<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   Form 10-K/A

Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934

For the fiscal year ended October 31, 1996

                        COMMISSION FILE NUMBER 000-21109

                                CUNO INCORPORATED
             (Exact name of registrant as specified in its charter)

         Delaware                               06-1159240
(State or other jurisdiction of             (I.R.S. Employer
incorporation or organization)              Identification No.)

400 Research Parkway, Meriden, Connecticut          06450
(Address of principal executive offices)         (Zip Code)

                          (203) 237-5541
        Registrant's telephone number, including area code

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. [ ]

     As of March 31, 1997, 13,830,663 common shares were outstanding, and the
aggregate market value of the common shares (based upon the last price on that
date) was approximately $212,646,000.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                                                 
     Certain portions of the documents of the Registrant listed below have been
incorporated by reference into the indicated parts of this Annual Report on Form
10-K.

     Notice of Annual Meeting of Shareholders March 27, 1997 and Proxy
Statement filed January 21, 1997 . . Part III, Items 10-13
                                     Part IV, Item 14

     The exhibit index is located on page 53.

                                        1


<PAGE>   2



                                     Part I

Item 1.           Business

(a)  General development of business:

         On July 11, 1996, Commercial Intertech Corp. ("Commercial Intertech")
initiated a plan to separate its Fluid Purification group subsidiaries and
divisions (the "Company" or "CUNO") from the rest of Commercial Intertech's
businesses in a tax-free transaction, subject to regulatory approval. The
following companies and divisions made up the Fluid Purification group companies
- CUNO Incorporated, USA; CUNO Pacific Pty., Ltd., Australia; Commercial
Intertech do Brasil, Ltda., Brazil; CUNO Europe S.A., France; CUNO KK, Japan;
CUNO Filtration Asia Pte. Ltd., Singapore; and divisions located in England,
Germany and Italy.

         On July 29, 1996, Commercial Intertech declared a distribution of 100
percent of its interest in the Company which was effected by a distribution on
September 10, 1996 of one share of common stock of the Company for each share of
Commercial Intertech held by existing shareholders of Commercial Intertech,
based on a record date of August 9, 1996. On that date, there were approximately
13,566,000 common shares of Commercial Intertech outstanding.

         In conjunction with the reorganization, the Company assumed $30,000,000
of Commercial Intertech's debt which was paid in the form of a dividend. The
dividend was paid out of the proceeds from a credit facility entered into by the
Company shortly after the reorganization. In addition, the Company declared an
additional dividend of $35,675,000 payable to Commercial Intertech.

         The Company is a world leader in the design, manufacturing and
marketing of a comprehensive line of filtration products for the separation,
clarification and purification of liquids and gases. The Company's products,
which include proprietary depth filters and semi-permeable membrane filters, are
used in the health care, fluid processing and potable water markets. These
products, most of which are disposable, effectively remove contaminants that
range in size from molecules to sand particles. The Company's sales are
approximately balanced between international and domestic markets.

                                        2


<PAGE>   3



ITEM 1.  (Continued)

         The Company's objective is to provide high value-added products and
premium customer service. The Company's proprietary manufacturing processes
result in products that lower customers' operating expenses and improve the
quality of customers' end products by providing longer lasting, higher quality,
and more efficient filters. As part of the Company's commitment to customer
service, the Company designates its 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.

         In mid-1994, the Company realigned its business to accelerate net sales
growth and improve operating margins. A new senior management team developed and
implemented the following initiatives, which are key elements of its 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 focus, (v) improve operating efficiencies and (vi) pursue
selective acquisitions. Due principally to these initiatives, net sales, before
adjusting for foreign currency fluctuations, increased from $143 million to $179
million, a 25 percent increase from fiscal year 1994 to fiscal year 1996.

(b)      Financial information about industry segments:

         The Company operates in one industry segment which is the design,
development, manufacture and sale of liquid and gas filtration products.

(c)      Narrative description of business:

Market 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, 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.

                                        3


<PAGE>   4



ITEM 1.  (Continued)

Health Care

         The health care 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 health care 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.

         The health care market customers include pharmaceutical and
biotechnology companies which 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 health care market totalled $47,912,000,
$39,938,000, and $32,654,000 in 1996, 1995 and 1994, 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 semiconductors, and power generation facilities. As
sophisticated manufacturing processes increase and as the adoption of practices
focused on quality increase, the Company believes 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.

         One of the fastest growing areas of the fluid processing market is
semi-conductor manufacturing. The ever-increasing demand to place finer
circuitry on computer chips is requiring a cleaner environment and much higher
quality standards for the chemicals and the ultra pure water used in the
manufacturing process. Ultra pure water is used to rinse the chips during
manufacture in order to ensure that the product is particle free and no residual
contamination is left on the chip surface. 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 rapidly expanding demand for
electronic products and the wider use of computer chips is fueling industry
growth. Sales to the fluid processing market totalled $81,839,000, $77,528,000
and $69,606,000 in 1996, 1995 and 1994 respectively.

                                        4


<PAGE>   5





ITEM 1.  (Continued)

Potable Water

         The potable water market includes residential, commercial and food
service customers. According to industry data, it is estimated that 1.2 billion
people in the world do not have safe drinking water. 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. The sharpest growth in this
market may occur in Asia/Pacific Rim and South 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. Specifically, restaurants have become increasingly aware
of the need for water filtration and control of the taste and quality of the
water used in their businesses. Sales to the potable water market totalled
$49,317,000, $45,233,000 and $40,851,000 in 1996, 1995 and 1994, respectively.

Growth Strategy

         The Company's goal is to grow at a rate higher than the general
filtration market and to increase the Company's operating margins. Key elements
of the Company's growth strategy include:

         Develop New Products for Specific Markets. The Company has initiated a
strategy to develop high value-added products for specific markets.
Historically, the Company offered non-differentiated products and often competed
solely on price. To gain a better understanding of specific markets and guide
new product development, the Company 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.

                                        5


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ITEM 1.  (Continued)

         Decrease Product Development Cycle Times. The Company has decreased its
product development cycle times from an average of four to five years to
approximately 18 months 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. The
Company believes it can continue to shorten product development cycle times
through these same methods.

         Develop Pre/Final Filter Systems. Many filtration systems have one or
more prefilters 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. The Company has a leading prefilter market position and
is expanding the number of final filters it offers. This allows the Company to
provide its customers with a total filter solution from one vendor.

         Increased Customer Focus. The Company has traditionally sold to the
distributor, who in turn sells to the end user. The Company's current goal is to
provide unmatched customer service to its end-user customers, while providing
resources for its distributors. In many cases the customer is unable to define
its filtration needs accurately and seeks outside resources to identify and
chose the best filtration alternative. The Company's S.A.S.S. professionals meet
this need. Management has been training and focusing distributors on specific
market segments and providing additional sales and marketing support. This
enables distributors to provide customers with superior industry expertise and
company-specific product knowledge.

         Improve Operating Efficiencies. The Company believes it can improve
operating efficiencies by implementing cost controls, productivity gains,
profit-based compensation for its employees, shifting product mix to higher
margin health care and fluid processing markets and outsourcing production of
certain processes. The Company has 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.

                                        6


<PAGE>   7



ITEM 1.  (Continued)

         Pursue Selective Acquisitions. The Company believes that the continuing
trend towards consolidation in certain portions of the filtration industry,
together with recent systems trends (prefilter and filter), will provide the
Company with attractive opportunities to acquire high-quality companies and
subsequently allow the Company to expand into new geographic markets, add new
customers, provide new products, manufacturing and service capabilities or
increase the Company's penetration with existing customers. The Company
evaluates acquisition candidates on a regular basis.

Products

         The Company manufactures a full range of products by offering its
customers solutions to a wide range of filtration requirements. Many of the
products manufactured by the Company use electrokinetic adsorption, a
proprietary chemical process developed by the Company which alters both membrane
and depth filter media surfaces. Electrokinetic adsorption uses molecular
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.

         The Company typically groups its products into the following
categories:

Membranes

         The typical polymer and nylon membranes that the Company produces
resemble 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. The Company manufactures "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 which
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.

                                        7


<PAGE>   8



ITEM 1.  (Continued)

         The Company's products include those sold under the following labels:
Zetapor(R), Microfluor(R), Polypro(R), ZetaBind(R), Electropor(TM),
BevASSURE(TM), Synchro(R), Acro(R), and AC/PH Lithowater(R).

Depth Filters

         The Company's 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. The Company's 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.

         The Company manufactures depth filters in a wide variety of cartridge
and pore sizes with "absolute" particulate ratings. The filter cartridges are
used in filter housings which 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.

         The Company's depth filter products include those sold under the
following labels: Zeta Plus(R), Betafine(R), MicroKlean(R), Beta-Klean(R),
Betapure(R), MicroWynd(R), and PetroFit(R).

Cleanable Filters and Systems

         The Company designs and manufactures an extensive range of
self-cleaning disc filters, backwash strainers and recleanable metal filters.
The self-cleaning disc filters and back wash 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.

                                        8


<PAGE>   9



ITEM 1.  (Continued)

         The Company's cleanable filters and system products include those sold
under the following labels: Poro-Klean(R), Micro-Screen(R), and Auto-Klean(R).

Housings and Systems

         The Company designs and manufactures 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 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. The Company supplies a broad range of standard housings manufactured
from 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.

         The Company designs and manufactures 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.

         The Company's range of housings are designed and manufactured to
regulatory pressure vessel codes, particularly for applications in the oil and
gas, refinery and petrochemical industries. The Company designs and markets
housings to meet the local regulatory requirements in most countries.

Backlog

         The Company's backlog on October 31, 1996 was $15.3 million as compared
to $14.2 million the previous year. Due to the relatively short manufacturing
cycle and to the Company's use of wholesale distributors, as well as general
industry practice, backlog which typically represents approximately 30 days of
shipments is not deemed to be significant. A substantial portion of the
Company's revenues result from orders booked and billed in the same month.

                                        9


<PAGE>   10



ITEM 1.   (Continued)

Competition

         The markets in which the Company competes are highly competitive. The
Company competes with many domestic and international filtration companies in
its global markets including some which are larger and which possess greater
resources. No one company has a significant presence in all the Company's
markets. The principal methods of competition are product specifications,
performance, quality, knowledge, reputation, technology, distribution
capabilities, service and price. Some of the Company's other competitors are
multi-line companies with other principal sources of income, some of which have
substantially greater resources than the Company; many others are local product
assemblers or service companies that purchase components and supplies such as
valves and tanks from more specialized manufacturers than the Company.

Research and Development and Product Development

         The Company's research and development and engineering activities are
conducted in its own laboratories, supplemented by on-site development and
application of custom design and other technical skills. The Company's research,
development and engineering expenditures, which consisted mainly of the
development of new products, product applications and manufacturing processes
for fiscal year 1996, 1995, and 1994 were approximately $9.9 million, $8.3
million and $7.8 million, respectively, and 5.5 percent, 5.1 percent, and 5.4
percent of net sales, respectively. The Company also incurs additional internal
costs relating to its sales and service personnel for product development.

Manufacturing

         The Company's manufacturing is largely vertically integrated, using
unique, proprietary and patented processes, with many of the major components of
its filtration units manufactured and assembled in its own plants. The Company
has begun to outsource some portfolios of its manufacturing processes, such as
certain segments of metal housing manufacturing. The Company believes that it
generally has sufficient manufacturing capacity for the foreseeable future. The
Company has developed a new, more efficient membrane manufacturing process which
the Company believes provides a competitive advantage through the production of
superior products at lower costs.

