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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION   Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the fiscal year ended October 31, 2004 COMMISSION FILE NUMBER 000-21109 CUNO INCORPORATED 
  Delaware
    
    06-1159240(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)400 Research Parkway, Meriden, Connecticut
    
    06450(Address of principal executive offices)
    
    (Zip Code)
 (203) 237-5541 
  SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
               NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
               COMMON STOCK, PAR VALUE $.001 PER SHARE
                    (Title of class) Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to the filing requirements for at least 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 registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [X] Indicate with a check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [   ] As of November 30, 2004, approximately 17,122,698 common shares were
outstanding, and the aggregate market value of the common shares (based
upon the last price on that date) was approximately $1.1 billion. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Proxy Statement for the 2005 Annual Meeting of
Shareholders are incorporated by reference into Part II, Part III and Part
IV of this report to the extent described herein. 1




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TABLE OF CONTENTS  Part IITEM 1. BUSINESSITEM 2. PROPERTIESITEM 3. LEGAL PROCEEDINGSITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSPART IIITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERSITEM 6. SELECTED FINANCIAL DATAITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 2004-2002ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 9A. CONTROLS AND PROCEDURESPART IIIITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTITEM 11. EXECUTIVE COMPENSATIONITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSPart IVITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-KSIGNATURESEX-13: CERTAIN SECTIONS OF THE ANNUAL REPORTEX-21: SUBSIDIARIES OF THE REGISTRANTEX-23.1: CONSENT OF REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRMSEX-23.2: CONSENT OF REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRMSEX-31.1: CERTIFICATION OF MARK G. KACHUREX-31.2: CERTIFICATION OF FREDERICK C. FLYNNEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION    Table of Contents  
 Part I 
 ITEM 1. BUSINESS (a) General development of business: CUNO Incorporated (CUNO the Company, or we) is a world leader
in the designing, manufacturing and marketing of a comprehensive line of
filtration products for the separation, clarification and purification of
liquids and gases. Our products, which include proprietary depth filters
and semi-permeable membrane filters, are used in the potable water, fluid
processing, and healthcare markets. These products, most of which are
disposable, effectively remove contaminants that range in size from
molecules to sand particles. Our sales are balanced between domestic
(approximately 53%) and international markets (approximately 47%). Our objective is to provide high value-added products and premium
customer service. Our proprietary manufacturing processes result in
products with features that lower customers operating expenses and
improve the quality of customers end products. As part of our commitment
to customer service, we designate our own scientists, each of whom possess
particular industry expertise, to collaborate with customers on specific
projects to insure satisfaction with its products and to create new
products. Our success is partially dependent on the development and
implementation of the following initiatives, which are key elements of our
ongoing growth strategy: (i) develop new products for specific markets,
(ii) decrease product development cycle times, (iii) develop pre/final
filter systems, (iv) increase customer satisfaction, (v) improve operating
efficiencies, and (vi) pursue selective acquisitions. (b) Financial information about industry segments: The Company is divided into five geographic operating segments, each
of which has general operating autonomy over its products and local
operations. These operating segments are as follows: North America,
Europe, Japan, Asia/Pacific, and Latin America. See Note 9  Segment
Financial Data on pages 36-37 of the 2004 Annual Report to Stockholders
which is incorporated herein by reference. (c) Narrative description of business: Overview:Filtration is the process of separating particles of various
sizes from liquids or gases. The mechanics of filtration range from the
removal of coarse contaminants, most often particulates, as large as 200
microns such as sand and sediment, to the elimination of bacteria and
viruses at less than .01 micron (human hair is typically 20 microns in
diameter). A filtration device consists of a plastic or metal housing and
a filtration medium. Filtration media, which can be manufactured out of a
variety of substances, act as the separator or barrier in the filtration
process. Filtration media include microporous membranes, glass, synthetic and
cellulosic fibers, carbon based material, porous metals and ceramics.
Microporous membranes are thin, film-like materials with millions of
uniform microscopic holes. Membranes are the most widely used filtration
media because they remove specifically-sized particles and can be
configured into a variety of shapes and sizes. Each of CUNOs five
operating segments manufacture and sell products into the potable water,
fluid processing, and healthcare markets. Operating Segments:We serve three primary markets through a geographical
operating structure. Each of our five operating segments (North America,
Europe, Japan, Asia/Pacific, and Latin America ) manufacture and sell
products into the Potable Water, Fluid Processing, and Healthcare markets.
These markets represent the end markets in which the customers reside.
Since the nature and attributes of the markets vary widely by geographic
region, to best address these markets we have established a management
structure based upon geography. The management for each of the geographic
regions operate independent sales and manufacturing organizations that
function within an overall 2




