Within Fluid Handling Technologies, Fybroc continued to build upon the success of the industry's first completely non-metallic fiberglass reinforced plastic (FRP) magnet-drive pump by expanding its 2530 Series to now include the industry's largest pump size for this type of pump.Dean Pump received an order from a Russian oil company for titanium pumps. Dean was chosen for their unique ability to meet the specialized construction and machining requirements for these pumps, as well as their ability to deliver the equipment in less than half the time of the competition. To enhance their international growth, Dean entered into an agreement with Dorian Drake International Inc. to handle sales and marketing for specific international markets including all of Europe, Africa, New Zealand and the Middle East, as well as a majority of Asia and parts of South America.

Filtration and Purification Technologies revenue was up 14% to $22.4 million in 2008 while operating income was up 53% to $1.6 million from $1.1 million in fiscal 2007.

Within Filtration and Purification Technologies, Mefiag has been successful expanding internationally and introducing new products. Strong order activity was experienced in Vietnam and India while opportunities to expand in China are being diligently explored. Mefiag also introduced a complete high-capacity, high temperature HT-Series filter line to address the needs of the anodizing industry that is struggling to cope with processes that need to run at extreme temperatures.

Keystone Filter introduced a unique, new patented GIANT® filter housing and a new line of sub-micronic filter cartridges that will provide exceptional flow rates and fine filtration for high quality water treatment applications such as beverage bottling and ultra pure laboratory water.

For the second consecutive year, Met-Pro Corporation was recognized as one of America's "200 Best Small Companies" by Forbes magazine. Your Corporation was one of only eighty-nine companies to repeat on the Top 200 list this year. I share the great pride of the many Met-Pro employees who worked so hard to be part of this elite group.

Met-Pro was also recognized as one of America's "Top Publicly-Held Manufacturers" by Start-It magazine. Start-It's list highlights "top publicly-held manufacturers chosen by revenue" in the industrial machinery sector of "discrete industries".

Not only did we enjoy great results in 2008, but more importantly, we positioned your Company to capitalize on the growth opportunities we see before us around the world.

There has been no appreciable break in the strong levels of activity experienced throughout this past year, so we are entering the new fiscal year with good momentum. We have a sound foundation for continued success in the strength of international markets, our more coordinated, organized and concerted sales and marketing efforts, and the steady demand for parts and consumables from our growing base of installed equipment.

At the same time that our broadening product line, global reach, and strategic sales and marketing initiatives are driving revenue growth, our increasing size and scale is enabling us to improve the operating leverage in our business model. In the past year, we have been able to reduce costs and improve efficiency through facility consolidation, global sourcing, and better logistics. We believe the various initiatives underway have the potential to further reduce costs and improve productivity. And, we have an extremely strong balance sheet which can be used to support investments to further enhance efficiency initiatives or to expand into interesting new growth markets. The desalination, water purification equipment, and bio filtration markets offer opportunities where Met-Pro could effectively leverage its extensive knowledge and global relationships.

On a more somber note, we pause to mourn the passing of Earl J. Wofsey. Mr. Wofsey, or Jack as he was better known, served as a Director and Vice Chairman of the Company for many years. He also served as the Company's General Counsel from its inception in 1966 through 1996. His contribution to the Company's growth and success was significant. He will be missed and his loss sorely felt.

Since our founding over 40 years ago, Met-Pro's growth and prosperity has been built on a culture of honesty and integrity in our relationships with fellow employees, vendors, and customers. We must not forget that our purpose is to promote a challenging and innovative workplace that fosters creation of superior, environmentally-sound products, services, and solutions that meet the needs of customers. To assure this message is never forgotten, we are working with our employees to reinforce policies, reiterate expectations, and ensure total commitment to first-rate ethics and sound business practices.

Your Company is well-positioned to capitalize on a number of important trends that are gaining momentum. Worldwide industrialization, the pressure to reduce energy consumption, concerns for the environment, and the need to enhance recycling efforts are putting a premium on companies like Met-Pro that can provide cost effective solutions around the world.

We are excited about our accomplishments, but even more so about our opportunities not only for the new fiscal year, but for years to come. I would like to thank the many loyal, dedicated and talented employees who have contributed to our success as well as thank our shareholders for their continued support.


Kindest Regards,

Dear Fellow Shareholder
Your Company had the best year in its history as we reported both record revenues and earnings in fiscal 2008. Our focus on programs to deliver value for our customers through enhanced sales and marketing initiatives drove strong growth in both domestic and international markets. In addition, revenues are benefiting from a steady rise in recurring sales of parts and consumables for our growing installed base of equipment. Through expanded global sourcing, and the consolidation and integration of our various businesses, we were able to increase gross margins and continue to improve operating efficiency, leveraging the bottom line impact from our top line growth.

