GELMAN SCIENCES INC, S-2/A, 1995-03-22

GELMAN SCIENCES INC
S-2/A, 1995-03-22
LABORATORY APPARATUS & FURNITURE

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 22, 1995

Registration No. 33-88808
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------

AMENDMENT NO. 3

TO
FORM S-2

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------

GELMAN SCIENCES INC.
(Exact name of Registrant as specified in its charter)

MICHIGAN
(State or other jurisdiction
of incorporation or organization)
38-1614806
(I.R.S. Employer Identification No.)

600 SOUTH WAGNER ROAD
ANN ARBOR, MICHIGAN 48103-9019
(313) 665-0651
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
------------------------------

JAMES J. FAHRNER, VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
GELMAN SCIENCES INC.
600 SOUTH WAGNER ROAD
ANN ARBOR, MICHIGAN 48103-9019
(313) 665-0651
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

Copies to:

STANLEY E. EVERETT
BROUSE & MCDOWELL
500 FIRST NATIONAL TOWER
AKRON, OHIO 44308
(216) 535-5711
CHRISTOPHER B. NOYES
GODFREY & KAHN, S.C.
780 NORTH WATER STREET
MILWAUKEE, WISCONSIN 53202
(414) 273-3500

------------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

CALCULATION OF ADDITIONAL REGISTRATION FEE

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<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH ADDITIONAL PROPOSED MAXIMUM AGGREGATE AMOUNT OF
CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE OFFERING ADDITIONAL
TO BE REGISTERED REGISTERED(1) PER UNIT(2) PRICE(2) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock............................ 287,500 $ 13.875 $ 3,989,062.50 $ 1,375.54(2)
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</TABLE>

(1) On January 27, 1995, the Registrant paid a filing fee of $5,403.02 with
respect to an offering of 1,150,000 shares of Common Stock in connection
with the initial filing of the Registrant's Registration Statement on Form
S-2. The Registrant is increasing the number of shares to be offered from
1,150,000 shares to 1,437,500, including 187,500 additional shares subject
to an overallotment option granted to the Underwriters.

(2) Calculated in accordance with Rule 457(c) solely for purposes of computing
the registration fee and based upon the average of the high and the low
prices of the Common Stock reported on the American Stock Exchange on March
20, 1995.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /

If the Registrant elects to deliver its latest annual report to security
holders, or a compete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this Form, check the following box. / /

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2

GELMAN SCIENCES INC.
CROSS REFERENCE SHEET

<TABLE>
<CAPTION>
FORM S-2 ITEM CAPTION OR LOCATION IN PROSPECTUS
- --------------------------------------------- ---------------------------------------------
<S> <C>
1. Forepart of the Registration Statement
and Outside Front Cover Page of
Prospectus...............................
Facing Page of Registration Statement; Cross-
Reference Sheet; Outside Front Cover Page of
Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus............................
Inside Front Cover Page of Prospectus;
Available Information; Incorporation of
Certain Documents by Reference; Table of
Contents; Outside Back Cover Page of
Prospectus
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges.......
Summary; Investment Considerations
4. Use of Proceeds..........................
Use of Proceeds
5. Determination of Offering Price..........
Not Applicable
6. Dilution.................................
Not Applicable
7. Selling Security Holders.................
Not Applicable
8. Plan of Distribution.....................
Underwriting
9. Description of Securities to be
Registered...............................
Description of Capital Stock
10. Interests of Named Experts and Counsel...
Not Applicable
11. Information with Respect to the
Registrant...............................
Business; Index to Financial Statements;
Price Range of Common Stock and Dividend
Policy; Selected Consolidated Financial
Information; Management's Discussion and
Analysis of Financial Condition and Results
of Operations
12. Incorporation of Certain Information by
Reference................................
Incorporation of Certain Documents by
Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities..............................
Not Applicable
</TABLE>
<PAGE> 3

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such state.

SUBJECT TO COMPLETION, DATED MARCH 21, 1995

PROSPECTUS

1,250,000 SHARES

[GELMAN LOGO]

COMMON STOCK

All of the shares of Common Stock offered hereby are being sold by Gelman
Sciences Inc. (the "Company"). The Common Stock of the Company is listed on the
American Stock Exchange under the symbol "GSC." On March 21, 1995, the last
reported sale price of the Common Stock was $14.625 per share. See "Price Range
of Common Stock and Dividend Policy."

-------------------------

SEE "INVESTMENT CONSIDERATIONS" FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
-------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

<TABLE>
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- ------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) THE COMPANY(2)
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<S> <C> <C> <C>
Per Share....................................... $ $ $
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Total(3)........................................ $ $ $
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
</TABLE>

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."

(2) Before deducting expenses payable by the Company estimated at $300,000.

(3) The Company has granted to the Underwriters a 30-day option to purchase up
to an additional 187,500 shares of Common Stock solely to cover
over-allotments, if any, on the same terms and conditions as set forth
above. If the option is exercised in full, the total Price to Public, total
Underwriting Discount and total Proceeds to the Company will be $ ,
$ and $ , respectively. See "Underwriting."

-------------------------

The shares of Common Stock are offered by the several Underwriters when, as
and if delivered to and accepted by the Underwriters and subject to various
conditions, including their right to reject orders in whole or in part. It is
expected that the shares of Common Stock will be ready for delivery on or about
March , 1995.
-------------------------

CLEARY GULL REILAND & MCDEVITT INC.

MCDONALD & COMPANY
Securities, Inc.
RONEY & CO.

The date of this Prospectus is March , 1995
<PAGE> 4

LABORATORY PRODUCTS

<TABLE>
<S> <C>
[Three photographs of the Company's The Company's laboratory products are
products manufactured for the utilizedin the biotechnology
biotechnology and pharmaceutical and pharmaceutical markets for new
markets.] drug and product development,
sample preparation and testing, fluid
sterilization, environmental testing and
academic research.
</TABLE>

MEDICAL DEVICES

<TABLE>
<S> <C>
[Two photographs of the Company's Medical devices are used
products used in healthcare in healthcare applications
applications.] such as the diagnosis and
treatment of disease,
delivery of intravenous
solutions to patients and
hemodialysis treatment.
</TABLE>

------------------------------

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE AMERICAN STOCK EXCHANGE OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

2
<PAGE> 5

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission can be
inspected and copied at public reference facilities maintained by the Commission
at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, or at its Regional
Offices located at Suite 1400, 500 West Madison Street, Chicago, Illinois
60661-2511; and Suite 1300, 7 World Trade Center, New York, New York 10007, and
copies of such materials can be obtained from the Public Reference Section of
the Commission, at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Such reports, proxy statements and other information can also be
inspected at the offices of the American Stock Exchange, 86 Trinity Place, New
York, New York 10006.

This Prospectus constitutes a part of a registration statement filed by the
Company with the Commission under the Securities Act of 1933, as amended. This
Prospectus omits certain of the information contained in the Registration
Statement, and reference is hereby made to the Registration Statement and
related exhibits for further information with respect to the Company and the
securities offered hereby. Any statements contained herein concerning the
provisions of any document are not necessarily complete, and in such instance
reference is made to the copy of such document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference.

------------------------------

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by the Company with the Commission are
incorporated by reference in this Prospectus:

(1) The Company's Annual Report on Form 10-K for the fiscal year ended
July 31, 1994; and

(2) The Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended October 31, 1994 and January 31, 1995.

Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus. The
Company will provide without charge to each person to whom a copy of this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any document incorporated by reference in this Prospectus (other than
exhibits unless such exhibits are expressly incorporated by reference in such
documents). Requests should be directed to Shareholder Relations, Gelman
Sciences Inc., 600 South Wagner Road, Ann Arbor, Michigan 48103-9019; telephone
(313) 665-0651.

3
<PAGE> 6

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements, including the notes thereto,
appearing elsewhere in this Prospectus. Unless otherwise indicated, information
in this Prospectus relating to share data reflects two 3-for-2 stock splits
effective December 28, 1993 and August 12, 1994 and assumes that the
Underwriters' over-allotment option is not exercised. As reflected herein, the
Company has adopted a convention of referring to a fiscal year by the year in
which the fiscal year ends. For example, the fiscal year ended July 31, 1994 is
referred to herein as "fiscal 1994."

THE COMPANY

The Company designs, manufactures and markets a comprehensive line of
specialty microfiltration products for the separation, purification and
sterilization of liquids and gases. The Company's core technologies are the
manufacturing of microporous membranes which serve as a barrier, filter or
separator of microscopic particles and the packaging and sealing of these
membranes into microfiltration products. The Company's products include syringe,
capsule and cartridge filters, microporous membranes and other microfiltration
products. Microfiltration products with healthcare applications account for over
60% of the Company's sales. These products are sold to biotechnology,
pharmaceutical and healthcare companies for use in the research, development and
manufacturing of new drugs and vaccines and their administration to patients.
The Company believes that it offers a greater variety of membranes and
microfiltration products in its markets than any other manufacturer and that it
has built significant brand recognition, particularly in scientific and
industrial laboratories. Nearly all of the Company's microfiltration products
are disposable, and many are used in high volume applications requiring regular
replacement.

The Company's products are marketed worldwide for scientific and industrial
applications in the biotechnology/pharmaceutical, medical/healthcare, high
technology manufacturing and environmental markets. The Company's product lines
include:

- Laboratory products are utilized in the biotechnology and pharmaceutical
markets for new drug and product development, sample preparation and
testing, fluid sterilization, environmental testing and academic
research.

- Process filtration products are used in high technology manufacturing
applications such as sterilization of pharmaceutical products,
ultrapurification of water for the manufacture of semiconductor chips and
the production of ultrapure chemicals.

- Medical devices are used in healthcare applications such as the diagnosis
and treatment of disease, delivery of intravenous solutions to patients
and hemodialysis treatment.

- Membranes are sold primarily to medical products manufacturers who
incorporate them into products such as medical devices and diagnostic
kits for early detection of pregnancy and monitoring levels of
cholesterol and glucose.

Over the last several years, the Company resolved environmental lawsuits
relating to groundwater contamination at its Ann Arbor, Michigan manufacturing
facility, divested all non-core product lines and strengthened senior
management. As a result of these actions, the Company has been able to focus on
those microfiltration products which provide the Company a competitive advantage
and brand name recognition. The Company has developed growth and operating
strategies which focus its sales, marketing and manufacturing efforts on these
products. These strategies have accelerated sales growth and improved
profitability in the Company's operations. Year over year sales growth of the
Company's core products increased from 5% in fiscal 1990 to 12% in fiscal 1994.
The Company's operating earnings increased from $427,000 in fiscal 1990 to $9.2
million in fiscal 1994.

4
<PAGE> 7

The Company believes that the worldwide demand for microfiltration products
in its markets is approximately $1.4 billion and is growing as a result of a
broadening base for filter applications, increasing concern for consumer safety,
a trend toward finer and more economical filtration, more stringent governmental
regulations and intensive research efforts to find cures for contagious, genetic
and other diseases. Management's strategy is to focus on geographic areas and
product applications in which microfiltration needs are expected to exceed
overall market growth. This growth strategy is being implemented by (a) focusing
on the Company's microfiltration products with competitive advantages and brand
name recognition; (b) strengthening the Company's international management team
and distributor network in order to build its presence in the growing
international marketplace; (c) marketing to large multinational companies the
benefits of purchasing their worldwide filtration requirements from a single
supplier; (d) accelerating new product development and introduction; and (e)
pursuing new market opportunities for the Company's microfiltration products.
The Company's internal projections reflect $200 million in sales in fiscal 1998
primarily as a result of growth in international sales. The Company believes
that its existing manufacturing facilities can accommodate this sales growth.
See "Investment Considerations" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations," as well as the other information
included elsewhere herein or incorporated herein by reference, which prospective
investors should consider prior to purchasing shares of the Common Stock offered
hereby. In addition to sales growth, management has been implementing a strategy
to increase profitability by (i) reducing product scrap and waste; (ii)
increasing automation to reduce labor content; (iii) consolidating suppliers to
improve the quality and reduce the cost of purchased materials; (iv) targeting
sales efforts on high margin microfiltration products and membranes; and (v)
increasing capacity utilization.

The Company is a Michigan corporation with its executive offices at 600
South Wagner Road, Ann Arbor, Michigan 48103-9019; telephone (313) 665-0651.

THE OFFERING

<TABLE>
<S> <C>
Common Stock Offered........................ 1,250,000 shares
Common Stock to be Outstanding after the
Offering.................................. 7,468,969 shares(1)
Use of Proceeds............................. Repayment of certain indebtedness
American Stock Exchange Symbol.............. GSC
</TABLE>

- -------------------------
(1) Does not include 782,296 shares of Common Stock issuable upon the exercise
of outstanding stock options and warrants at January 31, 1995. See Note F to
the Consolidated Financial Statements.

5
<PAGE> 8

SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JANUARY 31,
YEAR ENDED JULY 31, (UNAUDITED)
----------------------------------------------------- ------------------
1990 1991 1992 1993 1994 1994 1995
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Net sales................ $73,294 $76,516 $81,460 $86,209 $94,963 $45,576 $48,185
Gross profit............. 33,848 35,726 38,499 42,545 47,710 22,546 24,602
Pollution-related
expenses.............. 223 806 4,988(1) 543 -- -- --
Operating earnings....... 427 3,189 1,519 6,738 9,226 3,999 4,780
Interest expense......... 2,823 2,851 2,590 2,006 1,689 878 882
Net earnings (loss)
before extraordinary
items................. (1,955) 88 (859) 2,702 4,937 1,992 2,487
Net earnings (loss)...... (1,955) 88 (1,211)(2) 2,702 4,754(3) 1,992 2,487
PER SHARE DATA
Net earnings (loss)
before extraordinary
items................. $ (.37) $ .02 $ (.15) $ .47 $ .78 $ .32 $ .38
Net earnings (loss)...... (.37) .02 (.21)(2) .47 .75(3) .32 .38
Weighted average shares
outstanding(4)........ 5,254 5,575 5,662 5,751 6,308 6,183 6,597
OTHER DATA
Capital expenditures..... $ 9,657 $ 4,491 $ 4,027 $ 5,860 $ 6,682 $ 3,446 $ 3,207
Depreciation and
amortization.......... 4,067 4,186 4,219 4,452 4,396 2,251 2,092
</TABLE>

<TABLE>
<CAPTION>
JANUARY 31, 1995
(UNAUDITED)
-------------------------
ACTUAL AS ADJUSTED(5)
------- --------------
<S> <C> <C>
BALANCE SHEET DATA
Working capital..................................................... $23,862 $ 27,362
Total assets........................................................ 74,902 74,902
Total debt.......................................................... 26,527 9,643
Stockholders' equity................................................ 33,615 50,499
</TABLE>

(2) Includes an extraordinary charge of $352,000 or $.06 per share (net of tax
benefit) for settlement of product liability litigation. See Note K to the
Consolidated Financial Statements.

(3) Includes an extraordinary charge of $183,000 or $.03 per share (net of tax
benefit) for deferred finance charges, redemption premium and fees relating
to the redemption of industrial development revenue bonds issued by the
Company in 1989. See Notes B and K to the Consolidated Financial
Statements.

(4) The number of weighted average shares outstanding includes common stock
equivalents (stock options and warrants) outstanding during the fiscal
year.

(5) Adjusted to reflect the sale by the Company of the 1,250,000 shares of
Common Stock offered hereby and the application of the estimated net
proceeds therefrom. See "Use of Proceeds."

6
<PAGE> 9

INVESTMENT CONSIDERATIONS

Prospective investors should carefully consider the investment
considerations set forth below, as well as other information included elsewhere
herein or incorporated herein by reference, prior to purchasing shares of the
Common Stock offered hereby.

LOSS OF KEY DISTRIBUTORS

The Company's sales to three laboratory products distributors were
approximately $22 million or 23% of total sales in fiscal 1994. These
distributors resell the Company's products and other laboratory products to
end-user customers. The loss of any one of these distributors could have an
adverse effect on the Company's sales and results of operations. Management
believes the loss of any one of these distributors is unlikely due to the
Company's long-term relationship with these distributors and the investments
made by these distributors in inventory, promotional programs and training of
their sales forces. See "Business -- Sales and Marketing" and "-- Customers."

ADEQUACY OF RESERVE FOR ENVIRONMENTAL LIABILITIES

The Company is performing a remediation plan pursuant to a consent decree
dated October 26, 1992 with the State of Michigan relating to groundwater
contamination at its Ann Arbor manufacturing facility. The remediation plan
requires the Company to treat the groundwater to the extent necessary to reduce
the contaminants to a defined level. Total costs to the Company of
pollution-related activities will be dependent upon the efficacy and duration of
the remediation plan, obtaining a cost-free repository for treated groundwater
and settlement of private environmental lawsuits. As of January 31, 1995, the
Company had accrued $1.1 million to cover the future costs and expenses of the
remediation plan and settlement of private environmental lawsuits. The Company
believes that the reserve is adequate to cover all such future costs and
expenses; however, there can be no assurance that future events will not have an
effect on the required amount of the reserve. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Business --
Environmental Matters," and Note G to the Consolidated Financial Statements.

