279	19,192,318
	$97,166,586	$89,071,391	$80,531,131

The Company follows the practice of allocating general corporate expenses,

including depreciation and amortization expense, among the reporting segments.

32

MET-PRO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JANUARY 31, 2007, 2006 AND 2005

NOTE 1:

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of operations: The Company manufactures and sells product recovery and pollution control equipment for purification of air and liquids, and fluid handling equipment for corrosive, abrasive and high temperature liquids. The Company has two reporting segments; Product Recovery/Pollution Control Technologies and Fluid Handling Technologies, and one other segment (Filtration/Purification Technologies). 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., Strobic Air Corporation, MPC Inc., Pristine Water Solutions Inc., Mefiag (Guangzhou) Filter Systems Ltd. and Met-Pro (Hong Kong) Company Limited. Significant intercompany accounts and transactions have been eliminated. Use of estimates: 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. Foreign currency translation: Assets and liabilities of the Company’s foreign subsidiaries are translated at current exchange rates, while income and expenses are translated at average rates for the period. Translation gains and losses are reported as a component of accumulated other comprehensive income in the Statement of Shareholders’ Equity. Marketable securities: All of our marketable securities are classified as available-for-sale. Available-for-sale securities are carried at fair value, with the unrealized gains and losses, net of any related tax effect, reported as a component of accumulated other comprehensive income in the Statement of Shareholders’ Equity. Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are included in other income, net. Inventories: Inventories 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, net of accumulated depreciation. Expenditures for maintenance and repairs are charged to expense as incurred. Renewals and betterments are capitalized (see Note 4). For financial reporting purposes, provisions for depreciation are calculated on a straight-line basis over the following estimated useful lives of the assets:

	Years
Buildings and improvements	10-39
Machinery and equipment	5-10
Furniture and fixtures	5-7
Automotive equipment	3

33

MET-PRO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEARS ENDED JANUARY 31, 2007, 2006 AND 2005

The carrying amount of all long-lived assets is evaluated periodically to determine if adjustment to the depreciation period or the non-depreciated balance is warranted. Based upon its most recent analysis, the Company believes that no impairment of property, plant and equipment exists as of January 31, 2007.

Costs in excess of net assets of businesses acquired:

In June 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations”, and SFAS No. 142, “Goodwill and Other Intangible Assets”. SFAS No. 141, which was effective for business combinations completed after June 30, 2001, requires, among other things, that (1) the purchase method of accounting be used for all business combinations, (2) specific criteria be established for the recognition of intangible assets separately from goodwill and (3) additional information about acquired intangible assets be provided. SFAS No. 142, which became effective for the Company as of February 1, 2002, primarily addresses the accounting for goodwill and intangible assets subsequent to their acquisition. Among other things it requires that goodwill not be amortized for financial statement purposes; instead, management is required to test goodwill for impairment at least annually. The Company performed its annual impairment test for each reporting unit in the fourth quarter of the fiscal year ended January 31, 2007 using a fair value approach. The test for goodwill impairment involves significant judgment in estimating projections of fair value generated through future performance of each of the reporting units which comprise our operating segments. In calculating the fair value of the reporting units using the present value of estimated future cash flows method, we rely on a number of assumptions including sales and related gross margin projections, operating margins, anticipated working capital requirements and market rate of returns used in discounting projected cash flows. These assumptions were based upon the outlook of markets and industries, our business plans and historical data. Inherent uncertainties exist in determining and applying such factors. The discount rate used in the projection of fair value represents a weighted average cost of capital applicable to Met-Pro Corporation.

No impairment was present upon performing this test, since the fair value of each reporting unit exceeded its carrying value, including goodwill.At January 31, 2007, costs in excess of net assets of businesses acquired associated with the Company’s two reporting segments and one other segment totaled $20,798,913.

The changes in the carrying amount of costs in excess of net assets of businesses acquired by the two reporting segments and one other segment for the fiscal year ended January 31, 2007 are as follows:

Product Recovery/Pollution Control Technologies Fluid Handling Technologies Filtration/ Purification Technologies Total       

Balance as of February 1, 2006	$15,706,667	$11,542	$5,080,704	$20,798,913
Goodwill acquired during the period	-	-	-	-
Balance as of January 31, 2007	$15,706,667	$11,542	$5,080,704	$20,798,913

Revenue recognition:

The Company recognizes revenues from product sales or services provided when the following revenue recognition criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the selling price is fixed or determinable and collectibility is reasonably assured. The Securities and Exchange Commission’s Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition”, provides guidance on the application of generally accepted accounting principles to selected revenue recognition issues. The Company has concluded that its revenue recognition policy is appropriate and in accordance with generally accepted accounting principles and SAB No. 104.

Advertising:

Advertising costs are charged to operations in the year incurred and were $933,957, $1,259,192 and $1,307,722 for the years ended January 31, 2007, 2006 and 2005, respectively.

34

MET-PRO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEARS ENDED JANUARY 31, 2007, 2006 AND 2005

Research and development:

Research and development costs are charged to operations in the year incurred and were $2,291,262, $1,951,829, and $2,225,859 for the years ended January 31, 2007, 2006, and 2005, respectively.

Stock-based compensation:

Effective February 1, 2006, the Company began accounting for share-based compensation under the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123(R), “Share-Based Payment,” which requires the recognition of the fair value of share-based compensation. Under the fair value recognition provisions for SFAS No. 123(R), share-based compensation is estimated at the grant date based on the fair value of the awards expected to vest and recognized as expense ratably over the requisite service period of the award. The Company has used the Black-Scholes valuation model to estimate fair value of share-based awards, which requires various assumptions including estimating stock price volatility, forfeiture rates and expected life.

Earnings per share:

Basic earnings per share are computed based on the weighted average number of common shares outstanding during each year.

Diluted earnings per share are computed based on the weighted average number of shares outstanding plus all potential dilutive common shares outstanding (stock options) during each year.

Basic and diluted earnings per share have been restated to reflect the effect of the four-for-three stock split, which was effective November 15, 2005.

Dividends:

On December 15, 2006, the Board of Directors declared a $.0675 per share quarterly cash dividend payable on March 14, 2007 to shareholders of record on February 28, 2007, amounting to an aggregate of $757,029.

Stock splits:

On October 10, 2005, the Company’s Board of Directors declared a four-for-three stock split, effective in the form of a stock distribution, which was paid on November 15, 2005 to shareholders of record on November 1, 2005. The Company retained the current par value of $.10 per share for all common shares. All references in the financial statements and notes to the number of shares outstanding, per share amounts, and stock option data of the Company’s common shares have been restated to reflect the effect of the stock split for all periods presented.

Shareholders’ equity reflects the stock split by reclassifying from “Additional Paid-in Capital” to “Common Shares” an amount equal to the par value of the additional shares arising from the split.

Concentrations of credit risk:

Financial instruments which potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents (see Note 2), and trade accounts receivable. The Company believes concentrations of accounts receivable credit risk are limited due to the number of customers, and dispersion among the operating segments and geographic areas. It is the policy of management to review the outstanding accounts receivable balance at the end of each reporting period, as well as the bad debt write-offs experienced in the past, and establish an allowance for doubtful accounts for uncollectable amounts.

35

MET-PRO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEARS ENDED JANUARY 31, 2007, 2006 AND 2005

Supplemental cash flow information:

	2007	2006	2005
Cash paid during the year for:
Interest	$357,130	$263,433	$327,776
Income taxes	3,824,715	2,009,523	2,132,030

Recent accounting pronouncements:

In March 2005, the FASB issued FASB Interpretation (“FIN”) No. 47, “Accounting for Conditional Asset Retirement Obligations”. FIN No. 47 requires an entity to recognize a liability for a conditional asset retirement obligation when incurred if the liability can be reasonably estimated. The Interpretation also clarifies that the term Conditional Asset Retirement Obligation refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. FIN No. 47 also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. FIN No. 47 was effective for the Company with its fiscal year ended January 31, 2006. FIN No. 47 has not had a material impact on our financial position, results of operations or cash flows.

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections”, which replaces APB No. 20, “Accounting Changes,” and SFAS No. 3, “Reporting Accounting Changes in Interim Financial Statements”. SFAS No. 154 changes the requirements for accounting and reporting a change in accounting principle, and applies to all voluntary changes in accounting principles, as well as changes required by an accounting pronouncement in the unusual instance it does not include specific transition provisions. Specifically, SFAS No. 154 requires retrospective application to prior periods’ financial statements, unless it is impracticable to determine the period specific effects or the cumulative effect of the change. When it is impracticable to determine the effects of the change, the new accounting principle must be applied to the balances of assets and liabilities as of the beginning of the earliest period for which retrospective application is practicable and a corresponding adjustment must be made to the opening balance of retained earnings for that period rather than being reported in an income statement. When it is impracticable to determine the cumulative effect of the change, the new principle must be applied as if it were adopted prospectively from the earliest date practicable. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. SFAS No. 154 does not change the transition provisions of any existing pronouncements. SFAS No. 154 has not had a material impact on our financial position, results of operations or cash flows.