                                       10


<PAGE>   11




ITEM 1.   (Continued)

Raw Material Suppliers

         The primary raw materials used by the Company are cotton, nylon,
acrylic, cellulose and various resins, plastics and metals. The Company has not
experienced a shortage of any of its raw materials in the past three years. The
Company believes that there is an adequate supply of all of its raw materials at
competitive prices from a variety of suppliers.

Distribution and Sales

         The Company has over 150 independent distributors of its products in 65
countries. Distributors represent the primary channel in the marketing of the
Company's health care and fluid processing products. The Company has agreements
with all of its major distributors in the United States. In certain markets
outside the United States, the Company uses dedicated sales people. The
Company's potable water products are sold directly to wholesalers, such as
plumbing suppliers, water quality dealers and major resellers, and through
manufacturing representatives.

         The Company's agreements with its 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 the Company and require distributors to carry an adequate stock of its
products. The Company does not believe that the loss of any one of its
distributors would have a significant adverse effect on the Company. The
Company's top ten distributors accounted for approximately 25 percent of its
total sales in fiscal year 1996.

         The Company believes that no end-user of any of its products accounts
for more than 5 percent of sales. As of October 31, 1996, the Company employed
over 250 people as sales people. Of such employees, 155 are located overseas.

                                       11


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ITEM 1.   (Continued)

Trademarks and Patents

         Trademarks and brand name recognition are important to the Company. The
Company generally owns the trademarks under which its products are marketed. The
Company has registered its trademarks and will continue to do so as they are
developed or acquired. The Company has over 300 registered trademarks throughout
the world.

         The Company has over 200 active patents throughout the world and 35
patents pending worldwide. The Company additionally relies on proprietary,
non-patented technologies to a certain extent. Certain of the Company's
employees sign non-disclosure and assignment of proprietary rights agreements.

         The Company protects its intellectual property and believes there is
significant value associated with it. However, the Company believes that the
loss of one or more of its trademarks and patents would not have a material
adverse effect, as it is not heavily dependent on any one or few and is
continually expanding its intellectual estate through new additions.

Seasonality

         The Company's 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

         Management believes that it is 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.

         The Company manufactures certain filtration products that are used as
components in medical devices and the Company must use the Food and Drug
Administration ("FDA") listed materials in the manufacture of these products.
Additionally, the Company maintains Drug Master File ("DMF") files on certain
products sold into the health care market.

                                       12


<PAGE>   13



ITEM 1.   (Continued)

         Certain medical devices marketed and manufactured by the Company's
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 premarket clearance or premarket 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 premarket approval application ("PMA").
A 510(k) clearance will be granted if the submitted information establishes that
the proposed 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 the Company, 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 the Company's business.

Employees

         At October 31, 1996, the Company employed over 1,300 people worldwide
(exclusive of employees of independent distributors), with over 700 employees in
the United States and over 600 employees in other countries.

         (d) Financial information about foreign and domestic
operations and export sales.

         See Note J to the financial statements on page 44 of this document.

                                       13


<PAGE>   14








ITEM 2.  PROPERTIES

         The Company's world headquarters is located in Meriden, Connecticut.
This facility also contains its primary manufacturing and assembly plant. The
following table sets forth the location and approximate size of the Company's
principal properties and facilities, all of which except one are owned by the 
Company.
<TABLE>
<CAPTION>

                                                   Approximate
                                                  Facility Size
          Location                                  (Sq. Ft.)
          --------                                --------------

<S>                                                  <C>    
     Meriden, Connecticut.......................     189,000
     Enfield, Connecticut.......................     120,000
     Stafford Springs, Connecticut..............     165,000
     Kita-Ibaragi, Japan........................      40,000
     Marinque, Brazil...........................      65,000
     Calais, France.............................      50,000
     Mazeres, France............................      40,000
     Sydney, Australia * .......................     290,000
     Singapore ** ..............................      18,546
<FN>
     *  40 percent of this facility is sublet to an unrelated
third party.

    **  Leased facility
</TABLE>

         In addition to the properties listed above, the Company leases one
facility in the United States and 17 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.

     None

ITEM 4A.  EXECUTIVE OFFICERS OF THE REGISTRANT

         Information regarding executive officers of the Registrant is presented
in Part III below and incorporated here by reference.

                                       14


<PAGE>   15



                                     PART II

ITEM 5.   MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
          RELATED STOCKHOLDER MATTERS

         The Company's common stock is quoted on the NASDAQ market under the
symbol CUNO. The following table shows the high and low closing price on NASDAQ
for a share of the Company's common stock since the inception of trading:
<TABLE>
<CAPTION>
                                                       1996
                                                   ------------
                                                   High     Low
                                                   ----     ---
         <S>                                       <C>    <C> 
         Fourth Quarter *........................  $ 16   $ 14 1/2
<FN>
         * Market price information includes the period September 10, 1996 (the
        distribution date of CUNO shares) through the quarter ended October 31,
        1996.
</TABLE>

As of October 31, 1996, there were 3,605 holders of record of the Company's
common stock.

         The Company has not paid any dividends on its common stock since its
inception and does not intend to pay any dividends for the foreseeable future.
The Company is also prohibited from declaring any dividends on its capital stock
through October 31, 1998 in accordance with its senior unsecured revolving
credit facility.

                                       15


<PAGE>   16



ITEM 6.  SELECTED FINANCIAL DATA

CUNO INCORPORATED AND SUBSIDIARIES
SUMMARY OF FINANCIAL DATA, 1991 - 1996 (1)

(in thousands, except per-share data and ratios)
<TABLE>
<CAPTION>

                                1996     1995      1994      1993      1992       1991
                              --------------------------------------------------------
INCOME DATA
<S>                          <C>       <C>       <C>       <C>       <C>       <C>     
  Net sales..................$179,068  $162,699  $143,111  $130,771  $128,195  $131,019
  Gross profit...............  74,220    62,927    50,604    40,605    38,383    44,337
  Distribution and other
     nonrecurring costs (2)..   5,564       --        --        --        --        --
  Interest expense...........     820       691       706       281     1,638     1,353
  Income (loss) before
     income taxes............  11,011     9,563     2,043    (2,549)   (4,814)    4,065
  Net income (loss)..........   5,593     6,101     1,807      (701)   (4,300)    1,209
  Earnings per share:

     Net income (loss).......    0.41      0.45      0.13     (0.05)    (0.32)     0.09

OTHER FINANCIAL DATA
  Total assets...............$138,756  $162,827  $153,071  $145,952  $151,135  $153,524
  Current assets.............  68,154    88,928    77,710    67,805    68,914    71,980
  Less current liabilities...  56,597    39,754    35,483    31,264    33,130    30,077
     Net working capital.....  11,557    49,174    42,227    36,541    35,784    41,903
  Net plant investment.......  48,201    47,931    48,332    49,555    51,563    49,072
  Gross capital expenditures.   6,472     5,728     3,816     3,241     6,729     8,554
  Long-term debt.............  33,772     4,060     5,175     5,580     4,418     6,450
  Shareholders' equity.......  43,148   112,189   106,466   103,743   107,314   111,910
  Shareholders' equity per
     share...................    3.13      8.27      7.85      7.65      7.91      8.25
  Average number of shares
     outstanding during
     the year................  13,566    13,566    13,566    13,566    13,566    13,566

RATIOS
  Gross profit to net sales..   41.4%     38.7%     35.4%     31.1%     29.9%     33.8%
  Net income to net sales....    3.1%      3.7%      1.3%     (0.5)%    (3.4)%     0.9%
  Effective income tax rates.   49.2%     36.2%     11.6%     72.5%    (10.7)%    70.3%
  Net income to average
     shareholders' equity....    7.2%      5.6%      1.7%     (0.7)%    (3.9)%     1.1%
  Ratio of current assets to
     current liabilities.....  1.20:1    2.24:1    2.19:1    2.17:1    2.08.1    2.39.1
  Ratio of long-term debt to
     shareholders' equity
     plus long-term debt.....   43.9%      3.5%      4.6%      5.1%      4.0%      5.4%
<FN>

   (1)  In the Summary of Financial Data above, it was assumed that the common
        shares issued in conjunction with the reorganization were outstanding
        for all periods presented. However, the Company's allocation of debt and
        payment of dividends to Commercial Intertech, which resulted from the
        reorganization and as more fully described in the footnotes to the
        financial statements, are reflected in the 1996 amounts only.

   (2)  Included in 1996 operating income and net income were distribution and
        other nonrecurring costs to the Company associated with the recent
        reorganization. These expenses totaled $4,858 (net of income taxes of
        $706).
</TABLE>

                                       16


<PAGE>   17



ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS 1996-1994

         On July 29, 1996, Commercial Intertech Corp. (Commercial Intertech) of
Youngstown, Ohio announced that its Board of Directors declared a dividend to
its common shareholders of 100 percent of the common stock of CUNO Incorporated
of Meriden, Connecticut, its wholly-owned fluid purification business ("CUNO" or
the "Company"). The new CUNO shares were distributed on September 10, 1996 on
the basis of one common share of CUNO for each Commercial Intertech common share
outstanding, payable to holders of record as of the close of business on August
9, 1996 (the "Distribution" or "Spin-off"). The accompanying consolidated
financial statements present the financial condition and the results of
operations of the Company and its subsidiaries as if the Company were a
stand-alone corporation during the periods shown.

   YEAR ENDED OCTOBER 31, 1996 COMPARED TO YEAR ENDED OCTOBER 31, 1995

        As part of the Spin-off in September 1996, the Company incurred $5.6
million of distribution and other nonrecurring costs. The Company also assumed
$30.0 million of Commercial Intertech's debt, which was accounted for as a
dividend to Commercial Intertech, and declared a dividend of $35.7 million
payable to Commercial Intertech. If the Company had not incurred the
distribution and other nonrecurring costs and if the debt had been outstanding
for the entire year, earnings per share in fiscal year 1996 would have been
$0.70. 

        Net Sales. Net sales of $179.1 million in fiscal year 1996 represented
a 10.1% increase over net sales of $162.7 million in fiscal year 1995. The
effects of foreign currency fluctuations reduced net sales in fiscal year 1996
by $4.0 million as compared to fiscal year 1995.

        Net sales for the Company's U.S. operations increased by $11.5 million
to $86.4 million in fiscal year 1996, a 15.4% increase over fiscal year 1995 net
sales of $74.9 million. The increase in U.S. net sales was generated primarily
by new product introductions in both the health care and fluid processing
markets, including proprietary nylon membrane products. Net sales of these
membrane products increased by more than 100% in the U.S. in fiscal year 1996.
General economic conditions combined with the new sales programs increased the
sale of core products. The sale of both new and existing products also
benefited from management initiatives that placed more focus on in-field
customer service and improved customer support. Much of this new customer
support, especially in the health care and fluid processing markets, has been
provided through the Scientific Application Support Service ("SASS") staff, a
program implemented in fiscal year 1995. The Company continued to increase the
SASS staff in fiscal year 1996. Engineering employment in the Company,
including SASS positions, increased by 28% since the beginning of fiscal year
1994. 

        Net sales for the Company's U.S. operations into the potable water
market increased by 7.6% overall in fiscal year 1996, with certain markets up
sharply. Net sales to the food service segment of this market, which includes
restaurants and institutions, increased significantly in fiscal year 1996 due
to new products as well as successful collaborative projects with key
customers. The sale of home and commercial water purification products improved
in fiscal year 1996 due to the creation of a dedicated sales force for the
product line and the success of new product sales.

