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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2004

Commission file number 000-21109


CUNO INCORPORATED
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

Delaware 06-1159240
- ------------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

400 Research Parkway, Meriden, Connecticut 06450
- ------------------------------------------ -----------------------------
(Address of principal executive offices) (Zip Code)

(203) 237-5541
- --------------------------------------------------------------------------------
Registrant's telephone number, including area code

Not Applicable
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter periods that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes [X] No [ ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

Common Stock, $0.001 Par Value -- 16,919,045 shares as of January 31, 2004



CUNO INCORPORATED



PAGE
----

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

Consolidated Statements of Income 1

Consolidated Balance Sheets 2

Consolidated Statements of Cash Flows 3

Notes to Unaudited Condensed Consolidated Financial Statements 4-10

Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations 11-19

Item 3. Quantitative and Qualitative Disclosures About Market Risk 20

Item 4. Controls and Procedures 20


PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K 21-26




CUNO INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(dollars in thousands, except share and per-share amounts)



THREE MONTHS ENDED
JANUARY 31,
2004 2003
-------------- --------------

Net sales $ 75,409 $ 66,437
Operating expenses:
Cost of products sold 40,553 36,683
Selling, general and administrative 20,238 17,789
Research, development and engineering 4,189 3,670
-------------- --------------
64,980 58,142
-------------- --------------

Operating income 10,429 8,295

Nonoperating income (expense):
Interest expense (83) (147)
Interest and other income, net 150 91
-------------- --------------
67 (56)
-------------- --------------

Income before income taxes 10,496 8,239

Income taxes 3,491 2,851

-------------- --------------
Net income $ 7,005 $ 5,388
============== ==============

Basic earnings per common share $ 0.42 $ 0.33

Diluted earnings per common share $ 0.41 $ 0.32

Basic shares outstanding 16,687,240 16,563,423

Diluted shares outstanding 17,215,135 16,941,155


See accompanying notes.

-1-


CUNO INCORPORATED
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)



(unaudited)
JANUARY 31, OCTOBER 31,
2004 2003
-------------- --------------

ASSETS
Current assets
Cash and cash equivalents $ 60,854 $ 57,603
Accounts receivable, less allowances for
doubtful accounts of $1,826 and $1,705, respectively 61,457 59,658
Inventories, net 33,078 31,058
Deferred income taxes 8,965 9,020
Prepaid expenses and other current assets 5,425 4,306
-------------- --------------
Total current assets 169,779 161,645

Noncurrent assets
Deferred income taxes 1,393 1,340
Goodwill, net 29,494 28,489
Prepaid pension costs 7,894 7,923
Other noncurrent assets 4,252 3,551
Property, plant and equipment, net 87,339 85,060
-------------- --------------
Total assets $ 300,151 $ 288,008
============== ==============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
Current portion of long-term debt $ 951 $ 849
Bank loans 12,362 11,804
Accounts payable 23,696 20,850
Accrued payroll and related taxes 13,042 15,665
Other accrued expenses 10,114 12,234
Accrued income taxes 3,862 2,558
-------------- --------------
Total current liabilities 64,027 63,960

Noncurrent liabilities
Long-term debt, less current portion 564 401
Deferred income taxes 9,848 9,862
Accrued pension liability 5,687 5,457
Other long term liabilities 381 -
-------------- --------------
Total noncurrent liabilities 16,480 15,720

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,
16,919,045 and 16,863,482 shares issued 17 17
Treasury Stock, at cost (2,747 shares) (57) (57)
Additional paid-in-capital 55,895 53,787
Unearned compensation (1,972) (784)
Accumulated other comprehensive loss --
Foreign currency translation adjustments 6,917 3,282
Fair value of derivative financial instruments, net (231) 13
Minimum pension liability, net (2,049) (2,049)
-------------- --------------
4,637 1,246
Retained earnings 161,124 154,119
-------------- --------------
Total stockholders' equity 219,644 208,328
-------------- --------------
Total liabilities and stockholders' equity $ 300,151 $ 288,008
============== ==============


See accompanying notes.

-2-


CUNO INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(dollars in thousands)



THREE MONTHS ENDED
JANUARY 31,
2004 2003
-------------- --------------

OPERATING ACTIVITIES
Net income $ 7,005 $ 5,388
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,656 2,371
Noncash compensation recognized under employee stock plans 193 143
Gains on sales of property, plant and equipment (8) (3)
Pension funding less than (in excess of) expense 111 (6,000)
Deferred income taxes 390 128
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable 275 38
Inventories (1,161) (1,030)
Prepaid expenses and other current assets (851) (670)
Accounts payable and accrued expenses (3,783) (4,674)
Accrued income taxes 752 1,730
-------------- --------------
Net cash provided by (used for) operating activities 5,579 (2,579)

INVESTING ACTIVITIES
Proceeds from sales of property, plant and equipment - 19
Acquisition of companies, net of cash acquired (554) (149)
Capital expenditures (3,718) (3,426)
Other, net (83) -
-------------- --------------
Net cash used for investing activities (4,355) (3,556)

FINANCING ACTIVITIES
Principal payments on long-term debt - (25)
Principal payments on short-term debt (78) (416)
Proceeds from short-term debt - 829
Net borrowings (repayments) under short-term bank loans 199 (1,046)
Proceeds from stock options exercised 392 149
-------------- --------------
Net cash provided by (used for) financing activities 513 (509)

Effect of exchange rate changes on cash and cash equivalents 1,514 534
-------------- --------------
Net change in cash and cash equivalents 3,251 (6,110)
Cash and cash equivalents -- beginning of period 57,603 40,872
-------------- --------------
Cash and cash equivalents -- end of period $ 60,854 $ 34,762
============== ==============


See accompanying notes.

-3-


CUNO INCORPORATED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per-share amounts)

JANUARY 31, 2004

NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES

CUNO Incorporated (the "Company", "CUNO", or "we") designs,
manufactures and markets a comprehensive line of filtration products for the
separation, clarification and purification of liquids and gases. Our products,
which include proprietary depth filters and semi-permeable membrane filters, are
sold in the potable water, healthcare and fluid processing markets throughout
the world.

