CUNO Cuno (MM)

CUNO Reports Strong Second Quarter Results * Record second quarter Sales of $104.7 million (up 27%) MERIDEN, Conn., May 25 /PRNewswire-FirstCall/ -- CUNO Incorporated (NASDAQ:CUNO) today reported its second quarter financial results for the period ended April 30, 2005. Sales were $104.7 million, up 27% versus the same period in 2004 and up 24% in local currency. Net income for the second quarter of $8.4 million was flat versus the same period in 2004. Diluted earnings per share of $0.48 for the period were down 2% compared to $0.49 in the prior year period. Commenting on the Company's second quarter results, Mark G. Kachur, Chairman and Chief Executive Officer, said, "Our second quarter results included strong worldwide sales. We achieved double-digit sales growth in each of our primary markets, including Potable Water (up 42%), Healthcare (up 12%) and Fluid Processing (up 15%). Our sales increased 27% (up 24% in local currency); adjusted for the acquisition of WTC Industries (which was completed on Aug. 2, 2004), our organic sales growth was 15%. This marks the sixth consecutive quarter we have achieved double-digit sales growth in each of our primary markets. In addition, our international scope contributed to our strong results, as international sales increased by 17% (up 12% in local currency), led by strong growth in each of our major geographic segments. As expected, our second quarter earnings were unfavorably impacted by start-up costs of approximately $500,000 (equivalent to about $0.02 in EPS) related to a new manufacturing facility in Mexico and compliance costs of approximately $800,000 (equivalent to about $0.03 in EPS) associated with the Sarbanes-Oxley Act; both of these initiatives are progressing as planned." For the first six months of 2005, sales were a record $204.1 million, up 29% (up 26% in local currency), and net income increased 5% to $16.3 million versus $15.4 million in the prior year first half. Organic sales growth was 17%, as particularly strong sales growth in our international operations supplemented solid growth in North America. Diluted earnings per share were a record $0.93, up 3% from $0.90 in the first six months of 2004, despite approximately $700,000 (equivalent to about $0.03 in EPS) of start-up costs related to our new manufacturing facility in Mexico and compliance costs of approximately $900,000 (equivalent to about $0.04 in EPS) associated with the Sarbanes-Oxley Act. Commenting on business conditions and the outlook for CUNO, Mr. Kachur added, "Our incoming orders were a second quarter record $109.1 million and our backlog remains strong. As a result, we expect to achieve continued strong financial results in fiscal 2005." On May 11, 2005, CUNO entered into an Agreement and Plan of Merger with 3M Company, whereby CUNO will be acquired by 3M in an all cash merger for $72 per share. The transaction, which is subject to customary regulatory approvals and approval by CUNO's shareholders, is currently expected to close in the third calendar quarter of 2005. A special meeting of CUNO shareholders will be scheduled thirty days in advance for CUNO shareholders to vote on this proposed transaction. A conference call will be held Thursday, May 26 at 10:00 a.m. (EDT) to review the Company's second quarter financial results and business outlook. The call-in number is 1-800-611-1147 for interested analysts and investors. Alternatively, visit us at http://www.cuno.com/investors to access the webcast of our conference call. Also, visit us at http://www.cuno.com/ for additional information about the Company. CUNO 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. CUNO's products, which include proprietary depth filters and semi-permeable membrane filters, are used in the potable water, healthcare, and fluid processing markets. CUNO wants to provide shareowners and prospective investors with more meaningful and useful information and, therefore, this press release includes various comments regarding business conditions and the outlook for CUNO, which reflect currently available information. These forward-looking statements are subject to risks and uncertainties which could cause performance or actual results to differ materially from those expressed herein. Such risks and uncertainties include, among