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corporate framework of strategic initiatives and performance targets. The
majority of these initiatives and targets are established to best address
the three major markets and to achieve the financial objectives of the
business. Further detail on our three major markets follows: Potable Water:The potable water market includes residential,
commercial, and food service customers. Demand is driven both by
consumers desire to improve the taste and quality of their drinking water
and by the expanded concern of regulatory agencies. North American sales
have increased sharply since 1999 due primarily to exceptional growth in
new appliance filters for the original equipment manufactures (OEMs)
market and, to a lessor extent, as a result of the successful
assimilation of certain acquisitions. Growth potential appears especially
strong in Asia/Pacific and Latin American countries where the quality of
drinking water has been found to be severely deficient in several regions.
Water safety concerns have driven the growth of the consumer bottled
water market to over $2 billion in the United States, as well as the
growth in the water filtration market. The food service industry has an increasing need for consistent
global product quality. Food service includes water used for fountain
beverages, steam ovens, coffee and tea (i.e. recipe quality water).
Specifically, restaurants have become increasingly aware of the need for
water filtration to control the taste and quality of the water used in
their businesses. Worldwide sales to the potable water market totaled
$169,910,000, $132,938,000 and $119,456,000 during the years ended
October 31, 2004, 2003, and 2002, respectively. Fluid Processing:Major customers in the fluid processing market
include chemical, petrochemical and oil and gas processors, manufacturers
of paints and resins, producers of electronics and semi-conductors, and
power generation facilities. As sophisticated manufacturing processes
increase and as the adoption of practices focused on quality increase, we
believe the demand for filtration products will also increase. In part,
this trend is driven by the enhanced ability to detect contaminants in
process streams. As automation increases, focus on quality control
increases, and as the ability to detect contaminants progresses, fluid
filtration will play a greater role in the manufacturing process. A significant segment of our fluid processing market is electronics
manufacturing. Ultra pure water is used to rinse the components during
manufacturing in order to ensure that the product is particle free with no
residual contamination. The industry uses corrosive, high purity
chemicals and gases for the manufacture of computer chips, hard disks,
video terminals and other components. All of the chemicals and gases used
are processed through very fine filtration systems. The strengthening
demand for electronic products and oil and gas products has helped recent
sales growth, and certain new products are expected to stimulate growth in
the future. Sales to the fluid processing market totaled $88,058,000,
$74,626,000 and $68,714,000 during the years ended October 31, 2004, 2003,
and 2002, respectively. Healthcare: The healthcare market is experiencing rapid growth as a result
of the intensive research efforts to find cures for diseases, the
increasing use of rapid and simpler diagnostic tests to help reduce
healthcare costs, the trend toward finer and more cost-efficient
filtration and increased governmental regulation. When harmful elements
are identified, they are often regulated or new medical standards of care
are implemented to decrease or eliminate contact. In many cases, fluid
filtration can play a key role in eliminating contact with many harmful
elements. Price is not the primary factor in the customers filtration
decision process, but rather the performance and reliability of the
product. Our healthcare market customers include pharmaceutical and
biotechnology companies that require cost-efficient filtration and high
levels of purity for production of sterile, contaminate free drugs, as
well as producers of diagnostic test kits which require highly efficacious
membranes. In addition, applications include the production of
bacteria-free water and food and beverage products. Sales to the
healthcare market totaled $93,643,000, $80,667,000 and $70,031,000 during
the years ended October 31, 2004, 2003, and 2002, respectively. Growth Strategy:Our goals are to grow at a rate higher than the general
filtration market, expand our market share and to increase our operating
margins and profitability. Key elements of our growth strategy include: 3




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Develop New Products for Specific Markets.We have initiated a
strategy to develop high value-added products for specific markets. To
gain a better understanding of specific markets and guide new product
development, we introduced Scientific Application Support Services
(S.A.S.S.). S.A.S.S. uses scientists with post-graduate degrees who are
experts in the specific industry they serve. They collaborate with
customers who are developing and implementing new processes or products
that have specific filtration requirements. Often these relationships
lead to the development of new market-specific products. Decrease Product Development Cycle Times.We have decreased our
product development cycle times to approximately 18 to 24 months. This
improvement has occurred through increased market focus, collaboration
with leading-edge customers through S.A.S.S. teams and the formation of
cross-functional product launch teams. We believe we can continue to
shorten product development cycle times through these same methods. Develop Pre/Final Filter Systems.Many filtration systems have one
or more pre-filters to remove large contaminants from the liquid or gas
before it passes through the final filter, prolonging the life of the more
expensive final filter. When these filters are designed together in a
system, the performance of the system is enhanced. We have a leading
pre-filter market position and are expanding the number of final filters
we offer. This allows the Company to provide its customers with a total
filtration solution from one vendor. Increased Customer Focus.We have traditionally sold to
distributors, who in turn sell to the end user. Our current goal is to
provide unmatched customer service to our end-user customers, while
providing resources to our distributors. In many cases the customer is
unable to define its filtration needs accurately and seeks outside
resources to identify and choose the best filtration alternative. Our
S.A.S.S. professionals meet this need. Management has been training and
focusing distributors on specific market segments and providing additional
training, sales, and marketing support. This enables distributors to
provide customers with superior industry expertise and company-specific
product knowledge. Improve Operating Efficiencies.We believe we can improve operating
efficiencies by offering higher margin new products and implementing cost
controls, supply chain management, productivity gains, profit-based
compensation programs and outsourcing production of certain processes. We
have initiated a capital investment program designed to (i) integrate
cell-based manufacturing, (ii) provide higher yields from raw materials,
(iii) improve inventory management, (iv) lower labor costs, (v) reduce
manufacturing cycle times, and (vi) reduce scrap rates. Pursue Selective Acquisitions.We review opportunities to acquire
high-quality companies which will allow us to expand into new geographic
markets, add new customers, provide new products, manufacturing and
service capabilities or increase our penetration with existing customers. On August 2, 2004, we completed the acquisition of 100% of the outstanding
stock of WTC Industries and its operating subsidiary PentaPure (WTC) for a
total purchase price of approximately $115 million. WTC is a manufacturer
and marketer of water filtration products for the point-of-use potable
water market with a primary customer base consisting of OEMs. The amount
of goodwill and other intangible assets recorded in connection with this
acquisition amounted to approximately $73.3 million and $28 million,
respectively. In fiscal 2002, we completed a product line acquisition in Australia and a
distributor acquisition in Europe for total consideration of $700,000.
The amount of goodwill and other intangibles recorded in connection with
these acquisitions amounted to $250,000 and $244,000, respectively. Products:We manufacture a full range of products by offering our
customers solutions to a wide range of filtration requirements. Many of
the products manufactured by us use electrokinetic adsorption, a
proprietary chemical process we developed which alters both membrane and
depth filter media surfaces. Electrokinetic adsorption uses molecular 4




