<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT UNDER SECTION 15 (d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the year ended December 31, 1997 Commission file number 000-21109
CUNO INCORPORATED SAVINGS AND RETIREMENT PLAN
(Full title of the plan )
CUNO INCORPORATED
400 RESEARCH PARKWAY
MERIDEN, CONNECTICUT 06450
(Name and issuer of the securities held pursuant to the plan and the address of
its principal executive office)
<PAGE> 2
FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULES
CUNO INCORPORATED
SAVINGS AND RETIREMENT PLAN
Year ended December 31, 1997 and period from
September 10 (date of adoption) to December 31, 1996
with Report of Independent Auditors
<PAGE> 3
CUNO INCORPORATED SAVINGS AND RETIREMENT PLAN
AUDITED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Auditors
Statements of Assets Available for Plan Benefits
December 31, 1997 1
December 31, 1996 2
Statements of Changes in Assets Available for Plan Benefits
Year ended December 31, 1997 3
Period from September 10, 1996 to December 31, 1996 4
Notes to Financial Statements 5-7
Schedules of Assets Held for Investment Purposes
December 31, 1997 8
December 31, 1996 9
Exhibit 23 -- Consent of Independent Auditors 10
</TABLE>
<PAGE> 4
REPORT OF INDEPENDENT AUDITORS
Administrative Committee
CUNO Incorporated Savings and Retirement Plan
We have audited the accompanying statements of assets available for plan
benefits of the CUNO Incorporated Savings and Retirement Plan (the "Plan") as of
December 31, 1997 and 1996, and the related statements of changes in assets
available for plan benefits for the year ended December 31, 1997 and the period
from September 10 (date of adoption) to December 31, 1996. Our audit also
included the supplemental schedules of investments as of December 31, 1997 and
1996. These financial statements and supplemental schedules are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets available for plan benefits of the Plan at
December 31, 1997 and 1996, and the changes in assets available for plan
benefits for the year ended December 31, 1997 and the period from September 10
to December 31, 1996 in conformity with generally accepted accounting
principles. Also, in our opinion, the related supplemental schedules of
investments, when considered in relation to the financial statements taken as a
whole, present fairly in all material respects, the information set forth
therein.
Our audit was performed for the purpose of forming an opinion on the financial
statements taken as a whole. The fund information in the financial statements is
presented for purposes of additional analysis rather than to present the assets
available for benefits and changes in assets available for benefits of each
fund. The fund information has been subjected to the auditing procedures applied
in our audit of the financial statements and, in our opinion, is fairly stated
in all material respects in relation to the financial statements taken as a
whole.
Hartford, Connecticut
June 24, 1998 /s/ Ernst & Young LLP
<PAGE> 5
CUNO INCORPORATED SAVINGS AND RETIREMENT PLAN
STATEMENT OF ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
DECEMBER 31, 1997
<TABLE>
<CAPTION>
FUND INFORMATION
------------------------------------------------------------------------------------
AMERICAN AMERICAN AMERICAN
BENHAM CENTURY CENTURY CENTURY
INTERMEDIATE STRATEGIC STRATEGIC STRATEGIC BARCLAYS
BENHAM TERM TREASURY ALLOCATION: ALLOCATION: ALLOCATION: EQUITY
STABLE ASSET FIXED INCOME CONSERVATIVE MODERATE AGGRESSIVE INDEX
FUND* FUND FUND FUND* FUND* FUND*
------------ ------------- ------------ ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investments:
Mutual funds $ 2,467,867 $ 691,866 $ 572,314 $ 1,490,694 $ 1,374,418 $2,182,462
CUNO Incorporated common stock -- -- -- -- -- --
Participant loans receivable -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------
2,467,867 691,866 572,314 1,490,694 1,374,418 2,182,462
Receivables:
Employer's contribution -- -- -- -- -- --
Participants' contributions 13,372 4,936 5,465 14,741 18,088 28,122
----------- ----------- ----------- ----------- ----------- ----------
13,372 4,936 5,465 14,741 18,088 28,122
----------- ----------- ----------- ----------- ----------- ----------
