EFP enters into nine distribution agreements

Filtration Industry Analyst

January 2006

Filtration Company Index 3M Co Ahlstrom Altair Technology

4

Axium Process

6

BWT Aktiengesellschaft

9

Bekaert

8

Blackburn and Associates

6

CECO Environmental

5

CH2M HILL

7

Ceetak Ltd

6

Clarcor Inc

7

Conwed

7

Cummins Donaldson

3 2,12

Dresser-Rand

4

EPA

2

Ecosphere Technologies

3

Entegris Esco Technologies

NEWS

5 1,12

4 10

Fibermark

1

GL&V

8

GE Energy

4

GlobeTec

4

Hollingsworth & Vose

16

ITT

2,9

Inge AG

5

Johnson Controls

9

KHS Maschinen- und Anlagenbau AG

5

Koch Membrane Systems

5

Kvaerner

4

Lantor

1

Larox MFRI Inc

5 13

Mann + Hummel

6,16

Mast Carbon

8,16

Met-Pro

5

Millipore

3,8,9

Moen

6

PCC

4

PICA

16

Parker Hannifin Pall Pentair Pierce SPX Sartorius Siemens AG

6,7,8,9 3,4,5,13 8,9 3 14 7 11

Stormwater Management

9

Tamfelt Corp

8

UK Filtration Society

9

Walter Industries Inc Watts Water Technologies

7 8,9

Westfalia Separator

7

Whitehouse Scientific

5

Zenon

2

2,14

ITT TO SPLIT STOCK AND RAISE ANNUAL DIVIDEND According to ITT, holders of the company’s stock at the close of business on 7 February will receive one extra share on 21 February. The annual dividend, based on a presplit share count, will be US$.88 a share, beginning in April. Excluding items, ITT forecast 2005 profit at US$5.17 to US$5.22 a share, surrounding the US$5.21 average predicted by analysts in a survey by Thomson First Call. ITT estimates that its revenue will grow 6% to 8% in 2006 to about US$7.85 billion to US$7.98 billion. Net income will be US$5.78 to US$5.92 a share, also bracketing the US$5.90 a share average predicted by analysts. Revenue growth should be driven in large part from ITT’s water and wastewater businesses, as well as continued strength in the defence business. Prudential analysts have forecast that ITT would turn its attention to acquiring companies in its diversified industrial or water businesses, particularly in Asia.

ISO 9001:2000 FOR DONALDSON MEMBRANE PLANT Donaldson’s membrane plant in Ivyland, Pennsylvania, USA has received ISO9001:2000 certification. The International Organisation of Standardisation (ISO) is the source of the ISO 9000 and ISO 14000 families of quality and environmental management standards. According to Donaldson, included among the ISO 9001:2000 standards are product defect tracking, supplier management and corporate objectives and activities.

Ongoing activities include employee and management training, the establishment of interrelated processes and systems to ensure that customer requirements are understood and met; ongoing quality goals and a detailed process for addressing and correcting problems. The 60,000 ft2 plant produces Donaldson’s expanded PTFE membranes and related composite materials which are marketed under the Tetratex® brand. These products include thermobonded composites used in industrial filtration applications, including coated filter bags and cartridge media, and other advanced PTFE membrane materials used in technical applications, including liquid microfiltration, venting, and medical applications. (For Donaldson’s quarterly report, see page 12.)

ZENON WARNS OF FOURTH QUARTER, FULL-YEAR LOSS Zenon Environmental Inc has predicted a fourth-quarter and full-year operating loss. This is due, the company says, to higher than expected project costs, production delays, a manufacturing reorganisation of its water-treatment products, some weaker Homespring sales and the deferral of some revenue to the first quarter. However, the company has reportedly made process in shipping out all delayed orders of its ZeeWeed 1000 version 3. Zenon said it expects a before-tax operating loss of between C$10 million (US$8.55 million) and C$12 million for the fourth quarter ending 31 December and full fiscal 2005 operating loss of C$12 million to C$14 million. Under a recently initiated restructuring, the Ontario, Canada-based company has consolidated manufacturing

and cut its product lines, eliminated jobs, and used different procedures to better manage subcontracted project costs. In order to improve future profitability Zenon plans to consolidate manufacturing in Hungary and Canada, reduce overhead resulting from headcount reductions and reduction of selling costs, improve bid project margins due to the adoption of recent technology improvements and adopt new risk management procedures to better control subcontracted project costs. (For the full quarterly report, see page 14.)

EFP ENTERS INTO NINE DISTRIBUTION AGREEMENTS Emergency Filtration Products (EFP) has entered into distribution agreements with nine international distributors operating in the following countries: Australia, Canada, Denmark, New Zealand, Pakistan, South Africa, South Korea, Sweden and Thailand. The company is also at an advanced stage of negotiations to sign additional distributors in a number of other countries. These distributors have agreed to order a minimum of 550,000 NanoMasks and 7,250,000 NanoMask filters over the next two years. The current delivery schedule, which is based on the company’s production capacity, involves approximately 225,000 NanoMasks and 3,000,000 NanoMask filters to be delivered in equal allotments over the course of 2006. In 2007, deliveries to these distributors are currently scheduled to reach 325,000 NanoMasks and 4,250,000 NanoMask filters. Following the delivery plan for 2006, deliveries are currently scheduled to be made in equal numbers over the course of the year. These schedules could be either accelerated and/or increased should EFP’s

production capabilities permit, and at the distributors’ requests. “We are well under way to getting our Nogales plant operational in the near future, a development which has enabled us to sign a number of distributors in some important international markets,” said Douglas Beplate, president and CEO of EFP. “The task before us is to rapidly ramp up production to meet demand for our NanoMask and NanoMask filters, which continues to increase. Towards that end, we regard the Nogales plant to be crucial to the future success of our company. We intend to not only manufacture NanoMasks and NanoMask filters in Nogales, but to also manufacture some, if not all of our other products there as well.”