COMMON STOCK OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS; AVAILABILITY OF
PREFERRED STOCK

Upon completion of the Offering, directors and executive officers of the
Company will beneficially own approximately 21% of the Common Stock, including
17% owned by Charles Gelman, Chairman, Chief Executive Officer and a director of
the Company. Accordingly, Mr. Gelman, if he acts alone or together with other
directors and executive officers, would have the ability to significantly
influence certain corporate transactions requiring shareholder approval. Among
other provisions, the Company's Restated Articles of Incorporation authorize the
Board of Directors to issue from time to time, in one or more designated series,
shares of Preferred Stock with such voting, dividend, redemption, conversion and
exchange provisions as the Board of Directors determines. Since the issuance of
shares of Preferred Stock could be made convertible into shares of Common Stock,
their issuance could dilute the voting power of holders of Common Stock and
could discourage certain takeover attempts which might be viewed by some
shareholders of the Company to be in their best interests. See "Description of
Capital Stock."

USE OF PROCEEDS

Based on an assumed public offering price of $14.625 per share, the net
proceeds to the Company from the Offering are estimated to be $16,884,375. The
Company intends to apply the net proceeds to repay a term note payable to NBD
Bank, N.A. and to reduce outstanding indebtedness under the Company's Credit
Agreement with NBD Bank, N.A. and Comerica Bank (the "Credit Agreement"). The
term note bears interest at the 90-day London Interbank Offered Rate plus 1.375%
per annum (7.95% at March 21, 1995), and the outstanding indebtedness under the
Credit Agreement bears interest at a variable rate (7.61% at February 23, 1995).
The term note is due and payable in full on December 31, 1995 and the Credit
Agreement expires on December 31, 1996. See "Capitalization" and Note B to the
Consolidated Financial Statements.

7
<PAGE> 10

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

The Common Stock is listed and traded on the American Stock Exchange under
the symbol "GSC." The following table sets forth, for the periods indicated, the
high and low sale prices of the Common Stock as reported on the American Stock
Exchange:

<TABLE>
<CAPTION>
FISCAL QUARTER ENDED HIGH LOW
----------------------------------------------------- ---- ----
<S> <C> <C>
FISCAL 1993:
October 31......................................... $4 1/8 $3 3/8
January 31......................................... $5 7/8 $3 7/8
April 30........................................... $6 5/8 $5 3/8
July 31............................................ $7 3/4 $5 3/4
FISCAL 1994:
October 31......................................... $8 3/8 $ 7
January 31......................................... $11 1/4 $7 3/8
April 30........................................... $12 1/2 $ 10
July 31............................................ $ 14 $10 1/8
FISCAL 1995:
October 31......................................... $15 1/4 $12 1/2
January 31......................................... $15 7/8 $11 5/8
April 30 (through March 21, 1995).................. $ 15 $ 12
</TABLE>

The last sale price of the Common Stock as reported on the American Stock
Exchange on March 21, 1995 was $14 5/8. At March 21, 1995, there were
approximately 1,200 beneficial holders of the Common Stock.

The Company has never paid a cash dividend and intends to retain all
earnings for investment in and growth of the Company's business. The payment of
future dividends, if any, will be determined by the Board of Directors in light
of existing conditions, including the Company's earnings, financial condition
and requirements, restrictions in financing agreements, business conditions and
other factors deemed relevant by the Board of Directors. Financial covenants and
other restrictions in the Credit Agreement limit the payment of cash dividends
on the Common Stock.

8
<PAGE> 11

CAPITALIZATION

The following table sets forth the unaudited consolidated short-term debt
and capitalization of the Company as of January 31, 1995 and as adjusted to give
effect to the estimated net proceeds obtained upon the sale of the shares of
Common Stock offered hereby and the application of the net proceeds to reduce
indebtedness. This table should be read in conjunction with the Consolidated
Financial Statements and the related notes thereto.

<TABLE>
<CAPTION>
JANUARY 31, 1995
(UNAUDITED)
----------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Short-term debt, including current portion of long-term debt............ $ 5,788 $ 2,288
======= =========
Long-term debt, less current portion.................................... $20,739 $ 7,355
------- -----------
Stockholders' equity:
Preferred stock, par value $1.00 per share, 500,000 shares authorized,
none outstanding................................................... -- --
Common stock, par value $.10 per share, 15,000,000 shares authorized,
6,218,969 shares issued and outstanding; 7,468,969 as
adjusted(1)........................................................ 622 747
Additional capital.................................................... 14,670 31,429
Retained earnings..................................................... 19,579 19,579
Foreign currency translation adjustments.............................. (806) (806)
Less loan to Employee Stock Ownership Plan............................ (450) (450)
------- -----------
Total stockholders' equity......................................... 33,615 50,499
------- -----------
Total capitalization............................................. $54,354 $57,854
======= =========
</TABLE>

9
<PAGE> 12

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data shown below for, and as of the end
of, each of the five years in the five-year period ended July 31, 1994 has been
derived from the Consolidated Financial Statements of the Company. The
Consolidated Financial Statements of the Company as of July 31, 1993 and 1994
and for the years ended July 31, 1992, 1993 and 1994, together with the related
Report of Independent Auditors by Coopers & Lybrand, L.L.P., are included
elsewhere herein. The Consolidated Financial Statements of the Company for the
years ended July 31, 1990 and 1991 were audited by Coopers & Lybrand, L.L.P.,
whose report thereon dated September 29, 1992 except for Notes B and H as to
which the date was October 26, 1992, included an explanatory paragraph
indicating that the ultimate costs of the environmental remediation program
agreed to by the Company could exceed the amount estimated and accrued. The
selected consolidated financial data shown below for the six months ended
January 31, 1994 and 1995, are derived from unaudited consolidated financial
statements of the Company which, in the opinion of management, reflect all
adjustments (consisting only of normal recurring accruals) necessary to fairly
present such information in accordance with generally accepted accounting
principles for the unaudited interim periods. The following data should be read
in conjunction with the Consolidated Financial Statements and related notes
thereto included elsewhere herein and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JANUARY 31,
YEAR ENDED JULY 31, (UNAUDITED)
----------------------------------------------- -----------------
1990 1991 1992 1993 1994 1994 1995
------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Net sales............................................. $73,294 $76,516 $81,460 $86,209 $94,963 $45,576 $48,185
Cost of products sold............................... 39,446 40,790 42,961 43,664 47,253 23,030 23,583
------- ------- ------- ------- ------- ------- -------
Gross profit.......................................... 33,848 35,726 38,499 42,545 47,710 22,546 24,602
Selling and administrative expenses................. 29,018 28,815 29,232 31,044 33,785 16,299 17,320
Research and development expenses .................. 4,606 3,733 3,242 4,139 4,877 2,326 2,624
Pollution-related expenses.......................... 223 806 4,988(1) 543 -- -- --
Other expense (income) -- net....................... (426) (817) (482) 81 (178) (78) (122)
------- ------- ------- ------- ------- ------- -------
Operating earnings.................................... 427 3,189 1,519 6,738 9,226 3,999 4,780
Interest expense...................................... 2,823 2,851 2,590 2,006 1,689 878 882
------- ------- ------- ------- ------- ------- -------
Earnings (loss) before income taxes and extraordinary
items............................................... (2,396) 338 (1,071) 4,732 7,537 3,121 3,898
Income taxes (credit)................................. (441) 250 (212) 2,030 2,600 1,129 1,411
------- ------- ------- ------- ------- ------- -------
Net earnings (loss) before extraordinary items........ (1,955) 88 (859) 2,702 4,937 1,992 2,487
Extraordinary items(2)................................ -- -- (352) -- (183) -- --
------- ------- ------- ------- ------- ------- -------
Net earnings (loss)................................... $(1,955) $ 88 $(1,211) $ 2,702 $ 4,754 $ 1,992 $ 2,487
======= ======= ======= ======= ======= ======= =======
PER SHARE DATA
Primary earnings (loss) before extraordinary
items(3)............................................ $ (.37) $ .02 $ (.15) $ .47 $ .78 $ .32 $ .38
Extraordinary items(2)................................ -- -- (.06) -- (.03) -- --
------- ------- ------- ------- ------- ------- -------
Primary earnings (loss)(3)............................ $ (.37) $ .02 $ (.21) $ .47 $ .75 $ .32 $ .38
======= ======= ======= ======= ======= ======= =======
Primary weighted average common shares
outstanding(4)...................................... 5,254 5,575 5,662 5,751 6,308 6,183 6,597
</TABLE>

<TABLE>
<CAPTION>
JANUARY 31,
JULY 31, (UNAUDITED)
----------------------------------------------- -----------------
1990 1991 1992 1993 1994 1994 1995
------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Cash.................................................. $ 205 $ 811 $ 867 $ 1,142 $ 1,525 $ 883 $ 1,906
Accounts receivable -- net............................ 15,774 16,348 16,529 17,088 20,859 18,845 21,680
Inventories........................................... 14,566 13,827 13,331 12,986 13,990 14,139 14,183
Working capital....................................... 21,418 21,943 8,211 19,133 23,450 21,073 23,862
Total assets.......................................... 62,968 62,903 61,530 63,495 71,687 67,941 74,902
Long-term debt including current portion.............. 30,946 30,415 25,624 23,854 23,649 25,437 24,809
Total liabilities..................................... 43,068 42,759 41,879 41,239 41,252 43,119 41,287
Stockholders' equity.................................. 19,900 20,144 19,651 22,256 30,435 24,822 33,615
</TABLE>

- -------------------------
(1) Includes a $4.0 million charge for settlement of environmental lawsuits and
costs of a remediation plan initiated in fiscal 1992 as part of such
settlement. See Note G to the Consolidated Financial Statements.
(2) The amount for fiscal 1994 is a charge (net of tax benefit) for deferred
finance charges, redemption premium and fees relating to the redemption of
industrial development revenue bonds issued by the Company in 1989, and the
amount for fiscal 1992 is a charge (net of tax benefit) for settlement of
product liability litigation. See Notes B and K to the Consolidated
Financial Statements.
(3) Fully diluted earnings per share for fiscal 1993 were $.45 based on the
weighted average number of common and common equivalent shares outstanding
of 5,952,710. The computation for fully diluted earnings per share was equal
to primary earnings per share for fiscal 1990, 1991, 1992 and 1994 and the
six months ended January 31, 1994 and 1995.
(4) Includes common stock equivalents (stock options and warrants) outstanding
during the fiscal year.

10
<PAGE> 13

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

Over the last several years, the Company resolved environmental lawsuits
relating to groundwater contamination at its Ann Arbor manufacturing facility,
divested all non-core product lines and strengthened its senior management team.
As a result of these actions, the Company has been able to focus on those
microfiltration products where the Company has a competitive advantage and brand
name recognition. The Company, which strives to be the highest quality, lowest
cost producer of microfiltration products, has developed growth and operating
strategies which focus its sales, marketing and manufacturing efforts on these
products. Year over year sales growth of the Company's core products increased
from 5% in fiscal 1990 to 12% in fiscal 1994. The Company's operating earnings
increased from $427,000 in fiscal 1990 to $9.2 million in fiscal 1994. The
Company's growth and operating strategies include:

- Concentrating the Company's global sales and marketing efforts on
the biotechnology/ pharmaceutical and medical/healthcare markets where
management believes that the Company has the greatest opportunity for
profitability and growth. In fiscal 1994, over 60% of the Company's sales
were to these markets, marking a shift from the Company's past industrial
focus. The Company has strengthened its global sales and marketing
management in the United States, Japan, France and Germany, the Company's
four largest markets.

- Utilizing continuous improvement programs and increased automation
to reduce product scrap and waste and the labor content of products. In
fiscal 1992, the Company completed the construction of its state-of-the-art
membrane manufacturing facility in Pensacola, Florida. This facility
produces membranes more efficiently and at lower cost than previously in
its Ann Arbor facility. In fiscal 1994, the Company reengineered its plant
lay-out in Ann Arbor thereby improving manufacturing efficiencies. During
the period from fiscal 1990 to fiscal 1994, gross profit as a percentage of
net sales improved from 46.2% to 50.2%.

- Focusing on controlling operating expenses. From fiscal 1990 to
fiscal 1994, selling and administrative expenses as a percentage of net
sales decreased from 39.6% to 35.6% through a combination of cost controls
and increased sales volume.

RESULTS OF OPERATIONS

The following table sets forth certain statement of operations data as a
percentage of net sales for the periods indicated.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JULY 31, JANUARY 31,
--------------------------- ----------------
1992 1993 1994 1994 1995
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net sales.................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of products sold...................... 52.7 50.6 49.8 50.5 48.9
----- ----- ----- ----- -----
Gross profit................................. 47.3 49.4 50.2 49.5 51.1
Selling and administrative expenses........ 35.9 36.0 35.6 35.8 35.9
Research and development expenses.......... 4.0 4.8 5.1 5.1 5.5
Pollution-related expenses................. 6.1 0.7 -- -- --
Other expense (income) -- net.............. (0.6) 0.1 (0.2) (0.2) (0.2)
----- ----- ----- ----- -----
Operating earnings........................... 1.9 7.8 9.7 8.8 9.9
Interest expense........................... 3.2 2.3 1.8 1.9 1.8
Income taxes (credit)...................... (0.3) 2.4 2.7 2.5 2.9
----- ----- ----- ----- -----
Net earnings (loss) before extraordinary
items...................................... (1.0) 3.1 5.2 4.4 5.2
Extraordinary items.......................... (0.4) -- (0.2) -- --
----- ----- ----- ----- -----
Net earnings (loss).......................... (1.4)% 3.1% 5.0% 4.4% 5.2%
===== ===== ===== ===== =====
</TABLE>

11
<PAGE> 14

Comparison of Six Months ended January 31, 1995 and 1994

Net sales for the six months ended January 31, 1995 increased $2.6 million
or 5.7% to $48.2 million as compared to net sales of $45.6 million for the six
months ended January 31, 1994. Net sales for the six months ended January 31,
1994 included (a) non-recurring sales of $3.0 million related to the Company's
Australian non-core product lines that have been divested and (b) a special
shipment of $800,000 of roll stock membrane to a single customer. This customer
has placed its annual order this year; however, the shipment dates are spread
over the next twelve months. Sales in the first half of fiscal 1995 were
favorably affected by the weakened U.S. dollar, which increased reported sales
by $798,000. The Company's sales growth, adjusted for these items, was 13.4%.

Sales to customers in North, Central and South America increased 10.8% over
the same period of the prior fiscal year primarily due to a 31.6% increase in
sales of medical devices. Sales to customers in Europe increased 17.0% mainly
due to increases in sales of process filtration products in Italy and France.
Sales to customers in the Asia/Pacific region declined 28.0% as a result of the
divestiture of the Australian non-core product lines. Without the effect of
these sales, Asia/Pacific sales would have increased 22.5%, primarily as a
result of increases in sales of process filtration products in Japan and Korea.
Worldwide sales of laboratory products, medical devices and process filtration
products increased 11.1%, 23.6% and 19.7%, respectively. Worldwide sales of
microporous membranes decreased 8.2% as a result of the special shipment to a
single customer in the first half of fiscal 1994. Without the effect of this
shipment, sales of microporous membranes would have increased 14.7%.

Gross profit increased $2.1 million or 9.1% to $24.6 million in the six
months ended January 31, 1995, compared to $22.5 million in the six months ended
January 31, 1994. As a percentage of net sales, gross profit increased to 51.1%
from 49.5%. The improvement in gross profit margin is primarily attributable to
the divesture of the lower margin non-core product lines and improved operating
efficiencies, which was partially offset by a less favorable product mix due to
lower membrane sales as a percentage of total net sales.

Selling and administrative expenses increased $1.0 million or 6.3% to $17.3
million in the six months ended January 31, 1995 compared to $16.3 million in
the six months ended January 31, 1994. The increase in selling and
administrative expenses was primarily due to efforts to implement the Company's
growth strategy, particularly in the international markets.

Research and development expenses increased to $2.6 million in the six
months ended January 31, 1995 as compared to $2.3 million in the six months
ended January 31, 1994, or 12.8%. As a percentage of net sales, these expenses
were 5.5% compared to 5.1%. The higher research and development spending is a
result of an increased effort to develop and modify products to meet customer
requirements.

The effective tax rate for each of the six months ended January 31, 1995
and 1994 was 36.2%.