Assets available for benefits $ 2,481,239 $ 696,802 $ 577,779 $ 1,505,435 $ 1,392,506 $2,210,584
=========== =========== =========== =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
FUND INFORMATION
------------------------------------------------------------------------------------------
TWENTIETH AMERICAN
TWENTIETH AMERICAN CENTURY CENTURY CUNO CUNO
CENTURY CENTURY INTERNATIONAL EQUITY STOCK FUND: STOCK FUND: PARTICIPANT
ULTRA VALUE GROWTH GROWTH PARTICIPANT EMPLOYER LOAN
FUND* FUND FUND FUND DIRECTED* MATCH FUND
---------- -------- ------------- -------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investments:
Mutual funds $3,279,829 $211,977 $ 116,189 $251,038 -- -- --
CUNO Incorporated common stock -- -- -- -- $ 1,567,540 $ 107,896 --
Participant loans receivable -- -- -- -- -- -- $ 330,483
---------- -------- ----------- -------- ----------- ----------- -----------
3,279,829 211,977 116,189 251,038 1,567,540 107,896 330,483
Receivables:
Employer's contribution -- -- -- -- -- 565,082 --
Participants' contributions 41,377 11,613 11,743 12,604 11,336 -- --
---------- -------- ----------- -------- ----------- ----------- -----------
41,377 11,613 11,743 12,604 11,336 565,082 --
---------- -------- ----------- -------- ----------- ----------- -----------
Assets available for benefits $3,321,206 $223,590 $ 127,932 $263,642 $ 1,578,876 $ 672,978 $ 330,483
========== ======== =========== ======== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
TOTAL
-----------
<S> <C>
Investments:
Mutual funds $12,638,654
CUNO Incorporated common stock 1,675,436
Participant loans receivable 330,483
-----------
14,644,573
Receivables:
Employer's contribution 565,082
Participants' contributions 173,397
-----------
738,479
-----------
Assets available for benefits $15,383,052
===========
</TABLE>
* An individual investment which represents more than 5% of the plan assets
available for benefits.
-1-
See accompanying notes.
<PAGE> 6
CUNO INCORPORATED SAVINGS AND RETIREMENT PLAN
STATEMENT OF ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
FUND INFORMATION
--------------------------------------------------------------------------------
AMERICAN AMERICAN AMERICAN
BENHAM CENTURY CENTURY CENTURY
INTERMEDIATE STRATEGIC STRATEGIC STRATEGIC
BENHAM TERM TREASURY ALLOCATION: ALLOCATION: ALLOCATION:
STABLE ASSET FIXED INCOME CONSERVATIVE MODERATE AGGRESSIVE
FUND* FUND* FUND FUND* FUND*
------------ ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Investments:
Mutual funds $1,321,654 $ 350,373 $ 308,569 $ 740,506 $ 657,852
CUNO Incorporated common stock -- -- -- -- --
Participant loans receivable -- -- -- -- --
---------- ---------- ---------- ---------- ----------
1,321,654 350,373 308,569 740,506 657,852
Receivables:
Employer's contribution -- -- -- -- --
Participants' contributions 15,348 5,169 4,764 22,031 17,719
---------- ---------- ---------- ---------- ----------
15,348 5,169 4,764 22,031 17,719
---------- ---------- ---------- ---------- ----------
Assets available for benefits $1,337,002 $ 355,542 $ 313,333 $ 762,537 $ 675,571
========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
FUND INFORMATION
-----------------------------------------------------------------------
BARCLAYS TWENTIETH CUNO CUNO
EQUITY CENTURY STOCK FUND: STOCK FUND: PARTICIPANT
INDEX ULTRA PARTICIPANT EMPLOYER LOAN
FUND* FUND* DIRECTED* MATCH FUND TOTAL
---------- ---------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Investments:
Mutual funds $ 770,155 $1,347,926 -- -- -- $5,497,035
CUNO Incorporated common stock -- -- $1,016,305 -- -- 1,016,305
Participant loans receivable -- -- -- -- $ 209,180 209,180
---------- ---------- ---------- ---------- ---------- ----------
770,155 1,347,926 1,016,305 -- 209,180 6,722,520
Receivables:
Employer's contribution -- -- -- $ 131,255 -- 131,255
Participants' contributions 19,701 39,338 13,604 -- -- 137,674
---------- ---------- ---------- ---------- ---------- ----------
19,701 39,338 13,604 131,255 -- 268,929
---------- ---------- ---------- ---------- ---------- ----------
Assets available for benefits $ 789,856 $1,387,264 $1,029,909 $ 131,255 $ 209,180 $6,991,449
========== ========== ========== ========== ========== ==========
</TABLE>
* An individual investment which represents more than 5% of the plan assets
available for benefits.
