AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 8, 1997

REGISTRATION NO. 333-22447
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

CUNO INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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

DELAWARE 3569 06-1159240
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NO.) IDENTIFICATION NO.)
INCORPORATION OR
ORGANIZATION)

400 RESEARCH PARKWAY, MERIDEN, CONNECTICUT 06450, (203) 237-5541
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

PAUL J. POWERS
CHIEF EXECUTIVE OFFICER
CUNO INCORPORATED
400 RESEARCH PARKWAY, MERIDEN, CONNECTICUT 06450, (203) 237-5541
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

COPIES TO:
HERBERT S. WANDER, ESQ., P.C. DEWEY B. CRAWFORD, ESQ.
DAVID J. KAUFMAN, ESQ. GARDNER, CARTON & DOUGLAS
KATTEN MUCHIN & ZAVIS 321 NORTH CLARK STREET
525 WEST MONROE STREET SUITE 3400-QUAKER TOWER
CHICAGO, ILLINOIS 60661 CHICAGO, ILLINOIS 60610
(312) 902-5200 (312) 644-3000

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

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

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 this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering: [_]

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please 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
SECTION 8(A), MAY DETERMINE.

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

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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 APRIL 8, 1997

PROSPECTUS 2,000,000 SHARES

LOGO
CUNO INCORPORATED

COMMON STOCK

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

All of the 2,000,000 shares of Common Stock, $.001 par value per share (the
"Common Stock"), offered hereby are being sold by CUNO Incorporated ("CUNO" or
the "Company"). The Company's Common Stock is traded on the Nasdaq National
Market under the symbol "CUNO." On April 4, 1997, the last reported sale price
of the Company's Common Stock was $14.50 per share, as reported on the Nasdaq
National Market. See "Price Range of Common Stock."

PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE INFORMATION DISCUSSED
UNDER THE CAPTION "RISK FACTORS" AT PAGE 6.

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.

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

PRICE PROCEEDS
TO UNDERWRITING TO
PUBLIC DISCOUNT(1) COMPANY(2)
- --------------------------------------------------------------------------------

Per Share....................................... $ $ $
- --------------------------------------------------------------------------------
Total(3)........................................ $ $ $

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(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, estimated at $300,000, all of which are payable
by the Company.
(3) The Company has granted the Underwriters a 30-day option to purchase up to
300,000 additional shares of Common Stock on the same terms and conditions
as set forth above to cover over-allotments, if any. If the Underwriters
exercise the over-allotment option in full, the total Price to Public will
be $ , the total Underwriting Discount will be $ and the total
Proceeds to Company will be $ . See "Underwriting."

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

The shares of Common Stock are offered by the Underwriters, subject to prior
sale, when, as and if delivered to and accepted by the Underwriters and subject
to their right to reject orders in whole or in part. It is expected that
delivery of the certificates representing shares of Common Stock will be made
on or about , 1997 through The Depository Trust Company or at the offices
of Robert W. Baird & Co. Incorporated, Milwaukee, Wisconsin.

ROBERT W. BAIRD & CO.
INCORPORATED
GOLDMAN, SACHS & CO.

CLEARY GULL REILAND & MCDEVITT INC.

THE DATE OF THIS PROSPECTUS IS , 1997.

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

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THE OFFERING,
AND MAY BID FOR, AND PURCHASE, SHARES OF COMMON STOCK IN THE OPEN MARKET. FOR
A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK
ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 103 UNDER REGULATION M.
SEE "UNDERWRITING."

Health
Care
. Bioprocessing/
Pharmaceuticals
. Food & Beverage
. Diagnostic/
Laboratory

Pressures to contain health care costs; demands for rapid and cost
effective diagnostic tests; and increased governmental regulations are three of
the forces driving this $900 million market. The Health Care market is estimated
to be growing at 10% per year and contributes 27%* of CUNO sales revenue.

CUNO manufactures an extensive range of filtration systems for
bioprocessing and biological manufacturing procedures ranging from prefiltration
products to sterilizing grade final membrane filters. These systems are used in
the sterile filtration of pharmaceutical products, clarification of human blood
plasma products, production of therapeutic drugs from genetically engineered
organisms, and clarification of beer, wine and soft drinks. Additionally, the
systems are used to purify water and gas for product formulation and equipment
cleaning and the removal of endotoxins from various solutions. Worldwide, CUNO
holds more than 200 patents for its products.

* Based on 1996 sales of $179 million

Fluid
Processing
. Electronics
. Coatings
. Chemicals/
Petrochemicals

This $1.2 billion dollar market is estimated to be growing at 8% per year
and contributes 46%* of CUNO's sales revenues. Fluid processing customers
requirements for purer chemical solutions; high quality industrial and
automotive finish paints and coatings; ultra pure process water demands of
electronics manufacturers as well as government regulations to reduce potential
exposure to toxic materials assure this market's continued growth.

CUNO believes it is a leading manufacturer of filtration systems for paints
and coatings, electronics and petrochemical/chemical markets and provides
filtration systems for many industry leaders across the spectrum of these
activities. These systems may provide the ultra pure water used in the
manufacture of microchips, or remove chemical or physical contaminants from
automotive coatings. These systems remove undesirable substances from
transformer coolants, improving the efficiency of these devices and can be
found in gas processing plants where they remove corrosive chemicals. CUNO has
steadily invested in research and manufacturing technology to ensure that its
products continue to hold leadership positions in every major area of fluid
purification for processing applications.

* Based on 1996 sales of $179 million

[PHOTO]
Zetapor(R) is available in flat stock and cartridge form.

[PHOTO]
CUNO filtration products, such as Zetabind(R) are used extensively for
diagnostic testing.

[ARTWORK]

Potable Water/
Consumer
. Residential &
Commercial
. Food Service

The Potable Water market is driven by dramatically increased water safety
concerns; consumer desire for better tasting water and other beverages; and
restaurant standardization of soft drink quality and taste. This $800 million
market is estimated to be growing at 8% per year and contributes 27%* of CUNO's
sales revenue.

Water filtration products for home and commercial uses are the focus of
CUNO's Aqua-Pure(R) and Water Factory Systems(R). Aqua-Pure offers a range of
filters for home use that includes water softening devices, whole house
filtration systems that remove iron, scale and other contaminants from the
incoming water supply and point-of-use filter systems. Water Factory reverse
osmosis systems include devices for home and commercial filtration of water at
the molecular level for uses as diverse as home water consumption to spot-free
car wash rinses.

* Based on 1996 sales of $179 million

[PHOTO]
Aqua-Pure whole house and point-of-use filtration systems.

[PHOTO]
Betapure(R) absolute rated paint filter cartridge.

[PHOTO]
Water Factory Systems(R) reverse osmosis carafe home water system.

PROSPECTUS SUMMARY

This Prospectus contains certain statements of a forward-looking nature
relating to future events or the future financial performance of the Company.
Prospective investors are cautioned that such statements are only predictions
and that actual events or results may differ materially. In evaluating such
statements, prospective investors should specifically consider the various
factors identified in this Prospectus, including the matters set forth under
the caption "Risk Factors," which could cause actual results to differ
materially from those indicated in such forward-looking statements.

The following summary is qualified in its entirety by the more detailed
information and Consolidated Financial Statements and notes thereto appearing
elsewhere in this Prospectus. Unless otherwise indicated, the information in
this Prospectus assumes no exercise of the Underwriters' over-allotment option.

THE COMPANY

The Company believes it is a world leader in the design, manufacture and
marketing of a comprehensive line of filtration products for the separation,
clarification and purification of liquids and gases. The Company's products,
which include proprietary depth filters and semi-permeable membrane filters,
are used in the health care, fluid processing and potable water markets. These
products, most of which are disposable, effectively remove contaminants that
range in size from molecules to sand particles. Prominent customers include
Amgen Inc., Boston Chicken, Inc., Eli Lilly and Company, Genzyme Corporation,
KFC Corporation, McDonald's Corporation, Monsanto Company and Minnesota Mining
and Manufacturing Company ("3M"). Approximately 52% of the Company's net sales
in fiscal year 1996 were derived from its international operations.

The Company's objective is to provide high value-added products and premium
customer service. The Company's proprietary manufacturing processes provide
longer lasting, higher quality and more efficient filters that lower customers'
operating expenses and improve the quality of customers' end products. As part
of its commitment to customer service, the Company's scientists, each of whom
possesses particular industry expertise, collaborate with customers on specific
projects to ensure product satisfaction and to develop new products.

In mid-1994, the Company realigned its business to accelerate sales growth
and improve operating margins. A new senior management team developed and
implemented the following initiatives, which are key elements of its ongoing
growth strategy: (i) develop new products for specific markets, (ii) decrease
product development cycle times, (iii) develop pre/final filter systems, (iv)
increase customer focus, (v) improve operating efficiencies and (vi) pursue
selective acquisitions. Due principally to these initiatives, net sales
increased by 25.1% from $143 million to $179 million from fiscal year 1994 to
fiscal year 1996 and operating margins (excluding distribution and other
nonrecurring costs) improved from 3.5% to 9.8% over the same period. These
initiatives resulted in the introduction of 15 new products or product
extensions that produced over $18 million in aggregate net sales in the 24
months prior to the Spin-off (as defined below). The Company has scheduled the
introduction of 13 new products in fiscal year 1997, nine of which have already
been introduced.

On September 10, 1996 (the "Distribution Date"), the Company's businesses and
operations and the associated assets and liabilities were spun-off from
Commercial Intertech Corp. ("Commercial Intertech") to its stockholders through
a dividend distribution of the Common Stock of the Company (the "Spin-off").

The Company was incorporated in Delaware on May 23, 1985. Its principal
executive offices are located at 400 Research Parkway, Meriden, Connecticut,
06450 and its telephone number is (203) 237-5541.

THE OFFERING

Common Stock offered by the Company.... 2,000,000 shares
Common Stock to be outstanding after
the Offering.......................... 15,830,663 shares(1)
Use of Proceeds........................ For repayment of indebtedness, working
capital and other general corporate
purposes. See "Use of Proceeds."
Nasdaq National Market Symbol.......... CUNO

- --------
(1) As of January 31, 1997 there were 374,790 shares of Common Stock issuable
upon the exercise of outstanding options at a weighted average exercise
price of $13.72 per share and 562,150 shares of Common Stock reserved for
issuance in the future under the CUNO Incorporated 1996 Stock Incentive
Plan (the "Employee Stock Plan") and the CUNO Incorporated Non-Employee
Directors' Stock Plan (the "Directors Stock Plan" together with the
Employee Stock Plan, the "Stock Plans"). These shares were excluded from
this total. See "Capitalization," "Management--Stock Plans" and Note K of
Notes to Consolidated Financial Statements.

SUMMARY FINANCIAL AND OTHER DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The following table sets forth summary financial and other data of the
Company. The income statement data for the fiscal years ended October 31, 1993,
1994, 1995 and 1996 are derived from audited Consolidated Financial Statements
of the Company. The income statement data for the fiscal year ended October 31,
1992 and the three months ended January 31, 1996 and 1997 and the balance sheet
data as of January 31, 1996 and 1997 are derived from the unaudited
Consolidated Financial Statements of the Company. The data should be read in
conjunction with the Consolidated Financial Statements (including the notes
thereto) and other financial information included elsewhere herein and with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

THREE MONTHS
YEAR ENDED OCTOBER 31, ENDED JANUARY 31,
------------------------------------------------ ------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- -------- --------

INCOME STATEMENT
DATA:(1)
Net sales.............. $128,195 $130,771 $143,111 $162,699 $179,068 $ 41,004 $ 44,839
Gross profit........... 38,383 40,605 50,604 62,927 74,220 15,748 19,201
Distribution and other
nonrecurring costs.... -- -- -- -- (5,564) -- --
Operating income
(loss)................ (2,538) (1,678) 4,978 10,840 11,906 2,636 3,927
Interest expense, net.. (1,458) (114) (618) (546) (664) (70) (555)
Other (expense) income,
net................... (818) (757) (2,317) (731) (231) 75 (68)
Income (loss) before
income taxes.......... (4,814) (2,549) 2,043 9,563 11,011 2,641 3,304
(Provision) benefit for
income taxes.......... 514 1,848 (236) (3,462) (5,418) (790) (1,239)
Net income (loss)...... (4,300) (701) 1,807 6,101 5,593 1,851 2,065
Net income (loss) per
share(2).............. $ (0.32) $ (0.05) $ 0.13 $ 0.45 $ 0.41 $ 0.14 $ 0.15
OTHER DATA:
Depreciation and
amortization.......... $ 8,276 $ 7,664 $ 8,154 $ 7,929 $ 7,475 $ 2,032 $ 1,779
Capital expenditures... 6,729 3,245 2,927 5,234 6,325 1,050 1,001

AS OF
JANUARY 31, 1997
--------------------
AS
ACTUAL ADJUSTED(3)
-------- -----------

BALANCE SHEET DATA:
Working capital........................................... $ 16,144 $ 16,144
Total assets.............................................. 135,098 135,098
Short-term debt........................................... 13,218 13,218
Long-term debt, excluding current maturities.............. 35,577 8,544
Total stockholders' equity................................ 44,151 71,184

(3) As adjusted to give effect to the sale of the 2,000,000 shares of Common
Stock offered hereby at an assumed public offering price of $14.50 per
share and the application of the estimated net proceeds therefrom. See "Use
of Proceeds."

RISK FACTORS

Because the Company wants to provide investors with more meaningful and
useful information, this Prospectus contains certain forward-looking
statements (as such term is defined in the rules promulgated pursuant to the
Securities Act of 1933, as amended (the "Securities Act")) that reflect the
Company's current expectations regarding the future results of operations and
performance and achievements of the Company. Such forward-looking statements
are subject to the safe harbor created by the Private Securities Litigation
Reform Act of 1995. The Company has tried, wherever possible, to identify
these forward-looking statements by using words such as "anticipate,"
"believe," "estimate," "expect" and similar expressions. These statements
reflect the Company's current beliefs and are based on information currently
available to it. Accordingly, these statements are subject to certain risks,
uncertainties and assumptions, including the factors set forth in the
following Risk Factors, which could cause the Company's future results,
performance or achievements to differ materially from those expressed in, or
implied by, any of these statements. The Company undertakes no obligation to
release publicly the results of any revisions to any such forward-looking
statements that may be made to reflect events or circumstances after the date
of this Prospectus or to reflect the occurrence of unanticipated events.

In addition to the other information in this Prospectus, prospective
investors should carefully consider the following Risk Factors before
purchasing any of the Common Stock offered hereby.

LIMITED HISTORY AS A STAND-ALONE COMPANY

The Company has operated as a stand-alone company only since the Spin-off
and Commercial Intertech has no obligation to provide assistance to the
Company or any of its subsidiaries except as described in "Certain Related
Party Transactions--Arrangements Between the Company and Commercial
Intertech." There can be no assurance that services provided to the Company by
Commercial Intertech under such arrangements, which are scheduled to expire in
September 1997, will continue to be provided and, if not, whether, or on what
terms, such services could be replaced. Any termination of the arrangements
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Certain Related Party Transactions--
Arrangements Between the Company and Commercial Intertech."

LIMITED RELEVANCE OF HISTORICAL FINANCIAL INFORMATION

The financial information included herein may not necessarily reflect the
results of operations, financial position and cash flows of the Company in the
future or what the results of operations, financial position and cash flows
would have been had the Company been a separate, stand-alone entity during the
periods presented prior to the Spin-off. Such financial information does not
completely reflect additional changes that will occur in the future funding
and operations of the Company as a result of the Spin-off. In addition, the
financial statements of the Company for the periods prior to the Spin-off
include allocations and other estimates of certain assets, liabilities and
expenses that were not historically recorded at the level of, but were
associated with, the businesses transferred to the Company. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Overview" and the Consolidated Financial Statements (including the notes
thereto) appearing elsewhere in this Prospectus.

RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS

Approximately 50%, 54% and 52% of the Company's net sales for fiscal years
1994, 1995 and 1996, respectively, were derived from its international
operations. Consequently, the Company's operations may be adversely affected
by significant fluctuations in the value of the U.S. dollar in comparison to
local currencies in the countries in which the Company operates. The Company
manufactures products in Japan, Brazil, France and Australia. The Company's
international operations may be affected by economic, political and
governmental conditions in some of the countries where the Company has
manufacturing facilities or where its products are sold. In addition, changes
in economic or political conditions in any of the countries in which the
Company

operates could result in unfavorable taxation policies, exchange rates, new or
additional currency or exchange controls, governmental regulations or other
restrictions being imposed on the operations of the Company or expropriation.
At times, the Company uses foreign currency exchange contracts to minimize the
impact of currency fluctuations on specific, identifiable transactions. See
Note J of Notes to Consolidated Financial Statements.

PATENTS AND PROPRIETARY TECHNIQUES

The Company has a patent portfolio as well as other proprietary information
and manufacturing techniques and has applied, and will continue to apply, for
patents to protect its technology. The Company's success depends in part upon
its ability to protect its technology and proprietary products under U.S. and
foreign patent and other intellectual property laws. Trade secrets and
confidential know-how which are not patented are protected through
confidentiality agreements, contractual provisions and internal Company
administrative procedures. There can be no assurance that such arrangements
will provide meaningful protection for the Company in the event of any
unauthorized use or disclosure. There can be no assurance that third parties
will not assert infringement claims against the Company or that a license or
similar agreement will be available on reasonable terms in the event of an
unfavorable ruling on any such claim. In addition, any such claim may require
the Company to incur substantial litigation expenses or subject the Company to
significant liabilities and could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business--Trademarks and Patents."

TECHNOLOGICAL AND REGULATORY CHANGE

The filtration and separations industry is characterized by changing
technology, competitively imposed process standards and regulatory
requirements, each of which influences the demand for the Company's products
and services. Changes in legislative, regulatory or industrial requirements or
competitive technologies may render certain of the Company's filtration and
separations products and processes obsolete. Acceptance of new products may
also be affected by the adoption of new government regulations requiring
stricter standards. The Company's ability to anticipate changes in technology
and regulatory standards and to develop and introduce new and enhanced
products successfully on a timely basis will be a significant factor in the
Company's ability to grow and to remain competitive. There can be no assurance
that the Company will be able to achieve the technological advances that may
be necessary for it to remain competitive or that certain of its products will
not become obsolete. The Company is also subject to the risks generally
associated with new product introductions and applications, including lack of
market acceptance, delays in product development and failure of products to
operate properly. See "Business--Competition" and "--Research and Development,
Product Development and Engineering."

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

Commercial Intertech structured the Spin-off to qualify as tax-free under
Section 355 of the Internal Revenue Code (the "Code"). However, no ruling was
requested from the Internal Revenue Service ("IRS") concerning the federal
income tax consequences of the transaction. There is no assurance that the
Spin-off will be treated as tax-free by the IRS. If the Spin-off were
determined to not be a tax-free distribution, the Company could be liable for
significant federal income taxes. See "Certain Related Party Transactions--
Certain Federal Income Tax Consequences of the Spin-off."

RISKS ASSOCIATED WITH ACQUISITIONS

The Company's business strategy depends in part on its ability to effect
acquisitions. Future acquisitions could be financed by internally generated
funds, bank borrowings, public offerings or private placements of equity or
debt securities, a combination of the foregoing or effectuated in stock-for-
stock transactions. If the Company completes acquisitions, it will encounter
various associated risks, including the possible inability to integrate an
acquired business into the Company's manufacturing systems, increased goodwill
amortization, diversion of management's attention and unanticipated problems
or liabilities, some or all of which could have a material adverse effect on
the Company's business, financial condition and results of operations. As a
result of the Spin-off, the Company will not be able to account for any
acquisition as a pooling of interests until September 11, 1998. There can be
no assurance that the Company will be able to make acquisitions on terms
favorable to the Company. See "Business--Growth Strategy."

COMPETITION

The filtration and separations markets in which the Company competes are
highly competitive. The Company competes with many domestic and international
companies in its global markets. There can be no assurance that the Company's
products will continue to compete successfully with the products of its
competitors. The principal methods of competition in the markets in which the
Company competes are product specifications, performance, quality, knowledge,
reputation, technology, distribution capabilities, service and price. The
Company is under constant pressure from its customers to increase product
efficiency while reducing cost. The Company has a significant number of
competitors, some of which are larger and have greater financial and other
resources than the Company. See "Business--Market Overview" and "--
Competition."

DEPENDENCE ON KEY PERSONNEL

The Company's success will depend in a large part upon its ability to
attract and retain highly qualified management, marketing, sales and research
and development ("R&D") personnel. Due to the specialized nature of the
Company's business it may be difficult to locate and hire qualified personnel.
The loss of the services of key personnel, or the inability of the Company to
attract and retain other key personnel, would have a material adverse effect
on the Company's business, financial condition and results of operations. The
Company does not have any employment agreements with management other than the
employment agreement with Mark Kachur, which expires in April 1997. See
"Management."

AGREEMENTS WITH COMMERCIAL INTERTECH; LACK OF ARM'S-LENGTH NEGOTIATIONS

In connection with the Spin-off, the Company entered into three agreements
with Commercial Intertech for the purpose of defining the ongoing relationship
with Commercial Intertech. While these agreements were not the result of
arm's-length negotiations between independent parties, the Company believes
such agreements contain terms comparable to those that would have resulted
from negotiations between unaffiliated parties, although there can be no
assurance that the parties would have agreed upon comparable terms. However,
such agreements contain certain provisions dealing with corporate
opportunities presented to the Company's officers or members of the Company's
Board of Directors who are also officers of Commercial Intertech or members of
Commercial Intertech's Board of Directors. Although such provisions would not
necessarily have been included if Commercial Intertech and the Company had
been unaffiliated parties negotiating at arm's-length, the Company and
Commercial Intertech believe that the intercompany agreements as a whole
reflect the results that would have been reached by unaffiliated parties
negotiating at arm's-length. See "Certain Related Party Transactions--
Arrangements Between the Company and Commercial Intertech."