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charges on dissolved ions to bind finer contaminants to the filter
surface. This attribute significantly enhances filtration efficiency by
removing contaminants smaller than the micron rating of the filter. We
typically group our products into the following categories: Membranes:The typical polymer and nylon membranes that we produce
resembles plastic films except for the molecular size pores that are
engineered into the surface and depth of the membrane. By varying pore
size and altering the physical or chemical properties of the membrane, the
quantity and type of substances which can pass through the membrane can be
regulated with absolute certainty. We manufacture absolute rated
products where no particle above a certain size can pass through the
membrane. In many applications, these membranes can be integrity tested
to ensure specific performance both at the beginning and end of a
particular process. A membrane can be employed in a variety of
configurations, including flat sheets, discs and cartridges that contain
high surface area and pleated membrane media. Uses of membranes include water purification for electronics and
applications in semiconductor manufacturing, pharmaceutical, biotechnology
and other applications, as well as residential use for drinking water. Our products include those sold under the following labels: Zetapor®,
Microfluor ®, PolyPro®, Zetabind®, Electropor®II, BevASSURE®, MaxMedia,
Synchro, Acro, AC/PH Lithowater®, LifeASSURE®, PhotoSHIELD, OPTIMA,
SterASSURE® and Novylon®. Depth Filters:Our disposable depth filters are constructed from a matrix
or formation of very fine and micro-fine fibers such as polypropylene,
cotton, polyester, glass fiber, acrylic, rayon, polymer, carbon and other
materials. The fibre matrix is then processed into a rigid filter media
using techniques such as thermal bonding, resin bonding, pleating or
winding. Our technology has a strong emphasis on graded density
attributes and electrokinetic adsorption. Graded density depth technology
allows filter media to be manufactured with very open porous outer layers,
progressively becoming smaller in the size of the pores or void volume
through the depth of the filter media. Graded density construction
extends filter life in many applications and reduces pressure loss across
the filtration process thereby reducing energy costs. The structure of
graded density filter media allows particles to be trapped throughout the
depth of the cartridge which minimizes surface binding, allows for high
contaminant capacity and lower pressure drops than solely trapping
particles on the surface of the media. We manufacture depth filters in a wide variety of cartridge and pore
sizes with absolute particulate ratings. The filter cartridges are used
in filter housings that can be manufactured in a broad range of metals or
plastics to suit particular customer specifications. Filter housings are
designed for a wide range of temperatures and pressures. Our depth filter products include those sold under the following
labels: Zeta Plus®, Betafine®, Micro-Klean® III, Beta-Klean®, Betapure®,
PolyNet®, BioCap®, Micro-Wynd® II, Econo-Klean®, Virosorb®, Petro-Klean®,
Delipid®, Zetacarbon®, and MPF. Cleanable Filters and Systems:We design and manufacture an extensive
range of self-cleaning disc filters, backwash strainers and recleanable
metal filters. The self-cleaning disc filters and backwash strainers can
be electrically or mechanically operated with automatic controls to
provide for specific requirements in process applications. The
recleanable metal filter elements are constructed of sintered porous
stainless steel or metal screens in tubular and pleated construction. The
recleanable elements can be cleaned in place in a filter housing or
removed for mechanical, ultrasonic or chemical cleaning. Our cleanable filters and system products include those sold under
the following labels: Poro-Klean®, Micro-Screen®, Auto-Klean®,
CTG-Klean, and DuoFLO®. Housings and Systems:We design and manufacture a wide variety of filter
housings to suit specific process and customer applications. The
housings can be of plastic or metal construction utilizing a broad range
of materials 5




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including polypropylene, PVC, nylon, aluminum, copper, brass, steel,
stainless steel and other specialized metals, such as titanium. Specialized designs include sanitary, electropolished and coated
finishes for chemical resistance and ease of sterilization, sanitization
or cleaning. We supply a broad range of standard housings manufactured
from type 316 stainless steel in sanitary, polished and electropolished
finishes for enhancing pharmaceutical and electronic applications. Finish
specifications can be measured in terms of Roughness Average (Ra) with
average variations in surface finish measured in microns down to 0.45
micron, the size of small bacteria. We design and manufacture proprietary housings and systems such as
CTG-Klean with patented features and a totally enclosed disposable filter
media pack for use in critical applications where housing cleanliness is
essential or when physical separation of toxic or corrosive chemicals from
the metal housing is desired. Our range of housings are designed and manufactured to regulatory
pressure vessel codes, particularly for applications in the oil and gas,
refinery and petrochemical industries. We design and market housings to
meet the local regulatory requirements in most countries. Backlog:Our backlog on October 31, 2004 was $23.5 million as compared to
$21.9 million as of the same date the previous year. Due to the
relatively short manufacturing cycle and our use of wholesale distributors
as well as general industry practice, backlog, which typically represents
less than 30 days of shipments, is not deemed to be significant. A
substantial portion of our revenues result from orders received and
product sold in the same month. Competition:The markets in which we compete are highly competitive. We
compete with many domestic and international filtration companies in our
global markets including some which are larger and which possess greater
resources. No one company has a significant presence in all of our
markets. The principal methods of competition are product specifications,
performance, quality, knowledge, reputation, technology, distribution
capabilities, service and price. Some of our other competitors are
multi-line companies with other principal sources of income, some of which
have substantially greater resources than the Company. Other competitors
are local product assemblers or service companies that purchase components
and supplies such as valves and tanks from more specialized manufacturers.
Through our S.A.S.S. teams, we have developed many products by
collaborating with our customers throughout the design and development
process. We believe that these relationships provide us with a
competitive advantage over other manufacturers. Research and Development:Our research, development, and engineering
activities are conducted in our own laboratories, supplemented by on-site
development and application of custom design and other technical skills.
Our research, development and engineering expenditures, which consisted
mainly of the development of new products, product applications and
manufacturing processes for fiscal years 2004, 2003, and 2002 were
approximately $17.4 million, $15.0 million and $14.7 million,
respectively, and 4.9 percent, 5.2 percent and 5.7 percent of net sales,
respectively. We also incur additional internal costs relating to our
sales and service personnel for product development. Manufacturing:Our manufacturing is largely vertically integrated, using
unique, proprietary and patented processes, with many of the major
components of our filtration units manufactured and assembled in our own
plants. We have begun to outsource a limited amount of our manufacturing
processes, such as segments of metal housing manufacturing. We believe
that we generally have sufficient manufacturing capacity for the
foreseeable future. We have developed a new, more efficient membrane
manufacturing process that we believe provides a competitive advantage
through the production of superior products at lower costs. Other than
our facilities in Singapore, all of our manufacturing facilities are ISO
9002 certified. Raw Material Suppliers:The primary raw materials used by the Company are
cotton, nylon, acrylic, cellulose, resins, plastics and metals. We have
not experienced a shortage of any of our raw materials in the past three
years. 6




