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, 2004 Commission file number 000-21109
CUNO INCORPORATED SAVINGS AND RETIREMENT PLAN
(Full title of the plan)
CUNO INCORPORATED
400 RESEARCH PARKWAY
MERIDEN, CONNECTICUT 06450
(Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office)
CUNO INCORPORATED SAVINGS AND RETIREMENT PLAN
FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULE
Page
----
Report of Independent Registered Public Accounting Firm 1
FINANCIAL STATEMENTS
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4 - 10
Supplemental Schedule*
Schedule H, Line 4 (i) -- Schedule of Assets (Held at End of Year) 11
Exhibit Index 12
* Other schedules required by Section 2520-103.1 of the Department of Labor's
Rules and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974 are not included as supplemental schedules because
they are not applicable.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Participants and Administrator of the
CUNO Incorporated Savings and Retirement Plan:
We have audited the accompanying statements of net assets available for benefits
of the CUNO Incorporated Savings and Retirement Plan (the "Plan") as of December
31, 2004 and the related statements of changes in net assets available for
benefits for the year 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 audit. The financial
statements of the Plan as of December 31, 2003 were audited by other auditors
whose reported dated June 25, 2004 expressed an unqualified opinion of those
statements.
We conducted our audit of these statements in accordance with the standards of
the Public Company Accounting Oversight Board of the United States. These
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits as of December 31,
2004 and the changes in net assets available for benefits for the year then
ended in conformity with accounting principles generally accepted in the United
States of America.
Our audit was performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental Schedule H, line 4i
of Assets (Held at End of Year) as of December 31, 2004, 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 audit of the financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Fiondella, Milone & LaSaracina LLP
Manchester, Connecticut
June 23, 2005
1
CUNO Incorporated Savings and Retirement Plan
Statements of Net Assets Available For Benefits
December 31, 2004 and 2003
- --------------------------------------------------------------------------------
<Table>
<Caption>
2004 2003
INVESTMENTS
Mutual funds $29,243,784 $25,048,416
CUNO Incorporated common stock 13,261,741 9,475,348
Participant loans 1,280,048 935,147
----------- -----------
43,785,573 35,458,911
----------- -----------
CONTRIBUTIONS RECEIVABLE
Employer 257,270 195,907
Participants 22,509 146,391
----------- -----------
279,779 342,298
----------- -----------
Net Assets available for benefits $44,065,352 $35,801,209
=========== ===========
The accompanying notes are an integral part of these financial statements.
2
CUNO Incorporated Savings and Retirement Plan
Statements of Changes in Net Assets Available For Benefits
For The Years Ended December 31, 2004 and 2003
- --------------------------------------------------------------------------------
<Table>
<Caption>
2004 2003
ADDITIONS TO NET ASSETS ATTRIBUTED TO
Investment income
Interest $ 64,157 $ 64,261
Dividends 515,455 379,069
Net appreciation in fair value of investments 4,618,606 6,163,783
----------- -----------
Total investment income 5,198,218 6,607,113
----------- -----------
Contributions
Participants 3,841,567 2,769,017
Employer's 1,008,153 825,501
----------- -----------
Total contributions 4,849,720 3,594,518
----------- -----------
Total additions 10,047,938 10,201,631
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO
Benefits paid to participants 1,783,795 758,714
----------- -----------
Total deductions 1,783,795 758,714
----------- -----------
Net increase in net assets available for
benefits 8,264,143 9,442,917
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 35,801,209 26,358,292
----------- -----------
End of year $44,065,352 $35,801,209
=========== ===========
The accompanying notes are an integral part of these financial statements.
3
CUNO Incorporated
Savings and Retirement Plan
Notes to Financial Statements
December 31, 2004 and 2003
NOTE 1 -- DESCRIPTION OF PLAN
GENERAL
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") are eligible to participate in the Plan on the first day of the
month following 30 days of credited service. The Plan is subject to the
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA").