See accompanying notes.
-2-
<PAGE> 7
CUNO INCORPORATED SAVINGS AND RETIREMENT PLAN
STATEMENT OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
FUND INFORMATION
------------------------------------------------------------------------------------
AMERICAN AMERICAN AMERICAN
BENHAM CENTURY CENTURY CENTURY
INTERMEDIATE STRATEGIC STRATEGIC STRATEGIC
BENHAM TERM TREASURY ALLOCATION: ALLOCATION: ALLOCATION:
STABLE ASSET FIXED INCOME CONSERVATIVE MODERATE AGGRESSIVE
FUND FUND FUND FUND FUND
------------ ------------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
ADDITIONS:
Additions to net assets attributed to:
Interest income
Net realized and unrealized
appreciation (depreciation)
in fair value of investments -- $ 14,220 $ 3,985 $ 75,080 $ 82,401
Dividend income $ 102,540 27,375 46,866 75,474 64,675
----------- ----------- ----------- ----------- -----------
102,540 41,595 50,851 150,554 147,076
Less investment expenses 418 99 219 539 865
----------- ----------- ----------- ----------- -----------
102,122 41,496 50,632 150,015 146,211
----------- ----------- ----------- ----------- -----------
Contributions:
Participants 389,192 124,504 106,069 288,273 315,530
Employer -- -- -- -- --
----------- ----------- ----------- ----------- -----------
389,192 124,504 106,069 288,273 315,530
----------- ----------- ----------- ----------- -----------
Total Additions 491,314 166,000 156,701 438,288 461,741
----------- ----------- ----------- ----------- -----------
DEDUCTIONS:
Benefits paid to participants 94,396 7,566 3,024 13,636 25,886
----------- ----------- ----------- ----------- -----------
Total deductions 94,396 7,566 3,024 13,636 25,886
----------- ----------- ----------- ----------- -----------
Net increase prior to interfund transfers 396,918 158,434 153,677 424,652 435,855
Interfund transfers 747,319 182,826 110,769 318,246 281,080
----------- ----------- ----------- ----------- -----------
Net increase 1,144,237 341,260 264,446 742,898 716,935
Assets at beginning of period 1,337,002 355,542 313,333 762,537 675,571
----------- ----------- ----------- ----------- -----------
Assets at end of period $ 2,481,239 $ 696,802 $ 577,779 $ 1,505,435 $ 1,392,506
=========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
FUND INFORMATION
---------------------------------------------------------------------------------
TWENTIETH AMERICAN
TWENTIETH AMERICAN CENTURY CENTURY
BARCLAYS CENTURY CENTURY INTERNATIONAL EQUITY
EQUITY INDEX ULTRA VALUE GROWTH GROWTH
FUND FUND FUND FUND FUND
------------ ----------- ----------- ------------- --------
<S> <C> <C> <C> <C> <C>
ADDITIONS:
Additions to net assets attributed to:
Interest income
Net realized and unrealized
appreciation (depreciation)
in fair value of investments $ 359,512 $ (253,463) $ (21,880) $ (18,206) $ (7,400)
Dividend income 55 667,342 32,707 15,402 27,833
----------- ----------- ----------- ----------- --------
359,567 413,879 10,827 (2,804) 20,433
Less investment expenses 616 1,167 48 15 28