        Net sales from international operations increased by $4.9 million to
$92.7 million in fiscal year 1996 from $87.8 million in fiscal year 1995. Net
sales improved in all international operations in fiscal year 1996 when
compared in local currencies. Europe's net sales improved as a result of new
product introductions and further penetration of the Eastern European market.
Japan's net sales, when adjusted for the changes in the value of the Yen,
increased by 8.4%, but in U.S. dollar terms decreased by $1.7 million. Net
sales in other international markets increased by $3.8 million overall in
fiscal year 1996, or 12.7%, as compared to fiscal year 1995. A portion of the
growth in these other markets was due to product line extensions launched over
the past two years, as well as to the introduction of SASS into these markets
during fiscal year 1995.

        Gross Profit. Gross profit increased by $11.3 million to $74.2 million
in fiscal year 1996 from $62.9 million in fiscal year 1995 and increased as a
percentage of net sales to 41.4% from 38.7% over the same period. Approximately
$6.3 million of this increase was attributable to higher sales volume and $5.0
million to a shift to higher margin new products, improved operating
efficiencies in the U.S. and Europe and the extension of certain product lines
into the Brazilian market. A portion of the intangible assets carried by the
Company became fully amortized, reducing amortization expense by $0.9 million. 

        Selling, General and Administrative Expenses. Selling, general and
administrative expenses, excluding distribution and other nonrecurring costs,
increased by 9.0% in fiscal year 1996 as compared to fiscal year 1995, but
decreased by 0.3% as a percentage of net sales. Although all operations
reported increased expenses in fiscal year 1996, no one operation increased
proportionally more than the others. Generally, the increase in selling,
general and administrative expenses stemmed from sales and engineering
personnel recruitment, increased sales training for both Company and
distributor personnel and improved sales and marketing promotional support. 

                                       17



 
<PAGE>   18



ITEM 7.  (Continued)

        Fiscal year 1996 selling, general and administrative expenses included
charges for services provided to the Company by its former parent, Commercial
Intertech. Similar services were provided in fiscal year 1995 and fiscal year
1994. Under an agreement signed prior to the Spin-off, Commercial Intertech
will continue to provide services in fiscal year 1997 as part of the transition
of the Company to stand-alone status. These expenses will be charged to the
Company on a basis consistent with prior years, but are expected to be less
than prior years. These services are not expected to continue beyond fiscal
year 1997. See "Certain Related Party Transactions--Arrangements Between the
Company and Commercial Intertech."

        Operating Income. As a result of the above, operating income increased
by 9.8% to $11.9 million in fiscal year 1996 from $10.8 million in fiscal year
1995. 

    YEAR ENDED OCTOBER 31, 1995 COMPARED TO YEAR ENDED OCTOBER 31, 1994

        Net Sales. Net sales of $162.7 million in fiscal year 1995 represented
a $19.6 million, or 13.7%, increase over net sales of $143.1 million in fiscal
year 1994. Exchange rate fluctuations in fiscal year 1995 primarily benefited
operations in Japan and Europe. All operations recorded increased net sales in
fiscal year 1995.

        Net sales for the Company's U.S. operation increased by $2.9 million to
$74.9 million in fiscal year 1995 from $72.0 million in fiscal year 1994.
Strength in the electronics segment of the fluid processing market supported
the growth. In addition, management initiatives, such as a market focused sales
organization, the creation of the SASS teams to support customers in certain
markets and closer interaction with distributors, which began during the last
half of fiscal year 1994, started to favorably affect net sales during the last
six months of fiscal year 1995.

        Net sales from international operations increased by $16.7 million to
$87.8 million in fiscal year 1995 from $71.1 million in fiscal year 1994. All
of the geographic regions reported improvements in fiscal year 1995. Net sales
in Europe increased in fiscal year 1995 by $6.0 million, or 27.9%, as compared
to fiscal year 1994, with much of the gain attributable to the health care
market. 

        Gross Profit. Gross profit for the Company increased by $12.3 million
to $62.9 million in fiscal year 1995 from $50.6 million in fiscal year 1994 and
increased as a percentage of net sales from 35.4% to 38.7% over the same
period. Much of the improvement was from U.S. operations and was the result of
increased sales in the potable water market and the divestment in fiscal year
1994 of an underperforming operation servicing the fluid processing market.
Additionally, new management in the European manufacturing operation improved
efficiencies in fiscal year 1995.

        Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $6.5 million, or 14.2%, to $52.1 million
in fiscal year 1995 from $45.6 million in fiscal year 1994 and increased as a
percentage of net sales to 32.0% from 31.9% over the same period. Much of the
increase in these expenses related to the costs associated with enlarging the
sales staff worldwide. From the end of fiscal year 1994 to the end of fiscal
year 1995, the number of sales personnel in the Company increased by 19.0%.

        Operating Income. As a result of the above, operating income increased
by 118% to $10.8 million in fiscal year 1995 from $4.9 million in fiscal year
1994. 

OTHER MATTERS

        Distribution and Other Nonrecurring Costs. The Company recorded $5.6
million in distribution and other nonrecurring costs during fiscal year 1996
($4.9 million after tax or $0.36 per share), of which $3.5 million was related
directly to the Spin-off, $1.6 million was associated with establishing the
Company as a stand-alone entity and $0.5 million was related to the improvement
of certain foreign distribution channels in conjunction with stand-alone
activities. Certain of these costs are not tax-deductible. 


                                       18


<PAGE>   19



ITEM 7.  (Continued)

        Nonoperating Activity. Net nonoperating income and expenses improved by
$0.4 million in fiscal year 1996 and $1.7 million in fiscal year 1995. Fiscal
year 1996 was favorably impacted by a $0.3 million reduction in exchange losses
and $0.1 million gain on the sale of idle assets. In fiscal year 1995 exchange
losses were $0.5 million less than fiscal year 1994. Additionally, a $1.1
million loss on the sale of assets was recorded in fiscal year 1994 as the
result of the Company's disposition of an underperforming operation.

        Taxes. The Company's effective tax rate for fiscal year 1996 was 49%,
primarily as a result of the nondeductibility of certain distribution expenses
related to the Spin-off which increased the rate by 12 percentage points. The
adjusted fiscal year 1996 tax rate is comparable to the fiscal year 1995
effective rate of 36%. The fiscal year 1994 effective tax rate of 12% was the
result of the reversal of tax valuation adjustments associated with certain
foreign operations. 

        Inflation Effects on Operations. Inflation had a negligible effect on
the Company's operations during fiscal years 1996 and 1995. The Company
estimates that inflationary effects, in aggregate, were generally recovered or
offset through increased pricing or cost reductions in both fiscal years. 


                                       19


<PAGE>   20




ITEM 7.  (Continued)

LIQUIDITY AND CAPITAL RESOURCES

         During fiscal year 1996, the Company generated cash from operating
activities of $7.9 million. As a result of the increased level of operations,
both accounts receivable and accounts payable increased, by a net of $2.6
million in fiscal year 1996 and a net of $2.4 million in fiscal year 1995. Due
to a focused program to improve inventory management, inventories declined by
$3.2 million in fiscal year 1996, increased $0.6 million in fiscal year 1995,
and declined $1.3 million in fiscal year 1994.

         During 1996, the Company entered into an interim agreement for a $55.0
million bridge loan to provide funding for $30.0 million in debt assumed from
Commercial Intertech at the time of the Spin-off and to support operating
requirements. On October 31, 1996, the bridge loan was replaced with the Credit
Facility. The Company pays variable interest rates under the Credit Facility
based upon prime interest or LIBOR rates, plus an applicable margin. The Credit
Facility prohibits the Company from declaring dividends during fiscal years 1997
and 1998. In fiscal year 1996, dividends of $36.9 million were declared payable
to Commercial Intertech ($35.7 million by the Company in connection with the
Spin-off and $1.2 million by CUNO Pacific Pty. Ltd.). As of October 31, 1996,
$3.5 million had been paid, $28.8 million had been partially offset against a
receivable from Commercial Intertech and $4.6 million remained unpaid.

         Capital expenditures were $6.3 million in fiscal year 1996, $5.2
million in fiscal year 1995 and $2.9 million in fiscal year 1994. Budgeted
fiscal year 1997 capital spending is $10.5 million, the majority of which
pertains to equipment related to manufacturing capacity expansion and
improvements. The Company believes that funds from operations, current lines of
credit and the net proceeds from the sale of Common Stock offered hereby will be
sufficient to meet its anticipated needs for the next twelve months for working
capital, capital expenditures and general corporate purposes.

                                       21


<PAGE>   21




ITEM 7.  (Continued)

BUSINESS OUTLOOK

         Sales orders in the fourth quarter of 1996 in South America and Europe
were impacted by generally weak economic conditions in the regions, rather than
specific market conditions. Macroeconomics are forecasted to strengthen somewhat
in both of these regions during the first quarter of 1997 and steadily improve,
although slowly, throughout 1997. In the U.S. and Asia economic conditions have
remained nearly constant throughout 1996. Economic forecasts indicate that
growth in the U.S. is expected to remain steady but slow during the year. In
Asia, growth in the electronics market slowed in 1996 but is expected to improve
slightly in 1997. While Japan and Australian economies are somewhat uncertain,
overall, the Company expects results in the Asian region to be generally
favorable again in 1997 as penetration of fluid processing markets such as oil
and gas refining and chemical processing continues.

         The Company is committed to continuing its present strategy which has
proven successful to date. This strategy includes increasing the number and
frequency of new product introductions into all three of the company's major
markets, implementing additional customer focused programs in both marketing and
sales, and expanding use of the S.A.S.S support function. The Company expects to
continue its program of capital investment begun in 1996 with $10.5 million
budgeted for 1997. Much of this spending will be focused on expanding capacity
and productivity in membrane manufacturing and to improve processes, production
practices, and systems in other parts of the Company. Cash provided by
operations and standing lines of credit are expected to be adequate to fund the
Company's growth.

                                       22


<PAGE>   22



ITEM 7.  (Continued)

FORWARD LOOKING INFORMATION

         Because CUNO wants to provide shareholders with more meaningful and
useful information, this Annual Report contains certain statements which reflect
the Company's current expectations regarding the future results of operations,
performance and achievements of the Company. CUNO has tried, wherever possible,
to identify these "forward looking" statements by using words such as
"anticipate," "believe," "estimate," "expect" and similar expressions. These
statements reflect the Company's current beliefs and are based on information
currently available to it. Accordingly, these statements are subject to risks
and uncertainties which could cause the Company's actual results, performance or
achievements to differ materially from those expressed in, or implied by these
statements. These risks and uncertainties include the following: absence of
history as a stand-alone company; volumes of shipments of the Company's
products, changes in the Company's product mix and product pricing; costs of raw
materials; the rate of economic and industry growth in the United States and the
other countries in which the Company conducts its business; economic and
political conditions in the foreign countries in which the Company conducts a
substantial part of its operations and other risks associated with international
operations including taxation policies, exchange rate fluctuations and the risk
of expropriation; the Company's ability to protect its technology, proprietary
products and manufacturing techniques; changes in technology, changes in
legislative, regulatory or industrial requirements and risks generally
associated with new product introductions and applications; and domestic and
international competition in the Company's global markets. The Company is not
obligated to update or revise these "forward looking" statements to reflect new
events or circumstances.