Net earnings increased $495,000 or 24.8% to $2.5 million or $.38 per share
for the six months ended January 31, 1995 compared to $2.0 million or $.32 per
share for the six months ended January 31, 1994. As a percentage of net sales,
net earnings were 5.2% compared to 4.4%.

Comparison of Fiscal Years ended July 31, 1994 and 1993

Net sales for fiscal 1994 increased $8.8 million or 10.2% to $95.0 million
as compared to net sales of $86.2 million for fiscal 1993. Net sales to U.S.
customers were $59.8 million, an increase of $5.9 million or 11.0% over fiscal
1993. Sales to customers in international markets were $35.2 million, an
increase of $2.8 million or 8.7% as compared to fiscal 1993. The increase in
sales to U.S. customers was primarily attributable to growth in sales of medical
devices and microporous membranes. The international growth was partially offset
by fluctuations in foreign currency rates. Without the effects of the
fluctuations in foreign currency rates, the increase in international sales in
fiscal 1994 would have been 12% over fiscal 1993.

Worldwide sales of microporous membranes increased 35.6% compared to fiscal
1993. This growth was attributable to fulfilling significant orders from
original equipment manufacturers that use bulk membrane in

12
<PAGE> 15

filtration applications and diagnostic health care kits. Sales of products for
the medical devices market increased 24.1% in fiscal 1994 over fiscal 1993 due
primarily to increased sales of microfiltration products with hemodialysis
treatment and intravenous therapy applications. Industrial process product sales
increased 11.4% in fiscal 1994, with particularly strong sales in the
international markets. Laboratory product sales increased 4.0% over fiscal 1993.

Gross profit increased $5.2 million or 12.1% to $47.7 million in fiscal
1994 as compared to $42.5 million in fiscal 1993. As a percentage of net sales,
gross profit was 50.2% compared to 49.4%. The improvement in the Company's gross
profit margin was attributable to increased sales volume and a higher percentage
of microporous membrane sales which have a higher gross margin than other
products sold by the Company.

Selling and administrative expenses increased $2.7 million or 8.8% to $33.8
million in fiscal 1994 compared to $31.0 million in fiscal 1993. As a percentage
of net sales, these expenses declined to 35.6% compared to 36.0%. These expenses
increased over the prior fiscal year due primarily to higher selling expenses
resulting from increased sales.

Research and development expenses increased $738,000 or 17.8% to $4.9
million in fiscal 1994 compared to $4.1 million in fiscal 1993 due to a greater
new product development effort. As a percentage of net sales, research and
development expenses increased to 5.1% from 4.8% in fiscal 1993.

During fiscal 1994 all charges and cost recoveries related to pollution
expenses were recorded in a reserve maintained by the Company for
pollution-related charges. The Company had third party cost recoveries of
$750,000 from the settlement of a lawsuit against certain chemical companies.
The Company reached a settlement on a lawsuit for $561,000 with residents
located near its Ann Arbor facilities for damages related to groundwater
contamination. In addition, the Company incurred costs of $1.3 million related
to the implementation of a remediation plan and legal costs of $312,000 in
defense of these lawsuits. At July 31, 1994, the Company had accrued $1.5
million to complete the remediation plan and to pay for other costs associated
with groundwater contamination. The ultimate costs incurred by the Company as a
result of the groundwater contamination will depend on the efficacy and duration
of the remediation plan, obtaining a cost-free repository for treated
groundwater and settlement of private lawsuits. See "Business -- Environmental
Matters."

In a series of transactions in fiscal 1994, the Company's Australian
subsidiary sold all of its non-core product lines for cash and a note
receivable. Included in other expense (income) is a gain of $108,000 or $.02 per
share on the sale of the assets relating to the non-core products. Sales from
these product lines were $4.4 million and $5.0 million for fiscal 1994 and 1993,
respectively.

Interest expense decreased $317,000 or 15.8% to $1.7 million in fiscal 1994
compared to $2.0 million in fiscal 1993. This change was due to steps taken by
management to secure more favorable interest rates.

The Company's effective tax rate for fiscal 1994 was 34.5% as compared to
42.9% in fiscal 1993. The lower effective tax rate was attributable to use of
net operating loss carryforwards from certain foreign subsidiaries in fiscal
1994 and use of research and development tax credits.

Net earnings increased $2.1 million or 75.9% to $4.8 million or $.75 per
share in fiscal 1994 compared to $2.7 million or $.47 per share in fiscal 1993.
Net earnings included an extraordinary charge of $295,000 (net of $112,000 tax
benefit) or $.03 per share to write-off deferred finance charges and the payment
of a premium and fees incurred in connection with the redemption of industrial
development revenue bonds. Excluding these charges, net earnings would have been
$4.9 million or $.78 per share as compared with net earnings of $2.7 million or
$.47 per share in fiscal 1993.

Comparison of Fiscal Years ended July 31, 1993 and 1992

Net sales for fiscal 1993 increased $4.7 million or 5.8% to $86.2 million
from $81.5 million for fiscal 1992. Net sales to U.S. customers were $53.8
million, an increase of $6.2 million or 12.9% over fiscal 1992. Sales to
international customers were $32.3 million, a decrease of $1.4 million or 4.0%
compared to fiscal 1992. This decrease was mainly attributable to continued
down-sizing at the Company's Australian subsidiary and

13
<PAGE> 16

fluctuations in foreign exchange rates. Without the effect of the exchange rates
and the Australian down-sizing, growth in the international market would have
been 2.8% in fiscal 1993 over fiscal 1992. The Company believes the strong
performance in the U.S. market in fiscal 1993 was the result of new product
introductions and strong distributor relations.

Worldwide sales of laboratory products increased 12.5% over fiscal 1992
because of strong sales in the U.S. market. Sales of microporous membrane
increased 23.7% and sales of medical device products increased 13.2% in fiscal
1993. Industrial process product sales were slightly higher, increasing 3.1%.
This lower increase was primarily due to discontinuing the sale of certain
process microfiltration products to two customers.

Gross profit increased $4.0 million or 10.5% to $42.5 million in fiscal
1993 compared to $38.5 million in fiscal 1993. As a percentage of net sales,
gross profit improved to 49.4% compared to 47.3%. The improvement in the
Company's gross profit margin was the result of productivity improvements,
increased sales and a greater percentage of laboratory products and microporous
membrane sales which have higher margins over other products.

Selling and administrative expenses increased $1.8 million or 6.2% to $31.0
million in fiscal 1993 compared to $29.2 million in fiscal 1992. As a percentage
of net sales, these expenses were 36.0% compared to 35.9%. The higher
expenditures were attributable to the sales increase and an increase in
expenditures for marketing programs.

Research and development expenses increased $897,000 or 27.7% to $4.1
million in fiscal 1993 compared to $3.2 million in fiscal 1992. As a percentage
of net sales, research and development expenses were 4.8% compared to 4.0%. The
increased expenditures reflect the Company's efforts to ensure timely
development of new products.

Pollution-related expenses decreased $4.4 million to $543,000 in fiscal
1993 compared to $5.0 million in fiscal 1992. As a percentage of net sales,
these expenses were 0.6% compared to 6.1%. This change was primarily
attributable to a $4.0 million charge for the settlement of the environmental
lawsuits with the State of Michigan in fiscal 1992.

Other expense (income)-net declined $563,000 due mainly to net losses on
foreign currency transactions in fiscal 1993 compared with net gains in fiscal
1992.

Interest expense decreased $584,000 or 22.6% to $2.0 million in fiscal 1993
compared to $2.6 million in fiscal 1992. These changes were due to lower debt
levels and more favorable interest rates.

The Company's effective tax rate for fiscal 1993 was 42.9% which compares
with a tax benefit of 19.8% in fiscal 1992 due to the environmental charge.

Net earnings for fiscal 1993 were $2.7 million or $.47 per share in fiscal
1993 compared to a loss of $1.2 million or $.21 per share in fiscal 1992. The
loss for fiscal 1992 was attributable to the settlement of a product liability
lawsuit and the environmental settlement with the State of Michigan Department
of Natural Resources. Without these two significant items, the Company would
have reported net earnings of $1.7 million or $.30 per share.

LIQUIDITY AND CAPITAL RESOURCES

Net cash flow provided by operating activities was $8.4 million, $8.2
million, $4.5 million and $2.2 million for the fiscal years ended July 31, 1992,
1993, 1994 and the six-month period ended January 31, 1995, respectively. The
lower level of cash provided by operations in fiscal 1994 was attributable to
higher inventories and accounts receivable as a result of the increased sales
volume and increasing inventory levels for delivery performance. The Company's
cash balances were $867,000, $1.1 million, $1.5 million and $1.9 million at July
31, 1992, 1993, 1994 and January 31, 1995, respectively.

Net cash flow provided by financing activities in fiscal 1994 included the
receipt of $992,000 related to a note receivable and $924,000 for stock options
exercised. During the year, the Company recorded and received

14
<PAGE> 17

a tax benefit of $608,000 from the exercise of non-qualified stock options. Net
cash flow provided by investing activities in fiscal 1994 included the receipt
of $820,000 plus a note receivable for $726,000 relating to the sale of the
Company's non-core product lines. The cash proceeds from the sale of these
product lines were used to reduce indebtedness of the Australian subsidiary.

Capital expenditures for the fiscal years ended July 31, 1992, 1993, 1994
and the six months ended January 31, 1995, were $4.0 million, $5.9 million, $6.7
million and $3.2 million, respectively. These expenditures were made primarily
to upgrade equipment and molds. In fiscal 1994, the Company spent $1.0 million
to reengineer its plant layout in Ann Arbor which increased available
manufacturing space, improved manufacturing efficiencies and reduced
work-in-process inventories and scrap. Capital expenditures of $7 to $8 million
are planned for fiscal 1995. The majority of the planned spending is for
manufacturing automation, process improvement, and new molds, which should
reduce the unit costs of the Company's products. The Company believes that funds
generated from operations and amounts available under the Credit Agreement will
be adequate to fund fiscal 1995 capital expenditures.

During fiscal 1994, the Company increased its credit facility under the
Credit Agreement to $22.5 million from $17.5 million. At January 31, 1995, the
unused portion of the line of credit provided under the Credit Agreement was
$7.5 million. The Company also refinanced its $5.1 million industrial
development revenue bonds by issuing new bonds bearing interest at 120% of the
90-day Eurodollar rate (approximately 7.25% as of January 31, 1995) with
principal and interest due quarterly through July 2004.

As of January 31, 1995, the Company had an outstanding interest rate swap
agreement to obtain long-term fixed interest rates for a notional amount of $5
million. Under the terms of the agreement, the Company secured a fixed rate of
7.41% on the notional amount through January 25, 1996. During fiscal 1994, the
Company purchased a 7.5% interest rate cap on $5 million notional amount
effective May 1, 1995 through May 1, 1998. The interest rate swap and cap
agreements have been entered into with major financial institutions that are
expected to perform fully under the terms of the agreements.

Cash outflows during fiscal 1994 for the groundwater remediation plan at
its Ann Arbor facility, the settlement of lawsuits and associated legal expenses
were $2.4 million, approximately $1.3 million of which was to construct the
infrastructure for the remediation system. The groundwater remediation is
expected to take up to an additional eight years and costs will be dependent
upon the efficacy and duration of remediation efforts and obtaining a cost-free
repository for treated groundwater. As of January 31, 1995, the Company had
accrued $1.1 million for expenses related to this remediation and the settlement
of private lawsuits. The Company currently estimates that additional remediation
expenses and the costs of the settlement of private lawsuits for the second half
of fiscal 1995 will be approximately $200,000. The infrastructure for the
remediation system is substantially complete. The Company estimates that the
annual operating costs for the remediation system will be in the range of
$75,000 to $100,000.

15
<PAGE> 18

BUSINESS

GENERAL

- Laboratory products are utilized in the biotechnology and
pharmaceutical markets for new drug and product development, sample
preparation and testing, fluid sterilization, environmental testing and
academic research.

- Process filtration products are used in high technology
manufacturing applications such as sterilization of pharmaceutical
products, ultrapurification of water for the manufacture of semiconductor
chips and the production of ultrapure chemicals.

- Medical devices are used in healthcare applications such as the
diagnosis and treatment of disease, delivery of intravenous solutions to
patients and hemodialysis treatment.

- Membranes are sold primarily to medical products manufacturers who
incorporate them into products such as medical devices and diagnostic kits
for early detection of pregnancy and monitoring levels of cholesterol and
glucose.

Over the last several years, the Company resolved environmental lawsuits
relating to groundwater contamination at its Ann Arbor manufacturing facility,
divested all non-core product lines and strengthened senior management. As a
result of these actions, the Company has been able to focus on those
microfiltration products which provide the Company a competitive advantage and
brand name recognition. The Company has developed growth and operating
strategies which focus its sales, marketing and manufacturing efforts on these
products. These strategies have accelerated sales growth and improved
profitability in the Company's operations. Year over year sales growth of the
Company's core products increased from 5% in fiscal 1990 to 12% in fiscal 1994.
The Company's operating earnings increased from $427,000 in fiscal 1990 to $9.2
million in fiscal 1994.

16
<PAGE> 19

microfiltration products. The Company's internal projections reflect $200
million in sales in fiscal 1998 primarily as a result of growth in international
sales. The Company believes that its existing manufacturing facilities can
accommodate this sales growth. See "Investment Considerations" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations," as
well as the other information included elsewhere herein or incorporated herein
by reference, which prospective investors should consider prior to purchasing
shares of the Common Stock offered hereby. In addition to sales growth,
management has been implementing a strategy to increase profitability by (i)
reducing product scrap and waste; (ii) increasing automation to reduce labor
content; (iii) consolidating suppliers to improve the quality and reduce the
cost of purchased materials; (iv) targeting sales efforts on high margin
microfiltration products and membranes; and (v) increasing capacity utilization.

PRODUCT AND MARKET OVERVIEW

Filtration is the process of separating particles of various sizes from
liquids or gases, including (a) macrofiltration, for the separation of
large-size particles visible to the naked eye (a grain of sand); (b)
microfiltration, for the separation and removal of microscopic-sized particles
(bacteria); and (c) reverse osmosis, for separation at the molecular level
(desalination of saltwater). 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.

Of the filtration processes, microfiltration has the most diverse
applications. Microfiltration utilizes several different types of filtration
media, including microporous and nylon membranes, glass fibers and ceramics.
Microporous membranes are thin, film-like materials with millions of microscopic
holes per square inch. These membranes are the most popular microfiltration
media because they offer the following benefits: (i) removal of
specifically-sized particles, (ii) configuration into a variety of shapes and
sizes of filtration devices, and (iii) incorporation into economical, disposable
filtration devices.

The Company believes that worldwide demand for microfiltration products in
its markets is $1.4 billion, two-thirds of which is from outside the United
States. It is expected that the growth rate for sales of microfiltration
products internationally will exceed that of the United States over the next
several years, particularly in the Asia/Pacific Rim and Latin America. Growth
opportunities in the Asia/Pacific Rim and Latin America should result primarily
from increasing industrialization, the effects of government regulations and
environmental concerns. Sales in Western Europe are growing primarily due to
microfiltration demands from biotechnology, pharmaceutical and healthcare
companies.

The demand for microfiltration products in the United States is growing due
to (a) a broadening base for filter applications, (b) increasing concern for
consumer safety, (c) a trend toward finer and more economical filtration, (d)
more stringent governmental regulations and (e) intensive research efforts to
find cures for contagious, genetic and other diseases. In addition, demand is
increasing for biomedical and diagnostic membranes for routine sterilization,
cell cultures, protein separation and diagnostic tests.

GROWTH STRATEGY

The Company's strategy is to expand its position as a manufacturer of
microfiltration products to the biotechnology/pharmaceutical,
medical/healthcare, high technology manufacturing and environmental markets by
responding to customer needs with high quality products at competitive prices.
Management expects to increase sales in excess of market growth by increasing
international sales, expanding sales to existing customers, introducing new
products and entering new markets with microfiltration products. The Company is
implementing these sales and marketing strategies and making the infrastructure
investments necessary to achieve the expected growth.

The Company's growth strategy focuses on the following key factors:

Key Products with Competitive Advantages and Brand Name Recognition. The
Company is focusing its sales and marketing programs on those microfiltration
products which have competitive advantages and brand name recognition. The
Company has targeted these products because of their ease of use, novel and
unique design and superior performance characteristics.

International Sales Growth. Historically, the Company's worldwide sales
have been divided approximately 65% U.S. and 35% international. The Company
believes, however, that the worldwide market for microfiltration products is
approximately 35% U.S. and 65% international. The Company's historical sales mix

17
<PAGE> 20

reflects its prior focus on domestic markets. The Company has redirected its
marketing focus to take advantage of the significant demand for microfiltration
products outside the United States. The Company believes that the international
markets are growing due to demand from the scientific, medical and industrial
communities and the effect of increasing government regulation. The Company has
made investments to enhance its international marketing and distribution
efforts, including expanding the number of international distributors and
strengthening sales and marketing management in Japan, France and Germany, the
Company's largest markets outside the United States. International sales are
expected to become the fastest growing component of the Company's business.