other things: volumes of shipments of CUNO's products; changes in product mix and product pricing; costs of raw materials; the rate of economic and industry growth in the U.S. and the other countries in which CUNO conducts business; economic and political conditions in the foreign countries in which CUNO conducts a substantial part of its operations and other risks associated with international operations including exchange rate fluctuations; CUNO's ability to protect its technology; continuing beneficial relationships with customers; proprietary products and manufacturing techniques; changes in technology; changes in legislative, regulatory or industrial requirements and risks generally associated with new product introductions and applications; domestic and international competition in CUNO's global markets; and failure of the transaction with 3M to close as anticipated. CUNO assumes no obligation to update the information contained in this press release. Investor contact: Frederick C. Flynn, Jr. 203/238-8847 CUNO Incorporated Consolidated Statements of Income (unaudited) (dollars in thousands, except share and per-share amounts) Three Months Ended Six Months Ended April 30, April 30, 2005 2004 2005 2004 Net sales $104,725 $82,745 $204,101 $158,154 Less costs and expenses: Cost of products sold 59,970 43,676 116,900 84,229 Selling, general and administrative 26,298 22,434 50,962 42,604 Research, development and engineering 5,157 4,036 10,081 8,225 Amortization 650 76 1,303 144 92,075 70,222 179,246 135,202 Operating income 12,650 12,523 24,855 22,952 Nonoperating income (expense): Interest expense (561) (87) (1,084) (170) Interest and other income, net 342 216 565 366 (219) 129 (519) 196 Income before income taxes 12,431 12,652 24,336 23,148 Income taxes 4,003 4,208 8,077 7,699 Net income $8,428 $8,444 $16,259 $15,449 Basic earnings per common share $0.50 $0.51 $0.96 $0.93 Diluted earnings per common share $0.48 $0.49 $0.93 $0.90 Basic shares outstanding 16,958,565 16,694,466 16,931,554 16,690,853 Diluted shares outstanding 17,460,183 17,214,286 17,459,076 17,211,187 CUNO Incorporated Consolidated Balance Sheets (unaudited) (in thousands, except share amounts) April 30, October 31, 2005 2004 Assets Current assets Cash and cash equivalents $20,717 $23,359 Accounts receivable, less allowances for doubtful accounts of $2,086 and $2,230, respectively 91,920 89,593 Inventories, net 50,516 47,275 Deferred income taxes 14,520 12,656 Prepaid expenses and other current assets 6,993 5,974 Total current assets 184,666 178,857 Noncurrent assets Deferred income taxes 761 892 Goodwill, net 104,566 103,977 Other intangible assets 31,876 32,894 Prepaid pension costs 9,786 9,785 Other noncurrent assets 5,574 4,832 Property, plant and equipment, net 112,067 103,321 Total assets $449,296 $434,558 Liabilities and Stockholders' Equity Current liabilities Current portion of long-term debt $322 $276 Bank loans 10,476 11,048 Accounts payable 33,984 33,469 Accrued payroll and related taxes 16,094 20,329 Other accrued expenses 11,371 11,502 Accrued income taxes 3,916 4,539 Total current liabilities 76,163 81,163 Noncurrent liabilities Long-term debt, less current portion 68,494 75,569 Deferred income taxes 21,741 16,662 Retirement benefits 4,599 4,396 Other noncurrent liabilities 970 789 Total noncurrent liabilities 95,804 97,416 Stockholders' equity Preferred Stock, $.001 par value; 2,000,000 shares authorized, no shares issued - - Common Stock, $.001 par value; 50,000,000 shares authorized, 17,280,123 and 17,122,698 shares issued and outstanding 17 17 Treasury Stock, at cost (2,747 shares) (57) (57) Additional paid-in-capital 68,195 63,413 Unearned compensation (4,597) (2,164) Accumulated other comprehensive loss -- Foreign currency translation adjustments 10,754 7,966 Minimum pension liability (386) (386) Change in fair value of derivative financial instruments (46) - 10,322 7,580 Retained earnings 203,449 187,190 Total stockholders' equity 277,329 255,979 Total liabilities and stockholders' equity $449,296 $434,558 DATASOURCE: CUNO Incorporated CONTACT: Frederick C. Flynn, Jr. of CUNO Incorporated, +1-203-238-8847, Web site: http://www.cuno.com/ Company News On-Call: http://www.prnewswire.com/comp/126696.html

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