Sales for the fiscal year ended January 31, 2008 were a record $106.9 million, up 14% from $93.5 million for fiscal 2007.

Growth in international markets remained strong as countries around the globe continue to invest in expanding their industrial infrastructure. For 2008, international sales increased 34% to a record $30.2 million and represented 28% of total sales while operating income nearly doubled to $4.1 million.

Income from operations, excluding a gain on the sale of property (which constitutes a non-GAAP(1) financial measure) rose 44% to $14.1 million. For 2008, income from operations was 13.2% of sales, a significant improvement over 10.4% of sales in fiscal 2007 and evidence of the operating leverage in our business model.

For the year we reported net income of $11.9 million, or $0.78 per fully diluted share. Excluding a $2.2 million net gain on the sale of property(1), net income rose 40% to a record $9.7 million while fully diluted earnings per share were up 37% to $0.63.

The Company also reported strong cash flows. For 2008, cash flows from operating activities were up 153% to $9.9 million. As a result, our balance sheet is the strongest in the Company's history. At the end of the fiscal year, cash on hand totaled $21.9 million, or $1.43 per share, and the current ratio was 4.0. Total debt was only $6.1 million, reducing the total debt to equity ratio to just 7%.

This strong financial position enabled the company to reward shareholders through both a four-for-three stock split and by increasing the quarterly cash dividend by 9%. This is the thirty-third consecutive year the Company has paid a cash or stock dividend.

In addition to the many financial accomplishments of the past year, we also made great strides toward improving our ability to innovate and develop exciting new cost effective solutions for our customers. In February, Thomas V. Edwards was named the Company's Technical Director to lead this effort. Through his leadership we were better able to leverage our extensive intellectual property and coordinate the various research and development projects underway throughout the organization. For Met-Pro, bringing new solutions to our clients is a key to our continued growth.

In fiscal 2008, Product Recovery/Pollution Control Technologies, which is our largest business segment, was also our fastest growing segment, with revenues for the year up 19% to $56.9 million. Operating income was up 51% as both sales and operating income rose in all of the business units in this segment. For 2008, the operating margin rose to 11.6%.

Product Recovery/Pollution Control Technologies segment results are being driven by the introduction of new products and capabilities, global expansion, and improved operating efficiencies. In December, Flex-Kleen moved to a 45,500 square foot facility consolidating office and manufacturing space. Their move follows similar relocations and consolidations of our Sethco, Mefiag, and Systems business units as part of our strategy to improve our capacity utilization, reduce our cost structure, and improve operations and efficiencies throughout the Company.

Within Product Recovery/Pollution Control Technologies, Duall had an outstanding year, posting record sales and income. Duall also introduced their new HLFW Hydro-Lance® wet particulate collector to their line of air handling products. This new design minimizes the system footprint and maintains a continuous self cleaning operation.

The Company's Systems business unit also had an outstanding year, posting record sales as it penetrated the China market, and engineered, built, and shipped the largest equipment order in Met-Pro's history. Systems also demonstrated an exciting new technology, successfully commissioning a thermal oxidizer revamp at an ethanol plant that is the first known facility where water recovered from flue gas can be re-used.

Our Strobic Air subsidiary received a number of large domestic orders during the year. These included orders to supply laboratory fume hood exhaust systems to a prestigious hospital medical research facility in the Northeastern United States, a leading research facility along the South Atlantic seaboard and a premier cancer research hospital facility in the Southcentral United States.

International Sales continued to receive orders from around the world. Among the more notable orders in 2008 were the supply of a thermal oxidizer/scrubber system for use in a synthetic rubber manufacturing facility located in the People's Republic of China, dust collectors for a copper mine in South America, a dust collector for use in a food processing plant in South America, and dust collectors for a petrochemical facility in Southeast Asia. The advantage of our broad product line and technologically advanced engineering capabilities was demonstrated when a paper mill in South America wanted to use lower cost fuels and still comply with sulfur dioxide and particulate emission regulations. Utilizing Duall scrubbers and Flex-Kleen dust collectors, International Sales developed a flue gas treatment system that will allow the paper mill to do just that and, as a result, achieve significant cost savings.

Fluid Handling Technologies is our second largest business segment and, in July, Gennaro A. D'Alterio was named General Manager of the Dean Pump, Fybroc, and Sethco business units after leading the Dean Pump and Fybroc sales and marketing efforts since 2002. Fluid Handling revenues in fiscal 2008 were $27.6 million, up 6% from $26.1 million in fiscal 2007. However, operating income was up 35% to $5.9 million in fiscal 2008, reflecting pricing actions and operating efficiency improvements implemented as part of our strategic initiatives and new leadership.