----------- ----------- ----------- ----------- --------
358,951 412,712 10,779 (2,819) 20,405
----------- ----------- ----------- ----------- --------
Contributions:
Participants 420,158 693,542 33,520 24,166 32,020
Employer -- -- -- -- --
----------- ----------- ----------- ----------- --------
420,158 693,542 33,520 24,166 32,020
----------- ----------- ----------- ----------- --------
Total Additions 779,109 1,106,254 44,299 21,347 52,425
----------- ----------- ----------- ----------- --------
DEDUCTIONS:
Benefits paid to participants 26,967 110,111 16 134 16
----------- ----------- ----------- ----------- --------
Total deductions 26,967 110,111 16 134 16
----------- ----------- ----------- ----------- --------
Net increase prior to interfund transfers 752,142 996,143 44,283 21,213 52,409
Interfund transfers 668,586 937,799 179,307 106,719 211,233
----------- ----------- ----------- ----------- --------
Net increase 1,420,728 1,933,942 223,590 127,932 263,642
Assets at beginning of period 789,856 1,387,264 -- -- --
----------- ----------- ----------- ----------- --------
Assets at end of period $ 2,210,584 $ 3,321,206 $ 223,590 $ 127,932 $263,642
=========== =========== =========== =========== ========
</TABLE>
<TABLE>
<CAPTION>
FUND INFORMATION
--------------------------------------------------
CUNO CUNO
STOCK FUND: STOCK FUND: PARTICIPANT
PARTICIPANT EMPLOYER LOAN
DIRECTED MATCH FUND TOTAL
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
ADDITIONS:
Additions to net assets attributed to:
Interest income $ 19,699 $ 19,699
Net realized and unrealized
appreciation (depreciation)
in fair value of investments $ 1,972,583 $ (10,960) -- 2,195,872
Dividend income 104,370 -- -- 1,164,639
----------- ----------- ----------- -----------
2,076,953 (10,960) 19,699 3,380,210
Less investment expenses 85 -- -- 4,099
----------- ----------- ----------- -----------
2,076,868 (10,960) 19,699 3,376,111
----------- ----------- ----------- -----------
Contributions:
Participants 2,447,274 -- -- 4,874,248
Employer -- 565,082 -- 565,082
----------- ----------- ----------- -----------
2,447,274 565,082 -- 5,439,330
----------- ----------- ----------- -----------
Total Additions 4,524,142 554,122 19,699 8,815,441
----------- ----------- ----------- -----------
DEDUCTIONS:
Benefits paid to participants 136,679 5,407 423,838
----------- ----------- ----------- -----------
Total deductions 136,679 5,407 -- 423,838
----------- ----------- ----------- -----------
Net increase prior to interfund transfers 4,387,463 548,715 19,699 8,391,603
Interfund transfers (3,838,496) (6,992) 101,604 --
----------- ----------- ----------- -----------
Net increase 548,967 541,723 121,303 8,391,603
Assets at beginning of period 1,029,909 131,255 209,180 6,991,449
----------- ----------- ----------- -----------
Assets at end of period $ 1,578,876 $ 672,978 $ 330,483 $15,383,052
=========== =========== =========== ===========
</TABLE>
See accompanying notes.