The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with accounting principles generally accepted
in the United States of America 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 accounting
principles generally accepted in the United States of America for annual
financial statements. In the opinion of management, all adjustments which are of
a normal recurring nature considered necessary for a fair presentation of the
financial position and results of operations for the interim periods set forth
herein have been included. 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. Operating results for the interim periods are not necessarily
indicative of the results that may be expected for the full year. These interim
unaudited financial statements should be read in conjunction with the Company's
Annual Report on Form 10-K for the year ended October 31, 2003.

The preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and disclosures made in the accompanying notes to the
financial statements. Actual results could differ from those estimates.

Certain prior year amounts have been reclassified to conform to current
year presentation.

INVENTORIES:

Inventories are stated at the lower of cost or market. Inventories in
the United States of America are primarily valued by the last-in, first-out
(LIFO) cost method. The methods used for all other inventories are first-in,
first-out (FIFO) and average cost. 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 our 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.

Inventories consist of the following:



JANUARY 31, OCTOBER 31,
2004 2003
-------------- --------------

Raw materials $ 13,143 $ 13,112
Work-in-process 4,655 3,992
Finished goods 15,280 13,954
-------------- --------------
$ 33,078 $ 31,058
============== ==============


4


ACCOUNTS PAYABLE

At January 31, 2004 and December 31, 2003, approximately $3,996 and
$2,294, respectively, representing book overdrafts of cash accounts, were
reclassified to accounts payable.

OTHER INCOME:

Interest and other income (expense), net consisted of the following:



THREE MONTHS ENDED
JANUARY 31,
2004 2003
-------------- --------------

Interest income $ 239 $ 141
Exchange gains (losses) (13) (38)
Gains on sales of property,
Plant, and equipment 8 3
Other, net (84) (15)
-------------- --------------
$ 150 $ 91
============== ==============


EARNINGS PER SHARE:

Basic earnings per common share is based on net income divided by the
weighted average number of common shares outstanding during the period. Diluted
earnings per common share is based on net income divided by the weighted average
number of common shares outstanding during the period, including the effect of
stock equivalents, where such effect is dilutive:



JANUARY 31, JANUARY 31,
2004 2003
-------------- --------------

NUMERATOR:

Net income $ 7,005 $ 5,388
============== ==============

DENOMINATORS:

Weighted average shares outstanding 16,687,240 16,563,423
DENOMINATOR FOR BASIC EARNINGS PER SHARE 16,687,240 16,563,423
============== ==============

Weighted average shares outstanding 16,687,240 16,563,423
Effect of dilutive employee stock options 413,234 352,603
Effect of dilutive restricted shares 114,661 25,129
-------------- --------------
DENOMINATOR FOR DILUTED EARNINGS PER SHARE 17,215,135 16,941,155
============== ==============

Basic earnings per share $ 0.42 $ 0.33
Diluted earnings per share $ 0.41 $ 0.32


Approximately 253,197 and 221,750 shares related to options to purchase
common stock and unvested restricted stock were excluded from the computations
of diluted earnings per share at January 31, 2004 and 2003, respectively,
because the exercise price was greater than the average market price of the
common stock during the periods.

5


COMPREHENSIVE INCOME:

Total comprehensive income was comprised of the following:



THREE MONTHS ENDED
JANUARY 31,
2004 2003
-------------- --------------

Net income $ 7,005 $ 5,388

Other comprehensive income (loss):
Change in fair value of derivative
financial instruments, net of deferred
income taxes of $120 and $95 (202) (131)

(Losses) gains related to derivative
financial instruments reclassified into
earnings from other comprehensive
income, net of $26 and $45 tax benefit (42) 62

Foreign currency translation adjustments 3,635 2,219
-------------- --------------

Total comprehensive income $ 10,396 $ 7,538
============== ==============


EMPLOYEE STOCK OPTIONS:

The Company has stock option plans under which employees and directors
have options to purchase Common Stock. The Company applies APB 25, "Accounting
for Stock Issued to Employees" and related interpretations in accounting for its
stock option plans. The Company has adopted those provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (FAS 123) and Statement of Financial Accounting Standards No. 148,
"Accounting for Stock-Based Compensation - Transition and Disclosure - an
amendment of Statement of Financial Accounting Standards No. 123", which require
the disclosure of pro forma effects on net income and earnings per share as if
compensation cost had been recognized based upon the fair value method at the
date of grant for options awarded.

Pro forma information regarding net income and earnings per share is
required by Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (FAS 123), which requires that the information be determined as if
we had accounted for our employee stock options under the fair-value method of
FAS 123. The fair value for the options granted during the following periods
were estimated at the date of grant using the Black-Scholes pricing model with
the following weighted average assumptions:



Three Months Ended
January 31,
2004 2003
------ -------

Volatility 23.39% 28.80%
Risk-free interest rate 3.46% 3.69%
Expected option life 5 years 5 years
Dividend yield -- --


6



The following table illustrates the effect on net income and earnings
per share as if compensation cost had been recognized based on the fair value of
the options at the grant dates for awards under those plans consistent with FAS
123, as amended, using the Black-Scholes fair value method for option pricing.



