For
the quarter ended: April 30, 2005 |
Commission
file number: 001-07763 |
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) |
Indicate
by check mark whether the Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X
No |
Indicate
by check mark whether the Registrant is an accelerated filer (as defined
in Rule 12b-2 of the Exchange Act). Yes X
No |
As of April 30, 2005 the Registrant had 8,388,575 Common Shares,
par value of $.10 per share, issued and
outstanding. |
2 | |
3 | |
4 | |
5 | |
6 | |
10 | |
PART
I - FINANCIAL INFORMATION |
||||
Item
1. Financial Statements |
||||
April
30, |
January
31, |
|||
ASSETS |
2005 |
2005 |
||
Current
assets |
||||
Cash and cash equivalents |
$19,807,864 |
$20,889,476
|
||
Accounts receivable, net of allowance for doubtful |
||||
accounts of approximately $236,000 and |
||||
$213,000, respectively |
13,366,843 |
13,637,599
|
||
Inventories |
16,224,188 |
13,843,171 |
||
Prepaid expenses, deposits and other current assets |
1,189,342 |
1,250,098 |
||
Deferred income taxes |
650,151 |
650,151 |
||
Total current assets |
51,238,388 |
50,270,495 |
||
Property,
plant and equipment, net |
11,141,929 |
11,287,253
|
||
Costs
in excess of net assets of businesses acquired, net |
20,798,913 |
20,798,913 |
||
Other
assets |
561,619 |
567,405 |
||
Total
assets |
$83,740,849 |
$82,924,066
|
||
LIABILITIES
AND SHAREHOLDERS' EQUITY |
||||
Current
liabilities |
||||
Current portion of long-term debt |
$1,500,000 |
$1,500,910
|
||
Accounts payable |
4,664,685 |
5,028,074
|
||
Accrued salaries, wages and expenses |
5,482,855 |
5,397,195
|
||
Dividend payable |
650,115 |
648,381 |
||
Customers' advances |
1,914,386 |
1,293,332 |
||
Total current liabilities |
14,212,041 |
13,867,892 |
||
Long-term
debt |
3,696,942 |
4,039,068
|
||
Other
non-current liabilities |
41,564 |
41,015
|
||
Deferred
income taxes |
1,825,603 |
1,810,900 |
||
Total liabilities |
19,776,150 |
19,758,875
|
||
Shareholders'
equity |
||||
Common shares, $.10 par value; 18,000,000 shares |
||||
authorized, 9,634,956 shares issued, |
||||
of which 1,246,381 and 1,266,914 shares were reacquired |
||||
and held in treasury at the respective dates |
963,496 |
963,496
|
||
Additional paid-in capital |
7,922,603 |
7,930,646
|
||
Retained earnings |
66,700,406 |
66,032,446 |
||
Accumulated other comprehensive income |
48,037 |
100,635 |
||
Treasury shares, at cost |
(11,669,843 |
) |
(11,862,032 |
) |
Total shareholders' equity |
63,964,699 |
63,165,191 |
||
Total liabilities and shareholders'
equity |
$83,740,849 |
$82,924,066
|
||
See
accompanying notes to consolidated financial statements. |
|
|||||
Three Months Ended | |||||
April
30, | |||||
2005 |
2004 |
||||
Net
sales |
$17,927,612 |
$15,634,646 |
|||
Cost
of goods sold |
11,973,337 |
10,572,214 |
|||
Gross
profit |
5,954,275 |
5,062,432 |
|||
|
|||||
Operating
expenses |
|||||
Selling |
1,954,263 |
1,932,368 |
|||
General and administrative |
2,093,458 |
1,802,308 |
|||
4,047,721 |
3,734,676 |
||||
Income
from operations |
1,906,554 |
1,327,756 |
|||
Interest
expense |
(66,052 |
) |
(96,847
|
) | |
Other
income, net |
126,989 |
2,804 |
|||
Income
before taxes |
1,967,491 |
1,233,713 |
|||
Provision
for taxes |
649,273 |
419,464 |
|||
Net
income |
$1,318,218 |
$814,249 |
|||
Earnings
per share, basic (1) |
$.16 |
$.10
|
|||
|
|||||
Earnings
per share, diluted (2)
|
$.16 |
$.10 |
|||
Cash
dividend per share -
declared (3) |
$.0775 |
$.0725 |
|||
Cash
dividend per share - paid
(3) |
$.0775 |
$.0725 |
(1) |
Basic
earnings per share are based upon the weighted average number of shares
outstanding of 8,381,731 and 8,342,386 for the three-month periods ended
April 30, 2005 and 2004, respectively. |
(2) |
Diluted
earnings per share are based upon the weighted average number of shares
outstanding of 8,464,944 and 8,480,996 for the three-month periods ended
April 30, 2005 and 2004, respectively. |
(3) |
The
Board of Directors declared quarterly dividends of $.0775 per share