POTENTIAL CONFLICTS OF INTEREST OF BOARD OF DIRECTORS AND MANAGEMENT

Paul J. Powers, Chairman of the Board of Directors, President, Chief
Executive Officer and Chief Operating Officer of Commercial Intertech, is also
Chairman of the Board of Directors and Chief Executive Officer of the Company.
In addition, four of the nine members of the Company's Board of Directors are
also members of the Commercial Intertech Board of Directors. See "Management."
These relationships and the contractual and other ongoing relationships
between the Company and Commercial Intertech may give rise to potential
conflicts of interest should the interests of the Company and Commercial
Intertech be different. The Distribution and Interim Services Agreement
provides that any corporate opportunity, transaction, agreement or other
arrangement that becomes known to a director or officer of the Company, which
officer or director is also an officer or director of Commercial Intertech or
a subsidiary of Commercial Intertech, shall not be the property or corporate
opportunity of the Company, even if such opportunity, transaction, agreement
or other arrangement relates to the fluid purification business. There is no
termination date for this provision. See "Certain Related Party Transactions--
Arrangements Between the Company and Commercial Intertech--Distribution and
Interim Services Agreement."

POSSIBLE VOLATILITY OF SHARE PRICE

The market price for the Common Stock may be significantly affected by
factors such as the announcement of new products or services by the Company or
its competitors, technological innovation by the Company or its competitors,
the growth and expansion of the Company's business, trends and uncertainties
affecting the filtration and separations industry as a whole, issuances and
repurchases of Common Stock, quarterly variations in the Company's operating
results or the operating results of the Company's competitors, investors'
expectations of the Company's prospects, changes in earnings estimates by
analysts or reported results that vary materially from such estimates and
general economic and other conditions. In addition, in recent years the stock
market has experienced extreme price fluctuations. This volatility has had a
substantial effect on the market prices of securities issued by many companies
for reasons unrelated to the operating performance of the specific companies.
These broad market fluctuations may adversely affect the market price of the
Common Stock. See "Price Range of Common Stock."

ANTI-TAKEOVER PROVISIONS

The Company's Amended and Restated Certificate of Incorporation (the
"Restated Certificate") and Amended and Restated Bylaws (the "Restated
Bylaws") contain provisions that (i) eliminate the stockholders' ability to
act by written consent, (ii) provide for a staggered board of directors, (iii)
require an affirmative vote of 80% of the stockholders entitled to vote to
remove directors (who can only be removed for cause), to amend certain
provisions of the Restated Certificate or to repeal or amend the Restated
Bylaws and (iv) allow the Company's Board of Directors, without obtaining
stockholder approval, to issue shares of preferred stock having rights that
could adversely affect the voting power and economic rights of holders of the
Common Stock. In addition, the Company cannot be acquired in a transaction
accounted for as a pooling of interests until September 11, 1998. In 1996, the
Company also adopted the Rights Plan (as defined below). Also, Section 203 of
the Delaware General Corporation Law restricts certain business combinations
with any "interested stockholder" as defined by such statute. Any of the
foregoing factors may delay, defer, make less attractive or prevent a change
in control of the Company, which could adversely affect the market price of
the Company's Common Stock. See "Description of Capital Stock--Stockholder
Rights Plan."

USE OF PROCEEDS

The net proceeds to be received by the Company from the sale of 2,000,000
shares of Common Stock offered hereby, after deducting the estimated
underwriting discount and offering expenses payable by the Company, are
estimated to be approximately $27.0 million ($31.1 million if the
Underwriters' over-allotment option is exercised in full) at an assumed
offering price of $14.50 per share.

The Company intends to use the net proceeds to repay a portion of the
indebtedness outstanding under the Company's Senior Unsecured Revolving Credit
Facility with Mellon Bank, N.A. (the "Credit Facility"), which was incurred in
connection with the Spin-off. The balance of the net proceeds will be used for
working capital and other general corporate purposes. The Credit Facility
bears interest at the rate of approximately 6% per annum and matures on
October 31, 2001. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources" and the
Consolidated Financial Statements (including the notes thereto).

PRICE RANGE OF COMMON STOCK

The Company's Common Stock is traded on the Nasdaq National Market under the
symbol "CUNO." The following table sets forth, for the periods indicated, the
high and low bid information for the Common Stock as regularly quoted on the
Nasdaq National Market. The Common Stock commenced trading on September 11,
1996. Prior thereto, there was no public market for the Common Stock.

HIGH LOW
------ ------

FISCAL YEAR 1996:
Fourth Quarter (commencing September 11, 1996).............. $15.75 $14.25
FISCAL YEAR 1997:
First Quarter............................................... $17.50 $14.63
Second Quarter (through April 4, 1997)...................... 16.88 14.13

On April 4, 1997, the last reported sale price of the Common Stock on the
Nasdaq National Market was $14.50. As of April 4, 1997, there were
approximately 3,470 holders of record.

DIVIDEND POLICY

Except as described in Note 5 to Selected Financial and Other Data, the
Company has not declared or paid, and does not anticipate paying in the near
future, any cash dividends on its Common Stock, but intends instead to retain
future earnings, if any, for reinvestment in the future operation and
expansion of the Company's business and related development activities. Any
future determination to pay cash dividends will be at the discretion of the
Company's Board of Directors and will be dependent upon the Company's
financial condition, results of operations, capital requirements, general
business conditions, legal restrictions on the payment of dividends,
restrictions imposed by financing arrangements and other factors as the Board
of Directors deems relevant. The terms of the Credit Facility prohibit the
Company from declaring dividends during fiscal years 1997 and 1998. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

CAPITALIZATION

The table below sets forth the capitalization of the Company as of January
31, 1997 and as adjusted to reflect the application of the estimated net
proceeds from the issuance and sale by the Company of 2,000,000 shares of
Common Stock offered hereby (at an assumed offering price of $14.50 per share)
assuming all of the net proceeds are used to repay indebtedness under the
Credit Facility. See "Use of Proceeds." This table should be read in
conjunction with the Consolidated Financial Statements (including the notes
thereto).

AS OF
JANUARY 31, 1997
--------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)

Short-term debt(1)........................................ $13,218 $13,218
======= =======
Long-term debt:
Credit Facility......................................... $33,000 $ 5,967
Mortgages and other..................................... 2,577 2,577
------- -------
Total long-term debt.................................. 35,577 8,544
------- -------
Stockholders' equity:
Preferred Stock, $.001 par value; 2,000,000 shares
authorized; no shares outstanding...................... -- --
Common Stock, $.001 par value; 50,000,000 shares
authorized; 13,822,076 shares issued and outstanding
actual; 15,822,076 shares issued and outstanding as
adjusted(2)............................................ 14 16
Additional paid-in-capital.............................. 7,262 34,293
Retained earnings....................................... 35,701 35,701
Unearned compensation................................... (3,578) (3,578)
Minimum pension liability adjustment.................... (811) (811)
Translation adjustments................................. 5,563 5,563
------- -------
Total stockholders' equity............................ 44,151 71,184
------- -------
Total capitalization.................................. $79,728 $79,728
======= =======

- --------
(1) Excludes as of January 31, 1997, $8.9 million of payables due to
Commercial Intertech. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources."
(2) As of January 31, 1997, there were 374,790 shares of Common Stock issuable
upon the exercise of outstanding options at a weighted average exercise
price of $13.72 per share and 562,150 shares of Common Stock reserved for
issuance in the future under the Stock Plans. These shares were excluded
from these totals. See "Management--Stock Plans" and Note K of Notes to
Consolidated Financial Statements.

SELECTED FINANCIAL AND OTHER DATA

The following table sets forth selected financial and other data of the
Company. The balance sheet data as of October 31, 1994, 1995 and 1996 and the
income statement data for the fiscal years ended October 31, 1993, 1994, 1995
and 1996 are derived from Consolidated Financial Statements of the Company,
which have been audited by Ernst & Young LLP, independent auditors. The
balance sheet data as of October 31, 1992 and 1993 and as of January 31, 1996
and 1997 and the income statement data for the fiscal year ended October 31,
1992 and the three months ended January 31, 1996 and 1997 are derived from
unaudited consolidated financial statements. The unaudited consolidated
financial statements include all adjustments, consisting of normal recurring
accruals, that the Company considers necessary for a fair presentation of the
financial position and the results of operations for these periods. The
results of operations for the three months ended January 31, 1997 are not
necessarily indicative of results that may be expected for the full year. The
data should be read in conjunction with the Consolidated Financial Statements
(including the notes thereto), "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and other financial information
included herein.

THREE MONTHS
YEAR ENDED OCTOBER 31, ENDED JANUARY 31,
------------------------------------------------- ------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- --------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

INCOME STATEMENT
DATA:(1)
Net sales.............. $128,195 $130,771 $143,111 $162,699 $ 179,068 $41,004 $44,839
Cost of products sold.. (89,812) (90,166) (92,507) (99,772) (104,848) (25,256) (25,638)
-------- -------- -------- -------- --------- -------- --------
Gross profit........... 38,383 40,605 50,604 62,927 74,220 15,748 19,201
Selling, general and
administrative
expenses.............. (40,921) (42,283) (45,626) (52,087) (56,750) (13,112) (15,274)
Distribution and other
nonrecurring costs.... -- -- -- -- (5,564) -- --
-------- -------- -------- -------- --------- -------- --------
Operating income
(loss)................ (2,538) (1,678) 4,978 10,840 11,906 2,636 3,927
Interest expense, net.. (1,458) (114) (618) (546) (664) (70) (555)
Other (expense) income,
net................... (818) (757) (2,317) (731) (231) 75 (68)
-------- -------- -------- -------- --------- -------- --------
Income (loss) before
income taxes.......... (4,814) (2,549) 2,043 9,563 11,011 2,641 3,304
(Provision) benefit for
income taxes.......... 514 1,848 (236) (3,462) (5,418) (790) (1,239)
-------- -------- -------- -------- --------- -------- --------
Net income (loss)...... $ (4,300) $ (701) $ 1,807 $ 6,101 $ 5,593 $ 1,851 $ 2,065
======== ======== ======== ======== ========= ======== ========
Net income (loss) per
share(2).............. $ (0.32) $ (0.05) $ 0.13 $ 0.45 $ 0.41 $ 0.14 $ 0.15
OTHER DATA:
Depreciation and
amortization.......... $ 8,276 $ 7,664 $ 8,154 $ 7,929 $ 7,475 $ 2,032 $ 1,779
Capital expenditures... 6,729 3,245 2,927 5,234 6,325 1,050 1,001

AS OF
AS OF OCTOBER 31, JANUARY 31,
-------------------------------------------- -----------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS)

BALANCE SHEET DATA:
Working capital........ $ 35,784 $ 36,541 $ 42,227 $ 49,174 $ 11,557(3) $ 31,339 $ 16,144
Total assets........... 151,135 145,952 153,071 162,827 138,756 167,598 135,098
Short-term debt........ 9,135 9,816 10,840 11,476 11,653 11,803 13,218
Long-term debt,
excluding current
maturities............ 4,418 5,580 5,175 4,060 33,772(4) 3,858 35,577
Total stockholders'
equity................ 107,314 103,743 106,466 112,189 43,148(5) 112,611 44,151

- --------
(1) Operating income has been reduced by an amount equal to the Company's
estimate of the charges and expenses the Company would have incurred
during those time periods presented prior to the Spin-off if it had
operated as a separate, stand-alone entity.
(2) As of January 31, 1997, there were 374,790 shares of Common Stock issuable
upon the exercise of outstanding options at a weighted average exercise
price of $13.72 per share and 562,150 shares of Common Stock reserved for
issuance in the future under the Stock Plans. These shares were excluded
from the earnings per share calculations. Shares used to calculate net
income (loss) per share were 13,565,922 for fiscal years 1992 through 1996
and the three months ended January 31, 1996 and 13,809,608 for the three
months ended January 31, 1997. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
(3) Reflects a decrease of $33.6 million in working capital due to the net
change in the operating accounts with Commercial Intertech.
(4) Reflects the incurrence of $30.0 million of long-term debt in conjunction
with the Spin-off.
(5) Reflects a dividend of $65.7 million in connection with the Spin-off,
consisting of the assumption of $30.0 million in debt accounted for as a
dividend and the declaration of a $35.7 million dividend payable to
Commercial Intertech.

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

The discussion below contains certain forward-looking statements that are
based on the beliefs of the Company's management, as well as assumptions made
by, and information currently available to, the Company's management. The
Company's future results, performance or achievements could differ materially
from those expressed in, or implied by, any such forward-looking statements.
See "Risk Factors" for a discussion of factors that could cause or contribute
to such material differences. The following presentation of management's
discussion and analysis of the Company's financial condition and results of
operations should be read in conjunction with the Company's Consolidated
Financial Statements (including the notes thereto) and other financial
information included herein.

OVERVIEW

The Company's net sales, gross profit and operating income increased
significantly from fiscal year 1994 to fiscal year 1996. This improvement was
attributable to a number of business initiatives begun in 1994 by the new
senior management team. These initiatives included developing new products for
specific markets, decreasing product development cycle times, developing
pre/final filter systems, increasing customer focus and improving operating
efficiencies.

The Company's products are used in the health care, fluid processing and
potable water markets. The main factor supporting the worldwide industry
growth in these markets is the need to eliminate unwanted contaminants to
ensure safe, consistent products or services. This need is increasingly
important as the quality of the world's resources deteriorates, population
growth continues, world industrialization progresses, global manufacturing
becomes the norm, detection levels improve, global quality standards are
demanded and environmental consciousness grows.

The Company believes that its broad customer base and its geographic
diversity tend to insulate it from the adverse effects of softening demand in
any one market segment. In fiscal year 1996, approximately 52% of the
Company's net sales were derived from its international operations. Therefore,
the Company's operations may be affected by significant fluctuations in the
value of the U.S. dollar, particularly in Japan and Europe, as many products
for those major markets are manufactured in the U.S.

Selling price increases are implemented regularly by the Company to cover
the rising costs of wages, benefits, raw materials and purchased components.
Competitive pressures and price resistance in the marketplace can sometimes
limit the extent to which cost increases can be passed along to customers in
established product lines. Consequently, the Company relies upon economies of
scale efficiencies, productivity improvements and cost saving measures to
offset any shortfall in price increases and to maintain or improve profit
margins.

The Company's increased profitability is principally attributable to
operating cost leverage resulting from increasing net sales on a controlled
fixed-cost base and a change in the product mix to higher margin membrane
products. Although the Company's selling, general and administrative expenses
have increased in absolute dollar terms to support the Company's increased
sales effort, they have remained relatively constant as a percentage of net
sales on an annual basis.

Financial information described below may not necessarily be indicative of
future operating results or future financial condition. The $30.0 million in
debt described above gives rise to additional interest expense. In addition,
the Company will incur additional compensation expense resulting from the
conversion of 30,737 restricted shares of Commercial Intertech common stock
into shares of restricted Common Stock that occurred following the Spin-off.
The compensation expense, which is determined by the underlying value of the
Common Stock, will be recognized over various vesting periods up to a maximum
of five years. The Company will also

incur certain additional costs as a stand-alone public company which it did
not as a wholly-owned subsidiary. Other than the expenses described above, the
Company does not expect to incur other costs materially different from
historical results.

RESULTS OF OPERATIONS

The following table sets forth certain income statement data of the Company
expressed as a percentage of net sales for the periods presented:

PERCENTAGE OF NET SALES
-----------------------------------------------
THREE MONTHS
YEAR ENDED OCTOBER 31, ENDED JANUARY 31,
------------------------- ------------------
1994 1995 1996 1996 1997
------- ------- ------- -------- --------

Net sales.................... 100.0% 100.0% 100.0% 100.0% 100.0%
Gross profit................. 35.4 38.7 41.4 38.4 42.8
Selling, general and
administrative expenses..... (31.9) (32.0) (31.7) (32.0) (34.1)
Operating income............. 3.5 6.7 6.6(1) 6.4 8.8

- --------
(1)Includes distribution and other nonrecurring costs of $5,564,000, resulting
in a reduction of 3.2 percentage points.

THREE MONTHS ENDED JANUARY 31, 1997 COMPARED TO THREE MONTHS ENDED JANUARY
31, 1996

Results of operations for the three months ended January 31, 1997 are not
comparable to the three months ended January 31, 1996 because the Spin-off
occurred in the last quarter of fiscal year 1996. Results for the first
quarter of fiscal year 1996 do not include increased interest expense related
to the $30.0 million in debt incurred in conjunction in the Spin-off, a higher
tax rate resulting from the loss of certain foreign tax benefits previously
realized when the Company was a part of the Commercial Intertech combined tax
group and the amortization expense of performance shares, which are shares
granted and subject to retention based upon achievement of certain performance
goals. See "Stock Plans--Performance Share Awards." If, during the first
quarter of fiscal year 1996, the Company had outstanding the $30.0 million of
debt associated with the Spin-off and had the same tax rate as 1997, net
income per share for that period would have been $0.11 per share compared to
the actual $0.15 per share reported.

Net Sales. Net sales of $44.8 million in the first quarter of fiscal year
1997 represented a 9.4% increase over net sales of $41.0 million in the first
quarter of fiscal year 1996. Net sales for the Company's U.S. operations
increased by 15.0% over the same period, reflecting continued penetration of
the health care market by nylon membrane products.

Gross Profit. Gross profit in the first quarter of fiscal year 1997
increased by $3.5 million, or 21.9%, to $19.2 million from $15.7 million in
the first quarter of fiscal year 1996 and increased as a percentage of net
sales to 42.8% from 38.4%. This increase was a result of continued improvement
in manufacturing efficiencies, particularly in the U.S., in combination with
expanded sales of higher margin nylon membrane products.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $2.2 million, or 16.5%, to $15.3 million
in the first quarter of fiscal year 1997 from $13.1 million in the first
quarter of fiscal year 1996 and increased as a percentage of net sales to
34.1% from 32.0% over the same period. Growth in these expenses stems from
continued investment in selling and engineering resources worldwide and from
projects related to new data processing systems in the U.S., Brazil and
Singapore.

Operating Income. Operating income increased by $1.3 million, or 49.0%, to
$3.9 million in the first quarter of fiscal year 1997 from $2.6 million in the
first quarter of fiscal year 1996, with most of that gain in the U.S., where
expanded sales, an improved product mix and greater efficiencies resulted in
an overall significant improvement in operating performance.

Interest Expense. Interest expense increased by $0.5 million to $0.6 million
in the first quarter of fiscal year 1997 from $0.1 million in the first
quarter of fiscal year 1996. The increase in interest expense primarily
resulted from the $30.0 million of debt incurred by the Company in conjunction
with the Spin-off.

Income Taxes. The Company's effective income tax rate for the first quarter
of 1997 was 37.5% as compared to 30.0% during the first quarter of fiscal year
1996. The change reflects a loss of certain foreign tax benefits previously
realized when the Company was a part of the Commercial Intertech combined tax
group.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

OTHER MATTERS

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

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

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

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

SELECTED QUARTERLY RESULTS AND SEASONALITY

The following table sets forth certain quarterly operating information for
each of the nine quarters ending January 31, 1997, both in dollars and as a
percentage of net sales. This information was derived from the unaudited
financial statements of the Company, which, in the opinion of management, were
prepared on the same basis as the Consolidated Financial Statements contained
elsewhere in this Prospectus and includes all adjustments, consisting of
normal recurring accruals, which management considers necessary for the fair
presentation of the information for the periods presented. The financial data
given below should be read in conjunction with the Consolidated Financial
Statements (including the notes thereto). Results for any previous fiscal
quarter are not necessarily indicative of results for the full year or for any
future quarter.

The Company's business is typically not seasonal. However, net sales in the
first quarter of each fiscal year tend to be lower than the other quarters due
to planned holiday facility shut-downs and customary year-end distributor
inventory reductions.

QUARTERLY RESULTS
-------------------------------------------
GROSS PROFIT OPERATING INCOME
------------- --------------------
% OF % OF
NET NET NET
SALES AMOUNT SALES AMOUNT SALES
------- ------- ----- --------- -------
(IN THOUSANDS)

FISCAL YEAR 1995:
Quarter ended January 31...... $37,713 $13,926 36.9% $ 2,416 6.4%
Quarter ended April 30........ 39,630 14,995 37.8 2,276 5.7
Quarter ended July 31......... 43,467 17,025 39.2 2,643 6.1
Quarter ended October 31...... 41,889 16,981 40.5 3,505 8.4
FISCAL YEAR 1996:
Quarter ended January 31...... $41,004 $15,748 38.4% $ 2,636 6.4%
Quarter ended April 30........ 45,090 18,460 40.9 4,988 11.1
Quarter ended July 31......... 48,542 20,796 42.8 3,252(1) 6.7(1)
Quarter ended October 31...... 44,432 19,216 43.2 490(1) 1.1(1)
FISCAL YEAR 1997:
Quarter ended January 31...... $44,839 $19,201 42.8% $ 3,927 8.8%

- --------
(1) Includes distribution and other nonrecurring costs of $2,876 (quarter
ended July 31) and $2,688 (quarter ended October 31) associated with the
Spin-off, resulting in reductions of 5.9 and 7.3 percentage points,
respectively.

LIQUIDITY AND CAPITAL RESOURCES

During fiscal year 1996, the Company generated cash from operating
activities of $7.9 million. In the first quarter of fiscal year 1997, the
Company generated cash from operations of $0.6 million before reducing its
related party payables to Commercial Intertech by $3.2 million, resulting in
net cash used in operations of $2.6 million. In addition, the Company paid to
Commercial Intertech $2.4 million of the previously declared dividend of $35.7
million. By October 1997, the Company expects to pay the balance of $8.9
million of payables due to Commercial Intertech as of January 31, 1997, as
well as amounts due to Commercial Intertech under the Distribution and Interim
Services Agreement.

