Polypore 10-Q 2005 Q3 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

þ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended October 1, 2005

o Transition report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the transition period from                    to                    

Commission file number: 333-119224

POLYPORE, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	57-1006871
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)
13800 South Lakes Drive Charlotte, North Carolina	28273
(Address of Principal Executive Offices)	(Zip Code)

(704) 587-8409

(Registrant’s Telephone Number, Including Area Code)

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 period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yesþ Noo

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yeso Noþ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

The Company currently has 100 shares of common stock outstanding.

Polypore, Inc.
Index to Quarterly Report on Form 10-Q
For the Quarter Ended October 1, 2005

		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements		4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		35
Item 4.	Controls and Procedures		36
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings		36
Item 6.	Exhibits		37
SIGNATURES

In this Quarterly Report on Form 10-Q, the words “Polypore,” “Company,” “we,” “us” and “our” refer to Polypore, Inc. together with its subsidiaries unless the context indicates otherwise.

2

Forward-looking Statements

This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included in this Quarterly Report on Form 10-Q that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements, including, in particular, the statements about Polypore’s plans, objectives, strategies and prospects regarding, among other things, the financial condition, results of operations and business of Polypore and its subsidiaries. We have identified some of these forward-looking statements with words like “believe,” “may,” “will,” “should,” “expect,” “intend,” “plan,” “predict,” “anticipate,” “estimate” or “continue” and other words and terms of similar meaning. These forward-looking statements may be contained under the captions “Controls and Procedures” or “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” or the Company’s financial statements or the notes thereto. These forward-looking statements are based on current expectations about future events affecting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Many factors mentioned in our discussion in this Quarterly Report on Form 10-Q, including the risks outlined under “Risk Factors” set forth in Exhibit 99.1 to our Annual Report on Form 10-K for the fiscal year ended January 1, 2005, will be important in determining future results. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties, including with respect to Polypore, the following, among other things:

• the highly competitive nature of the markets in which we sell our products;

• the failure to continue to develop innovative products;

• the increased use of synthetic hemodialysis filtration membranes by our customers;

• the loss of our customers;

• the vertical integration by our customers of the production of our products into their own manufacturing process;

• increases in prices for raw materials or the loss of key supplier contracts;

• employee slowdowns, strikes or similar actions;

• product liability claims exposure;

• risks in connection with our operations outside the United States;

• the incurrence of substantial costs to comply with, or as a result of violations of, or liabilities under environmental laws;

• the failure to protect our intellectual property;

• the failure to replace lost senior management;

• the incurrence of additional debt, contingent liabilities and expenses in connection with future acquisitions;

• the failure to effectively integrate newly acquired operations; and

• the absence of expected returns from the amount of intangible assets we have recorded.

Because our actual results, performance or achievements could differ materially from those expressed in, or implied by, the forward-looking statements, we cannot give any assurance that any of the events anticipated by the forward-looking statements will occur or, if any of them do, what impact they will have.

Additional Information

We file our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, proxy statements, Current Reports on Form 8-K, and other reports filed or furnished pursuant to Section 13(a) or 15(d) under the Exchange Act with the U.S. Securities and Exchange Commission (“Commission” or “SEC”). These reports are available electronically as soon as reasonably practicable after we file such materials with the Commission through the Internet web site maintained by the SEC at http://www.sec.gov or by calling the SEC at its principal offices in Washington, DC at 1- 800-SEC-0330. The reports are also available in print to any shareholder who requests them by contacting our corporate secretary at the address above for the Company’s principal executive offices.

3

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Polypore, Inc.
Condensed Consolidated Balance Sheets

	October 1, 2005			January 1, 2005*
(in thousands)	(Unaudited)
Assets
Current assets:
Cash and equivalents	$	29,380		$	31,684
Accounts receivable, net		94,260			106,296
Inventories		54,205			61,789
Refundable income taxes		9,858			8,238
Deferred income taxes		3,403			7,954
Prepaid and other		7,113			5,288
Total current assets		198,219			221,249
Property, plant and equipment, net		389,755			441,350
Goodwill		537,517			535,844
Intangibles and loan acquisition costs, net		226,369			244,256
Environmental indemnification receivable, less current portion		17,285			20,125
Other		1,093			1,142
Total assets	$	1,370,238		$	1,463,966
Liabilities and shareholders’ equity
Current liabilities:
Revolving credit obligations	$	—		$	—
Accounts payable		21,312			20,581
Accrued liabilities		48,367			50,464
Current portion of debt-optional prepayment		—			25,000
Current portion of debt		88			2,260
Current portion of capital lease obligation		1,312			1,272
Total current liabilities		71,079			99,577
Debt, less current portion		776,724			824,939
Capital lease obligation, less current portion		6,355			7,344
Pension and postretirement benefits		47,045			48,652
Post employment benefits		7,895			10,119
Environmental reserve, less current portion		22,570			24,394
Deferred income taxes		124,850			138,566
Other		1,203			3,033
Commitments and contingencies
Shareholders’ equity:
Common stock		—			—
Paid-in capital		321,516			321,516
Retained (deficit)		(4,391	)		(14,870	)
Accumulated other comprehensive income (loss)		(4,608	)		696
		312,517			307,342
Total liabilities and shareholders’ equity	$	1,370,238		$	1,463,966

(*) Derived from audited consolidated financial statements.

See notes to condensed consolidated financial statements

4

Polypore, Inc.
Condensed Consolidated Statements of Income (Unaudited)

													Pre-
	Post-Transactions												Transactions
	Three Months			Three Months			Nine months			May 2, 2004			January 4, 2004
	Ended			Ended			Ended			through			through
(in thousands)	October 1, 2005			October 2, 2004			October 1, 2005			October 2, 2004			May 1, 2004
Net sales	$	105,764		$	117,496		$	330,876		$	206,225		$	179,273
Cost of goods sold		74,316			91,833			220,030			149,983			110,166
Gross profit		31,448			25,663			110,846			56,242			69,107
Selling, general and administrative expenses		17,546			18,871			54,138			31,485			23,381
Business restructuring		1,453			13,581			6,855			13,581			—
In process research and development		—			—			—			5,280			—
Operating income (loss)		12,449			(6,789	)		49,853			5,896			45,726
Other (income) expense:
Interest expense, net		15,116			13,602			44,863			21,974			6,048
Foreign currency and other		(126	)		506			(3,531	)		876			481
Unrealized gain on derivative instrument		—			—			—			—			(1,321	)
		14,990			14,108			41,332			22,850			5,208
Income (loss) before income taxes		(2,541	)		(20,897	)		8,521			(16,954	)		40,518
Income taxes		(4,258	)		(8,694	)		(1,958	)		(7,392	)		13,685
Net income (loss)	$	1,717		$	(12,203	)	$	10,479		$	(9,562	)	$	26,833

See notes to condensed consolidated financial statements

5

Polypore, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)

	Post-Transactions						Pre-Transactions
	Nine months			May 2, 2004			January 4, 2004
	Ended			through			through
(in thousands)	October 1, 2005			October 2, 2004			May 1, 2004
Operating activities:
Net income (loss)	$	10,479		$	(9,562	)	$	26,833
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation expense		28,947			10,677			14,409
Amortization expense		13,307			7,287			808
Amortization of loan acquisition costs		1,991			1,066			632
Inventory purchase accounting		—			18,505			—
Loss (gain) on disposal of property, plant and equipment		294			—			(1,432	)
Business restructuring		6,855			13,581			—
Foreign currency and other		(3,860	)		(2,056	)		(3,067	)
Changes in operating assets and liabilities:
Accounts receivable		6,181			(2,900	)		(13,189	)
Inventories		3,294			6,199			(1,434	)
Prepaid and other current assets		(2,248	)		(35	)		(107	)
Accounts payable and accrued liabilities		(3,678	)		(11,009	)		4,160
Other, net		(702	)		(6,285	)		1,298
Net cash provided by operating activities		60,860			25,468			28,911
Investing activities:
Purchases of property, plant and equipment		(9,994	)		(6,477	)		(5,497	)
Proceeds from sale of property, plant and equipment		24			62			1,923
Net cash used in investing activities		(9,970	)		(6,415	)		(3,574	)
Financing activities:
Proceeds from debt		—			821,517			610
Principal payments on debt		(50,065	)		(263,315	)		(7,923	)
Borrowings on revolving credit agreement		—			1,500			—
Payments on revolving credit agreement		—			(11,500	)		—
Loan acquisition costs		(437	)		(19,755	)		(59	)
Payments made for the change in ownership in connection with the Transactions		—			(867,368	)		—
Proceeds from equity investment		—			321,516			—
Net cash used in financing activities		(50,502	)		(17,405	)		(7,372	)
Effect of exchange rate changes on cash and equivalents		(2,692	)		(221	)		(2,156	)
Net increase (decrease) in cash and equivalents		(2,304	)		1,427			15,809
Cash and equivalents at beginning of period		31,684			35,872			20,063
Cash and equivalents at end of period	$	29,380		$	37,299		$	35,872

See notes to condensed consolidated financial statements

6

Polypore, Inc.
Notes to Condensed Consolidated Financial Statements
Nine months Ended October 1, 2005
(unaudited)

1. Description of Business and Transactions

Description of Business —Polypore, Inc. (the “Company” or “Polypore”), a wholly-owned subsidiary of Polypore International, Inc. (“Parent” or “Polypore International”), is a leading worldwide manufacturer and marketer of microporous membranes for use in energy storage and separations applications. The Company has a global presence in the major geographic markets of North America, South America, Western Europe and the Asia-Pacific region.

Change in Ownership— On January 30, 2004, the Company and its shareholders entered into a Stock Purchase Agreement with PP Acquisition Corporation (“PP Acquisition”), a subsidiary of Polypore International. On May 13, 2004, the Company and its stockholders consummated the stock purchase agreement with PP Acquisition, pursuant to which PP Acquisition purchased all of the outstanding shares of the Company’s capital stock (the “Transactions”). The aggregate purchase price, including acquisition related costs, was approximately $1,150,073,000 in cash. In connection with the Transactions, PP Acquisition obtained a new credit facility with initial borrowings of approximately $414,920,000, issued 8.75% senior subordinated notes with a face amount of $405,915,000 and received equity contributions from its shareholders of $320,385,000. PP Acquisition used the net proceeds from the new credit facility, the issuance of senior subordinated debt and equity contributions to pay the net purchase price to the existing shareholders, repay all outstanding indebtedness under the Company’s existing credit facility and pay transaction related fees and expenses. At the time of closing of the acquisition, PP Acquisition merged with and into the Company, with the Company as the surviving corporation. At the time of closing, all classes of common stock of the Company were canceled and the common stock of PP Acquisition was converted into 100 shares of common stock of the Company.