In July 2006, the FASB issued FIN No. 48, “Accounting for Uncertainty in Income Taxes - An Interpretation of SFAS No. 109”. FIN No. 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes.” FIN No. 48 also prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In addition, FIN No. 48 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The provisions of FIN No. 48 are to be applied to all tax positions upon initial adoption of this standard. Only tax positions that meet the more-likely-than-not recognition threshold at the effective date may be recognized or continue to be recognized as an adjustment to the opening balance of retained earnings (or other appropriate components of equity) for that fiscal year. The provisions of FIN No. 48 are effective for fiscal years beginning after December 15, 2006. The Company is evaluating the impact of the adoption of FIN No. 48 but does not currently expect the adoption of this new standard to have a material impact on our financial position, results of operations or cash flows.

In September 2006, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin (“SAB”) 108, to address diversity in practice in quantifying financial statement misstatements. SAB 108 requires that the Company quantify misstatements based on their impact on each of its financial statements and related disclosures. SAB 108 is effective for fiscal years ending after November 15, 2006. The Company has adopted SAB 108 effective as of January 31, 2007. The adoption of this bulletin did not have a material impact on our financial position, results of operations or cash flows.

36

MET-PRO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEARS ENDED JANUARY 31, 2007, 2006 AND 2005

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. SFAS No. 157 provides guidance for using fair value to measure assets and liabilities. It also responds to investors’ requests for expanded information about the extent to which companies’ measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. SFAS No. 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value, and does not expand the use of fair value in any new circumstances. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and is required to be adopted by the Company in the first quarter of fiscal 2009. The Company is currently evaluating the effect that the adoption of SFAS No. 157 will have on our financial position, results of operations or cash flows.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R)”. SFAS No. 158 requires that we recognize the overfunded or underfunded status of our pension plans (the Plans) as an asset or liability in the fiscal year ended January 31, 2007 consolidated balance sheet, with changes in the funded status recognized through other comprehensive income in the year in which they occur. SFAS No. 158 also requires us to measure the funded status of the Plans as of the year end consolidated balance sheet date not later than December 31, 2008. The impact of adopting SFAS No. 158 resulted in an increase in the pension liabilities and an increase in accumulated other comprehensive loss of approximately $0.3 million, prior to any deferred tax adjustment.

Reclassifications:

The Company reclassified the non-current pension liabilities that were included in the current liabilities section under the heading “accrued salaries, wages and expenses” to other non-current liabilities, and the related deferred income taxes from current to non-current in accordance with FASB No. 158 for all fiscal years presented in this Annual Report on Form 10-K. The effect of the reclassification of the pension liabilities will be to reduce current liabilities and increase non-current liabilities by $3,006,842 at January 31, 2006. In addition, the reclassification of the related deferred income taxes resulted in a reduction of deferred income taxes in the current asset section by $591,534, an increase in deferred income taxes in the current liabilities section by $226,048 and a decrease in deferred income taxes in the non-current liabilities section by $817,582 at January 31, 2006. As a result of these reclassifications, the total assets decreased by $591,534 at January 31, 2006. These reclassifications had no effect upon the Company’s consolidated statements of operations, shareholders’ equity or cash flows for any of the affected periods.

37

MET-PRO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEARS ENDED JANUARY 31, 2007, 2006 AND 2005

NOTE 2:	FAIR VALUE OF FINANCIAL INSTRUMENTS
	Cash and cash equivalents: Short-term investments at January 31, 2007 and 2006 were valued at cost (approximating market) and amounted to $17,322,194 and $17,683,305, respectively. Short-term investments consist principally of certificate of deposits 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. Marketable securities: At January 31, 2007, the Company's marketable securities had a fair market value of $24,090, which includes an unrealized gain of $2,270. The marketable securities are composed of 547 shares of Armstrong World Industries, Inc. (“AWI”) distributed to Met-Pro as part of a Chapter 11 reorganization settlement in October of 2006. Debt: The fair value and carrying amount of long-term debt was as follows:
		January 31,
		2007	2006
	Fair value	$7,371,688	$4,412,956
	Carrying amount	7,373,192	4,412,999
	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 interest rate swaps (see Note 5) to minimize its exposure to fluctuations in interest rates. The interest rate differential to be paid or received under these agreements 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,
	2007	2006
Raw materials	$13,596,396	$9,116,168
Work in process	2,365,479	2,334,589
Finished goods	3,334,404	4,987,724
	$19,296,279	$16,438,481
At January 31, 2007 and 2006, inventories valued at the last-in, first-out method (“LIFO”) were $2,927,376 and $2,814,882, respectively. The LIFO value of inventories was lower than replacement cost by $1,468,627 and $1,063,758 at January 31, 2007 and 2006, respectively. The book basis of LIFO inventories exceeded the tax basis by approximately $983,000 at both January 31, 2007 and 2006, as a result of applying the provisions of Accounting Principles Board Opinion No. 16, “Business Combinations”, to an acquisition completed in a prior year.

38

MET-PRO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEARS ENDED JANUARY 31, 2007, 2006 AND 2005

NOTE 4:	PROPERTY, PLANT AND EQUIPMENT
	Property, plant and equipment consisted of the following:

	January 31,
	2007	2006
Land	$2,155,061	$2,117,169
Buildings and improvements	17,631,279	11,524,857
Machinery and equipment	11,653,472	11,362,610
Furniture and fixtures	4,358,170	3,737,475
Automotive equipment	1,462,080	1,317,282
Construction in progress	206,898	3,210,341
	37,466,960	33,269,734
Less accumulated depreciation	20,633,972	19,431,513
	$16,832,988	$13,838,221

The construction in progress amounting to $3,210,341 at the fiscal year ended January 31, 2006 is partially due to an expansion of the Telford, Pennsylvania facility, in which the Company incurred costs of $1,827,943. In addition, part of the construction in progress balance was due to an expansion of our Mefiag B.V. facility in Heerenveen, The Netherlands, in which the Company incurred costs of $1,063,123 in the fiscal year ended January 31, 2006.

Depreciation of property, plant and equipment charged to operations amounted to $1,569,973, $1,455,618, and $1,459,116 for the fiscal years ended in 2007, 2006 and 2005, respectively.

During the second quarter of fiscal year 2007, the Company listed for sale, its 30,000 square foot building located on four acres in Hauppauge, Long Island, New York, previously occupied by the Sethco business unit, at an asking price of $4,950,000. The net book value of the land and building amounted to $812,756 as of January 31, 2007, and is included in the property, plant and equipment, net, section of the consolidated balance sheet. Effective May 1, 2006, the Company discontinued depreciating the unused Sethco facility.

39

MET-PRO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEARS ENDED JANUARY 31, 2007, 2006 AND 2005

NOTE 5:	DEBT
	The Company and its subsidiaries have domestic and foreign unsecured lines of credit totaling $5,000,000 which can be used for working capital. As of January 31, 2007, the Company’s Mefiag B.V. subsidiary borrowed $391,020 (300,000 Euro) from its available line of credit, which is included in the table below. Short-term and long-term debt consisted of the following:

	January 31,	January 31,
	2007	2006
Bond payable, bank, payable in
quarterly installments of $58,460,
plus interest at a rate of 16 basis points
below the ninety day LIBOR rate
(effective interest rate of 5.21% at
January 31, 2007), maturing April, 2021,
collateralized by the Telford, PA building.	$3,332,246	$50,000
Note payable, bank, payable in
quarterly installments of $300,000,
plus interest at a rate of 75 basis points
over the ninety day LIBOR rate
(effective interest rate of 6.12% at
January 31, 2007), maturing October, 2008.	2,400,000	3,600,000
Note payable, bank, payable in
quarterly installments of $32,585
(25,000 Euro), plus interest at a
fixed rate of 3.82%, maturing
January, 2016.	1,173,061	379,387
Line of credit, $391,020 (300,000 Euro),
payable upon demand, plus
interest at a rate of 70 basis points
over the thirty day EURIBOR rate
(effective interest rate of 4.31% at
January 31, 2007).	391,020	364,559
	7,296,327	4,393,946
Less current portion	1,955,202	1,689,413
	5,341,125	2,704,533
Fair market value of interest rate
swap liability	76,865	19,053
Long-term portion	$5,417,990	$2,723,586

The notes payable and bond payable are subject to certain covenants, including maintenance of prescribed amounts of leverage and fixed charge coverage ratios.