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

During 1996, the Company entered into an interim agreement for a $55.0
million bridge loan to provide funding for $30.0 million in debt assumed from
Commercial Intertech at the time of the Spin-off and to support operating
requirements. On October 31, 1996, the bridge loan was replaced with the
Credit Facility. The Company pays variable interest rates under the Credit
Facility based upon prime interest or LIBOR rates, plus an applicable margin.
On January 31, 1997, the Company's interest rate was approximately 6.0%. The
Credit Facility prohibits the Company from declaring dividends during fiscal
years 1997 and 1998. In fiscal year 1996, dividends of $36.9 million were
declared payable to Commercial Intertech ($35.7 million by the Company in
connection with the Spin-off and $1.2 million by CUNO Pacific Pty. Ltd.). As
of October 31, 1996, $3.5 million had been paid, $28.8 million had been
partially offset against a receivable from Commercial Intertech and $4.6
million remained unpaid.

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

BUSINESS

The discussion below contains certain forward-looking statements (as such
term is defined in the rules promulgated pursuant to the Securities Act) that
are based on the beliefs of the Company's management, as well as assumptions
made by, and information currently available to, the Company's management. The
Company's future results, performance or achievements could differ materially
from those expressed in, or implied by, any such forward-looking statements.
See "Risk Factors" for a discussion of factors that could cause or contribute
to such material differences.

GENERAL

The Company believes it is a world leader in the design, manufacture and
marketing of a comprehensive line of filtration products for the separation,
clarification and purification of liquids and gases. The Company's products,
which include proprietary depth filters and semi-permeable membrane filters,
are used in the health care, fluid processing and potable water markets. These
products, most of which are disposable, effectively remove contaminants that
range in size from molecules to sand particles. Prominent customers include
Amgen Inc., Boston Chicken, Inc., Eli Lilly and Company, Genzyme Corporation,
KFC Corporation, McDonald's Corporation, Monsanto Company and 3M.
Approximately 52% of the Company's net sales in fiscal year 1996 were derived
from its international operations. See Note J of Notes to Consolidated
Financial Statements.

The Company's objective is to provide high value-added products and premium
customer service. The Company's proprietary manufacturing processes provide
longer lasting, higher quality and more efficient filters that lower
customers' operating expenses and improve the quality of customers' end
products. As part of its commitment to customer service, the Company's
scientists, each of whom possesses particular industry expertise, collaborate
with customers on specific projects to ensure product satisfaction and to
develop new products.

In mid-1994, the Company realigned its business to accelerate net sales
growth and improve operating margins. A new senior management team developed
and implemented the following initiatives, which are key elements of its
ongoing growth strategy: (i) develop new products for specific markets, (ii)
decrease product development cycle times, (iii) develop pre/final filter
systems, (iv) increase customer focus, (v) improve operating efficiencies and
(vi) pursue selective acquisitions. Due principally to these initiatives, net
sales increased by 25.1% from $143 million to $179 million from fiscal year
1994 to fiscal year 1996 and operating margins (excluding distribution and
other nonrecurring costs) improved from 3.5% to 9.8% over the same period.
These initiatives resulted in the introduction of 15 new products or product
extensions that produced over $18 million in aggregate net sales in the 24
months prior to the Spin-off. The Company has scheduled the introduction of 13
new products in fiscal year 1997, nine of which have already been introduced.

MARKET OVERVIEW

Filtration is the process of separating particles of various sizes from
liquids or gases. The mechanics of filtration range from the removal of coarse
contaminants, most often particulates, as large as 200 microns, such as sand
and sediment, to the elimination of bacteria and viruses at less than .01
micron (human hair is typically 20 microns in diameter). A filtration device
consists of a plastic or metal housing and a filtration medium. Filtration
media, which can be manufactured out of a variety of substances, act as the
separator or barrier in the filtration process.

Filtration media include microporous membranes, glass, synthetic and
cellulosic fibers, porous metals and ceramics. Microporous membranes are thin,
film-like materials with millions of uniform microscopic holes. Membranes are
the most widely used filtration media because they remove specifically-sized
particles and can be configured into a variety of shapes and sizes.

The Company estimates, based on 1995 industry data, that the potential size
in 1995 and growth rate of the three markets it serves are as follows:

ESTIMATED WORLD ESTIMATED
WIDE POTENTIAL ANNUAL
MARKET MARKET SIZE GROWTH RATE
------ --------------- -----------
(IN MILLIONS)

Health Care.................................... $ 900 10%
Fluid Processing............................... 1,200 8%
Potable Water.................................. 800 8%
------
Total........................................ $2,900
======

Health Care

The health care market is experiencing growth as a result of the intensive
research efforts to find cures for diseases, the increasing use of more rapid
and simpler diagnostic tests to help reduce health care costs, the trend
towards finer and more cost-efficient filtration and increased governmental
regulation. When harmful elements are identified, they are often regulated or
new medical standards of care are implemented to decrease or eliminate
contact. In many cases, fluid filtration can play a key role in eliminating
contact with many harmful elements. Performance and reliability of the
product, rather than price, are the primary factors in the customers'
filtration decision process.

The health care market includes pharmaceutical and biotechnology companies,
which require cost-efficient filtration and high levels of purity for
production of sterile, contaminate free drugs, and producers of diagnostic
test kits, which require highly efficacious membranes. In addition,
applications include bacteria-free water and food and beverage products.

Fluid Processing

The fluid processing market's major segments include chemical, petrochemical
and oil and gas processors, manufacturers of paints and resins, electronics
and semiconductors, and power generation facilities. As the use of
sophisticated manufacturing processes and the adoption of practices focused on
quality increase, the Company believes the demand for filtration products will
also increase. In part, this trend is driven by the enhanced ability to detect
contaminants in process streams. As automation increases, focus on quality
control increases, and as the ability to detect contaminants progresses, fluid
filtration will play a greater role in the manufacturing process.

A growing segment of the fluid processing market is electronics
manufacturing. Ultra pure water is used to rinse the components during
manufacturing in order to ensure that the product is particle free with no
residual contamination. The industry uses corrosive, high purity chemicals and
gases for the manufacture of computer chips, hard disks, video terminals and
other components. All of the chemicals and gases used are processed through
very fine filtration systems. The expanding demand for electronic products and
the wider use of computer chips is fueling industry growth.

Potable Water

The potable water market includes residential, commercial and food service
customers. Demand is driven both by consumers' desire to improve the taste and
quality of their drinking water and by the expanded concern of regulatory
agencies. The largest growth in this market may occur in Asia/Pacific Rim and
South American countries where the quality of drinking water has been found to
be severely deficient in several regions. According to industry data, it is
estimated that 1.0 billion people in the world do not have safe drinking
water. Water safety concerns have driven the growth of the U.S. consumer
bottled water market to over $2 billion, as well as driven the growth in the
water filtration market.

In particular, the food service industry has an increasing demand for
consistent global product quality. Food service includes water used for
fountain beverages, steam ovens, coffee and tea. Specifically, restaurants
have become increasingly aware of the need for water filtration and control of
the taste and quality of the water used in their businesses.

GROWTH STRATEGY

Key elements of the Company's growth strategy include:

Develop New Products for Specific Markets. The Company has initiated a
strategy to develop high value-added products for specific markets based on
its core technologies. Historically, the Company offered non-differentiated
products and often competed solely on price. To gain a better understanding of
specific markets and guide new product development, the Company introduced
SASS. Scientists with post-graduate degrees who are experts in specific
industries are integral to SASS teams. These scientists collaborate with
customers who are developing and implementing new processes or products that
have specific filtration requirements. Often these relationships lead to the
development of new market specific products. The Company has scheduled the
introduction of 13 new products in fiscal 1997, nine of which have already
been introduced. Many of these new products are in the health care market, and
therefore offer high growth and above average margins. The Company believes
that these products offer its customers greater efficiency, quality, safety
and ease of use. The Company introduced 15 new products or product extensions
in the 24 months prior to the Spin-off that have generated aggregate sales of
$18 million.

Decrease Product Development Cycle Times. The Company has decreased its
product development cycle times from an average of four to five years to
approximately 18 to 24 months. This improvement has resulted from increased
market focus, collaboration with leading-edge customers through SASS teams and
the formation of cross-functional product launch teams. The Company believes
it can continue to shorten product development cycle times through these same
methods.

Develop Pre/Final Filter Systems. Many filtration systems have one or more
prefilters to remove large contaminants from the liquid or gas before it
passes through the final filter, prolonging the life of the more expensive
final filter. When these filters are designed together in a system, the
performance of the system is enhanced. The Company has a leading prefilter
market position and is expanding the number of final filters it offers. This
allows the Company to provide its customers with a total filter solution from
one vendor.

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

Improve Operating Efficiencies. The Company believes it can improve
operating efficiencies by implementing cost controls, productivity gains and
profit-based compensation for its employees as well as by shifting product mix
to higher margin health care and fluid processing products and outsourcing
production of certain processes. The Company has recently initiated a $10.5
million capital investment program designed to (i) implement cell-based
manufacturing, (ii) provide higher yields from raw materials, (iii) improve
inventory management, (iv) lower labor costs, (v) reduce manufacturing cycle
times and (vi) reduce scrap rates. The Company had gross profit margins of
35.4%, 38.7%, 41.4% and 42.8% in fiscal years 1994, 1995, 1996 and in the
first quarter of fiscal year 1997, respectively.

Pursue Selective Acquisitions. The Company believes that the continuing
trend towards consolidation in each of its markets, together with recent
systems trends (pre/final filter), will provide the Company with

attractive opportunities to acquire high-quality companies and subsequently
allow the Company to expand into new geographic markets, add new customers,
provide new products, manufacturing and service capabilities or increase the
Company's penetration with existing customers. The Company evaluates
acquisition candidates on a regular basis. In addition, management of the
Company believes that the Spin-off has enabled the Company to be in a better
position to use its Common Stock, which is directly tied to the performance of
the Company's business, to acquire other companies in the industry.

PRODUCTS

The Company manufactures a full range of products targeted for each of its
markets, offering its customers solutions to a wide range of filtration
requirements. Many of the products manufactured by the Company use
electrokinetic adsorption, a proprietary chemical process developed by the
Company that alters both membrane and depth filter media surfaces.
Electrokinetic adsorption uses molecular charges on dissolved ions to bind
finer contaminants to the filter surface. This attribute significantly
enhances filtration efficiency by removing contaminants smaller than the
micron rating of the filter. The Company groups its products into the
following categories.

Membranes

The typical polymer and nylon membranes that the Company produces resemble
plastic films, except for the molecular size pores that are engineered into
the surface and depth of the membrane. By varying pore size and altering the
physical or chemical properties of the membrane, the quantity and type of
substances that can pass through the membrane can be regulated with absolute
certainty. The Company manufactures "absolute rated" products where no
particle above a certain size can pass through the membrane. In many
applications, these membranes can be integrity tested to ensure specific
performance both at the beginning and end of a particular process. A membrane
can be employed in a variety of configurations, including flat sheets, discs
and pleated cartridges.

Containers for filter media or housings can be manufactured from various
metals or plastics and are designed to allow the application of pressure to
create the required flow of liquid through the membrane. The frequency of the
replacement of membranes depends on the application and intensity with which
they are used. In some applications, such as in pharmaceutical or
biotechnology, they are changed for each batch. In very clean applications or
in totally enclosed environments, they may be changed weekly, monthly or
annually.

Uses of membranes include water purification for electronics and
applications in semiconductor manufacturing, pharmaceutical, biotechnology and
other applications, as well as for residential drinking water.

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

Depth Filters

The Company's disposable depth filters are constructed from a matrix or
formation of very fine and micro-fine fibers such as polypropylene, cotton,
polyester, glass fiber, acrylic, rayon, polymer, carbon and other materials.
The fiber matrix is then processed into a rigid filter media using techniques
such as thermal bonding, resin bonding, pleating or winding. The Company's
technology strongly emphasizes graded density attributes and electrokinetic
adsorption. Graded density depth technology allows filter media to be
manufactured with very open porous outer layers, progressively becoming
smaller in the size of the pores or void volume through the depth of the
filter media. Graded density construction extends filter life in many
applications and reduces pressure loss across the filtration process, thereby
reducing energy costs. The structure of graded density filter media allows
particles to be trapped throughout the depth of the cartridge, which minimizes
surface binding, allows for high contaminant capacity and lowers pressure
drops rather than solely trapping particles on the surface of the media.

The Company manufactures depth filters in a wide variety of cartridge and
pore sizes with "absolute" particulate ratings. The filter cartridges are used
in filter housings that can be manufactured in a broad range of metals or
plastics to suit particular customer specifications. Filter housings are
designed for a wide range of temperatures and pressures.

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

Cleanable Filters

The Company designs and manufactures an extensive range of self-cleaning
disc filters, backwash strainers and recleanable metal filters. The self-
cleaning disc filters and backwash strainers can be electrically or
mechanically operated with automatic controls to provide for specific
requirements in process applications. The recleanable metal filter elements
are constructed of sintered porous stainless steel or metal screens in tubular
and pleated construction. The recleanable elements can be cleaned in place in
a filter housing or removed for mechanical, ultrasonic or chemical cleaning.

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

Housings and Systems

The Company designs and manufactures a wide variety of filter housings to
suit specific process and customer applications. The housings can be of
plastic or metal construction utilizing a broad range of materials including
polypropylene, PVC, nylon, aluminum, copper, brass, steel, stainless steel and
other specialized metals, such as titanium.

Specialized designs include sanitary, electropolished and coated finishes
for chemical resistance and ease of sterilization, sanitization or cleaning.
The Company supplies a broad range of standard housings manufactured from type
316 stainless steel in sanitary, polished and electropolished finishes for
enhancing pharmaceutical and electronic applications. Finish specifications
can be measured in terms of Roughness Average (Ra) with average variations in
surface finish measured in microns down to 0.45 micron, the size of small
bacteria.

The Company designs and manufactures proprietary housings and systems such
as CTG-Klean(TM) with patented features and a totally enclosed disposable
filter media pack for use in critical applications where housing cleanliness
is essential or when physical separation of toxic or corrosive chemicals from
the metal housing is desired.

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

The Company's products are principally sold into the health care, fluid
processing and potable water markets. In many cases, the Company's products
are sold into more than one of these end markets. The following table
summarizes the end markets into which the Company's products are sold.

MARKET REPRESENTATIVE APPLICATION REPRESENTATIVE
COMPANY PRODUCTS
- -------------------------------------------------------------------------------

HEALTH CARE
Pharmaceutical Manufacturing injectable Activated carbon, Zeta
drugs Plus(R), Zetapor(R),
Microfluor(R),
PolyPro(R), ZetaBind(R),
BevASSURE(TM) and
sanitary filter housings

Biological Blood plasma
fractionation

Diagnostics Membranes for test kits

Biotechnology Cell debris removal

Food and Beverage Wine and beer production

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

FLUID PROCESSING
Electronics Plating bath solutions Microfluor(R),
Betafine(R), Betafine-
D(R), Betapure(R),
Electropor(TM), filter
housings,
MicroWynd(R)II, Beta-
Klean(TM), Micro-
Klean(R)II, Auto-
Klean(R), Poro-Klean(R)
and Micro-Screen(R)

Semiconductors High purity water,
chemicals and gases for
manufacturing computer
chips

Coatings Processors Paint and resin
filtration

Chemical Product clarification
equipment protection

Oil, Gas and Removing contaminants
Petrochemical from oil and gas
streams

Magnetic Media Coating purity/optical
(recording tape and clarity
floppy disk)
Manufacturers

Printers and Graphic Manufacturing of high
Art Companies quality inks

Power Generation Filtration of insulating
oils

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

POTABLE WATER
Residential Drinking and cooking CUNO Food Service, CUNO
water and appliance System ONE(TM), Aqua-
protection Pure(R), CUNO OCS(TM),
Water Factory
Systems(R),
FaucetMATE(TM) and
CoolerMATE(R),
Synchro(R), Acro(R), PHP
and Lithowater(R)

Commercial and Apartment buildings,
Industrial offices, car washes and
printers

Food Service Fountain beverages,
steam ovens, coffee and
tea

NEW PRODUCTS

A part of the Company's growth strategy is to develop new products for
specific markets and to decrease product development cycle times. The Company
has introduced 15 new products or product extensions in the 24 months prior to
the Spin-off that have generated aggregate net sales of $18 million. The
Company has introduced or plans to introduce the following new products in
fiscal year 1997:

FISCAL YEAR 1997
MARKET NEW PRODUCT INTRODUCTION DESCRIPTION
- -----------------------------------------------------------------------------------

HEALTH CARE
Pharmaceutical and PolyPro(R) XL Second Quarter* Very high surface area
Biopharmaceutical filters designed to
protect valuable
membrane filters
Zetapor(R) II Fourth Quarter Uncharged Nylon66
cartridges validated
for bacteria retention
Zeta Plus(R) Second Quarter* A self-contained version
BioCap(TM) of Zeta Plus(R) media
that allows small to
medium volume
filtration for
laboratory and pilot
scale development
Food and Beverage BevASSURE(TM)II Third Quarter Nylon66 membrane filter
with improved
sanitization cycles
Diagnostic and ZetaBind(R) II Third Quarter Further advancements in
Laboratory the development of
ZetaBind(R) Nylon66
charged membrane to
enhance the membrane's
adaptability for
specific applications
- -----------------------------------------------------------------------------------
FLUID PROCESSING
Electronics Zeta Plus(R) EC Second Quarter* A media for polishing
filtration with
enhanced adsorption
characteristics
Electropor(TM) II Second Quarter* Higher flow rate Nylon66
membrane filter
Oil, Gas and Petro-Klean(TM) Second Quarter* New generation rigid
Petrochemical resin bonded depth
filter with greater
life
Chemical Z2 Beta-Klean(TM) Second Quarter* New generation absolute
rated, rigid resin-
bonded depth filter for
a wide variety of
chemical uses
- -----------------------------------------------------------------------------------
POTABLE WATER
Residential Aqua-Pure(R) DWS Second Quarter* Drinking water system
Aqua-Pure(R) Fourth Quarter Purification system for
countertop filter above counter use
Commercial and AC-PHP (PRO-SFR) First Quarter* Automated reverse
Industrial osmosis systems for car
wash rinse water
Food Service ScaleGard(TM) First Quarter* Reduce scale buildup in
filters steam ovens

* Already introduced.

COMPETITION

The Company competes with many domestic and international companies in its
global markets including Millipore Corporation, Pall Corporation, Memtec Ltd.,
Osmonics, Inc. and Culligan Water Technologies, Inc. No one company has a
significant presence in all the Company's markets. The principal methods of
competition are product specifications, performance, quality, knowledge,
reputation, technology, distribution capabilities, service and price. Some of
the Company's other competitors are multi-line companies with other principal
sources of income who have substantially greater resources than the Company;
many others are local product assemblers or service companies that purchase
components and supplies such as valves and tanks from more specialized
manufacturers than the Company. Through its SASS teams, the Company has
developed many products by collaborating with its customers throughout the
design and development process. The Company believes that these relationships
provide it with a competitive advantage over other manufacturers.

RESEARCH AND DEVELOPMENT, PRODUCT DEVELOPMENT AND ENGINEERING

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

MANUFACTURING

The Company's manufacturing is largely vertically integrated, using unique,
proprietary and patented processes, with many of the major components of its
filtration units manufactured and assembled in its own plants. As stated
above, the Company has begun to outsource some of its manufacturing processes,
such as metal housing manufacturing. The Company believes that it has
sufficient manufacturing capacity for the foreseeable future. The Company has
developed a new, more efficient membrane manufacturing process, which it
believes provides a competitive advantage through the production of superior
products at lower costs. All of the Company's manufacturing facilities are ISO
9002 certified.

RAW MATERIALS

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

DISTRIBUTION AND SALES

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

The Company's agreements with its U.S. distributors are generally for a
period of two years. Such agreements usually assign an exclusive territory,
prohibit distributors from carrying competing products, require that
distributors share market and customer related information with the Company
and require that distributors carry an adequate stock of its products. The
Company's agreements with its distributors are terminable without cause by
such distributors. The Company does not believe that the loss of any one of
its distributors would have an adverse effect on the Company. The Company's
top ten distributors accounted for approximately 25% of its net sales in
fiscal year 1996.

The Company believes that no end-user of any of its products accounts for
more than 5% of net sales. As of February 28, 1997, the Company employed over
255 sales people, of which over 160 are located overseas.

PROPERTIES

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

APPROXIMATE
FACILITY SIZE
LOCATION (SQ. FT.)
-------- -------------

Meriden, Connecticut......................................... 189,000
Enfield, Connecticut......................................... 120,000
Stafford Springs, Connecticut................................ 165,000
Kita-Ibaragi, Japan.......................................... 40,000
Marinque, Brazil............................................. 65,000
Calais, France............................................... 50,000
Mazeres, France.............................................. 40,000
Sydney, Australia*........................................... 290,000
Singapore**.................................................. 18,546

--------
* 40% of this facility is sublet to an unrelated third party.

** Leased facility.

In addition to the properties listed above, the Company leases one facility
in the U.S. and 17 facilities outside the U.S. These facilities are generally
used as warehouses and/or sales offices. Management believes that the current
properties are sufficient for the Company's operations.

TRADEMARKS AND PATENTS

Trademarks and brand name recognition are important to the Company. The
Company generally owns the trademarks under which its products are marketed.
The Company has registered its trademarks and will continue to do so as they
are developed or acquired. The Company has over 300 registered trademarks
throughout the world. The Company protects such trademarks and believes that
there is significant value associated with them.