payable on March 8, 2005 and June 8, 2005 to shareholders of record as of
February 25, 2005 and May 27, 2005, respectively. Quarterly dividends of
$.0725 per share were paid on March 10, 2004 and June 9, 2004 to
shareholders of record as of February 27, 2004 and May 28, 2004,
respectively. |
|
|||||||
Accumulated |
|||||||
Additional |
Other |
||||||
Common |
Paid-in |
Retained |
Comprehensive |
Treasury |
|||
Shares |
Capital |
Earnings |
Income/(Loss) |
Shares |
Total
|
Balances,
January 31, 2005 |
$963,496 |
$7,930,646 |
$66,032,446 |
$100,635 |
($11,862,032 |
) |
$63,165,191 |
||||
Comprehensive
income: |
|||||||||||
Net income |
- |
- |
1,318,218 |
- |
- |
||||||
Cumulative translation adjustment |
- |
- |
- |
(79,432 |
) |
- |
|||||
Interest rate swap, | |||||||||||
net of tax of ($15,292) |
- |
- |
- |
26,834 |
- |
||||||
Total comprehensive income |
1,265,620 |
||||||||||
Dividends
declared, $.0775 per |
|||||||||||
share |
- |
- |
(650,258 |
) |
- |
- |
(650,258 |
) | |||
Stock
option transactions |
- |
(8,043 |
) |
- |
- |
192,189 |
184,146 |
||||
Balances,
April 30, 2005 |
$963,496 |
$7,922,603 |
$66,700,406 |
$48,037 |
($11,669,843 |
) |
$63,964,699 |
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 |
- |
- |
814,249 |
- |
-
|
||||||
Cumulative translation adjustment |
- |
- |
- |
(125,961 |
) |
-
|
|||||
Interest rate swap, | |||||||||||
net of tax of ($29,031) |
- |
- |
- |
56,355 |
- |
||||||
Total comprehensive income |
744,643 |
||||||||||
Dividends
declared, $.0725 per |
|||||||||||
share |
- |
- |
(606,347 |
) |
- |
-
|
(606,347 |
) | |||
Stock
option transactions |
- |
(28,462 |
) |
- |
- |
552,651 |
524,189 |
||||
Purchase of 28,717 shares of | |||||||||||
treasury stock |
- |
- |
- |
- |
(481,687 |
) |
(481,687 |
) | |||
Balances,
April 30, 2004 |
$963,496 |
$7,926,997 |
$63,935,327 |
($398,222 |
) |
($11,976,066 |
) |
$60,451,532 |
|||
See accompanying notes to consolidated financial statements |
Three
Months Ended | ||||||
April
30, | ||||||
2005 |
2004 |
Cash
flows from operating activities |
||||||
Net Income |
$1,318,218 |
$814,249 |
||||
Adjustments to reconcile net income to net |
||||||
cash provided by (used in) operating activities: |
||||||
Depreciation and amortization |
374,519
|
358,256 |
||||
Deferred income taxes |
(589 |
) |
(606 |
) | ||
Loss on sale of property and equipment, net |
12,198 |
- |
||||
Allowance for doubtful accounts |
23,066 |
(19,736 |
) | |||
(Increase) decrease in operating assets: |
||||||
Accounts receivable |
206,313 |
4,253,669 |
||||
Inventories |
(2,402,889
|
) |
(1,384,106 |
) | ||
Prepaid expenses, deposits and other current assets |
57,228 |
(39,497 |
) | |||
Other assets |
(1,950
|
) |
(1,920 |
) | ||
Increase (decrease) in operating liabilities: |
||||||
Accounts payable and accrued expenses |
(264,409
|
) |
(1,121,513 |
) | ||
Customers’ advances |
623,810
|
55,869 |
||||
Other non-current liabilities |
549 |
549 |
||||
Net
cash provided by (used in) operating activities |
(53,936 |
) |
2,915,214 |
|||
Cash
flows from investing activities |
||||||
Proceeds from sale of property and equipment |
12,330 |
- |
||||
Acquisitions of property and equipment |
(261,596 |
) |
(284,632 |
) | ||
Net cash (used in) investing activities |
(249,266 |
) |
(284,632 |
) | ||
Cash
flows from financing activities |
||||||
Reduction of debt |
(300,910 |
) |
(309,232 |
) | ||
Exercise of stock options |
184,146 |
524,189 |
||||
Payment of dividends |
(648,524 |
) |
(603,441 |
) | ||
Purchase of treasury shares |
- |
(481,687 |
) | |||
Net cash (used in) financing activities |
(765,288 |
) |
(870,171 |
) | ||
Effect
of exchange rate changes on cash |
(13,122 |
) |
(25,277 |
) | ||
Net
increase (decrease) in cash and cash equivalents |
(1,081,612 |
) |
1,735,134 |
|||
Cash
and cash equivalents at February 1 |
20,889,476 |
16,996,253 |
||||
Cash
and cash equivalents at April 30 |
$19,807,864 |
$18,731,387
|
||||
See
accompanying notes to consolidated financial
statements. |
Three
Months Ended | |||
April 30, | |||