40

MET-PRO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEARS ENDED JANUARY 31, 2007, 2006 AND 2005

The Company has two separate interest rate swap agreements to hedge against the potential impact on earnings from increases in market interest rates. Effective October 29, 1998, the Company entered into a ten-year interest rate swap agreement for a notional amount equal to the balance on the note payable maturing October 2008. The Company swapped the ninety day LIBOR for a fixed rate of 5.23%. As a result, the effective fixed interest rate is 5.98%. Effective April 3, 2006, the Company entered into a fifteen-year interest rate swap agreement for a notional amount equal to the balance on the bond payable maturing April 2021. The Company swapped the ninety day LIBOR for a fixed rate of 4.87%. As a result, the effective fixed interest rate is 4.71%. These interest rate swap agreements are accounted for as fair value hedges that qualify for treatment under the short-cut method of measuring effectiveness in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” as amended by SFAS 138, “Accounting for Certain Derivative Instruments and Hedging Activities - an Amendment to FASB Statement No. 133”. There was no hedge ineffectiveness as of January 31, 2007. The fair value of the interest rate swap agreements resulted in a decrease in equity of $48,425 (net of tax) at January 31, 2007 and a decrease in equity of $12,385 (net of tax) at January 31, 2006. These results are recorded in the accumulated other comprehensive loss section of shareholders’ equity.

Maturities of short-term and long-term debt are as follows:

Year Ending
January 31,
2008	$1,955,202
2009	1,564,182
2010	364,182
2011	364,182
2012	364,182
Thereafter	2,684,397
	$7,296,327

NOTE 6:	ACCUMULATED OTHER COMPREHENSIVE LOSS
	Accumulated other comprehensive income/(loss) as of January 31 was comprised of the following:

	2007		2006
Interest rate swap, net of tax	($48,425	)	($12,385	)
Unrealized gain on securities available-for sale, net of tax	1,430		-
Foreign currency translation adjustment	691,730		400,431
Minimum pension liability adjustment, net of tax	(678,206	)	(709,867	)
	($33,471	)	($321,821	)

NOTE 7:

SHAREHOLDERS’ EQUITY

On December 15, 2000, the Company announced a 533,333 (adjusted for stock splits) share stock repurchase program, which began after the Company’s February 21, 2000 stock repurchase program was completed. During the fiscal year ended January 31, 2006, the Company repurchased 12,548 Common Shares at a cost of $140,135. At January 31, 2007, the Company had the authority to repurchase an additional 270,918 shares under the December 15, 2000 stock repurchase program.

41

MET-PRO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEARS ENDED JANUARY 31, 2007, 2006 AND 2005

	The Company has a Shareholders’ Rights Plan, under which the Company’s Board of Directors declared a dividend of one Right for each Common Share owned. The Plan provides, under certain conditions involving acquisition of the Company’s Common Shares, that holders of Rights, except for the acquiring entity, would be entitled to purchase Common Shares of the Company, or acquiring company, having a value of twice the Rights’ exercise price. The Rights under the Plan expire in 2010.
NOTE 8:	STOCK-BASED COMPENSATION
	Stock options: Effective February 1, 2006, the Company adopted SFAS No. 123(R), "Share-Based Payment," which revised SFAS No. 123, "Accounting for Stock-Based Compensation," and superseded APB No. 25, "Accounting for Stock Issued to Employees". Prior to February 1, 2006, the Company accounted for stock-based compensation under the provisions of APB No. 25 and related interpretations. Accordingly, no compensation expense related to granting of stock options had been recognized in the financial statements prior to adoption of SFAS No. 123(R) for stock options that were granted, as the grant price equaled the market price on the date of grant. The Company has adopted SFAS No. 123(R) using the modified prospective method, and accordingly the financial statement amounts for the prior periods presented in this Annual Report on Form 10-K have not been restated to reflect the fair value method of expensing share-based compensation. Under this transition method, compensation cost recognized in the fiscal year ended January 31, 2007 includes compensation cost for all share-based payments granted prior to, but not vested as of February 1, 2006 and shared-based payments granted after February 1, 2006. For the fiscal year ended January 31, 2007, the impact of the adoption of SFAS No. 123(R) as compared to if the Company had continued to account for share-based compensation under APB Opinion No. 25 is as follows: an increase in general and administrative expense by $327,200; a reduction in net income by $219,224; and a reduction in basic and diluted earnings per share by $0.02. SFAS No. 123(R) requires the Company to estimate forfeitures in calculating the compensation expense instead of recognizing these forfeitures and the resulting reduction in compensation expense as they occur. As of February 1, 2006, the cumulative after-tax effect of this change in accounting for forfeitures reduced stock-based compensation by $17,085. The estimate of forfeitures will be adjusted over the vesting period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. The adoption of this standard had no impact on net cash flows and results in the reclassification on the consolidated cash flows statement of related tax benefits from cash flows from operating activities to cash flows from financing activities to the extent these tax benefits exceeded the associated compensation cost recognized in the income statement. On December 15, 2006, the Company issued 179,000 stock options, with one-third exercisable one year from the grant date and the remaining two-thirds vesting two and three years from grant date, respectively. Previous options granted by the Company became exercisable with one-third exercisable as of the date of grant and the remaining two-thirds vesting over a two year period. In the event of a “change of control”, any unvested portion of the option shall become immediately exercisable. The Company’s present practice is that the duration of options is for up to ten years from the date of grant, subject to earlier termination under various conditions. The fair value of each option is amortized into compensation expense on a straight-line basis over its respective vesting period, net of estimated forfeitures. The fair value of options was estimated at the grant date using the Black-Scholes option valuation model. The per share weighted-average fair value at the date of grant for stock options granted during the fiscal year ended January 31, 2007 was $4.03 per option. The application of this valuation model relies on the following assumptions that are judgmental and sensitive in the determination of the compensation expense:

42

MET-PRO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEARS ENDED JANUARY 31, 2007, 2006 AND 2005

	Fiscal Years Ended
	January 31,
	2007	2006
Expected term (years)	5.0	5.0
Risk-free interest rate	3.63% - 4.58%	3.11% - 4.58%
Expected volatility	30% - 32%	30% - 32%
Dividend yield	2.26% - 3.39%	2.26% - 3.73%

Historical information was the principal basis for the selection of the expected term and dividend yield. The expected volatility is based on a weighted-average combination of historical and implied volatilities over a time period that approximates the expected term of the option. The risk-free interest rate was selected based upon the U.S. Treasury Bill rates in effect at the time of grant for the expected term of the option.

The following table summarizes stock option transactions for the fiscal year ended January 31, 2007:

				Weighted
			Weighted	Average
			Average	Remaining	Aggregate
		Shares	Exercise Price	Life (years)	Intrinsic Value
Options:
	Outstanding at February 1, 2006	810,742	$9.8071	7.68
	Granted	179,000	14.5300
	Forfeited	14,667	11.9900
	Expired	-	-
	Exercised	18,134	8.1200
	Outstanding at January 31, 2007	956,941	$10.6892	7.49	$4,488,819
	Exercisable at January 31, 2007	721,602	$9.6302	7.49	$4,149,067

The aggregate intrinsic value of options exercised during the fiscal years ended January 31, 2007, 2006 and 2005 was $92,085, $227,797 and $557,135, respectively. The intrinsic value of stock options is the amount by which the market price of the stock on a given date, such as at the end of the period or on the day of exercise, exceeded the market price of stock on the date of grant.

The following table summarizes information about the options outstanding and options exercisable as of January 31, 2007:

	Options Outstanding			Options Exercisable
		Weighted Average
		Remaining	Weighted Average		Weighted Average
	Shares	Life (years)	Exercise Price	Shares	Exercise Price
Range of prices:
$5.48 - 5.99	32,980	2.95	$5.5533	32,980	$5.5533
$6.00 - 6.99	64,716	4.13	6.8063	64,716	6.8063
$7.00 - 8.99	205,231	5.76	7.3740	205,231	7.3740
$9.00 - 11.99	161,340	8.18	9.8813	161,340	9.8813
$12.00 - 12.99	313,674	8.19	12.4230	257,335	12.5047
$13.00 - 14.99	179,000	9.87	14.5300	-	-
	956,941	7.49	$10.6892	721,602	$9.6302

43

MET-PRO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEARS ENDED JANUARY 31, 2007, 2006 AND 2005

As of January 31, 2007, there was $924,474 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plans. The cost is expected to be recognized over a weighted-average period of 2.1 years.

The following table provides the pro-forma net income and earnings per share for the fiscal year ended January 31, 2006 and 2005 as if compensation cost for stock-based employee compensation was determined as of the grant date under the fair value method of SFAS No. 123, "Accounting for Stock-Based Compensation," as amended by SFAS No. 148.