The Company has over 200 active patents throughout the world and at least 36
patent applications pending worldwide. The Company additionally relies on
proprietary, non-patented technologies to a certain extent. Certain of the
Company's employees sign non-disclosure and assignment of proprietary rights
agreements.

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

GOVERNMENT REGULATIONS

Management believes that the Company is in substantial compliance with
applicable regulations of Federal, state and local authorities relating to the
discharge of materials into the environment.

The Company manufactures certain filtration products that are used as
components in medical devices and the Company must use the Food and Drug
Administration ("FDA") listed materials in the manufacture of these products.

Certain medical devices marketed and manufactured by the Company's customers
are subject to extensive regulation by the FDA and, in some instances, by
foreign governments. Noncompliance with FDA requirements can result in, among
other things, fines, injunctions, civil penalties, recall or seizure of
products, total or partial suspension of production, failure of the government
to grant premarket clearance or premarket approval for devices, withdrawal of
marketing approvals or criminal prosecution. Before a new device can be
introduced into the market, the manufacturer must generally obtain FDA
clearance through either a 510(k) notification or a

premarket approval application ("PMA"). A 510(k) clearance will be granted if
the submitted information establishes that the proposed device is
"substantially equivalent" to a legally marketed Class I or II medical device,
or to a Class III medical device for which the FDA has not called for PMAs.
The FDA recently has been requiring a more rigorous demonstration of
substantial equivalence than in the past. It generally takes from four to
twelve months from submission to obtain a 510(k) clearance, but it may take
longer. The FDA may determine that a proposed device is not substantially
equivalent to a legally marketed device, or that additional information is
needed before a substantial equivalence determination can be made.

In many areas, the sale and promotion of water treatment devices is
regulated at the state level by product registration, advertising
restrictions, water testing, product disclosure and other regulations specific
to the water treatment industry. In some local areas, certain types of water
treatment products, including those manufactured by the Company, are
restricted because of a concern with the amount and type of contaminants per
volume of water discharged.

EMPLOYEES

At February 28, 1997, the Company employed over 1,240 people worldwide
(exclusive of employees of independent distributors), with over 720 employees
in the U.S. and approximately 520 employees in other countries. In the U.S.,
approximately 145 employees are members of a union under a contract that
expires on October 31, 1997. Locations outside the U.S. also employ
approximately 140 union members. The Company believes its employee relations
are generally good.

LEGAL PROCEEDINGS

The Company is a party to various legal proceedings and claims in the
ordinary course of business. The Company does not believe that the outcome of
any pending matters will, individually or in the aggregate, materially
adversely affect its business, financial condition or results of operations.

MANAGEMENT

EXECUTIVE OFFICERS, DIRECTORS AND EMPLOYEES

The executive officers, directors and employees of the Company as of March
31, 1997:

NAME AGE POSITION
- ---- --- --------

Paul J. Powers.................. 63 Chief Executive Officer and Chairman of the
Board
Mark G. Kachur.................. 53 President, Chief Operating Officer and
Director
Michael H. Croft................ 54 Senior Vice President
Ronald C. Drabik................ 51 Senior Vice President and Chief Financial
Officer
Timothy B. Carney............... 44 Vice President and Controller
John A. Tomich.................. 39 Counsel and Secretary
Joel B. Alvord.................. 58 Director
Charles L. Cooney............... 52 Director
Norbert A. Florek............... 57 Director
John M. Galvin.................. 64 Director
Gerald C. McDonough............. 68 Director
C. Edward Midgley............... 61 Director
David L. Swift.................. 60 Director

Paul J. Powers. Mr. Powers has been a director of the Company since 1986,
when the Company was a subsidiary of Commercial Intertech, and Chief Executive
Officer of the Company since July 1996. He has also been President and Chief
Operating Officer of Commercial Intertech since 1984 and Chief Executive
Officer since 1987. He is Chairman of the Board of Directors for both the
Company and Commercial Intertech. He holds a bachelor's degree in Economics
from Merrimack College and a master's degree in Business Administration from
George Washington University. Mr. Powers is also a director of Commercial
Intertech, Ohio Edison Company, Global Marine, Inc. and Twin Disc, Inc.

Mark G. Kachur. Mr. Kachur has been a director of the Company since July
1996, and President and Chief Operating Officer of the Company as of September
1996. From 1994 until the Spin-off, Mr. Kachur was a Senior Vice President of
Commercial Intertech and President of the Company. From 1992 until 1994, he
was President and CEO of Biotage Inc., a participant in the high performance
liquid chromatography market for the biotechnology industry, and from 1971 to
1991, he was with Pall Corporation, a supplier of filtration and separation
products, the last seven years as a Group Vice President. He holds a bachelor
of science degree in Mechanical Engineering from Purdue University and a
master's degree in Business Administration from the University of Hartford.

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

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

Timothy B. Carney. Mr. Carney has been the Company's Vice President and
Controller since the Spin-off. He served Commercial Intertech as Cuno Group
Controller from July 1993 until the Spin-off, and from 1989 until 1993 he
served Commercial Intertech as General Manager and Controller of Water Factory
Systems. He holds a bachelor of science degree (Economics) and a master's
degree in Business Administration from Youngstown State University.

John A. Tomich. Mr. Tomich has been Counsel and Secretary of the Company
since September 1996. Before joining the Company, after the Spin-off, he was
Counsel and Assistant Secretary for Commercial Intertech, where he had been
employed since January 1990 and had been involved extensively with the legal
matters affecting the Company. He holds a bachelor of engineering degree
(Mechanical Engineering) from Youngstown State University and juris doctor
from the University of Akron, School of Law. He is a licensed Patent Attorney.

Joel B. Alvord. Mr. Alvord has been a director of the Company since August
1996. He is currently Chairman of the Executive Committee and a Director of
Fleet Financial Group, having served as its Chairman for the past two years.
His banking career began in 1963. He became President of Hartford National
Corporation in 1978 and served as Chief Executive Officer of Shawmut National
Corporation from 1988 to 1995 when it was merged into Fleet Financial Group.
He was educated at Loomis Chaffee School and Dartmouth College, from which he
holds a bachelor's degree in History and a master's degree in Business
Administration from the Amos Tuck School of Business Administration. Mr.
Alvord is also a director of the Hartford Steam Boiler Inspection & Insurance
Company and has been a member of the Board of Directors of the Federal Reserve
Bank of Boston.

Charles L. Cooney. Dr. Cooney has been a director of the Company since
August 1996. He has been a Professor of Chemical and Biochemical Engineering
at the Massachusetts Institute of Technology ("MIT") since 1982. At MIT he is
also the executive officer of the Department of Chemical Engineering and co-
director of the Program on the Pharmaceutical Industry. Since 1989, he has
served as the regional editor of Bioseparations, and in 1992, Dr. Cooney
became a founding Fellow for the American Institute for Medical and Biological
Engineering. He holds a bachelor of science degree in Chemical Engineering
from the University of Pennsylvania and a master's degree and a Ph.D. in
Biochemical Engineering from MIT. Dr. Cooney is also a director of Genzyme
Corporation.

Norbert A. Florek. Mr. Florek has been a director of the Company since
August 1996. Mr. Florek retired from the Allstate Insurance Company in 1995,
where he served as Chief Financial Officer since 1990 and as a member of the
Board of Directors. Since 1995, he has been a private financial consultant. He
is a CPA and holds a bachelor's degree in Business Administration from Loyola
University. Mr. Florek is also a director of U.S.A. Utilities Incorporated.

David L. Swift. Mr. Swift has been a director of the Company since August
1996. Mr. Swift retired in 1996 from Acme-Cleveland Corporation, a
manufacturer of communications, motion control and measurement products, where
he served as Chairman of the Board since 1993 and Chief Executive Officer and
President since 1988. He holds a bachelor of science degree from Ball State
University and a juris doctor from the Salmon P. Chase College of Law. Mr.
Swift is also a director of Alltrista Corporation and Twin Disc, Inc.

John M. Galvin. Mr. Galvin has been a director of the Company since 1993,
when the Company was a subsidiary of Commercial Intertech. Since his
retirement in 1992 from The Irvine Company, a major landowner and developer
that also owns a major portfolio of income property, Mr. Galvin has been a
private investor and consultant. From 1987 until 1992, he was Vice Chairman
and Director of The Irvine Company. He holds a bachelor's degree in Business
Administration from Indiana University. Mr. Galvin is also a director of
Commercial Intertech, Global Marine, Inc. and Oasis Residential Inc.

Gerald C. McDonough. Mr. McDonough has been a director of the Company since
1992, when the Company was a subsidiary of Commercial Intertech. Mr. McDonough
retired from Leaseway Transportation Corporation, a trucking company, in 1988,
where he had served as Chairman of the Board and Chief Executive

Officer since 1982. He holds a bachelor's degree in Business Administration
from Case Western Reserve University. Mr. McDonough is also a director of
Commercial Intertech, York International Corporation, Brush-Wellman
Corporation and Associated Estates Realty Corporation and a trustee of the
Fidelity Funds.

C. Edward Midgley. Mr. Midgley has been a director of the Company since
1995, when the Company was a subsidiary of Commercial Intertech. Mr. Midgley
has been associated with PaineWebber Incorporated since 1995 and is currently
a Managing Director. From 1992 until 1995, he was Co-Head of Investment
Banking, Executive Managing Director, Head of Mergers and Acquisitions and a
Member of the Board of Directors of Kidder, Peabody & Co. Incorporated. He
holds a bachelor of arts degree in Economics from Princeton University and a
master's degree in Business Administration from Harvard Business School. Mr.
Midgley is also a director of Commercial Intertech.

Mr. Powers is the only person who is an officer of both the Company and
Commercial Intertech. Mr. Powers receives a salary and other benefits as an
officer of Commercial Intertech. The Company pays Mr. Powers directly for his
services to the Company.

BOARD OF DIRECTORS

The nine member Board of Directors is divided into three classes. The Board
is composed of three Class I directors (Messrs. Galvin, Alvord and Dr.
Cooney), three Class II directors (Messrs. Kachur, McDonough and Florek) and
three Class III directors (Messrs. Midgley, Powers and Swift). The terms of
the Class I, Class II and Class III directors expire on the date of the 1997,
1998 and 1999 annual meetings, respectively. At each annual meeting,
successors to the class of directors whose term expires at that annual meeting
will be elected for a three-year term. Directors elected by the stockholders
may be removed only for cause.

COMMITTEES OF THE BOARD OF DIRECTORS

Audit Committee

The Audit Committee has the responsibility for recommending the selection of
independent auditors by the Board of Directors; reviewing with such auditors,
prior to the commencement of or during such audit for each fiscal year, the
scope of the examination to be made; reviewing with such auditors the audited
financial reports, any changes in accounting policies, the services rendered
by such auditors (including management consulting services) and the effect of
such services on the independence of such auditors; reviewing the Company's
internal audit and control functions; considering such other matters relating
to such audits and to the accounting procedures employed by the Company as the
Audit Committee may deem appropriate; and reporting to the full Board of
Directors regarding all of the foregoing. This Committee consists of the
following four members: Messrs. Midgley (Chairman), Alvord, Florek and Dr.
Cooney. No member of the Audit Committee is an employee of the Company.

Compensation Committee

The Compensation Committee determines annual salaries and bonuses for all
elected officers and senior management, administers the Company's various
stock option and award plans, and has the authority to approve incentive and
deferred compensation plans, and related funding arrangements, for elected
officers and senior management. This Committee consists of the following four
members: Messrs. McDonough (Chairman), Galvin, Midgley and Alvord. No member
of the Compensation Committee is an employee of the Company.

Executive and Finance Committee

The Executive and Finance Committee, during the intervals between the
meetings of the Board of Directors, possesses and may exercise all the powers
of the Board in the management of the business and affairs of the Company to
the extent permitted by law. The Executive and Finance Committee has the
responsibility for overseeing and ensuring that the Company's financial
resources are managed prudently and cost effectively, with

emphasis on those issues that are long-term in nature, and makes
recommendations to the Board as to: (i) debt and capital structure; (ii)
issuance of shares or repurchase of outstanding shares; (iii) dividend policy
and the declaration of dividends; (iv) acquisitions and divestitures; and (v)
any other financial matters deemed appropriate by the Committee. The Executive
and Finance Committee shall also have such other powers and perform such other
duties as shall from time to time be prescribed by the Board of Directors. The
Executive and Finance Committee consists of the following five members:
Messrs. Powers (Chairman), Galvin, Midgley, McDonough and Swift.

Nominating and Pension Committee

The Nominating and Pension Committee has the responsibility to identify,
recruit and nominate prospective members of the Board of Directors. This
Committee also has the responsibility for overseeing and evaluating the
investments of the Company's pension plan trusts, selecting fund managers and
reviewing their performance, and designating the proportion of pension
contributions to be assigned to such managers. This Committee consists of the
following five members: Messrs. Galvin (Chairman), Swift, Florek, Powers and
Dr. Cooney.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee consists of Messrs. McDonough, Galvin, Midgley
and Alvord, none of whom is an employee of the Company. Messrs. McDonough,
Galvin and Midgley also serve as directors for Commercial Intertech, which has
entered into certain agreements with the Company that provided for the Spin-
off and govern various interim and ongoing relationships between and among the
two companies. See "Certain Related Party Transactions--Arrangements Between
the Company and Commercial Intertech."

COMPENSATION OF THE BOARD OF DIRECTORS

Directors who are not employees or officers of the Company receive an annual
retainer fee in the amount of $15,000, plus $1,000 for attending each meeting
of the Board and $600 for attending each committee meeting. Outside directors
have the option to make an annual election to receive the retainer and Board
meeting fees in deferred stock units instead of cash. Directors who opt for
the stock unit alternative receive a 20% premium in stock units versus the
cash option. Directors who are employees or officers of the Company do not
receive compensation for serving as directors. Directors are also reimbursed
for reasonable travel expenses to and from meetings of the Board and
committees. Outside directors receive non-qualified stock options to purchase
1,000 shares of Common Stock annually and receive 1,000 performance shares bi-
annually. The performance shares are earned based upon the achievement of
certain Company financial targets during a three year cycle. Mr. Powers, as an
officer of the Company, is not compensated for serving as a director of the
Company.

EXECUTIVE COMPENSATION

The following table sets forth information with respect to the cash
compensation paid by the Company for services rendered during the fiscal years
ended October 31, for the years listed below to its Chief Executive Officer
and the other executive officers of the Company whose total annual salary and
bonus exceeded $100,000 during fiscal year 1996 (each, a "Named Executive
Officer"). The salary described in this table for 1994, 1995, and the first
three quarters of 1996 (prior to the Spin-off) for Paul J. Powers, Mark G.
Kachur and Michael H. Croft was paid by Commercial Intertech. Salary paid to
these three executive officers for the fourth quarter of 1996 was paid by the
Company as follows: $25,000 for Paul J. Powers, $44,846 for Mark G. Kachur and
$32,695 for Michael H. Croft. The salary paid to John A. Tomich by the Company
during the fourth quarter of 1996 was $12,716 and the remaining salary amount
was paid to him by Commercial Intertech.

SUMMARY COMPENSATION TABLE

LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------ -----------------------
RESTRICTED SECURITIES
STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL OTHER ANNUAL AWARDS(2) OPTIONS COMPENSATION
POSITIONS YEAR SALARY ($) BONUS ($) COMPENSATION ($) ($) (#) ($)
- ------------------ ---- ---------- --------- ---------------- ---------- ---------- ------------

Paul J. Powers.......... 1996 397,503 -0- -0- -0- 65,000 16,023(5)
Chairman and Chief 1995 481,667 440,000 -0- 131,995 34,000 15,810
Executive Officer 1994 461,667 400,000 -0- 835,634 37,500 15,876
Mark G. Kachur.......... 1996 263,179 152,000 10,883 45,601 74,658(4) 25,627(6)
President and Chief 1995 247,500 135,000 38,414 24,008 15,000 21,706
Operating Officer 1994 134,300 120,000 -0- 174,375 15,000 -0-
Michael H. Croft........ 1996 194,599 115,000 24,850 -0- 13,000 37,217(7)
Senior Vice President 1995 183,000 30,000 12,000 -0- -0- 51,368
1994 175,000 30,000 12,000 19,750 -0- 21,000
Ronald C. Drabik(1)..... 1996 50,212 30,000 -0- 107,500(3) 13,000 1,865(8)
Senior Vice President
and Chief Financial
Officer
Timothy B. Carney....... 1996 99,795 40,000 -0- -0- 6,000 15,972(9)
Vice President and
Controller
1995 92,363 10,000 -0- 11,995 -0- 16,327
1994 87,971 13,500 5,467 9,875 -0- 44,738
John A. Tomich(10)...... 1996 89,316 12,000 -0- -0- 3,000 2,867(11)
Counsel and Secretary

- --------

(1) Mr. Drabik became Senior Vice President and Chief Financial Officer of
the Company on September 10, 1996 in connection with the Spin-off. Mr.
Drabik was not an employee of the Company prior to such date. At present,
Mr. Drabik's annual salary is $175,000.
(2) This column shows the market value of restricted share awards on the date
of grant. The aggregate holdings/value of restricted stock held on
October 31, 1996 by the individuals listed in this table, not including
awards that were earned after the end of the fiscal year as part of the
Company's Executive Management Incentive Plan and were elected to be
taken in the form of restricted stock were: Paul J. Powers--
67,896/$1,086,336; Mark G. Kachur--22,400/$358,400; Michael H. Croft--
4,020/$64,320; Ronald C. Drabik--7,146/$114,336; Timothy B. Carney--
3,294/$52,704; and John A. Tomich--1,876/$30,016.
(3) Includes the value of shares of Commercial Intertech common stock awarded
and converted to shares of Common Stock in connection with the Spin-off.
(4) Includes options for 22,500 shares of Commercial Intertech common stock
granted and converted to options for 39,658 shares of Common Stock in
connection with the Spin-off.
(5) Includes Commercial Intertech matching contributions to the Commercial
Intertech Non-Qualified Stock Purchase Plan in the amount of $10,425;
Commercial Intertech matching contributions pursuant to the Commercial
Intertech 401(k) Plan in the amount of $4,500; and Commercial Intertech
contribution pursuant to the Commercial Intertech Employee Stock
Ownership Plan in the amount of $1,098.
(6) Includes Commercial Intertech matching contributions to the Commercial
Intertech Non-Qualified Stock Purchase Plan in the amount of $2,300;
Commercial Intertech contribution pursuant to the Commercial Intertech
Employee Stock Ownership Plan in the amount of $1,098; Commercial
Intertech reimbursement of relocation costs in the amount of $17,344;
Company matching contributions pursuant to the Company 401(k) Plan in the
amount of $288; and Company reimbursement of relocation costs in the
amount of $4,597.
(7) Includes Commercial Intertech matching contributions to the Commercial
Intertech Non-Qualified Stock Purchase Plan in the amount of $1,107;
Commercial Intertech matching contributions pursuant to the Commercial
Intertech 401(k) Plan in the amount of $3,245; Commercial Intertech
reimbursement of relocation costs in the amount of $650; Commercial
Intertech's amortized retirement of a loan in the amount of $10,880;
Commercial Intertech contributions pursuant to the Commercial Intertech
Employee Stock Ownership Plan in the amount of $1,098; Company matching
contributions pursuant to the Company 401(k) Plan in the amount of $573;
Company reimbursement of relocation costs in the amount of $1,310; and
Company payment to a supplemental executive retirement plan in the amount
of $18,354.
(8) Includes Company reimbursement of relocation costs in the amount of
$1,865.
(9) Includes Commercial Intertech matching contributions pursuant to the
Commercial Intertech 401(k) Plan in the amount of $2,489; Commercial
Intertech's amortized retirement of a loan in the amount of $12,429;
Commercial Intertech contributions pursuant to the Commercial Intertech
Employee Stock Ownership Plan in the amount of $690; and Company matching
contributions pursuant to the Company 401(k) Plan in the amount of $364.

(10) Mr. Tomich became Counsel and Secretary of the Company on September 10,
1996 in connection with the Spin-off. Mr. Tomich was not an employee of
the Company prior to such date.
(11) Includes Commercial Intertech matching contributions pursuant to the
Commercial Intertech 401(k) Plan in the amount of $2,298 and Commercial
Intertech contribution pursuant to the Commercial Intertech Employee
Stock Ownership Plan in the amount of $569.

The following table sets forth, for each of the Named Executive Officers,
options granted for the Common Stock during fiscal year 1996 pursuant to the
Employee Stock Plan.

OPTION GRANTS IN LAST FISCAL YEAR

INDIVIDUAL GRANTS
---------------------------------------------
POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATE
SECURITIES OPTIONS OF STOCK PRICE
UNDERLYING GRANTED TO APPRECIATION FOR OPTION
OPTIONS EMPLOYEES EXERCISE OR TERM(3)
GRANTED IN FISCAL BASE PRICE EXPIRATION ---------------------------
NAME (#)(1) YEAR ($/SHARE) DATE 5% ($) 10% ($)
- ---- ---------- ---------- ----------- ---------- ------------ --------------

Paul J. Powers.......... 65,000 19.2 15.125 9/25/06 618,386 1,567,101
Mark G. Kachur.......... 35,000 10.4 15.125 9/25/06 332,977 843,824
39,658(2) 11.7 10.709 1/23/06 267,122 676,936
Michael H. Croft........ 13,000 3.8 15.125 9/25/06 123,677 313,420
Ronald C. Drabik........ 13,000 3.8 15.125 9/25/06 123,677 313,420
Timothy B. Carney....... 6,000 1.8 15.125 9/25/06 57,082 144,656
John A. Tomich.......... 3,000 0.9 15.125 9/25/06 28,541 72,328

- --------
(1) The options were granted subject to a three-year vesting period, with 50%
of the options granted becoming exercisable on each of the second and
third anniversaries of the grant date. No SARs were granted. The vesting
of the options may be accelerated in the event of a change in control.
(2) This represents a stock option granted to Mr. Kachur for shares of
Commercial Intertech common stock that were converted to the Company's
shares in connection with the Spin-off.
(3) Potential Realizable Value is presented net of the option exercise price
but before any federal or state income taxes associated with exercise.
These amounts represent certain assumed rates of appreciation only. Actual
gains are dependent on the future performance of the Common Stock and the
option holder's continued employment throughout the vesting period. The
amounts reflected in the table may not necessarily be achieved.