THREE MONTHS ENDED
JANUARY 31,
2004 2003
-------------- --------------

Net income, as reported $ 7,005 $ 5,388

Add: Stock-based compensation expense included
in reported net income, net of income taxes 129 93

Deduct: Total stock-based compensation expense
determined under fair value based method for all
awards, net of income taxes 620 552
-------------- --------------
Pro forma net income $ 6,514 $ 4,929
============== ==============

Earnings per share:
Basic - as reported $ 0.42 $ 0.33
Basic - pro forma $ 0.39 $ 0.30
Diluted - as reported $ 0.41 $ 0.32
Diluted - pro forma $ 0.38 $ 0.29


NEWLY ISSUED ACCOUNTING STANDARDS

In December 2003, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 132 (revised
2003), "Employers' Disclosures about Pensions and Other Postretirement
Benefits". This standard revises employers' disclosures about pension plans and
other postretirement benefit plans. It does not change the measurement or
recognition of those plans as required by SFAS No. 87, "Employers' Accounting
for Pensions", SFAS No. 88, "Employers' Accounting for Settlements and
Curtailments of Defined Benefit Pension Plans and for Termination Benefits", and
SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions". This standard retains the disclosure requirements contained in SFAS
No. 132, "Employers' Disclosures about Pensions and Other Postretirement
Benefits", which it replaces. It requires additional disclosures to those in the
original SFAS No. 132 about the assets, obligations, cash flows and net periodic
benefit cost of defined benefit pension plans and other defined benefit
postretirement plans. The provisions of SFAS No. 132 remain in effect until the
provisions of SFAS No. 132 (revised 2003) are adopted. SFAS No. 132 (revised
2003) is generally effective for fiscal years ending after December 15, 2003.
The interim-period disclosures required by SFAS No. 132 (revised 2003) are
effective for interim periods beginning after December 15, 2003 and are
reflected herein in Note 3 - Benefit Plans. The Company does not expect the
adoption of this standard in fiscal year 2004 to have an impact on the Company's
financial position or results of operations.

NOTE 2- GOODWILL AND INTANGIBLE ASSETS

Goodwill amounted to $29,494 and $28,489 at January 31, 2004 and
October 31, 2003, respectively. The increase in goodwill was primarily driven by
changes in foreign exchange rates, as well as an increase associated with two
small acquisitions in Europe, which resulted in goodwill of $340.

Other intangible assets, which are included in "Other noncurrent
assets", amounted to $2,533 and $2,075 at January 31, 2004 and October 31, 2003,
respectively. The increase in other intangible assets was related primarily to
two small acquisitions in Europe, in which we allocated approximately $480 to
intangible assets, relating mainly to customer lists and non-compete agreements.
Amortization expense for the three-month period ended January 31, 2004 amounted
to $64. Other changes reflect the impact of fluctuations in foreign exchange
rates.

7


NOTE 3 - BENEFIT PLANS

Components of Net Periodic Benefit Cost are as follows:



THREE MONTHS ENDED
JANUARY 31,
2004 2003
-------------- --------------

Service cost $ 683 $ 544
Interest cost 633 586
Expected return on plan assets (823) (885)
Amortization of transition asset 20 18
Amortization of prior service cost 102 32
Amortization of net loss 141 140
-------------- --------------
Net periodic benefit cost $ 756 $ 435
============== ==============


During the quarter ended January 31, 2004, employer contributions of
$645 were made to the pension plans. We currently anticipate contributing an
additional $1,935 to fund our pension plans in fiscal 2004 for a total expected
contribution of $2,580.

The pension assumptions used to determine our October 31, 2003 plan
liabilities and the fiscal 2004 pension expense are as follows:



US PLANS JAPAN PLANS
-------- -----------

Weighted-average discount rate 6.20% 2.00%
Rates of increases in compensation levels 4.00% 2.25%
Expected long-term rate of return on assets 8.75% 4.75%


We determine our assumptions based on current economic and market data,
as well as expectations of future economic and market data. Included in our
analysis are company-specific considerations, such as current and future
investment allocations, participant demographics, and employee compensation
strategies.

Pension expense for fiscal 2004 is determined at the beginning of the
fiscal year and expensed ratably throughout the year. The total pension expense
to be recognized in 2004 will amount to approximately $3.0 million ($1.7 million
in fiscal 2003). We made an incremental cash contribution of $6.0 million in the
first quarter of fiscal 2003 and generally make normal cash contributions to the
Plans in an amount equivalent to the annual expense.

NOTE 4 - ACQUISITIONS

In 2004, we completed two acquisitions in Europe for total
consideration of $554. The amount of goodwill and other intangible assets
recorded in connection with these two acquisitions amounted to $340 and $480,
respectively. Neither of these acquisitions had a material impact on the
Company's historical financial statements or pro forma operating results.

NOTE 5 - SEGMENT DATA

For management reporting and control, the Company is divided into five
geographic operating segments as presented below. Each segment has general
operating autonomy over its markets.

8


Operating segment data includes the results of all subsidiaries,
consistent with the management reporting of these operations. Financial
information by geographic operating segments is summarized below:



THREE MONTHS ENDED
JANUARY 31,
2004 2003
-------------- --------------

NET SALES:
Europe $ 16,633 $ 13,086
Japan 9,821 8,086
Asia/Pacific 10,635 8,758
Latin America 3,487 2,364
-------------- --------------
Subtotal - Foreign sales 40,576 32,294
North America 45,808 42,904
Intercompany sales (10,975) (8,761)
-------------- --------------
Total net sales $ 75,409 $ 66,437
============== ==============


Our sales by market are summarized below:



THREE MONTHS ENDED
JANUARY 31,
2004 2003
-------------- --------------

NET SALES:
Potable Water $ 34,853 $ 30,381
Fluid Processing 20,270 17,628
Healthcare 20,286 18,428
-------------- --------------
Total net sales $ 75,409 $ 66,437
============== ==============


Our operating income by segment is detailed below:



THREE MONTHS ENDED
JANUARY 31,
2004 2003
-------------- --------------

OPERATING INCOME:
North America $ 6,159 $ 5,230
Europe 1,126 795
Japan 1,058 743
Asia/Pacific 1,733 1,192
Latin America 353 335
-------------- --------------
Segment total 10,429 8,295
-------------- --------------
Interest expense (83) (147)
Other, net 150 91
-------------- --------------
Income before income taxes $ 10,496 $ 8,239
============== ==============


Interest expense and other income (expense) have not been allocated to
segments.

9


Our assets by segment are detailed below:



JANUARY 31, OCTOBER 31,
2004 2003
-------------- --------------

ASSETS:
North America $ 185,992 $ 197,374
Europe 58,850 46,643
Japan 32,663 30,788
Asia/Pacific 25,278 20,531
Latin America 11,759 11,702
General Corporate 60,854 57,604
Eliminations and other (75,245) (76,634)
-------------- --------------
Total Assets $ 300,151 $ 288,008
============== ==============


General corporate assets (principally cash) are not allocated to
segments.