		January 31,		January 31,
		2006		2005
Net income, as reported		$7,313,284		$4,814,679
Add:	Stock-based employee compensation expense
	included in reported net income, net of tax	-		-
Less:	Pro-forma expense related to stock options granted,
	net of tax effects	(308,080	)	(409,919	)
Pro-forma		$7,005,204		$4,404,760
Earnings per share, basic:
	As reported	$.65		$.43
	Pro-forma	.63		.40
Earnings per share, diluted:
	As reported	$.65		$.43
	Pro-forma	.62		.39

For the purposes of this pro-forma disclosure, the fair value of the options at the date of grant was estimated using the Black-Scholes option-pricing model.

44

MET-PRO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEARS ENDED JANUARY 31, 2007, 2006 AND 2005

NOTE 9:	INCOME TAXES
	The provision for income taxes was comprised of the following:

	2007	2006	2005
Current
Federal	$2,998,574	$1,601,149	$1,501,388
State	425,314	236,709	240,048
Foreign	91,660	260,416	227,630
	3,515,548	2,098,274	1,969,066
Deferred	26,203	610,593	511,225
	$3,541,751	$2,708,867	$2,480,291

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 (liabilities) were as follows:

	2007		2006
Deferred tax assets
Inventory cost capitalization	$135,157		$140,115
Pension cost	1,232,328		863,819
Non-compete agreements	195,176		238,386
Other	374,865		197,635
Total deferred tax assets	1,937,526		1,439,955
Deferred tax liabilities
Accelerated depreciation	649,252		628,737
Inventory - Dean Pump Division	363,727		344,071
Prepaid expenses	231,736		211,556
Goodwill	2,307,633		1,879,200
Total deferred tax liabilities	3,552,348		3,063,564
Net deferred tax (liabilities)	($1,614,822	)	($1,623,609	)

A reconciliation of the federal statutory rate and the Company’s effective tax rate is presented as follows: 

	2007				2006				2005
Computed expected
federal tax expense	$3,649,077		34.0	%	$3,407,531		34.0	%	$2,480,291		34.0	%
State income taxes,
net of federal
income tax benefit	280,707		2.6		156,228		1.5		158,432		2.2
Research and
development tax credits	(136,500	)	(1.3	)	(591,517	)	(5.9	)	-		-
Other	(251,533	)	(2.3	)	(263,375	)	(2.6	)	(158,432	)	(2.2	)
Effective income taxes	$3,541,751		33.0	%	$2,708,867		27.0	%	$2,480,291		34.0	%

The research and development tax credits totaling $591,517 in the fiscal year ended January 31, 2006, includes $450,463 of research and development tax credits for the prior three fiscal years ended January 31, 2005.

45

MET-PRO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEARS ENDED JANUARY 31, 2007, 2006 AND 2005

NOTE 10:	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, 2007 were as follows:

2008	$171,961
2009	40,737
2010	39,382
2011	19,691

	Rental expense for the above operating leases during the fiscal years ended in 2007, 2006, and 2005 was $160,672, $174,995, and $266,884, respectively.
NOTE 11:	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 pension plans equal to the amounts that are tax deductible. In the third quarter ended October 31, 2006, the Company amended its defined benefit pension plans to freeze the accrual of future benefits for all its salaried and non-union hourly employees, effective on December 31, 2006, which resulted in the Company recognizing a curtailment loss of $234,180. As of January 31, 2007, the Company adopted SFAS No. 158, which requires the recognition of the overfunded or underfunded status of its pension plans as an asset or liability, with changes in the funded status recognized through other comprehensive income in the year they occur. The Company recognized the liability for the funded status in its consolidated balance sheet. The Company plans to change the annual measurement date for its pension plans during the fiscal year ended January 31, 2008. On October 31, 2006, the Company’s annual measurement date, the accumulated benefit obligation related to the Company’s pension plans exceeded the fair value of the pension plan assets (such excess is referred to as an unfunded accumulated benefit obligation). This difference is due to the decline in the market value of investments during the fiscal year ended January 31, 2003 combined with a reduction in the discount rate from 7.00% to 5.75% between the fiscal years ended January 31, 2003 and 2006. A pension liability adjustment was recorded in the fourth quarter of the fiscal year ended January 31, 2007 as an increase to the pension liability with a corresponding increase to shareholders’ equity and a decrease in intangible assets. During the fiscal year ended January 31, 2007, the Company recorded an after-tax increase to shareholders’ equity of $31,661 and a decrease to intangible assets of $690,887. Net periodic pension cost (income) included the following components:

	2007		2006		2005
Service cost - benefits earned during the period	$708,246		$620,064		$629,673
Interest cost on projected benefit obligation	1,071,627		1,029,984		1,002,086
Expected return on assets	(1,169,858	)	(1,027,598	)	(996,546	)
Amortization	186,051		118,306		86,147
Curtailment loss	234,180		-		-
	$1,030,246		$740,756		$721,360

46

MET-PRO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEARS ENDED JANUARY 31, 2007, 2006 AND 2005

The following table sets forth the plans’ change in benefit obligations, change in plan assets and amounts recognized on the Company’s consolidated balance sheet at January 31, 2007 and 2006:
	2007		2006
Change in benefit obligation:
Benefit obligation at beginning of year	$19,031,679		$16,804,683
Service cost	708,246		620,064
Interest cost	1,071,627		1,029,984
Amendments	155,004		52,045
Actuarial loss	433,170		1,415,687
Curtailment	(2,014,829	)	-
Benefits paid	(872,240	)	(890,784	)
Benefit obligation at end of year	$18,512,657		$19,031,679
Change in plan assets:
Fair value of plan assets at beginning of year	$14,107,986		$12,052,579
Actual gain on plan assets	1,814,190		1,028,733
Employer contribution	132,106		1,917,458
Benefits paid	(872,240	)	(890,784	)
Fair value of plan assets at end of year	$15,182,042		$14,107,986
Funded status	($3,330,615	)	($4,923,693	)
Unrecognized actuarial loss	785,902		2,957,626
Unrecognized transition (asset)	(1,602	)	(81,375	)
Unrecognized prior service costs	292,217		691,484
Net amount recognized	($2,254,098	)	($1,355,958	)
Amounts recognized in the consolidated balance sheet consist of:
Accrued benefit liability - short term	($99,472	)	($132,106	)
Accrued benefit liability - long term	(3,231,143	)	(3,006,842	)
Intangible assets	-		690,887
Accumulated other comprehensive loss	1,076,517		1,092,103
Net amount recognized	($2,254,098	)	($1,355,958	)
Prior to the adoption of SFAS No. 158, the Company would have recognized a reduction in the additional minimum pension liability of $402,903, and a corresponding increase to accumulated other comprehensive income of $275,671 (net of $127,232 in tax) in relation to the pension benefit plans, as required by SFAS No. 87. The total additional minimum pension liability recognized on the pension benefit plans prior to the adoption of SFAS No. 158 was $689,200. The effect of the adoption of SFAS No. 158 on the consolidated balance sheet was as follows:

	January 31,  2007
Accrued benefit liability - short term	-
Accrued benefit liability - long term	($278,624	)
Intangible assets	(108,693	)
Accumulated other comprehensive loss (net of tax effect of $143,307)	244,010
The accumulated benefit obligation, projected benefit obligation, and fair value of plan assets for plans with accumulated benefit obligations in excess of assets were $18,234,033, $18,512,657 and $15,182,042, respectively, as of October 31, 2006, and $17,246,934, $19,031,679 and $14,107,986, respectively, as of October 31, 2005.

47

MET-PRO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEARS ENDED JANUARY 31, 2007, 2006 AND 2005

The Company contributed $132,106 to the pension plans during the plan year ended October 31, 2006 and expects an additional contribution of $99,300 during the Company’s fiscal year ending January 31, 2008.

The following benefit payments, as appropriate, are expected to be paid:

Year Ending
January 31,
2008	$887,016
2009	922,998
2010	973,248
2011	1,029,402
2012	1,150,863
2013 - 2017	6,974,849
	$11,938,376

Weighted average assumptions used in accounting for benefit obligations for the fiscal year ended January 31:

	2007	2006	2005
Discount rate	5.75%	5.75%	6.25%
Expected long-term rate of
return on assets	8.50%	8.50%	9.00%
Rate of increase in
compensation levels		3% for One Year	3% for Two Years
(where applicable)	4.50%	Then 4.50% Thereafter	Then 4.50% Thereafter

Weighted average assumptions used in accounting for net projected pension cost for the fiscal year ended January 31:

	2007	2006	2005
Discount rate	5.75%	6.25%	6.25%
Expected long-term rate of
return on assets	8.50%	8.50%	9.00%
Rate of increase in
compensation levels	3% for One Year	3% for Two Years	3% for Three Years
(where applicable)	Then 4.50% Thereafter	Then 4.50% Thereafter	Then 4.50% Thereafter

In selecting the expected long-term rate of return on asset assumption, the Company considered the average rate of earnings on the funds invested or to be invested to provide for the benefits of these plans. This included considering the trust’s asset allocation and the expected returns likely to be earned over the life of the plans.