Focused Account Penetration. The Company has dedicated sales teams and
other resources to develop global supplier agreements with large multinational
biotechnology and pharmaceutical companies. This sales strategy is designed to
market to these companies the benefits of purchasing their worldwide filtration
requirements from the Company. Many of these companies require consistent
microfiltration in their manufacturing processes -- from laboratory research
through finished production -- and would benefit from the Company's ability to
supply a wide variety of microfiltration products and its willingness to partner
with customers in developing new products.

Acceleration of New Product Development and Introduction. In the last two
years, the Company has organized product development teams which are focused on
understanding customer procedures and potential applications for the Company's
microfiltration products and working with customers to develop innovative and
creative products to address their filtration needs. These teams also identify
product modifications to enhance performance of, and new applications for, the
Company's existing product lines. In addition, the Company has succeeded in
shortening the period of product development, introduction and commercialization
of new and modified products from approximately 24 months to as little as 12
months, thereby accelerating revenue growth. The Company's marketing plans are
developed, distribution agreements formulated and sales force trained
concurrently with product development efforts.

New Markets. The increased awareness of and need for sterilization,
purification and separation of liquids and gases, as well as the use of
membranes in other specialized applications, have created new market
opportunities for the Company's products. The Company intends to examine and
exploit opportunities in those emerging markets which the Company believes have
significant growth opportunities, including medical, home healthcare,
biotechnology and diagnostic applications.

OPERATING STRATEGY

The Company continues its focus on increasing profitability by reducing
product scrap and waste, reducing labor content, consolidating suppliers,
improving product mix and increasing manufacturing efficiency and capacity
utilization.

Reduction of Product Scrap and Waste. The Company is reducing the amount of
product scrap and waste by (a) increasing its quality standards for raw
materials and plastic parts purchased from suppliers, (b) purchasing additional
automated machinery and equipment and (c) implementing Company-wide continuous
improvement programs. These programs are designed to identify sources of scrap,
set goals for the reduction of scrap, eliminate waste and educate the work force
to improve quality in the manufacturing process.

Reduction of Labor Content. Management believes that it can increase
profitability by investing in automated machinery and equipment. Automation
reduces the labor content and improves the quality of the Company's
microfiltration products. In fiscal 1994, the Company spent approximately $2
million to purchase machinery and equipment for its medical devices product
line. To further increase automation, the Company plans to make expenditures of
approximately $3 million in fiscal 1995 for its capsule and intravenous fluid
filter manufacturing lines.

Product Mix. In the last three years, the Company has increased its sales
and marketing efforts to promote the sale of its higher margin laboratory and
microporous membrane products. As a result of the improvement of its
international distribution network and growth in the international markets, the
Company

18
<PAGE> 21

expects to increase international sales of its laboratory products. The Company
actively promotes the sale of membranes, primarily to manufacturers of medical
products, through a dedicated sales force.

Consolidation of Suppliers. The Company has reduced the number of its
suppliers of raw materials and plastic parts by concentrating its purchases with
those suppliers which meet the Company's high quality standards. The Company has
recently been successful in negotiating volume price discounts with many of
these suppliers. An increase in the quality of purchased materials has enabled
the Company to reduce its incoming and in-process quality inspection expenses.

Manufacturing Efficiency and Capacity Utilization. The Company's
state-of-the-art manufacturing facility in Pensacola, Florida, completed in
fiscal 1992, produces membranes more efficiently and at a lower cost than
previously in Ann Arbor. The construction of the Pensacola facility allowed the
Company to reengineer its plant lay-out in Ann Arbor which increased available
manufacturing space, improved manufacturing efficiencies and reduced
work-in-process inventory and scrap. The Company's existing facilities have the
capacity to support additional sales growth.

PRODUCTS

The Company's core technologies are the manufacturing of microporous
membranes and the packaging and sealing of these membranes into microfiltration
products. Microfiltration products manufactured by the Company using its
proprietary membranes as the filtration media account for approximately 75% of
sales. The remainder of the Company's products incorporate high quality
filtration media such as nonwoven media and glass fiber purchased from third
parties. These other filtration media allow the Company to complement its wide
variety of microporous product offerings, particularly in the laboratory and
process filtration product lines.

The design, engineering and manufacturing of the filtration device is
critical to the performance of a microfiltration product. The Company has the
technical expertise to integrate various filtration media into custom-designed
plastic housings. The Company uses state-of-the-art manufacturing processes to
ensure the proper sealing of filtration media in these housings.

The Company's revenues from the four major product lines for the last three
fiscal years and for the six month periods ended January 31, 1994 and 1995 are
as follows (in millions):

The above table does not include sales from non-core products lines which
have been divested in the past three years or sales of other miscellaneous
products that are distributed by the Company's foreign subsidiaries on behalf of
other manufacturers. Sales from the divested product lines and of other products
totaled $10.5 million in fiscal 1992, $7.5 million in fiscal 1993 and $6.8
million in fiscal 1994, and $4.3 million and $1.2 million for the six months
ended January 31, 1994 and 1995, respectively.

Laboratory Products. Laboratory products are small volume filters utilized
in research, clinical and industrial laboratories for new drug and product
development and for sample preparation and fluid sterilization. These products
are also used in environmental testing and manufacturing quality control
operations. Nearly all of these filters are inexpensive, disposable items. The
Company believes that its 30% U.S. market share of microfiltration products sold
to the laboratory market makes it one of the largest manufacturers in this
market. However, the Company believes that it can improve its international
market share in laboratory products, which is currently less than 5%.

Process Filtration Products. Process filtration products utilize
microporous membranes in cartridge and capsule form for use in various process
industry applications, such as the biotechnology/pharmaceutical,

19
<PAGE> 22

semiconductor and fine chemicals industries. In many manufacturing processes,
these products are required to remove particles and contaminants, including
bacteria, and for the clarification and purification of waters and chemicals.
Process filtration products are disposable and require regular replacement.

Medical Devices. The medical devices product line consists principally of
three products: intravenous fluid filters, transducer protectors for
hemodialysis equipment and insufflation filters for noninvasive laser and
endoscopic surgery. In addition, the Company manufactures ophthalmic,
cardiovascular, prebypass and respiratory filters. The Company's medical devices
are sold primarily to major healthcare manufacturers for private label use. The
Company sells a line of ready-to-market products and works with its healthcare
manufacturer customers to develop custom products.

Membranes. In addition to use in its own products, the Company sells
microporous membranes to third parties who incorporate them into products such
as diagnostic kits for early detection of pregnancy and monitoring levels of
cholesterol and glucose. As the concern for controlling costs in the healthcare
industry continues, new applications for membrane-based diagnostic kits are
growing rapidly. Many of the Company's competitors do not manufacture their own
membranes and have to purchase them at higher cost from suppliers. Membranes
have higher gross profit margins than the Company's other products because they
are produced on highly automated equipment with minimal handling costs.

SALES AND MARKETING

The Company serves the U.S. laboratory markets through the four largest
distributors serving these markets: Baxter International Inc., Curtin Matheson
Scientific, Inc., Fisher Scientific International Inc. and VWR Corporation. The
Company believes that sales by these distributors account for over 50% of the
microfiltration products consumed in the U.S. laboratory market. Distributors
enable the Company to reach thousands of end-user customers who have similar
microfiltration needs.

In the United States, the Company's process filtration products are sold
through a network of distributors who specialize in products sold for a broad
range of process applications. These distributors are supported by the Company's
field sales organization which provides training and assistance in sales calls.

The Company sells its medical devices and membranes throughout the world
through a direct sales force. By using a direct sales force the Company is able
to provide customized service to its end-user customers and utilize market
feedback to develop new microfiltration applications.

Internationally, the Company serves the laboratory and process filtration
markets through a combination of a direct sales force and independent
distributors. The Company has foreign sales and distribution subsidiaries
operating in Australia, Canada, France, Germany, Ireland, Italy, Japan and the
United Kingdom.

RESEARCH AND PRODUCT DEVELOPMENT

The Company maintains a strong commitment to applied research and
development. The Company's product development efforts are focused on the
enhancement of existing product lines and development of new products based on
the Company's existing technologies and production capabilities. The Company
employs a staff of approximately 70 in its research and development department,
including experienced polymer chemists, biochemists, engineers and laboratory
technicians. Research and development expenditures were $3.2 million, $4.1
million and $4.9 million in fiscal 1992, 1993 and 1994, respectively.

CUSTOMERS

The Company believes that no end-user of any of its products accounts for
more than 5% of sales. Sales by the Company to three U.S. distributors of its
laboratory products accounted for 23% of total sales in fiscal 1994. The loss of
any one of these distributors could have an adverse effect on the Company.
Management believes the loss of any one of these distributors is unlikely due to
the Company's long-term relationship with these distributors and the investments
made by these distributors in inventory, promotional programs and training of
their sales forces. Baxter International Inc., which distributes the Company's
products through its

20
<PAGE> 23

Baxter Scientific Products Division and purchases the Company's products through
its Baxter Healthcare Division, a manufacturer of healthcare products, accounted
for $10.5 million or 11.1% of sales in fiscal 1994.

COMPETITION

The filtration and separation industry is fragmented, with many firms
developing expertise in specialized applications. The Company's primary
competitors are Millipore Corporation, Pall Corporation and, to a lesser extent,
Sartorious Membranfilter GmbH.

The Company believes that it offers a greater variety of membranes and
microfiltration products in its markets than any other manufacturer in the
world. The Company competes with other manufacturers based on a variety of
factors, including product innovation and performance, price and customer
service. The Company has developed many of its microfiltration products in
conjunction with its customers, which have worked closely with the Company
during the design process. The Company believes that these close working
relationships with its customers in the development of specialized products
gives it a competitive advantage over other manufacturers.

PROPERTIES

Summary information on the Company's principal manufacturing and
distribution facilities is as follows:

<TABLE>
<CAPTION>
APPROXIMATE
LOCATION SQUARE FOOTAGE OWNED/LEASED
- ---------------------- -------------- ------------
<S> <C> <C>
Ann Arbor, Michigan 180,000 Owned
Ann Arbor, Michigan 20,000 Leased
Pensacola, Florida 58,000 Owned
Pleasanton, California 18,000 Leased
</TABLE>

All of the Company's membranes are manufactured at its Pensacola facility and
are either sold directly to customers or shipped to its Ann Arbor facility and
incorporated into the Company's microfiltration products. Stainless steel
housings for process filtration devices are manufactured at the Company's
Pleasanton facility. The Company purchases all of the plastic components for its
filters.

INTELLECTUAL PROPERTY

The Company has 137 active patents and 125 registered and 58 unregistered
trademarks throughout the world. The Company does not consider any one of these
patents or trademarks to be materially important to its business. The Company
relies to a great extent on its technological skills and product development
achievements to compete effectively.

RAW MATERIAL SUPPLIERS

The primary raw materials used by the Company are polymers, solvents and
plastic injection molded components. 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.

EMPLOYEES

The Company has approximately 825 employees. The Company's hourly employees
are not represented by a collective bargaining agreement. The Company believes
that relations with employees are good. There have been no work stoppages due to
labor difficulties.

FINANCIAL SEGMENTS AND INFORMATION REGARDING GEOGRAPHIC AREAS

The Company reports financial information for two industry segments:
Filtration Products and Health Products. See Note I to the Consolidated
Financial Statements. Filtration Products are primarily comprised of
21
<PAGE> 24

laboratory products, certain membranes and process filtration products for the
biotechnology, pharmaceutical, environmental and industrial markets. Health
Products are primarily comprised of products for the medical and healthcare
industries, including custom-manufactured disposable filters and certain
membranes for original equipment manufacturers in the healthcare field.

The Company has foreign subsidiaries operating in Australia, Canada,
France, Germany, Ireland, Italy, Japan and the United Kingdom. These operations
are sales and distribution facilities. All of the Company's products are
manufactured in the United States. The Company sells directly to non-owned
foreign distributors in many regions of the world. See Note I to the
Consolidated Financial Statements.

ENVIRONMENTAL MATTERS

The Company's operations are subject to extensive federal, state and local
regulation under environmental laws and regulations concerning, among other
things, emissions into the air, discharges into the water and the generation,
handling, storage, transportation, treatment and disposal of wastes and other
materials. Inherent in the Company's manufacturing operations is the risk of
environmental liabilities which cannot be predicted with certainty. The Company
has incurred and will continue to incur environmental regulatory compliance
costs on an ongoing basis associated with the operation of its business.

Until May 1986, the Company used 1,4-dioxane, an organic chemical, in
manufacturing processes at its manufacturing facility in Ann Arbor and stored
and disposed of waste water using methods then permitted by the responsible
governmental agencies for this chemical. In January 1986, 1,4-dioxane was
determined to be present in groundwater wells near the Company's manufacturing
plant. Under an October 1992 consent judgment resolving litigation with the
State of Michigan, the Company is remediating this contamination without
admitting wrongdoing. The Company has resolved eight of ten private lawsuits
related to groundwater contamination. The Company has been successful in defense
of the remaining two lawsuits in the trial courts; however, the verdicts are
being appealed by the plaintiffs. The Company believes that the ultimate
resolution of these lawsuits will not have a material adverse effect on the
Company's financial position or results of operations.

The remediation plan requires the Company to treat the groundwater to the
extent necessary to reduce the contaminants to a defined level. Management
estimates that remediation will take eight years. Total costs to the Company of
pollution-related activities will be dependent upon the efficacy and duration of
the remediation plan, obtaining a cost-free repository for treated groundwater
and settlement of private environmental lawsuits. As of January 31, 1995, the
Company had accrued $1.1 million to cover the future costs and expenses of the
remediation plan and settlement of private environmental lawsuits. The Company
believes that the reserve is adequate to cover all such future costs and
expenses; however, there can be no assurance that future events will not have an
effect on the amount of the required reserve. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Note G to the
Consolidated Financial Statements.

LEGAL PROCEEDINGS

The Company, in the normal course of business, is involved in incidental,
routine litigation. In the opinion of management, currently pending legal
proceedings and claims against the Company will not individually or in the
aggregate have a material adverse effect on the Company's financial condition or
results of operations.

22
<PAGE> 25

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information regarding the executive
officers and directors of the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ------------------------------ --- --------------------------------------------------------
<S> <C> <C>
Charles Gelman................ 63 Chairman of the Board, Chief Executive Officer and a
Director
Kim A. Davis.................. 43 President, Chief Operating Officer and a Director
James C. Marshall............. 51 Senior Vice President
Robert L. Buker............... 47 Vice President, Corporate Communications
Alfred G. Craske.............. 51 Vice President, Marketing
James J. Fahrner.............. 43 Vice President-Finance, Treasurer and Chief Financial
Officer
Mark A. Sutter................ 33 Vice President, Research & Development
Edward J. Levitt.............. 50 Secretary and Corporate Counsel
Robert M. Collins............. 63 Director
John A. Geishecker, Jr. ...... 57 Director
Saul H. Hymans................ 57 Director
Hajime Kimura................. 44 Director
Nina I. McClelland............ 65 Director
Charles Newman................ 53 Director
</TABLE>

Charles Gelman founded the Company in 1959. He was the Company's President
from 1974 to April 1988 and from October 1990 to May 1993. He has been the
Company's Chairman, Chief Executive Officer and a director since 1974.

Kim A. Davis was appointed President and Chief Operating Officer of the
Company in May 1993 and was elected a director of the Company on March 18, 1995.
Mr. Davis is responsible for worldwide operations including sales, marketing and
manufacturing. From January 1991 to May 1993, Mr. Davis was Chief Operating
Officer of Promega Corporation, a Wisconsin-based biotechnology company. Prior
to joining Promega, Mr. Davis was president and chief executive officer of a
privately-held engineering graphics software company from November 1989.

James C. Marshall is Senior Vice President responsible for manufacturing
operations in Pensacola, Florida. Prior to that, he was responsible for the
Company's Ann Arbor Operations, and has worked in the manufacturing function for
the Company for over 30 years.

Robert L. Buker has been Vice President of Corporate Communications since
December 1994. He was Vice President, Marketing, from January 1994 to December
1994. Previously, he was Vice President of Corporate Communications, and
Director, Corporate Communications since June 1986.

Alfred G. Craske was hired as Vice President, Marketing, in December 1994.
Mr. Craske was the Vice President, Marketing and Sales for Difco Laboratories, a
provider of media products for growth of microbiological organisms, from
September 1993 to November 1994. From May 1991 to May 1993, he was Vice
President, Marketing and Sales of Hitachi Instruments, Inc., a distributor of
scientific products. Prior thereto, Mr. Craske was Vice President, Marketing and
Sales for Extrel Corporation.