The acquisition of the Company by PP Acquisition was accounted for as a purchase in conformity with FASB Statement No. 141,Business Combinations(“FAS 141”) and FASB Statement No. 142,Goodwill and Other Intangible Assets(“FAS 142”). The total cost of the acquisition has been allocated as a change in basis to the tangible and intangible assets acquired and liabilities assumed based on their respective fair values as of May 13, 2004, the date of the merger. For accounting purposes, the Transactions were accounted for as if they occurred on the last day of the Company’s fiscal month ended May 1, 2004, which is the closest fiscal month end to May 13, 2004, the closing date of the Transactions.

The following table summarizes the final purchase price allocation based upon the fair value of the assets acquired and liabilities assumed at the date of acquisition.

(in thousands)
Current assets	$	201,405
Property, plant and equipment		406,934
Intangible assets		253,005
Goodwill		537,517
Other assets		23,933
Total assets acquired		1,422,794
Current liabilities		85,830
Debt, less current portion		819,790
Pension, postretirement and post employment benefits		54,027
Deferred income taxes		120,298
Other		22,464
Total liabilities assumed		1,102,409
Net assets acquired	$	320,385

The excess of the purchase price over the fair value of the net assets purchased was approximately $537,517,000 and was allocated to goodwill. The goodwill was assigned to the Energy Storage and Separations Media segments in the amounts of $373,468,000 and $164,049,000, respectively. The goodwill is not deductible for income tax purposes.

7

Polypore, Inc.
Notes to Condensed Consolidated Financial Statements
Nine months Ended October 1, 2005
(unaudited)

The following unaudited pro forma financial data summarizes the results of operations for the three and nine months ended October 2, 2004 as if the Transactions had occurred as of the beginning of each period. Unaudited pro forma results below are based on historical results of operations and include adjustments for depreciation, amortization and interest expense associated with the Transactions and the related income tax effects of these adjustments. The unaudited pro forma results for the three and nine months ended October 2, 2004 exclude non-recurring costs of $10,015,000 and $18,505,000, respectively, for the sale of inventory that was revalued in connection with the application of purchase accounting for the Transactions. The unaudited pro forma results for the nine months ended October 2, 2004 also exclude non-recurring costs of $5,280,000 for the write-off of in process research and development costs. The pro forma amounts do not necessarily reflect actual results that would have occurred.

	Three Months			Nine Months
	Ended			Ended
(in thousands)	October 2, 2004			October 2, 2004
Net sales	$	117,496		$	385,498
Net income (loss)	$	(6,746	)	$	17,807

2. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company are prepared in accordance with U.S. generally accepted accounting principles for interim financial information. Accordingly, the unaudited condensed consolidated financial statements and notes do not contain certain information included in the Company’s annual financial statements. In the opinion of management, all normal and recurring adjustments that are necessary for a fair presentation have been made. Operating results for the three and nine months ended October 1, 2005 are not necessarily indicative of the results that may be expected for the fiscal year ended December 31, 2005. The unaudited condensed consolidated financial statements should be read in conjunction with the annual audited financial statements for the year ended January 1, 2005.

3. Accounting Pronouncements

In June 2005, the FASB issued Statement No. 154,Accounting Changes and Error Corrections(“FAS 154”). This standard establishes new standards on accounting for changes in accounting principles. Pursuant to the new rules, all such changes must be accounted for by retrospective application to the financial statements of prior periods unless it is impracticable to do so. FAS 154 completely replaces APB Opinion No. 20 and FAS 3, though it carries forward the guidance in those pronouncements with respect to accounting for changes in estimates, changes in the reporting entity and the correction of errors. This Statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. Management does not believe there will be a significant impact as a result of adopting this Statement.

In June 2005, the FASB ratified the consensus reached by the EITF on Issue No. 05-5,Accounting for Early Retirement or Postemployment Programs with Specific Features (Such As Terms Specified in Altersteilzeit Early Retirement Arrangements). The EITF agreed with FASB staff observations that the salary components of Type I and Type II ATZ arrangements (excluding the bonus and additional contributions into the German government pension scheme) should be recognized over the period from the point at which the ATZ period begins until the end of the active service period. Additionally, the portion of the salary that is deferred under a Type II arrangement should be discounted if payment is expected to be deferred for a period longer than one year. In addition, the EITF reached a consensus that the bonus feature and the additional contributions into the German government pension scheme (collectively, the additional compensation) under a Type II ATZ arrangement should be accounted for as a post employment benefit under Statement 112. An entity should recognize the additional compensation over the period from the point at which the employee signs the ATZ contract until the end of the active service period. The EITF also concluded that the employer should recognize the government subsidy when it meets the necessary criteria and is entitled to the subsidy. The consensus in this Issue is effective for fiscal years beginning after December 15, 2005, and reported as a change in accounting estimate affected by a change in accounting principle as described in paragraph 19 of FAS 154. The Company is currently evaluating the provisions of this standard to determine the impact of adopting this statement.

8

Polypore, Inc.
Notes to Condensed Consolidated Financial Statements
Nine months Ended October 1, 2005
(unaudited)

In December 2004, the FASB issued Statement No. 153,Exchanges of Nonmonetary Assets(“FAS 153”), an amendment of APB Opinion No. 29,Accounting for Nonmonetary Transactions(“APB 29”). The amendments made by FAS 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have commercial substance. Previously, APB 29 required that the accounting for an exchange of a productive asset for a similar productive asset or an equivalent interest in the same or similar productive asset should be based on the recorded amount of the asset relinquished. The Statement is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. Earlier application is permitted for nonmonetary asset exchanges occurring in fiscal periods beginning after the date of issuance. Management does not believe there will be a significant impact as a result of adopting this Statement.

In November 2004, the FASB issued Statement No. 151,Inventory Costs(“FAS 151”). This statement amends Accounting Research Bulletin No. 43, Chapter 4,Inventory Pricing, to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). FAS 151 requires that idle facility expense, excess spoilage, double freight and re-handling costs be recognized as current-period charges regardless of whether they meet the criterion of “so abnormal”. FAS 151 also requires that allocation of fixed production overhead expenses to the costs of conversion be based on the normal capacity of the production facilities. FAS 151 is effective for all fiscal years beginning after June 15, 2005. Management does not believe there will be a significant impact as a result of adopting this Statement.

4. Inventories

Inventories are carried at the lower of cost or market using the first-in, first-out (“FIFO”) method of accounting. For purchase accounting, the value of inventory on hand at May 1, 2004 was increased by $19,007,000 to reflect the fair value of such inventory, less cost to sell. Operating results for the three months ended October 2, 2004 and the period from May 2, 2004 through October 2, 2004 include an increase in cost of goods sold of $10,015,000 and $18,505,000, respectively, representing the write-off of the purchase accounting adjustment for inventory that was sold during this period. The remaining inventory purchase accounting adjustment was charged to cost of goods sold in the fourth quarter of 2004.

Inventories consist of the following:

(in thousands)	October 1, 2005		January 1, 2005
Raw materials	$	21,365	$	22,243
Work-in-process		7,378		6,395
Finished goods		25,462		33,151
Total	$	54,205	$	61,789

5. Debt

Debt, in order of priority, consists of:

(in thousands)	October 1, 2005		January 1, 2005
Senior credit facilities:
Revolving credit facility	$	—	$	—
Term loan facilities		367,099		416,941
8.75% senior subordinated notes		408,375		429,315
Other		1,338		5,943
		776,812		852,199
Less optional prepayment		—		25,000
Less current maturities		88		2,260
Long-term debt	$	776,724	$	824,939

9

Polypore, Inc.
Notes to Condensed Consolidated Financial Statements
Nine months Ended October 1, 2005
(unaudited)

The Company made optional prepayments on the term loans of $20,000,000 and $25,000,000 on September 30, 2005 and March 1, 2005, respectively. In accordance with the credit agreement, the prepayments were applied first to the quarterly principal payments due for the next twelve months and second, pro rata against the remaining scheduled principal payments. After giving effect to the prepayments, the term loans will require quarterly payments of principal at the end of each fiscal quarter beginning on December 29, 2006.

6. Pension and Other Postretirement Benefits

The Company’s subsidiaries sponsor multiple defined benefit pension plans, which are primarily located at subsidiaries outside of the U.S., and an other postretirement benefit plan located in the U.S.

The following tables provide the components of net periodic benefit cost:

	Pension Plans
	Post-Transactions												Pre-Transactions
	Three Months			Three Months			Nine months			May 2, 2004			January 4, 2004
	Ended			Ended			Ended			through			through
	October 1,			October 2,			October 1,			October 2,
(in thousands)	2005			2004			2005			2004			May 1, 2004
Service cost	$	533		$	453		$	1,763		$	755		$	604
Interest cost		699			668			2,315			1,113			891
Expected return on plan assets		(192	)		(196	)		(650	)		(327	)		(261	)
Amortization of prior service cost		—			—			—			—			57
Recognized net actuarial loss		13			36			43			60			48
Net periodic benefit cost	$	1,053		$	961		$	3,471		$	1,601		$	1,339

	Other Postretirement Benefits
	Post-Transactions								Pre-Transactions
	Three Months		Three Months		Nine months		May 2, 2004		January 4, 2004
	Ended		Ended		Ended		through		through
	October 1,		October 2,		October 1,		October 2,
(in thousands)	2005		2004		2005		2004		May 1, 2004
Service cost	$	7	$	7	$	21	$	12	$	9
Interest cost		29		29		86		48		38
Amortization of prior service cost		—		—		—		—		(15	)
Recognized net actuarial loss		—		1		1		2		1
Net periodic benefit cost	$	36	$	37	$	108	$	62	$	33

10

Polypore, Inc.
Notes to Condensed Consolidated Financial Statements
Nine months Ended October 1, 2005
(unaudited)

7. Income Taxes

The income tax provision for the interim periods presented is computed at the effective rate expected to be applicable in each respective full year using the statutory rates on a country-by-country basis. The income tax expense recorded in the financial statements differs from the Federal statutory income tax rate due to a variety of factors, including state income taxes, foreign tax credits, the mix of income between U.S. and foreign jurisdictions taxed at varying rates, certain export sales which are excluded from taxable income and various changes in estimates of permanent differences and valuation allowances. In 2005, the impact of permanent differences on the effective tax rate is exacerbated by the relatively low consolidated income (loss) before income taxes.

The American Jobs Creation Act (the “Act”) was enacted on October 22, 2004. The Act contains a temporary provision that encourages companies to repatriate foreign earnings and a deduction from federal taxable income related to certain qualifying domestic production manufacturing activities.

The Company is still in the process of evaluating the effects of the repatriation provision that allows companies to repatriate foreign earnings to the U.S. by making certain dividends received by a U.S. corporation from controlled foreign corporations eligible for an 85% dividends-received deduction. This deduction would result in a 5.25% effective federal rate on repatriated earnings. The Company is not able to estimate the impact of the repatriation provisions at this time. However, the Company does not expect any negative impact from these provisions.

The impact of the qualified production activities deduction on taxable income is currently being evaluated. While the implications of this provision vary based on transition rules and the future income mix, the Company expects the provision will have a favorable impact on the Company’s effective tax rate in the future to the extent that the Company has taxable income in the U.S.