The following table sets forth, for each of the Named Executive Officers,
information regarding the exercise of options for the Common Stock during
fiscal year 1996 and unexercised options held as of the end of fiscal year
1996 pursuant to the Employee Stock Plan.

AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1996 AND
FISCAL YEAR END 1996 OPTION VALUES

NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTION AT FY END (#) AT FY END ($)(1)
SHARES ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- --------------- ------------ ------------------------- -------------------------

Paul J. Powers.......... -- -0- -0-/ 65,000 -0-/ 56,875
Mark G. Kachur.......... -- -0- -0-/114,317 -0-/468,150
Michael H. Croft........ -- -0- -0-/ 13,000 -0-/ 11,375
Ronald C. Drabik........ -- -0- -0-/ 13,000 -0-/ 11,375
Timothy B. Carney....... -- -0- -0-/ 6,000 -0-/ 5,250
John A. Tomich.......... -- -0- -0-/ 3,000 -0-/ 2,625

- --------
(1) The value per option is calculated by subtracting the exercise price from
the October 31, 1996 closing sales price of the Common Stock on the Nasdaq
National Market of $16.00.

The following table sets forth, for each of the Named Executive Officers,
long-term incentive awards made during fiscal year 1996 pursuant to the
Employee Stock Plan.

LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR

ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF PERFORMANCE OR NON-STOCK PRICE BASED PLANS
SHARES, UNITS OTHER PERIOD ----------------------------------
OR OTHER RIGHTS UNTIL MATURATION THRESHOLD TARGET MAXIMUM
NAME (#) OR PAYOUT(1) (#) (#) (#)
- ---- --------------- ---------------- ----------- ---------- ----------

Paul J. Powers.......... 50,000 10/31/99 12,500 50,000 75,000
Mark G. Kachur.......... 30,000 10/31/99 7,500 30,000 45,000
Michael H. Croft........ 10,000 10/31/99 2,500 10,000 15,000
Ronald C. Drabik........ 10,000 10/31/99 2,500 10,000 15,000
Timothy B. Carney....... 4,000 10/31/99 1,000 4,000 6,000
John A. Tomich.......... 2,000 10/31/99 500 2,000 2,000

- --------
(1) The date in the column represents the date on which the three-year
performance period ends.

Employees may retire from the Company with unreduced benefits under the
Company's retirement plans at age 65 or later with 25 or more years of
service. The table below shows the estimated annual pension benefits provided
under the Company's defined benefit retirement plans for employees in higher
salary classifications retiring at age 65 or later.

ESTIMATED TOTAL ANNUAL RETIREMENT BENEFITS UNDER THE PENSION PLAN FOR
SALARIED EMPLOYEES AND SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS

YEARS OF SERVICE
--------------------------------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ -------- -------- -------- -------- --------

$150,000 $ 40,684 $ 54,245 $ 67,806 $ 71,196 $ 74,587
200,000 55,684 74,245 92,806 97,446 102,087
250,000 70,684 94,245 117,806 123,696 129,587
300,000 85,684 114,245 142,806 149,946 157,087
400,000 115,684 154,245 192,806 202,446 212,087

Benefits under the plans are calculated generally under a formula of 50% of
the participant's final average compensation reduced by 50% of the
participant's estimated social security benefits, reflected in the table in
the form of a straight life annuity. The compensation covered by the pension
plan is base salary as set forth in the Salary column of the Summary
Compensation Table above. The compensation covered by the supplemental
executive retirement plan is also base salary for Mr. Kachur, the only
participant in that plan. As of January 31, 1997, Mr. Kachur had two credited
years of service, Mr. Drabik had no credited years of service, Mr. Carney had
12 credited years of service and Mr. Tomich had seven credited years of
service with the Company. Mr. Croft has elected not to participate in the
pension plan. In addition, Mr. Powers is not a participant in the pension
plan.

THE EXECUTIVE MANAGEMENT INCENTIVE PLAN

The Executive Management Incentive Plan ("EMIP") was approved by Commercial
Intertech prior to the Spin-off and is a performance-based plan in which
payouts are set in accordance with the requirements of Section 162(m) of the
Code. The EMIP provides annual incentive compensation opportunities to the
Company's senior executives based solely on the achievement of predetermined
financial performance objectives (e.g., corporate net income).

THE MANAGEMENT INCENTIVE PLAN

The Management Incentive Plan ("MIP") provides compensation that is not
performance-based as defined in Code Section 162(m), but which will be based
on both objective and subjective evaluations of individual executive
performance. The MIP provides opportunities for executives to earn annual
incentives based on the achievement of a combination of financial goals
(operating and net income, return on net sales, return on assets and operating
cash flow) for the Company and individual objectives. A threshold net income
level will have to be achieved before any payments are made.

The Compensation Committee has selected 52 individuals for plan
participation in fiscal year 1997. Associated target award ranges will be
determined according to individual responsibility levels, business judgment
and median market data for comparably sized manufacturing companies.

For fiscal year 1996, the Compensation Committee extended an opportunity to
certain Company participants in Commercial Intertech's Senior Management
Target Incentive Plan and Salaried Employee Incentive Plan to elect to receive
up to 50% of their earned awards in restricted stock. For a number of
participants who elected to receive part of their fiscal year 1996
compensation in restricted stock, the Company increased the stock award by
20%. The vesting period associated with the stock award is three years, and in
the event a participant voluntarily leaves the Company or is terminated "for
cause," the shares will be forfeited. Beginning in fiscal year 1997, the
Compensation Committee will offer a 25% increase in the stock award and a
four-year vesting period.

EMPLOYMENT AGREEMENT

In connection with the Spin-off, the Company assumed the Employment
Agreement Mr. Kachur signed with Commercial Intertech on December 3, 1993,
which expires in April 1997. The Employment Agreement provides for a base
salary of $240,000 and grants of stock options as well as other Company
benefit programs, including group life insurance, hospitalization and medical
plans.

CHANGE OF CONTROL AGREEMENTS

The Company has entered into termination and change in control agreements
(each, a "Termination Agreement") with Messrs. Carney, Croft, Drabik, Kachur,
Powers and Tomich (each, an "Executive"). Under each Termination Agreement,
following a "Change in Control" (as defined in the Termination Agreement), if
an Executive is terminated without cause or if the Executive terminates his
own employment for certain reasons, such Executive could receive (in addition
to certain other benefits described below): (i) two to three times the sum of
the base salary and the higher of (x) the highest average of incentive
compensation for any two years of the most recent five years or (y) the amount
of bonus for the year in which termination occurs; (ii) the value of any
shares, dividends or other property payable assuming maximum performance with
respect to any performance shares held by such Executive; (iii) accrued and
unpaid base salary and pro rata portion of his highest recent bonus; (iv) the
actuarial value of accrued benefits under such Executive's supplemental
retirement plan; (v) all vested nonforfeitable amounts owing under any
comprehensive benefit plans; (vi) continuation of certain benefits for two or
three years, such as medical benefits; and (vii) certain other benefits and
payments. If a Change in Control occurs, the Company is obligated to set
aside, in trust, sufficient assets to fund all obligations under the
Termination Agreements. In addition, payment received by an Executive in
connection with a Change in Control could be "grossed up" for any excise taxes
imposed by the "Golden Parachute" provisions of the Code. Under the
Termination Agreements, each Executive may not compete with the Company for a
certain period of time.

STOCK PLANS

Prior to the Spin-off, the Board of Directors and Commercial Intertech, as
sole Company stockholder, adopted the CUNO Incorporated 1996 Stock Incentive
Plan (the "Employee Stock Plan") and the CUNO Incorporated Non-Employee
Directors' Stock Plan (the "Directors' Stock Plan" together with the Employee
Stock Plan, the "Stock Plans"). The purpose of the Stock Plans is to motivate
non-employee directors, officers, key employees and consultants to the Company
("Participants") by allowing them to participate in the

Company's future, to recognize and reward Participants' contributions and
achievements and business performance through incentives linked to performance
objectives and to enable the Company to attract and retain these persons by
offering them an ownership interest in the Company. The Stock Plans are
administered by the Compensation Committee. The Employee Stock Plan authorizes
the issuance of up to 1,000,000 shares of Common Stock (plus any unused shares
under the Directors' Stock Plan) pursuant to the grant or exercise of stock
options, stock appreciation rights, restricted stock, performance shares,
annual incentive bonuses or deferred stock to officers, key employees and
consultants of the Company. The Directors' Stock Plan authorizes the issuance
of up to 200,000 shares of Common Stock (plus any unused shares under the
Employee Stock Plan) pursuant to the grant or exercise of stock options,
deferred stock or performance shares to non-employee directors of the Company.
Options granted to certain senior executives, management and other employees
will vest or become exercisable over varied periods that will be determined at
the time such options are granted. On the Distribution Date, directors who
were not employees of the Company or any affiliate ("Non-Employee Directors")
were automatically granted options to purchase 1,000 shares on the
Distribution Date, and Non-Employee Directors will be granted options for
1,000 shares of Common Stock on the date of each annual stockholder's meeting
beginning in 1997. Such options were, and shall be, granted at fair market
value on the date of grant. Non-Employee Directors will also be permitted to
elect to receive their retainer and meeting fees in the form of deferred stock
instead of cash. Non-Employee Directors who elect to receive their retainer or
meeting fees in such alternate form will receive shares of Common Stock with a
value equal to as much as 120% of the value of the retainer or meeting fees
the Non-Employee Director would have received in cash. Non-Employee Directors
who held office on the Distribution Date received 5,000 performance shares and
will also receive on a bi-annual basis performance shares for 1,000 shares of
Common Stock, and the right to receive such shares will be conditioned upon
the successful satisfaction of certain Company financial targets during a
specified period.

Stock Options may be either "incentive stock options" (within the meaning of
Section 422 of the Code) or nonstatutory options (collectively, "Stock
Options"). Only nonstatutory stock options may be granted to Non-Employee
Directors. The exercise price per share purchasable under an option shall be
determined at the time of grant by the Compensation Committee. Generally,
Participants will be given ten years in which to exercise a Stock Option, or a
shorter period once a Participant terminates employment. Payment may be made
in cash or in the form of unrestricted shares the Participant already owns or
by other means. At the Company's option, it may provide a Participant with a
loan or guarantee of a loan for the exercise price of an option. The right to
exercise an option may be conditioned upon the completion of a period of
service or other conditions.

Stock Appreciation Rights ("SARs") entitle a Participant to receive an
amount in cash, shares or both, equal in value to (i) the excess of the fair
market value of one share over the exercise price per share specified in the
related Stock Option multiplied by (ii) the number of shares to which the SAR
relates. The right to exercise a SAR may be conditioned upon the completion of
a period of service or other conditions. Generally, Participants will be given
ten years in which to exercise a SAR, or a shorter period once a Participant
terminates employment.

Shares of Restricted Stock ("Restricted Stock") may also be awarded under
the Stock Plans, which requires the completion of a period of service or the
attainment of specified performance goals by the Participant or the Company or
a subsidiary, division or department of the Company or such other criteria as
the Compensation Committee may determine. Upon a participant's Termination of
Employment (as defined in the Stock Plans), the Restricted Stock still subject
to restriction generally will be forfeited by the Participant. The
Compensation Committee may waive these restrictions in the event of hardship
or other special circumstances.

Performance Share Awards ("Performance Shares") are grants of shares of
Common Stock or the right to receive shares in the future that are subject to
restrictions on transfer and retention based on satisfaction of certain
performance criteria of the Company, the Participant or both. If the specified
performance objectives established by the Committee are attained during the
time period specified by the Committee (which will generally be at least a
two-year period) and if the Participant continues in employment through the
performance period, the restrictions on transfer and retention will be
removed.

Depending on a Participant's responsibilities, the performance criteria will
be based on any of the following, either alone or in any combination, and
either on a consolidated or business unit level, as the Committee may

determine: sales, net asset turnover, earnings per share, cashflow, cashflow
from operations, operating profits or income, operating margin, net income,
net income margin, return on net assets, return on total assets, return on
common equity, return on total capital and total shareholder return. The
Committee will specifically determine these criteria and may include or
exclude any or all of the following items: extraordinary, unusual or
nonrecurring items; effects of accounting changes; effects of financing
activities; expenses for restructuring or productivity initiatives; non-
operating items; spending for acquisitions; effects of divestitures; and
effects of litigation or settlements. Capital gains may be included or
excluded. The maximum number of performance shares that may be awarded to any
Participant under the Plan for any year is one half of the shares of Common
Stock reserved under the plan. Performance Shares in respect of which the
Company's deduction is subject to Section 162(m) of the Code may only be paid
if the performance objectives are achieved, except where the Participant's
employment is terminated for an extraordinary reason, in which case the
Participant may receive a proportionate award.

Deferred Stock ("Deferred Stock") is stock that can be awarded to a
Participant in the future, at a specified time and under specified conditions.
The Compensation Committee will determine the Participants to whom, and the
time or times at which, any Deferred Stock shall be awarded, the number of
shares of Deferred Stock to be awarded to any Participant, the duration, the
period during which and the conditions under which receipt of the shares will
be deferred and any other terms and conditions of the Deferred Stock.

Annual Incentive Awards ("Annual Incentives") are awards granted each fiscal
year by the Committee and based on the satisfaction of specified bonus
targets. The targets are based on Company performance measurements, as
determined by the Committee, and include the following: sales, net asset
turnover, earnings per share, cashflow, cashflow from operations, operating
profits or income, net income, operating margin, net income margin, return on
net assets, return on total assets, return on common equity, return on total
capital and total shareholder return. The Committee will specifically
determine these criteria and may include or exclude any or all of the
following items: extraordinary, unusual or nonrecurring items; effects of
accounting changes; effects of financing activities; expenses for
restructuring or productivity initiatives; non-operating items; spending for
acquisitions; effects of divestitures; and effects of litigation or
settlements. Capital gains may be included or excluded. The Committee will
determine each year whether the objectives have been satisfied and awards will
be paid only if the deduction is subject to Section 162(m) of the Code, except
for an extraordinary reason for a termination of employment.

Payment may be made in cash, or at the election of the Participant, in the
form of Common Stock, Deferred Stock, Restricted Stock, or a combination of
the foregoing. If Deferred Stock or Restricted Stock is chosen, it will be
subject to limitation on transfer and risk of forfeiture for a designated
period (generally, four years) and may have a value of as much as 130% of the
cash value of the award had it been paid in cash. The maximum compensation
that any Participant may receive in connection with an Annual Incentive,
including Restricted Stock or Deferred Stock worth 130% of the cash value, is
$1.5 million.

Amendments and Modifications. The Stock Plans, as adopted, are not limited
as to their duration. The Board of Directors of the Company may amend, alter,
or discontinue the Stock Plans, subject to certain limits.

Change in Control. In the event of a Change in Control of the Company (as
defined in the Stock Plans):

(1) any SAR and Stock Options outstanding as of the date of such Change
in Control that are not then exercisable and vested will become fully
exercisable and vested to the full extent of the original grant; and

(2) the restrictions and deferred limitations applicable to any shares of
Restricted Stock and Deferred Stock will lapse and such shares of
Restricted Stock and Deferred Stock will become free of all restrictions
and become fully vested and transferable to the full extent of the original
grant. Also, the performance goals and other restrictions with respect to
any outstanding award of Performance Shares or Annual Incentives may be
deemed to be satisfied in full and fully distributable.

A Change in Control includes any transaction that would result in any person
owning, directly or indirectly, 20% or more of the outstanding Common Stock of
the Company or the voting power of the Company, certain changes in the members
of the board of directors, certain corporate transactions (such as a merger)
and the sale of substantially all of the Company's assets.

BENEFICIAL OWNERS

The following table sets forth, as of February 28, 1997, certain information
with respect to the beneficial ownership of Common Stock by (i) each person
known by the Company to own beneficially more than 5% of the outstanding
shares of Common Stock, (ii) each Company director, (iii) the Chief Executive
Officer and each of the other Named Executive Officers and (iv) all Company
directors and executive officers as a group.

PERCENT OF VOTING SHARES
SHARES -------------------------------
BENEFICIALLY PRIOR TO THE AFTER THE
NAME OF BENEFICIAL OWNER OWNED OFFERING OFFERING
- ------------------------ ------------ ------------- ------------

National City Bank
N.E.(1)................. 831,099 6.0% 5.2%
Janus Capital
Corporation(2).......... 704,325 5.1 4.4
Joel B. Alvord........... 12,944 * *
Timothy B. Carney........ 10,471(3) * *
Charles L. Cooney........ 6,416 * *
Michael H. Croft......... 24,838(3) * *
Ronald C. Drabik......... 17,146 * *
Norbert A. Florek........ 8,208 * *
John M. Galvin........... 16,812 * *
Mark G. Kachur........... 105,928(3)(4) * *
Gerald C. McDonough...... 10,916 * *
C. Edward Midgley........ 26,416 * *
Paul J. Powers........... 243,699 1.7 1.5
David L. Swift........... 7,339 * *
John A. Tomich........... 6,681(3) * *
All directors and
executive officers as a
group (13 people)....... 497,814 3.5 3.1

- --------
* Less than 1%.

(1) As reported on a Schedule 13G dated February 19, 1997 filed with the
Commission by National City Bank N.E. According to such Schedule 13G,
National City Bank N.E. has sole voting power over 671,035 shares, shared
voting power over 159,556 shares and no voting power over 508 shares, and
sole investment power over 91,189 shares, shared investment power over
696,610 shares and no investment power over 43,300 shares. The address of
the stockholder is National City Center, 1900 East Ninth Street,
Cleveland, Ohio 44114-3484.
(2) As reported on a Schedule 13G dated February 10, 1997 filed with the
Commission by Janus Capital Corporation. According to such Schedule 13G,
Janus Capital Corporation has shared voting power and shared dispositive
power with respect to all 704,325 of these shares. The address of the
stockholder is 100 Fillmore Street, Denver, Colorado 80206-4923.
(3) Includes the following number of Common Shares (fractional shares not
shown) credited to the accounts of the above-mentioned beneficial owners
by the trustee acting under the provisions of the Company's 401(k) Plan:
Mr. Carney--1,268 shares; Mr. Croft--1,571 shares; Mr. Kachur--68 shares;
and Mr. Tomich--90 shares.
(4) Includes 39,658 shares of Common Stock subject to options exercisable
within 60 days.

DESCRIPTION OF CAPITAL STOCK

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

COMMON STOCK

As of March 31, 1997, there were 13,830,663 shares of Common Stock
outstanding, excluding shares of Common Stock reserved for issuance upon
exercise of options granted under the Stock Plans. The Common Stock is listed
on the Nasdaq National Market under the symbol "CUNO."

Subject to preferences that may be applicable to any outstanding Preferred
Stock, holders of Common Stock are entitled to receive ratably such dividends
as may be declared by the Board of Directors out of funds legally available
therefor. Holders of Common Stock are entitled to one vote per share in all
matters to be voted upon by stockholders. In the event of a liquidation,
dissolution or winding up of the Company, holders of Common Stock are entitled
to share ratably in all assets remaining after payment of the Company's
liabilities and the liquidation preferences of any outstanding Preferred
Stock. Holders of Common Stock have no preemptive rights and no rights to
convert their Common Stock into any other securities and there are no
redemption provisions with respect to such shares. All of the outstanding
shares of Common Stock are subject to, and may be adversely affected by, the
rights of the holders of shares of any series of Preferred Stock that the
Company may issue in the future. The Common Stock is not liable to further
call or assessment by the Company or for liabilities of the Company imposed on
its stockholders under state law.

Holders of Common Stock have certain rights to purchase Series A Preferred
Stock (as defined below) or Common Stock under certain circumstances. See "--
Preferred Stock" and "--Stockholder Rights Plan."

PREFERRED STOCK

Preferred Stock may be issued in series from time to time with such
designations, relative rights, priorities, preferences, qualifications,
limitations and restrictions thereof as the Board determines. The rights,
priorities, preferences, qualifications, limitations and restrictions of
different series of Preferred Stock may differ with respect to dividend rates,
amounts payable on liquidation, voting rights, conversion rights, redemption
provisions, sinking fund provisions and other matters. The Board may authorize
the issuance of Preferred Stock which ranks senior to the Common Stock with
respect to the payment of dividends and the distribution of assets on
liquidation. In addition, the Board is authorized to fix the limitations and
restrictions, if any, upon the payment of dividends on Common Stock to be
effective while any shares of Preferred Stock are outstanding. The Board,
without stockholder approval, can issue Preferred Stock with voting and
conversion rights which could adversely affect the voting power of the holders
of Common Stock. The issuance of Preferred Stock may have the effect of
delaying, deferring or preventing a change of control of the Company. The
Company has no present intention to issue shares of Preferred Stock.