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We believe that there is an adequate supply of all of our raw materials at
competitive prices from a variety of suppliers. Distribution and Sales:We have approximately 150 independent
distributors of our products in 80 countries. Distributors represent the
primary channel in the marketing of our healthcare and fluid processing
products. We have agreements with all of our major distributors in the
United States. In certain markets outside the United States, we use
dedicated sales people. Our potable water products are sold directly to
wholesalers, such as plumbing suppliers, water quality dealers and major
resellers, and through manufacturing representatives. Agreements with our United States distributors are usually for a
period of two years. Such agreements usually assign an exclusive
territory, prohibit distributors from carrying competing products, require
that distributors share market and customer related information other than
pricing with us, and require distributors to carry an adequate stock of
our products. We do not believe that the loss of any one of our
distributors would have a significant adverse effect on the Company. Our
top ten customers accounted for approximately 29 percent of our total
sales in fiscal year 2004. Whirlpool Corporation accounted for approximately 13.4 percent, 14.3
percent and 13.2 percent of sales during the fiscal years ended October
31, 2004, 2003 and 2002, respectively. We believe that no other customers
account for more than ten percent of sales. As of October 31, 2004, the
Company employed approximately 470 people as sales people. Of such
employees, approximately 310 are located overseas. Trademarks and Patents:Trademarks and brand name recognition are
important to the Company. We generally own the trademarks under which our
products are marketed. We have registered our trademarks and will
continue to do so as they are developed or acquired. We have
approximately 476 registered trademarks throughout the world. We have approximately 250 active patents throughout the world and
approximately 218 patent applications pending worldwide. Additionally, we
rely on proprietary, non-patented technologies to a certain extent.
Certain of our employees sign non-disclosure and assignment of proprietary
rights agreements. We protect our intellectual property and believe there is significant
value associated with it. However, we believe that the loss of one or
more of our trademarks and patents would not have a material adverse
effect, as we are not heavily dependent on any one or few and we are
continually expanding our intellectual estate through new additions. Seasonality:Our business is typically not seasonal. However, sales in
the first quarter of each fiscal year tend to be lower than the other
quarters due to the holiday season and year-end distributor inventory
reductions. Government regulations:We believe that we are in substantial compliance
with applicable regulations of Federal, state and local authorities
regulating the handling of specified substances and the discharge of
materials into the environment. We manufacture certain filtration products that are used as
components in medical devices and we must use the Food and Drug
Administration (FDA) listed materials in the manufacture of these
products. Additionally, we maintain Drug Master File (DMF) files on
certain products sold into the health care market. Certain medical devices marketed and manufactured by our customers
are subject to extensive regulation by the FDA and, in some instances, by
foreign governments. Noncompliance with FDA requirements can result in,
among other things, fines, injunctions, civil penalties, recall or seizure
of products, total or partial suspension of production, failure of the
government to grant pre-market clearance or pre-market approval for
devices, withdrawal of marketing approvals and criminal prosecution.
Before a new device can be introduced into the market, the manufacturer
must generally obtain FDA clearance through either a 510(k) notification
or pre-market approval application (PMA). A 510(k) clearance will be
granted if the submitted information establishes that the proposed 7