8. Segment Information

The Company’s operations are principally managed on a products basis and are comprised of two reportable segments: Energy Storage and Separations Media. The Energy Storage segment produces and markets membranes that provide the critical function of separating the cathode and anode in a variety of battery markets, including lithium, industrial and transportation applications. The Separations Media segment produces and markets membranes used as the high technology filtration element in various healthcare and industrial applications.

The Company evaluates the performance of segments and allocates resources to segments based on operating income before interest, income taxes, depreciation and amortization.

11

Polypore, Inc.
Notes to Condensed Consolidated Financial Statements
Nine months Ended October 1, 2005
(unaudited)

Financial information relating to the reportable operating segments is presented below:

													Pre-
	Post-Transactions												Transactions
	Three Months			Three Months			Nine months			May 2, 2004			January 4, 2004
	Ended			Ended			Ended			through			through
(in thousands)	October 1, 2005			October 2, 2004			October 1, 2005			October 2, 2004			May 1, 2004
Net sales to external customers:
Energy storage	$	76,018		$	78,608		$	233,934		$	138,812		$	119,436
Separations media		29,746			38,888			96,942			67,413			59,837
Total net sales to external customers	$	105,764		$	117,496		$	330,876		$	206,225		$	179,273
Operating income:
Energy storage	$	13,842		$	15,215		$	45,330		$	33,504		$	35,146
Separations media		60			3,380			11,378			11,546			10,580
Segment operating income		13,902			18,595			56,708			45,050			45,726
Business restructuring		(1,453	)		(15,369	)		(6,855	)		(15,369	)		—
In-process research and development		—			—			—			(5,280	)		—
Inventory purchase accounting		—			(10,015	)		—			(18,505	)		—
Total operating income (loss)		12,449			(6,789	)		49,853			5,896			45,726
Reconciling items:
Interest expense		15,116			13,602			44,863			21,974			6,048
Other		(126	)		506			(3,531	)		876			(840	)
Total consolidated income (loss) before income taxes	$	(2,541	)	$	(20,897	)	$	8,521		$	(16,954	)	$	40,518
Depreciation and amortization:
Energy storage	$	8,363		$	6,531		$	25,045		$	10,869		$	7,208
Separations media		5,529			4,301			17,209			7,095			8,009
Total depreciation and amortization	$	13,892		$	10,832		$	42,254		$	17,964		$	15,217

12

Polypore, Inc.
Notes to Condensed Consolidated Financial Statements
Nine months Ended October 1, 2005
(unaudited)

9. Related Party Transactions

The Company’s German subsidiary has an equity investment in a German patent and trademark legal firm. The investment represents 25% ownership of the firm and is accounted for by the equity method of accounting. The equity investment account balance was $150,000 and $154,000 at October 1, 2005 and January 1, 2005, respectively. Charges from the affiliate for work performed were $147,000 and $870,000 for the three and nine month periods ended October 1, 2005, respectively. Charges from the affiliate were $210,000, $210,000, and $523,000 for the three months ended October 2, 2004 and the periods from January 4, 2004 through May 1, 2004 and May 2, 2004 through October 2, 2004, respectively. Amounts due to the affiliate were approximately $81,000 and $357,000 at October 1, 2005 and January 1, 2005, respectively.

The Company’s corporate headquarters were housed in space leased by a former shareholder of the Company from an affiliate of the former shareholder. A portion of the lease payments and other expenses, primarily insurance and allocated other direct costs, were charged to the Company. Charges from the affiliate for work performed were $0 and $32,000 for the three and nine month periods ended October 1, 2005, respectively. Charges from the affiliate were $165,000 and $369,000 for the periods from January 4, 2004 through May 1, 2004 and May 2, 2004 through October 2, 2004, respectively.

10. Comprehensive Income

Comprehensive income (loss) is as follows:

												Pre-
	Post-Transactions											Transactions
	Three Months		Three Months			Nine months			May 2, 2004			January 4, 2004
	Ended		Ended			Ended			through			through
	October 1,		October 2,			October 1,			October 2,
(in thousands)	2005		2004			2005			2004			May 1, 2004
Net income (loss)	$	1,717	$	(12,203	)	$	10,479		$	(9,562	)	$	26,833
Other comprehensive income (loss), primarily foreign currency translation		195		2,669			(5,304	)		7,847			(19,848	)
Comprehensive income (loss)	$	1,912	$	(9,534	)	$	5,175		$	(1,715	)	$	6,985

11. Environmental Matters

The Company accrues for environmental obligations when such expenditures are probable and reasonably estimable. The amount of liability recorded is based on currently available information, including the progress of remedial investigations, current status of discussions with regulatory authorities regarding the method and extent of remediation, presently enacted laws and existing technology. Accruals for estimated losses from environmental obligations are adjusted as further information develops or circumstances change. Costs of future expenditures for environmental obligations are not discounted to their present value. Recoveries of environmental costs from other parties are recognized as assets when their receipt is deemed probable. Although it is not possible to predict with certainty the outcome of environmental matters of which the Company is aware, or the ultimate costs of remediation, management does not believe that any reasonably possible expenditures that may be incurred in excess of amounts accrued should result in a material adverse effect on the business, financial condition or results of operations of the Company.

In connection with the Transactions, the Company identified a potential enforcement issue with the United States Environmental Protection Agency (“EPA”). On April 5, 2005, the Company received a Finding of Violation (“FOV”) dated March 28, 2005 from the EPA alleging a noncompliance with the Title V Air Operating Permit at its Corydon, Indiana facility relating to the control of fugitive emissions at the facility. The Company recorded its best estimate of potential penalties through adjustment to the allocation of purchase price. On October 21, 2005, the

13

Polypore, Inc.
Notes to Condensed Consolidated Financial Statements
Nine months Ended October 1, 2005
(unaudited)

Company received a formal offer for settlement of the matter from the EPA. Although a final agreement has not been reached, management does not believe that penalties resulting from this matter will have a material adverse effect on the business, financial condition or results of operations of the Company.

In connection with the Transactions, the Company identified potential environmental contamination at its manufacturing facility in Potenza, Italy. Subsequent to the Transactions, additional environmental studies were performed with the assistance of a third-party advisor and a preliminary plan for remediation was developed. The Company reported the matter to the proper authorities and presented its plan for remediation. Based on this initial plan, the Company recorded an initial estimate of the liability of $1,392,000 in the preliminary allocation of purchase price at January 1, 2005. During the three months ended April 2, 2005, the remediation plan was further refined and new cost estimates were developed with assistance of the third-party advisor and in consultation with the Italian environmental authorities. Based on these changes, the accrual was increased by $1,869,000 through further adjustment to the preliminary allocation of purchase price. The Company anticipates that expenditures will be made over the next seven to ten years.

In connection with the acquisition of Membrana in 2002, the Company recorded a reserve for environmental obligations that was finalized in 2003. The reserve provides for costs to remediate known environmental issues and operational upgrades which are required in order for the Company to remain in compliance with local regulations. The Company anticipates that expenditures will be made over the next seven to ten years. The initial estimate and subsequent finalization of the reserve was included in the allocation of purchase price at the date of acquisition.

The Company has indemnification agreements for certain environmental matters from Acordis A.G. (“Acordis”) and Akzo Nobel (“Akzo”), the prior owner of Membrana. Akzo originally provided broad environmental protections to Acordis with the right to assign such indemnities to Acordis’s successors. Akzo’s indemnifications relate to conditions existing prior to December 1999, which is the date that Membrana was sold to Acordis. The Akzo agreement provides indemnification of claims through December 2007, with the indemnification percentage decreasing each year during the coverage period. Through December 2003, Akzo pays 75% of any approved claim. After that, Akzo pays 65% of claims reported through December 2006 and 50% of claims reported through December 2007. Claims indemnified through the Akzo agreement are subject to an aggregate 2,000,000 Euro deductible which has been met. In addition to the Akzo indemnification, Acordis provides separate indemnification of claims incurred from December 1999 through February 2002, the acquisition date. At October 1, 2005, amounts receivable under the indemnification agreement were $17,999,000.

12. Business Restructuring

2005 Restructuring Plan

In order to better accommodate customer growth and related demand for both lead-acid and lithium battery separators in the greater Asian market, the Company’s Energy Storage segment is transferring certain assets from Europe and the United States to its facilities in Thailand and China. The capacity realignment plan includes the closure of the Company’s facility in Feistritz, Austria, the downsizing of its Norderstedt, Germany facility and the relocation of certain assets from these two plants to the Company’s facilities in Prachinburi, Thailand. Additionally, finishing equipment from the Company’s facility in Charlotte, North Carolina will be relocated to its facility in Shanghai, China. The total cost of the realignment plan is expected to be approximately $7,900,000, of which $5,437,000 has been recognized ($289,000 in the three months ended October 1, 2005) and the remaining costs will be recognized over the rest of 2005 and in 2006. We expect to realize a portion of the cost savings in 2006 and the full amount of the savings in 2007. The timing and scope of these restructuring measures are subject to change as the Company further evaluates its business needs and costs.

As part of the realignment plan, the Company announced on June 16, 2005 layoffs of 110 employees at its Feistritz, Austria, Norderstedt, Germany and Charlotte, North Carolina facilities. The total cost of the employee layoffs and early retirement program is expected to be approximately $4,600,000, of which $3,938,000 has been recognized ($89,000 in the three months ended October 1, 2005) and the remaining costs will be recognized over the rest of 2005 and in 2006.

The Company recorded an impairment charge of $1,278,000 in the three months ended July 2, 2005 for property, plant and equipment located at the Feistritz, Austria facility that will not be relocated to Prachinburi, Thailand. In

14

Polypore, Inc.
Notes to Condensed Consolidated Financial Statements
Nine months Ended October 1, 2005
(unaudited)

accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, the impairment charge represents the amount by which the carrying value of the assets exceeds the expected future cash flows to be generated over the remaining life of the assets.

The Company estimates that other costs, including disassembly, moving, and legal expenses, will be approximately $2,000,000, of which $221,000 has been incurred ($200,000 during the three months ended October 1, 2005). These costs will be recognized as incurred in accordance with FASB Statement No. 146,Accounting for Costs Associated with Exit or Disposal Activities(“FAS 146”).

2004 Restructuring Plan

In an effort to manage costs and in response to the decision of a customer to outsource its dialyzer production, the Company implemented a number of cost reduction measures in 2004 relating to the Separations Media segment, including employee layoffs, the relocation of certain research and development operations conducted in a leased facility in Europe to facilities where the related manufacturing operations are conducted and other cost reductions.

The timing and scope of these restructuring measures are subject to change as the Company further evaluates its business needs and costs. On September 3, 2004, the Company announced a layoff of approximately 200 employees at its Wuppertal, Germany facility. During the year ended January 1, 2005, a charge of $13,899,000 was recorded as an estimate of the costs associated with the layoff. The Company expects to make most of the payments and realize a portion of the cost savings related to the layoffs during fiscal 2005. In connection with a customer’s outsourcing of its dialyzer production, the Company also recorded a charge for raw materials, a portion of which the Company was obligated to purchase under an existing purchase commitment, of $1,788,000 in cost of goods sold during the year ended January 1, 2005. Finally, in connection with the relocation of its research and development operations, the Company expects to record a charge to earnings of approximately $2,600,000, of which $1,530,000 has been recognized ($1,276,000 in the three months ended October 1, 2005) and the remainder is expected to occur in the fourth quarter of 2005. The Company does not expect to record any impairment to long-lived assets in connection with the relocation.