NOTE 6 - CONTINGENCIES

The Company is subject to various legal actions, governmental audits,
and proceedings relating to various matters incidental to its business including
product liability and environmental claims. While the outcome of such matters
cannot be predicted with certainty, in the opinion of management, after
reviewing such matters and consulting with our counsel and considering any
applicable insurance or indemnifications, any liability which may ultimately be
incurred is not expected to materially affect the consolidated financial
position, cash flows or results of operations of the Company.

Currently, we have self-insurance limits for workers' compensation,
product liability and employee medical claims. Our workers' compensation
policies have per-individual deductibles ranging from $100 to $350, our product
liability policy has a $250 per claim deductible and our medical plan for
employees has a stop-loss of $200 per individual.

NOTE 7 - PRODUCT WARRANTY

We warrant our products against defects in design, materials, and
workmanship, generally for periods ranging from one to three years. A provision
for estimated future costs related to these warranties is recorded on a monthly
basis and is included in cost of goods sold. Activity related to the product
warranty liability was as follows:



THREE-MONTHS ENDED YEAR ENDED
JANUARY 31, OCTOBER 31,
2004 2003
-------------- --------------

Balance at beginning of year $ 817 $ 785
Provision for warranty obligations 325 818
Settlements made (228) (816)
Changes in foreign exchange rates 13 30
-------------- --------------

Balance at end of year $ 927 $ 817
============== ==============


10


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

(amounts in thousands, except share and per-share amounts)

Management's discussion and analysis of financial condition and results of
operations ("MD&A") is provided as a supplement to the accompanying unaudited
interim condensed consolidated financial statements and footnotes to provide an
understanding of our financial position, changes in our financial position and
results of our operations. Our MD&A is organized as follows:

- COMPANY OVERVIEW. This section provides a general description of
our business.

- COMPANY RISK FACTORS. This section describes the material risks
inherent in our business that investors should be aware of.

- CAUTION CONCERNING FORWARD-LOOKING STATEMENTS. This section
discusses how certain forward-looking statements made by us
throughout the MD&A and elsewhere in this report are based on
management's present expectations about future events and are
inherently susceptible to uncertainty and changes in
circumstances.

- CRITICAL ACCOUNTING POLICIES. This section discusses those
accounting policies that are both considered important to our
financial statements and require significant judgment and
estimates on the part of management in their application.

- RESULTS OF OPERATIONS. This section provides an analysis of our
results of operations for the three months ended January 31, 2004
and 2003, including a brief description of transactions and events
that impact the comparability of these results.

- FINANCIAL POSITION AND LIQUIDITY. This section provides an
analysis of our cash position and cash flows, as well as a
discussion of our financing arrangements.

Other information is presented in Items 3, 4 and elsewhere as follows:

- QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK. This
section discusses information about the various market risks we
are exposed to as of the end of the latest fiscal period
presented.

- CONTROLS AND PROCEDURES. This section discusses the conclusions of
our executive officer and principal financial officer about the
effectiveness of our disclosure controls and procedures.

- OTHER INFORMATION. This section describes material developments in
the business or markets in which we compete, as well as any other
information important to our stakeholders.

COMPANY OVERVIEW

CUNO is a world leader in the designing, manufacturing and marketing of
a comprehensive line of filtration products for the separation, clarification
and purification of liquids and gases. Our products, which include proprietary
depth filters and semi-permeable membrane filters, are used in the potable
water, fluid processing, and healthcare markets. These products, most of which
are disposable, effectively remove contaminants that range in size from
molecules to sand particles. Our sales are approximately balanced between
domestic and international markets. Our objective is to provide high value-added
products and premium customer service. Our proprietary manufacturing processes
result in products that lower customers' operating expenses and improve the
quality of customers' end products by providing longer lasting, higher quality
and more efficient filters.

11


COMPANY RISK FACTORS

RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS

Approximately 50% of our net sales are derived from international
operations. Consequently, our reported financial results may be adversely
affected by significant fluctuations in the value of the US dollar in comparison
to local currencies in the countries in which we operate outside the US. We
manufacture products in Japan, China, Brazil, France, Singapore and Australia.
Our international operations may be affected by economic, political and
governmental conditions in some of the countries where we have manufacturing
facilities or where our products are sold. In addition, changes in economic or
political conditions in any of the countries in which we operate could result in
unfavorable taxation policies, exchange rates, new or additional currency or
exchange controls, governmental regulations, credit risks, or other restrictions
being imposed on the operations of the Company or expropriation.

PATENTS AND PROPRIETARY TECHNIQUES

We have a broad patent portfolio as well as other proprietary
information and manufacturing techniques and have applied, and will continue to
apply, for patents to protect our technology. The Company's success depends in
part upon our ability to protect our technology and proprietary products under
US 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
litigation expenses or subject the Company to liabilities.

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 our products and services. Changes in
legislative, regulatory or industrial requirements or competitive technologies
may render certain of our 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 are
significant factors in our ability to grow and to remain competitive. Similar to
all companies, we are 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.

COMPETITION

The filtration and separations markets in which we compete are highly
competitive. We compete with many domestic and international companies in the
global markets. The principal methods of competition in the markets in which we
compete are product specifications, performance, quality, knowledge, reputation,
technology, distribution capabilities, service and price.

INFLATION

Inflation had a negligible effect on our operations. We estimate that
inflationary effects, in the aggregate, were generally recovered or offset
through increased pricing or cost reductions in all periods presented.