-3-
<PAGE> 8
CUNO INCORPORATED SAVINGS AND RETIREMENT PLAN
STATEMENT OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
PERIOD FROM SEPTEMBER 10 TO DECEMBER 31, 1996
<TABLE>
<CAPTION>
FUND INFORMATION
---------------------------------------------------------------------
AMERICAN AMERICAN
BENHAM CENTURY CENTURY
INTERMEDIATE STRATEGIC STRATEGIC
BENHAM TERM TREASURY ALLOCATION: ALLOCATION:
STABLE ASSET FIXED INCOME CONSERVATIVE MODERATE
FUND FUND FUND FUND
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
ADDITIONS:
Additions to net assets attributed to
Investment income:
Net realized and unrealized
appreciation (depreciation)
in fair value of investments -- $ (1,717) $ (605) $ 26
Dividend income $ 1,327 262 52 91
----------- ----------- ----------- -----------
1,327 (1,455) (553) 117
Less investment expenses -- -- -- --
----------- ----------- ----------- -----------
1,327 (1,455) (553) 117
----------- ----------- ----------- -----------
Contributions:
Participants 1,335,660 356,997 313,886 762,487
Employer -- -- -- --
----------- ----------- ----------- -----------
1,335,660 356,997 313,886 762,487
----------- ----------- ----------- -----------
Total Additions 1,336,987 355,542 313,333 762,604
----------- ----------- ----------- -----------
Interfund transfers 15 -- -- (67)
----------- ----------- ----------- -----------
Net increase 1,337,002 355,542 313,333 762,537
Assets at beginning of period -- -- -- --
----------- ----------- ----------- -----------
Assets at end of period $ 1,337,002 $ 355,542 $ 313,333 $ 762,537
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
FUND INFORMATION
--------------------------------------------------------------------
AMERICAN
CENTURY
STRATEGIC TWENTIETH CUNO
ALLOCATION: BARCLAYS CENTURY STOCK FUND:
AGGRESSIVE EQUITY INDEX ULTRA PARTICIPANT
FUND FUND FUND DIRECTED
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
ADDITIONS:
Additions to net assets attributed to
Investment income:
Net realized and unrealized
appreciation (depreciation)
in fair value of investments $ (1,316) $ (15,465) $ (31,761) $ (1,534)
Dividend income 199 -- 2,749 --
----------- ----------- ----------- -----------
(1,117) (15,465) (29,012) (1,534)
Less investment expenses -- -- -- --
----------- ----------- ----------- -----------
(1,117) (15,465) (29,012) (1,534)
----------- ----------- ----------- -----------
Contributions:
Participants 676,755 805,539 1,416,167 1,031,215
Employer -- -- -- --
----------- ----------- ----------- -----------
676,755 805,539 1,416,167 1,031,215
----------- ----------- ----------- -----------
Total Additions 675,638 790,074 1,387,155 1,029,681
----------- ----------- ----------- -----------
Interfund transfers (67) (218) 109 228
----------- ----------- ----------- -----------
Net increase 675,571 789,856 1,387,264 1,029,909
Assets at beginning of period -- -- -- --
----------- ----------- ----------- -----------
Assets at end of period $ 675,571 $ 789,856 $ 1,387,264 $ 1,029,909
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
FUND INFORMATION
-----------------------------
CUNO
STOCK FUND: PARTICIPANT
EMPLOYER LOAN
MATCH FUND TOTAL
----------- ----------- -----------
<S> <C> <C> <C>
ADDITIONS:
Additions to net assets attributed to
Investment income:
Net realized and unrealized
appreciation (depreciation)
in fair value of investments -- -- $ (52,372)
Dividend income -- -- 4,680
----------- ----------- -----------
-- -- (47,692)
Less investment expenses -- -- --
----------- ----------- -----------
-- -- (47,692)
----------- ----------- -----------
Contributions:
Participants -- $ 209,180 6,907,886
Employer $ 131,255 -- 131,255
----------- ----------- -----------
131,255 209,180 7,039,141
----------- ----------- -----------
Total Additions 131,255 209,180 6,991,449
----------- ----------- -----------
Interfund transfers -- -- --
----------- ----------- -----------
Net increase 131,255 209,180 6,991,449
Assets at beginning of period -- -- --
----------- ----------- -----------
Assets at end of period $ 131,255 $ 209,180 $ 6,991,449
=========== =========== ===========
</TABLE>
See accompanying notes.