The restructuring reserve is comprised of the following:

	Balance at											Foreign			Balance at
	January 1,		Restructuring			Non-cash			Cash			Currency			October 1,
(in thousands)	2005		Charges			Charges			Payments			Translation			2005
2004 Restructuring Plan
Severance and benefit costs	$	14,944	$	(112	)	$	—		$	(8,950	)	$	(921	)	$	4,961
Raw materials		1,256		—			—			(881	)		(129	)		246
Other		—		1,530			—			(1,151	)		—			379
2005 Restructuring Plan
Severance and benefit costs		—		3,938			—			(186	)		(116	)		3,636
Asset disposals and impairments		—		1,278			(1,278	)		—			—			—
Other		—		221			—			(221	)		—			—
Total	$	16,200	$	6,855		$	(1,278	)	$	(11,389	)	$	(1,166	)	$	9,222

The current portion of the reserve for business restructuring costs is recorded in accrued liabilities and the non-current portion is recorded in other non-current liabilities.

15

Polypore, Inc.
Notes to Condensed Consolidated Financial Statements
Nine months Ended October 1, 2005
(unaudited)

13. Financial Statements of Guarantors

On May 13, 2004, the Company and its stockholders consummated a stock purchase agreement with PP Acquisition, pursuant to which PP Acquisition purchased all the outstanding shares of the Company’s capital stock. In connection with the acquisition, the Company obtained borrowings under a new senior secured credit facility and through the issuance of senior subordinated notes, the proceeds of which were used to purchase the Company’s capital stock and repay existing indebtedness under the credit agreement.

Payment of the senior subordinated notes is fully and unconditionally guaranteed, jointly and severally, on a senior subordinated basis without restrictions on funds transfer by certain of the Company’s subsidiaries (the “Guarantors”). Each guarantor is 100% owned by the Company. Management has determined that separate complete financial statements of the Guarantors would not be material to users of the financial statements. The following sets forth condensed consolidating financial statements of the Guarantors and non-Guarantor subsidiaries.

Condensed Consolidating Balance Sheet
As of October 1, 2005

			Combined
	Combined		Non-				Reclassifications
	Guarantor		Guarantor		The		and
(in thousands)	Subsidiaries		Subsidiaries		Company		Eliminations			Consolidated
Assets
Cash and equivalents	$	83	$	23,667	$	5,630	$	—		$	29,380
Accounts receivable, net		34,213		60,047		—		—			94,260
Inventories		15,390		38,815		—		—			54,205
Other		5,232		7,876		7,266		—			20,374
Total current assets		54,918		130,405		12,896		—			198,219
Due from affiliates		179,504		210,630		292,254		(682,388	)		—
Investment in subsidiaries		165,720		205,521		268,813		(640,054	)		—
Property, plant and equipment, net		108,782		280,973		—		—			389,755
Goodwill		—		—		537,517		—			537,517
Intangibles and loan acquisition costs, net		73		—		226,296		—			226,369
Other		812		17,566		—		—			18,378
Total assets	$	509,809	$	845,095	$	1,337,776	$	(1,322,442	)	$	1,370,238
Liabilities and shareholders’ equity
Accounts payable, accrued liabilities and other	$	10,089	$	45,485	$	14,105	$	—		$	69,679
Current portion of debt		88		—		—		—			88
Current portion of capital lease obligation		1,312		—		—		—			1,312
Total current liabilities		11,489		45,485		14,105		—			71,079
Due to affiliates		296,760		214,249		171,379		(682,388	)		—
Debt, less current portion		—		1,250		775,474		—			776,724
Capital lease obligation, less current portion		6,355		—		—		—			6,355
Pension and postretirement benefits		2,339		44,706		—		—			47,045
Post employment benefits		—		7,895		—		—			7,895
Environmental reserve, less current portion		—		22,570		—		—			22,570
Deferred income taxes and other		3,360		58,392		64,301		—			126,053
Shareholders’ equity		189,506		450,548		312,517		(640,054	)		312,517
Total liabilities and shareholders’ equity	$	509,809	$	845,095	$	1,337,776	$	(1,322,442	)	$	1,370,238

16

Polypore, Inc.
Notes to Condensed Consolidated Financial Statements
Nine months Ended October 1, 2005
(unaudited)

13. Financial Statements of Guarantors (continued)

Condensed Consolidating Balance Sheet
As of January 1, 2005

				Combined
	Combined		��	Non-
	Guarantor			Guarantor		The		Reclassifications
(in thousands)	Subsidiaries			Subsidiaries		Company		and Eliminations			Consolidated
Assets
Cash and equivalents	$	2,263		$	20,244	$	9,177	$	—		$	31,684
Accounts receivable, net		37,237			69,059		—		—			106,296
Inventories		19,265			42,524		—		—			61,789
Other		1,561			9,985		9,934		—			21,480
Total current assets		60,326			141,812		19,111		—			221,249
Due from affiliates		178,805			253,225		300,797		(732,827	)		—
Investment in subsidiaries		172,372			212,563		273,046		(657,981	)		—
Property, plant and equipment, net		113,048			328,302		—		—			441,350
Goodwill		—			—		535,844		—			535,844
Intangibles and loan acquisition costs, net		82			—		244,174		—			244,256
Other		797			20,470		—		—			21,267
Total assets	$	525,430		$	956,372	$	1,372,972	$	(1,390,808	)	$	1,463,966
Liabilities and shareholders’ equity
Accounts payable, accrued liabilities and other	$	8,857		$	54,561	$	7,627	$	—		$	71,045
Current portion of debt		97			2,163		25,000		—			27,260
Current portion of capital lease obligation		1,272			—		—		—			1,272
Total current liabilities		10,226			56,724		32,627		—			99,577
Due to affiliates		306,530			281,718		144,579		(732,827	)		—
Debt, less current portion		—			3,683		821,256		—			824,939
Capital lease obligation, less current portion		7,344			—		—		—			7,344
Pension and postretirement benefits		2,231			46,421		—		—			48,652
Post employment benefits		—			10,119		—		—			10,119
Environmental reserve, less current portion		—			24,394		—		—			24,394
Deferred income taxes and other		3,359			71,072		67,168		—			141,599
Shareholders’ equity		195,740			462,241		307,342		(657,981	)		307,342
Total liabilities and shareholders’ equity	$	525,430		$	956,372	$	1,372,972	$	(1,390,808	)	$	1,463,966

17

Polypore, Inc.
Notes to Condensed Consolidated Financial Statements
Nine months Ended October 1, 2005
(unaudited)

13. Financial Statements of Guarantors (continued)

Condensed Consolidating Statement of Income

For the three months ended October 1, 2005

				Combined
	Combined			Non-
	Guarantor			Guarantor		The			Reclassifications
(in thousands)	Subsidiaries			Subsidiaries		Company			and Eliminations			Consolidated
Net sales	$	41,395		$	64,369	$	—		$	—		$	105,764
Cost of goods sold		19,348			54,968		—			—			74,316
Gross profit		22,047			9,401		—			—			31,448
Selling, general and administrative expenses		11,179			6,367		—			—			17,546
Business restructuring		—			1,453		—			—			1,453
Operating income		10,868			1,581		—			—			12,449
Other (income) expense, net		(536	)		459		15,067			—			14,990
Equity earnings in subsidiaries		—			—		(6,578	)		6,578			—
Income (loss) before income taxes		11,404			1,122		(8,489	)		(6,578	)		(2,541	)
Income taxes		5,933			15		(10,206	)		—			(4,258	)
Net income (loss)	$	5,471		$	1,107	$	1,717		$	(6,578	)	$	1,717

Condensed Consolidating Statement of Income
For the three months ended October 2, 2004

				Combined
	Combined			Non-
	Guarantor			Guarantor			The			Reclassifications
(in thousands)	Subsidiaries			Subsidiaries			Company			and Eliminations			Consolidated
Net sales	$	48,031		$	69,465		$	—		$	—		$	117,496
Cost of goods sold		30,661			61,172			—			—			91,833
Gross profit		17,370			8,293			—			—			25,663
Selling, general and administrative expenses		10,314			8,557			—			—			18,871
Business restructuring		—			13,581			—			—			13,581
Operating income (loss)		7,056			(13,845	)		—			—			(6,789	)
Other (income) expense, net		(409	)		3,395			11,122			—			14,108
Equity in loss of subsidiaries		—			—			10,790			(10,790	)		—
Income (loss) before income taxes		7,465			(17,240	)		(21,912	)		10,790			(20,897	)
Income taxes		4,893			(3,878	)		(9,709	)		—			(8,694	)
Net income (loss)	$	2,572		$	(13,362	)	$	(12,203	)	$	10,790		$	(12,203	)

18

Polypore, Inc.
Notes to Condensed Consolidated Financial Statements
Nine months Ended October 1, 2005
(unaudited)

13. Financial Statements of Guarantors (continued)

Condensed Consolidating Statement of Income

For the nine months ended October 1, 2005

				Combined
	Combined			Non-
	Guarantor			Guarantor			The			Reclassifications
(in thousands)	Subsidiaries			Subsidiaries			Company			and Eliminations			Consolidated
Net sales	$	123,697		$	207,179		$	—		$	—		$	330,876
Cost of goods sold		60,892			159,138			—			—			220,030
Gross profit		62,805			48,041			—			—			110,846
Selling, general and administrative expenses		33,205			20,933			—			—			54,138
Business restructuring		159			6,696			—			—			6,855
Operating income		29,441			20,412			—			—			49,853
Other (income) expense, net		(1,405	)		(190	)		42,927			—			41,332
Equity earnings in subsidiaries		—			—			(32,264	)		32,264			—
Income (loss) before taxes		30,846			20,602			(10,663	)		(32,264	)		8,521
Income taxes		15,290			3,894			(21,142	)		—			(1,958	)
Net income (loss)	$	15,556		$	16,708		$	10,479		$	(32,264	)	$	10,479

Condensed Consolidating Statement of Income

For the period from May 2, 2004 through October 2, 2004

				Combined
	Combined			Non-
	Guarantor			Guarantor			The			Reclassifications
(in thousands)	Subsidiaries			Subsidiaries			Company			and Eliminations			Consolidated
Net sales	$	86,390		$	119,835		$	—		$	—		$	206,225
Cost of goods sold		54,032			95,951			—			—			149,983
Gross profit		32,358			23,884			—			—			56,242
Selling, general and administrative expenses		17,578			13,907			—			—			31,485
Business restructuring		—			13,581			—			—			13,581
In process research and development		5,280			—			—			—			5,280
Operating income (loss)		9,500			(3,604	)		—			—			5,896
Other (income) expense, net		(639	)		4,144			19,345			—			22,850
Equity in loss of subsidiaries		—			—			2,756			(2,756	)		—
Income (loss) before income taxes		10,139			(7,748	)		(22,101	)		2,756			(16,954	)
Income taxes		5,941			(794	)		(12,539	)		—			(7,392	)
Net income (loss)	$	4,198		$	(6,954	)	$	(9,562	)	$	2,756		$	(9,562	)