KEY CUSTOMERS AND SUPPLIERS

We have multi-year contracts and arrangements in place with several of
our major customers and suppliers. These contracts and arrangements help us
effectively plan and manage our operations. Since the markets for our products
are dynamic, these contracts and arrangements are continually evolving as we are
sensitive to the changing needs of our customers and the ongoing performance of
our suppliers. There is no assurance, however, that these

12


contracts and arrangements will be renewed, will not be terminated prematurely
or revised to take into consideration the evolving nature of our relationships
with our customers and suppliers.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

Because we want to provide shareholders with more meaningful and useful
information, this quarterly report contains statements relating to future events
and the predicted performance of CUNO Incorporated (the "Company", "CUNO", or
"we") which may constitute forward-looking statements, as defined under the
Private Securities Litigation Act. We have tried, wherever possible, to identify
these "forward looking" statements by using words such as "anticipate,"
"believe," "estimate," "expect" and similar expressions. These statements
reflect our current beliefs and are based on information currently available to
us. Accordingly, these statements are subject to risks and uncertainties which
could cause our actual results performance or achievements to differ materially
from those expressed in, or implied by, these statements. These risks and
uncertainties include the following: economic and political conditions in the
foreign countries in which we conduct a substantial part of our operations and
other risks associated with international operations including taxation
policies, credit risk, exchange rate fluctuations and the risk of expropriation;
our ability to protect our technology, proprietary products and manufacturing
techniques; volumes of shipments of our products, changes in our product mix and
product pricing; continuing beneficial relationships with customers; costs of
raw materials; the rate of economic and industry growth in the United States and
the other countries in which we conduct our business; changes in technology,
changes in legislative, regulatory or industrial requirements and risks
generally associated with new product introductions and applications; and
domestic and international competition in our global markets. We assume no
obligation to publicly release revisions to the forward-looking statements to
reflect new events or circumstances.

CRITICAL ACCOUNTING POLICIES

The Securities and Exchange Commission ("SEC") defines the most
critical accounting policies as the ones that are most important to the
portrayal of a company's financial condition and operating results, and require
management to make its most difficult, subjective or complex judgments, often as
a result of the need to make estimates about the effect of matters that are
inherently uncertain. Based on this definition, our most critical accounting
policies include: revenue recognition, accounting for depreciation and
amortization, employee benefits, contingencies, allowance for doubtful accounts,
income taxes, and stock based compensation. The methods, estimates and judgments
we use in applying these most critical accounting policies have a significant
impact on the results we report in our financial statements. There were no
changes in accounting policies or significant changes in accounting estimates
during the current period. All of our critical accounting policies and
significant estimates have been discussed with the Audit Committee of the Board
of Directors. We have not made any significant changes to our critical
accounting policies or estimates since year end.

Revenue Recognition -- We recognize revenue in accordance with SEC
Staff Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements"
("SAB 101"). SAB 101 requires that four basic criteria be met before revenue can
be recognized: 1) there is evidence that an arrangement exists; 2) delivery has
occurred; 3) the fee is fixed or determinable; and 4) collectibility is
reasonably assured. We recognize revenue upon determination that all criteria
for revenue recognition have been met, which, based on our shipping terms, is
considered to have occurred upon shipment of the finished product.

Depreciation and Amortization - We depreciate our property, plant and
equipment using the straight-line method over the estimated useful life of the
asset. These periods range as follows:

Land improvements 10 - 20 years
Buildings and additions 30 - 40 years
Machinery and equipment 5 - 20 years

We amortize our patents and other amortizable intangible assets over
their estimated useful lives. The straight line method of amortization is used
unless another method is more appropriate and reliable in reflecting the pattern
in which the asset provides economic benefits. These periods generally range
from 10 - 20 years.

13


We review the carrying values of intangibles and long-lived assets on
an annual basis. In addition, in the event that facts and circumstances indicate
that the carrying value of intangibles and long-lived assets or other assets may
be impaired at any other time, an evaluation is performed. Our evaluations
compare the estimated future undiscounted cash flows associated with the asset
to the asset's carrying amount.

Employee Benefits - We account for our pension plans in accordance with
SFAS No. 87, "Employer's Accounting for Pensions". In applying this accounting
practice, assumptions are made regarding the valuation of benefit obligations
and the performance of plan assets.

The primary assumptions are as follows:

- Weighted average discount rate - this rate is used to estimate the
current value of future benefits. This rate is adjusted based on
movements in long-term interest rates.

- Expected long-term rate of return on assets - this rate is used to
estimate future growth in investments and investment earnings. The
expected return is based upon a combination of historical market
performance and anticipated future returns for a portfolio reflecting
the mix of equity, debt and other investments indicative of our plan
assets.

- Rates of increase in compensation levels - this rate is used to
estimate projected annual pay increases, which are used to determine
the wage base used to project employees' pension benefits at
retirement.

We determine these assumptions based on consultations with our outside
actuaries and investment advisors. Any variance in the above assumptions could
have a significant impact on future recognized pension costs, assets and
obligations.

Contingencies, Claims and Assessments -- From time to time, we are
involved with contingencies, claims, and assessments. We use both in-house and
outside legal counsel to assess the probability of loss. The Company establishes
an accrual for specific contingencies, claims and assessments when both of the
following conditions are present: a loss is deemed probable and the amount of
the anticipated loss can be reasonably estimated. There can be no assurance that
the ultimate resolution of these contingencies, claims, and assessments will not
differ materially from our estimates.

Allowance for Bad Debts -- The allowance for doubtful accounts is
established to represent our best estimate of the net realizable value of the
outstanding accounts receivable balances. We estimate our allowance for doubtful
accounts based on past due amounts and historical write-off experience, as well
as trends and factors surrounding the credit risk of specific customers. In an
effort to identify adverse trends, we perform periodic credit evaluations of our
customers and ongoing account balance reviews and agings of receivables. Amounts
are considered past due when payment has not been received within the time frame
of the credit terms extended. Write-offs are charged directly against the
allowance for doubtful accounts and occur only after all collection efforts have
been exhausted. Actual write-offs and adjustments could differ from the
allowance estimates due to unanticipated changes in the business environment as
well as factors and risks surrounding specific customers.

Income Taxes - We estimate and use our expected annual effective income
tax rate to accrue income taxes on an interim basis. We update these estimates
quarterly. We record valuation allowances to reduce our deferred income tax
assets to an amount that we believe is more likely than not to be realized. We
consider estimated future taxable income and ongoing prudent and feasible tax
planning strategies in assessing the need for a valuation allowance. If we were
to determine that we will not realize all or part of our deferred income tax
assets in the future, we would make an adjustment to the carrying value of the
deferred income tax asset, which would be reflected as an income tax expense.
Conversely, if we were to determine that we will realize a deferred income tax
asset, which

14


currently has a valuation allowance, we would reverse the valuation allowance
which would be reflected as an income tax benefit in our financial statements.