James J. Fahrner was hired as Vice President-Finance, Treasurer and Chief
Financial Officer in November 1990. Previously, Mr. Fahrner was a Vice President
and Treasurer of J.P. Industries, Inc., a manufacturer of industrial and
consumer durable goods, from November 1989 to September 1990.

Mark A. Sutter was appointed as Vice President, Research & Development in
May 1992, and is responsible for all research and development activities.
Previously, Mr. Sutter served as Director of Membrane

23
<PAGE> 26

Research & Development and Cartridge Capsule Product Development and in various
marketing functions for the Company since January 1986.

Edward J. Levitt was appointed as Secretary of the Company in March 1994.
From December 1991 to March 1994, Mr. Levitt was Assistant Vice President-Legal.
Since April 1989, Mr. Levitt has served as Corporate Counsel.

Robert M. Collins has been a director of the Company since June 1994. Mr.
Collins has been an independent consultant since April 1991. Prior to that, he
was President of Cobe Laboratories, Inc., a medical supply company, from 1989 to
April 1991.

John A. Geishecker, Jr. has been a director of the Company since 1978. Mr.
Geishecker has been Vice President-Planning and Finance, of Rule Industries, a
diversified manufacturer, for more than five years.

Saul H. Hymans has been a director of the Company since 1980. Dr. Hymans is
a professor of Economics and Statistics and the Director of Research Seminars in
Quantitative Economics and has been a faculty member of the University of
Michigan since 1964.

Hajime Kimura has been a director of the Company since September 1994. Dr.
Kimura has been President and Chief Executive of JMS Co. Ltd., a large Japanese
medical supply company, since August 1994 and was employed in various positions
at JMS for the five years prior to his appointment as President.

Nina I. McClelland has been a director of the Company since 1989. Dr.
McClelland has been the Chairman of the Board and an executive officer of the
National Sanitation Foundation since 1980. She is also an Adjunct Professor,
School of Public Health, at the University of Michigan.

Charles Newman has been a director of the Company since May 1992. Mr.
Newman has been President of ReCellular Inc., manufacturer of cellular phones,
since 1989.

DESCRIPTION OF CAPITAL STOCK

The Company's authorized capital stock consists of 15,000,000 shares of
Common Stock, $.10 par value, and 500,000 shares of Preferred Stock, $1.00 par
value. As of February 23, 1995, there were 6,235,625 shares of Common Stock
outstanding, which were held beneficially by approximately 1,200 shareholders.
There are currently no shares of Preferred Stock outstanding.

COMMON STOCK

Holders of Common Stock are entitled to one vote for each share held. All
outstanding shares of Common Stock are, and those offered hereby will be,
validly issued, fully paid and nonassessable. Holders of Common Stock are
entitled to such dividends as may be declared by the Board of Directors out of
funds legally available therefor. Upon liquidation, dissolution or winding-up of
the Company, the assets legally available for distribution to shareholders are
distributable ratably among the holders of Common Stock at that time
outstanding, subject to prior distribution rights of creditors of the Company
and of holders of any Preferred Stock then outstanding. The Common Stock does
not have preemptive or other subscription rights, any conversion rights or any
redemption rights.

Chapters 7A and 7B of the Michigan Business Corporation Act (the "MBCA")
may affect attempts to acquire control of the Company. In general, under Chapter
7A of the MBCA, "business combinations" (defined to include, among other
transactions, certain mergers, share exchanges, sales or other dispositions of
assets or shares and recapitalizations) between covered Michigan business
corporations or their subsidiaries and an "interested shareholder" (defined as
the direct or indirect beneficial owner of at least 10% of the voting power of a
covered corporation's outstanding shares) can only be consummated if approved by
at least 90% of the votes of each class of the corporation's shares entitled to
vote and by at least two-thirds of such voting shares not held by the interested
shareholder or affiliates, unless five years have elapsed after the person
involved became an "interested shareholder" and unless certain price and other
conditions are satisfied. The Board of Directors has the power to elect to be
subject to Chapter 7A as to specifically identified or

24
<PAGE> 27

unidentified interested shareholders, but has not currently elected to be
subject to Chapter 7A. Upon completion of the Offering, Charles Gelman will
continue to beneficially own approximately 17% of the outstanding Common Stock
and, if the Board of Directors elects to have the Company subject to Chapter 7A,
Mr. Gelman would be able to prevent the attainment of the required approval by
holders of 90% or more of the outstanding shares of the Common Stock.

In general, under Chapter 7B of the MBCA, an entity that acquires
"controlling shares" of the Company may vote the controlling shares on any
matter only if a majority of all shares, and of all non-"interested shares," of
each class of stock entitled to vote as a class, approve such voting rights.
Interested shares are shares owned by officers of the Company,
employee-directors of the Company and the entity making the acquisition of
controlling shares. Controlling shares are shares that, when added to shares
already owned by a person, would give the person voting power in the election of
directors over any of three thresholds: one-fifth, one-third and a majority. The
effect of the statute is to condition the acquisition of voting control of a
corporation on the approval of a majority of the pre-existing disinterested
shareholders. Chapter 7B currently applies to the Company. However, the Board of
Directors could amend the Company's Restated By-laws (the "By-laws") before a
"control share acquisition" occurs to provide that Chapter 7B does not apply to
the Company.

The Company's Restated Articles of Incorporation, as amended (the
"Articles") and By-laws provide for staggered terms for the election of
directors. As a result, at least two annual meetings will generally be required
for shareholders to elect a majority of the Board of Directors. Directors are
divided into three classes, with each class elected once every three years. The
By-laws provide that directors may only be removed for cause.

The By-laws establish procedures, including advance notification to the
Company, that a shareholder must follow to place the name of any person in
nomination for election to the Company's Board of Directors. In general, notice
must be received not less than 60 nor more than 90 days prior to the date of the
annual meeting and must contain certain specified information, including in
part, the name of the proposed nominee, certain biographical and other
information with respect to such nominee and certain information concerning the
shareholder submitting the proposal.

The Articles permit corporate action to be taken by written consent of the
minimum percentage required by statute for the proposed corporate action without
a formal meeting of shareholders. The Articles further provide that the Company
is required to give notice of any such consent action to all non-consenting
shareholders.

The transfer agent and registrar for the Common Stock is Society National
Bank. The Common Stock of the Company is listed on the American Stock Exchange
under the symbol "GSC".

PREFERRED STOCK

The Preferred Stock may be issued from time to time in one or more series.
The Board of Directors is authorized to determine the rights, preferences,
privileges and restrictions granted to and imposed upon any wholly unissued
series of Preferred Stock and to fix the number of shares of any series of
Preferred Stock and the designation of any such series. The issuance of
Preferred Stock could be used, under certain circumstances, as a method of
preventing a takeover of the Company and could permit the Board of Directors,
without any action by the holders of Common Stock, to issue Preferred Stock
which could have a detrimental effect on the rights of holders of Common Stock,
including the loss of voting control. Anti-takeover provisions that could be
included in the terms of any Preferred Stock issued may depress the market price
of the Company's Common Stock and may limit the ability of shareholders to
receive a premium on their shares by discouraging takeover and tender offer
bids. The Company has no present plans to issue any shares of Preferred Stock.

25
<PAGE> 28

UNDERWRITING

The several Underwriters named below have severally agreed, subject to the
terms and conditions contained in the Underwriting Agreement, to purchase from
the Company the aggregate number of shares of Common Stock (assuming the
Underwriters' over-allotment option is not exercised) set forth below opposite
their respective names.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------------------------------------------------------------- ---------
<S> <C>
Cleary Gull Reiland & McDevitt Inc. ...............................
McDonald & Company Securities, Inc. ...............................
Roney & Co. .......................................................
Total......................................................... 1,250,000
=========
</TABLE>

The Underwriting Agreement provides that all of the shares of Common Stock
being offered, excluding shares covered by the over-allotment option granted to
the Underwriters, must be purchased if any are purchased.

The Company has been advised that the several Underwriters propose to offer
the Common Stock to the public at the public offering price set forth on the
cover page of this Prospectus and may offer to selected dealers at such price
less a concession of not more than $ per share; that the Underwriters may
allow and such dealers may reallow a concession of $ per share on sales to
certain other dealers; and that the public offering price and concessions and
reallowances to dealers may be changed by the Underwriters.

The Company has granted the Underwriters an option, exercisable within 30
days after the date of this Prospectus, to purchase up to an additional 187,500
shares of Common Stock to cover over-allotments, at the same price per share
being paid by the Underwriters for the other shares offered hereby. If the
Underwriters exercise this option in whole or in part, each of the Underwriters
will be committed to purchase such additional shares in approximately the same
proportion as set forth in the above table. The Underwriters may purchase such
shares only to cover over-allotments, if any, made in connection with the
Offering made hereby.

The Company and its present executive officers and directors have agreed
with the Underwriters that they will not offer or sell any shares of the Common
Stock for 120 days from the effective date of the Registration Statement without
the prior written consent of Cleary Gull Reiland & McDevitt Inc.; provided,
however, that commencing 30 days after the effective date of the Registration
Statement, non-employee directors of the Company collectively have the right to
sell up to 11,000 shares of the Common Stock.

The Underwriting Agreement provides that the Company will indemnify the
several Underwriters against certain liabilities, including civil liabilities
under the Securities Act, or will contribute to payments the Underwriters may be
required to make in respect thereof.

LEGAL MATTERS

Certain legal matters in connection with the Common Stock offered hereby
will be passed upon for the Company by Brouse & McDowell, a Legal Professional
Association, Akron, Ohio, and for the Underwriters by Godfrey & Kahn, S.C.,
Milwaukee, Wisconsin.

26
<PAGE> 29

EXPERTS

The Consolidated Financial Statements of the Company included in this
Prospectus have been audited by Coopers & Lybrand, L.L.P., independent auditors,
to the extent and for the periods indicated in their report with respect thereto
which includes an explanatory paragraph indicating that the ultimate costs of
the remediation program agreed to by the Company could exceed the amount
estimated and accrued at July 31, 1994, and are included herein or incorporated
by reference in reliance on the aforementioned report given on September 22,
1994 and upon the authority of said firm as experts in accounting and auditing.

27
<PAGE> 30

GELMAN SCIENCES INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Independent Auditor's Report....................................................... F-2
Consolidated Balance Sheets as of July 31, 1993 and 1994........................... F-3
Consolidated Statements of Operations for the Years Ended July 31, 1992, 1993 and
1994............................................................................ F-4
Consolidated Statements of Cash Flows for the Years Ended July 31, 1992, 1993 and
1994............................................................................ F-5
Consolidated Statements of Stockholders' Equity for the Years Ended July 31, 1992,
1993
and 1994........................................................................ F-6
Notes to Consolidated Financial Statements......................................... F-7
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets as of January 31, 1994 and 1995
(unaudited)..................................................................... F-16
Condensed Consolidated Statements of Operations for the Six Months Ended
January 31, 1994 and 1995 (unaudited)........................................... F-17
Condensed Consolidated Statements of Cash Flows for the Six Months Ended
January 31, 1994 and 1995 (unaudited)........................................... F-18
Notes to Condensed Consolidated Financial Statements (unaudited)................... F-19
</TABLE>

F-1
<PAGE> 31

INDEPENDENT AUDITOR'S REPORT

Board of Directors and Stockholders
Gelman Sciences Inc.
Ann Arbor, Michigan

We have audited the consolidated balance sheets of Gelman Sciences Inc. and
Subsidiaries as of July 31, 1994 and 1993, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended July 31, 1994, included on pages F-3 through
F-15, inclusive. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements 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 Gelman Sciences
Inc. and Subsidiaries as of July 31, 1994 and 1993, and the consolidated results
of their operations and cash flows for each of the three years in the period
ended July 31, 1994 in conformity with generally accepted accounting principles.

As discussed in Note G to the financial statements, the Company has agreed
to perform a remediation program for groundwater contamination. The ultimate
costs of this remediation program could exceed the amount estimated and accrued
at July 31, 1994.

COOPERS & LYBRAND L.L.P.

Detroit, Michigan
September 22, 1994

F-2
<PAGE> 32

GELMAN SCIENCES INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
JULY 31,
---------------------
1993 1994
-------- --------
<S> <C> <C>
ASSETS

Current Assets
Cash................................................................. $ 1,142 $ 1,525
Accounts receivable less allowances (1993 - $927; 1994 - $790)....... 17,088 20,859
Inventories
Finished products................................................. 5,841 5,790
Work in process................................................... 2,638 1,555
Raw materials and purchased parts................................. 4,507 6,645
-------- --------
12,986 13,990
Other current assets................................................. 3,600 3,849
-------- --------
Total Current Assets......................................... $ 34,816 $ 40,223
Property, Plant and Equipment
Land................................................................. 1,429 1,433
Buildings and improvements........................................... 16,937 18,851
Equipment............................................................ 43,816 43,270
-------- --------
62,182 63,554
Less allowances for depreciation..................................... (34,972) (34,392)
-------- --------
27,210 29,162
Intangibles and Other Assets........................................... 1,469 2,302
-------- --------
Total Assets................................................. $ 63,495 $ 71,687
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable to banks............................................... $ 1,415 $ 1,549
Accounts payable..................................................... 5,214 5,611
Compensation and amounts withheld.................................... 4,361 4,273
Other accrued expenses............................................... 3,329 3,511
Current maturities of long-term debt................................. 1,364 1,829
-------- --------
Total Current Liabilities.................................... 15,683 16,773
Long-Term Debt, exclusive of current maturities........................ 22,490 21,820
Other Long-Term Liabilities............................................ 3,066 2,659
Stockholders' Equity
Preferred stock, par value $1.00 per share -- authorized shares
500,000, none outstanding......................................... -- --
Common stock, par value $.10 per share -- issued and outstanding
2,597,000 shares in 1993 and 6,131,000 shares in 1994............. 260 613
Additional capital................................................... 12,508 14,055
Retained earnings.................................................... 12,345 17,092
Foreign currency translation adjustments............................. (1,265) (875)
Less loan to Employee Stock Ownership Plan........................... (600) (450)
Note receivable -- common stock...................................... (992) --
-------- --------
Total Stockholders' Equity................................... 22,256 30,435
-------- --------
Total Liabilities and Stockholders' Equity................... $ 63,495 $ 71,687
======== ========
</TABLE>

See notes to consolidated financial statements.

