UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the year ended December 31, 2002 Commission file number 000-21109
CUNO INCORPORATED SAVINGS AND RETIREMENT PLAN
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(Full title of the plan)
CUNO INCORPORATED
400 RESEARCH PARKWAY
MERIDEN, CONNECTICUT 06450
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(Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office)
CUNO INCORPORATED SAVINGS AND RETIREMENT PLAN
AUDITED FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULES
Page
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Report of Independent Auditors
Statements of Assets Available for Benefits 1
Statements of Changes in Assets Available for Benefits 2
Notes to Financial Statements 3-6
Supplemental Schedule
Schedule H, Line 4(i) -- Schedule of Assets (Held at End of Year) 7
Exhibit Index 8
REPORT OF INDEPENDENT AUDITORS
Administrative Committee
CUNO Incorporated Savings and Retirement Plan
We have audited the accompanying statements of assets available for benefits of
the CUNO Incorporated Savings and Retirement Plan (the "Plan") as of December
31, 2002 and 2001, and the related statements of changes in assets available for
benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 assets available for benefits of the Plan at December
31, 2002 and 2001, and the changes in its assets available for benefits for the
years then ended, in conformity with accounting principles generally accepted in
the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held at end of year) as of December 31, 2002 is presented for purposes of
additional analysis and is not a required part of the financial statements but
is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ Ernst & Young LLP
Hartford, Connecticut
June 13, 2003
CUNO Incorporated Savings and Retirement Plan
Statements of Assets Available For Benefits
December 31, 2002 and 2001
December 31,
-----------------------------------
2002 2001
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Investments:
Mutual funds $18,573,175 $19,887,033
CUNO Incorporated Common Stock 5,911,045 5,366,425
Participant loans receivable 970,305 975,371
----------- -----------
25,454,525 26,228,829
Contributions receivable:
Employer 779,513 716,608
Participants 124,254 53,873
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903,767 770,481
Assets available for benefits $26,358,292 $26,999,310
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See accompanying notes.
1
CUNO Incorporated Savings and Retirement Plan
Statements of Changes In Assets Available For Benefits
For The Year Ended December 31, 2002 and 2001
December 31,
-----------------------------------
2002 2001
------------ ------------
Additions to net assets attributed to:
Interest income $ 77,308 $ 85,948
Dividend income 346,231 328,444
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423,539 414,392
Contributions:
Participants 2,841,952 2,225,291
Transfer of assets from merged plan -- 900,875
Employer 779,513 716,608
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3,621,465 3,842,774
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Total additions 4,045,004 4,257,166
Benefits paid to participants (1,108,371) (1,742,590)
Net realized and unrealized depreciation
in fair value of investments (3,577,651) (2,050,691)
------------ ------------
Net (decrease) increase in assets available
for benefits (641,018) 463,885
Assets available for benefits, beginning of year 26,999,310 26,535,425
------------ ------------
Assets available for benefits, end of year $ 26,358,292 $ 26,999,310
============ ============
See accompanying notes.
2
CUNO Incorporated
Savings and Retirement Plan
Notes to Financial Statements
December 31, 2002 and 2001
NOTE 1 -- DESCRIPTION OF PLAN
The CUNO Incorporated Savings and Retirement Plan (the "Plan") consists of a
pre-tax savings program, a post-tax savings program, and an employer matching
program. All employees of CUNO Incorporated (the "Company" or "Plan Sponsor" or
"Employer") that have been credited with at least 500 hours of service within a
six month period following their initial date of employment, or have completed
one year of service recognized by the Plan, are eligible to participate in the
Plan. The Plan is subject to the applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
Under the pre-tax program, participants may elect to contribute up to 15 percent
of their compensation, on a tax-deferred basis, to the Plan. Under the post-tax
program, participants may elect to contribute up to an additional seven percent
of their compensation. These contributions are made with after-tax dollars and
do not receive Company matching contributions. Participants may also contribute
amounts representing distributions from other qualified defined benefit or
contribution plans. The Company makes an annual discretionary matching
contribution, in the form of Company Common Stock, which represents a percentage
of the participants' pre-tax contributions. The matching percentage is applied
to each participant's pre-tax contributions not exceeding 6 percent of eligible
compensation.