We take tax positions in our worldwide corporate income tax filings
based on careful interpretations of global statutes, rules, regulations and
court decisions that may be applied and interpreted differently by various
taxing jurisdictions. These taxing jurisdictions may or may not challenge our
application and interpretation of a wide body of tax jurisprudence. However, we
do not anticipate that any sustained challenge by any taxing jurisdiction will
have a material adverse effect on our financial position or net income.

Stock Based Compensation - We currently account for our stock option
awards under the recognition and measurement principles of APB Opinion No. 25,
"Accounting for Stock Issued to Employees", and related interpretations. No
stock-based employee compensation cost pertaining to stock options is reflected
in net income, as all options granted under our plans had exercise prices equal
to the market value of the underlying common stock on the date of grant.
Restricted share grants awarded to employees are included in earnings as an
expense over the vesting period of the award.

RESULTS OF OPERATIONS

THREE MONTH PERIOD ENDED JANUARY 31, 2004 VS. THREE MONTH PERIOD ENDED JANUARY
31, 2003

OVERVIEW

During the first three months of fiscal 2004, CUNO's sales and earnings
grew at a double-digit pace. This growth was driven significantly by the overall
weakness of the U.S. Dollar. Sales were particularly strong in the North
American potable water market (up 9.9 percent) and overseas sales in general (up
23.5 percent and up 5.7 percent on a currency adjusted basis). Our margins
continue to improve due primarily to the benefit of incremental sales volume,
offset in part by increased structural costs such as pension and depreciation
expenses.

Going forward, business and market uncertainties may affect results.
See "Company Risk Factors" above and Management's Discussion and Analysis in our
Annual Report on Form 10-K for the fiscal year ended October 31, 2003 for a full
discussion of the key factors which affect our business and operating results.

Below is a summary of selected consolidated earnings information:



THREE MONTHS ENDED
JANUARY 31,

2004 2003 CHANGE
---------- ---------- ------

Net sales $ 75,409 $ 66,437 13.5%
Cost of products sold 40,553 36,683 10.5%
Gross margin 34,856 29,754 17.1%
Gross margin percent 46.2% 44.8% 140 bpt

Selling, general and administrative 20,238 17,789 13.8%
SG&A as a percent of sales 26.8% 26.8% --

Operating income 10,429 8,295 25.7%
Operating margin 13.8% 12.5% 130 bpt
Effective tax rate 33.3% 34.6% 130 bpt

Net income 7,005 5,388 30.0%
Diluted earnings per share $ 0.41 $ 0.32 28.1%


15


BUSINESS ENVIRONMENT

Our geographic and market diversity helps limit the impact of any one
market or the economy of any single country on our consolidated results. The
uncertainty of the economic conditions in various markets and geographic regions
in which we compete is likely to continue to present challenges to our business
near term. The U.S. Dollar was significantly weaker compared to most of the
currencies in countries we conduct business in during the first quarter of 2004
compared to the first quarter of 2003. We translate revenue and expense accounts
at the average exchange rates during the periods presented.

NET SALES

Net sales were $75.4 million in the first quarter of fiscal 2004
representing a 13.5 percent increase over 2003's first quarter sales of $66.4
million. This increase can generally be attributed to an increase in the unit
volume of worldwide sales. Had currency values been unchanged from the first
quarter of 2003, net sales in the first quarter of 2004 would have been $5.2
million lower than the reported sales of $75.4 million, or 5.6 percent greater
overall.

The following table displays the Company's sales by geographic segment:



THREE MONTHS ENDED CURRENCY
JANUARY 31, PERCENT ADJUSTED
2004 2003 CHANGE CHANGE
-------- -------- ------- --------

North America $ 38,938 $ 36,895 5.5% 5.5%
Europe 13,857 11,120 24.6% 5.0%
Japan 9,594 7,979 20.2% 7.3%
Asia/Pacific 9,779 8,232 18.8% 1.5%
Latin America 3,241 2,211 46.6% 19.5%
-------- -------- ---- ----
Total sales $ 75,409 $ 66,437 13.5% 5.6%
======== ======== ==== ====


North American sales increased 5.5 percent in the first quarter of 2004
as compared to the same quarter in 2003. Stronger potable water market sales
were responsible for the growth in North America during this time period.
Potable water continues to achieve strong sales of its series of filters
designed for customers who serve various channels of distribution with final
sales to US residential consumers. North American fluid processing sales were
flat and healthcare sales were down due primarily to a reduction in sales to a
large diagnostic customer. European sales increased 5.0 percent in local
currency as compared to the same period in 2003. Potable water sales were
particularly strong in the quarter reflecting greater demand for our products
serving the OEM and appliance markets. Sales in Japan were up 7.3 percent in
local currency led by a strong increase in sales to the healthcare market.
Asia/Pacific sales were up 1.5 percent excluding changes in currency values. All
markets were relatively flat in 2004 compared to the prior period. First quarter
2004 Latin American sales were up 19.5 percent when expressed in local currency
due primarily to new product sales associated with a relatively new customer in
the potable water market.

The following table displays the Company's sales by market:



THREE MONTHS ENDED CURRENCY
JANUARY 31, PERCENT ADJUSTED
2004 2003 CHANGE CHANGE
-------- -------- ------- --------

Potable Water $ 34,853 $ 30,381 14.7% 10.6%
Fluid Processing 20,270 17,628 15.0% 4.4%
Healthcare 20,286 18,428 10.1% (1.4%)
-------- -------- ---- ----
Total sales $ 75,409 $ 66,437 13.5% 5.6%
======== ======== ==== ====


16


The strength in the potable water market was broad geographically,
driven largely by strong overseas sales (up 13.7 percent in local currency) and
strong sales growth in North America (up 9.9 percent) associated with OEM
customers, direct marketing companies, and appliance manufacturers. Fluid
Processing sales were flat in the U.S. but were up 7.0 percent overseas on a
local currency basis. Healthcare sales were flat overseas and down 5.8 percent
in the U.S. due primarily to a reduction in diagnostic sales.