                                       23


<PAGE>   23



ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CUNO INCORPORATED AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
<TABLE>
<CAPTION>

                                             Year Ended October 31,
                                           1996       1995       1994
                                         --------   --------   ------
                                           (in thousands, except
                                       per share and common share data)

<S>                                    <C>         <C>         <C>     
Net sales............................. $179,068    $162,699    $143,111
Less costs and expenses:
   Cost of products sold..............  104,848      99,772      92,507
   Selling, general and administrative
     expenses.........................   56,750      52,087      45,626
   Distribution and other
     nonrecurring costs...............    5,564         --          --
                                       ---------   ---------   ---------
                                        167,162     151,859     138,133
                                       ---------   ---------   ---------

Operating income......................   11,906      10,840       4,978

Nonoperating income (expense):
   Interest income....................      156         145          88
   Interest expense...................     (820)       (691)       (706)
   Exchange losses....................     (171)       (449)       (933)
   Gain (loss) on sale of assets......      121         --       (1,053)
   Other..............................     (181)       (282)       (331)
                                       ---------   ---------   ---------
                                           (895)     (1,277)     (2,935)
                                       ---------   ---------   ---------
Income before income taxes............   11,011       9,563       2,043
Provision for income taxes:
   Current............................    5,293       4,697       1,491
   Deferred...........................      125      (1,235)     (1,255)
                                       ---------   ---------   ---------
                                          5,418       3,462         236
                                       ---------   ---------   ---------

Net income............................ $  5,593    $  6,101    $  1,807
                                       =========   =========   =========

Earnings per common share.............   $ 0.41      $ 0.45      $ 0.13

Weighted average common shares
   outstanding........................ 13,565,922  13,565,922  13,565,922
</TABLE>





See notes to consolidated financial statements.

                                       24


<PAGE>   24



ITEM 8.  (Continued)

CUNO INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                          October 31,
                                                        1996      1995
                                                     --------------------
                                                        (in thousands)
<S>                                                  <C>       <C>     
Assets
CURRENT ASSETS
   Cash and cash equivalents........................ $  5,244  $  6,740
   Accounts and notes receivable (less
     allowances of $1,133 and $1,136, respectively).   36,944    33,381
   Inventories......................................   19,149    21,763
   Deferred income taxes............................    5,333     5,766
   Prepaid expenses and other current assets........    1,484     2,511
   Receivables from related party...................      --     18,767
                                                     --------- --------
             Total current assets...................   68,154    88,928

NONCURRENT ASSETS
   Intangible assets................................   19,695    21,663
   Pension assets...................................    1,174     3,264
   Other noncurrent assets..........................    1,532     1,041
                                                     --------- --------
             Total noncurrent assets................   22,401    25,968

PROPERTY, PLANT AND EQUIPMENT, NET..................   48,201    47,931
                                                     --------- --------

                 Total assets....................... $138,756  $162,827
                                                     ========= ========
</TABLE>


                                       25


<PAGE>   25



ITEM 8.  (Continued)

CUNO INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                          October 31,
                                                        1996      1995
                                                     -------------------
                                                        (in thousands)
<S>                                                  <C>       <C>     
Liabilities and Shareholders' Equity
CURRENT LIABILITIES
   Bank loans......................................  $ 10,690  $ 10,440
   Accounts payable................................    12,719    10,780
   Accrued payroll and related taxes...............     9,084     8,446
   Accrued other expenses..........................     6,986     6,105
   Accrued income taxes............................     1,360     2,947
   Current portion of long-term debt...............       962     1,036
   Dividends payable to related party..............     4,612       --
   Payable to related party........................    10,184       --
                                                     --------- ---------
                Total current liabilities..........    56,597    39,754

NONCURRENT LIABILITIES
   Long-term debt..................................    33,772     4,060
   Deferred income taxes...........................     3,670     4,067
   Retirement benefits.............................     1,569     2,757
                                                     --------- ---------
                Total noncurrent liabilities.......    39,011    10,884

SHAREHOLDERS' EQUITY
   Preferred stock, $.001 par value; 2,000,000
     shares authorized, no shares issued
     and outstanding...............................       --        --
   Common stock, $.001 par value;
     Authorized: 50,000,000 shares
       Issued: 1996 - 13,774,568 shares
          (excluding 6,854 in treasury)
               1995 - 13,565,922 shares ...........        14        14
   Additional paid-in-capital......................     6,736     3,391
   Retained earnings...............................    33,636   102,245
   Unearned compensation...........................    (3,448)      --
   Minimum pension liability adjustment............      (811)      --
   Translation adjustments.........................     7,021     6,539
                                                     --------- ---------
                Total shareholders' equity.........    43,148   112,189
                                                     --------- ---------

         Total liabilities and shareholders' equity  $138,756  $162,827
                                                     ========= =========
</TABLE>

See notes to consolidated financial statements.

                                       26


<PAGE>   26



ITEM 8.  (Continued)

CUNO INCORPORATED AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>


Year Ended October 31,                    1996      1995      1994
                                     -----------------------------------
                                    (in thousands, except per share data)
<S>                                     <C>       <C>       <C>     
COMMON STOCK
   Balance at end of year...........    $     14  $     14  $     14

ADDITIONAL PAID-IN CAPITAL
   Balance at beginning of year.....       3,391     3,391     3,391
   Performance shares issued........       3,448       --        --
   Shares repurchased...............        (103)      --        --
                                        --------- --------- --------
   Balance at end of year...........       6,736     3,391     3,391

RETAINED EARNINGS
   Balance at beginning of year.....     102,245    97,284    97,507
   Net income for the year..........       5,593     6,101     1,807

   Less:
      Dividends to Commercial
        Intertech...................      36,943       --      1,958
      Transfer of Commercial
        Intertech debt..............      30,000       --        --
      Divisional equity retained by
        Commercial Intertech........       7,259     1,140        72
                                        --------- --------- --------
   Balance at end of year...........      33,636   102,245    97,284

UNEARNED COMPENSATION
   Balance at beginning of year.....         --        --        --
   Performance shares issued........      (3,448)      --        --
                                        --------- --------- --------
   Balance at end of year...........      (3,448)      --        --

MINIMUM PENSION LIABILITY
   Balance at beginning of year.....         --        --        --
   Other............................        (811)      --        --
                                        --------- --------- --------
   Balance at end of year...........        (811)      --        --

TRANSLATION ADJUSTMENTS
   Balance at beginning of year.....       6,539     5,777     2,831
   Net change for year..............         482       762     2,946
                                        --------- --------- --------
   Balance at end of year...........       7,021     6,539     5,777

        Total Shareholders' Equity..    $ 43,148  $112,189  $106,466
                                        ========= ========= ========

Shareholders' equity per share of
    common stock....................       $3.13     $8.27     $7.85
                                        ========= ========= ========
</TABLE>



See notes to consolidated financial statements.

                                       27


<PAGE>   27



ITEM 8.  (Continued)

CUNO INCORPORATED AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>

                                                           Year Ended October 31,
                                                           1996    1995      1994
                                                        -------------------------
                                                               (in thousands)
<S>                                                     <C>       <C>       <C>     
OPERATING ACTIVITIES:
   Net income . . . . . . . . . . . . . . . . . . . . . $  5,593  $  6,101  $  1,807
   Adjustments to reconcile net income to net
      cash provided by operating activities:
         Provision for depreciation and amortization. .    7,475     7,929     8,154
         Loss on sale of fixed assets . . . . . . . . .      --        --      1,053
         Pension plan credits . . . . . . . . . . . . .      692     1,019       676
         Change in deferred income taxes. . . . . . . .     (239)   (1,222)   (1,143)
         Changes in current assets and liabilities:
            (Increase) in accounts receivable . . . . .   (5,050)   (3,839)     (756)
            Decrease (increase) in inventories. . . . .    3,224      (636)    1,301
            Decrease (increase) in prepaid expenses
               and other current assets . . . . . . . .      838      (292)      166
            Increase in receivable from affiliate . . .   (3,833)   (3,128)   (4,814)
            Increase in accounts payable and accrued
               expenses . . . . . . . . . . . . . . . .    2,425     1,477     1,323
            (Decrease) increase in accrued income
               taxes. . . . . . . . . . . . . . . . . .   (3,236)      335       229
                                                        --------  --------  -------- 

   Net cash provided by operating activities. . . . . .    7,889     7,744     7,996


INVESTING ACTIVITIES:
   Proceeds from sale of fixed assets . . . . . . . . .       43       113       109
   Investment in intangibles. . . . . . . . . . . . . .      --       (343)     (207)
   Capital expenditures . . . . . . . . . . . . . . . .   (6,325)   (5,234)   (2,927)
                                                        --------  --------  -------- 

   Net cash (used) by investing activities. . . . . . .   (6,282)   (5,464)   (3,025)

FINANCING ACTIVITIES:
   Proceeds from long-term debt . . . . . . . . . . . .   61,000     4,012       -- 
   Principal payments on long-term debt . . . . . . . .  (30,987)   (4,900)     (882)
   Net borrowings under bank loan agreements. . . . . .    1,311       880      (104)
   Conversion of other assets . . . . . . . . . . . . .     (701)        1        32
   Assumed debt paid to Commercial Intertech. . . . . .  (30,000)      --        --
   Dividends paid to Commercial Intertech . . . . . . .   (3,534)      --     (1,958)
                                                        --------  --------  -------- 

        Net cash (used) by financing activities . . . .   (2,911)       (7)   (2,912)

Effect of exchange rate changes on cash and
   cash equivalents . . . . . . . . . . . . . . . . . .     (192)       59       396
                                                        --------  --------  -------- 

Net (decrease)increase in cash and cash equivalents . .   (1,496)    2,332     2,455
Cash and cash equivalents at beginning of year. . . . .    6,740     4,408     1,953
                                                        --------  --------  -------- 

Cash and cash equivalents at end of year. . . . . . . . $  5,244  $  6,740  $  4,408
                                                        ========  ========  ======== 

Supplemental disclosures:
Cash paid during the year for:
   Interest . . . . . . . . . . . . . . . . . . . . . . $    694  $    716  $    703
   Income taxes . . . . . . . . . . . . . . . . . . . .    9,732     4,338     1,149

Noncash transactions:
   Assumption of Commercial Intertech debt. . . . . . . $ 30,000  $    --   $    --
   Dividends payable to Commercial Intertech offset
      against receivable from affiliate . . . . . . . .   28,797       --        --
   Dividends declared to Commercial Intertech
      but unpaid. . . . . . . . . . . . . . . . . . . .    4,612       --        --
</TABLE>


See notes to consolidated financial statements.

                                       28


<PAGE>   28



ITEM  8. (Continued)

                       CUNO INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - ORGANIZATION AND ACCOUNTING POLICIES

Organization:

         On July 11, 1996, Commercial Intertech Corp. ("Commercial Intertech")
initiated a plan to separate its Fluid Purification group subsidiaries and
divisions (the "Company" or "CUNO") from the rest of Commercial Intertech's
businesses in a tax-free transaction, subject to regulatory approval. The
following companies and divisions made up the Fluid Purification Group companies
- CUNO Incorporated, USA; CUNO Pacific Pty. Ltd., Australia; Commercial
Intertech do Brasil, Ltda., Brazil; CUNO Europe S.A., France; CUNO KK, Japan;
CUNO Filtration Asia Pte. Ltd., Singapore; and divisions located in England,
Germany and Italy.

         On July 29, 1996, Commercial Intertech declared a distribution of 100
percent of its interest in the Company to be effected by a distribution on
September 10, 1996 of one share of common stock of the Company for each share of
Commercial Intertech held by existing shareholders of Commercial Intertech,
based on a record date of August 9, 1996. On that date, there were approximately
13,566,000 common shares of Commercial Intertech outstanding.

         As part of the distribution, the Company's Articles of Incorporation
were amended to provide for the authorization of 2,000,000 shares of $.001 par
value Preferred Stock and 50,000,000 shares of $.001 par value Common Stock. No
preferred shares were issued with the distribution (see Note D).