The Plan provides for separate investment options in one or more mutual funds as
directed by the participants. These options include the Merrill Lynch
Fundamental Growth Fund, Merrill Lynch U.S. Government Mortgage Fund, Dreyfus
Premier Balanced Fund, MFS Total Return Fund, Merrill Lynch S&P 500 Index Fund,
Van Kampen Growth and Income Fund, Oppenheimer International Growth Fund,
Alliance Bernstein Technology Fund, AIM Mid Cap Core Equity Fund, PIMCO Total
Return Fund, Van Kampen American Value Fund and the AIM Small Cap Growth Fund.
Participants may also invest in the Merrill Lynch Retirement Preservation Trust
and Company Common Stock. The participants may change their investment
alternatives at their discretion. Participant contribution percentages may be
modified each quarter.
The Plan is administered by the Compensation and Pension 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.
CONTRIBUTIONS
Under the pre-tax program, participants may elect to contribute up to 15 percent
of their eligible compensation, on a tax-deferred basis, to the Plan. As of
April 1, 2004, the Company amended the Plan to allow participants to contribute
up to 50 percent of their eligible compensation, on a tax-deferred basis, to the
Plan. Under the post-tax program, participants may elect to contribute up to an
additional 10 percent of their compensation. These contributions are made with
after-tax dollars and do not receive Company matching contributions.
Participants, who have attained the age of 50 before the close of each
respective Plan year, may also make an additional contribution, commonly known
as the "catch up contribution", of $3,000 for Plan year 2004 and $2,000 for Plan
year 2003.
4
CUNO Incorporated
Savings and Retirement Plan
Notes to Financial Statements (continued)
NOTE 1 -- DESCRIPTION OF PLAN (CONTINUED)
Participants may also contribute amounts representing distributions from other
qualified defined benefit or contribution plans under the rollover provisions of
the Plan. Participants may change their salary deferral percentage to be
effective with the first pay period following the first day of each quarter.
Prior to the 2003 Plan year, the Company made an annual discretionary matching
contribution, in the form of Company Common Stock, which was applied to the
participants' pre-tax contributions based on their elected contribution rate.
Beginning January 1, 2003, the Company began making these matching contributions
on a quarterly basis.
The Company matches an employee's pre-tax contributions in an amount up to 50
percent of the first six percent of eligible compensation. Participants may
transfer matching contributions made in Company Common Stock to the other
investment options at their discretion.
VESTING
All employee contributions and related Plan earnings are immediately vested.
Effective April 1, 2004, the Company amended the Plan such that Company matching
contributions plus actual earnings are immediately vested once contributed.
Prior to this amendment, Company matching contributions plus actual earnings
thereon vested ratably based on years of continuous service (20% per year for
five years).
At December 31, 2004 and 2003, forfeited nonvested accounts totaled $19,243 and
$4,196, respectively. These accounts will be used to reduce future employer
contributions. Also, in 2004 and 2003, employer contributions were reduced by
$15,908 and $33,149, respectively, from forfeited nonvested accounts.
PARTICIPANT ACCOUNTS
The account of each participant reflects a separate record of participant and
Company contributions, withdrawals, loans, administrative expenses, investment
earnings and gains and losses. Allocations of net investment gains and losses,
interest and dividend income, and administrative expenses are based upon
participant account balances, as described in the Plan document. The benefit to
which a participant is entitled is the benefit that can be provided from the
participant's vested account.
5
CUNO Incorporated
Savings and Retirement Plan
Notes to Financial Statements (continued)
NOTE 1 -- DESCRIPTION OF PLAN (CONTINUED)
PARTICIPANT LOANS
Participants may borrow from their fund accounts up to a maximum amount equal to
the lesser of $50,000 or 50 percent of their account balance. A participant may
have two loans outstanding at any given time. 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 collateralized 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. Principle
and interest is paid ratably through payroll deductions.
DISTRIBUTIONS TO PARTICIPANTS
On termination of service due to death, disability, or retirement, a participant
may elect to receive either a lump-sum amount equal to the value of the vested
interest in his or her account or in annual installments. For termination of
service for other reasons, a participant may receive the value of the vested
interest in his or her account as a lump-sum distribution. Upon the death of a
participant, distribution of the participant's vested account is made to their
designated beneficiary. Participants with balances in their accounts of less
that $5,000 must take a lump sum distribution.