In connection with the adoption of the Rights Plan, the Company's Board of
Directors has created one series of Preferred Stock, consisting of 300,000
shares of Series A Preferred Stock (as defined below). No shares of Series A
Preferred Stock have been issued as of the date of this Prospectus. Each share
of Series A Preferred Stock when and if issued will be entitled to a minimum
preferential quarterly dividend payment of $1.00 per share but, if greater,
will be entitled to an aggregate dividend per share of 100 times the dividend
declared per share of Common Stock. In the event of liquidation, the holders
of the Series A Preferred Stock will be entitled to a minimum preferential
liquidation payment of $100 per share. Thereafter, and after the holders of
the Common Stock receive a liquidation payment of $1.00 per share, the holders
of the Series A Preferred Stock and the holders of the Common Stock will share
the remaining assets in the ratio of 100 to 1 (as adjusted) for each share of
Series A Preferred Stock and share of Common Stock so held, respectively.
Finally, in the event of any merger, consolidation or other transaction in
which Common Stock is exchanged, each share of Series A Preferred Stock will
be entitled to receive 100 times the amount received per share of Common
Stock. These rights are protected by customary antidilution provisions. In the
event that the amount of accrued and unpaid dividends on the Series A
Preferred Stock is equivalent to six full quarterly dividends or more, the
holders of the

Series A Preferred Stock shall have the right, voting as a class, to elect two
directors in addition to the directors elected by the holders of the Common
Stock until all cumulative dividends on the Series A Preferred Stock have been
paid through the last quarterly dividend payment date or until noncumulative
dividends have been paid regularly for at least one year.

CERTAIN CORPORATE PROVISIONS

The Restated Certificate and the Restated Bylaws contain a number of
provisions relating to corporate governance and to the rights of stockholders.
Certain of these provisions may be deemed to have a potential "anti-takeover"
effect in that such provisions may delay, defer or prevent a change of control
of the Company. These provisions include (i) the classification of the Board
into three classes, each serving for staggered three year terms, (ii) the
authority of the Board to issue series of Preferred Stock with such voting
rights and other powers as the Board may determine, (iii) notice requirements
in the Restated Bylaws relating to nominations to the Board and to the raising
of business matters at stockholders meetings, (iv) a requirement that a vote
of at least 80% of shares entitled to vote generally for the election of
directors is required to amend provisions of the Restated Certificate relating
to the classification of the Board and removal of directors and (v) a
prohibition of stockholder action by written consent.

DELAWARE ANTI-TAKEOVER LAW

The Company is a Delaware corporation that is subject to Section 203 of the
Delaware General Corporation Law ("Section 203"). Under Section 203, certain
"business combinations" between a Delaware corporation, whose stock generally
is publicly traded or held of record by more than 2,000 stockholders, and an
"interested stockholder" are prohibited for a three-year period following the
date that such stockholder became an interested stockholder, unless (i) the
corporation has elected in its certificate of incorporation not to be governed
by Section 203 (the Company has not made such election), (ii) the business
combination was approved by the board of directors of the corporation before
the other party to the business combination became an interested stockholder,
(iii) upon consummation of the transaction that made it an interested
stockholder, the interested stockholder owned at least 85% of the voting stock
of the corporation outstanding at the commencement of the transaction
(excluding voting stock owned by directors who are also officers or held in
employee benefit plans in which the employees do not have a confidential right
to tender or vote stock held by the plan) or (iv) the business combination is
approved by the board of directors of the corporation and ratified by two-
thirds of the voting stock that the interested stockholder did not own. The
three-year prohibition also does not apply to certain business combinations
proposed by an interested stockholder following the announcement or
notification of certain extraordinary transactions involving the corporation
and a person who had not been an interested stockholder during the previous
three years or who became an interested stockholder with the approval of a
majority of the corporation's directors. The term "business combination" is
defined generally to include mergers or consolidations between a Delaware
corporation and an interested stockholder, transactions with an interested
stockholder involving the assets or stock of the corporation or its majority-
owned subsidiaries and transactions that increase an interested stockholder's
percentage ownership of stock. The term "interested stockholder" is defined
generally as those stockholders who become beneficial owners of 15% or more of
a Delaware corporation's voting stock, together with the affiliates or
associates of that stockholder.

STOCKHOLDER RIGHTS PLAN

The Board of Directors of the Company adopted a Stockholder Rights Plan (the
"Rights Plan") pursuant to which a preferred share purchase right (a "Right")
is associated with, and trades with, each share of the Common Stock
outstanding.

Each Right, when it becomes exercisable, entitles its registered holder to
purchase from the Company one-hundredth of a share of Series A Junior
Participating Preferred Stock, par value $.001 per share (the "Series A
Preferred Stock"), of the Company at a price of $60 per one-hundredth of a
share of Series A Preferred Stock (the "Purchase Price"), subject to
adjustment.

The Rights are not exercisable until the earlier of (i) a person or group of
affiliated or associated persons having acquired beneficial ownership of 15%
or more of the outstanding Common Stock (except pursuant to a Permitted Offer,
as defined in the Rights Plan) (an "Acquiring Person") or (ii) 10 days (or
such later date as the Company's Board of Directors may determine) following
the commencement of, or announcement of an intention to make, a tender offer
or exchange offer the consummation of which would result in a person or group
becoming an Acquiring Person (the earlier of such dates being called the
"Rights Distribution Date").

In the event that any person or group becomes an Acquiring Person (the
"Shares Acquisition Date"), each holder of a Right will thereafter have the
right (the "Flip-In Right") to receive, upon exercise, the number of shares of
Common Stock or one-hundredths of a share of Series A Preferred Stock (or, in
certain circumstances, other securities of the Company) having a value
(immediately prior to such triggering event) equal to two times the exercise
price of the Right. Notwithstanding the foregoing, following the occurrence of
the event described above, all Rights that are, or (under certain
circumstances specified in the Rights Plan) were, beneficially owned by any
Acquiring Person or any affiliate or associate thereof will be null and void.

In the event that, at any time following the Shares Acquisition Date, (i)
the Company is acquired in a merger or other business combination transaction
in which the holders of all of the outstanding Common Stock immediately prior
to the consummation of the transaction are not the holders of all of the
surviving corporation's voting power or (ii) more than 50% of the Company's
assets or earning power is sold or transferred, in either case with or to an
Acquiring Person or any affiliate or associate or any other person in which
such Acquiring Person, affiliate or associate has an interest or any person
acting on behalf of or in concert with such Acquiring Person, affiliate or
associate or, if in such transaction all holders of Common Stock are not
treated alike, then each holder of a Right (except Rights which previously
have been voided as set forth above) shall thereafter have the right (the
"Flip-Over Right") to receive, upon exercise, common shares of the acquiring
company having a value equal to two times the exercise price of the Right. The
holder of a Right will continue to have the Flip-Over Right whether or not
such holder exercises or surrenders the Flip-In Right. At any time after a
person becomes an Acquiring Person and prior to the acquisition by such person
or group of 50% or more of the Common Stock, the Board of Directors of the
Company may exchange the Rights (other than the Rights owned by the Acquiring
Person or its associates and affiliates, which shall have become void) at an
exchange ratio of one share of Common Stock per Right (subject to adjustment).

The Rights will expire at the close of business on August 8, 2006, unless
redeemed by the Company as described herein. At any time prior to the earlier
to occur of (i) a person or group becoming an Acquiring Person or (ii) the
expiration of the Rights, and under certain other circumstances, the Company
may redeem the Rights in whole, but not in part, at a price of $.01 per Right
(the "Redemption Price"). Additionally, following the Shares Acquisition Date,
the Company may redeem the then outstanding Rights in whole, but not in part,
at the Redemption Price, provided that such redemption is in connection with a
merger or other business combination transaction or series of transactions
involving the Company in which all holders of Common Stock are treated alike,
but not involving an Acquiring Person or its affiliates or associates. Series
A Preferred Stock purchasable upon exercise of the Rights will not be
redeemable.

The Rights have certain anti-takeover effects. The Rights should not
interfere with any merger or business combination approved by the Company's
Board of Directors since the Rights may be redeemed by the Company at the
Redemption Price prior to the time that a person or group becomes an Acquiring
Person. However, by causing substantial dilution to a person or group that
attempts to acquire the Company on terms not approved by the Company's Board
of Directors, the Rights may interfere with certain acquisitions, including
acquisitions that may offer a premium over market price to some or all of the
Company's stockholders. The Rights are not intended to prevent an acquisition
of the Company on terms that are favorable and fair to all stockholders.

CERTAIN RELATED PARTY TRANSACTIONS

ARRANGEMENTS BETWEEN THE COMPANY AND COMMERCIAL INTERTECH

The Company and Commercial Intertech entered into the following agreements
for the purpose of governing the post-Spin-off relationships.

Distribution and Interim Services Agreement. Subject to certain exceptions,
the distribution and interim services agreement (the "Distribution and Interim
Services Agreement") provides for cross-indemnities principally designed to
place financial responsibility for the liabilities of the Company's business
with the Company and financial responsibility for the liabilities of the
remaining businesses of Commercial Intertech with Commercial Intertech
following the Spin-off.

The Distribution and Interim Services Agreement provides that certain
services, including tax, accounting, payroll, employee benefit and legal
services, will continue to be provided to the Company for a period up to 12
months following the Distribution Date, at rates comparable to those charged
to the Company by Commercial Intertech for similar services provided prior to
the Spin-off, with certain exceptions. For the first quarter of fiscal year
1997, the Company paid approximately $800,000 in fees. In addition, the
Distribution and Interim Services Agreement provides that any corporate
opportunity, transaction, agreement or other arrangement that becomes known to
a director or officer of the Company, who is also an officer or director of
Commercial Intertech or a subsidiary of Commercial Intertech, shall not be the
property or corporate opportunity of the Company but of Commercial Intertech,
even if such opportunity, transaction, agreement or other arrangement relates
to the Company's business. To the extent a conflict arises between Commercial
Intertech and the Company under the Distribution and Interim Services
Agreement, the following procedures shall be used: (i) each party shall
appoint two members to a dispute resolution committee; (ii) if such committee
is unable to resolve such dispute, it shall refer the dispute to the chief
executive officer of each company for resolution; and (iii) if such chief
executive officers are unable to resolve such dispute, they shall refer the
dispute to final, binding arbitration. Mr. Powers currently serves as Chief
Executive Officer of both Commercial Intertech and the Company. In addition,
Messrs. Galvin, McDonough and Midgley are directors of both the Company and
Commercial Intertech and would, together with Mr. Powers, be subject to the
corporate opportunity provisions of the Distribution and Interim Services
Agreement.

Tax Allocation Agreement. A tax sharing agreement (the "Tax Allocation
Agreement") provides that the Company is liable for U.S. federal, state, local
and foreign tax liabilities that are attributable to the Company through the
Distribution Date and that Commercial Intertech is responsible for all such
taxes of Commercial Intertech (excluding the Company). In addition, all taxes
(other than as described below) attributable to or occasioned by the
separation of the Company's business and Commercial Intertech's remaining
business and the Spin-off are the Company's responsibility.

Under the Tax Allocation Agreement, if the Spin-off is determined to be
taxable because a change of control of Commercial Intertech occurs, then the
resulting tax liability will be borne solely by Commercial Intertech. If the
Spin-off is determined to be taxable because of a change of control of the
Company, then the resulting tax liability shall be borne solely by the
Company. Under the Tax Allocation Agreement, each of Commercial Intertech and
the Company make certain representations, warranties and covenants to the
other party not to take any action that would be inconsistent with any
requirement, nor fail to take any action required, in order to preserve the
tax-free nature of the Spin-off. To the extent that either party violates such
representations, warranties or covenants, then the party in breach shall be
solely liable for the resulting tax liability. If a tax liability arises in
connection with the Spin-off for any reason not set forth above, then such
liability shall be borne equally by Commercial Intertech and the Company. For
purposes of the Tax Allocation Agreement "a change of control" shall mean a
greater than 50% change in stock ownership, measured by vote and value of
either company.

Employee Benefits Agreement. The employee benefits and compensation
allocation agreement (the "Benefits Agreement") provides that any Commercial
Intertech stock-based awards held by Company

employees and Company non-employee directors who are not also directors of
Commercial Intertech and half of such options held by Company non-employee
directors who are also directors of Commercial Intertech were, as of the
Distribution Date, replaced with similar stock-based awards for Common Stock,
in each case adjusted so that the value thereof after the Distribution Date
was equal to the value of the replaced award before the Distribution Date. The
Benefits Agreement provides that, effective as of the Distribution Date, the
Company became responsible for all benefit related other liabilities to
employees and their beneficiaries and dependents as well as former employees
of former Company businesses and their beneficiaries and dependents.

INDEBTEDNESS BETWEEN THE COMPANY AND COMMERCIAL INTERTECH

In connection with the Spin-off, the Company assumed $30.0 million of
Commercial Intertech's debt, which was accounted for as a dividend to
Commercial Intertech. The debt was paid from the proceeds of the Credit
Facility entered into by the Company shortly after the Spin-off. In addition,
the Company and it subsidiaries owe Commercial Intertech $6.8 million as of
February 28, 1997 for amounts due under the Distribution and Interim Services
Agreement as well as other intercompany charges. The Company expects to pay
these balances by October 1997. Payments for these obligations are expected to
be funded through the Company's internally generated cashflow or existing
lines of credit.

In connection with the Spin-off, the Company entered into a credit agreement
with Mellon Bank, N.A. (the "Bank"), in its capacity as agent for various
banks, subsequent to which the Bank agreed to provide the Credit Facility. The
Company has drawn down a portion of the Credit Facility and has used some of
the borrowings to repay the $30.0 million debt incurred in connection with the
Spin-off.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE SPIN-OFF

Commercial Intertech structured the the Spin-off to qualify as a tax-free
spin-off under Section 355 of the Code. However, no ruling was requested from
the IRS concerning the federal income tax consequences of the transaction. If
the Spin-off were determined to not qualify under Section 355 of the Code,
then Commercial Intertech will be treated as if it sold the stock of the
Company in a taxable transaction resulting in a substantial tax liability to
Commercial Intertech. However, in certain circumstances the Company may be
required to indemnify Commercial Intertech against 50% or all of such
liability. See "--Arrangements Between the Company and Commercial Intertech."

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the offering, there will be 15,830,663 shares of Common
Stock of the Company outstanding. All of these shares, including the 2,000,000
shares sold in the offering, are and will be immediately eligible for resale
in the public market without restriction under the Securities Act, unless they
are held by "affiliates" of the Company within the meaning of Rule 144 under
the Securities Act.

The Company has granted to the Underwriters (as defined below) an option,
expiring 30 days from the date of this Prospectus, to purchase up to 300,000
additional shares of Common Stock at the public offering price less the
underwriting discount set forth on the cover page of this Prospectus. The
Underwriters may exercise such option solely to cover over-allotments, if any,
made in connection with the sale of the Common Stock that the Underwriters
have agreed to purchase. To the extent the Underwriters exercise such option,
each of the Underwriters will be committed, subject to certain conditions, to
purchase a number of option shares proportionate to such Underwriter's initial
commitment.

In general, under Rule 144 as currently in effect, a stockholder, including
an "affiliate" of the Company, as that term is defined in Rule 144 (an
"Affiliate"), who has beneficially owned his or her restricted securities (as
that term is defined in Rule 144) for at least two years from the later of the
date such securities were acquired from the Company or (if applicable) the
date they were acquired from an Affiliate is entitled to sell, within any

three-month period, a number of such shares that does not exceed the greater
of 1% of the then outstanding shares of Common Stock (approximately 158,000
shares immediately after the offering) or the average weekly trading volume in
the Common Stock during the four calendar weeks preceding the date on which
notice of such sale was filed under Rule 144, provided that certain
requirements concerning availability of public information, manner of sale and
notice of sale are satisfied. In addition, under Rule 144(k), if a period of
at least three years has elapsed between the later of the date restricted
securities were acquired from the Company and the date they were acquired from
an Affiliate of the Company, a stockholder who is not an Affiliate of the
Company at the time of sale and has not been an Affiliate for at least three
months prior to the sale would be entitled to sell the shares immediately
without compliance with the foregoing requirements under Rule 144. The
Securities and Exchange Commission has reduced the two year holding period to
one year and the three year holding period to two years effective April 29,
1997.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Company's Common Stock is
ChaseMellon Shareholder Services, L.L.C.

UNDERWRITING

Subject to the terms and conditions set forth in the Underwriting Agreement,
the Company has agreed to sell to each of the underwriters named below (the
"Underwriters"), and each of the Underwriters, for whom Robert W. Baird & Co.
Incorporated, Goldman, Sachs & Co. and Cleary Gull Reiland & McDevitt Inc. are
acting as representatives (the "Representatives"), has severally agreed to
purchase from the Company the respective number of shares of Common Stock set
forth opposite its name below:

NUMBER
UNDERWRITERS OF SHARES
- ------------ ---------

Robert W. Baird & Co. Incorporated....................................
Goldman, Sachs & Co...................................................
Cleary Gull Reiland & McDevitt Inc....................................
---------
Total............................................................... 2,000,000
=========

In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all 2,000,000 shares of
Common Stock offered hereby if any are purchased. In the event of a default by
any Underwriter, the Underwriting Agreement provides that, in certain
circumstances, purchase commitments of the non-defaulting Underwriters may be
increased or the Underwriting Agreement may be terminated.

The Company has been advised by the Underwriters that the several
Underwriters propose to offer such Common Stock to the public at the public
offering price set forth on the cover page of this Prospectus and to certain
dealers at such price less a concession not in excess of $ per share. The
Underwriters may allow and such dealers may re-allow a concession not in
excess of $ per share to other dealers. After the shares of Common Stock
are released for sale to the public, the offering price and other selling
terms may be changed by the Representatives.

The Company has granted to the Underwriters an option, expiring 30 days from
the date of this Prospectus, to purchase up to 300,000 additional shares of
Common Stock at the public offering price less the underwriting discount set
forth on the cover page of this Prospectus. The Underwriters may exercise such
option solely to cover over-allotments, if any, made in connection with the
sale of the Common Stock that the Underwriters have agreed to purchase. To the
extent the Underwriters exercise such option, each of the Underwriters will be
committed, subject to certain conditions, to purchase a number of option
shares proportionate to such Underwriter's initial commitment.

The Company and its officers and directors have agreed that, except with the
prior written consent of Robert W. Baird & Co. Incorporated, during the 90
days following the date of this Prospectus, they will not, directly or
indirectly, offer, sell or otherwise dispose of, contract to sell or otherwise
dispose of, or cause or in any way permit to be sold or otherwise disposed of,
any shares of Common Stock or any other Company capital stock, rights to
purchase Common Stock or other Company capital stock or securities or
instruments convertible into or exchangeable for Common Stock or other Company
capital stock, except for the Common Stock offered hereby. Notwithstanding the
foregoing, the Company may (i) grant options, restricted stock, performance
shares and stock appreciation rights pursuant to the Stock Plans in the
ordinary course consistent with past practice, provided that none of such
instruments shall be exercisable as the case may be, during the 90-day period
described above and (ii) issue shares of Common Stock upon the exercise of
options currently outstanding. Any permitted shortening of such periods and
any related sales of Common Stock would not necessarily be preceded by a
public announcement of the Company or the Representatives that such consent
has been given.

The Underwriting Agreement provides that the Company will indemnify the
Underwriters against certain liabilities under the Securities Act of 1933 or
contribute to payments the Underwriters may be required to make in respect
thereof.

In connection with the Offering, the Underwriters may engage in transactions
that stabilize, maintain or otherwise affect the price of the Common Stock.
Specifically, the Underwriters may over-allot the Offering, creating a
syndicate short position. In addition, the Underwriters may bid for, and
purchase, shares of Common Stock in the open market to cover syndicate short
positions or to stabilize the price of the Common Stock. Finally, the
Underwriters may reclaim selling concessions allowed for distributing the
Common Stock in the Offering, if the Underwriters repurchase previously
distributed Common Stock in syndicate covering transactions, in stabilization
transactions or otherwise. Any of these activities may stabilize or maintain
the market price of the Common Stock above independent market levels. The
Underwriters are not required to engage in these activities, and may end any
of these activities at any time.

The Underwriters and dealers may engage in passive market making
transactions in the Common Stock in accordance with Rule 103 of Regulation M
promulgated by the Securities and Exchange Commission (the "Commission"). In
general, a passive market maker may not bid for, or purchase, the Common Stock
at a price that exceeds the highest independent bid. In addition, the net
daily purchases made by any passive market maker generally may not exceed 30%
of its average daily trading volume in the Common Stock during a specified
two-month prior period, or 200 shares, whichever is greater. A passive market
maker must identify passive market making bids as such on the Nasdaq
electronic inter-dealer reporting system. Passive market making may stabilize
or maintain the market price of the Common Stock above independent market
levels. Underwriters and dealers are not required to engage in passive market
making and may end passive market making activities at any time.

LEGAL MATTERS

Certain legal matters with respect to the legality of the Common Stock being
offered hereby will be passed upon for the Company by Katten Muchin & Zavis, a
partnership including professional corporations, Chicago, Illinois. Certain
legal matters in connection with the offering will be passed upon for the
Underwriters by Gardner, Carton & Douglas, Chicago, Illinois.

EXPERTS

The Consolidated Financial Statements and schedule of the Company at October
31, 1996 and 1995, and for each of the three years in the period ended October
31, 1996, appearing in this Prospectus and Registration Statement have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereon appearing elsewhere herein, and are included in reliance upon
such reports given upon the authority of such firm as experts in accounting
and auditing.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Exchange Act
and in accordance therewith files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information filed by the Company may be inspected and copied at the public
reference facilities maintained by the Commission at the Commission's Public
Reference Room, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549, and at the Commission's Regional Offices at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and at 7 World Trade
Center, Suite 1300, New York, New York 10048. Copies of such material can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549 at prescribed rates.
Copies of reports, proxy and information statements and other information
regarding registrants that file electronically are available on the

Commission's Web site at http://www.sec.gov. The Company's Common Stock is
listed on the Nasdaq National Market, and such reports, proxy statements and
other information can also be inspected at the offices of The Nasdaq Stock
Market, 1735 K Street, N.W., Washington, D.C. 20006.