The table below sets forth the target allocations and asset allocations for the plan as follows:

	2006		2005
Target allocation:
Equity securities	40-80	%	40-80	%
Debt securities	20-60	%	20-60	%
Asset allocation as of October 31:
Equity securities	75	%	75	%
Debt securities	25	%	25	%
Total	100	%	100	%

48

MET-PRO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEARS ENDED JANUARY 31, 2007, 2006 AND 2005

The assets of the funds will be invested in a manner consistent with the safeguards and diversity to which a prudent investor would adhere to and undertake on the behalf of the plans’ participants. The main objective is to obtain the highest possible return commensurate with the level of assumed risk and with an investment horizon sufficient to permit market cycles to be reasonably reflected.

Directors’ Benefit Plan:

The Company provides a non-qualified pension plan for Directors which is presently 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 $744,966 and $750,697 at January 31, 2007 and 2006, 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:

The Company has a 401(k) profit sharing plan in which all employees of the Company in the United States are eligible to participate, following the completion of one year of service and after attaining age 21. Pursuant to this plan, employees can contribute up to 25% of their compensation to the Plan. The Company will match, in the form of Met-Pro Common Shares, up to 50% of the employee’s contribution up to 4% of compensation. Effective January 1, 2007, the Company added a discretionary contribution to the Plan for non-bargaining unit employees in the United States in lieu of the Defined Benefit Plan, which was frozen on December 31, 2006 and accelerated the eligibility to participate in the 401(k) profit sharing plan from the completion of one year of service to six-months of service. The discretionary contribution is (i) 2% for employees under 45 years old or with less than 5 years of service, (ii) 3% for employees 45 years or older and between five to nine years of service, or (iii) 4% for employees 45 years or older and with ten or more years of service. The levels of discretionary contribution will not change with the employee’s age or years of service going forward and all future eligible new hires after April 15, 2006 will receive a discretionary contribution at the 2% level. The Company provided cash contributions to the 401(k) profit sharing plan of $257,688, $211,327, and $202,963 for the fiscal years ended January 31, 2007, 2006 and 2005, respectively.

Employees’ Stock Ownership Trust:

The Company sponsors an employee stock ownership plan under which it may make discretionary contributions to the trust either in cash or in shares of the Company for salaried employees in the United States eligible to participate in the plan. There were no contributions to the Employees’ Stock Ownership Trust for the fiscal years ended in 2007, 2006 and 2005. 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:

In 1997, the Board of Directors of the Company approved a stock option plan covering 350,000 shares (increased to 622,222 shares after giving effect to stock splits effective October 15, 2003 and November 15, 2005) that was approved by the Company’s shareholders at the 1997 meeting of shareholders (the “1997 Plan”). In 2001, the Board of Directors of the Company approved an equity incentive plan covering 350,000 shares (increased to 622,222 shares after giving effect to stock splits effective October 15, 2003 and November 15, 2005) that was approved by the Company’s shareholders at the 2001 meeting of shareholders (the “2001 Plan”). In 2005, the Board of Directors of the Company approved an equity incentive plan covering 500,000 shares (increased to 666,666 shares after giving effect to a stock split effective November 15, 2005) that was approved by the Company’s shareholders at the 2005 meeting of shareholders (the “2005 Plan”). These plans contain anti-dilution provisions that apply to stock splits and stock dividends declared by the Company.

49

MET-PRO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEARS ENDED JANUARY 31, 2007, 2006 AND 2005

The status of the plans was as follows (adjusted for stock splits):
1997 Plan	2007	2006	2005
Options outstanding, beginning	213,077	260,368	342,509
Grants	-	-	11,907
Exercises	12,801	47,291	94,048
Cancellations	-	-	-
Options outstanding, ending	200,276	213,077	260,368
Options price range at January 31	$5.4844	$5.4844	$5.4844
	to	to	to
	$12.8588	$12.8588	$12.8588
Options exercisable at January 31	200,276	213,077	243,780
Options available for grant at January 31	0	0	0

2001 Plan	2007	2006	2005
Options outstanding, beginning	597,665	266,126	133,284
Grants	10,849	344,340	144,101
Exercises	5,333	4,977	9,480
Cancellations	14,667	7,824	1,779
Options outstanding, ending	588,514	597,665	266,126
Options price range at January 31	$7.3575	$7.3575	$7.3575
	to	to	to
	$14.5300	$12.8588	$12.8588
Options exercisable at January 31	521,326	424,545	128,715
Options available for grant at January 31	8,000	4,182	340,698

2005 Plan	2007	2006
Options outstanding, beginning	-	-
Grants	168,151	-
Exercises	-	-
Cancellations	-	-
Options outstanding, ending	168,151	-
Options price at January 31	$14.5300
Options exercisable at January 31	-	-
Options available for grant at January 31	498,515	666,666
The weighted average exercise prices of the Company’s stock option plans were as follows:

	2007	2006	2005
Options outstanding, beginning	$9.4379	$8.6994	$6.9060
Grants	$14.5300	$10.9835	$12.8588
Exercises	$8.1159	$6.2043	$6.7488
Cancellations	$11.9900	$11.1080	$7.3575
Options outstanding, ending	$10.6892	$9.4379	$8.6994

50

MET-PRO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FOR THE YEARS ENDED JANUARY 31, 2007, 2006 AND 2005

NOTE 12:	OTHER INCOME, NET
	Other income, net was comprised of the following:

	2007		2006	2005
Interest income	$962,296		$602,282	$276,118
Other miscellaneous income/(expense)	(29,706	)	26,753	6,082
	$932,590		$629,035	$282,200

NOTE 13:

BUSINESS SEGMENT DATA

During the fiscal quarter ended October 31, 2006, management reviewed operating segment aggregation in accordance with SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information,”and based upon changes beginning in February 2006 in the manner in which management manages the Company, as well as the current economic characteristics of its operating segments, management has determined that a revision of the aggregation of operating segments is appropriate. Therefore, the segment discussion outlined below represents the adjusted segment structure as determined by management in accordance with SFAS No. 131. All prior year amounts related to these reporting segments have been restated to conform to the new reporting segment structure. The Company has identified six operating segments and has aggregated those segments into two reportable segments as follows: Product Recovery/Pollution Control Technologies and Fluid Handling Technologies and one other segment (Filtration/Purification Technologies). The Filtration/Purification Technologies segment is comprised of four operating segments that do not presently meet the criteria for aggregation outlined in SFAS No. 131. However, the Company’s analysis is that SFAS No. 131 permits the aggregation of operating segments if, individually, each operating segment does not meet any of the following quantitative thresholds: (i) reported revenue is 10 percent or more of combined revenue of all reported operating segments, (ii) the absolute amount of reported profit or loss is 10 percent or more of the greater, in absolute amounts, of either the combined reported profit of all operating segments that did not report a loss or the combined reported loss of all operating segments that did report a loss, and (iii) its assets are 10 percent or more of the combined assets of all operating segments. Since none of the operating segments included in the Filtration/Purification Technologies segment meets these criteria, and at least 75 percent of total consolidated revenue is included in the Product Recovery/Pollution Control Technologies and Fluid Handling Technologies reporting segments, the Company has determined the aggregation of these operating segments into this other segment is appropriate under SFAS No. 131. The following is a description of each segment: Product Recovery/Pollution Control Technologies: This reportable segment consists of one operating segment that manufactures products for the purification of air or liquids. Many of these products are custom designed and engineered to solve a customer’s pollution control or product recovery issues. The products are sold worldwide through Company sales personnel and a network of manufacturer’s representatives. This reporting segment is comprised of the Duall, Systems, Flex-Kleen and Strobic Air business units.