         In conjunction with the reorganization, the Company assumed $30,000,000
of Commercial Intertech's debt which was accounted for as a dividend to
Commercial Intertech. The debt was repaid from the proceeds of a credit facility
entered into by the Company shortly after the reorganization (see Note C). In
addition, the Company declared a dividend of $35,675,000 payable to Commercial
Intertech. Of this amount, $4,612,000 remains payable at October 31, 1996. In
addition, CUNO Pacific Pty. Ltd. declared and paid a $1,268,000 dividend in
February 1996.

                                       29


<PAGE>   29



ITEM  8. (Continued)

         The accounts of the Company represent the consolidation of all entities
formerly organized as the Fluid Purification Group of Commercial Intertech. The
transfer of Commercial Intertech's interests and assets in the business and
divisions which comprise the Company has been accounted for as a reorganization
of entities under common control in a manner similar to a pooling of interests
as of the time of the combination. Accordingly, the historical basis is carried
over. The Company's shareholders' equity has been retroactively restated as if
the reorganization had occurred at the beginning of the earliest period
presented. The accompanying consolidated financial statements represent the
financial condition of the Company and the results of operations as if the
Company was a stand-alone corporation during the years shown. References to
subsidiaries include those companies and divisions which have been organized
under the consolidated Company. All significant transactions between the Company
and its subsidiaries have been eliminated.

         The Company and Commercial Intertech have entered into a Tax Allocation
Agreement providing, among other things, for the respective rights and
obligations of Commercial Intertech and the Company concerning tax liabilities
(including the allocation of and indemnification for tax liabilities) in
connection with the distribution. In addition, the Company and Commercial
Intertech have entered into a Distribution and Interim Services Agreement which
provides that certain services which have historically been provided to the
Company by Commercial Intertech will continue to be provided to the Company
following the Distribution Date, at rates specified in such agreement, for a
period of up to twelve months following the Distribution Date, with certain
exceptions. The Tax Allocation Agreement and Distribution and Interim Services
Agreement are not expected to result in expenses materially different from those
reflected in the historical financial statements.

         Commercial Intertech provides certain management and administrative
services to the Company. Amounts of Commercial Intertech's general corporate,
accounting, legal, and other administrative costs related to such services have
been allocated to the Company based on actual dollars spent or the relative
percentage of time each department spends providing services to the Company.
Management believes that this allocation method provides the Company with a
reasonable amount of such expenses.

Consolidation:

         The accounts of the Company and all of its subsidiaries are included in
the consolidated financial statements. All significant intercompany accounts and
transactions are eliminated in consolidation.

                                       30


<PAGE>   30



ITEM  8. (Continued)

Inventories:

         Inventories are stated at the lower of cost or market. Inventories in
the United States are primarily valued on the last-in, first-out (LIFO) cost
method. The method used for all other inventories is first-in, first-out (FIFO).
Approximately 48 percent (49 percent in 1995) of worldwide inventories are
accounted for using the LIFO method. Inventories as of October 31 consisted of
the following:
<TABLE>
<CAPTION>

                                      1996      1995
                                      ----      ----
                                      (in thousands)
<S>                                 <C>       <C>    
     Raw materials................. $ 2,817   $ 3,063
     Work in process...............   6,503     6,784
     Finished goods................   9,829    11,916
                                    --------  --------
                                    $19,149   $21,763
                                    ========  ========
</TABLE>

         If all inventories were priced using the FIFO method, which
approximates replacement cost, inventories would have been $2,296,000 higher in
1996 and $2,220,000 higher in 1995.

INTANGIBLES:

         Intangible assets at October 31 are summarized as follows:
<TABLE>
<CAPTION>

                                                 1996      1995
                                                 ----      ----
                                                 (in thousands)

    <S>                                         <C>       <C>   
     Goodwill, less accumulated amortization
       (1996 - $5,519,000; 1995 - $4,944,000)...$16,164   $16,739
     Other intangibles, less accumulated
       amortization (1996 -$21,833,000;
       1995 - $20,440,000)......................  3,531     4,924
                                                --------  --------
                                                $19,695   $21,663
                                                ========  ========
</TABLE>

         Goodwill, which is the excess of cost over the fair value of net assets
acquired, generally is amortized on a straight-line basis over 40 years.

         Other intangibles, including patents, know-how and trademarks, are
carried at their appraised value on the acquisition date less accumulated
amortization, which is provided using the straight-line method over 10 to 25
years.

                                       31


<PAGE>   31




ITEM  8. (Continued)

Properties And Depreciation:

         Property, plant and equipment are recorded at cost. Buildings and
equipment are depreciated over their useful lives, principally by use of the
straight-line method, which range from 10 to 40 years for buildings and 2.5 to
20 years for machinery and equipment.

Impairment of Long-Lived Assets:

         In the event that facts and circumstances indicate that the carrying
value of intangibles and long-lived assets or other assets may be impaired, an
evaluation of recoverability would be performed. If an evaluation is required,
the estimated future undiscounted cash flows associated with the asset is
compared to the asset's carrying amount to determine if a write-down is
required.

Income Taxes:

         The Company uses the liability method in measuring the provision for
income taxes and recognizing deferred tax assets and liabilities on the balance
sheet. Deferred income tax assets and liabilities principally arise from
differences between the tax basis of the asset or liability and its reported
amount in the consolidated financial statements. Deferred tax balances are
determined by using provisions of the enacted tax laws; the effects of future
changes in tax laws or rates are not anticipated.

         Provisions are made for appropriate income taxes on undistributed
earnings of foreign subsidiaries which are expected to be remitted to the parent
company in the near term. The cumulative amount of unremitted earnings of
subsidiaries, which aggregated approximately $3,000,000 at October 31, 1996, is
deemed to be indefinitely reinvested and, accordingly, no provision for US
federal and state income taxes has been provided thereon. Upon distribution of
those earnings in the form of dividends or otherwise, the Company would be
subject to both US income taxes (subject to an adjustment for foreign tax
credits) and withholding taxes payable to the various foreign countries.
Determination of the amount of any unrecognized deferred US tax liability is not
practicable because of the complexities associated with its hypothetical
calculation.

                                       32


<PAGE>   32




ITEM 8.  (Continued)

Translation of Foreign Currencies:

         The financial statements of foreign entities are translated in
accordance with Statement of Financial Accounting Standards (SFAS) No. 52,
except for those entities located in highly inflationary countries. Under this
method, revenue and expense accounts are translated at the average exchange rate
for the year while all assets and liability accounts are translated into US
dollars at the current exchange rate. Resulting translation adjustments are
recorded as a separate component of shareholders' equity and do not affect
income determination.

Cash Equivalents:

         The Company considers all highly liquid investments with a maturity of
three months or less, when purchased, to be cash equivalents. Cash equivalents
consist of time deposits in financial institutions at October 31, 1996 and 1995.

Revenue Recognition:

         Revenue is recognized when the earning process is complete and the
risks and rewards of ownership have transferred to the customer, which is
considered to have occurred upon shipment of the finished product.

Advertising:

         Advertising costs are expensed as incurred and included in "selling,
general and administrative expenses". Advertising expenses were $3,124,000,
$2,906,000 and $2,738,000 for 1996, 1995 and 1994, respectively.

Distribution and Other Nonrecurring Costs:

         Distribution and other nonrecurring costs represent incremental costs
to the Company associated with the recent reorganization. Such costs are
primarily comprised of professional service fees and costs associated with
combining operations under a unified management.

Earnings Per Share:

         All share and per-share information has been retroactively restated to
reflect the distribution in a manner similar to a stock split. In determining
the weighted average number of common shares outstanding, it was assumed that
the shares issued in conjunction with the reorganization were outstanding during
each year presented. Fully diluted earnings per share is not presented as the
effect of other common stock equivalents on the 1996 earnings per share
calculation was not material.

                                       33


<PAGE>   33




ITEM  8. (Continued)

Uses 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 revenue and expenses during the reporting
period. Actual results could differ from those estimates.

Newly Issued Accounting Standards:

         In October 1995, SFAS No. 123, "Accounting for Stock-Based
Compensation" was issued. This standard establishes a fair value method of
accounting for or disclosing stock-based compensation plans. In 1997, the
Company intends to adopt the disclosure provisions of this standard which
requires disclosing the pro forma consolidated net income and earnings per share
amounts assuming the fair value method was effective on November 1, 1995. The
adoption of the disclosure provisions will not affect consolidated results of
operations, financial position, or cash flows.

         In October 1996, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued Statement of Position
("SOP") 96-1, "Environmental Remediation Liabilities." The SOP is effective for
fiscal years beginning after December 15, 1996. The SOP does not make changes to
existing accounting rules, but it clarifies how existing authoritative guidance
on loss contingencies should be applied in determining environmental
liabilities. The Company does not believe the SOP will have any material impact
on its financial position or results of operations. The Company will be required
to report under the SOP in its 1998 financial statements.

                                       34


<PAGE>   34



ITEM 8.  (Continued)

NOTE B - PROPERTY, PLANT AND EQUIPMENT

         Property, plant and equipment is comprised of the following:
<TABLE>
<CAPTION>

                                                   1996     1995
                                                   ----     ----
                                                   (in thousands)

<S>                                              <C>      <C>    
     Land and land improvements................. $ 6,495  $ 6,672
     Buildings..................................  26,301   27,706
     Machinery and equipment....................  58,749   56,550
     Construction in progress...................   4,605    2,451
                                                 -------  -------

                                                  96,150   93,379
     Less depreciation and amortization.........  47,949   45,448
                                                 -------  -------

                                                 $48,201  $47,931
                                                 =======  =======
</TABLE>

     Depreciation expense was $5,614,000 in 1996, $5,330,000 in
1995 and $5,395,000 in 1994.

NOTE C - DEBT

         Long-term debt obligations are summarized below:
<TABLE>
<CAPTION>

                                               1996    1995
                                               ----    ----
                                              (in thousands)

<S>                                          <C>      <C>   
     Revolving credit....................... $31,000  $   --
     Mortgages..............................   3,675    4,973
     Other..................................      59      123
                                             -------  -------
                                              34,734    5,096
     Less current portion...................     962    1,036
                                             -------  -------
                                             $33,772  $ 4,060
                                             =======  =======
</TABLE>

         During the fourth quarter of fiscal 1996, the Company entered into a
$55.0 million bridge loan agreement to pay Commercial Intertech the $30.0
million of debt assumed as part of the spin-off in the form of a dividend. The
Company then replaced the bridge financing with a $60.0 million senior unsecured
revolving credit facility.

                                       35


<PAGE>   35



ITEM 8.  (Continued)

         The new senior unsecured revolving credit facility was used to repay
all outstanding debt associated with the bridge financing and for other general
purposes. The credit facility matures in five years. The Company pays a variable
per annum fee on the unused amount of the commitment, payable quarterly in
arrears. The rate was 0.125 percent at October 31, 1996. The interest rate on
outstanding borrowings at October 31, 1996 was 8.25 percent. The facility has
interest options determinable by the Company based upon prime interest or LIBOR
rates plus an applicable margin. These significantly reduced rates were not
available to the Company on October 31, 1996 because the loan was not fully
syndicated. Syndication has been completed and the rate at November 30, 1996 was
5.97 percent. The Company has $7.0 million in outstanding letters of credit at
October 31, 1996 which reduces the availability of this credit facility. The
credit agreement includes covenants which require the maintenance of certain
financial ratios. The Company was in compliance with these covenants at October
31, 1996. The Company is prohibited from declaring dividends during fiscal 1997
and 1998. However, the Company may repurchase a maximum of $5,000,000 in
treasury stock during 1997 and 1998 for its employee benefit plans.