|
2005 |
2004 | |
Net
income: |
|||
As reported |
$1,318,218 |
$814,249 | |
Pro forma |
1,276,528
|
761,645 | |
Basic
earnings per share: |
|||
As reported |
$.16 |
$.10 | |
Pro forma |
.15 |
.09 | |
Diluted
earnings per share: |
|||
As reported |
$.16 |
$.10 | |
Pro forma |
.15 |
.09 |
April
30, |
January 31, | ||
2005 |
2005 | ||
Raw
materials |
$9,335,623 |
$7,965,553 | |
Work
in progress |
1,971,761 |
1,682,391 | |
Finished
goods |
4,916,804 |
4,195,227 | |
$16,224,188 |
$13,843,171 |
Three
Months Ended | |||
April
30, | |||
2005 |
2004 | ||
Cash
paid during the period for: |
|||
Interest |
$62,796 |
$86,306 | |
Income
taxes |
45,812 |
51,800 |
Three Months Ended | ||||
April
30, |
|
2005 |
2004 |
||
(Loss)
on sale of property and equipment |
($12,198 |
) |
$
- |
|
Other,
primarily interest income |
139,187 |
80,465 |
||
Unusual
charge - patent litigation |
- |
(77,661 |
) | |
$126,989 |
$2,804 |
Three Months Ended | |||
April 30, | |||
2005 |
2004 | ||
Net
sales |
|||
Product recovery/pollution control equipment |
$10,244,280 |
$9,251,532 | |
Fluid handling equipment |
7,683,332 |
6,383,114 | |
$17,927,612 |
$15,634,646 | ||
Income
from operations |
|||
Product recovery/pollution control equipment |
$929,992 |
$587,088 | |
Fluid handling equipment |
976,562 |
740,668 | |
$1,906,554 |
$1,327,756 |
April
30, |
|
January
31, | |
2005 |
2005 | ||
Identifiable
assets |
|||
Product recovery/pollution control equipment |
$42,609,496 |
$41,554,730
| |
Fluid handling equipment |
20,216,194 |
19,784,083 | |
62,825,690 |
61,338,813 | ||
Corporate |
20,915,159 |
21,585,253 | |
$83,740,849 |
$82,924,066 |
Three Months Ended | ||||
April 30, | ||||
2005 |
2004 |
|||
Net
sales |
100.0 |
% |
100.0 |
% |
Cost
of goods sold |
66.8 |
% |
67.6 |
% |
Gross
profit |
33.2 |
% |
32.4 |
% |
|
| |||
Selling
expenses |
10.9 |
% |
12.4 |
% |
General
and administrative expenses |
11.7 |
% |
11.5 |
% |
Income
from operations |
10.6 |
% |
8.5 |
% |
|
| |||
Interest
expense |
(.4 |
%) |
(.6 |
%) |
Other
income, net |
.8 |
% |
- |
|
Income
before taxes |
11.0 |
% |
7.9 |
% |
|
| |||
Provision
for taxes |
3.6 |
% |
2.7 |
% |
Net
income |
7.4 |
% |
5.2 |
% |
· |
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 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 year ended
January 31, 2005 as compared to the prior year. During the fiscal year
ended January 31, 2005, 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; |
· |
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; |
· |
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/or |
· |
failure
in execution of acquisition
strategy. |
(a) |
During
the first quarter ended April 30, 2005, the Company did not sell any of
our equity securities that were not registered under the Securities Act of
1933. |
(b) |
Not
applicable |
(c) |
The
following table summarizes Met-Pro’s purchases of its Common Shares for
the quarter ended April 30,
2005: |
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, 2005 |
0 |
$
- |
0 |
212,599 |
|||||
March
1-31, 2005 |
0 |
-
|
0 |
212,599 |
|||||
April
1-30, 2005 |
0 |
- |
0 |
212,599 |
|||||
Total |
0 |
$
- |
0 |
212,599 |
(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 400,000 (adjusted for stock split) shares. The program has no fixed
expiration date. |
(a) |
Exhibits
Required by Item 601 of Regulation S-K | ||
Exhibit
No. |
Description | ||
under
Section 302 of the | |||
Sarbanes-Oxley
Act of 2002.* | |||
under
Section 302 of the | |||
Sarbanes-Oxley
Act of 2002.* | |||
Pursuant
18 U.S.C. Section 1350.* | |||
Pursuant
18 U.S.C. Section 1350.* |
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized. |
Met-Pro Corporation | ||
(Registrant) | ||
June 1, 2005 | /s/ Raymond J. De Hont | |
Raymond J. De Hont | ||
Chairman, President and Chief Executive | ||
Officer |
June
1, 2005 |
/s/
Gary J. Morgan | |
Gary
J. Morgan | ||
Vice
President of Finance, | ||
Secretary
and Treasurer, Chief | ||
Financial Officer, Chief Accounting | ||
Officer and Director |