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device is substantially equivalent to a legally marketed Class I or II
medical device, or to a Class III medical device for which the FDA has not
called for PMAs. The FDA recently has been requiring a more rigorous
demonstration of substantial equivalence than in the past. It generally
takes from four to twelve months from submission to obtain a 510(k)
clearance, but it may take longer. The FDA may determine that a proposed
device is not substantially equivalent to a legally marketed device, or
that additional information is needed before a substantial equivalence
determination can be made. In many areas the sale and promotion of water treatment devices is
regulated at the state level by product registration, advertising
restrictions, water testing, product disclosure and other regulations
specific to the water treatment industry. In some local areas certain
types of water treatment products, including those manufactured by us, are
restricted because of a concern with the amount and type of contaminants
per volume of water they discharge as locally regulated. Environmental Matters:Compliance with foreign, Federal, state and local
laws and regulations enacted to regulate the handling of and the discharge
of specified materials into the environment has not had, and is not
expected to have, a material effect upon our business. Employees:At October 31, 2004, we employed approximately 2,200 people
worldwide (exclusive of employees of independent distributors and
temporary staff), with approximately 1,300 employees in the United States
and 900 employees in other countries. (d) Financial information about foreign and domestic operations and export
sales. See Note 9 to the financial statements on pages 36-37 of the 2004
Annual Report to Stockholders which is incorporated herein by reference. Caution concerning forward-looking statements: Because we want to provide
shareholders with more meaningful and useful information, this annual
report on Form 10-K contains statements relating to future events and the
predicted performance of the Company which may constitute forward-looking
statements, as defined under the Private Securities Litigation Act. We
have tried, wherever possible, to identify these forward-looking
statements by using words such as anticipates, believes, estimates,
plans,, expects, and similar expressions. These statements reflect
our current beliefs and are based on information currently available to
us. Accordingly, these statements are subject to risks and uncertainties
which could cause our actual results performance or achievements to differ
materially from those expressed in, or implied by, these statements.
These risks and uncertainties include the following: economic and
political conditions in foreign countries in which we conduct a
substantial part of our operations and other risks associated with
international operations including taxation policies, credit risk,
exchange rate fluctuations and the risk of expropriation; our ability to
protect our technology, proprietary products and manufacturing techniques;
volumes of shipments of our products, changes in our product mix and
product pricing; continuing beneficial relationships with customers; cost
of raw materials; the rate of economic and industry growth in the United
States and the other countries in which we conduct our business; changes
in technology, changes in legislative, regulatory or industrial
requirements and risks generally associated with new product introduction
and applications; and domestic and international competition in our global
markets. We assume no obligation to publicly release revisions to the
forward-looking statements to reflect new events or circumstances. AUDIT COMMITTEE FINANCIAL EXPERT Our Audit Committee consists of four Directors, Messrs. John M.
Galvin, who is Chairman of the Committee, David L. Swift, C. Edward
Migley, and Dr. Charles L. Cooney. All of these Directors are independent
as defined in the rule of the Securities and Exchange Commission pursuant
to the Securities Exchange Act of 1934, as amended. 8




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The responsibilities of our Audit Committee, as more fully discussed
in its Charter, are to assist the Board of Directors in fulfilling its
oversight responsibilities for the financial reporting process, the system
of internal control, the audit process, and the Companys process for
monitoring compliance with laws and regulations. The Board of Directors of the Company has determined that at least
one member of the Audit Committee, Mr. John M. Galvin, is an audit
committee financial expert. An audit committee financial expert is a
person who has (i) and understanding of generally accepted accounting
principles and financial statements, (ii) the ability to assess the
general application of said principles in connection with the accounting
for estimates, accruals and reserves, (iii) experience preparing,
auditing, analyzing or evaluating financial statements of comparable
breadth and complexity to the Companys or experience supervising others
who do, (iv) an understanding of internal controls and procedures, and (v)
an understanding of audit committee functions. CODE OF ETHICS The Company has adopted a formal Code of Ethics including its
Principal Executives and Senior Financial Officers that applies to its
Chief Executive Officer, Chief Financial Officer and its Controller. The
Company has posted this Code of Ethics to its website, www.cuno.com, and
will provide a copy to any person without charge upon request. AVAILABLE INFORMATION The Company provides free of charge access to its annual report on Form
10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and
other SEC filings, through its website, www.cuno.com, as soon as
reasonably practicable after such reports are electronically filed with
the SEC. The Company will also provide free of charge a copy of its 2004 Annual
Report to Shareholders upon written request to: John A. Tomich
General Counsel and Secretary
CUNO Incorporated
400 Research Parkway
Meriden, CT 06450 Or by calling: 1-203-237-5541 9




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ITEM 2. PROPERTIES Our world headquarters is located in Meriden, Connecticut. This
facility also contains a manufacturing and assembly plant. The following
table sets forth the location and approximate size of our principal
properties and facilities, most of which are owned by the Company. We are
of the opinion that all the facilities we own or lease are well
maintained, appropriately insured, in good operating condition and
suitable for their present uses. ApproximateFacility SizeLocation
    
    (Sq. Ft.)North America:Meriden, Connecticut
    
    
    189,000Enfield, Connecticut
    
    
    155,000Enfield, Connecticut**
    
    
    175,000Stafford Springs, Connecticut
    
    
    165,000Eagan, Minnesota**
    
    
    60,000Churubusco, Indiana
    
    
    47,000Japan:Kita-Ibaragi, Japan
    
    
    40,000Europe:Sucy en Brie, France **
    
    
    20,000Nantes, France **
    
    
    4,600Calais, France
    
    
    50,000Mazeres, France
    
    
    40,000Asia/Pacific:Sydney, Australia *
    
    
    265,000Singapore**
    
    
    18,546Shanghai, China **
    
    
    4,700Latin America:Mairinque, Brazil
    
    
    65,000
  *
    
    10 percent of this facility is sublet to unrelated third parties.**
    
    Leased facility. In addition to the properties listed above, we lease one facility in
the United States and approximately 16 facilities outside the United
States. These facilities are generally used as warehouses and/or sales
offices. 
 ITEM 3. LEGAL PROCEEDINGS As of the date hereof there is no pending litigation of a material
nature, other than ordinary routine litigation incidental to the business,
to which the Company or any of its subsidiaries is a party or which may
affect the income from, title, to, or possession of, any of their
respective properties. 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There were no matters submitted to a vote of stockholders during the fourth quarter of fiscal year 2004. 10