         Mortgages relate to two manufacturing facilities. Two loans relating to
a Japanese manufacturing facility bear interest at 1.75 and 1.88 percent, and
mature through the year 2000. One of the two loans is secured with property and
equipment in KitaIbaragi, Japan (net book value at October 31, 1996
-$5,466,000). The second loan is unsecured. A facility located in Enfield,
Connecticut collateralizes a loan which bears interest at 5.0 percent, also
maturing in the year 2000. The Enfield facility's net book value at October 31,
1996 was $3,885,000.

         Principal payments due in the five years after
October 31, 1996 are:

                           (in thousands)
          1997................................$   962
          1998................................    913
          1999................................    924
          2000................................    935
          2001................................ 31,000

         The Company had available unused short-term lines of credit in various
countries totaling approximately $9.2 million at October 31, 1996. Drawdowns
under the unused short-term lines of credit are subject to the lender's
approval.

         Outstanding bank loans at October 31, 1996 and 1995 had weighted
average interest rates of 1.4 percent and 2.5 percent, respectively. The bank
loans and unused short-term lines of credit are payable upon demand and are
unsecured. There are no significant commitment fees related to the bank loans or
unused lines of credit.

                                       36


<PAGE>   36



ITEM 8.  (Continued)

NOTE - D CAPITAL STOCK

         The authorized capital stock of the Company consists of 50,000,000
shares of Common Stock, par value $.001 per share, and 2,000,000 shares of
Preferred Stock, par value $.001 per share.

Common Stock

         In conjunction with the reorganization, 13,565,922 shares of Common
Stock were issued excluding shares of Common Stock reserved for issuance upon
exercise of options granted under the Company's Stock Option Plans. Subject to
preferences that may be applicable to any outstanding Preferred Stock, holders
of Common Stock are entitled to receive ratably such dividends as may be
declared by the Board of Directors out of funds legally available therefor.
Holders of Common Stock are entitled to one vote per share in all matters to be
voted upon by shareholders. In the event of a liquidation, dissolution or
winding up of the Company, holders of Common Stock are entitled to share ratably
in all assets remaining after payment of the Company's liabilities and the
liquidation preferences of any outstanding Preferred Stock. Holders of Common
Stock have no preemptive rights and no rights to convert their Common Stock into
any other securities, and there are no redemption provisions with respect to
such shares. All of the outstanding shares of Common Stock are subject to, and
may be adversely affected by, the rights of the holders of shares of any series
of Preferred Stock which the Company may issue in the future.

Preferred Stock

         The authorized class of Preferred Stock may be issued in series from
time to time with such designations, relative rights, priorities, preferences,
qualifications, limitations and restrictions thereof as the Board of Directors
determines. The rights, priorities, preferences, qualifications, limitations and
restrictions of different series of Preferred Stock may differ with respect to
dividend rates, amounts payable on liquidation, voting rights, conversion
rights, redemption provisions, sinking fund provisions and other matters. The
Board of Directors may authorize the issuance of Preferred Stock which ranks
senior to the Common Stock with respect to the payment of dividends and the
distribution of assets upon liquidation. In addition, the Board is authorized to
fix the limitations and restrictions, if any, upon the payment of dividends on
Common Stock to be effective while any shares of Preferred Stock are
outstanding.

                                       37


<PAGE>   37



ITEM 8.  (Continued)

NOTE E - OPERATING LEASES

         The Company has entered into certain lease agreements for various
facilities and equipment. Rent expense under operating leases was approximately
$1,672,000 in 1996, $1,729,000 in 1995, and $1,532,000 in 1994.

         Future minimum lease payments under noncancellable operating leases
with an initial term of one year or more were as follows at October 31, 1996:

                             (in thousands)
          1997...................................$  705
          1998...................................   509
          1999...................................   380
          2000...................................   349
          2001...................................   348
          Thereafter.............................   234
                                                 ------
          Total minimum lease payments...........$2,525
                                                 ======

NOTE F - BENEFIT PLANS

         The Company maintains noncontributory defined benefit plans for
substantially all of its United States employees. Pension benefits for the
hourly employees covered by these plans are expressed as a flat benefit rate
times years of continuous service. The salaried employees have previously been
included in a defined benefit pension plan sponsored by Commercial Intertech.
Benefits for salaried employees are now provided under a successor plan with
essentially the same benefits which are based upon a percentage of the
employee's average compensation during the preceding ten years, reduced by 50
percent of the Social Security Retirement Benefit. The Company's funding policy
is to contribute amounts to the plans sufficient to meet the minimum funding
requirements set forth in the Employee Retirement Income Security Act of 1974,
plus such additional amounts as may be deemed appropriate from time to time.

         The Company also accounts for pension costs under the provisions of
SFAS No. 87 for contributory defined benefit pension plans covering its
employees in Japan. Benefits under these plans are based on years of service and
compensation in the period immediately preceding retirement. Funding is
predicated on minimum contributions as required by local laws and regulations
plus additional amounts, if any, as may be deemed appropriate. Some employees of
other foreign operations also participate in postemployment benefit arrangements
not subject to the provisions of SFAS No. 87.

                                       38


<PAGE>   38



ITEM 8.  (Continued)

         The following table sets forth the funded status and amounts recognized
in the Consolidated Balance Sheets at October 31, 1996 and 1995 for the
Company's US and foreign defined benefit pension plans. Other foreign pension
plans do not determine net assets or the actuarial present value of accumulated
benefits as calculated and disclosed herein:
<TABLE>
<CAPTION>

                                                    1996      1995
                                                    ----      ----
                                                     (in thousands)

<S>                                               <C>       <C>    
Actuarial present value of benefit obligations:
 Vested benefit obligation....................... $(17,546) $(18,426)
                                                  ========= =========

 Accumulated benefit obligation.................. $(20,071) $(20,492)
                                                  ========= =========

Projected benefit obligation..................... $(24,567) $(26,009)
Market value of plan assets......................   19,632    16,921
                                                  --------- ---------
Projected benefit obligation in excess of
  plan assets....................................   (4,935)   (9,088)
Unrecognized net loss............................      819     2,887
Unrecognized prior service cost..................    1,132     1,451
Unrecognized net obligation......................      567     3,590
Additional minimum liability.....................     (408)   (2,498)
                                                  --------- ---------
Net pension liability recognized in the
   consolidated balance sheets................... $ (2,825) $ (3,658)
                                                  =========  ========
</TABLE>

         Plan assets at October 31, 1996 are invested in publicly traded and
restricted mutual funds, various corporate and government bonds, guaranteed
income contracts and listed stocks, including common stock of the Company having
a market value of $376,000 at that date. Salaried plan assets have been
estimated.

                                       39


<PAGE>   39



ITEM 8.  (Continued)

         A summary of the various components of net periodic pension cost for
defined benefit plans and cost information for other plans for the three-year
period is shown below:
<TABLE>
<CAPTION>

                                               1996     1995    1994
                                               ----     ----    ----
                                                  (in thousands)
<S>                                         <C>      <C>      <C>    
Defined benefit plans:
  Service cost..............................$ 1,651  $ 1,337  $ 1,095
  Interest cost.............................  1,049    1,065      831
  Actual return on plan assets.............. (1,930)  (1,785)    (462)
  Net amortization and deferral.............  1,369    1,145     (150)
                                            -------- -------- --------
     Net pension expense....................  2,139    1,762    1,314

Other plans:
  Foreign plans.............................    273      218      184
                                            -------- -------- --------
     Total pension expense..................$ 2,412  $ 1,980  $ 1,498
                                            ======== ======== ========
</TABLE>

         Assumptions used in the accounting for the defined benefit plans as of
October 31 were:
<TABLE>
<CAPTION>

                                               1996     1995    1994
                                               ----     ----    ----
<S>                                           <C>      <C>      <C> 
Domestic Plans
--------------
Weighted-average discount rate..............   7.75%    7.25%    8.5%
Rates of increase in compensation levels....   5.0 %    4.5 %    4.5%
Expected long-term rate of return on assets.  10.0 %   10.0 %   10.0%

CUNO KK (Japan) Plan
--------------------
Weighted-average discount rate..............   4.0 %    4.0 %    5.0%
Rates of increase in compensation levels....   4.0 %    5.0 %    5.0%
Expected long-term rate of return on assets.   4.5 %    5.5 %    6.0%
</TABLE>


                                       40


<PAGE>   40




ITEM 8.  (Continued)

NOTE G - INCOME TAXES

         The components of income (loss) before income taxes and the provision
(benefit) for income taxes are summarized as follows:
<TABLE>
<CAPTION>

                                               1996    1995    1994
                                               ----    ----    ----
                                                  (in thousands)
<S>                                         <C>      <C>      <C>     
Income (loss) before income taxes
  Domestic................................. $ 3,436  $ 3,652  $(1,037)

  Foreign..................................   7,575    5,911    3,080
                                            -------- -------- --------
                                             11,011    9,563    2,043

Provision (benefit) for income taxes
  Current
    Domestic - Federal.....................   1,947    1,466       (3)
             - State and local.............     722      368      115
    Foreign................................   2,960    3,546    1,379
  Benefit of operating loss carryforwards..    (336)    (683)      --
                                            -------- -------- --------
                                              5,293    4,697    1,491
  Deferred
    Domestic - Federal.....................      79     (633)    (376)
             - State and local.............       4      (95)    (140)
    Foreign................................      42     (507)    (739)
                                            -------- -------- --------
                                                125   (1,235)  (1,255)
                                            -------- -------- --------
                                              5,418    3,462      236

Net income (loss)
  Domestic.................................     684    2,546     (633)
  Foreign..................................   4,909    3,555    2,440
                                            -------- -------- --------
                                            $ 5,593  $ 6,101  $ 1,807
                                            ======== ======== ========
</TABLE>

         A reconciliation of the effective tax rate to the US statutory rate
follows:
<TABLE>
<CAPTION>

                                               1996    1995    1994
                                               ----    ----    ----

<S>                                            <C>    <C>     <C>  
Statutory US federal income tax rate.......    35.0%  35.0%   35.0%
State and local taxes on income net of
  domestic federal income tax benefit......     4.4    1.9    (0.8)
Impact of foreign subsidiaries on effective
  rate.....................................    (2.8)   4.0   (36.6)
Benefit of operating loss carryforwards....    (3.1)  (7.1)     --
Nonrecurring distribution costs............    11.9     --      --
Goodwill with no US tax benefit............     3.1    4.7    21.8
All other..................................      .7   (2.3)   (7.8)
                                              ------  -----  ------
  Effective income tax rate................    49.2%  36.2%   11.6%
                                              ======  =====  ======
</TABLE>







                                       41


<PAGE>   41



ITEM 8.  (Continued)

         Significant components of the Company's deferred income tax liabilities
and assets as of October 31 are as follows:
<TABLE>
<CAPTION>

                                               1996    1995    1994
                                               ----    ----    ----
<S>                                          <C>      <C>     <C>   
Deferred income tax liabilities:
  Tax over book depreciation................ $4,508   $4,925  $5,222
  Other.....................................     61       87     103
                                             -------  ------- ------
    Total deferred income tax liabilities...  4,569    5,012   5,325
Deferred income tax assets:
  Pension liability.........................    942      684     511
  Employee benefits.........................  1,919    2,209   2,031
  Net operating loss carryforwards..........  1,061    1,832   3,279
  Inventory valuation.......................  1,001      877     538
  Net operating loss carryback..............  1,309    1,309   1,081
  Other.....................................  1,061    1,632   1,628
                                             -------  ------- ------
    Total deferred income tax assets........  7,293    8,543   9,068
  Valuation allowance for deferred income
    tax assets..............................  1,061    1,832   3,279
                                             -------  ------- ------
     Net deferred income tax assets.........  6,232    6,711   5,789
                                             -------  ------- ------
     Net deferred income tax assets......... $1,663   $1,699  $  464
                                             =======  ======= ======
</TABLE>



         The valuation allowance has decreased by $771,000 in 1996, $1,447,000
in 1995 and $931,000 in 1994. The decrease in 1996 is the result of the
reorganization of Cuno Latina Ltda. (Brazil), in addition to the utilization of
net operating loss carryforwards. Although realization of the net deferred
income tax assets is not assured, management believes it is more likely than not
that all of the remaining net deferred income tax assets will be realized. The
amount of the net deferred income tax assets considered realizable, however,
could be reduced if estimates of future taxable income are reduced.