51

MET-PRO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

FOR THE YEARS ENDED JANUARY 31, 2007, 2006 AND 2005

	Fluid Handling Technologies: This reportable segment consists of one operating segment that manufactures high quality centrifugal pumps that are applied on difficult applications including pumping of acids, brines, caustics, bleaches, seawater, high temperature liquids and a wide variety of waste liquids. A variety of pump configurations make these products adaptable to almost any pumping application. These products are sold worldwide through an extensive network of distributors. This reporting segment is comprised of the Dean Pump, Fybroc and Sethco business units. Filtration/Purification Technologies: This other segment consists of four operating segments that produce the following products: proprietary chemicals for the treatment of municipal drinking water systems and boiler and cooling tower systems; cartridges and filter housings; filtration products for difficult industrial air and liquid applications; and filter systems using horizontal disc technology. This other segment is comprised of the Keystone Filter, Pristine Water Solutions, Mefiag and Mefiag B.V. operating segments. The accounting policies of the reporting segments are the same as those described in the summary of significant accounting policies. The Company evaluates the performance of these segments based on many factors including sales, sales trends, margins and operating performance. No significant inter-company revenue is realized in these reporting segments. Interest income and expense are not included in the measure of reporting segment profit reviewed by management. Income taxes are also not included in the measure of reporting segment operating profit reviewed by management. No significant intercompany revenue is realized by these reporting segments. Interest income and expense are not included in the measure of reporting segment profit reviewed by management. Income taxes are also not included in the measure of reporting segment operating profit reviewed by management. Financial information for the two reporting segments and one other segment is shown on page 32.
NOTE 14:	GEOGRAPHIC INFORMATION
	Tansfers 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:

	2007	2006	2005
Net sales:
United States	$68,246,183	$64,106,151	$56,664,160
Foreign	23,164,931	21,009,949	15,452,129
	$91,411,114	$85,116,100	$72,116,289
Income from operations:
United States	$7,628,754	$7,112,573	$5,731,250
Foreign	2,522,388	2,550,031	1,652,865
	$10,151,142	$9,662,604	$7,384,115
Total assets:
United States	$87,245,117	$79,295,147	$75,154,819
Foreign	9,921,469	9,776,244	7,532,785
	$97,166,586	$89,071,391	$82,687,604

52

MET-PRO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

FOR THE YEARS ENDED JANUARY 31, 2007, 2006 AND 2005

NOTE 15:

CONTINGENCIES

Beginning in 2002, the Company and/or one of its divisions began to be named as one of many defendants in asbestos-related lawsuits filed predominantly in Mississippi on a mass basis by large numbers of plaintiffs against a large number of industrial companies including in particular those in the pump and fluid handling industries. More recently, the Company and/or this division have been named as one of many pump and fluid handling defendants in asbestos-related lawsuits filed in New York and Maryland by individual plaintiffs, sometimes husband and wife. To a lesser extent, the Company and/or this division have also been named together with many other pump and fluid handling defendants in these type of cases in other states as well. The complaints filed against the Company and/or this division have been vague, general and speculative, alleging that the Company, and/or the division, along with the numerous other defendants, sold unidentified asbestos-containing products and engaged in other related actions which caused injuries and loss to the plaintiffs. The Company believes that it and/or the division have meritorious defenses to the cases which have been filed and that none of its and/or the division's products were a cause of any injury or loss to any of the plaintiffs. The Company’s insurers have hired attorneys who together with the Company are vigorously defending these cases. The Company and/or the division have been dismissed from or settled a number of these cases. The sum total of payments made through January 31, 2007 to settle these cases is $305,000, all of which has been paid by the Company’s insurers including legal expenses, except for corporate counsel expenses, with an average cost per settled claim, excluding legal fees, of approximately $28,000. As of January 31, 2007, there were a total of 37 cases pending against the Company, as compared to 51 cases that were pending as of January 31, 2006. During the fiscal year ended January 31, 2007, 20 new cases were filed against the Company, and the Company was dismissed from or settled 34 cases. Most of the pending cases have not advanced beyond the early stages of discovery, although several cases are on schedules leading to trial. The Company presently believes that none of the pending cases will have a material adverse impact upon the Company’s results of operations, liquidity or financial condition. The Company is also party to a small number of other legal proceedings arising in the ordinary course of business. Although the ultimate outcome of any legal matter cannot be predicted with certainty, based upon the present information, including the Company’s assessment of the facts of each particular claim as well as accruals, the Company believes that no pending proceeding will have a material adverse impact upon the Company’s results of operations, liquidity, or financial condition.

53

QUARTERLY FINANCIAL DATA (Unaudited)

				Earnings	Earnings
				Per Share,	Per Share,
2006	Net Sales	Gross Profit	Net Income	Basic	Diluted

First Quarter	$17,927,612	$5,954,275	$1,318,218	$.12	$.12
Second Quarter	22,646,520	7,062,723	1,956,549	.18	.17
Third Quarter	21,918,792	6,713,264	1,882,022	.17	.17
Fourth Quarter	22,623,176	6,944,397	2,156,495	.19	.19

				Earnings	Earnings
				Per Share,	Per Share,
2007	Net Sales	Gross Profit	Net Income	Basic	Diluted

First Quarter	$19,779,041	$5,855,359	$1,207,448	$.11	$.11
Second Quarter	23,778,882	6,734,490	1,808,685	.16	.16
Third Quarter	25,323,927	8,318,009	2,172,818	.19	.19
Fourth Quarter	22,529,264	7,601,426	2,001,878	.18	.18

Adjusted for four-for-three stock split.

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure:

None.

Item 9A.  Controls and Procedures:

As of the end of the period covered by this report, the Company’s management, including its Chief Executive Officer and Chief Financial Officer, evaluated the Company’s disclosure controls and procedures related to the recording, processing, summarizing and reporting of information in the Company’s periodic reports that it files with the SEC. These disclosure controls and procedures have been designed by the Company to ensure that (a) material information relating to the Company, including its consolidated subsidiaries, is accumulated and made known to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, by other employees of the Company and its subsidiaries as appropriate to allow timely decisions regarding required disclosure, and (b) this information is recorded, processed, summarized, evaluated and reported, as applicable, within the time periods specified in the SEC’s rules and forms. Due to the inherent limitations of control systems, not all misstatements may be detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Additionally, controls could be circumvented by the individual acts of some persons or by the collusion of two or more people.

Accordingly, as of January 31, 2007, the Chief Executive Officer and Chief Financial Officer of the Company concluded that the disclosure controls and procedures were effective to accomplish their objectives. The Company continually strives to improve its disclosure controls and procedures to enhance the quality of its financial reporting and to maintain dynamic systems that change as conditions warrant.

Since Met-Pro Corporation is an accelerated filer, its management is required to assess and report on the effectiveness of its internal control over financial reporting as of January 31, 2007. As a result of that assessment, management determined that there were no material weaknesses as of January 31, 2007 and, therefore, concluded that Met-Pro’s internal control over financial reporting was effective. Management’s Report on Internal Control Over Financial Reporting is included in Item 8: Financial Statements and Supplementary Data.

Item 9B.  Other Information:

None.

54

PART III

Pursuant to Paragraph G (3) of the General Instructions to Form 10-K, portions of the information required in Part III of Form 10-K are incorporated by reference from Met-Pro’s proxy statement to be filed with the SEC in connection with our 2007 Annual Meeting of Shareholders.

Item 10.  Directors, Executive Officers and Corporate Governance:

We have codes of ethics that apply to all Directors, officers and employees, including our Chief Executive Officer and our Chief Financial Officer (who is also our principal accounting officer). You can find our codes of ethics on our website by going to the following address:www.met-pro.com, and clicking on the link for our codes of ethics under the “Investor Relations - Corporate Governance” captions. We will post on our website any amendments to the codes of ethics, as well as any waivers that are required to be disclosed by the rules of either the Securities and Exchange Commission or the New York Stock Exchange.

Our Board of Directors has adopted charters for the three standing committees of the Board, those being the Audit, Compensation and Stock Option, and Corporate Governance and Nominating Committees. You can find these documents on our website by going to the following address: www.met-pro.com, and clicking on the link “charters” under the “Investor Relations - Corporate Governance” captions.

You may obtain a printed copy of any of the foregoing materials by writing to: Corporate Secretary, Met-Pro Corporation, 160 Cassell Road, Harleysville, PA 19438.

The information required by this Item (except for the information set forth on page 6 of this Report with respect to Executive Officers of Registrant) is hereby incorporated by reference to the applicable information set forth in our proxy statement for our 2007 Annual Meeting of Shareholders, including the information set forth under the captions “Election of Directors”, “The Board of Directors and its Committees”, “Share Ownership of Executive Officers and Directors”, “Section 16(a) Beneficial Ownership Reporting Compliance”, “Independence of Directors/Corporate Governance Guidelines” and “Codes of Ethics”.

Item 11.  Executive Compensation:

The information required by this Item is hereby incorporated by reference to the applicable information set forth in our proxy statement for our 2007 Annual Meeting of Shareholders, including the information set forth under the captions “Compensation Discussion and Analysis”, “Compensation and Stock Option Committee Report on Executive Compensation”, “Summary Compensation Table”, “Grants of Plan-Based Awards”, “Outstanding Equity Awards at Fiscal Year End”, “Options Exercises and Year End Holdings”, “Pension Benefits”, “Compensation Termination of Employment and Change of Control Arrangements”, “Director Compensation” and “Director Summary Compensation Table”.

Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters:

The information required by this Item is hereby incorporated by reference to the applicable information set forth in our proxy statement for our 2007 Annual Meeting of Shareholders, including the information set forth under the captions “Share Ownership of Executive Officers and Directors” and “Beneficial Ownership of Principal Shareholders”.

Item 13.  Certain Relationships and Related Transactions, and Director Independence:

The information required by this Item is hereby incorporated by reference to the applicable information set forth in our proxy statement for our 2007 Annual Meeting of Shareholders, including the information set forth under the captions “Election of Directors”, “Independence of Directors/Corporate Governance Guidelines” and “Certain Business Relationships”.