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PART II 
 ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The portion of the 2004 Annual Report to Stockholders appearing on page 1
under the heading Market Data is incorporated herein by reference. The remaining information called for by this item relating to Securities
Authorized for Issuance under Equity Compensation Plans is reported in
Note 10 on pages 38-39 of the 2004 Annual Report to Stockholders. 
 ITEM 6. SELECTED FINANCIAL DATA The financial data on page 5 of the 2004 Annual Report to Stockholders,
captioned Summary of Financial Data is incorporated herein by reference. 
  ITEM 7.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 2004-2002 The following portions of the 2004 Annual Report to Stockholders are
incorporated herein by reference: (a) All of the material on pages 6-17 under the heading Managements
Discussion and Analysis of Financial Condition and Results of Operations. 
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Information appearing under the caption Market Risk Disclosures
appearing on pages 16-17 of the 2004 Annual Report to Stockholders is
incorporated herein by reference. 
 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The consolidated financial statements of the Company and report of
independent registered public accounting firm included on pages 18-40 of the
Annual Report to Stockholders for the fiscal year ended October 31, 2004
are incorporated herein by reference. Quarterly Results of Operations on page 40 of the 2004 Annual Report to
Stockholders is incorporated herein by reference. 
  ITEM 9.
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None 
 ITEM 9A. CONTROLS AND PROCEDURES As of October 31, 2004, an evaluation of the effectiveness of the design
and operation of the Companys disclosure control and procedures was
performed under the supervision and with the participation of the
Companys management, including the Chief Executive Officer and Chief
Financial Officer. Based on that evaluation, the Companys management,
including the Chief Executive Officer and the Chief Financial Officer,
concluded that the Companys disclosure controls and procedures were
effective as of October 31, 2004. 11




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There have been no significant changes in the Companys internal controls
over financial reporting during the most recent fiscal quarter that
materially affected, or are reasonably likely to materially affect, the
Companys internal controls over financial reporting. Section 404 of the Sarbanes-Oxley Act of 2002 (the Act) will require the
Company to include an internal control report from management in its
Annual Report on Form 10-K for the year ended October 31, 2005 and in
subsequent reports thereafter. The internal control report must include
the following: (1) a statement of managements responsibility for
establishing and maintaining adequate internal control over financial
reporting, (2) a statement identifying the framework used by management to
conduct the required evaluation of the effectiveness of the Companys
internal control over financial reporting, (3) managements assessment of
the effectiveness of the Companys internal control over financial
reporting as of October 31, 2005, including a statement as to whether or
not internal control over financial reporting is effective, and (4) a
statement that the Companys independent auditors have issued an
attestation report on managements assessment of internal controls over
financial reporting. Management acknowledges its responsibility for establishing and
maintaining internal controls over financial reporting and seeks to
continually improve those controls. In addition, in order to achieve
compliance with Section 404 of the Act within the required timeframe, the
Company has been conducting a process to document and evaluate its
internal controls over financial reporting. In this regard, the Company
has dedicated internal resources, engaged outside consultants and adopted
a detailed work plan to: (1) assess and document the adequacy of internal
controls over financial reporting; (2) take steps to improve control
processes where required; (3) validate through testing that controls are
functioning as documented; and (4) implement a continuous reporting and
improvement process for internal control over financial reporting. The
Company believes its process for documenting, evaluating and monitoring
its internal control over financial reporting is consistent with the
objectives of Section 404 of the Act. Given the risks inherent in the design and operation of internal controls
over financial reporting, the Company can provide no assurance as to its,
or its independent auditors, conclusions at October 31, 2005 with respect
to the effectiveness of its internal controls over financial reporting. 12




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PART III 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information regarding the Directors of the Registrant required by
Section 16 of the Exchange Act is incorporated by reference to the
definitive Proxy Statement of the Registrant, required to be filed with
the Commission within 120 days of October 31, 2004, in connection with the
annual meeting of stockholders to be held on March 3, 2005. The principal executive officers of the Company and their recent
business experience are as follows: Name
    
    Office Held
    
    AgeMark G. Kachur
    
    Chairman of the Board
of Directors,
President and Chief
Executive Officer
    
    
    61Frederick C. Flynn, Jr.
    
    Senior Vice President
- Finance and
Administration, Chief
Financial Officer and
Assistant Secretary
    
    
    54Thomas J. Hamlin.
    
    Senior Vice President, Research
& Development
    
    
    43Timothy B. Carney
    
    Senior Vice
President, and
General Manager and
President  Worldwide
Water Group
    
    
    52Anthony C. Doina.
    
    Vice President - Worldwide Fluid Processing
    
    
    48Colin McLaren.
    
    Vice President - Worldwide Healthcare
    
    
    47William J. DeFrances.
    
    Vice President,
Controller, Treasurer
and Assistant
Secretary
    
    
    40John A. Tomich
    
    General Counsel and
Secretary
    
    
    47
 None of the officers are related and they are elected from year to
year or until their successors are duly elected and qualified. Mark G. Kachur.Mr. Kachur is the Chairman of the Board of
Directors, President and Chief Executive Officer of the Company. Mr.
Kachur has been a director of the Company since July 1996. Since joining
the Company in 1994, Mr. Kachur has been a Senior Vice President of
Commercial Intertech and President and Chief Operating Officer of the
Company. From 1992 until 1994, he was President and CEO of Biotage, Inc.,
from 1971 to 1991, he was with Pall Corporation, the last seven years as a
Group Vice President. He holds a bachelor of science degree in Mechanical
Engineering from Purdue University and a masters degree in Business
Administration from the University of Hartford. 13