         The tax benefits from net operating loss carryforwards relate to the
operation in Brazil and are available indefinitely.

                                       42


<PAGE>   42




ITEM 8.  (Continued)

NOTE H - RELATED PARTY TRANSACTIONS

         Transactions with Commercial Intertech included in the balance sheets
as "Receivables from related party", "Dividends payable to related party" and
"Payable to related party" represent a net balance as a result of various
transactions between the Company and Commercial Intertech. These accounts are
short-term and non-interest bearing. The balance is primarily the result of the
Company's declaration of dividends and other payments associated with the
reorganization. Prior to the reorganization, the balance was primarily the
result of the Company's participation in Commercial Intertech's domestic cash
management system as all excess cash was remitted to Commercial Intertech and
certain disbursements were made by Commercial Intertech. Also included are
transactions relating to the Company's federal income tax liability and other
corporate charges. Transactions with other Commercial Intertech subsidiaries are
included in the "Other" classification. A summary of transactions follows:
<TABLE>
<CAPTION>

                                                 October 31,
                                        --------------------------- 
                                          1996       1995      1994
                                          ----       ----      ----
                                             (in thousands)
<S>                                     <C>       <C>       <C>     
  Balance at beginning of year......... $ 18,767  $ 15,104  $ 10,923
     Net cash remitted to
       Commercial Intertech............   22,145    15,084    11,716
     Administrative expenses...........  (11,835)   (9,869)   (8,607)
     Payment of dividends..............  (31,063)      --        --
     Other.............................   (8,198)   (1,552)    1,072
                                        --------- --------- --------
  Balance at end of year............... $(10,184) $ 18,767  $ 15,104
                                        ========= ========= ========
</TABLE>


NOTE I - PRODUCT DEVELOPMENT COSTS

         The Company maintains ongoing development programs at various
facilities to formulate, design and test new products and product alternatives,
and to further develop and significantly improve existing products. Costs
associated with these activities, which the Company expenses as incurred, are
shown below:
<TABLE>
<CAPTION>

                                       1996     1995    1994
                                       ----     ----    ----

<S>                                  <C>      <C>      <C>    
     Research and development....... $ 3,625  $ 2,483  $ 1,884
     Engineering....................   6,236    5,825    5,888
                                     -------- -------- -------

                                     $ 9,861  $ 8,308  $ 7,772
                                     ======== ======== =======

     Percent of net sales...........    5.5%     5.1%     5.4%
                                     ======== ======== =======
</TABLE>


                                       43


<PAGE>   43



ITEM 8.  (Continued)

NOTE J - SEGMENT REPORTING

         The Company has a single industry segment which is engaged in the
design, manufacture and sale of products in the fluid purification industry. In
the following table, data in the column labeled "Europe" pertains to
subsidiaries operating within the European Economic Community. Data in the
"Other" column pertains to operations located in Asia, Australia and Brazil.

         Operating income represents total revenue less total operating
expenses. Identifiable assets are those assets used in the operations of each
business or geographic area or which are allocated when used jointly.
<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------
GEOGRAPHIC AREA

                       UNITED
                       STATES    EUROPE     JAPAN     OTHER  ELIMINATION  CONSOLIDATED
--------------------------------------------------------------------------------------
1996
--------------------------------------------------------------------------------------
<S>                   <C>       <C>       <C>       <C>       <C>          <C>     
Sales to customers..  $ 86,394  $ 30,541  $ 28,778  $ 33,355  $     --     $179,068
Inter-area sales....    16,894     1,305       300        41   (18,540)          --
                      ----------------------------------------------------------------
Total net sales.....   103,288    31,846    29,078    33,396   (18,540)     179,068
Operating income....     1,935     2,923     1,269     5,779        --       11,906
Identifiable assets.    74,647    17,350    24,430    17,085                133,512
Corporate assets....                                                          5,244
Total assets........                                                        138,756

--------------------------------------------------------------------------------------
1995
--------------------------------------------------------------------------------------
Sales to customers..  $ 74,893  $ 27,700  $ 30,508  $ 29,598  $     --     $162,699
Inter-area sales....    16,516     1,423       593     1,470   (20,002)          --
                      --------- --------- --------- --------- ---------    --------
Total net sales.....    91,409    29,123    31,101    31,068   (20,002)     162,699
Operating income....     1,607     2,351     2,533     4,349        --       10,840
Identifiable assets.   101,640    11,381    26,595    16,471        --      156,087
Corporate assets....                                                          6,740
Total assets........                                                        162,827

--------------------------------------------------------------------------------------
1994
--------------------------------------------------------------------------------------
Sales to customers..  $ 71,964  $ 21,651  $ 25,234  $ 24,262  $     --     $143,111
Inter-area sales....    12,981     1,069       236     1,197   (15,483)          --
                      --------- --------- --------- --------- ---------    --------
Total net sales.....    84,945    22,720    25,470    25,459   (15,483)     143,111
Operating income....    (1,413)      373     2,392     3,626        --        4,978
Identifiable assets.    96,174    13,749    25,125    13,615        --      148,663
Corporate assets....                                                          4,408
Total assets........                                                        153,071
</TABLE>


         Net assets of foreign subsidiaries at October 31, 1996 and 1995 were
$24,043,000 and $36,298,000, respectively, of which net current assets were
$9,677,000 and $19,558,000 respectively.

                                       44


<PAGE>   44



ITEM 8.  (Continued)

NOTE K - STOCK OPTIONS AND AWARDS

         In September 1996, the Company adopted and approved a stock option and
award plan which allows for the grant of a number of stock incentive
instruments, including nonqualified and incentive stock options, restricted
stock, performance shares and stock appreciation rights which may be granted as
part of a stock option or as a separate right to the holders of any options
previously granted. The plan permits the granting of such stock awards of up to
1,200,000 shares of Common Stock. Accordingly, such shares have been authorized
and reserved. The options are exercisable at various dates and have varying
expiration dates. Approximately 946,760 shares of common stock are reserved for
issuance to key employees and nonemployee directors under the provisions of
these option and award plans as of October 31, 1996. Of its 353,961 stock
options which were granted during 1996, 81,961 related to Commercial Intertech
options held by Company executives prior to the September 10, 1996 distribution
date. Such options were issued in a manner to preserve the economic position of
the option holders which existed prior to the distribution. No accounting
expense was charged to earnings in connection with this issuance.

         Awards of performance shares totaled 215,500 in 1996. When rights,
options or awards are granted, associated compensation expense is accrued from
date of grant to the date such options or awards are exercised.

         A summary of the stock option activity follows for 1996:
<TABLE>
<CAPTION>

                                     -----------------------------------
                                      Shares    Exercise
                                       Under      Price       Options
                                      Option   (per share)  Exercisable
                                     -----------------------------------
     <S>                             <C>        <C>           <C>           
     Outstanding at October 31, 1995     --        --          --

     Options granted..............:  272,000     $ 15.13       --
     Commercial Intertech
       options exchanged..........:   81,961    7.47-10.99     --
     Options exercised ...........:      --        --          --
                                     -----------------------------------
     Outstanding at
       October 31, 1996...........:  353,961   $7.47-15.13     --
</TABLE>



         Shares available for future grants amounted to approximately 592,800
shares as of October 31, 1996.

                                       45


<PAGE>   45



ITEM 8.  (Continued)

NOTE L - FAIR VALUES OF FINANCIAL INSTRUMENTS

         The following methods and assumptions were used by the Company in
estimating its fair value disclosures of financial instruments:

Cash and cash equivalents:

         The carrying amounts reported in the balance sheets for cash and cash
equivalents approximate fair value.

Long and short-term debt:

         The carrying amounts of the Company's borrowings under its short-term
credit agreements approximate their fair value. The fair values of the long-term
debt are estimated using discounted cash flow analysis, based on the Company's
incremental borrowing rates for similar types of borrowing arrangements. The
fair value of the Company's long-term debt approximates its carrying value
because of the variable interest rate of the majority of the debt.

         The carrying amounts and fair values of the Company's financial
instruments follows:
<TABLE>
<CAPTION>

                                         October 31,
                            -------------------------------------
                                    1996                1995
                            Carrying    Fair    Carrying    Fair
                             Value     Value     Value     Value
                            -------    -------  --------   ------

<S>                         <C>        <C>       <C>      <C>    
Cash and cash equivalents.. $ 5,244    $ 5,244   $ 6,740  $ 6,740
Bank Loans.................  10,690     10,690    10,440   10,440
Long-term debt.............  34,734     34,719     5,096    5,068
</TABLE>

         The carrying amounts of accounts and notes receivable, receivables from
related party, accounts payable and accrued expenses and amounts payable to
related party approximates fair value because of the short-term nature of those
transactions.

Foreign currency exchange contracts:

         At times, the Company utilizes foreign currency exchange contracts to
minimize the impact of currency fluctuations on transactions. At October 31,
1996 and 1995, the Company held contracts for $1,000,000 and $500,000
respectively, with fair values of $1,002,000 and $500,000, respectively. The
fair value of foreign currency exchange contracts is estimated based on quoted
exchange rates at year end. The forward contracts are an effective hedge against
fluctuations in the value of the foreign currency. Therefore, the contracts have
no income statement impact.

                                       46


<PAGE>   46



ITEM 8.  (Continued)

NOTE M - DISPOSAL

         The Company recorded a loss of $1,053,000 during fiscal 1994 on the
disposal of assets it had acquired from Bioken Separation, Inc., a manufacturer
of proprietary cross-flow membrane devices and systems. The original cost of the
acquisition was $2,224,000.

NOTE N - QUARTERLY DATA (unaudited)
<TABLE>
<CAPTION>

1996                        First    Second     Third    Fourth
----                        -----    ------     -----    ------
                         (in thousands, except per-share amounts)
<S>                       <C>       <C>       <C>       <C>     
Net sales.................$ 41,004  $ 45,090  $ 48,542  $ 44,432
Gross profit..............  15,748    18,460    20,796    19,216
Distribution and other
  nonrecurring costs (1)..     --        --      2,876     2,688
Net income (loss).........   1,851     3,251       630      (139)

Earnings per common
  share...................   $0.14     $0.24     $0.05    $(0.01)

                                                            
1995                        First    Second     Third    Fourth
----                        -----    ------     -----    ------
                         (in thousands, except per-share amounts)

Net sales................ $ 37,713  $ 39,630  $ 43,467  $ 41,889
Gross profit.............   13,926    14,995    17,025    16,981
Net income...............    1,416     1,241     1,419     2,025

Earnings per common
  share..................    $0.10     $0.09     $0.10     $0.15
</TABLE>


         The Company incurred $2,876,000 or $.21 per share during the third
quarter of 1996 and $1,982,000 or $.15 per share during the fourth quarter (net
of taxes) for distribution and other nonrecurring costs.