All employee contributions and related Plan earnings are immediately vested.
Company matching contributions plus actual earnings thereon vest based on years
of continuous service. A participant is 100 percent vested after five years of
credited service.
Participants also become fully vested in Company matching contributions upon
attainment of their normal retirement date, or upon their death or disability.
If the participant's employment with the Company terminates for other reasons,
and the participant elects to receive distribution of his or her account, the
vested portion of his or her account is distributed to the participant and the
non-vested portion of the participant's account is used to reduce the Company
matching contribution. There were no non-vested assets attributed to terminated
employees at December 31, 2002 or 2001. As of December 31, 2002 and 2001 there
were no amounts allocated to accounts of fully vested persons who had elected to
withdraw from the Plan.
3
CUNO Incorporated
Savings and Retirement Plan
Notes to Financial Statements (continued)
NOTE 1 -- DESCRIPTION OF PLAN (CONTINUED)
The Plan provides for separate investment options in one or more mutual funds as
directed by the participants. These options include the Merrill Lynch Retirement
Preservation Trust, Merrill Lynch Fundamental Growth Fund, Merrill Lynch US
Government Mortgage Fund, Dreyfus Premier Balanced Fund, JP Morgan US Equity
Fund, Merrill Lynch S&P 500 Index Fund, Van Kampen American Value Fund, Dreyfus
Premier Balance Fund, Oppenheimer International Growth Fund, Alliance Technology
Fund, Lord Abbett Developing Growth Fund, and the CUNO Stock Fund. The
participants may change their investment alternatives semi-annually.
The Plan is administered by the Administrative Committee (the "Committee")
appointed by the Company's Board of Directors. Merrill Lynch Trust Company is
the Plan's trustee. The Company has the sole right to appoint the trustee, and
to terminate the Plan, subject to the provisions of ERISA. The Company pays all
significant administrative expenses.
Participants may borrow from their fund accounts up to a maximum equal to the
lesser of $50,000 or 50 percent of their account balance. Loan terms range from
1-5 years, except for the purchase of a primary residence, which term may be a
reasonable period of time that may exceed five years. The loans are secured by
the balance in the participant's account and bear interest at a rate
commensurate with local prevailing rates as determined by the Plan
Administrator. Principal and interest is paid ratably through monthly payroll
deductions.
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
participants will become 100 percent vested in their accounts.
The foregoing description of the Plan provides only general information.
Additional information about the plan agreement, forfeitures, and distributions
from the Plan may be obtained from the Plan Document.
4
CUNO Incorporated
Savings and Retirement Plan
Notes to Financial Statements (continued)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements have been prepared on the accrual basis of accounting.
VALUATION OF INVESTMENTS
Investments in common stock of CUNO Incorporated are carried at the closing
market price on the last business day of the year. Participant loans receivable
are stated at realizable value which approximates fair value.
Investments in mutual funds are carried at the fair value of their underlying
net assets as determined by their respective fund managers, based primarily on
market data.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires the Plan's management to make
estimates and assumptions that affect the reported amounts in the financial
statements. Actual results could differ from those estimates.