F-3
<PAGE> 33

GELMAN SCIENCES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
-------------------------------
1992 1993 1994
------- ------- -------
<S> <C> <C> <C>
Net sales..................................................... $81,460 $86,209 $94,963
Costs and expenses
Cost of products sold....................................... 42,961 43,664 47,253
Selling and administrative.................................. 29,232 31,044 33,785
Research and development.................................... 3,242 4,139 4,877
Pollution -- related expenses............................... 4,988 543 --
Other expense (income) -- net............................... (482) 81 (178)
------- ------- -------
79,941 79,471 85,737
------- ------- -------
Operating earnings............................................ 1,519 6,738 9,226
Interest expense.............................................. 2,590 2,006 1,689
------- ------- -------
Earnings (loss) before income taxes and extraordinary item.... (1,071) 4,732 7,537
Income taxes (credit)......................................... (212) 2,030 2,600
------- ------- -------
Net earnings (loss) before extraordinary item................. (859) 2,702 4,937
------- ------- -------
Extraordinary item............................................ 352 -- 183
------- ------- -------
Net earnings (loss)........................................... $(1,211) $ 2,702 $ 4,754
======= ======= =======
Primary earnings (loss) per share before extraordinary item... $(.15) $.47 $.78
===== ==== ====
Primary earnings (loss) per share............................. $(.21) $.47 $.75
===== ==== ====
Fully diluted earnings (loss) per share before extraordinary
item........................................................ $(.15) $.45 $.78
===== ==== ====
Fully diluted earnings (loss) per share....................... $(.21) $.45 $.75
===== ==== ====
</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE> 34

GELMAN SCIENCES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------
1992 1993 1994
-------- -------- --------
<S> <C> <C> <C>
Operating Activities
Net earnings (loss)...................................... $ (1,211) $ 2,702 $ 4,754
Extraordinary loss related to early extinguishment of
debt, before tax benefit.............................. -- -- 295
Depreciation and amortization............................ 4,219 4,452 4,396
Increase (decrease) in deferred income taxes............. (1,661) 275 627
Loss (gain) on sale of property, plant and equipment..... 90 31 (196)
Stock issued for employee service........................ 62 300 360
Contribution to employee stock ownership plan............ 150 150 150
(Increase) decrease in inventories....................... 736 (47) (1,431)
(Increase) decrease in accounts receivable............... 173 (1,051) (3,391)
(Increase) decrease in other current assets.............. 1,919 (433) (276)
Increase (decrease) in current liabilities............... (554) 2,285 382
Increase (decrease) in liabilities for environmental
activities............................................ 4,523 (515) (1,154)
Other.................................................... (4) 21 (25)
-------- -------- --------
Net Cash Provided by Operating Activities............. 8,442 8,170 4,491
-------- -------- --------

Financing Activities
Long-term debt borrowings................................ 24,125 25,700 33,011
Net increase (decrease) in short-term borrowings......... 40 (116) 114
Principal payments on long-term debt..................... (28,836) (28,327) (33,196)
Fees paid on early retirement of debt.................... -- -- (52)
Tax benefit from exercised stock options................. -- -- 608
Proceeds from exercised stock options.................... -- 389 924
Payment received -- note receivable common stock......... -- -- 992
-------- -------- --------
Net Cash Provided by (Used In) Financing Activities... (4,671) (2,354) 2,401
-------- -------- --------

Investing Activities
Capital expenditures..................................... (4,027) (5,860) (6,682)
Proceeds from sale of property, plant and equipment...... 83 50 537
(Increase) decrease in intangibles and other assets...... 263 66 (347)
-------- -------- --------
Net Cash Used in Investing Activities................. (3,681) (5,744) (6,492)
-------- -------- --------

Effects of Exchange Rate Changes on Cash................... (34) 203 (17)
-------- -------- --------
Net Change in Cash......................................... 56 275 383
Cash at Beginning of Year.................................. 811 867 1,142
-------- -------- --------
Cash at End of Year........................................ $ 867 $ 1,142 $ 1,525
======== ======== ========
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE> 35

GELMAN SCIENCES INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
LOAN TO
FOREIGN EMPLOYEE NOTE
CURRENCY STOCK RECEIVABLE
COMMON ADDITIONAL RETAINED TRANSLATION OWNERSHIP COMMON
STOCK CAPITAL EARNINGS ADJUSTMENTS PLAN STOCK
------ ---------- -------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balances at July 31, 1991............. $252 $ 11,765 $ 10,854 $ (835) $(900) $ (992)
------ --------- -------- --------- ------- --------
Net loss for 1992................... -- -- (1,211) -- -- --
Stock issued -- 14,370 shares....... 1 61 -- -- -- --
Currency translation adjustments.... -- -- -- 506 -- --
ESOP loan payment................... -- -- -- -- 150 --
------ --------- -------- --------- ------- --------
Balances at July 31, 1992............. 253 11,826 9,643 (329) (750) (992)
------ --------- -------- --------- ------- --------
Net earnings for 1993............... -- -- 2,702 -- -- --
Stock issued -- 68,050 shares....... 7 682 -- -- -- --
Currency translation adjustments.... -- -- -- (936) -- --
ESOP loan payment................... -- -- -- -- 150 --
------ --------- -------- --------- ------- --------
Balances at July 31, 1993............. 260 12,508 12,345 (1,265) (600) (992)
------ --------- -------- --------- ------- --------
Net earnings for 1994............... -- -- 4,754 -- -- --
Stock issued -- 161,270 shares...... 16 1,276 -- -- -- --
ESOP loan payment................... -- -- -- -- 150 --
Three-for-two common stock splits... 337 (337) (7) -- -- --
Tax benefit from exercise of stock
options.......................... -- 608 -- -- -- --
Currency translation adjustments.... -- -- -- 390 -- --
Officer loan repayment.............. -- -- -- -- -- 992
------ --------- -------- --------- ------- --------
Balances at July 31, 1994............. $613 $ 14,055 $ 17,092 $ (875) $(450) --
====== ========= ======== ========= ======= ========
</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE> 36

GELMAN SCIENCES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A -- SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation: The consolidated financial statements include
the accounts of all subsidiaries after elimination of intercompany accounts and
transactions. The financial data of foreign subsidiaries is translated using
current exchange rates at the end of the year for balance sheet accounts and
average exchange rates for operations. Translation gains and losses are
reflected in stockholders' equity, while transaction gains and losses are
reflected in the statements of operations. Foreign exchange transaction gains
(losses) of $264,000, $(129,000) and $77,000 were recognized in fiscal 1992,
1993 and 1994, respectively.

Inventories: Inventories are stated at the lower of cost or market. Cost
was determined by the last-in, first-out (LIFO) method at the U.S. locations,
representing approximately 69% and 78% of the July 31, 1993 and 1994
inventories, respectively, and by the first-in, first-out (FIFO) method for the
foreign locations. The current cost of inventories exceeded their LIFO carrying
amount by approximately $2,220,000 and $2,556,000 at July 31, 1993 and 1994,
respectively.

Properties and Depreciation: Properties are stated at cost. Depreciation is
computed using the straight-line method based on the estimated useful life of
the related asset. Included in property, plant and equipment are capitalized
computer software costs. At July 31, 1993 and 1994 the unamortized amount of
these costs was $246,000 and $92,700, respectively, and the amount amortized and
charged to expense was $194,000, for each of the two fiscal years ended July 31,
1993 and 1992 and $153,300 for the fiscal year ended July 31, 1994. The Company
capitalized interest costs of $91,000 in 1994, associated with the construction
of certain capital assets. No interest was capitalized in fiscal 1993 and 1992.

Intangibles: Intangibles consist principally of the excess of cost over net
assets of acquired companies, amortized over 30 years.

Income Taxes: Effective fiscal year 1992, the Company elected to adopt
Statement of Financial Account Standard No. 109 -- Accounting for Income Taxes.
SFAS No. 109 requires recognition of deferred tax liabilities and assets for the
expected future tax consequences of events that have been included in the
financial statements or the tax returns. Under this method, deferred tax
liabilities and assets are determined based on the difference between the
financial statement and tax basis of assets and liabilities, using enacted tax
rates in effect for the year in which the differences are expected to reverse.
The statement allows recognition of future tax benefits based on a realization
test of "more likely than not." The cumulative effect of adopting SFAS No. 109
was not material.

Earnings (Loss) Per Share: Primary earnings per share for fiscal 1992, 1993
and 1994 are based on the weighted average of common and common equivalent
shares of 5,661,749, 5,750,543 and 6,307,388, respectively. Common share
equivalents included in the computation represent shares issuable upon assumed
exercise of stock options and warrants which would have dilutive effect in years
where there are earnings. Fully diluted earnings per share for fiscal 1993 is
based on the weighted average of common and common equivalent shares of
5,952,710. Full dilution had no material effect on earnings per share in fiscal
1992 and 1994. All per share amounts have been restated to retroactively reflect
the two stock splits in fiscal 1994.

Financial Instruments: The Company enters into certain financial
instruments to reduce exposure to fluctuating foreign currency exchange rates
and interest rates. Gains and losses on contracts which hedge specific foreign
currency denominated transactions are deferred and recognized in the period in
which the transaction is completed. Realized and unrealized gains and losses on
other forward exchange contracts are recorded as other expense (income)
currently. The Company enters into interest rate financial instruments to manage
exposure to interest rate fluctuations. The difference to be paid or received on
a interest rate swap agreement is included in interest expense currently. The
fee paid on a interest rate cap agreement is amortized over the life of the
agreement.

F-7
<PAGE> 37

GELMAN SCIENCES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE B -- FINANCING

Financing consisted of the following obligations:

<TABLE>
<CAPTION>
JULY 31,
------------------
1993 1994
------- -------
(in thousands)
<S> <C> <C>
Borrowings under revolving credit agreement............................... $11,700 $13,000
Borrowings under term loan agreement due December 31, 1995................ 4,750 4,000
Industrial Development Revenue Bonds with maturities through July 1,
2004.................................................................... 5,336 5,045
Note payable, State of Michigan, bearing interest at 7.5%, through January
6, 2002................................................................. 975 850
Notes payable to banks.................................................... 1,415 1,549
Other..................................................................... 1,093 754
------- -------
Total debt................................................................ 25,269 25,198
Less current maturities and short-term debt............................... 2,779 3,378
------- -------
Long-term debt............................................................ $22,490 $21,820
======= =======
</TABLE>

Notes payable to banks of $1,549,000 are short-term borrowings under
foreign subsidiaries' local currency credit lines, supported by a parent
guarantee.

The Company has a three-year unsecured revolving credit agreement that
expires December 31, 1996. The amount of the commitment is $22,500,000. The
agreement contains certain financial covenants of which the most restrictive
requires that the interest coverage ratio be not less than 2.25 to 1.0 for the
twelve month period preceding the date of determination. Various interest rate
options are available under the agreement; at July 31, 1994, the option selected
charged interest at 5.7%.

The Company redeemed the 7.98% Industrial Development Revenue Bonds issued
in 1989. The redemption was funded by the issuance of 1994 Industrial
Development Revenue Bonds in the amount equal to the principal balance of the
1989 Bonds of $5.1 million. The 1994 bonds bear interest at 120% of the 90 day
Eurodollar rate (approximately 6% as of July 31, 1994) with principal and
interest due quarterly through July, 2004. The Company recorded a charge of
$295,000 net of $112,000 tax benefit, or $.03 per share, to write-off deferred
finance charges and record a redemption premium and fees related to the 1989
Bonds.

During fiscal 1994, the Company also renegotiated the interest rate on the
term loan from prime plus 1% to a Eurodollar rate plus an applicable margin
(approximately 6.3% as of July 31, 1994).

Maturities of long-term debt for the five fiscal years following July 31,
1994 are as follows: $1,829,000 in 1995; $16,612,000 in 1996; $565,000 in 1997;
$598,000 in 1998; $634,000 in 1999 and $3,411,000 thereafter. Interest paid
during the years ended July 31, 1992, 1993 and 1994 was $2,611,000, $2,020,000
and $1,433,000, respectively.

F-8
<PAGE> 38

GELMAN SCIENCES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE C -- INCOME TAXES

The components of earnings (loss) before income taxes and extraordinary
items consisted of the following:

<TABLE>
<CAPTION>
1992 1993 1994
------- ------ ------
(in thousands)
<S> <C> <C> <C>
U.S................................................................ $(1,339) $5,336 $6,132
Foreign............................................................ 268 (604) 1,405
------- ------ ------
$(1,071) $4,732 $7,537
======= ====== ======
</TABLE>

The provision (benefit) for income taxes is as follows:

<TABLE>
<CAPTION>
1992 1993 1994
------- ------ ------
(in thousands)
<S> <C> <C> <C>
Current payable:
U.S.............................................................. $ 1,163 $1,481 $1,469
State............................................................ -- 149 88
Foreign.......................................................... 253 138 489
Deferred (credit):
U.S.............................................................. (1,642) 277 556
Foreign.......................................................... 14 (15) (2)
------- ------ ------
$ (212) $2,030 $2,600
======= ====== ======
</TABLE>

Income tax benefit attributable to the extraordinary items in fiscal years
1992 and 1994 amounted to $206,000 and $112,000, respectively.

A reconciliation between the provision (benefit) for income taxes and the
amount compared through the application of the U.S. statutory tax rate (34%) to
earnings (loss) before income taxes and extraordinary items is as follows:

<TABLE>
<CAPTION>
1992 1993 1994
----- ------ ------
(in thousands)
<S> <C> <C> <C>
Income taxes (benefit) at the statutory rate........................ $(364) $1,609 $2,563
Add (deduct):
Effect of foreign losses that had no tax benefit.................. 202 342 47
Foreign rates in excess of U.S. statutory rate.................... (26) (30) 104
Non-deductible travel and entertainment........................... 19 13 34
Benefit of net operating loss carryforward........................ (59) (13) (161)
State income taxes, net of federal income tax benefit............. -- 98 58
Foreign sales corporation benefit................................. -- (10) (26)
Other items, net.................................................. 16 21 (19)
----- ------ ------
$(212) $2,030 $2,600
===== ====== ======
</TABLE>

Deferred income taxes for fiscal 1993 and 1994 reflect the impact of
"temporary differences" between amounts of assets and liabilities for financial
reporting purposes and such amounts as measured by tax laws.

F-9
<PAGE> 39

GELMAN SCIENCES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Temporary differences and carryforwards which give rise to a significant
portion of deferred tax assets and liabilities are as follows:

<TABLE>
<CAPTION>
JULY 31,
---------------------
1993 1994
------ ------
(in thousands)
<S> <C> <C>
Deferred tax assets
Allowance for doubtful accounts.................................... $ 161 $ 146
Litigation accruals................................................ 161 91
Inventory-related transactions..................................... 283 283
Administrative and general expenses not currently deductible....... 670 779
Environmental accrual.............................................. 1,184 720
Foreign operating loss carryforwards............................... 624 460
------ ------
3,083 2,479
Less excess tax over book depreciation and amortization.............. 1,537 1,676
------ ------
Gross deferred tax asset............................................. 1,546 803
Valuation allowance.................................................. (624) (460)
------ ------
Net deferred tax asset............................................... $ 922 $ 343
====== ======
Current deferred tax asset........................................... $1,494 $1,506
====== ======
Non-current deferred tax liability................................... $ 572 $1,163
====== ======
</TABLE>

The Company has a 100% valuation allowance on all foreign subsidiary
operating loss carryforwards. Net current deferred tax assets of $1,494,000 and
$1,506,000 for fiscal 1993 and 1994, respectively are included in other current
assets and net non-current liabilities of $572,000 and $1,163,000 for fiscal
1993 and 1994, respectively, are included in other long-term liabilities based
on their relationship to assets and liabilities that generated the temporary
difference.

Income taxes paid during the years ended July 31, 1992, 1993, and 1994 were
$1,229,000, $2,190,000 and $1,210,000, respectively. Taxes paid in 1994 reflect
the benefit received from the exercise of stock options under the non-qualified
stock option plan.

No deferred income taxes have been provided on undistributed earnings of
foreign subsidiaries since those earnings are expected to be reinvested
indefinitely in the subsidiaries.

NOTE D -- SAVINGS AND RETIREMENT PLANS

The Company has a Savings Plan and an Employee Stock Ownership Plan (ESOP)
covering substantially all U.S. employees. The Company contributes to the
Savings Plan $.85 for every dollar contributed by employees up to 6% of their
compensation, with one half of the Company's contribution in Company common
stock. Company contributions charged to operations under these plans were
$641,000, $714,000 and $780,000 for the years ended July 31, 1992, 1993 and
1994, respectively.

NOTE E -- STOCKHOLDERS' EQUITY

During the year, the Company's shareholders approved an increase in the
number of authorized shares of common stock from 4 million to 8 million. The
Company declared two, three-for-two stock splits for shareholders of record on
December 8, 1993 and July 11, 1994. The distribution dates were December 28,
1993 and August 12, 1994, respectively. A total of 3,372,523 shares of common
stock were issued in connection with the two splits. Cash was paid to settle
fractional shares. The stated par value per share of common stock remains at
$.10 and the value of the shares at par of $337,252 was transferred from
additional capital to common stock. All per share amounts have been restated to
retroactively reflect the stock splits.

F-10
<PAGE> 40

GELMAN SCIENCES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In September 1990, the Company issued 128,000 shares (pre-split) of its
common stock to an officer of the Company at market value in exchange for a
$992,000 promissory note and cancellation of 128,000 stock options outstanding.
During the year, this note was repaid in full plus accrued interest on the note.
In October 1982, the Trust under the Company's Employee Stock Ownership Plan
acquired 200,000 shares (pre-split) of the Company's common stock. The purchase
price of $2,250,000 was financed by a loan from the Company to the Trust,
repayable over a 15-year period at a 13.5% interest rate. The Company is making
annual contributions to the Trust during the 15-year period of $150,000 per year
to cover the principal payments plus additional contributions to cover interest.

The Company has a non-qualified stock option plan. The Company is entitled
to a tax deduction for income tax purposes of the amount that an employee
reports as ordinary income. Since the Company recognizes no compensation expense
from the exercise of the options, the tax benefit received is recorded as a
reduction to income taxes payable and an increase to additional capital.