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Frederick C. Flynn, Jr.Mr. Flynn is the Senior Vice President -
Finance and Administration, Chief Financial Officer, and Assistant
Secretary of the Company. Prior to joining CUNO in January 1999, Mr.
Flynn was Senior Vice President and Chief Financial Officer of GE Capital
Information Technology Solutions. From 1989 to 1995 Mr. Flynn was Vice
President and Treasurer of United Technologies Corporation. He holds a
bachelor of science degree in Economics from Boston College and a masters
degree in Business Administration from the University of Connecticut. Thomas J. Hamlin.Mr. Hamlin is the Senior Vice President of
Research and Development. Since joining the Company in 1983, Mr. Hamlin
has held a variety of positions including managerial positions in
manufacturing and plant operations as well as Vice President of Product
Development. Mr. Hamlin holds a bachelor of science degree in Mechanical
Engineering from Rensselaer Polytechnic Institute and a masters degree in
Business Administration from RPI, Hartford Graduate Center. Timothy B. Carney.Mr. Carney is the Companys Senior Vice President
and General Manager of the Worldwide Water Group. Previous to this, Mr.
Carney served as the Companys Controller and effective November 1999,
became Senior Vice President  Finance and Administration of the Companys
worldwide Water Group. From 1993 until joining the Company, he served
Commercial Intertech as CUNO Group Controller and from 1989 until 1993 he
served Commercial Intertech as General Manager and Controller of Water
Factory Systems. He holds a bachelor of science degree in Economics and a
masters degree in Business Administration from Youngstown State
University. Anthony C. Doina.Mr. Doina is the Vice President   Worldwide
Fluid Processing. Since joining the Company in 1994, Mr. Doina has also
served in the capacity of Vice President of Process Sales. From 1978
until 1994 he was employed by Pall Corporation, serving in a number of
positions in Research and Development, Marketing, and Sales (Vice
President of Sales). Prior to joining the Company, Mr. Doina had over 16
years of sales experience in the filtration industry. Mr. Doina holds a
bachelor of science degree in Chemistry from the University of Stony
Brook. Colin McLaren. Mr. McLaren is the Companys Vice President,
Worldwide Healthcare and Food & Beverage. Mr. McLaren joined the company
as Marketing & SASS Director Europe in January 1996, having been Vice
President, Europe, Africa and Middle Eastern Operations for Gelman
Sciences Inc. since 1992. Prior to this Mr. McLaren held various overseas
Sales and General management positions within the Gelman Sciences
organization. Mr. McLaren has over 22 years experience in the filtration
industry. He holds a Bacelor of Science degree in Clinical Microbiology
from Glasgow, Caladonian University and is a member of the Institute of
Medical Sciences  Clinical Microbiology. William J. DeFrances. Mr. DeFrances is currently the Vice President,
Controller and Treasurer of CUNO. Since joining CUNO in 1996, Mr.
DeFrances has held the positions of Director of Corporate Accounting and
Assistant Controller. Before joining CUNO, Mr. DeFrances was a senior
manager in the audit and advisory group at Price Waterhouse in Hartford.
He holds a bachelor of science degree in Accounting from Bryant College
and a Masters degree in Finance from the University of Connecticut. He is
also a CPA. John A. Tomich.Mr. Tomich is General Counsel and Secretary of the
Company. Before joining CUNO Incorporated after the spin-off from
Commercial Intertech he was Counsel and Assistant Secretary for Commercial
Intertech, where he had been employed since January 1990 and had been
involved extensively with the legal matters affecting CUNO. He holds a
bachelor of Engineering degree in Mechanical Engineering from Youngstown
State University and Juris Doctor degree from the University of Akron,
School of Law. He is a licensed patent attorney. 
 ITEM 11. EXECUTIVE COMPENSATION The information required by this item is incorporated by reference to
the definitive Proxy Statement of the Registrant, which is required to be
filed with the Commission within 120 days of October 31, 2004, in
connection with the annual meeting of stockholders to be held on March 3,
2005. 14




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ITEM 12.
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this item is incorporated by reference to
the definitive Proxy Statement of the Registrant, which is required to be
filed with the Commission within 120 days of October 31, 2004, in
connection with the annual meeting of stockholders to be held on March 3,
2005. 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this item is incorporated by reference to
the definitive Proxy Statement of the Registrant, which is required to be
filed with the Commission within 120 days of October 31, 2004, in
connection with the annual meeting of stockholders to be held on March 3,
2005. 
 Part IV 
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by this item is incorporated by reference to
the definitive Proxy Statement of the Registrant, which is required to be
filed with the Commission within 120 days of October 31, 2004, in
connection with the annual meeting of stockholders to be held on March 3,
2005. 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) DOCUMENTS FILED AS PART OF THIS REPORT: (1) The following consolidated financial statements of CUNO Incorporated
included in its
2004 Annual Report to Shareholders are incorporated by reference in
Item 8: Page NumberIn This ReportReport of Registered Independent Public Accounting
Firms
    
    
    18-19Consolidated Statements of Income -
Years ended October 31, 2004,
2003, and 2002
    
    
    20Consolidated Balance Sheets as of
October 31, 2004 and 2003
    
    
    21Consolidated Statements of Stockholders
Equity  Years ended October 31,
2004, 2003, and 2002
    
    
    22Consolidated Statements of Cash Flows -
Years ended October 31, 2004, 2003, and 2002
    
    
    23Notes to Consolidated Financial Statements
    
    
    24-40
 15




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(2)
    
    The following financial statement schedule
of CUNO Incorporated is included in Item 14 (d): Schedule II Valuation and Qualifying Accounts
    