GROSS PROFIT

Gross profit increased $5.1 million to $34.9 million in the first
quarter of 2004 from $29.8 million in the first quarter of 2003. Gross profit as
a percentage of net sales (gross margin) increased during that same period from
44.8 percent in 2003 to 46.2 percent in 2004. This increase is primarily
attributable to the overall increase in the volume of sales (sales up 13.5
percent in the quarter).

Although we are under pressure to maintain competitive prices with our
customers, we pursue various supply-chain management initiatives designed to
lower our production costs. In addition, we have ongoing programs to modernize
our manufacturing facilities to further gain efficiencies.

OPERATING EXPENSES

Selling, general and administrative expenses (SG&A) were up 13.8
percent, slightly in excess of the 13.5 percent sales growth rate. However, SG&A
expenses were 26.8 percent of sales in both the first quarter of fiscal 2004 and
the first quarter of fiscal 2003. Because of CUNO's international operations,
the weaker US dollar served to increase the consolidated US dollar reported SG&A
expense. We face rising structural costs such as pension expenses which have
increased from $435 in the first quarter of 2003 to $756 in the first quarter of
2004. In addition, worldwide depreciation charges increased from $2,371 in the
first quarter of 2003 to $2,656 in the first quarter of 2004 (up 11 percent).

Research, development and engineering expenses (incurred primarily in
the US and to a lesser extent in Europe) increased 14.1 percent to $4.2 million
in the first quarter of 2004, reflecting our continued focus on the development
of new products and technologies. As a percentage of sales, research,
development and engineering expenses were 5.6 percent of sales in the first
quarter of fiscal 2004 compared to 5.5 percent of sales in the first quarter of
fiscal 2003.

OPERATING INCOME

As a result of the above, operating income increased $2.1 million, or
25.7 percent, to $10.4 million or 13.8 percent of sales in the first quarter of
fiscal 2004 compared to $8.3 million or 12.5 percent of sales in the first
quarter of 2003.

Our operating income by segment is detailed below:



THREE MONTHS ENDED
JANUARY 31, DOLLAR PERCENT
2004 2003 CHANGE CHANGE
-------- -------- ------- -------

OPERATING INCOME:
North America $ 6,159 $ 5,230 $ 929 17.8%
Europe 1,126 795 331 41.6%
Japan 1,058 743 315 42.4%
Asia/Pacific 1,733 1,192 541 45.4%
Latin America 353 335 18 5.4%
-------- -------- ------
Total $ 10,429 $ 8,295 $2,134 25.7%
-------- -------- ------


17


The increase in operating income in the U.S. was driven by the $2.0
million increase in sales, offset by variable costs and structural costs
discussed above. The results of our foreign operations are heavily dependent on
the relationship of their functional currency compared to the U.S. Dollar. We
translate our foreign revenue and expense accounts into U.S. Dollars using the
average exchange rate for the period. European sales increased 5.0 percent on a
local currency basis, while the Euro strengthened approximately 18 percent
(average first quarter of 2004 versus average first quarter of 2003) - these
factors drove the increase in Europe's operating income. Sales in Japan were up
7.3 percent on a local currency basis, and the Yen strengthened versus the U.S.
Dollar approximately 12 percent quarter over quarter. Asia/Pacific sales were
relatively flat quarter over quarter, but the Australian Dollar strengthened
approximately 30 percent in comparison (approximately 50 percent of our sales in
the region are denominated in Australian Dollars). Local currency sales in Latin
America increased 19.5 percent, but operating profits were adversely impacted by
increased costs associated with the launch of some new product initiatives.

INCOME TAXES

The Company's effective income tax rate for the first quarter of 2004
was 33.3 percent compared to 34.6 percent in the first quarter of 2003. The
decrease in our effective tax rate was driven by the expanded availability and
utilization of certain state credits in the U. S. and foreign tax planning
initiatives. Also, our tax rate is impacted by the change in the mix of income
attributed to the various countries in which we do business.

As of January 31, 2004, the Company had a full valuation allowance
against approximately $792 of NOLs in China and approximately $298 of NOLs in
Germany. Our China operations are start-up in nature with a history of losses
(no profit has been earned since inception in 2001) and our German operation has
incurred losses in three out of the past four fiscal years. The remaining
countries in which we carry valuation allowances against NOLs are generally
operations which are new to CUNO, have a history of losses, or are in volatile
economic regions of the world.

FINANCIAL POSITION AND LIQUIDITY

We assess liquidity in terms of the Company's ability to generate cash
to fund our operating and investing activities. Of particular importance to the
management of liquidity are cash flows generated by operating activities,
capital expenditure levels, and adequate bank financing alternatives.

We manage our worldwide cash requirements considering the cost
effectiveness of the funds available from the many subsidiaries through which we
conduct our business. We believe that our existing cash and cash equivalents
position ($60.9 million at January 31, 2004) and available sources of liquidity
(approximately $24.3 million of available, uncommitted, unused worldwide
short-term lines of credit) are sufficient to meet current and anticipated
requirements for the foreseeable future. We do not rely on commercial paper or
off-balance sheet financing arrangements for our liquidity needs nor do we have
any investments in special purpose entities ("SPEs"), or variable interest
entities ("VIEs") .

We continue to invest in R&D to provide future sources of revenue
through the development of new products, as well as through additional uses for
existing products. Our efforts are spread across the various markets in which we
compete, with particular emphasis on new products and technologies in Healthcare
and the improvement in design and function of products within Potable Water. We
consider R&D and the development of new products and technologies an integral
part of our growth strategy and a core competence of the Company.

Likewise, we continue to invest in capital expenditures in order to
expand and modernize manufacturing facilities around the globe. We currently
have plans to expand manufacturing lines in Brazil, China, and Australia in
order to meet product demands around the globe. In addition, new manufacturing
lines and processes are being installed in the US to benefit the potable water,
fluid processing, and healthcare markets.

