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Five analysts and top management from eleven sector firms examine the environmental services sector in this special 65-page Environmental Services issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info460.htm.

TWST: Richard Eastman, how do you approach the sector?

Mr. Eastman: Actually, we take a little bit of a different approach. We try to focus on companies, namely filtration/separation companies that prevent contamination in the environment or in the production process. Filtration and separation companies typically have a number of characteristics. The motivation to purchase the product is generally economic — either quality, consistency, or safety in the environment or in the production process. The companies have kind of a high percentage of repeat sales, the barriers to entry are high, and the businesses tend to be very global. They tend to be somewhat defensive stocks with demand across various industries, and yet they do offer some cyclical qualities when the economy does rebound. We look at cash flow, we look for companies that are making money and have an earnings history or trend, and we look for reasonable valuations. Right now, the average p/e of the group is less than 21 times forward earnings.

TWST: Richard, which stocks are you recommending in the filtration/separation group?

Mr. Eastman: Actually a number of them. One that I find attractive in the environmental services area is Tetra Tech (Nasdaq:TTEK). Lastly, we do like CUNO (Nasdaq:CUNO). CUNO has done a very nice job in a tough environment of maintaining its earnings growth. The company’s mix of business is about 45% water, things like food service, appliance filtration, residential point of use, and about 25% health care, which provides stability on the revenue line. Management has done a nice job on the margin line. Their margins have been drifting higher with cost reductions and sales mix. 80% of their product is consumable. We have a $33, 12-month price target on the stock and think it’s one of the higher quality filtration companies that has done well in a tough environment, but also could do very well if the economy rebounds in the second half of 2002.

TWST: Rick, what are you hearing from investors? What is your reading of the sentiment surrounding the sector?

Mr. Eastman: It certainly has improved over the last six to nine months. We had all started to become conditioned to the types of returns we saw from 1997-2000. Many of these stocks were orphaned as growth didn’t keep pace with many sectors. But in the last nine months, people have looked to these companies for consistency and some visibility. I think these stocks quite frankly have been a good place to hide. Historically, you can look at these stocks and, generally speaking, expect high single-digit or low-teens type of returns. The risk/return profile of this group is being given more value today. We believe they offer defensive qualities and yet, at the same time, if the economy recovers you should certainly see an uptick in the business volume and the earnings.

1) Environmental Services - In an in-depth (10,300 words) Analyst Roundtable, Stacy Gray Devine, Director at Deutsche Banc Alex. Brown, Richard Eastman, Managing Director at Robert W. Baird & Company, William Genco, First Vice President at Merrill Lynch Global Securities, Jami Goodfriend, Analyst that specializes in research and investment in environmental/infrastructure systems at First Analysis Corporation and Alan Pavese, Research Analyst at Credit Suisse First Boston, examine the outlook for the sector including industry segment, investment approach and share specific stock recommendations.

2) The TWST confidential Off-The-Record survey of management performance at seven sector firms asked market insiders about the ability of management teams to create shareholder value.

3) CEO interviews (average 2,500 words). Top management of eleven sector firms examine the outlook for their firm and the sector.