19

Polypore, Inc.
Notes to Condensed Consolidated Financial Statements
Nine months Ended October 1, 2005
(unaudited)

Condensed Consolidating Statement of Income

For the period January 4, 2004 through May 1, 2004

				Combined
	Combined			Non-
	Guarantor			Guarantor		The			Reclassifications
(in thousands)	Subsidiaries			Subsidiaries		Company			and Eliminations			Consolidated
Net sales	$	76,282		$	102,991	$	—		$	—		$	179,273
Cost of goods sold		34,796			75,370		—			—			110,166
Gross profit		41,486			27,621		—			—			69,107
Selling, general and administrative expenses		13,105			10,276		—			—			23,381
Operating income		28,381			17,345		—			—			45,726
Other (income) expense, net		(367	)		971		4,604			—			5,208
Equity earnings in subsidiaries		—			—		(30,056	)		30,056			—
Income before taxes		28,748			16,374		25,452			(30,056	)		40,518
Income taxes		9,775			5,291		(1,381	)		—			13,685
Net income (loss)	$	18,973		$	11,083	$	26,833		$	(30,056	)	$	26,833

20

Polypore, Inc.
Notes to Condensed Consolidated Financial Statements
Nine months Ended October 1, 2005
(unaudited)

13. Financial Statements of Guarantors (continued)

Condensed Consolidating Statement of Cash Flows
For the nine months ended October 1, 2005

				Combined
	Combined			Non-
	Guarantor			Guarantor			The			Reclassifications
(in thousands)	Subsidiaries			Subsidiaries			Company			and Eliminations			Consolidated
Net cash provided by operating activities	$	41,324		$	34,943		$	16,328		$	(31,735	)	$	60,860
Investing activities:
Purchases of property, plant and equipment		(2,871	)		(7,123	)		—			—			(9,994	)
Proceeds from sale of property, plant and equipment		24			—			—			—			24
Net cash used in investing activities		(2,847	)		(7,123	)		—			—			(9,970	)
Financing activities:
Principal payments on debt		(949	)		(4,096	)		(45,020	)		—			(50,065	)
Loan acquisition costs		—			—			(437	)		—			(437	)
Intercompany transactions, net		(39,727	)		(17,590	)		25,582			31,735			—
Net cash provided by (used in) financing activities		(40,676	)		(21,686	)		(19,875	)		31,735			(50,502	)
Effect of exchange rate changes on cash and equivalents		19			(2,711	)		—			—			(2,692	)
Net increase (decrease) in cash and equivalents		(2,180	)		3,423			(3,547	)		—			(2,304	)
Cash and equivalents at beginning of period		2,263			20,244			9,177			—			31,684
Cash and equivalents at end of period	$	83		$	23,667		$	5,630		$	—		$	29,380

21

Polypore, Inc.
Notes to Condensed Consolidated Financial Statements
Nine months Ended October 1, 2005
(unaudited)

13. Financial Statements of Guarantors (continued)

Condensed Consolidating Statement of Cash Flows
For the period from May 2, 2004 through October 2, 2004

				Combined
	Combined			Non-
	Guarantor			Guarantor			The			Reclassifications
(in thousands)	Subsidiaries			Subsidiaries			Company			and Eliminations			Consolidated
Net cash provided by operating activities	$	13,896		$	8,187		$	—		$	3,385		$	25,468
Investing activities:
Purchases of property, plant and equipment		(3,346	)		(3,131	)		—			—			(6,477	)
Proceeds from sale of property, plant, and equipment		—			62			—			—			62
Net cash used in investing activities		(3,346	)		(3,069	)		—			—			(6,415	)
Financing activities:
Proceeds from debt		—			682			820,835			—			821,517
Principal payments on debt		(1,037	)		(344	)		(261,934	)		—			(263,315	)
Borrowings on revolving credit agreement		—			—			1,500			—			1,500
Payments on revolving credit agreement		—			—			(11,500	)		—			(11,500	)
Loan acquisition costs		—			—			(19,755	)		—			(19,755	)
Payments made for the change in ownership in connection with the Transactions		—			—			(867,368	)		—			(867,368	)
Proceeds from equity investment		—			—			321,516			—			321,516
Payment of dividends		4,140			(4,140	)		—			—			—
Intercompany transactions, net		(27,198	)		(3,098	)		33,681			(3,385	)		—
Net cash provided by (used in) financing activities		(24,095	)		(6,900	)		16,975			(3,385	)		(17,405	)
Effect of exchange rate changes on cash and cash equivalents		19			(240	)		—			—			(221	)
Net increase (decrease) in cash and cash equivalents		(13,526	)		(2,022	)		16,975			—			1,427
Cash and cash equivalents at beginning of period		11,788			24,084			—			—			35,872
Cash and cash equivalents at end of period	$	(1,738	)	$	22,062		$	16,975		$	—		$	37,299

22

Polypore, Inc.
Notes to Condensed Consolidated Financial Statements
Nine months Ended October 1, 2005
(unaudited)

13. Financial Statements of Guarantors (continued)

Condensed Consolidating Statement of Cash Flows
For the period from January 4, 2004 through May 1, 2004

				Combined
	Combined			Non-						Reclassifications
	Guarantor			Guarantor			The			and
(in thousands)	Subsidiaries			Subsidiaries			Company			Eliminations			Consolidated
Net cash provided by operating activities	$	14,891		$	16,640		$	—		$	(2,620	)	$	28,911
Investing activities:
Purchases of property, plant and equipment		(2,958	)		(2,539	)		—			—			(5,497	)
Proceeds from sale of property, plant and equipment		—			1,923			—			—			1,923
Net cash used in investing activities		(2,958	)		(616	)		—			—			(3,574	)
Financing activities:
Proceeds from debt		—			610			—			—			610
Principal payments on debt		—			(3,778	)		(4,145	)		—			(7,923	)
Loan acquisition costs		—			—			(59	)		—			(59	)
Intercompany transactions, net		(6,028	)		(141	)		3,549			2,620			—
Net cash provided by (used in) financing activities		(6,028	)		(3,309	)		(655	)		2,620			(7,372	)
Effect of exchange rate changes on cash and equivalents		237			(2,393	)		—			—			(2,156	)
Net increase (decrease) in cash and equivalents		6,142			10,322			(655	)		—			15,809
Cash and equivalents at beginning of period		1,531			13,762			4,770			—			20,063
Cash and equivalents at end of period	$	7,673		$	24,084		$	4,115		$	—		$	35,872

23

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussions of our financial condition and results of operations should be read together with our unaudited consolidated financial statements and the related notes included elsewhere in this Quarterly Report onForm 10-Q and our audited consolidated financial statements and the related notes included in our Annual Report onForm 10-K for the fiscal year ended January 1, 2005.

Overview

We are a leading worldwide developer, manufacturer and marketer of highly specialized polymer-based membranes used in separation and filtration processes in terms of market share. Our products and technologies target specialized applications and markets that require the removal or separation of various materials from liquids, with such materials ranging in size from microscopic to those visible to the human eye. We manage our operations under two business segments: energy storage and separations media. The energy storage segment, which accounts for approximately two-thirds of our total sales, produces different types of membranes that function as separators in lead-acid batteries used in transportation and industrial applications and lithium batteries used in electronics applications. The separations media segment, which accounts for approximately one-third of our total sales, produces membranes used in various healthcare and industrial applications, including hemodialysis, blood oxygenation, ultrapure water filtration, degasification and other specialty applications.

We serve markets with an attractive mix of both stability and growth. Our lead-acid battery separators serve the stable and predictable market for transportation and industrial applications, with approximately 80% of sales for transportation applications coming from replacement batteries in the aftermarket. This replacement market is primarily driven by the growing size of the worldwide fleet of motor vehicles, which according toWard’s Motor Vehicles Facts and Figures,has been growing approximately 3% per year. According to industry analysts, sales in the rechargeable lithium battery market are expected to grow at a compound annual growth rate of approximately 16% through 2011, driven by growth in underlying markets for portable electronic products (primarily mobile telephones and laptop computers) and the displacement of nickel-based battery technologies. In our primary healthcare end-market, hemodialysis, industry analysts estimate that the number of end-stage renal disease, or “ESRD,” patients has been growing 7% per year over the last twenty years, while the frequent dialysis treatments required to treat the disease create a stable and recurring demand for dialyzers and our dialyzer membranes. In our industrial and specialty filtration markets, ever-increasing demand for higher-purity process streams is driving high growth rates in a variety of end-markets, including semiconductor and microelectronics manufacturing, food and beverage processing and water purification.

Our markets are highly specialized, and we generally compete with only a few other companies. We enjoy longstanding relationships and collaborative partnerships with a diverse base of customers who are among the leaders in their respective markets. These relationships are strengthened by our ability to develop highly technical membrane products that meet the precise and evolving needs of customers. Most of our products require years of cooperative development with customers, extensive testing and, in some applications, regulatory approval prior to the introduction of our customers’ products to the market. Although many of our products are critical functional components in our customers’ end products, they typically represent a relatively small percentage of the final delivered cost. In many of our markets, we are often selected as the customer’s exclusive supplier.

We serve our customers globally with strategically located manufacturing facilities in the major geographic markets of North America, Europe and Asia.

Historically, our growth has been both organic and through acquisitions. In December 1999, we acquired Celgard, Inc., the lithium battery separator and separation membrane business of Celanese A.G., which gave us access to the fast-growing electronics and specialty filtration markets. In February 2002, we acquired Membrana GmbH, a German corporation, from Acordis A.G., or “Acordis,” to expand our presence in attractive healthcare and specialty filtration markets. Almost every process stream has a filtration application, while many end products require materials possessing specialized filtration and separation functions. The large and extremely fragmented filtration and separation market presents an opportunity for further consolidation into our already diverse markets and leading platform of technologies.

On May 13, 2004, Polypore and its stockholders consummated a stock purchase agreement with PP Acquisition Corporation (“PP Acquisition”), a subsidiary of Polypore International, pursuant to which PP Acquisition purchased all of the outstanding shares of the Company’s capital stock. The aggregate purchase price, including acquisition-

24

related costs, was approximately $1,150.1 million in cash. In connection with these transactions, PP Acquisition (i) obtained a credit facility with initial borrowings of approximately $414.9 million, (ii) issued $225.0 million aggregate principal amount of 8.75% senior subordinated dollar notes due 2012 and€150.0 million aggregate principal amount of 8.75% senior subordinated euro notes due 2012 (collectively, the “8.75% senior subordinated notes”), with an aggregate face amount of $405.9 million, and (iii) received equity contributions from its shareholders of $320.4 million. PP Acquisition used the net proceeds from the credit facility, the issuance of the 8.75% senior subordinated notes and the equity contributions to pay the net purchase price to the existing shareholders, repay all outstanding indebtedness under Polypore’s existing credit facility and pay transaction-related fees and expenses. At the time of closing of the acquisition, PP Acquisition merged with and into Polypore, with Polypore as the surviving corporation (the transactions associated with the acquisition of Polypore being, collectively, the “Transactions”).