The Company has filed with the Commission a Registration Statement on Form
S-1 (the "Registration Statement") under the Securities Act, with respect to
the shares offered hereby. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. Any statements contained
herein concerning the provisions of any document filed as an Exhibit to the
Registration Statement or otherwise filed with the Commission are not
necessarily complete and, in each instance, reference is made to the copy of
such document so filed. Each such statement is qualified in its entirety by
such reference. The Registration Statement, including the exhibits and
schedules thereto, may be inspected without charge at the Commission's
principal office at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549 and copies of either of them or any part thereof may be obtained from
such office, upon payment of the fees prescribed by the Commission. The
Registration Statement, including the exhibits and schedules thereto, is also
available on the Commission's Web site at http://www.sec.gov.

CUNO INCORPORATED

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

PAGE
----

AUDITED FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors........................ F-2
Consolidated Balance Sheets as of October 31, 1996 and 1995.............. F-3
Statements of Consolidated Income for the Years Ended October 31, 1996,
1995 and 1994........................................................... F-4
Statements of Consolidated Stockholders' Equity for the Years Ended
October 31, 1996, 1995 and 1994......................................... F-5
Statements of Consolidated Cash Flows for the Years Ended October 31,
1996, 1995 and 1994..................................................... F-6
Notes to Consolidated Financial Statements............................... F-7
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Statements of Consolidated Income for the Three Months Ended January 31,
1997 and 1996 (unaudited)............................................... F-21
Consolidated Balance Sheets as of January 31, 1997 (unaudited) and
October 31, 1996........................................................ F-22
Statements of Consolidated Cash Flows for the Three Months Ended January
31, 1997 and 1996 (unaudited)........................................... F-23
Notes to Unaudited Condensed Consolidated Financial Statements as of
January 31, 1997........................................................ F-24

F-1

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

Stockholders and Board of Directors
CUNO Incorporated

We have audited the accompanying consolidated balance sheets of CUNO
Incorporated and subsidiaries as of October 31, 1996 and 1995, and the related
statements of consolidated income, stockholders' equity and cash flows for
each of the three years in the period ended October 31, 1996. 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 CUNO
Incorporated and subsidiaries at October 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended October 31, 1996, in conformity with generally
accepted accounting principles.

/s/ Ernst & Young LLP

Hartford, Connecticut
December 16, 1996

F-2

CUNO INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

OCTOBER 31,
------------------
1996 1995
-------- --------
(IN THOUSANDS,
EXCEPT PER
SHARE AND COMMON
SHARE DATA)

ASSETS
CURRENT ASSETS
Cash and cash equivalents................................. $ 5,244 $ 6,740
Accounts and notes receivable (less allowances of $1,133
and $1,136, respectively)................................ 36,944 33,381
Inventories............................................... 19,149 21,763
Deferred income taxes..................................... 5,333 5,766
Prepaid expenses and other current assets................. 1,484 2,511
Receivables from related party............................ -- 18,767
-------- --------
Total current assets.................................... 68,154 88,928
NONCURRENT ASSETS
Intangible assets......................................... 19,695 21,663
Pension assets............................................ 1,174 3,264
Other noncurrent assets................................... 1,532 1,041
-------- --------
Total noncurrent assets................................. 22,401 25,968
PROPERTY, PLANT AND EQUIPMENT, NET.......................... 48,201 47,931
-------- --------
Total assets.......................................... $138,756 $162,827
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank loans................................................ $ 10,690 $ 10,440
Accounts payable.......................................... 12,719 10,780
Accrued payroll and related taxes......................... 9,084 8,446
Accrued other expenses.................................... 6,986 6,105
Accrued income taxes...................................... 1,360 2,947
Current portion of long-term debt......................... 962 1,036
Dividends payable to related party........................ 4,612 --
Payable to related party.................................. 10,184 --
-------- --------
Total current liabilities............................... 56,597 39,754
NONCURRENT LIABILITIES
Long-term debt............................................ 33,772 4,060
Deferred income taxes..................................... 3,670 4,067
Retirement benefits....................................... 1,569 2,757
-------- --------
Total noncurrent liabilities............................ 39,011 10,884
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value; 2,000,000 shares
authorized, no shares issued and outstanding............. -- --
Common stock, $.001 par value;
Authorized: 50,000,000 shares
Issued: 1996-13,774,568 shares (excluding 6,854 in
treasury) 1995-13,565,922 shares......................... 14 14
Additional paid-in-capital................................ 6,736 3,391
Retained earnings......................................... 33,636 102,245
Unearned compensation..................................... (3,448) --
Minimum pension liability adjustment...................... (811) --
Translation adjustments................................... 7,021 6,539
-------- --------
Total stockholders' equity.............................. 43,148 112,189
-------- --------
Total liabilities and stockholders' equity............ $138,756 $162,827
======== ========

See notes to consolidated financial statements.

F-3

CUNO INCORPORATED AND SUBSIDIARIES

STATEMENTS OF CONSOLIDATED INCOME

YEAR ENDED OCTOBER 31,
-------------------------------------
1996 1995 1994
----------- ----------- -----------
(IN THOUSANDS, EXCEPT
PER SHARE AND COMMON SHARE DATA)

Net sales............................... $ 179,068 $ 162,699 $ 143,111
Less costs and expenses:
Cost of products sold................. 104,848 99,772 92,507
Selling, general and administrative
expenses............................. 56,750 52,087 45,626
Distribution and other nonrecurring
costs................................ 5,564 -- --
----------- ----------- -----------
167,162 151,859 138,133
----------- ----------- -----------
Operating income........................ 11,906 10,840 4,978
Nonoperating income (expense):
Interest income....................... 156 145 88
Interest expense...................... (820) (691) (706)
Exchange losses....................... (171) (449) (933)
Gain (loss) on sale of assets......... 121 -- (1,053)
Other................................. (181) (282) (331)
----------- ----------- -----------
(895) (1,277) (2,935)
----------- ----------- -----------
Income before income taxes.............. 11,011 9,563 2,043
Provision for income taxes:
Current............................... 5,293 4,697 1,491
Deferred.............................. 125 (1,235) (1,255)
----------- ----------- -----------
5,418 3,462 236
----------- ----------- -----------
Net income.............................. $ 5,593 $ 6,101 $ 1,807
=========== =========== ===========
Earnings per common share............... $ 0.41 $ 0.45 $ 0.13
=========== =========== ===========
Weighted average common shares
outstanding............................ 13,565,922 13,565,922 13,565,922
=========== =========== ===========

See notes to consolidated financial statements.

F-4

CUNO INCORPORATED AND SUBSIDIARIES

STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY

YEAR ENDED OCTOBER 31,
---------------------------------------
1996 1995 1994
------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

COMMON STOCK
Balance at end of year............... $ 14 $ 14 $ 14
ADDITIONAL PAID-IN CAPITAL
Balance at beginning of year......... 3,391 3,391 3,391
Performance shares issued............ 3,448 -- --
Shares repurchased................... (103) -- --
------------ ------------ ------------
Balance at end of year............... 6,736 3,391 3,391
RETAINED EARNINGS
Balance at beginning of year......... 102,245 97,284 97,507
Net income........................... 5,593 6,101 1,807
Less:
Dividends to Commercial Intertech... 36,943 -- 1,958
Transfer of Commercial Intertech
debt............................... 30,000 -- --
Divisional equity retained by
Commercial Intertech............... 7,259 1,140 72
------------ ------------ ------------
Balance at end of year............... 33,636 102,245 97,284
UNEARNED COMPENSATION
Balance at beginning of year......... -- -- --
Performance shares issued............ (3,448) -- --
------------ ------------ ------------
Balance at end of year............... (3,448) -- --
MINIMUM PENSION LIABILITY
Balance at beginning of year......... -- -- --
Other................................ (811) -- --
------------ ------------ ------------
Balance at end of year............... (811) -- --
TRANSLATION ADJUSTMENTS
Balance at beginning of year......... 6,539 5,777 2,831
Net change for year.................. 482 762 2,946
------------ ------------ ------------
Balance at end of year............... 7,021 6,539 5,777
------------ ------------ ------------
Total stockholders' equity......... $ 43,148 $ 112,189 $ 106,466
============ ============ ============
Stockholders' equity per share of
common stock.......................... $ 3.13 $ 8.27 $ 7.85
============ ============ ============

See notes to consolidated financial statements.

F-5

CUNO INCORPORATED AND SUBSIDIARIES

STATEMENTS OF CONSOLIDATED CASH FLOWS

YEAR ENDED OCTOBER 31,
--------------------------
1996 1995 1994
-------- ------- -------
(IN THOUSANDS)

OPERATING ACTIVITIES:
Net income....................................... $ 5,593 $ 6,101 $ 1,807
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for depreciation and amortization..... 7,475 7,929 8,154
Loss on sale of equipment....................... -- -- 1,053
Pension plan credits............................ 692 1,019 676
Change in deferred income taxes................. (239) (1,222) (1,143)
Changes in current assets and liabilities:
(Increase) in accounts receivable.............. (5,050) (3,839) (756)
Decrease (increase) in inventories............. 3,224 (636) 1,301
Decrease (increase) in prepaid expenses and
other current assets.......................... 838 (292) 166
Increase in receivable from affiliate.......... (3,833) (3,128) (4,814)
Increase in accounts payable and accrued
expenses...................................... 2,425 1,477 1,323
(Decrease) increase in accrued income taxes.... (3,236) 335 229
-------- ------- -------
Net cash provided by operating activities.... 7,889 7,744 7,996
INVESTING ACTIVITIES:
Proceeds from sale of equipment.................. 43 113 109
Investment in intangibles........................ -- (343) (207)
Capital expenditures............................. (6,325) (5,234) (2,927)
-------- ------- -------
Net cash (used) by investing activities...... (6,282) (5,464) (3,025)
FINANCING ACTIVITIES:
Proceeds from long-term debt..................... 61,000 4,012 --
Principal payments on long-term debt............. (30,987) (4,900) (882)
Net borrowings under bank loan agreements........ 1,311 880 (104)
Conversion of other assets....................... (701) 1 32
Assumed debt paid to Commercial Intertech........ (30,000) -- --
Dividends paid to Commercial Intertech........... (3,534) -- (1,958)
-------- ------- -------
Net cash (used) by financing activities...... (2,911) (7) (2,912)
Effect of exchange rate changes on cash and cash
equivalents....................................... (192) 59 396
-------- ------- -------
Net (decrease)increase in cash and cash
equivalents....................................... (1,496) 2,332 2,455
Cash and cash equivalents at beginning of year..... 6,740 4,408 1,953
-------- ------- -------
Cash and cash equivalents at end of year........... $ 5,244 $ 6,740 $ 4,408
======== ======= =======
Supplemental disclosures:
Cash paid during the year for:
Interest......................................... $ 694 $ 716 $ 703
Income taxes..................................... 9,732 4,338 1,149
Noncash transactions:
Assumption of Commercial Intertech debt.......... $ 30,000 $ -- $ --
Dividends payable to Commercial Intertech offset
against receivable from affiliate............... 28,797 -- --
Dividends declared to Commercial Intertech but
unpaid.......................................... 4,612 -- --

See notes to consolidated financial statements.

F-6

CUNO INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A--ORGANIZATION AND ACCOUNTING POLICIES

Organization:

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

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

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

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

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

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

Commercial Intertech provides certain management and administrative services
to the Company. Amounts of Commercial Intertech's general corporate,
accounting, legal, and other administrative costs related to such

F-7

CUNO INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

services have been allocated to the Company based on actual dollars spent or
the relative percentage of time each department spends providing services to
the Company. Management believes that this allocation method provides the
Company with a reasonable amount of such expenses.

Consolidation:

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

Inventories:

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

1996 1995
------- -------
(IN THOUSANDS)

Raw materials.............................................. $ 2,817 $ 3,063
Work in process............................................ 6,503 6,784
Finished goods............................................. 9,829 11,916
------- -------
$19,149 $21,763
======= =======

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

Intangibles:

Intangible assets at October 31 are summarized as follows:

1996 1995
------- -------
(IN THOUSANDS)

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

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

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

Properties and Depreciation:

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

F-8

CUNO INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Impairment of Long-Lived Assets:

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

Income Taxes:

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

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

Translation of Foreign Currencies:

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

Cash Equivalents:

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

Revenue Recognition:

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

Advertising:

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

Distribution and Other Nonrecurring Costs:

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

F-9

CUNO INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Earnings Per Share:

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

Uses of Estimates:

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.

Newly Issued Accounting Standards:

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

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

NOTE B--PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is comprised of the following:

1996 1995
------- -------
(IN THOUSANDS)

Land and land improvements................................ $ 6,495 $ 6,672
Buildings................................................. 26,301 27,706
Machinery and equipment................................... 58,749 56,550
Construction in progress.................................. 4,605 2,451
------- -------
96,150 93,379
Less depreciation and amortization........................ 47,949 45,448
------- -------
$48,201 $47,931
======= =======

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

F-10

CUNO INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE C--DEBT

Long-term debt obligations are summarized below:

1996 1995
------- ------
(IN THOUSANDS)

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

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

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

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

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

(IN THOUSANDS)

1997..................................................... $ 962
1998..................................................... 913
1999..................................................... 924
2000..................................................... 935
2001..................................................... 31,000

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

F-11

CUNO INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

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

NOTE--D CAPITAL STOCK

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

Common Stock

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

Preferred Stock

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

Stockholder Rights Plan

Prior to the Spin-off, the Company adopted a Stockholder Rights Plan,
pursuant to which a preferred share purchase right (a "Right") is associated
with, and trades with, each share of Common Stock outstanding.

Each Right, when it becomes exercisable, entitles its holder to purchase
from the Company one-hundredth of a share of Series A Junior Participating
Preferred Stock ("Series A Preferred Stock"), par value $.001 per share, of
the Company at a price of $60 per one-hundredth share, subject to adjustment.

The Rights are not exercisable until the earlier of (i) the acquisition of
15% or more of the Company's Common Stock by a person or group of affiliated
persons (an "Acquiring Person"); or (ii) 10 days following the commencement or
announcement of an intention to make a tender or exchange offer which would
result in a person or group becoming an Acquiring Person.

F-12

CUNO INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Each holder of a Right will have the right to receive, upon exercise, the
number of shares of Common Stock or one-hundredths of a share of Series A
Preferred Stock having a value (immediately prior to such triggering event)
equal to two times the exercise price of such Right.

In the event that the Company is acquired in a merger or acquisition, as
defined, each holder of a Right shall have the right to receive, upon
exercise, common shares of the acquiring company having a value equal to two
times the exercise price of the Right. The Rights expire on August 8, 2006.

NOTE E--OPERATING LEASES

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

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

(IN THOUSANDS)

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

NOTE F--BENEFIT PLANS

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

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

F-13

CUNO INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

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

1996 1995
-------- --------
(IN THOUSANDS)

Actuarial present value of benefit obligations:
Vested benefit obligation............................ $(17,546) $(18,426)
======== ========
Accumulated benefit obligation....................... $(20,071) $(20,492)
======== ========
Projected benefit obligation......................... $(24,567) $(26,009)
Market value of plan assets.......................... 19,632 16,921
-------- --------
Projected benefit obligation in excess of plan
assets.............................................. (4,935) (9,088)
Unrecognized net loss................................ 819 2,887
Unrecognized prior service cost...................... 1,132 1,451
Unrecognized net obligation.......................... 567 3,590
Additional minimum liability......................... (408) (2,498)
-------- --------
Net pension liability recognized in the consolidated
balance sheets...................................... $ (2,825) $ (3,658)
======== ========

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

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

1996 1995 1994
------ ------ ------
(IN THOUSANDS)

Defined benefit plans:
Service cost..................................... $1,651 $1,337 $1,095
Interest cost.................................... 1,049 1,065 831
Actual return on plan assets..................... (1,930) (1,785) (462)
Net amortization and deferral.................... 1,369 1,145 (150)
------ ------ ------
Net pension expense.............................. 2,139 1,762 1,314
Other plans:
Foreign plans.................................... 273 218 184
------ ------ ------
Total pension expense.......................... $2,412 $1,980 $1,498
====== ====== ======

Assumptions used in the accounting for the defined benefit plans as of
October 31 were:

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

Domestic plans:
Weighted-average discount rate................... 7.8% 7.3% 8.5%
Rates of increase in compensation levels......... 5.0 4.5 4.5
Expected long-term rate of return on assets...... 10.0 10.0 10.0
CUNO KK (Japan) plan:
Weighted-average discount rate................... 4.0 4.0 5.0
Rates of increase in compensation levels......... 4.0 5.0 5.0
Expected long-term rate of return on assets...... 4.5 5.5 6.0

F-14

CUNO INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE G--INCOME TAXES

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

1996 1995 1994
------- ------- -------
(IN THOUSANDS)

Income (loss) before income taxes
Domestic....................................... $ 3,436 $ 3,652 $(1,037)
Foreign........................................ 7,575 5,911 3,080
------- ------- -------
11,011 9,563 2,043
Provision (benefit) for income taxes
Current
Domestic--Federal............................ 1,947 1,466 (3)
--State and local........................ 722 368 115
Foreign...................................... 2,960 3,546 1,379
Benefit of operating loss carryforwards........ (336) (683) --
------- ------- -------
5,293 4,697 1,491
Deferred
Domestic--Federal............................ 79 (633) (376)
--State and local........................ 4 (95) (140)
Foreign...................................... 42 (507) (739)
------- ------- -------
125 (1,235) (1,255)
------- ------- -------
5,418 3,462 236
------- ------- -------
Net income (loss)
Domestic..................................... 684 2,546 (633)
Foreign...................................... 4,909 3,555 2,440
------- ------- -------
$ 5,593 $ 6,101 $ 1,807
======= ======= =======

A reconciliation of the effective tax rate to the U.S. statutory rate
follows:

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

Statutory U.S. federal income tax rate.................. 35.0% 35.0% 35.0%
State and local taxes on income net of domestic federal
income tax benefit..................................... 4.4 1.9 (0.8)
Impact of foreign subsidiaries on effective rate........ (2.8) 4.0 (36.6)
Benefit of operating loss carryforwards................. (3.1) (7.1) --
Nonrecurring distribution costs......................... 11.9 -- --
Goodwill with no U.S. tax benefit....................... 3.1 4.7 21.8
All other............................................... 0.7 (2.3) (7.8)
---- ---- -----
Effective income tax rate............................... 49.2% 36.2% 11.6%
==== ==== =====

F-15

CUNO INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

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

1996 1995 1994
------ ------ ------
(IN THOUSANDS)

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

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

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

F-16

CUNO INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE H--RELATED PARTY TRANSACTIONS

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

OCTOBER 31,
--------------------------
1996 1995 1994
-------- ------- -------
(IN THOUSANDS)

Balance at beginning of year..................... $ 18,767 $15,104 $10,923
Net cash remitted to Commercial Intertech...... 22,145 15,084 11,716
Administrative expenses........................ (11,835) (9,869) (8,607)
Payment of dividends........................... (31,063) -- --
Other.......................................... (8,198) (1,552) 1,072
-------- ------- -------
Balance at end of year........................... $(10,184) $18,767 $15,104
======== ======= =======

NOTE I--PRODUCT DEVELOPMENT COSTS

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

1996 1995 1994
------ ------ ------
(IN THOUSANDS)

Research and development........................... $3,625 $2,483 $1,884
Engineering........................................ 6,236 5,825 5,888
------ ------ ------
$9,861 $8,308 $7,772
====== ====== ======
Percent of net sales............................... 5.5% 5.1% 5.4%
====== ====== ======

NOTE J--SEGMENT REPORTING

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

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

F-17

CUNO INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

GEOGRAPHIC AREA

UNITED
STATES EUROPE JAPAN OTHER ELIMINATION CONSOLIDATED
------- ------- ------- ------- ----------- ------------
(IN THOUSANDS)

1996
Sales to customers... $86,394 $30,541 $28,778 $33,355 $ -- $179,068
Inter-area sales..... 16,894 1,305 300 41 (18,540) --
------- ------- ------- ------- -------- --------
Total net sales...... 103,288 31,846 29,078 33,396 (18,540) 179,068
Operating income..... 1,935 2,923 1,269 5,779 -- 11,906
Identifiable assets.. 74,647 17,350 24,430 17,085 133,512
Corporate assets..... 5,244
--------
Total assets......... $138,756
========
1995
Sales to customers... $74,893 $27,700 $30,508 $29,598 $ -- $162,699
Inter-area sales..... 16,516 1,423 593 1,470 (20,002) --
------- ------- ------- ------- -------- --------
Total net sales...... 91,409 29,123 31,101 31,068 (20,002) 162,699
Operating income..... 1,607 2,351 2,533 4,349 -- 10,840
Identifiable assets.. 101,640 11,381 26,595 16,471 -- 156,087
Corporate assets..... 6,740
--------
Total assets......... $162,827
========
1994
Sales to customers... $71,964 $21,651 $25,234 $24,262 $ -- $143,111
Inter-area sales..... 12,981 1,069 236 1,197 (15,483) --
------- ------- ------- ------- -------- --------
Total net sales...... 84,945 22,720 25,470 25,459 (15,483) 143,111
Operating income..... (1,413) 373 2,392 3,626 -- 4,978
Identifiable assets.. 96,174 13,749 25,125 13,615 -- 148,663
Corporate assets..... 4,408
--------
Total assets......... $153,071
========

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

NOTE K--STOCK OPTIONS AND AWARDS

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

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

F-18

CUNO INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

A summary of the stock option activity follows for 1996:

SHARES EXERCISE
UNDER PRICE OPTIONS
OPTION (PER SHARE) EXERCISABLE
------- ----------- -----------

Outstanding at October 31, 1995............. -- -- --
Options granted........................... 272,000 $ 15.13 --
Commercial Intertech options exchanged.... 81,961 7.47-10.99 --
Options exercised......................... -- -- --
------- ----------- ---------
Outstanding at October 31, 1996............. 353,961 $7.47-15.13 --

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

NOTE L--FAIR VALUES OF FINANCIAL INSTRUMENTS

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

Cash and cash equivalents:

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

Long and short-term debt:

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

The carrying amounts and fair values of the Company's financial instruments
follows:

OCTOBER 31,
---------------------------------
1996 1995
---------------- ----------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
-------- ------- -------- -------
(IN THOUSANDS)

Cash and cash equivalents................. $ 5,244 $ 5,244 $ 6,740 $ 6,740
Bank loans................................ 10,690 10,690 10,440 10,440
Long-term debt............................ 34,734 34,719 5,096 5,068

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

FOREIGN CURRENCY EXCHANGE CONTRACTS:

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

F-19

CUNO INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE M--DISPOSAL

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

NOTE N--QUARTERLY DATA (UNAUDITED)

FIRST SECOND THIRD FOURTH
1996 ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER
SHARE DATA)

Net sales.................................. $41,004 $45,090 $48,542 $44,432
Gross profit............................... 15,748 18,460 20,796 19,216
Distribution and other nonrecurring
costs(1).................................. -- -- 2,876 2,688
Net income (loss).......................... 1,851 3,251 630 (139)
Earnings per common share.................. 0.14 0.24 0.05 (0.01)

FIRST SECOND THIRD FOURTH
1995 ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER
SHARE DATA)

Net sales.................................. $37,713 $39,630 $43,467 $41,889
Gross profit............................... 13,926 14,995 17,025 16,981
Net income................................. 1,416 1,241 1,419 2,025
Earnings per common share.................. 0.10 0.09 0.10 0.15

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

The Company incurred $2,876,000 or $0.21 per share during the third quarter
of 1996 and $1,982,000 or $0.15 per share during the fourth quarter (net of
taxes) for distribution and other nonrecurring costs.