PALL TECHNOLOGY REMOVES PRIONS A study, entitled “Removal of exogenous (spiked) and endogenous prion infectivity from red cells with a new prototype of leukoreduction filter”, published in the official journal of the AABB (Transfusion 2005; 45 (12): 1839-1844), has shown that Pall’s filtration technology removes infectious scrapie prions. (Scrapie is a degenerative disease affecting sheep.) The research focused on three approaches to evaluate the performance of the Pall prion reduction filter. In the exogenous (spiking) phase of the study, scrapie-infected brain homogenates were added to human red blood cells and then passed through a prion removal filter. The results showed that prions were removed below the level of detection by the Western blot assay. In another phase of the exogenous study, scrapieinfected brain homogenates were diluted to obtain a variety of concentrations of infectious

Filtration Industry Analyst

prion. These varying concentrations were divided into a test (filtered) group and a control (non-filtered) group and injected into the brains of healthy hamsters. The results of this phase of the study found that the prion reduction filter removed 3.7 logs (over 99.9%) of the infectious prion. The researchers concluded that the use of this type of filter could reduce the risk of vCJD transmission through blood transfusion. Samuel Sowemimo-Coker, principal scientist and technical director at Pall Medical, who conducted the tests, said: “Transmission of vCJD by blood transfusion is a serious threat and prion reduction by filtration is a realistic and practical approach to minimise the risk.” (For Pall’s quarterly report, see page 13.)

PIERCE TO MARKET ECOSPHERE TRUCKS Ecosphere Technologies Inc, based in Florida, USA, has signed an exclusive 5-year agreement with Pierce Manufacturing, Inc, a subsidiary of the Oshkosh Truck Corp, to manufacture, market, and deliver the US’s first Tactical Water Filtration Truck (TWFT) to the military, homeland security and disaster recovery markets. Ecosphere says that its filtration system is the only highvolume filtration system to be tested and verified by the US Environmental Protection Agency (EPA) through its environmental technology verification programme to respond to a terrorist or natural disaster. “The Tactical Water Filtration Truck (TWFT) will provide the critical water requirements needed for homeland security, military operations, bio-terrorism response, and natural disaster relief domestically and worldwide,” claims Jim

Parker, vice president of government sales at Pierce. “Parker also anticipates that Pierce will market the TWFT through its dealer network to military, federal, state, county and municipal agencies, local fire and police departments, and local emergency services organisations.” Pierce is a North American manufacturer of custom fire apparatus and Homeland Security vehicles which enable police, fire and emergency management personnel to respond effectively to terrorism and natural disasters and to mitigate their effects.

MILLIPORE TO REPATRIATE FOREIGN EARNINGS Millipore has repatriated approximately US$500 million of foreign earnings under the American Jobs Creation Act of 2004. The Act, which was passed in October 2004, reportedly provides a onetime incentive for United States companies to repatriate accumulated income earned in foreign jurisdictions at a reduced income tax cost of 5.25%, compared to the usual US corporate tax rate of 35%. Millipore will invest the proceeds into US-based strategic initiatives in order to help accelerate its growth over the next five years. It will incur a one-time tax charge of approximately US$26 to US$30 million in the fourth quarter of fiscal 2005 part of the transaction. As well as this, Millipore has signed a five-year, US$500 million (E430) revolving credit facility with Bank of America, JP Morgan, ABN AMRO, and other lenders, which it will borrow against as part of the repatriation. “The repatriation of our foreign earnings will provide us with a unique opportunity to efficiently and cost-effectively

strengthen our balance sheet,” said Kathleen Allen, corporate vice president and CFO of Millipore. “Our increased cash position will give us greater flexibility to invest in strategic growth initiatives that have the potential to drive attractive returns for shareholders in the future.”

CUMMINS AWARDED DIESEL REDUCTION PROJECT Cummins Inc plans to participate in a public-private partnership led by the California South Coast Air Quality Management District (SCAQMD), based in the USA, to demonstrate adanced diesel engine emissions control systems that meet the EPA 2010 on-highway standard. Next-generation Cummins aftertreatment research and technology will be used on the ISL 9 litre engine to verify the emissions reduction capability of a combined system incorporating both a diesel particulate filter and nitrogen oxides adsorber. “We’ve already seen great strides made by natural gas engine manufacturers and announcements that these natural gas engines will meet very tough 2010 emissions standards by 2007,” said Dr. Barry Wallerstein, SCAQMD executive officer. “This collaborative research will give added assurances that diesel technologies will make similar strides. Multiple fuel technologies meeting the 2010 standards as early as possible will provide fleet operators with a variety of choices to meet their needs and help advance the state of knowledge on advanced engine control technologies.” An interagency funding agreement between the SCAQMD, California Air Resources Board (CARB) and the U.S. Department of Energy (DOE) will contribute US$1,450,000 toward the cost of the project.

3

NEWS

January 2006