The acquisition of the Company by PP Acquisition was accounted for as a purchase in conformity with FASB Statement No. 141,Business Combinations(“FAS 141”) and FASB Statement No. 142,Goodwill and Other Intangible Assets(“FAS 142”). The total cost of the merger of PP Acquisition with and into the Company has been allocated as a change in basis to the tangible and intangible assets acquired and liabilities assumed based on their respective fair values as of May 13, 2004, the date of the merger. The excess of the purchase price over the fair value of the net assets purchased was approximately $537.5 million and was allocated to goodwill. The goodwill is not deductible for income tax purposes. For accounting purposes, the Transactions were accounted for as if they occurred on the last day of the Company’s fiscal month ended May 1, 2004, which is the closest fiscal month end to May 13, 2004, the closing date of the Transactions.

Critical accounting policies

Critical accounting policies are those accounting policies that can have a significant impact on the presentation of our financial condition and results of operations, and that require the use of complex and subjective estimates based on past experience and management’s judgment. Because of uncertainty inherent in such estimates, actual results may differ from these estimates. Below are those policies that we believe are critical to the understanding of our operating results and financial condition. Management has discussed the development and selection of these critical accounting policies with the Audit Committee of our Board of Directors. For additional accounting policies, see Note 2 of the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended January 1, 2005.

Allowance for doubtful accounts

Accounts receivable are primarily composed of amounts owed to us through our operating activities and are presented net of an allowance for doubtful accounts. We establish an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. We charge accounts receivables off against our allowance for doubtful accounts when we deem them to be uncollectible on a specific identification basis. The determination of the amount of the allowance for doubtful accounts is subject to judgment and estimated by management. If circumstances or economic conditions deteriorate, we may need to increase the allowance for doubtful accounts.

Impairment of intangibles and goodwill

Identified intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. In accordance with FAS 142, goodwill and indefinite-lived intangible assets are not amortized, but are subject to an annual impairment test based on cash flow projections and fair value estimates. The determination of undiscounted cash flows is based on the Company’s strategic plans and historical results adjusted to reflect current and anticipated operating conditions. Estimating future cash flows requires significant judgment by us in such areas as future economic conditions, industry-specific conditions, product pricing and necessary capital expenditures. The use of different assumptions would increase or decrease the estimated value of future cash flows and recognition of an impairment loss might be required.

Pension and other postretirement benefits

Certain assumptions are used in the calculation of the actuarial valuation of our defined benefit pension plans and other postretirement benefits. These assumptions include the weighted average discount rate, rates of increase in compensation levels, expected long-term rates of return on assets and increases or trends in healthcare costs. If

25

actual results are less favorable than those projected by management, we may be required to recognize additional expense and liabilities.

Environmental matters

In connection with the Transactions, we identified and accrued for potential environmental contamination at our manufacturing facility in Potenza, Italy and potential penalties that may result from a Finding of Violation (“FOV”) at our manufacturing facility in Corydon, Indiana from the U.S. Environmental Protection Agency. In connection with the acquisition of Membrana in 2002, we recorded a reserve for environmental obligations for costs to remediate known environmental issues and operational upgrades as a matter of good manufacturing practices or in order to remain in compliance with local regulations.

We accrue for environmental obligations when such expenditures are probable and reasonably estimable. The amount of liability recorded is based on currently available information, including the progress of remedial investigations, current status of discussions with regulatory authorities regarding the method and extent of remediation, presently enacted laws and existing technology. Accruals for estimated losses from environmental obligations are adjusted as further information develops or circumstances change. If actual results are less favorable than those projected by management, we may be required to recognize additional expense and liabilities.

We have indemnification agreements for certain environmental matters from Acordis and Akzo Nobel, or “Akzo,” the prior owners of Membrana GmbH. Recoveries of environmental costs from other parties are recognized as assets when their receipt is deemed probable. We have recorded a receivable with regard to the Akzo indemnification agreement. If indemnification claims cannot be enforced against Acordis and Akzo, we may be required to reduce the amount of indemnification receivables recorded.

Results of operations

The information presented below for the pro forma nine months ended October 2, 2004 has been derived by combining the statement of operations for the pre-transactions period from January 4, 2004 through May 1, 2004 with the statement of operations for the post-transactions period from May 2, 2004 through October 2, 2004 and applying the pro forma adjustments for the Transactions. The pro forma results of operations for the nine months ended October 2, 2004 include adjustments for depreciation, amortization and interest expense associated with the Transactions and the related income tax effects of these adjustments. The pro forma results exclude non-recurring costs of $5.3 million for the write-off of in-process research and development costs and $18.5 million for the sale of inventory that was written up in purchase accounting for the Transactions.

	Three months ended						Nine months ended
	October 1,			October 2,			October 1,			October 2,
(in millions)	2005			2004			2005			2004(1)
Net sales	$	105.8		$	117.5		$	330.9		$	385.5
Gross profit		31.4			25.7			110.8			144.4
Selling, general and administrative expenses		17.5			18.9			54.1			60.0
Business restructuring		1.5			13.6			6.9			13.6
Operating income (loss)		12.4			(6.8	)		49.8			70.8
Interest expense, net		15.1			13.6			44.8			40.8
Foreign currency and other		(0.1	)		0.5			(3.5	)		1.3
Income (loss) before income taxes		(2.6	)		(20.9	)		8.5			28.7
Income taxes		(4.3	)		(8.7	)		(2.0	)		10.9
Net income (loss)	$	1.7		$	(12.2	)	$	10.5		$	17.8

26

	Three months ended						Nine months ended
	October 1,			October 2,			October 1,			October 2,
	2005			2004			2005			2004(1)
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Gross profit		29.7	%		21.9	%		33.5	%		37.5	%
Selling, general and administrative expenses		16.5	%		16.1	%		16.3	%		15.6	%
Business restructuring		1.4	%		11.6	%		2.1	%		3.5	%
Operating income (loss)		11.7	%		(5.8	)%		15.0	%		18.4	%
Interest expense, net		14.3	%		11.6	%		13.5	%		10.6	%
Foreign currency and other		(0.1	)%		0.4	%		(1.1	)%		0.3	%
Income (loss) before income taxes		(2.5	)%		(17.8	)%		2.6	%		7.4	%
Income taxes		(4.1	)%		(7.4	)%		(0.6	)%		2.8	%
Net income (loss)		1.6	%		(10.4	)%		3.2	%		4.6	%

(1) Unaudited pro forma financial information as if the Transactions had occurred on January 4, 2004, the first day of the nine month period ending October 2, 2004.

Three month period ended October 1, 2005 with three month period ended October 2, 2004

Net sales.Net sales for the three months ended October 1, 2005 were $105.8 million, a decrease of $11.7 million, or 10.0%, from the three months ended October 2, 2004. For the energy storage segment, net sales for the three months ended October 1, 2005 were $76.0 million, a decrease of $2.6 million, or 3.3%, from the three months ended October 2, 2004. Lithium battery separator sales in the three months ended October 1, 2005 were approximately the same as in the prior year. Although the lithium battery market remains volatile, we have seen an improvement in rechargeable lithium battery market conditions, especially in China, beginning late in the first quarter of 2005. Improved sales volumes for rechargeable lithium separators were somewhat offset by weakness in disposable lithium separator sales as military demand has declined. The overall increase in lithium sales volumes was offset by lower average sales prices due to increased capacity in the rechargeable lithium battery separator market and a higher portion of sales to our larger customers, who receive lower average prices. Lead acid battery separator sales decreased by $1.7 million due primarily to timing of orders. Energy storage sales include $.3 million from the negative impact of the dollar/euro exchange rate. For the separations media segment, net sales for the three months ended October 1, 2005 were $29.8 million, a decrease of $9.1 million, or 23.4%, from the three months ended October 2, 2004. The decrease in separations media sales was due primarily to the loss of a hemodialysis customer during the third quarter of 2004 and a decline in cellulosic membrane demand, offset somewhat by increases in synthetic membrane sales volumes. While positive developments in our synthetic membrane business provide promise for the future, we expect the decline in cellulosic demand to continue and to likely outpace synthetic gains during the near term. We are in the process of assessing future cellulosic demand and developing our strategic response. Separations media net sales include $.3 million from the negative impact of the dollar/euro exchange rate.

Gross profit. Gross profit for the three months ended October 1, 2005 was $31.4 million, an increase of $5.7 million, or 22.2%, from the three months ended October 2, 2004. Gross profit as a percent of sales for the three months ended October 1, 2005 increased to 29.7% from 21.9% in the prior year. Gross profit for the three months ended October 2, 2004 included an increase in cost of goods sold of $10.0 million for the write-off of the purchase accounting adjustment for inventory that was sold during this period. For the energy storage segment, gross profit for the three months ended October 1, 2005 was $26.8 million, an increase of $4.8 million, or 22.0%, from the same period in the prior year. Gross profit in the energy storage segment as a percent of sales for the three months ended October 1, 2005 increased to 35.3% from 28.0% in the prior year. The increase in gross profit during the three months ended October 1, 2005 is due primarily to a $5.0 million increase in cost of goods sold for the write-off of the purchase accounting adjustment for inventory that was sold during the three months October 2, 2004. Raw material and energy cost increases have to date largely been offset by internal cost saving actions. For the separations media segment, gross profit for the three months ended October 1, 2005 was $4.6 million, an increase of $0.9 million, or 23.0%, from the same period in the prior year. Gross profit in the separations media segment as a percent of sales for the three months ended October 1, 2005 increased to 15.3% from 9.5% in the same period of the prior year. The increase in gross profit was due primarily to a $5.0 million increase in cost of goods sold for the write-off of the purchase accounting adjustment for inventory that was sold during the three months October 2, 2004. The impact of the purchase accounting adjustment was mostly offset bv a decrease in production volumes

27

associated with the decline in cellulosic demand, resulting in higher production costs per unit as fixed costs were applied to lower production volumes.

Selling, general and administrative expenses. Selling, general and administrative expenses for the three months ended October 1, 2005 were $17.5 million, a decrease of $1.4 million, or 7.4%, from the three months ended October 2, 2004. The decrease was due primarily to lower expenses in connection with cost reduction measures.

Interest expense, net. Interest expense, net was $15.1 million for the three months ended October 1, 2005, an increase of $1.5 million from the three months ended October 2, 2004. The increase in interest expense is attributable to higher interest rates on our variable rate term loans, offset to some extent by the interest savings resulting from the prepayments on the term loans made during 2005.