HARDSHIP WITHDRAWALS
The Plan allows for hardship withdrawals according to provisions of the Plan and
the Internal Revenue Code ("IRC"). The hardship withdrawal is limited to the
participants vested account balance. The necessity of the hardship withdrawal is
reviewed by the Company and includes allowance for major medical expenses,
purchase of a primary residence, college expenses for a family member, and
prevention of eviction from or foreclosure on a principal residence. There is a
12-month suspension of all contributions to the Plan following a hardship
withdrawal.
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.
6
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.
INVESTMENTS VALUATION AND INCOME RECOGNITION
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 their outstanding balances, 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
published 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 of America requires the Plan's
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and changes therein. Actual results could differ from
those estimates.
PAYMENT OF BENEFITS
Benefits are recorded when paid.
PLAN EXPENSES
All expenses of the Plan are paid by the Company except for loan origination and
loan maintenance fees, which are paid by the participants.
RISKS AND UNCERTAINTIES
The Plan provides for various investment options in any combination of mutual
funds and a collective trust fund with various investment objectives. Investment
securities, including mutual funds and a collective trust fund, are exposed to
various risks, such as interest rate, market and credit risks. Due to the level
of risk associated with certain investment securities, it is at least reasonably
possible that changes in the values of
7
CUNO Incorporated
Savings and Retirement Plan
Notes to Financial Statements (continued)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
investment securities will occur in the near term and that such changes could
materially affect participants' account balances and the amounts reported in the
statements of net assets available for plan benefits.
NOTE 3 - INVESTMENTS
During the years ended December 31, 2004 and 2003, the Plan's investments
(including investments purchased, sold as well as held during the year)
appreciated in fair value as determined by quoted market prices as follows:
<Table>
<Caption>
Net Realized and Unrealized
Appreciation in
Fair Value of Investments
Year Ended December 31,
2004 2003
---------- ----------
CUNO Incorporated common stock $3,236,590 $2,518,265
Shares of mutual funds 1,382,016 3,645,518
---------- ----------
$4,618,606 $6,163,783
========== ==========
The following presents investments which represent 5% or more of the Plan's net
assets at December 31, 2004 and 2003:
<Table>
<Caption>
December 31,
2004 2003
----------- -----------
Merrill Lynch Fundamental Growth Fund $ 6,515,160 $ 6,080,121
Dreyfus Premier Balanced Fund 3,649,958 3,652,611
Merrill Lynch Retirement Preservation Trust 6,173,953 5,323,319
Merrill Lynch S&P 500 Index Fund 4,209,131 3,711,777
CUNO Common Stock 13,261,741 9,475,348
</Table>
NOTE 4 -- TAX STATUS
The Internal Revenue Service has determined and informed the Company by a letter
dated March 23, 2004, that the Plan is designed in accordance with the
applicable sections of the IRC. The Plan has been amended since receiving the
determination letter.
8
CUNO Incorporated
Savings and Retirement Plan
Notes to Financial Statements (continued)
NOTE 4 -- TAX STATUS (CONTINUED)
However, the plan administrator and the Plan's tax counsel believe that the
Plan, as amended, is designed and is currently being operated in compliance with
the applicable requirements of the IRC. Therefore, no provision for income taxes
has been included in the Plan's financial statements.
NOTE 5 -- PARTY-IN-INTEREST TRANSACTIONS
Merrill Lynch Trust Company is the trustee and custodian as defined by the Plan.
Therefore, transactions in various Merrill Lynch funds qualify as
party-in-interest transactions. Certain investment management fees are also
charged to the Plan by Merrill Lynch. These amounts are charged directly against
the investment income reported by each mutual fund investment. Fees paid by the
Plan to Merrill Lynch for loan recordkeeping fees and other miscellaneous
expenses for the plan years ended December 31, 2004 and 2003 were $5,480 and
$3,930, respectively.
NOTE 6 -- PLAN TERMINATION
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.
