Cuno (NASDAQ:CUNO)
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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