Income taxes.Income taxes as a percentage of the loss before income taxes for the three months ended October 1, 2005 was 167.6%, as compared to 41.6% for the three months ended October 2, 2004. The income tax expense recorded in the financial statements differs from the Federal statutory income tax rate due to a variety of factors, including state income taxes, foreign tax credits, the mix of income between U.S. and foreign jurisdictions taxed at varying rates, certain export sales which are excluded from taxable income and various changes in estimates of permanent differences and valuation allowances. In 2005, the impact of permanent differences on the effective tax rate is exacerbated by the relatively low consolidated income (loss) before income taxes.

Nine month period ended October 1, 2005 with the pro forma nine month period ended October 2, 2004

Net sales.Net sales for the nine months ended October 1, 2005 were $330.9 million, a decrease of $54.6 million, or 14.2%, from the pro forma nine months ended October 2, 2004. For the energy storage segment, net sales for the nine months ended October 1, 2005 were $233.9 million, a decrease of $24.3 million, or 9.4%, from the pro forma nine months ended October 2, 2004. Lithium battery separator sales in the nine months ended October 1, 2005 decreased from the same period in the prior year by $26.4 million due to lower sales volume and average sales prices. The decline in sales volumes is due to unusually strong demand in China that occurred during the first half of 2004. In the second half of 2004 and early 2005, demand for rechargeable lithium battery separators in China slowed down and we experienced a decline in ordering patterns. Although the lithium battery market remains volatile, we have seen an improvement in rechargeable lithium battery market conditions, especially in China, beginning late in the first quarter of 2005. In addition, during the three months ended October 1, 2005, we experienced a decline in disposable lithium separator sales volumes as military demand has declined. Average sales prices have declined in 2005 due to increased capacity in the rechargeable lithium battery separator market and a higher portion of sales to our larger customers, who receive lower average prices. Lead-acid battery separator sales remained relatively consistent with sales from the same period in the prior year. Energy storage sales include $3.5 million from the positive impact of the dollar/euro exchange rate. For the separations media segment, net sales for the nine months ended October 1, 2005 were $97.0 million, a decrease of $30.3 million, or 23.8%, from the pro forma nine months ended October 2, 2004. The decrease in separations media sales was due to the loss of a hemodialysis customer during the third quarter of 2004 and a decline in cellulosic membrane demand, offset somewhat by increases in synthetic membrane sales volumes. While positive developments in our synthetic membrane business provide promise for the future, we expect the decline in cellulosic demand to continue and to likely outpace synthetic gains during the near term. We are in the process of assessing future cellulosic demand and developing our strategic response. Separations media net sales include $4.0 million from the positive impact of the dollar/euro exchange rate.

Gross profit. Gross profit for the nine months ended October 1, 2005 was $110.8 million, a decrease of $33.6 million, or 23.3%, from the pro forma nine months ended October 2, 2004. Gross profit as a percent of sales for the nine months ended October 1, 2005 decreased to 33.5% from 37.5% in the pro forma nine month period ending October 2, 2004. For the energy storage segment, gross profit for the nine months ended October 1, 2005 was $83.6 million, a decrease of $17.4 million, or 17.2%, from the same period in the prior year. Gross profit in the energy storage segment as a percent of sales for the nine months ended October 1, 2005 decreased to 35.8% from 39.2%. The decrease was the result of lower production volumes of lithium separators, a change in product mix and higher depreciation expense. The decrease in production volumes for lithium battery separators resulted in higher production costs per unit as fixed costs were applied to lower production volumes. Raw material and energy cost increases have to date largely been offset by internal cost saving actions. For the separations media segment, gross profit for the nine months ended October 1, 2005 was $27.2 million, a decrease of $16.2 million, or 37.4%, from the same period in the prior year. Gross profit in the separations media segment as a percent of sales for the nine months ended October 1, 2005 decreased to 28.0% from 34.1% in the same period of the prior year. The decrease was due to the decrease in production volumes, resulting in higher production costs per unit as fixed costs were applied to lower production volumes.

28

Selling, general and administrative expenses. Selling, general and administrative expenses for the nine months ended October 1, 2005 were $54.1 million, a decrease of $5.9 million, or 9.8%, from the pro forma nine months ended October 2, 2004. The decrease was due primarily to lower expenses in connection with cost reduction measures.

Interest expense, net.Interest expense, net was $44.8 million for the nine months ended October 1, 2005, an increase of $4.0 million from the pro forma nine months ended October 2, 2004. The increase in interest expense is attributable to higher interest rates on our variable rate term loans, offset to some extent by the interest savings resulting from the prepayments on the term loans made during 2005.

Income taxes.Income taxes as a percentage of income before income taxes for the nine months ended October 1, 2005 was 23.0%, as compared to the statutory rate of 38.0% for the pro forma nine months ended October 2, 2004. The income tax expense recorded in the financial statements differs from the Federal statutory income tax rate due to a variety of factors, including state income taxes, foreign tax credits, the mix of income between U.S. and foreign jurisdictions taxed at varying rates, certain export sales which are excluded from taxable income and various changes in estimates of permanent differences and valuation allowances. In 2005, the impact of permanent differences on the effective tax rate is exacerbated by the relatively low consolidated income (loss) before income taxes.

Business restructuring

In the three and nine months ended October 1, 2005, we recorded restructuring charges aggregating $1.5 million and $6.8 million, respectively. All restructuring charges, except for the asset impairment, will result in cash outflows. The cash outflows related to restructuring charges will be funded by cash from operating activities.

2005 restructuring.In order to better accommodate customer growth and related demand for both lead-acid and lithium battery separators in the greater Asian market, the Company’s energy storage segment is transferring certain assets from Europe and the United States to its facilities in Thailand and China. The capacity realignment plan includes the closure of the Company’s facility in Feistritz, Austria, the downsizing of its Norderstedt, Germany facility and the relocation of certain assets from these two plants to the Company’s facilities in Prachinburi, Thailand. Additionally, finishing equipment from the Company’s facility in Charlotte, North Carolina will be relocated to its facility in Shanghai, China. The total cost of the realignment plan is expected to be approximately $7.9 million, of which $5.4 million has been recognized ($0.2 million in the three months ended October 1, 2005) and the remaining costs will be recognized over the rest of 2005 and in 2006. We expect to realize a portion of the cost savings in 2006 and the full amount of the savings in 2007. The timing and scope of these restructuring measures are subject to change as the Company further evaluates its business needs and costs.

As part of the realignment plan, the Company announced on June 16, 2005 layoffs of 110 employees at its Feistritz, Austria, Norderstedt, Germany and Charlotte, North Carolina facilities. The total cost of the employee layoffs and early retirement program is expected to be approximately $4.6 million , of which $3.9 million has been recognized ($0.09 million in the three months ended October 1, 2005) and the remaining costs will be recognized over the rest of 2005 and in 2006.

The Company recorded an impairment charge of $1.3 million in the three months ended July 2, 2005 for property, plant and equipment located at the Feistritz, Austria facility that will not be relocated to Prachinburi, Thailand. In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, the impairment charge represents the amount by which the carrying value of the assets exceeds the expected future cash flows to be generated over the remaining life of the assets.

The Company estimates that other costs, including disassembly, moving, and legal expenses, will be approximately $2.0 million, of which $0.2 million has been incurred ($0.2 million during the three months ended October 1, 2005). These costs will be recognized as incurred in accordance with FASB Statement No. 146,Accounting for Costs Associated with Exit or Disposal Activities(“FAS 146”).

2004 restructuring.In an effort to manage costs and in response to the decision of a customer to outsource its dialyzer production, the Company implemented a number of cost reduction measures in 2004 relating to the separations media segment, including employee layoffs, the relocation of certain research and development operations conducted in a leased facility in Europe to facilities where the related manufacturing operations are conducted and other cost reductions.

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The timing and scope of these restructuring measures are subject to change as the Company further evaluates its business needs and costs. On September 3, 2004, the Company announced a layoff of approximately 200 employees at its Wuppertal, Germany facility. During the year ended January 1, 2005, a charge of $13.9 million was recorded as an estimate of the costs associated with the layoff. The Company expects to make most of the payments and realize a portion of the cost savings related to the layoffs during fiscal 2005. In connection with a customer’s outsourcing of its dialyzer production, the Company also recorded a charge for raw materials, a portion of which the Company was obligated to purchase under an existing purchase commitment, of $1.8 million in cost of goods sold during the year ended January 1, 2005. Finally, in connection with the relocation of its research and development operations, the Company expects to record a charge to earnings of approximately $2.6 million, of which $1.5 million has been recognized ($1.3 million in the three months ended October 1, 2005) and the remainder is expected to occur in the fourth quarter of 2005. The Company does not expect to record any impairment to long-lived assets in connection with the relocation. The restructuring reserve is comprised of the following:

	Balance at											Foreign			Balance at
	January 1,		Restructuring			Non-cash			Cash			Currency			October 1,
(in millions)	2005		Charges			Charges			Payments			Translation			2005
2004 Restructuring Plan
Severance and benefit costs	$	14.9	$	(0.1	)	$	—		$	(8.9	)	$	(0.9	)	$	5.0
Raw materials		1.3		—			—			(0.9	)		(0.1	)		0.3
Other		—		1.5			—			(1.2	)		—			0.3
2005 Restructuring Plan
Severance and benefit costs		—		3.9			—			(0.2	)		(0.1	)		3.6
Asset disposals and impairments		—		1.3			(1.3	)		—			—			—
Other		—		0.2			—			(0.2	)		—			—
Total	$	16.2	$	6.8		$	(1.3	)	$	(11.4	)	$	(1.1	)	$	9.2

Liquidity and capital resources

Operating activities. Net cash provided by operations was $60.9 million in the nine months ended October 1, 2005, as compared to $54.4 million in the pro forma nine months ended October 2, 2004. Cash provided by operations for the nine months ended October 1, 2005 consisted of net income before non-cash expenses of $58.0 million and a decrease in working capital. Accounts receivable decreased approximately $6.2 million (net of $5.8 million due to a decrease in the dollar/euro exchange rate) and days sales outstanding decreased 12%, due to the timing of payments from customers and the collection of a receivable due from a customer that decided to outsource its dialyzer production in 2004. Our last sales to the customer occurred at the beginning of the fourth quarter of 2004. However, accounts receivable due from that customer remained outstanding until issues unrelated to the collection of the receivable were resolved. We resolved these issues and collected the amounts due from the former customer in the first quarter of 2005. Inventory decreased by approximately $3.3 million (net of $4.3 million due to a decrease in the dollar/euro exchange rate), resulting in a decrease in inventory days of approximately 11%. The decrease is a result of our annual European shutdowns for employee vacations in the third quarter. Accounts payable and accrued liabilities increased by approximately $3.2 million (net of $4.5 million due to a decrease in the dollar/euro exchange rate) due to an increase in accrued interest, timing of payments and a decrease in the restructuring accrual. Accrued interest increased by $8.8 million because interest on our subordinated debt is paid semi- annually in the second and fourth quarters. The restructuring reserve decreased by $5.8 million, as restructuring payments of $11.4 million were somewhat offset by restructuring payments of $5.5 million.