Item 14.Principal Accountant Fees and Services:

The information required by this Item is hereby incorporated by reference to the applicable information set forth in our proxy statement for our 2007 Annual Meeting of Shareholders, including the information set forth under the caption “Our Relationship with Our Independent Registered Public Accountants”.

55

PART IV

Item 15.  Exhibits and Financial Statement Schedules:

(a)	Exhibits and Financial Statements and Schedules:
	(1)	Financial Statements and Schedules:
		Financial statements filed as part of this report are listed in the Index to Consolidated Financial Statements and Supplementary Data that appears on page 24 of this report.
	(2)	Exhibits, including those incorporated by reference:

Exhibit No. Description

(2)(c)	Agreement and Plan of Merger dated July 31, 2003 by and between Met-Pro Corporation, a Delaware corporation, and Met-Pro Pennsylvania, Inc., a Pennsylvania corporation, incorporated by reference to the Company’s Current Report on Form 8-K filed on August 6, 2003.
(3)(f)	Articles of Incorporation of Met-Pro Corporation, a Pennsylvania corporation formerly known as Met-Pro Pennsylvania, Inc., incorporated by reference to the Company’s Current Report of Form 8-K filed on August 6, 2003.
(3)(g)	By-Laws of Met-Pro Corporation, a Pennsylvania corporation formerly known as Met-Pro Pennsylvania, Inc., incorporated by reference to the Company’s Current Report on Form 8-K filed on August 6, 2003.
(4)	Shareholders’ Rights Plan, incorporated by reference to the Company’s Current Report on Form 8-K filed on January 6, 2000.
(10)(b)	The 1997 Stock Option Plan, incorporated by reference to the Company’s Registration Statement on Form S-8 filed January 16, 1998.*
(10)(d)	Amendment No. 1 to the 1997 Stock Option Plan, incorporated by reference to the Company’s Annual Report on Form 10-K filed on May 4, 2001.*
(10)(f)	Key Employee Severance Agreement between Met-Pro Corporation and Gary J. Morgan, incorporated by reference to the Company’s Annual Report on Form 10-K filed on May 4, 2001.*
(10)(g)	Key Employee Severance Agreement between Met-Pro Corporation and Raymond J. De Hont, incorporated by reference to the Company’s Annual Report on Form 10-K filed on May 4, 2001.*
(10)(i)	Amendment to Key Employee Severance Agreement between Met-Pro Corporation and Gary J. Morgan, incorporated by reference to the Company’s Annual Report on Form 10-K filed on May 4, 2001.*
(10)(j)	The Company’s Director’s Retirement Plan, incorporated by reference to the Company’s Annual Report on Form 10-K filed on May 4, 2001.*
(10)(k)	Amendment No. 1 to the Company’s Director’s Retirement Plan, incorporated by reference to the Company’s Annual Report on Form 10-K filed on May 4, 2001.*
(10)(l)	Amendment No. 2 to the Company’s Director’s Retirement Plan, incorporated by reference to the Company’s Annual Report on Form 10-K filed on May 4, 2001.*
(10)(m)	Restoration Plan, effective February 1, 2000, incorporated by reference to the Company’s Annual Report on Form 10-K filed on May 4, 2001.*

56

Exhibit No. Description

(10)(n)	Amendment No. 1 to the Company’s Restoration Plan, incorporated by reference to the Company’s Annual Report on Form 10-K filed on May 4, 2001.*
(10)(o)	Additional 1% Supplemental Executive Retirement Plan, effective February 1, 2000, incorporated by reference to the Company’s Annual Report on Form 10-K filed on May 4, 2001.*
(10)(p)	The 2001 Equity Incentive Plan, incorporated by reference to the Company’s Registration Statement on Form S-8 filed August 22, 2001.*
(10)(q)	Year 2000 Employee Stock Purchase Plan, incorporated by reference to the Company’s Registration Statement on Form S-8 filed on June 13, 2000.*
(10)(r)	Salaried Pension Plan Amended and Restated effective September 1, 2000, incorporated by reference to the Company’s Annual Report on Form 10-K filed on April 28, 2003.*
(10)(s)	First Amendment to the Company’s Salaried Pension Plan dated August 15, 2002, incorporated by reference to the Company’s Annual Report on Form 10-K filed on April 28, 2003.*
(10)(t)	Second Amendment to the Company’s Salaried Pension Plan dated October 23, 2002, incorporated by reference to the Company’s Annual Report on Form 10-K filed on April 28, 2003.*
(10)(u)	Amendment No. 3 to the Company’s Directors’ Retirement Plan dated as of February 24, 2003, incorporated by reference to the Company’s Annual Report on Form 10-K filed on April 28, 2003.*
(10)(v)	Amendment No. 1 to the Company’s Additional 1% Supplemental Executive Plan dated as of March 21, 2003, incorporated by reference to the Company’s Annual Report on Form 10-K filed on April 28, 2003.*
(10)(w)	Directors Retirement Plan Trust dated as of February 11, 2000, incorporated by reference to the Company’s Annual Report on Form 10-K filed on April 28, 2003.*
(10)(x)	Amendment No. 1 to the Company’s Directors’ Retirement Plan Trust dated as of February 24, 2003, incorporated by reference to the Company’s Annual Report on Form 10-K filed on April 28, 2003.*
(10)(y)	Amendment No. 2 to the Company’s Directors’ Retirement Plan Trust dated as of February 24, 2003, incorporated by reference to the Company’s Annual Report on Form 10-K filed on April 28, 2003.*
(10)(z)	Restoration and Supplemental Executive Retirement Plan Trust Agreement dated as of February 11, 2000, incorporated by reference to the Company’s Annual Report on Form 10-K filed on April 28, 2003.*
(10)(aa)	Amendment No. 1 to the Company’s Restoration and Supplemental Executive Retirement Plan Trust Agreement dated as of February 24, 2003, incorporated by reference to the Company’s Annual Report on Form 10-K filed on April 28, 2003.*
(10)(ab)	The 2005 Equity Incentive Plan, incorporated by reference to the Company’s Registration Statement on Form S-8 filed June 9, 2005.*
(10)(ac)	Third Amendment to the Company’s Salaried Pension Plan dated as of August 31, 2005. **
(10)(ad)	Fourth Amendment to the Company’s Salaried Pension Plan dated as of April 5, 2006. **
(10)(ae)	Fifth Amendment to the Company’s Salaried Pension Plan dated as of October 18, 2006. **

57

Exhibit No. Description

(11)	Statement Re-computation of Per Share Earnings. See page 28 of Item 8.
(21)	List of Subsidiaries of Registrant as of January 31, 2007:

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
MPC Inc.	Delaware	MPC Inc.,
		a wholly-owned subsidiary of
		Met-Pro Corporation
Pristine Water Solutions Inc.	Delaware	Pristine Water Solutions Inc.,
		a wholly-owned subsidiary of
		Met-Pro Corporation
Mefiag (Guangzhou) Filter	People’s Republic of	Mefiag (Guangzhou) Filter Systems Ltd.,
Systems Ltd.	China	a wholly-owned subsidiary of Met-Pro (Hong
		Kong) Company Limited
Met-Pro (Hong Kong)	Hong Kong	Met-Pro (Hong Kong) Company
Company Limited		Limited, a wholly-owned subsidiary
		of Met-Pro Corporation

(23)	Consent of Independent Registered Public Accounting Firm **
(31.1)	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 **
(31.2)	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 **
(32.2)	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **
(32.2)	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **

58

The following exhibits required under Item 601 of Regulation S-K promulgated by the Securities & Exchange Commission have been omitted because they are either posted on our website, inapplicable or non-existent:

(9)	Voting trust agreements.
(12)	Statements re computation of ratios.
(13)	Annual report to security holders.
(14)	Code of ethics.
(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.

* Indicates management contract or compensatory plan or arrangement.

**Filed herewith.

59

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
April 13, 2007	By:	/s/ Raymond J. De Hont
Date		Raymond J. De Hont
		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/ Raymond J. De Hont	Chairman,	April 13, 2007
Raymond J. De Hont	Chief Executive Officer
	and President
/s/ Gary J. Morgan	Senior Vice President-Finance,	April 13, 2007
Gary J. Morgan	Secretary, Treasurer,
	Chief Financial Officer,
	Chief Accounting Officer
	and Director
/s/ Nicholas DeBenedictis	Director	April 13, 2007
Nicholas DeBenedictis
/s/ George H. Glatfelter II	Director	April 13, 2007
George H. Glatfelter II
/s/ William L. Kacin	Director	April 13, 2007
William L. Kacin
/s/ Alan Lawley	Director	April 13, 2007
Alan Lawley
/s/ Michael J. Morris	Director	April 13, 2007
Michael J. Morris
/s/ Constantine N. Papadakis	Director	April 13, 2007
Constantine N. Papadakis

60

EX-10.AC

Exhibit (10.ac)

THIRD AMENDMENT TO THE

MET-PRO CORPORATION SALARIED PENSION PLAN

Amended and Restated Effective September 1, 2000

This Third Amendment to the Met-Pro Corporation Salaried Pension Plan (the “Plan”) is made by Met-Pro Corporation (the “Company”) and is effective as of March 28, 2005.