NOTE F -- STOCK OPTIONS AND WARRANTS

The Company has granted options under the Company's non-qualified stock
option plans to certain key employees to purchase the Company's common stock at
fair market value on the date of grant. The options generally become exercisable
cumulatively, in equal installments over a period of four or five years
commencing one year from date of grant and expiring ten years after date of
grant. Changes in the number of shares available under outstanding options
during fiscal years 1992, 1993 and 1994 were as follows:

<TABLE>
<CAPTION>
NUMBER OF SHARES EXERCISE PRICE
---------------- ----------------
<S> <C> <C>
Outstanding at July 31, 1991................................ 339,925 $ 6.75 to $10.00
Granted................................................... 18,500 7.63
Exercised................................................. (300) 7.75
Cancelled................................................. (42,800) 7.75 to 10.00
------------ ----------------
Outstanding at July 31, 1992................................ 315,325 $ 6.75 to $10.00
Granted................................................... 91,150 7.75 to 16.00
Exercised................................................. (47,225) 6.75 to 10.00
Cancelled................................................. (16,300) 7.75 to 10.00
------------ ----------------
Outstanding at July 31, 1993................................ 342,950 $ 6.75 to $16.00
Granted................................................... 110,300 14.25 to 18.38
Exercised................................................. (144,149) 4.50 to 10.00
Cancelled................................................. (5,141) 5.08 to 10.25
Adjustment for Stock Splits............................... 369,398 3.00 to 12.25
------------ ----------------
Outstanding at July 31, 1994................................ 673,358 $ 3.00 to $12.25
============ ================
</TABLE>

At July 31, 1992, 1993 and 1994, options for 137,550, 148,175 and 259,252
shares, respectively, were exercisable and options for 317,586, 242,736 and,
subject to shareholder approval, 231,258 shares, respectively, were available
for future grants.

During the year, warrants to acquire 200 shares of Common Stock were
exercised at $10.00 per share and warrants to acquire 18,000 shares of Common
Stock were granted to purchase shares at $16.38 per share. The two 3-for-2 stock
splits increased the number of shares subject to outstanding warrants by 74,500.
These warrants are exercisable on the date of grant. At July 31, 1994, warrants
were outstanding and exercisable to purchase 144,900 shares at exercise prices
ranging from $3.33 to $10.92 per share as adjusted for stock splits.

F-11
<PAGE> 41

GELMAN SCIENCES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE G -- POLLUTION-RELATED EXPENSES

<TABLE>
<CAPTION>
ACCRUED LONG-TERM
LIABILITY DEBT
------- ---------
(in thousands)
<S> <C> <C>
Balance as of July 31, 1992............................................ $ 4,413 $ 625
Reclassification of State of Michigan note........................... (1,100) 1,100
Remediation costs charged to accrued liability....................... (390) --
Payments relating to settlements..................................... (42) (350)
------- ---------
Balance as of July 31, 1993............................................ $ 2,881 $ 1,375
Remediation costs charged to accrued liability....................... (1,258) --
Settlement with chemical companies, cost recovery.................... 750 --
Payments relating to settlements..................................... (561) (250)
Defense cost on settlement with local residents...................... (312) --
------- ---------
Balance as of July 31, 1994............................................ $ 1,500 $ 1,125
======= ========
</TABLE>

During the year, the Company settled its lawsuit against several chemical
companies for a cost recovery of $750,000 for damages in connection with the
groundwater contamination. Also during the year, the Company reached a
settlement for $561,000 with nearby residents wherein the residents filed suit
for damages associated with contamination of residential water supplies. The
defense and other costs associated with this case of $312,000 was offset against
the recovery from the chemical companies. Pollution-related expenses in fiscal
1992 and 1993, as shown on the Consolidated Statement of Operations, include
legal costs, settlement provisions and other related costs.

At July 31, 1994, $509,000 of the total accrued liability is classified as
other accrued expenses with the remainder classified as other long-term
liabilities. Of the total long-term debt, $191,000 is classified as current
maturities.

Total costs to the Company of pollution-related activities will be
dependent upon the efficacy and duration of the remediation plan and obtaining a
cost-free repository for treated groundwater. The ultimate costs to be incurred
could exceed the amount provided for at July 31, 1994. However, it is the
opinion of management that these additional costs, if any, will not have a
material adverse effect on the Company's operations because the cash outflows
would be spread over many future years.

NOTE H -- OTHER EXPENSE (INCOME)

For the year ended July 31, 1994, other expense (income) includes a gain of
$108,000 on the sale of Australian assets relating to the Laminar Air Flow
product line. Also included in other expense (income) are royalties, interest
income, gains and losses on sales of other assets and foreign exchange gains and
losses.

F-12
<PAGE> 42

GELMAN SCIENCES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE I -- OPERATIONS BY INDUSTRY SEGMENT AND GEOGRAPHIC AREA

The principal products of the Company are grouped into two segments: the
Filtration Products Group and the Health Products Group. Filtration Products are
primarily comprised of laboratory products, certain membranes and process
filtration products for the biotechnology, pharmaceutical, environmental and
industrial markets. Health Products are primarily comprised of products for the
medical and health industries, including custom-manufactured disposable filters
and certain membranes for original equipment manufacturers in the healthcare
field. In both of these segments, sales and distribution of the Company's
products both domestically and internationally are through Company salespeople
and a network of distributors.

<TABLE>
<CAPTION>
NET OPERATING IDENTIFIABLE DEPRECIATION CAPITAL
SALES EARNINGS ASSETS EXPENSE EXPENDITURES
------- --------- ------------ ------------ ------------
(in thousands)
<S> <C> <C> <C> <C> <C>
INDUSTRY SEGMENTS
Year Ended July 31, 1994
Filtration Products Group............... $62,916 $ 9,749 $ 49,431 $3,039 $4,223
Health Products Group................... 29,461 4,833 20,918 1,325 2,338
Other................................... 2,586 115 1,245 41 121
------- -------- ---------- --------- ---------
Totals................................ $94,963 $14,697 $ 71,594 $4,405 $6,682
======= ======== ========== ========= =========
Year Ended July 31, 1993
Filtration Products Group............... $56,900 $ 7,407 $ 44,407 $3,069 $3,717
Health Products Group................... 26,394 4,375 17,356 1,114 2,114
Other................................... 2,915 (14) 1,542 58 29
------- -------- ---------- --------- ---------
Totals................................ $86,209 $11,768 $ 63,305 $4,241 $5,860
======= ======== ========== ========= =========
Year Ended July 31, 1992
Filtration Products Group............... $53,612 $ 6,739 $ 42,942 $3,013 $3,082
Health Products Group................... 24,226 3,321 16,253 1,106 935
Other................................... 3,622 64 2,104 71 10
------- -------- ---------- --------- ---------
Totals................................ $81,460 $10,124 $ 61,299 $4,190 $4,027
======= ======== ========== ========= =========
</TABLE>

<TABLE>
<CAPTION>
NET OPERATING IDENTIFIABLE
SALES EARNINGS ASSETS LIABILITIES
-------- --------- ------------ -----------
(in thousands)
<S> <C> <C> <C> <C>
GEOGRAPHIC AREA DATA
Year Ended July 31, 1994
U.S. Operations...................................... $ 80,147 $13,477 $ 56,685 $37,026
Europe............................................... 13,631 809 7,579 1,428
Asia/Pacific......................................... 9,300 328 6,264 2,649
Other................................................ 3,095 83 1,066 149
Elimination -- Inter-area sales...................... (11,210) -- -- --
-------- -------- ---------- ---------
Totals............................................. $ 94,963 $14,697 $ 71,594 $41,252
======== ======== ========== =========
Year Ended July 31, 1993
U.S. Operations...................................... $ 72,589 $11,932 $ 50,517 $37,049
Europe............................................... 10,564 163 5,938 1,057
Asia/Pacific......................................... 8,958 (35) 5,684 2,991
Other................................................ 3,142 (292) 1,166 142
Elimination -- Inter-area sales...................... (9,044) -- -- --
-------- -------- ---------- ---------
Totals............................................. $ 86,209 $11,768 $ 63,305 $41,239
======== ======== ========== =========
Year Ended July 31, 1992
U.S. Operations...................................... $ 65,737 $ 9,889 $ 47,002 $36,677
Europe............................................... 9,848 22 6,750 1,332
Asia/Pacific......................................... 10,528 56 6,610 3,701
Other................................................ 3,141 157 937 169
Elimination -- Inter-area sales...................... (7,794) -- -- --
-------- -------- ---------- ---------
Totals............................................. $ 81,460 $10,124 $ 61,299 $41,879
======== ======== ========== =========
</TABLE>

F-13
<PAGE> 43

GELMAN SCIENCES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Operating earnings are total revenues less operating expenses, foreign
exchange gains or losses, interest and finance charges, and corporate expenses
(fiscal 1992 - $8,966,000; fiscal 1993 - $4,847,000; fiscal 1994 - $5,568,000).
Corporate expenses include an allocated share of administrative costs and
pollution-related expenses. Identifiable assets by industry segment include both
assets directly identified with those operations and an allocated share of
jointly used assets. Corporate assets consist of an allocated share of the
buildings, furniture and fixtures, and equipment. Asia/Pacific operations are
represented by subsidiaries located in Japan and Australia. European operations
are represented by subsidiaries located in the United Kingdom, Ireland, France,
Germany and Italy. The geographic data has been revised and restated
retroactively in order to present more meaningful data. Inter-area sales are
accounted for at prices comparable to unaffiliated customer sales. Export sales
to unaffiliated customers were: fiscal 1992 - $9,970,000; fiscal 1993 -
$10,018,000; fiscal 1994 - $9,239,000. Net sales to a major customer, who is a
distributor of the Company's products and a manufacturer of medical products,
approximated $8,487,000, $9,929,000 and $10,522,000 in fiscal 1992, 1993 and
1994, respectively.

NOTE J -- FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

Foreign Exchange Instruments: The Company enters into forward exchange
contracts to hedge foreign currency transactions on a continuing basis. At July
31, 1994 the Company had contracts outstanding to exchange foreign currencies
for U.S. dollars amounting to approximately $1.1 million denominated in British
pounds, Japanese yen, French francs and German deutschemarks, maturing at
various dates. Maximum market risk is limited to the difference between the spot
rate on the date of delivery and the contract price.

Interest rate instruments: At July 31, 1994, the Company had outstanding an
interest rate swap agreement to obtain long-term fixed interest rates for a
notional amount of $5 million. Under the terms of the agreement, the Company
secured a fixed rate of 7.41% on the notional amount, through January 25, 1996.
During the year, the Company purchased a 7.5% interest rate cap on $5 million
notional amount effective May 1, 1995 through May 1, 1998. The interest rate
swap and cap agreements have been entered into with major financial institutions
that are expected to fully perform under the terms of the agreements.

NOTE K -- EXTRAORDINARY ITEM

As more fully discussed in Note B -- Financing, during the year ended July
31, 1994, the Company redeemed the 7.98% Industrial Development Revenue Bonds
issued in 1989. The Company recorded a charge of $295,000 net of $112,000 tax
benefit or $.03 per share to write-off deferred finance charges and record a
redemption premium and fees related to the 1989 Bonds.

During the year ended July 31, 1992, the Company agreed to settle an
adverse $2.6 million verdict in a product liability case for $1.8 million. While
the lawsuit was pending, the Company believed that it had full insurance
coverage. In the interim, however, its primary insurance carrier was placed in
reorganization and the Company's secondary carrier failed. The Company received
$1.3 million from its primary insurance carrier as part of the reorganization in
December 1990. The balance of the settlement, $558,000, has been expensed and
recorded as an extraordinary loss net of a $206,000 tax benefit.

F-14
<PAGE> 44

GELMAN SCIENCES INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE L -- SUMMARY OF QUARTERLY RESULTS OF OPERATION (UNAUDITED)

Summarized quarterly financial information for fiscal years ended July 31,
1993 and July 31, 1994 is shown below:

<TABLE>
<CAPTION>
FISCAL 1993 FISCAL 1994
-------------------------------------- --------------------------------------
OCT. 31 JAN. 31 APR. 30 JULY 31 OCT. 31 JAN. 31 APR. 30 JULY 31
-------- -------- -------- -------- -------- -------- ------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales....................... $ 20,932 $ 20,200 $ 22,269 $ 22,808 $ 22,294 $ 23,282 $24,377 $ 25,010
Gross profit.................... 10,118 9,693 11,155 11,579 10,918 11,628 12,042 13,122
Research and development
expense....................... 941 979 1,035 1,184 1,220 1,106 1,188 1,363
Pollution-related expense....... 237 94 111 101 -- -- -- --
Earnings before income taxes and
extraordinary item............ 1,118 707 1,508 1,399 1,388 1,733 2,266 2,150
Income taxes.................... 480 292 653 605 490 639 784 687
Extraordinary item.............. -- -- -- -- -- -- (183) --
Net earnings.................... 638 415 855 794 898 1,094 1,299 1,463
Net earnings per share.......... .10 .07 .15 .13 .15 .18 .20 .23
</TABLE>

The third quarter ended April 30, 1994 includes an extraordinary charge
resulting from redemption of Industrial Development Revenue Bonds issued in
1989. The Company recorded a charge of $295,000 net of $112,000 tax benefit or
$.03 per share to write off deferred finance charges and record a redemption
premium and fees related to the 1989 Bonds.

F-15
<PAGE> 45

GELMAN SCIENCES INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
JANUARY 31,
-------------------
1994 1995
------- -------
<S> <C> <C>
ASSETS
Current Assets
Cash................................................................... $ 883 $ 1,906
Accounts receivable less allowances.................................... 18,845 21,680
Inventories
Finished products................................................... 6,794 5,785
Work in process..................................................... 2,328 1,689
Raw material and purchased parts.................................... 5,017 6,709
------- -------
14,139 14,183
Other current assets................................................... 3,948 4,485
------- -------
Total Current Assets........................................... 37,815 42,254
Property, Plant and Equipment............................................ 65,550 65,552
Less allowances for depreciation....................................... (36,983) (35,252)
------- -------
28,567 30,300
Intangibles and Other Assets............................................. 1,559 2,348
------- -------
Total Assets................................................... $67,941 $74,902
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable to banks................................................. $ 1,364 $ 1,718
Accounts payable....................................................... 5,562 4,396
Accrued expenses....................................................... 8,379 8,208
Current maturities of long-term debt................................... 1,437 4,070
------- -------
Total Current Liabilities...................................... 16,742 18,392
Long-Term Debt, exclusive of current maturities.......................... 24,000 20,739
Other Long-Term Liabilities.............................................. 2,377 2,156
Stockholders' Equity:
Preferred stock, par value $1.00 per share -- authorized shares
500,000, none outstanding........................................... -- --
Common stock, par value $.10 per share -- issued and outstanding
3,989,606 shares in 1994 and 6,218,969 shares in 1995............... 399 622
Additional capital..................................................... 12,868 14,670
Retained earnings...................................................... 14,337 19,579
Foreign currency translation adjustments............................... (1,190) (806)
Less loan to Employee Stock Ownership Plan............................. (600) (450)
Note receivable -- common stock........................................ (992) --
------- -------
Total Stockholders' Equity..................................... 24,822 33,615
------- -------
Total Liabilities and Stockholders' Equity..................... $67,941 $74,902
======= =======
</TABLE>

See notes to unaudited consolidated financial statements.

F-16
<PAGE> 46

GELMAN SCIENCES INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JANUARY 31,
-------------------
1994 1995
------- -------
<S> <C> <C>
Net sales................................................................ $45,576 $48,185
Costs and expenses
Cost of products sold.................................................. 23,030 23,583
Selling and administrative............................................. 16,299 17,320
Research and development............................................... 2,326 2,624
Other income -- net.................................................... (78) (122)
------- -------
Operating earnings....................................................... 3,999 4,780
Interest expense......................................................... 878 882
------- -------
Earnings before income taxes............................................. 3,121 3,898
Income taxes............................................................. 1,129 1,411
------- -------
Net earnings............................................................. $ 1,992 $ 2,487
======= =======
Primary earnings per share............................................... $ .32 $ .38
======= =======

Weighted average common and common equivalent shares outstanding......... 6,183,000 6,597,000
========= =========
</TABLE>

See notes to unaudited consolidated financial statements.

F-17
<PAGE> 47

GELMAN SCIENCES INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JANUARY 31,
---------------------
1994 1995
-------- --------
<S> <C> <C>
Operating Activities
Net earnings......................................................... $ 1,992 $ 2,487
Loss on disposal of assets........................................... -- 25
Depreciation and amortization........................................ 2,251 2,092
Increase in inventories.............................................. (1,153) (150)
Increase in accounts receivable...................................... (1,737) (724)
Increase in other current assets..................................... (345) (620)
Increase (decrease) in current liabilities........................... 814 (675)
Decrease in liabilities for environmental activities................. (746) (522)
Tax benefit from exercised stock options............................. 191 220
Other................................................................ 56 38
-------- --------
Net Cash Provided by Operating Activities.................... 1,323 2,171
-------- --------
Financing Activities
Long-term debt borrowings............................................ 15,683 14,420
Principal payments on long-term debt................................. (14,114) (13,267)
Proceeds from exercised stock options................................ 499 386
-------- --------
Net Cash Provided by Financing Activities.................... 2,068 1,539
-------- --------
Investing Activities
Capital expenditures................................................. (3,446) (3,207)
Increase in intangibles and other assets............................. (222) (71)
Proceeds from sale of assets......................................... 3 34
-------- --------
Net Cash Used in Investing Activities........................ (3,665) (3,244)
-------- --------
Effects of Exchange Rate Changes on Cash............................... 15 (85)
-------- --------
Net Change in Cash During the Period................................... (259) 381
Cash at Beginning of Period............................................ 1,142 1,525
-------- --------
Cash at End of Period.................................................. $ 883 $ 1,906
======== ========
</TABLE>

See notes to unaudited consolidated financial statements.