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

F-20

CUNO INCORPORATED AND SUBSIDIARIES

STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)

THREE MONTHS ENDED,
JANUARY 31,
----------------------
1997 1996
---------- ----------
(IN THOUSANDS, EXCEPT
PER SHARE DATA)

Net sales............................................... $44,839 $41,004
Less costs and expenses:
Cost of products sold................................. 25,638 25,256
Selling, general and administrative expenses.......... 15,274 13,112
---------- ----------
40,912 38,368
---------- ----------
Operating income........................................ 3,927 2,636
Nonoperating income (expense):
Interest income....................................... 36 31
Interest expense...................................... (591) (101)
Exchange losses....................................... (26) (10)
Gain on sale of assets................................ 6 98
Other................................................. (48) (13)
---------- ----------
(623) 5
---------- ----------
Income before income taxes.............................. 3,304 2,641
Provision for income taxes.............................. 1,239 790
---------- ----------
Net income.............................................. $ 2,065 $ 1,851
========== ==========
Net income per common share............................. $ 0.15 $ 0.14
========== ==========
Weighted average common shares outstanding.............. 13,809,608 13,565,922
========== ==========

See notes to unaudited condensed consolidated financial statements.

F-21

CUNO INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

JANUARY 31, OCTOBER 31,
1997 1996
----------- -----------
(IN THOUSANDS, EXCEPT
PER SHARE DATA)

ASSETS
Current assets
Cash and cash equivalents............................ $ 3,586 $ 5,244
Accounts and notes receivable (less allowances for
doubtful accounts of $1,406 and $1,133,
respectively)....................................... 36,437 36,944
Inventories.......................................... 19,712 19,149
Deferred income taxes................................ 5,301 5,333
Prepaid expenses and other current assets............ 1,393 1,484
-------- --------
Total current assets............................... 66,429 68,154
Noncurrent assets
Intangible assets, net............................... 19,213 19,695
Pension assets....................................... 1,146 1,174
Other noncurrent assets.............................. 1,493 1,532
Property, plant and equipment, net................... 46,817 48,201
-------- --------
Total assets....................................... $135,098 $138,756
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Bank loans........................................... $ 12,306 $ 10,690
Accounts payable..................................... 11,797 12,719
Accrued payrolls and related taxes................... 6,905 9,084
Accrued expenses..................................... 7,223 6,986
Accrued income taxes................................. 2,269 1,360
Current portion of long-term debt.................... 912 962
Dividends payable to related party................... 2,170 4,612
Payable to related party............................. 6,703 10,184
-------- --------
Total current liabilities.......................... 50,285 56,597
Noncurrent liabilities
Long-term debt....................................... 35,577 33,772
Deferred income taxes................................ 3,544 3,670
Retirement benefits.................................. 1,541 1,569
-------- --------
Total noncurrent liabilities....................... 40,662 39,011
Stockholders' equity
Preferred stock, $.001 par value; 2,000,000 shares
authorized, no shares issued and outstanding........ -- --
Common Stock, $.001 par value; 50,000,000 shares
authorized, 13,822,076 and 13,774,568 shares
outstanding......................................... 14 14
Additional paid-in-capital........................... 7,262 6,736
Retained earnings.................................... 35,701 33,636
Unearned compensation................................ (3,578) (3,448)
Minimum pension liability adjustment................. (811) (811)
Translation adjustments.............................. 5,563 7,021
-------- --------
Total stockholders' equity......................... 44,151 43,148
-------- --------
Total liabilities and stockholders' equity......... $135,098 $138,756
======== ========

See notes to unaudited condensed consolidated financial statements.

F-22

CUNO INCORPORATED AND SUBSIDIARIES

STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)

THREE MONTHS ENDED,
JANUARY 31,
--------------------
1997 1996
--------- ---------
(IN THOUSANDS)

OPERATING ACTIVITIES
Net income.............................................. $ 2,065 $ 1,851
Adjustments to reconcile net income to net cash (used
for) provided by operating activities:
Depreciation and amortization......................... 1,779 2,032
Gain on sale of equipment............................. (4) --
Provision for unearned compensation................... 404 --
Pension plan credits.................................. -- 309
Change in deferred income taxes....................... (228) 708
Changes in assets and liabilities:
Accounts receivable................................... (465) (49)
Inventories........................................... (1,196) 278
Prepaid expenses and other current assets............. (604) (30)
Payables to related party............................. (3,149) 537
Accounts payable and accrued expenses................. (2,078) (2,787)
Accrued income taxes.................................. 891 (1,220)
--------- ---------
Net cash (used for) provided by operating activities.... (2,585) 1,629
INVESTING ACTIVITIES
Proceeds from sale of equipment....................... 39 9
Capital expenditures.................................. (1,001) (1,050)
--------- ---------
Net cash (used for) investing activities................ (962) (1,041)
FINANCING ACTIVITIES
Proceeds from long-term debt.......................... 4,000 --
Principal payments on long-term debt.................. (2,049) (46)
Net borrowings under bank loan agreements............. 2,371 344
Conversion of other assets............................ -- (558)
Dividends paid to related party....................... (2,352) --
--------- ---------
Net cash provided by (used for) financing activities.... 1,970 (260)
Effect of exchange rate changes on cash and cash
equivalents............................................ (81) (240)
--------- ---------
Net change in cash and cash equivalents................. (1,658) 88
Cash and cash equivalents--beginning of period.......... 5,244 6,740
--------- ---------
Cash and cash equivalents--end of period................ $ 3,586 $ 6,828
========= =========

See notes to unaudited condensed consolidated financial statements.

F-23

CUNO INCORPORATED AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 1997

NOTE A--CUNO ORGANIZATION AND DISTRIBUTION

On July 29, 1996, the Board of Directors of Commercial Intertech Corp.
("Commercial Intertech" or "Related Party") approved a plan to spin-off its
fluid purification business by declaring a dividend distribution of 100% of
the common stock of CUNO Incorporated ("CUNO" or the "Company") on a pro-rata
basis to the holders of Commercial Intertech common shares (the "Distribution"
or "Spin-off"). On September 10, 1996, the Distribution date, each holder of
record of Commercial Intertech common shares as of the close of business on
August 9, 1996, the record date for the Distribution, received one share of
CUNO Common Stock for every one share of Commercial Intertech common share. No
fractional shares of CUNO were issued.

In connection with the Spin-off, the Company declared dividends of
approximately $35,675,000 payable from the CUNO subsidiaries to the parent
(Commercial Intertech), and immediately prior to the Distribution, CUNO
assumed $30,000,000 of Commercial Intertech's debt in the form of a dividend.

CUNO and Commercial Intertech have entered into a Tax Allocation Agreement
in connection with the Distribution. In addition, the companies have entered
into a Distribution and Interim Services Agreement which provides that certain
services which have historically been provided to CUNO by Commercial Intertech
will continue to be provided following the Distribution Date, at rates
specified in such agreement, for a period of up to twelve months.

NOTE B--BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the three-month
period ended January 31, 1997 are not necessarily indicative of the results
that may be expected for the year ending October 31, 1997. The condensed
consolidated balance sheet at October 31, 1996 was derived from the audited
consolidated financial statements as of that date. For further information,
refer to the consolidated financial statements and footnotes herein.

NOTE C--EARNINGS PER SHARE DATA

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

NOTE D--INCOME TAXES

The Company's effective income tax rate for the period was 37.5% compared to
30.0% during the first quarter of 1996. The change reflects a loss of certain
foreign tax benefits previously realized when the Company was a part of
Commercial Intertech's combined tax group.

F-24

CUNO INCORPORATED AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)

NOTE E--INVENTORIES

Inventories consisted of the following:

JANUARY 31, OCTOBER 31,
1997 1996
----------- -----------
(IN THOUSANDS)

Raw materials..................................... $ 2,642 $ 2,817
Work-in-process................................... 8,001 6,503
Finished goods.................................... 9,069 9,829
------- -------
$19,712 $19,149
======= =======

Inventories are stated at the lower of cost or market. Inventories in the
U.S. are primarily valued on the last-in, first-out (LIFO) cost method. The
method used for all other inventories is first-in, first-out (FIFO). An actual
valuation of inventory under the LIFO method can be made only at the end of
each year based on the inventory levels and costs at that time. Accordingly,
interim LIFO calculations must necessarily be based on management's estimates
of expected year-end inventory levels and costs. Because these are subject to
many factors beyond management's control, interim results are subject to the
final year-end LIFO inventory valuation.

F-25

[THIS PAGE INTENTIONALLY LEFT BLANK]

CUNO Systems
Marketed Worldwide

[ARTWORK]

[FLAG] Primary Distributors

[FLAG] CUNO Facilities

[FLAG] CUNO Major U.S. Facilities
Meriden, Connecticut, World Headquarters
Enfield, Connecticut
Stafford Springs, Connecticut

[FLAG] CUNO Major International Facilities
Calais, France
[FLAG] Mazeres, France
Blacktown, Australia
[FLAG] Mairinque, Brazil
Kita-Ibaragi, Japan
Republic of Singapore

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

NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT 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 PRO-
SPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO
BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON STOCK OFFERED HEREBY, NOR
DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
OF THE SECURITIES OFFERED HEREBY, TO ANY PERSON IN ANY JURISDICTION IN WHICH
IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CRE-
ATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
DATE SUBSEQUENT TO THE DATE HEREOF.

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

TABLE OF CONTENTS

PAGE
----

Prospectus Summary....................................................... 3
Risk Factors............................................................. 6
Use of Proceeds.......................................................... 10
Price Range of Common Stock.............................................. 10
Dividend Policy.......................................................... 10
Capitalization........................................................... 11
Selected Financial and Other Data........................................ 12
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 13
Business................................................................. 19
Management............................................................... 29
Summary Compensation Table............................................... 33
Beneficial Owners........................................................ 39
Description of Capital Stock............................................. 40
Certain Related Party Transactions....................................... 43
Shares Eligible for Future Sale.......................................... 44
Underwriting............................................................. 46
Legal Matters............................................................ 47
Experts.................................................................. 47
Available Information.................................................... 47
Index to Consolidated Financial Statements............................... F-1

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

2,000,000 SHARES

LOGO

CUNO INCORPORATED

COMMON STOCK

---------------
PROSPECTUS
---------------

ROBERT W. BAIRD & CO.
INCORPORATED

GOLDMAN, SACHS & CO.

CLEARY GULL REILAND & MCDEVITT INC.

, 1997

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

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Set forth below is an estimate of the approximate amount of fees and
expenses (other than underwriting commissions and discounts) payable by the
Registrant in connection with the issuance and distribution of the Common
Stock pursuant to the Prospectus contained in this Registration Statement. The
Registrant will pay all of these expenses.

APPROXIMATE
AMOUNT
-----------

Securities and Exchange Commission registration fee............ $ 10,716
NASD filing fee................................................ 4,037
Nasdaq listing fee............................................. 17,500
Accountants' fees and expenses................................. 25,000
Blue Sky fees and expenses..................................... 5,000
Legal fees and expenses........................................ 110,000
Transfer Agent and Registrar fees and expenses................. 5,000
Printing and engraving expenses................................ 110,000
Miscellaneous expenses......................................... 12,747
--------
Total........................................................ $300,000
========

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Article XII of the Registrant's Amended and Restated Certificate of
Incorporation (the "Restated Certificate") provides that the Registrant may
indemnify its directors, officers and employees to the full extent permitted
by the General Corporation Law of the State of Delaware (the "DGCL"), such
indemnification to be evidenced by an indemnification agreement, except that
the Registrant shall not be obligated to indemnify any such person (i) with
respect to proceedings, claims or actions initiated or brought voluntarily by
any such person and not by way of defense or (ii) for any amounts paid in
settlement of an action indemnified against by the Registrant without the
prior written consent of the Registrant. The Registrant has entered into
indemnity agreements with each of its directors. These agreements require the
Registrant, among other things, to indemnify such directors against certain
liabilities that may arise by reason of their status or service as directors,
to advance expenses to them as they are incurred, provided that they undertake
to repay the amount advanced if it is ultimately determined by a court that
they are not entitled to indemnification, and to obtain directors' liability
insurance if available on reasonable terms.

In addition, Article XII of the Restated Certificate provides that a
director of the Registrant shall not be personally liable to the Registrant or
its stockholders for monetary damages for breach of his or her fiduciary duty
as a director, except for liability (i) for any breach of the director's duty
of loyalty to the Registrant or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) for willful or negligent conduct in paying dividends
or repurchasing stock out of other than lawfully available funds or (iv) for
any transaction from which the director derives an improper personal benefit.

Reference is made to Section 145 of the DGCL, which provides for
indemnification of directors and officers in certain circumstances.

The Company has obtained a directors' and officers' liability insurance
policy which entitles the Company to be reimbursed for certain indemnity
payments it is required or permitted to make to its directors and officers.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

None.

II-1

ITEM 16. EXHIBITS

(a) Exhibits.

***1. Form of Underwriting Agreement.
*3.1 Amended and Restated Certificate of Incorporation of the Registrant.
*3.2 Amended and Restated Bylaws of the Registrant.
***4.1 Specimen stock certificate representing Common Stock.
*4.2 Registrant's Rights Agreement dated as of August 19, 1996.
***5. Opinion of Katten Muchin & Zavis as to the legality of securities to
be registered.
*10.1 CUNO Incorporated Non-Employee Directors' Stock Option Plan.
*10.2 CUNO Incorporated 1996 Stock Incentive Plan.
*10.3 CUNO Incorporated Distributorship Agreement.
*10.4 Distribution and Interim Services Agreement by and between CUNO In-
corporated and Commercial Intertech Corp.
*10.5 Tax Allocation Agreement by and between CUNO Incorporated and Commer-
cial Intertech Corp.
*10.6 Employee Benefits and Compensation Allocation Agreement by and be-
tween CUNO Incorporated and Commercial Intertech Corp.
*10.7 Employment Agreement dated December 3, 1993 between Commercial
Intertech Corp. and Mark G. Kachur.
**10.8 Termination and Change of Control Agreement dated October 1, 1996 be-
tween CUNO Incorporated and Paul J. Powers.
**10.9 Termination and Change of Control Agreement dated October 1, 1996 be-
tween CUNO Incorporated and Mark G. Kachur.
**10.10 Termination and Change of Control Agreement dated October 1, 1996 be-
tween CUNO Incorporated and Michael H. Croft.
**10.11 Termination and Change of Control Agreement dated October 1, 1996 be-
tween CUNO Incorporated and Ronald C. Drabik.
**10.12 Termination and Change of Control Agreement dated October 1, 1996 be-
tween CUNO Incorporated and Timothy B. Carney.
**10.13 Termination and Change of Control Agreement dated October 1, 1996 be-
tween CUNO Incorporated and John A. Tomich.
***10.14 Credit Agreement dated October 1, 1996 between CUNO Incorporated and
Mellon Bank, N.A.
***10.15 CUNO Incorporated Executive Management Incentive Plan.
***10.16 CUNO Incorporated Management Incentive Plan.
**21. Subsidiaries of Registrant.
23.1 Consent of Ernst & Young LLP.
***23.2 Consent of Katten Muchin & Zavis (contained in Exhibit 5).
***24. Power of Attorney (included on the signature page of this registra-
tion statement).

- --------
* Incorporated by reference to the Registrant's Registration Statement on
Form 10, as amended, filed with the Securities and Exchange Commission on
July 29, 1996.
** Incorporated by reference to the Registrant's Annual Report on Form 10-K
filed with the Securities and Exchange Commission on January 23, 1997.
*** Previously filed.

II-2

(b) Financial Statement Schedule

REPORT OF INDEPENDENT AUDITORS

Schedule II--Valuation and Qualifying Accounts

All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required or are
inapplicable, and therefore have been omitted, or the required information is
described in the Consolidated Financial Statements.

ITEM 17. UNDERTAKINGS

The Registrant hereby undertakes:

(1) For purposes of determining any liability under the Securities Act of
1933, as amended (the "Act") 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 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 Act, 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.

(3) Insofar as indemnification for liabilities arising under the Act may
be permitted to directors, officers and controlling persons of the
Registrant pursuant to the applicable provisions of the DGCL, 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 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.

II-3

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF MERIDEN, STATE OF
CONNECTICUT, ON THE 7TH DAY OF APRIL, 1997.

CUNO Incorporated

/s/ Ronald C. Drabik
By: _________________________________
Ronald C. Drabik
Senior Vice President Chief
Financial Officer

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES
INDICATED ON APRIL 7, 1997.

SIGNATURE TITLE

* Chief Executive Officer and Chairman
- ------------------------------------- of the Board (principal executive
PAUL J. POWERS officer)

* Senior Vice President and Chief
- ------------------------------------- Financial Officer (principal
RONALD C. DRABIK financial and accounting officer)

* President, Chief Operating Officer
- ------------------------------------- and Director
MARK G. KACHUR

* Director
- -------------------------------------
JOEL B. ALVORD

* Director
- -------------------------------------
CHARLES L. COONEY

* Director
- -------------------------------------
NORBERT A. FLOREK

* Director
- -------------------------------------
JOHN M. GALVIN

* Director
- -------------------------------------
GERALD C. MCDONOUGH

* Director
- -------------------------------------
C. EDWARD MIDGLEY

*By: /s/ Ronald C. Drabik Director
- -------------------------------------
Ronald C. Drabik
Attorney-in-Fact, Pursuant to
Power of Attorney

II-4

INDEX TO EXHIBITS

EXHIBITS
--------

23.1 Consent of Ernst & Young LLP.

(b) Financial Statement Schedule

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

Shareholders and Board of Directors
CUNO Incorporated

We have audited the consolidated financial statements of CUNO Incorporated
and subsidiaries as of October 31, 1996 and 1995, and for each of the three
years in the period ended October 31, 1996, and have issued our report thereon
dated December 16, 1996 (included elsewhere in this Registration Statement).
Our audits also included the financial statement schedule listed in Item 16(b)
of this Registration Statement. This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

/s/ Ernst & Young LLP

Hartford, Connecticut
December 16, 1996

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS

CUNO INCORPORATED AND SUBSIDIARIES

YEARS ENDED OCTOBER 31, 1996, 1995 AND 1994

COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- -------- -------- --------
ADDITIONS
---------
CHARGED CHARGED
BALANCE AT TO COSTS TO OTHER BALANCE AT
BEGINNING AND ACCOUNTS- END OF
DESCRIPTION OF PERIOD EXPENSES DESCRIBE DEDUCTIONS PERIOD
----------- ---------- -------- --------- ---------- ----------

Year ended October 31,
1996 Deducted from asset
accounts:
Allowance for doubtful
accounts receivable $1,135,916 $ 21,673 $ 0 $ 24,136(A) $1,133,453
========== ======== === ======== ==========
Valuation allowance for
deferred income tax
assets 435,000(B)
$1,832,000 $ 0 $ 0 $336,000(C) $1,061,000
========== ======== === ======== ==========
Year ended October 31,
1995 Deducted from asset
accounts:
Allowance for doubtful
accounts receivable $ 873,259 $643,310 $ 0 $380,653(A) $1,135,916
========== ======== === ======== ==========
Valuation allowance for
deferred income tax
assets 764,000(B)
$3,279,000 $ 0 $ 0 $683,000(C) $1,832,000
========== ======== === ======== ==========
Year ended October 31,
1994 Deducted from asset
accounts:
Allowance for doubtful
accounts receivable $ 702,025 $193,249 $ 0 $ 22,015(A) $ 873,259
========== ======== === ======== ==========
Valuation allowance for
deferred income tax
assets $4,210,000 $ 0 $ 0 $931,000(B) $3,279,000
========== ======== === ======== ==========

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

S-2