WITNESSETH

WHEREAS, the Company maintains the Plan for the benefit of its eligible employees;

WHEREAS, Section 16.1 of the Plan permits the Company to amend the Plan; and

WHEREAS, the Company desires to amend the Plan, effective March 28, 2005, to eliminate the mandatory distribution of benefits with an Actuarial Equivalent present value not exceeding $5,000.

NOW THEREFORE, the Plan is hereby amended, effective March 28, 2005, as follows:

1.Section 8.1 is amended by deleting the following parenthetical phrase:

“(if the Actuarial Equivalent present value of such benefit as of the Participant’s Annuity Starting Date or at the time of any prior distribution is in excess of $5,000)”

2.Section 8.2 is deleted in its entirety and it is retitled “Reserved.”

3.The second sentence of Section 8.3 is amended to read as follows:

A Participant’s Annuity Starting Date shall be the earliest of (a) the first day of the month coincident with or next following the day of the Participant’s Retirement, (b) the first day of the month coincident with or next following the Participant’s Normal Retirement Date if the Participant has a Separation from Service prior to that time, unless the Participant elects under Section 8.4 to commence to receive distribution prior to his Normal Retirement Date, and (c) effective for all Participants (except Participants that attained age 70½ after January 1, 1988 and before January 1, 2003, or Participants who are Five Percent Owners during the Plan Year ending with or within the calendar year in which they attain age 70½ or subsequent Plan Year), the first day of April immediately following the calendar year in which the Participant retires or attains age 70½, whichever occurs later.

4.The first sentence of Section 8.4 is amended to read as follows:

A Participant who has a Separation from Service before his Normal Retirement Date with a Vested Interest may elect to have distribution of his Retirement Benefit commence before his Normal Retirement Date.

IN WITNESS WHEREOF, the Company has caused this Third Amendment to be executed by its duly authorized officer this 31^st day of August, 2005.

ATTEST:			Met-Pro Corporation
By	/s/ Gary J. Morgan		By	/s/ Raymond J. De Hont
Title:		Vice President-Finance	Title:		President

EX-10.AD

Exhibit (10.ad)

FOURTH AMENDMENT TO THE

MET-PRO CORPORATION SALARIED PENSION PLAN

This Fourth Amendment to the Met-Pro Corporation Salaried Pension Plan (the “Plan”) is made by Met-Pro Corporation (the “Company”).

WITNESSETH

WHEREAS, the Company established the Plan for its eligible employees effective as of September 1, 1968, and amended and restated as of September 1, 2000; and

WHEREAS, the Company reserved the right in Section 16.1 of the Plan to amend the Plan at any time; and

WHEREAS, the Company now desires to amend the Plan to freeze participation in the Plan as to new hires effective as of April 15, 2006.

NOW, THEREFORE, the Plan is hereby amended as set forth below.

1. Section 1.20, Definition of “Eligible Employee” is amended by adding the following to the end thereof: Notwithstanding the foregoing, an Employee hired on or after April 15, 2006 shall not be eligible to participate in the Plan.

2.Section 2.3 of the Plan is amended by adding the following to the end thereof: Notwithstanding the foregoing, an Employee hired on or after April 15, 2006 shall not be eligible to participate in the Plan.

IN ALL OTHER RESPECTS, this Plan is continued in full force and effect. In order to maintain the terms of the Plan in a single document, this Amendment may be incorporated into the most recent restatement of the Plan.

IN WITNESS WHEREOF, the Company has caused this Fourth Amendment to be executed by its duly authorized officer this 5th day of April, 2006.

ATTEST:			Met-Pro Corporation
By	/s/ Gary J. Morgan		By	/s/ Raymond J. De Hont
Title:		Vice President-Finance	Title:		President

EX-10.AE

Exhibit (10.ae)

FIFTH AMENDMENT TO THE

MET-PRO CORPORATION SALARIED PENSION PLAN

This Fifth Amendment to the Met-Pro Corporation Salaried Pension Plan (the “Plan”) is made by Met-Pro Corporation (the “Company”).

WITNESSETH

WHEREAS, the Company adopted the Met-Pro Corporation Salaried Pension Plan and attendant Trust Agreement (the “Plan”) effective September 1, 1968 as amended and restated effective September 1, 2000;

WHEREAS, pursuant to the terms of the Plan, the Company may amend the Plan at any time; and

WHEREAS, the Company wishes to amend the Plan to freeze benefit accruals effective as of December 31, 2006 (the “Freeze Date”).

NOW, THEREFORE, BE IT RESOLVED, that all participant benefit accruals under the Plan are hereby frozen effective as of the Freeze Date;

RESOLVED, FURTHER,that all benefit accruals will cease under the Plan as of the Freeze Date;

RESOLVED, FURTHER, that no further service credit shall be granted under the Plan for any purpose except that service will continue to be counted for purposes of vesting of benefits that have accrued as of the Freeze Date and for determining eligibility for early retirement as to benefits accrued as of the Freeze Date, and no future compensation shall be taken into account for purposes of calculating a participant’s accrued benefit;

RESOLVED, FURTHER, that on and after the Freeze Date, the determination of the amount of a participant’s accrued benefit shall be based on the provisions of the Plan in effect as of the Freeze Date, but calculated as if the participant had terminated employment as of the Freeze Date;

RESOLVED, FURTHER, that the Plan is hereby amended as appropriate to reflect the foregoing resolutions by adding a new Article XIX to the end of the Plan as follows:

ARTICLE XIX

FREEZING OF PLAN

19.1   The Plan has been frozen as of December 31, 2006 (the “Freeze Date”). There shall be no future benefit accruals on and after the Freeze Date. A Participant’s Credited Service, Compensation, and Average Monthly Earnings shall be determined as of the Freeze Date. A Participant’s accrued benefit shall based on the provisions of the Plan in effect on the Freeze Date, but calculated as if the Participant had terminated employment as of the Freeze Date.

19.2   Notwithstanding the above, Years of Service shall continue to be counted under the Plan on and after the Freeze Date solely for purposes of vesting in a benefit accrued as of the Freeze Date and for determining eligibility for early retirement as to benefits accrued as of the Freeze Date, but not for any other purpose under the Plan.

19.3   All benefits, rights and features shall be preserved as required under Code Section 411(d)(6) and regulations issued thereunder.

RESOLVED, FURTHER, that the Company is authorized and directed to make any amendments to the Plan as may be required by the Internal Revenue Service or otherwise to maintain its tax-qualified status, the signature of an officer of the Company appearing on any such amendment being conclusive evidence of the approval thereof by the Board of Directors; and

RESOLVED, FURTHER, that all previous actions taken by the proper officers or employees and counsel of the Company to implement the foregoing are hereby ratified and confirmed as if such action were approved at a duly convened meeting of the Directors.

IN ALL OTHER RESPECTS, this Plan is continued in full force and effect. In order to maintain the terms of the Plan in a single document, this Amendment may be incorporated into the most recent restatement of the Plan.

IN WITNESS WHEREOF, the Company has caused this Fifth Amendment to be executed by its duly authorized officer this 18th day of October, 2006.

ATTEST:			Met-Pro Corporation
By	/s/ Gary J. Morgan		By	/s/ Raymond J. De Hont
Title:		Vice President-Finance	Title:		President

EX-31.1

Exhibit (31.1)

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Raymond J. De Hont, certify that:

1. I have reviewed this annual report on Form 10-K of Met-Pro Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financing reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 13, 2007	/s/    Raymond J. De Hont
	Raymond J. De Hont
	Chairman, Chief Executive Officer and President

EX-31.2

Exhibit (31.2)

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gary J. Morgan, certify that:

1. I have reviewed this annual report on Form 10-K of Met-Pro Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financing reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 13, 2007	/s/    Gary J. Morgan
	Gary J. Morgan
	Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit (32.1)

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned officer hereby certifies, as to the Report on Form 10-K of Met-Pro Corporation for the fiscal year ended January 31, 2007, that (i) the report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Met-Pro Corporation.

Date: April 13, 2007	/s/    Raymond J. De Hont
	Raymond J. De Hont
	Chairman, Chief Executive Officer and President

EX-32.2

Exhibit (32.2)

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned officer hereby certifies, as to the Report on Form 10-K of Met-Pro Corporation for the fiscal year ended January 31, 2007, that (i) the report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Met-Pro Corporation.

Date: April 13, 2007	/s/    Gary J. Morgan
	Gary J. Morgan
	Senior Vice President and Chief Financial Officer