-4-
<PAGE> 9
CUNO Incorporated
Savings and Retirement Plan
Notes to Financial Statements
December 31, 1997
1. DESCRIPTION OF PLAN
The CUNO Incorporated Savings and Retirement Plan (the "Plan") consists of a
pre-tax savings program, a post-tax savings program, and an employer matching
program. The Plan was adopted as of September 10, 1996. All employees of CUNO
Incorporated (the "Company" or "Plan Sponsor" or "Employer") that have been
credited with at least 500 hours of service within a six month period following
their initial date of employment, or have completed one year of service
recognized by the Plan, are eligible to participate in the Plan. The Plan is
subject to the applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").
Under the pre-tax program, participants may elect to contribute up to 15 percent
of their compensation, on a tax-deferred basis, to the Plan. Under the post-tax
program, participants may elect to contribute up to an additional 10 percent of
their compensation. These contributions are made with after-tax dollars and do
not receive Company matching contributions. Participants may also contribute
amounts representing distributions from other qualified defined benefit or
contribution plans. The Company makes an annual discretionary matching
contribution, in the form of Company common stock, that represents a percentage
of the participants' pre-tax contributions. The matching percentage is applied
to each participant's pre-tax contributions not exceeding 6 percent of eligible
compensation.
All investment account dollars that result from employee contributions and
related plan earnings are immediately vested. Company matching contributions
plus actual earnings thereon vest based on years of continuous service. A
participant is 100 percent vested after five years of credited service.
Participants also become fully vested in Company matching contributions upon
attainment of their normal retirement date, or upon their death or disability.
If the participant's employment with the Company terminates for other reasons,
and the participant elects to receive distribution of his or her account, the
vested portion of his or her account is distributed to the participant and the
non-vested portion of the participant's account is used to reduce the Company
matching contribution. There were no non-vested assets attributed to terminated
employees at December 31, 1997 or 1996. Fully-vested amounts allocated to
accounts of persons who have elected to withdraw from the plan amounted to
$713,190 at December 31, 1997 (none at December 31, 1996).
-5-
<PAGE> 10
The Plan provides for separate investment options in one or more funds as
directed by the participants. These options include the Benham Stable Asset
Fund, the Benham Intermediate-Term Treasury Fixed Income Fund, the Twentieth
Century Strategic Allocation: Conservative Fund, the Twentieth Century Strategic
Allocation: Moderate Fund, the Twentieth Century Strategic Allocation:
Aggressive Fund, the Barclays Equity Index Fund, the Twentieth Century Ultra
Fund, the Twentieth Century Value Fund, the Twentieth Century International
Growth Fund, the Twentieth Century Equity Growth Fund, and the CUNO Stock Fund.
The participants may change their investment alternatives semi-annually.
The Plan is administered by the Administrative Committee (the "Committee")
appointed by the Company's Board of Directors. Chase Manhattan Bank, N.A., an
independent third-party bank, is the Plan's trustee. The Company has the sole
right to appoint the trustee, and to terminate the Plan, subject to the
provisions of ERISA. The Company pays all significant administrative expenses.
Participants may borrow from their fund accounts up to a maximum equal to the
lessor of $50,000 or 50 percent of their account balance. Loan transactions are
treated as a transfer to/(from) the investment fund from/(to) the Participant
Loan Fund. Loan terms range from 1-5 years, except for the purchase of a primary
residence, which term may be a reasonable period of time that may exceed five
years. The loans are secured by the balance in the participant's account and
bear interest at a rate commensurate with local prevailing rates as determined
by the Plan Administrator. Principal and interest is paid ratably through
monthly payroll deductions.
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
participants will become 100 percent vested in their accounts.
The foregoing description of the Plan provides only general information.
Additional information about the plan agreement, forfeitures, and distributions
from the Plan may be obtained from the Committee.
2. SIGNIFICANT ACCOUNTING POLICIES
VALUATION OF INVESTMENTS
Investments in common stock of CUNO Incorporated are carried at the closing
market price on the last business day of the year. Participant loans receivable
are valued at cost which approximates fair value.