NOTE 3 - INVESTMENTS
During the years ended December 31, 2002 and 2001, the Plan's investments
(including investments purchased, sold as well as held during the year)
depreciated in fair value as determined by quoted market prices as follows:
Net Realized and Unrealized
Appreciation in Fair Value of
Investments
---------------------------------
Year Ended December 31,
---------------------------------
2002 2001
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CUNO Incorporated Common Stock $ 434,591 706,614
Shares of mutual funds (fully participant directed) $(4,012,242) (2,757,305)
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$(3,577,651) $(2,050,691)
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5
CUNO Incorporated
Savings and Retirement Plan
Notes to Financial Statements (continued)
NOTE 3 - INVESTMENTS (CONTINUED)
The following presents investments which represent 5% or more of the Plan's net
assets:
December 31,
------------------------------
2002 2001
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Merrill Lynch Fundamental Growth Fund $4,518,886 $6,175,106
Dreyfus Premier Balanced Fund 3,065,119 3,645,524
Merrill Lynch Retirement Preservation Trust 4,437,482 3,373,530
Merrill Lynch S&P 500 Index Fund 2,618,802 3,096,151
Merrill Lynch US Government Mortgage Fund 1,714,360 1,436,632
CUNO Common Stock 5,911,045 5,366,425
NOTE 4 -- INCOME TAX STATUS
The Plan Sponsor has received an opinion letter from the Internal Revenue
Service stating that the written form of the underlying prototype plan document
is qualified under Section 401(a) of the Internal Revenue Code (the "Code"), and
that any employer adopting this form of plan will be considered to have a plan
qualified under Section 401(a) of the Code. The Company has adopted certain
provisions of the Plan Sponsor's prototype plan and, as such, the Plan is
determined to be qualified under Section 401(a). Therefore, the related trust is
exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The plan administrator
believes the Plan is being operated in compliance with the applicable
requirements of the Code and, therefore, believes that the Plan is qualified and
the related trust is tax exempt.
NOTE 5 -- TRANSACTIONS WITH PARTIES-IN-INTEREST
The statements of changes in assets available for plan benefits reflect non-cash
matching contributions from the Company consisting of shares of the Company's
common stock. Such shares are recorded based on their fair market value.
NOTE 6 - TRANSFER OF ASSETS FROM MERGED PLAN
In March 1998, Cuno acquired Chemical Engineering Corporation ("CEC"). In May
2001, CEC'S 401(k) Plan merged with the Plan as a final consolidation of the two
Companies.
6
CUNO Incorporated Savings and Retirement Plan
Schedule H, Line 4(i) -- Schedule of Assets (Held at End of Year)
EIN # 06-1159240 Plan#008
December 31, 2002
Description of Investment,
Including Maturity Date,
Rate of Interest, Collateral,
Identity of Issue, Borrower, Lessor or Similar Party Par or Maturity Value Current Value
- ---------------------------------------------------- --------------------- -------------
Merrill Lynch Retirement Preservation Trust 4,437,482 shares $ 4,437,482
Merrill Lynch Retirement Preservation Trust - GM 33,983 shares 33,983
JP Morgan US Equity Fund Class A 4,472 shares 34,027
Merrill Lynch US Government Mortgage Fund 12,327 shares 127,589
Merrill Lynch Fundamental Growth Fund Class D 355,818 shares 4,518,886
Merrill Lynch Fundamental Growth Fund GM 6,506 shares 82,632
Van Kampen American Value Fund 44,514 shares 672,608
Van Kampen American Value Fund GM 4,879 shares 73,722
Dreyfus Premier Balance Fund 289,435 shares 3,065,117
Oppenheimer International Growth Fund 58,631 shares 640,245
Oppenheimer International Growth Fund GM 6,170 shares 67,380
Merrill Lynch S&P 500 Index Fund 243,383 shares 2,618,802
Lord Abbett Developing Growth Fund 7,019 shares 74,686
Alliance Technology Fund 10,729 shares 411,456
Merrill Lynch US Government Mortgage Fd Class D 165,639 shares 1,714,360
CUNO Incorporated Common Stock 178,474 shares 5,911,045
Participant Loan Fund Loans Receivable 970,305
Pending Settlement Fund Settlement Fund 200
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$25,454,525
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7
Exhibit Index
Exhibit No. Description
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23 Consent of Independent Auditors
99.1 Section 906 Certification of Chief Executive Officer
99.2 Section 906 Certification of Chief Financial Officer
8