         Earnings per share are computed independently for each of the quarters
presented. Therefore, the sum of the quarterly earnings per share may not
necessarily equal the total for the year.

         (1)   Included in 1996 operating income and net income were
               distribution and other nonrecurring costs to the Company
               associated with the recent reorganization. These expenses totaled
               $4,858 (net of income taxes of $706).

                                       47


<PAGE>   47



ITEM 8.  (Continued)

Report of Ernst & Young LLP, Independent Auditors

Shareholders and Board of Directors
CUNO Incorporated
Meriden, Connecticut

We have audited the accompanying consolidated balance sheets of CUNO
Incorporated and subsidiaries as of October 31, 1996 and 1995, and the related
statements of consolidated income, shareholders' equity and cash flows for each
of the three years in the period ended October 31, 1996. Our audits also
included the financial statement schedule listed in the Index at Item 14(a).
These financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of CUNO Incorporated
and subsidiaries at October 31, 1996 and 1995, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended October 31, 1996, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.

                                            /s/Ernst & Young LLP

Cleveland, Ohio
December 16, 1996

                                       48


<PAGE>   48




ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE.

                  None

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Regarding the directors of the Registrant, reference is made to the
information set forth under the caption "Election of Directors" in the Company's
definitive Proxy Statement filed January 21, 1997, which information is
incorporated by reference herein.

         The principal executive officers of the Company and their recent
business experience are as follows:

          Name              Office Held                       Age
          ----              -----------                       ---

Paul J. Powers...........Chairman of the Board of              61
                             Directors and Chief
                             Executive Officer

Mark G. Kachur...........President and Chief Operating         53
                             Officer

Michael H. Croft.........Senior Vice President                 52

Ronald C. Drabik.........Senior Vice President, Chief          50
                             Financial Officer,
                             Assistant Secretary and
                             Treasurer

Timothy B. Carney........Vice President and Controller         44

John A. Tomich...........Counsel and Secretary                 39




         None of the officers are related and they are elected from year to year
or until their successors are duly elected and qualified.

                                       49


<PAGE>   49



ITEM 10. (Continued)

         Paul J. Powers. Mr. Powers is the Chief Executive Officer of the
Company. He has also been a director of the Company and Commercial Intertech
since 1984, President and Chief Operating Officer of Commercial Intertech since
1984 and Chief Executive Officer of Commercial Intertech since 1987. He holds a
bachelor's degree in Economics from Merrimack College and a master's degree in
Business Administration from George Washington University. Mr. Powers is also a
director of Ohio Edison Company, Global Marine, Inc. and Twin Disc, Ind.

         Mark G. Kachur. Mr. Kachur is the President and Chief Operating 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 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.

         Michael H. Croft. Mr. Croft is the Senior Vice President of the
Company. From 1993 until 1996 Mr. Croft was President - U.S. Operations of the
Company. From 1984 until 1993 he was with CUNO Pacific Rim operations serving as
Managing Director of CUNO Pacific, CUNO Asia with oversight of CUNO K.K.
(Japan). He holds a bachelor's degree in Engineering (Chemistry) from The
University of Sydney and a Certificate in Marketing from the University of New
South Wales.

         Ronald C. Drabik. Mr. Drabik is the Senior Vice President, Chief
Financial Officer, Secretary and Treasurer of the Company. From July 1996 until
joining the Company, he was a Vice-President of Commercial Intertech. From 1995
until 1996, he was Vice President of Acme-Cleveland Corporation, a manufacturer
of telecommunication and other products. From 1993 until 1995, he was with
Met-Coil Systems Corp., a machine tool builder, for which he served at various
times as President, Executive Vice President, Senior Vice President and Chief
Financial Officer. From 1989 until 1992, he was Vice President of Finance and
Chief Financial Officer of RB&W Corporation, a manufacturer/distributor of
engineered fasteners. He holds a bachelor of arts degree from Baldwin-Wallace
College.

                                       50


<PAGE>   50



ITEM 10. (Continued)

         Timothy B. Carney. Mr. Carney is the Company's Vice President -
Controller and Assistant Secretary. From 1993 until joining the Company, he
served Commercial Intertech as CUNO Inc. Group Controller and from 1989 until
1993 he served Commercial Intertech as General Manager and Controller of Water
Factory Systems. He holds a bachelor's of science degree (Economics) and a
master's degree in Business Administration from Youngstown State University.

         John A. Tomich. Mr. Tomich is Counsel and Secretary of the Company.
Before joining CUNO Incorporated, after the spin-off, he was Counsel and
Assistant Secretary for Commercial Intertech Corporation, 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 (Mechanical
Engineering) from Youngstown State University, and Juris Doctor from the
University of Akron, School of Law. He is a licensed Patent Attorney.

                                       51


<PAGE>   51



ITEM 11. EXECUTIVE COMPENSATION

         Reference is made to the information set forth under the caption
"Executive Compensation" appearing in the Company's definitive Proxy Statement
filed January 21, 1997, which information is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
            AND MANAGEMENT

         Reference is made to the information contained under the captions
"Security Ownership of Board of Directors and Named Executives" and "Security
Ownership of Certain Beneficial Owners" in the Company's definitive Proxy
Statement filed January 21, 1997, which information is incorporated herein by
reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Reference is made to the information contained under the caption
"Compensation of Directors" in the Company's definitive Proxy Statement filed
January 21, 1997, which information is incorporated herein by reference.

                                       52


<PAGE>   52




                                     Part IV

ITEM 14  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 and Subsidiaries
                   are included in Item 8:

                                                         Page Number
                                                        In This Report
                                                        --------------

        Statements of Consolidated Income -
          Years ended October 31, 1996,
          1995, and 1994.............................        24
        Consolidated Balance Sheets as of
          October 31, 1996 and 1995..................     25 and 26
        Statements of Consolidated Shareholders'
          Equity - Years ended October 31,
          1996, 1995, and 1994.......................        27
        Statements of Consolidated Cash Flows -
          Years ended October 31, 1996, 1995,
          and 1994...................................        28
        Notes to Consolidated Financial Statements...      29 - 47
        Report of Independent Auditors...............        48

        (2) The following consolidated financial statement
            schedule of CUNO Incorporated and Subsidiaries
            are 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.

                                       53


<PAGE>   53



PART IV  (Continued)

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K
         (Continued)

     (3) Exhibits

             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

            10.4    Form of Distribution and Interim Services
                      Agreement by and between CUNO Incorporated
                      and Commercial Intertech Corp.

            10.5    Form of Tax Sharing Agreement by and between
                      CUNO Incorporated and Commercial Intertech
                      Corp.

            10.6    Form of Employee Benefits and Compensation
                      Allocation Agreement by and between CUNO
                      Incorporated and Commercial Intertech Corp.

            10.9    Employment Agreement - Mark G. Kachur
                      dated December 3, 1993

            10.11   Termination and Change of Control Agreement -
                      Paul J. Powers dated October 1, 1996

            10.12   Termination and Change of Control Agreement -
                      Mark G. Kachur dated October 1, 1996

            10.13   Termination and Change of Control Agreement -
                      Michael H. Croft dated October 1, 1996

            10.14   Termination and Change of Control Agreement -
                      Ronald C. Drabik dated October 1, 1996

            10.15   Termination and Change of Control Agreement -
                      Timothy B. Carney dated October 1, 1996

            10.16   Termination and Change of Control Agreement -
                      John A. Tomich dated October 1, 1996

                    Exhibits for "Material Contracts" are incorporated by
                      reference to exhibits filed by the Company on Form 10:

                                     Incorporated by Reference
                                     -------------------------

                      Exhibit 10.9    Amendment No. 1
                                        dated August 2, 1996

                      Exhibit 10.4    Amendment No. 1
                                        dated August 20, 1996

                      Exhibit 10.5    Amendment No. 2
                                        dated August 20, 1996

                      Exhibit 10.6    Amendment No. 2
                                        dated August 20, 1996

                                       54


<PAGE>   54

PART IV - (Continued)

ITEM 14.  EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K
          (Continued)

          Additional information relating to management contracts and
          renumerative plans is contained in Note K - Stock Options and
          Awards of the Notes to Consolidated Financial Statements
          on page 45.

          21 - Subsidiaries of the registrant

          23 - Consent of Ernst & Young LLP.

          27 - Financial Data Schedule

          (B)  There were no reports on Form 8-K for the quarter
               ended October 31, 1996.

                                       55


<PAGE>   55



                                   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:  April 7, 1997

/s/ Paul J. Powers                   /s/ Ronald C. Drabik
----------------------------         ----------------------------
Paul J. Powers                       Ronald C. Drabik
Chairman of the Board of             Senior Vice President and
Directors, and                       Chief Financial Officer,
Chief Executive Officer              Assistant Secretary and
                                     Treasurer

         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                  Date
           ----              -----                  ----

Joel B. Alvord              Director             April 7, 1997

Charles L. Cooney, Ph.D.    Director             April 7, 1997

Norbert A. Florek           Director             April 7, 1997

John M. Galvin              Director             April 7, 1997

Mark G. Kachur              Director             April 7, 1997

Gerald C. McDonough         Director             April 7, 1997

C. Edward Midgley           Director             April 7, 1997

David L. Swift              Director             April 7, 1997

                                       56


<PAGE>   56


<TABLE>
<CAPTION>



                                    SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

                                           CUNO INCORPORATED AND SUBSIDIARIES
                                       YEARS ENDED OCTOBER 31, 1996, 1995 AND 1994

=================================================================================================================
          COLUMN A                       COLUMN B              COLUMN C               COLUMN D         COLUMN E
-----------------------------------------------------------------------------------------------------------------
                                        Balance at                                                     Balance at
         Description                    Beginning              ADDITIONS              Deductions        End of
                                        of Period     --------------------------                        Period       
                                                                     Charged to
                                                       Charged to      Other
                                                       Costs and      Accounts-
                                                        Expenses      Describe
=================================================================================================================
<S>                                   <C>             <C>           <C>              <C>               <C>        
Year ended October 31, 1996
Deducted from asset accounts:
 Allowance for doubtful accounts
   receivable                         $ 1,135,916     $   21,673    $          0     $   24,136 (A)    $ 1,133,453
                                      ============    ===========   =============    ===========       ===========

 Valuation allowance for deferred                                                       435,000 (B)
   income tax assets                  $ 1,832,000     $        0    $          0     $  336,000 (C)    $ 1,061,000
                                      ============    ===========   =============    ===========       ===========

Year ended October 31, 1995
Deducted from asset accounts:
 Allowance for doubtful accounts
   receivable                         $   873,259     $  643,310    $          0     $  380,653 (A)    $ 1,135,916
                                      ============    ===========   =============    ===========       ===========


 Valuation allowance for deferred                                                       764,000 (B)
   income tax assets                  $ 3,279,000     $        0    $          0     $  683,000 (C)    $ 1,832,000
                                      ============    ===========   =============    ===========       ===========

Year ended October 31, 1994
Deducted from asset accounts:
 Allowance for doubtful accounts
   receivable                         $   702,025     $  193,249    $          0     $   22,015 (A)    $   873,259
                                      ============    ===========   =============    ===========       ===========

 Valuation allowance for deferred
   income tax assets                  $ 4,210,000     $        0    $                $  931,000 (B)    $ 3,279,000
                                      ============    ===========   =============    ===========       ===========


<FN>
(A) Uncollectible accounts written off, net of recoveries. 
(B) Increase (decrease) in net operating loss carryforwards for the year. 
(C) Net operating loss carryforwards utilized or expired.
</TABLE>

                                       S-1