18


Summary of Cash Flows follows:



THREE MONTHS ENDED
JANUARY 31,
2004 2003
-------------- --------------

CASH PROVIDED BY (USED FOR):
Operating activities $ 5,579 $ (2,579)
Investing activities (4,355) (3,556)
Financing activities 513 (509)
Effect of exchange rate changes on cash and cash
equivalents 1,514 534


Net cash provided by operating activities increased by $8,158 due primarily to:

- Increased net income of $1,617 in the first quarter of 2004

- An incremental $6,000 contribution to our US pension plans in the first
quarter of 2003

- Timing in the payments of accounts payable and accrued expenses
including an increase of $1,702 in book overdrafts

- Timing in the payments of income taxes

Net cash used for investing activities increased by $799 due primarily to:

- Increase in cash paid for acquisitions of $405

- Increase in capital expenditures of $292

Net cash provided by financing activities increased by $1,022 due primarily to:

- Increase in net borrowings under short-term bank loans of $1,245 due
primarily to the timing of certain cash payments

The effect of exchange rate changes on cash and cash equivalents increased $980
due primarily to the continued weakening of the U.S. Dollar against the Japanese
Yen, Euro and Australian Dollar.

Contractual Obligations and Commercial Commitments

Below is a table detailing, by maturity date, our Contractual
Obligations and Commercial Commitments as of October 31, 2003:



OBLIGATIONS AND
COMMITMENTS 2004 2005 2006 2007 2008 THEREAFTER
----------- ---- ---- ---- ---- ---- ----------

Bank loans $ 11,804 $ -- $ -- $ -- $ -- $ --
Long-term debt 849 143 151 76 10 21
Operating leases 2,895 2,487 2,241 2,011 1,613 --
--------------------------------------------------------------------
Total $ 15,548 $ 2,630 $ 2,392 $ 2,087 $ 1,623 $ 21
====================================================================


Also, see fiscal 2004 changes in bank loans and long-term debt detailed
on the Consolidated Statements of Cash Flows for the three months ended January
31, 2004. We had no material qualifying long-term purchase obligations at
October 31, 2003 and through the interim period in 2004. Our U.S. pension plans
require no minimum amount of funding in 2004. We plan to contribute
approximately $971 to our Japanese pension plan in fiscal 2004.

19


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The overall objective of our financial risk management program is to
seek a reduction in the potential negative earnings effects from changes in
foreign exchange and interest rates arising from business activities. We manage
these financial exposures through operational means and by utilizing available
financial instruments. Practices may change as economic conditions change.

Foreign Currency Risk

Our earnings and cash flows are subject to fluctuations due to changes
in foreign currency exchange rates. We utilize forward foreign exchange
contracts to hedge specific exposures relating to intercompany payments, certain
firm sales commitments and anticipated, but not yet committed, intercompany
sales (primarily parent company export sales to subsidiaries at pre-established
US dollar prices) and other specific and identified exposures. The terms of the
forward foreign exchange contracts are generally matched to the underlying
transaction being hedged, and are typically under one year.

Because such contracts are directly associated with identified
transactions, they are an effective hedge against fluctuations in the value of
the foreign currency underlying the transaction. All of our foreign exchange
contracts are accounted for at fair value based on readily available market
price quotations. We generally do not hedge overseas sales denominated in
foreign currencies or translation exposures. Further, we do not enter into
financial instruments for speculation or trading purposes.

We utilize bank loans and other debt instruments throughout our
worldwide operations. To mitigate foreign currency risk, such debt is generally
denominated in the underlying local currency of the affiliate. In certain
limited and specific circumstances, we will manage risk by denominating a
portion of debt outstanding in a currency other than the local currency.

ITEM 4. CONTROLS AND PROCEDURES

(a) Our chief executive officer and chief financial officer performed an
evaluation of our disclosure controls and procedures as of January 31, 2004 (the
"Evaluation Date"). Based on that evaluation, our chief executive officer and
chief financial officer concluded that our disclosure controls and procedures
were effective and sufficient to ensure that the information required to be
disclosed in the reports that we file under the Securities Exchange Act of 1934
is recorded, processed, summarized, and reported within the time periods
specified in the SEC's rules and forms.

(b) There have been no significant changes in our internal controls since
the Evaluation Date. We are not aware of any significant change in any other
factors that could significantly affect our internal controls subsequent to the
Evaluation Date.

20


PART II

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Documents filed as part of this report.

Exhibit 31.1 - Certification of Mark G. Kachur pursuant to Section 302
of the Sarbanes-Oxley Act of 2002

Exhibit 31.2 - Certification of Frederick C. Flynn, Jr. pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 32.1 - Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Exhibit 32.2 - Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K

We filed a Report on Form 8-K/A, dated December 18, 2003, under
"Item 4. Change in Registrant's Certifying Public Accountant,"
reporting the dismissal of Ernst & Young LLP as our independent
accountants effective after the filing of the Annual Report on Form
10-K for the year ended October 31, 2003, and the appointment of
PricewaterhouseCoopers LLP as our successor independent accountants.

We filed a Report on Form 8-K/A, dated December 18, 2003, under
"Item 4. Change in Registrant's Certifying Public Accountant,"
reporting the dismissal of Ernst & Young LLP as the independent
accountants of the CUNO Incorporated Savings and Retirement Plan (the
"Plan") and the appointment of PricewaterhouseCoopers LLP as the
successor independent accountants of the Plan.

We filed a Report on Form 8-K, dated December 15, 2003, under
"Item 7. Financial Statements and Exhibits," reporting our financial
results for the year ended October 31, 2003.

21


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

CUNO INCORPORATED

Date February 19, 2004

By /s/ Mark G. Kachur
------------------
Mark G. Kachur
Chairman of the Board of Directors,
President and Chief Executive Officer

By /s/ Frederick C. Flynn, Jr.
---------------------------
Frederick C. Flynn, Jr.
Senior Vice President -
Finance and Administration,
Chief Financial Officer and Assistant Secretary

22