    
    S-1
 All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and therefore
have been omitted. (3) Exhibits (i) 3.1  Articles of Incorporation Filed as of April 17,
1992 Incorporated by reference to Exhibit 3.1 to the
Companys Form 10 (as filed with Amendment
No. 2 thereto dated August 20, 1996). (10 )   Material Contracts (i) 10.9 Termination and Change of Control Agreement  Mark G.
Kachur dated October 1, 1996 (iii) 10.12 Termination and Change of Control Agreement  Timothy
B. Carney dated October 1, 1996, as amended
October 31, 1997. (i) 10.13 Termination and Change of Control Agreement  John A.
Tomich dated October 1, 1996 (ii) 10.15 CUNO Incorporated Executive Management Incentive Plan (ii) 10.16 CUNO Incorporated Management Incentive Plan (iii) 10.17 CUNO Incorporated Savings and Retirement Plan (iv) 10.20 CUNO Incorporated Nonqualified Deferred Compensation
Plan for Mark G. Kachur (v) 10.21 Termination and Change of Control Agreement  Frederick C.
Flynn, Jr. dated January 21, 1999 (vi) 10.23 Employment Agreement  Frederick C. Flynn, Jr. (vii) 10.24 Employment Agreement  Michael C. Croft (viii) 10.25 Employment Agreement  Mark G. Kachur (ix) 10.26 Employment Agreement  Frederick C. Flynn, Jr. (ix) 10.27 Employment Agreement  Thomas J. Hamlin (x) 10.28 Amended Employment Agreement  Mark G. Kachur (xi) 10.29 CUNO Incorporated Code of Ethics (xii) 10.30 Amended Employment Agreement  Mark G. Kachur (xiii) 10.31 Revolving Credit Agreement dated August 2, 2004 13  Certain sections of the Annual Report to Shareholders for the
year ended October 31, 2004. 21  Subsidiaries of the Registrant 23.1  Consent of Registered Independent Public Accounting Firms 23.2  Consent of Registered Independent Public Accounting Firms 31.1 Cerftication of Mark G. Kachur pursuant to Section 302 of the
Sarbanes-Oxley Act of 2003 31.2 Cerftication of Frederick C. Flynn pursuant to Section 302 of the
Sarbanes-Oxley Act of 2003 32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. sec.
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. sec.
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.    16




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(ii) Incorporated by reference to the Registrants Registration
Statement on Form S-1, as amended, filed with the Securities and Exchange
Commission on February 27, 1997. (iii) Incorporated by reference to the registrants Annual Report on
Form 10-K, filed with the Securities and Exchange Commission on January
28, 1998. (iv) Incorporated by reference to the registrants Annual Report on
Form 10-K, filed with the Securities and Exchange Commission on January
29, 1999. (v) Incorporated by reference to the registrants Quarterly Report on
Form 10-Q, filed with the Securities and Exchange Commission on April 4,
1999. (vi) Incorporated by reference to the registrants Quarterly Report
on Form 10-Q, filed with the Securities and Exchange Commission on June 4,
1999. (vii) Incorporated by reference to the registrants Quarterly Report
on Form 10-Q, filed with the Securities and Exchange Commission on
September 11, 2000. (viii) Incorporated by reference to the registrants Annual Report on
Form 10-K, filed with the Securities and Exchange Commission on January
16, 2002. (ix) Incorporated by reference to the registrants Quarterly Report
on Form 10-Q, filed with the Securities and Exchange Commission on
February 19, 2002. (x) Incorporated by reference to the registrants Quarterly Report on
Form 10-Q, filed with the Securities and Exchange Commission on August 21,
2002. (xi) Incorporated by reference to the registrants Annual Report on
Form 10-K, filed with the Securities and Exchange Commission on December
13, 2002. (xii) Incorporated by reference to the registrants (xiii) Incorporated by reference to the registrants Quarterly Report
on Form 10-Q, filed with the Securities and Exchange Commission on August
25, 2004. (b) Reports on Form 8-K for the quarter ended October 31, 2004. We filed a Report on Form 8-K, dated August 2, 2004, under Item 2.
Acquisition or Disposition of Assets, reporting that we completed our
acquisition of WTC Industries, Inc. We filed a Report on Form 8-K, dated August 25, 2004, under Item 7.
Financial Statements and Exhibits, reporting our financial results for
the quarter ended July 31, 2004 We filed a Report on Form 8-K/A, dated October 14, 2004, under Item
2. Acquisition or Disposition of Assets, reporting the purchase price
information and pro forma results of the acquisition of WTC Industries,
Inc. Additional information relating to management contracts and
renumerative plans is contained in Note 10  Stock Options and Awards of
the Notes to Consolidated Financial Statements on pages 35-36 of the 2004
Annual Report to Stockholders. 17




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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. CUNO Incorporated Date: December 22, 2004 /s/ Mark G. Kachur
    
    /s/ Frederick C. Flynn, Jr.Mark G. Kachur
    
    Frederick C. Flynn, Jr.Chairman of the Board
    
    Senior Vice President of Directors, President, and
    
    Finance and Administration,Chief Executive Officer
    
    Chief Financial Officer,
and Assistant Secretary
 Pursuant to the requirements 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 date indicated above. Name
    
    Title
    
    DateJoel B. Alvord*
    
    Director
    
    December 22, 2004Charles L. Cooney,
Ph.D.*
    
    Director
    
    December 22, 2004Frederick C. Flynn, Jr.*
    
    Director
    
    December 22, 2004John M. Galvin*
    
    Director
    
    December 22, 2004Mark G. Kachur*
    
    Chairman
    
    December 22, 2004C. Edward Midgley*
    
    Director
    
    December 22, 2004David L. Swift*
    
    Director
    
    December 22, 2004
 *By:
    
    /s/ John A. TomichJohn A. TomichAttorney-in-Fact, Pursuant toPower of Attorney
 18