F-18
<PAGE> 48

GELMAN SCIENCES INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

GENERAL

In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (which are of a normal recurring
nature) necessary to present fairly the financial position of the Company and
subsidiaries as of January 31, 1995, and the results of their operations and
cash flows for the six months ended January 31, 1995 and 1994. These financial
statements should be read in conjunction with the audited financial statements
and notes thereto set forth on pages F-2 through F-15. The results of operations
for the six months ended January 31, 1995 and 1994 are not necessarily
indicative of the results for the full year.

PUBLIC OFFERING

On January 27, 1995, the Company filed a Registration Statement with the
Commission to sell 1,000,000 shares of Common Stock in an underwritten public
offering. The Company has granted the Underwriters an option for 30 days to
purchase up to an additional 150,000 shares of Common Stock solely to cover
over-allotments, if any.

The net proceeds from the sale of the Common Stock will be used to repay a
term note payable to NBD Bank N.A. and to reduce outstanding indebtedness under
the Credit Agreement.

POLLUTION-RELATED MATTERS

The Company has settled several lawsuits related to groundwater
contamination and has begun remediation activities. The remediation plan
requires the Company to treat the groundwater to the extent necessary to reduce
the contaminants to a defined level. Management estimates that remediation will
take eight years. Total costs to the Company of pollution-related activities
will be dependent upon the efficacy and duration of the remediation plan and
obtaining a cost-free repository for treated groundwater. The ultimate costs to
be incurred could exceed the amount provided of $1.1 million at January 31,
1995. However, it is the opinion of management that these additional costs, if
any, will not have a material adverse effect on the Company's operations because
the cash outflows would be spread over many future years.

F-19
<PAGE> 49

MEMBRANES

<TABLE>
<S> <C>
[Two photographs of the Company's The Company manufactures membranes
products sold primarily to medical for its microfiltration products.
products manufacturers.] These membranes are also sold
primarily to medical products
manufacturers who incorporate them
into products such as diagnostic kits
for early detection of pregnancy and
monitoring levels of cholesterol and
glucose.
</TABLE>

PROCESS FILTRATION PRODUCTS

<TABLE>
<S> <C>
[Three photographs of the Company's Process filtration products are used in high
products used in high technology technology manufacturing applications such as
manufacturing applications.] sterilization of pharmaceutical products,
ultrapurification of water
for the manufacture of semiconductor chips
and the production of ultrapure chemicals.
The filters are disposable, used in high
volume applications and require regular
replacement. Cartridge filters are
housed in stainless steel vessels, many of
which are manufactured by the Company.
</TABLE>
<PAGE> 50

- ------------------------------------------------------
- ------------------------------------------------------

NO DEALER, SALES REPRESENTATIVE, OR OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
ITS DATE.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 4
Investment Considerations............. 7
Use of Proceeds....................... 7
Price Range of Common Stock and
Dividend Policy..................... 8
Capitalization........................ 9
Selected Consolidated Financial
Data................................ 10
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 11
Business.............................. 16
Management............................ 23
Description of Capital Stock.......... 24
Underwriting.......................... 26
Legal Matters......................... 26
Experts............................... 27
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>

- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------

1,250,000 SHARES

[GELMAN LOGO]

COMMON STOCK

--------------------

PROSPECTUS

--------------------

CLEARY GULL REILAND & MCDEVITT INC.

MCDONALD & COMPANY
Securities, Inc.

RONEY & CO.

MARCH , 1995
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 51

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Set forth below is an estimate of the fees and expenses payable by the
Company in connection with the offering of the shares of Common Stock.

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee................ $ 6,779
NASD filing fee.................................................... 2,067
Legal fees and expenses............................................ 65,000
Blue Sky fees and expenses (including legal fees).................. 15,000
Accounting fees and expenses....................................... 60,000
Transfer Agent and Registrar fees.................................. 1,500
Printing and engraving fees........................................ 110,000
AMEX listing fees.................................................. 17,500
Miscellaneous...................................................... 22,154
--------
Total......................................................... $300,000
========
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Sections 561 through 571 of the Michigan Business Corporation Act ("MBCA")
set forth the conditions and limitations governing the indemnification of
officers, directors and other persons.

The MBCA provides for indemnification of directors and officers acting in
good faith and in a manner they reasonably believe to be in or not opposed to
the best interest of the Company or its shareholders (and, with respect to a
criminal proceeding, if they have no reasonable cause to believe their conduct
to be unlawful) against (i) expenses (including attorney's fees), judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred
in connection with any threatened, pending, or completed action, suit, or
proceeding (other than an action by or in the right of the Company) arising out
of a position with the Company (or with some other entity at the Company's
request) and (ii) expenses (including attorney's fees) and amounts paid in
settlement actually and reasonably incurred in connection with a threatened,
pending, or completed action or suit by or in the right of the Company, unless
the director or officer is found liable to the Company and an appropriate court
does not determine that he or she is nevertheless fairly and reasonably entitled
to indemnification. The MBCA requires indemnification for expenses to the extent
that a director or officer is successful in defending against any such action,
suit or proceeding, and otherwise requires in general that the indemnification
provided for in (i) and (ii) above be made only on a determination by a majority
vote of a quorum of the Board of Directors who were not parties to or threatened
to be made parties to such action. In certain circumstances, the MBCA further
permits advances to cover such expenses before a final determination that
indemnification is permissible, upon receipt of (i) a written affirmation by the
directors or officers of their good faith belief that they have met the
applicable standard of conduct set forth in the MBCA, (ii) receipt of a written
undertaking by or on behalf of the directors of officer to repay such amounts
unless it shall ultimately be determined that they are entitled to
indemnification and (iii) a determination that the facts then known to those
making the advance would not preclude indemnification.

Indemnification under the MBCA is not exclusive of other rights to
indemnification to which a person may be entitled under a company's articles of
incorporation, bylaws, or a contractual agreement. Reference is made to Article
VII of the Company's Restated Bylaws which provides for indemnification of
directors and officers of the Company and others to the full extent permitted by
the aforesaid sections of the MBCA.

The Articles (Article X) provide that a director of the Company shall not
be personally liable to the Company or its shareholders for monetary damages for
breach of the director's fiduciary duty, provided such limitation on liability
does not involve (i) a breach of the director's duty of loyalty to the Company
or its shareholders; (ii) acts or omissions not in good faith or that involve
intentional misconduct or knowing

II-1
<PAGE> 52

violation of law; (iii) a violation of certain provisions of the MBCA; (iv) a
transaction from which the director derived an improper personal benefit; and
(v) an act or omission occurring before March 1, 1987. The Articles further
provide that any amendment to these director liability provisions will have
prospective effect only.

The MBCA permits the Company to purchase insurance on behalf of its
directors and officers against liabilities arising out of their positions with
the Company whether or not such liabilities would be within the indemnification
provisions of the MBCA. The Company carries a directors' and officers' liability
insurance policy which insures officers and directors of the Company against
certain liability by reason of certain acts and omissions in connection with
their duties for the Company and indemnifies the Company against losses for
which it may be required or permitted by law to indemnify such directors and
officers, generally covering such losses up to $5,000,000 in the aggregate in
each policy year. The insurance policy is in effect until August 31, 1995 and
the total premium for such policy is $42,300.

Reference is made to Section 7 of the Underwriting Agreement, a copy of
which is filed as Exhibit 1 to the Registration Statement, for information
concerning indemnification arrangements among the Company and the Underwriters.

ITEM 16. EXHIBITS

<TABLE>
<S> <C>
1 Form of Underwriting Agreement.*
5 Opinion of Brouse & McDowell regarding legality of securities being offered.
10(a) Employment Agreement between the Company and Charles Gelman, as amended,
incorporated by reference from Exhibit 10(1) to the Company's Form 10-K for year
ended July 31, 1988.
10(b) Deferred Compensation Agreement between the Company and James C. Marshall,
incorporated by reference from Exhibit 10(3) to the Company's Form 10-K for year
ended July 31, 1988.
10(c) Employment Agreement between the Company and James C. Marshall, incorporated by
reference from Exhibit 10(4) to the Company's Form 10-K for year ended July 31,
1989.
10(d) 1978 Employee Stock Option Plan, as amended, incorporated by reference from
Exhibit 10(2) to the Company's Form 10-K for year ended July 31, 1987.
10(e) 1988 Stock Plan, incorporated by reference from Exhibit 10(6) to the Company's
Form 10-K for year ended July 31, 1988.
10(f) Warrant Agreements, dated December 16, 1987, with John A. Geishecker and Saul
Hymans, incorporated by reference to Exhibits 28.4 and 28.5 to the Company's Form
S-8 Registration Statement No. 33-37235 filed with the Securities and Exchange
Commission on October 9, 1990.
10(g) Warrant and Stock Appreciation Rights Agreements, dated January 12, 1989, with
John A. Geishecker and Saul Hymans, incorporated by reference to Exhibits 28.7 and
28.8 to the Company's Form S-8 Registration Statement No. 33-37235 filed with the
Securities and Exchange Commission on October 9, 1990.
10(h) Warrant Agreement, dated January 12, 1989, with Nina I. McClelland, incorporated
by reference to Exhibit 28.10 to the Company's Form S-8 Registration Statement No.
33-37235 filed with the Securities and Exchange Commission on October 9, 1990.
10(i) Confidentiality, Anti-Competition and Termination Benefits Agreement between James
J. Fahrner and the Company, incorporated by reference from Exhibit 10(10) to the
Company's Form 10-K for year ended July 31, 1993.
10(j) Confidentiality, Anti-Competition and Termination Benefits Agreement between
Robert L. Buker and the Company, incorporated by reference from Exhibit 10(11) to
the Company's Form 10-K for year ended July 31, 1993.
10(k) Confidentiality, Anti-Competition and Termination Benefits Agreement between Eric
Gelman and the Company, incorporated by reference from Exhibit 10(12) to the
Company's Form 10-K for year ended July 31, 1993.
</TABLE>

II-2
<PAGE> 53

<TABLE>
<S> <C>
10(l) Warrant Agreement, dated September 2, 1992, with Charles Newman, incorporated by
reference from Exhibit 10(14) to the Company's Form 10-K for year ended July 31,
1993.
10(m) Consent Judgment in Kelley v. Gelman Sciences Inc. entered October 26, 1992,
incorporated by reference from Exhibit 10(15) to the Company's Form 10-K for year
ended July 31, 1993.
10(n) Consent Judgment in State of Michigan v. Gelman Sciences Inc. entered October 26,
1992, incorporated by reference from Exhibit 10(16) to the Company's Form 10-K for
year ended July 31, 1993.
10(o) Employment Agreement dated May 4, 1993, between the Company and Kim A. Davis,
incorporated by reference from Exhibit 10(17) to the Company's Form 10-K for year
ended July 31, 1993.
10(p) Warrant Agreement, dated June 17, 1994, with Robert Collins, incorporated by
reference from Exhibit 10(16) of the Company's Form 10-K for year ended July 31,
1994.
10(q) Warrant Agreement, dated June 17, 1994, with John A. Geishecker, incorporated by
reference from Exhibit 10(17) of the Company's Form 10-K for year ended July 31,
1994.
10(r) Warrant Agreement, dated June 17, 1994, with Saul Hymans, incorporated by
reference from Exhibit 10(18) of the Company's Form 10-K for year ended July 31,
1994.
10(s) Warrant Agreement, dated June 17, 1994, with Nina McClelland, incorporated by
reference from Exhibit 10(19) of the Company's Form 10-K for year ended July 31,
1994.
10(t) Warrant Agreement, dated June 17, 1994, with Charles Newman, incorporated by
reference from Exhibit 10(20) of the Company's Form 10-K for year ended July 31,
1994.
10(u) Confidentiality, Anti-Competition and Termination Benefits Agreement between Mark
A. Sutter and the Company, incorporated by reference from Exhibit 10(21) of the
Company's Form 10-K for year ended July 31, 1994.
10(v) Confidentiality, Anti-Competition and Termination Benefits Agreement between
Edward J. Levitt and the Company, incorporated by reference from Exhibit 10(22) of
the Company's Form 10-K for year ended July 31, 1994.
10(w) Credit Agreement (the "Credit Agreement") dated October 29, 1993 between the
Company, NBD Bank, N.A. and Comerica Bank, incorporated by reference from Exhibit
4.1 of the Company's Form 10-K for year ended July 31, 1993.
10(x) First Amendment to Credit Agreement dated April 1, 1994.*
10(y) Warrant Agreement, dated September 2, 1994, with Dr. Hajime Kimura, incorporated
by reference from Exhibit 10(1) to the Company's Form 10-Q for the quarter ended
January 31, 1995.
11 Statement re Computation of Per Share Earnings.*
13(a) Annual Report to Shareholders for the fiscal year ended July 31, 1994.*
13(b) Form 10-Q for the fiscal quarter ended October 31, 1994.*
13(c) Form 10-Q for the fiscal quarter ended January 31, 1995.*
23(a) Consent of Independent Auditors.
23(b) Consent of Brouse and McDowell (Included in Exhibit 5 above).
24 Powers of Attorney.*
</TABLE>

- -------------------------
*Previously filed as an exhibit to this registration statement.

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event

II-3
<PAGE> 54

that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

II-4
<PAGE> 55

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Ann Arbor, State of Michigan, on March 21, 1995.

GELMAN SCIENCES INC.

By: /s/ James J. Fahrner
------------------------------------
James J. Fahrner
Vice President-Finance and
Treasurer

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:

<TABLE>
<S> <C>
* Date: March 21, 1995
- -----------------------------------------------
Charles Gelman
Chairman of the Board and a Director
(Chief Executive Officer)

/s/ James J. Fahrner Date: March 21, 1995
- -----------------------------------------------
James J. Fahrner
Vice President-Finance and Treasurer
(Chief Financial Officer and
Principal Accounting Officer)
</TABLE>

Directors: Robert M. Collins, John A. Geishecker, Jr., Saul H. Hymans, Hajime
Kimura, Nina I. McClelland and Charles Newman*

<TABLE>
<S> <C>
*By: /s/ James J. Fahrner Date: March 21, 1995
------------------------------------------
James J. Fahrner
Attorney-In-Fact**
</TABLE>

- -------------------------
** Pursuant to authority granted by powers of attorney, copies of which have
previously been filed.

II-5
<PAGE> 56

EXHIBIT INDEX

<TABLE>
<CAPTION>
NO. DESCRIPTION
- --- -----------------------------------------------------------------------------------
<S> <C>
5 Opinion of Brouse & McDowell.
23 (a) Consent of Independent Auditors.
</TABLE>

<PAGE> 1
[BROUSE & MCDOWELL LETTERHEAD]

EXHIBIT 5

March 22, 1995

Gelman Sciences Inc.
600 South Wagner Road
Ann Arbor, Michigan 48103-9019

Re: Registration on Form S-2 of 1,437,500 Shares
of the Common Stock of Gelman Sciences Inc.

Gentlemen:

We are acting as counsel to Gelman Sciences Inc. (the "Company") in
connection with the issuance and sale by the Company of up to 1,437,500 shares
of its common stock, par value $.10 per share (including up to 187,500 such
shares to cover over-allotments) (the "Shares"), in accordance with the
underwriting agreement (the "Underwriting Agreement") among the Company and the
underwriters named in Schedule A thereto (the "Underwriters").

We have examined such documents, records and matters of law as we have
deemed necessary for purposes of this opinion, and based thereon we are of the
opinion that the Shares are duly authorized and, when issued and delivered to
the Underwriters pursuant to the Underwriting Agreement against payment of the
consideration therefor as provided therein, will be validly issued, fully paid
and nonassessable.

We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement on Form S-2 No. 33-88808 filed by the Company to effect
registration of the Shares under the Securities Act of 1933 (the "Registration
Statement") and to the reference to this firm under the caption "Legal
Matters" in the prospectus comprising a part of the Registration Statement.

Very truly yours,

Brouse & McDowell
-------------------------
Brouse & McDowell

<PAGE> 1
EXHIBIT 23(a)

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion and incorporation by reference in this
registration statement on Amendment No. 3 to Form S-2 of our reports dated
September 22, 1994, on our audits of the consolidated financial statements and
financial statement schedules of Gelman Sciences, Inc. and Subsidiaries. We
also consent to the reference to our firm under the caption "Experts."

COOPERS & LYBRAND L.L.P.

Detroit, Michigan
March 21, 1995