NOTE 7 -- SUBSEQUENT EVENTS
Employees of WTC Industries and its operating subsidiary Pentapure, which was
acquired by the Company on August 2, 2004, were eligible to participate in the
Plan effective January 1, 2005. The assets of the PentaPure, Inc. 401(k) Plan
totaling $1,511,010 were merged into the Plan effective March 7, 2005.
In April 2005, the Committee approved adding the Munder Small Cap Fund as an
available investment option, effective May 2, 2005. In addition, the Dreyfus
Premier Balanced Fund will be removed from the available investment options,
effective May 2, 2005. Participants will be able to reallocate their funds in
the Dreyfus Premier Balanced Fund to other available investment options. Any
funds that are not reallocated by May 2, 2005 from the Dreyfus Premier Balanced
Fund will be transferred to the MFS Total Return Fund.
On May 11, 2005, CUNO entered into an Agreement and Plan of Merger with 3M
9
Company. On the terms and subject to the conditions of the Merger Agreement,
which has been approved by the Board of Directors of each of CUNO and 3M, at the
effective time of the Merger, each share of common stock, par value $0.001, of
CUNO will be converted into the right to receive $72.00 in cash. Consummation of
the Merger is subject to customary conditions, including (i) approval of the
holders of CUNO Common Stock, (ii) absence of any law or order prohibiting the
consummation of the Merger and (iii) expiration or termination of the
Hart-Scott-Rodino waiting period and obtaining certain other regulatory
approvals.
10
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, 2004
(c) DESCRIPTION OF INVESTMENT,
INCLUDING MATURITY DATE,
(b) IDENTITY OF ISSUE, BORROWER, RATE OF INTEREST, COLLATERAL, (d) (e) CURRENT
(a) LESSOR OR SIMILAR PARTY PAR OR MATURITY VALUE COST VALUE
Common Stock:
* CUNO Incorporated Common Stock Common stock, 223,262 shares ** $13,261,741
Mutual Funds:
Merrill Lynch Trust Company:
MFS Total Return Fund Mutual fund, 20,703 shares ** 331,251
* Merrill Lynch Fundamental Growth Fund Mutual fund, 376,188 shares ** 6,515,160
Dreyfus Premier Balance Fund Mutual fund, 286,047 shares ** 3,649,958
Van Kampen American Value Fund Class A Mutual fund, 53,094 shares ** 1,292,304
* Merrill Lynch S&P 500 Index Fund Mutual fund, 283,634 shares ** 4,209,131
AIM Small Cap Growth Fund Class A Mutual fund, 21,260 shares ** 583,792
* Merrill Lynch US Government Mortgage Fund Mutual fund, 173,586 shares ** 1,782,728
Alliance Bernstein Technology A Fund Mutual fund, 10,911 shares ** 622,031
AIM Mid Cap Core Equity Fund A Mutual fund, 27,923 shares ** 799,707
Van Kampen Growth and Income Fund Class A Mutual fund, 37,920 shares ** 765,614
Oppenheimer International Growth Fund Mutual fund, 102,651 shares ** 1,962,688
PIMCO Total Return Fund Class A Mutual fund, 52,031 shares ** 555,167
* Merrill Lynch Trust Company Cash ** 300
Collective Trust:
Merrill Lynch Trust Company:
* Merrill Lynch Retirement Preservation Trust 6,173,953 shares ** 6,173,953
* Participant Loans Loans to participants ** 1,280,048
collateralized by their accounts.
Interest rates in effect during
period of 5.00% to 10.50%.
Payment terms ranged up to ten
years.
-----------
$43,785,573
-----------
* Denotes party-in-interest
** Not applicable. All investments are the result of participant-directed
accounts.
11
Exhibit Index
Exhibit No. Description
- ----------- ------------
23 Consent of Independent Auditors
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CUNO INCORPORATED
Date June 28, 2005
By /s/Mark G. Kachur
- --------------------
Mark G. Kachur
Chairman of the Board of Directors,
President and Chief Executive Officer
By /s/ Frederick C. Flynn, Jr.
- ------------------------------
Frederick C. Flynn, Jr.
Senior Vice President -
Finance and Administration,
Chief Financial Officer and Assistant Secertary