Investments in mutual funds are carried at the fair value of their underlying
net assets as determined by their respective fund managers, based primarily on
market data.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
-6-
<PAGE> 11
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires the administrator to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
3. INCOME TAX STATUS
On December 31, 1996, the Internal Revenue Service ruled that the Plan qualifies
under Section 401(a) of the Internal Revenue Code and is, therefore, not subject
to tax under present income tax law. Once qualified, the Plan is required to
operate in conformity with the Internal Revenue Code to maintain its
qualification. The Plan Administrator is not aware of any course of action or
series of events that have occurred that might adversely affect the Plan's
qualified status.
4. TRANSACTIONS WITH PARTIES-IN-INTEREST
The statements of changes in assets available for benefits reflect non cash
matching contributions from the Company consisting of shares of the Company's
common stock. Such shares are recorded based on their fair market value.
5. YEAR 2000 ISSUE (UNAUDITED)
The Plan Sponsor has developed a plan to modify its internal information
technology to be ready for the year 2000 and has begun converting critical data
processing systems. The project also includes determining whether third party
service providers have reasonable plans in place to become year 2000 compliant.
The Plan Sponsor currently expects the project to be substantially complete by
early 1999. The Plan Sponsor does not expect this project to have a significant
effect on plan operations.
-7-
<PAGE> 12
CUNO INCORPORATED SAVINGS AND RETIREMENT PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
CURRENT
IDENTITY OF PARTY DESCRIPTION OF INVESTMENT COST VALUE
- ----------------- ------------------------- ---- -----
<S> <C> <C> <C>
Benham Stable Asset Fund Units $ 2,467,867 $ 2,467,867
Benham Intermediate Term Treasury Fixed Income Fund Units 679,387 691,866
American Century Strategic Allocation: Conservative Fund Units 572,241 572,314
American Century Strategic Allocation: Moderate Fund Units 1,425,987 1,490,694
American Century Strategic Allocation: Aggressive Fund Units 1,310,485 1,374,418
Barclays Equity Index Fund Units 1,854,184 2,182,462
Twentieth Century Ultra Fund Units 3,597,396 3,279,829
American Century Value Fund Units 233,667 211,977
Twentieth Century International Growth Fund Units 133,990 116,189
American Century Equity Growth Fund Units 259,059 251,038
CUNO Incorporated Common stock 1,515,964 1,567,540
CUNO Incorporated Common stock 119,140 107,896
Participant Notes Loans receivable -- 330,483
----------- -----------
$14,169,367 $14,644,573
=========== ===========
</TABLE>
All of the above parties are considered parties-in-interest.
-8-
<PAGE> 13
CUNO INCORPORATED SAVINGS AND RETIREMENT PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
CURRENT
IDENTITY OF PARTY DESCRIPTION OF INVESTMENT COST VALUE
- ----------------- ------------------------- ---- -----
<S> <C> <C> <C>
Benham Stable Asset Fund Units $1,321,654 $1,321,654
Benham Intermediate Term Treasury Fixed Income Fund Units 352,090 350,373
American Century Strategic Allocation: Conservative Fund Units 309,174 308,569
American Century Strategic Allocation: Moderate Fund Units 740,480 740,506
American Century Strategic Allocation: Aggressive Fund Units 659,168 657,852
Barclays Equity Index Fund Units 785,619 770,155
Twentieth Century Ultra Fund Units 1,379,687 1,347,926
CUNO Incorporated Common stock 1,017,840 1,016,305
Participant Notes Loans receivable -- 209,180
---------- ----------
$6,565,712 $6,722,520
========== ==========
</TABLE>
All of the above parties are considered parties-in-interest.
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<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-39763) pertaining to the CUNO Incorporated 1996 Stock Incentive
Plan, CUNO Incorporated Non-Employee Directors' Stock Option Plan and CUNO
Incorporated Savings and Retirement Plan of our report dated June 24, 1998, with
respect to the financial statements and schedules of the CUNO Incorporated
Savings and Retirement Plan included in this Annual Report (Form 11-K) for the
year ended December 31, 1997.
Hartford, Connecticut
June 29, 1998 /s/ Ernst & Young LLP
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