Cash provided by operations for the pro forma nine months ended October 2, 2004 consisted of net income before non-cash expenses, offset somewhat by an increase in working capital. Accounts receivable increased and inventory decreased due to higher sales of lithium battery separators and hemodialysis membranes during this period. Accounts payable and accrued liabilities increased due primarily to the restructuring accrual.

Investing activities. Capital expenditures for the nine months ended October 1, 2005 were $10.0 million as compared to $12.0 million for the pro forma nine months ended October 2, 2004. We expect to spend approximately $15.0 million for capital expenditures in fiscal 2005. In the nine months ended October 2, 2004, we received proceeds of $1.9 million from the sale of undeveloped land at our French facility.

Financing activities. Cash used in financing activities for the nine months ended October 1, 2005 was $50.5 million as compared to $24.8 million for the pro forma nine months ended October 2, 2004. During the nine months ended October 1, 2005, we made optional prepayments totaling $45.0 million on the term loans under the

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Credit Facility and payments on other debt of $5.1 million. In accordance with the Credit Facility, the prepayments were applied first to the quarterly principal payments due for the next twelve months and second, pro rata against the remaining scheduled principal payments. After giving effect to the prepayments, the term loans will require quarterly principal payments of of approximately $0.9 million at the end of each fiscal quarter beginning on December 29, 2006.

We intend to fund our ongoing operations through cash generated by operations and availability under our Credit Facility. As part of the Transactions, we incurred substantial debt under our Credit Facility and from the issuance of the 8.75% senior subordinated notes, with interest payments on this indebtedness substantially increasing our liquidity requirements.

Our Credit Facility provided for initial borrowings of $370.0 million and€36.0 million under the term loan facilities due 2011 and a $90.0 million revolving credit facility due in 2010 (all of which remains unfunded). Our Credit Facility permits us to incur additional senior secured debt at the option of participating lenders, subject to the satisfaction of certain conditions.

On June 15, 2005, we completed a technical amendment to the Credit Facility to provide certain definitional changes in the debt covenant calculation to accommodate the asset relocations associated with the 2005 restructuring.

Borrowings under our Credit Facility bear interest at our choice of the Eurodollar rate or adjusted base rate, or “ABR,” in each case, plus an applicable margin, subject to adjustment based on a pricing grid. As of October 1, 2005, our cash interest requirements for the next 12 months are expected to be approximately $58.9 million.

Our Credit Facility requires us to meet a minimum interest coverage ratio, a maximum leverage ratio and a maximum capital expenditures limitation. Under our Credit Facility, compliance with the minimum interest coverage ratio and maximum leverage ratio tests is determined based on a calculation of adjusted EBITDA in which certain items are added back to EBITDA.

Adjusted EBITDA is calculated as follows:

	Twelve
	Months			Nine months			Three Months
	Ended			Ended			Ended
	October 1,			October 1,			October 1,
(in millions)	2005			2005			2005
Net income	$	5.2		$	10.5		$	1.7
Add:
Depreciation and amortization		58.1			42.3			13.9
Interest expense, net		60.7			44.8			15.1
Income taxes		(1.3	)		(2.0	)		(4.3	)
EBITDA		122.7			95.6			26.4
Add:
Foreign currency (gain) loss		(1.2	)		(3.1	)		—
Inventory purchase accounting adjustments (1)		.5			—			—
Transactions costs (2)		.4			—			—
Operating lease payments on lease to be refinanced (3)		2.8			2.1			.7
Business restructuring (4)		7.2			6.9			1.5
Loss on disposal of property, plant, and equipment		.8			.3			.3
Adjusted EBITDA	$	133.2		$	101.8		$	28.9

(1)	Represents the write-off of the inventory purchase accounting adjustment for inventory that was sold during the period.
(2)	Represents non-recurring costs incurred in connection with the Transactions.
(3)	Represents payments under an operating lease agreement that we intend to terminate and purchase the equipment from the lessor.

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(4) Represents business restructuring costs associated with the 2004 and 2005 restructuring, including severance and benefit costs for employee layoffs, loss on an inventory purchase commitment, asset impairment and other related expenses.

The calculation of the minimum interest coverage ratio is as follows:

	Twelve
	Months
	Ended
	October 1,
(in millions)	2005
Adjusted EBITDA	$	133.2
Consolidated interest expense, as defined in the Credit Agreement	$	58.1
Actual interest coverage ratio		2.29	x
Permitted minimum interest coverage ratio		2.25	x

We are required to maintain a ratio of Adjusted EBITDA to interest expense for any four consecutive fiscal quarters ending during any of the following periods or on any of the following dates of at least the following ratios:

Date or Period	Ratio
October 2, 2004 through July 1, 2006	2.25 to 1.00
September 30, 2006 through January 3, 2009	2.50 to 1.00
April 4, 2009 through January 2, 2010	2.75 to 1.00
April 3, 2010 and each fiscal quarter thereafter	3.00 to 1.00

The calculation of the maximum leverage ratio is as follows:

	Twelve
	Months
	Ended
	October 1,
(in millions)	2005
Indebtedness, as defined in the Credit Agreement	$	784.5
Adjusted EBITDA	$	133.2
Actual leverage ratio		5.89	x
Permitted maximum leverage ratio		6.00	x

We are required to maintain a ratio of total indebtedness to Adjusted EBITDA at the end of any quarter ending during any of the following periods or on any of the following dates of not more than the following ratios:

Date or Period	Ratio
October 1, 2005		6.00 to 1.00
December 31, 2005 through July 1, 2006		5.75 to 1.00
September 30, 2006 through December 30, 2006		5.50 to 1.00
March 31, 2007 through June 30, 2007		5.25 to 1.00
September 29, 2007		5.00 to 1.00
December 29, 2007 through March 29, 2008		4.75 to 1.00
June 28, 2008 through September 27, 2008		4.50 to 1.00
January 3, 2009 through October 3, 2009		4.25 to 1.00
January 2, 2010 and each fiscal quarter thereafter		4.00 to 1.00

In addition, the Credit Facility contains certain restrictive covenants which, among other things, limit the incurrence of additional indebtedness, investments, dividends, transactions with affiliates, asset sales, acquisitions, mergers and consolidations, prepayments of other indebtedness, liens and encumbrances and other matters customarily restricted

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in such agreements. The facilities also contain certain customary events of default, subject to grace periods, as appropriate.

We believe that annual capital expenditure limitations imposed by our Credit Facility will not significantly inhibit us from meeting our ongoing capital expenditure needs.

Our 8.75% senior subordinated notes will mature in 2012 and are guaranteed by most of our existing and future domestic restricted subsidiaries, subject to certain exceptions. Except under certain circumstances, the 8.75% senior subordinated notes do not require principal payments prior to their maturity in 2012. Interest on the 8.75% senior subordinated notes is payable semi-annually in cash. The 8.75% senior subordinated notes contain customary covenants and events of default, including covenants that limit our ability to incur debt, pay dividends and make investments.

Future principal debt payments are expected to be paid out of cash flows from operations, borrowings on our revolving credit facility and future refinancing of our debt.

We believe we have sufficient liquidity to meet our cash requirements over both the short (next twelve months) and long term (in relation to our debt service requirements). In evaluating the sufficiency of our liquidity for both the shorter and longer term, we considered the expected cash flows to be generated by our operations and the available borrowings under our Credit Facility compared to our anticipated cash requirements for operating expenses, debt service, working capital, cash taxes, and capital expenditures as well as funding requirements for long-term liabilities. However, our ability to make scheduled payments of principal, to pay interest on or to refinance our indebtedness and to satisfy our other debt obligations will depend upon our future operating performance, which will be affected by general economic, financial, competitive, legislative, regulatory, business and other factors beyond our control. See “Risk factors” set forth in Exhibit 99.1 to our Annual Report on Form 10-K for fiscal 2004.

We anticipate that our operating cash flow, together with borrowings under the revolving credit facility, will be sufficient to meet our anticipated future operating expenses, capital expenditures and debt service obligations as they become due for at least the next twelve months. However, our ability to make scheduled payments of principal of, to pay interest on or to refinance our indebtedness and to satisfy our other debt obligations will depend upon our future operating performance, which will be affected by general economic, financial, competitive, legislative, regulatory, business and other factors beyond our control. See “Risk factors” set forth in Exhibit 99.1 to our Annual Report on Form 10-K for fiscal 2004.

From time to time, we may explore additional financing methods and other means to lower our cost of capital, which could include stock issuance or debt financing and the application of the proceeds therefrom to the repayment of bank debt or other indebtedness. In addition, in connection with any future acquisitions, we may require additional funding which may be provided in the form of additional debt or equity financing or a combination thereof. There can be no assurance that any additional financing will be available to us on acceptable terms.

Foreign operations

We manufacture our products at 11 strategically located facilities in North America, Europe and Asia. Net sales from the foreign locations for the nine months ended October 1, 2005 was approximately $207.3 million as compared to $222.8 million for the pro forma nine months ended October 2, 2004. Typically, we sell our products in the currency of the country where the manufacturing facility that produces the product is located. Sales to foreign customers are subject to numerous additional risks, including the impact of foreign government regulations, currency fluctuations, political uncertainties and differences in business practices. There can be no assurance that foreign governments will not adopt regulations or take other action that would have a direct or indirect adverse impact on our business or market opportunities within such governments’ countries. Furthermore, there can be no assurance that the political, cultural and economic climate outside the United States will be favorable to our operations and growth strategy.

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Seasonality

Historically, our results of operations have not been materially affected by seasonal fluctuations. However, operations at our European production facilities are traditionally subject to shutdown during the month of August each year for employee vacations. As a result, revenues and net income during the third quarter of fiscal 2005 and in any fiscal year in the future may be impacted by these shutdowns. In view of the seasonal fluctuations, we believe that comparisons of our operating results for the third quarter of any fiscal year with those of the other quarters during the same fiscal year may be of limited relevance in predicting our future financial performance.

Off-balance sheet arrangements

The Company is not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the Company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

New accounting standards

In June 2005, the FASB issued Statement No. 154,Accounting Changes and Error Corrections(“FAS 154”). This standard establishes new standards on accounting for changes in accounting principles. Pursuant to the new rules, all such changes must be accounted for by retrospective application to the financial statements of prior periods unless it is impracticable to do so. FAS 154 completely replaces APB Opinion No. 20 and FAS 3, though it carries forward the guidance in those pronouncements with respect to accounting for changes in estimates, changes in the reporting entity and the correction of errors. This Statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. Management does not believe there will be a significant impact as a result of adopting this Statement.

In June 2005, the FASB ratified the consensus reached by the EITF on Issue No. 05-5,Accounting for Early Retirement or Postemployment Programs with Specific Features (Such As Terms Specified in Altersteilzeit Early Retirement Arrangements). The EITF agreed with FASB staff observations that the salary components of Type I and Type II ATZ arrangements (excluding the bonus and additional contributions into the German government pension scheme) should be recognized over the period from the point at which the ATZ period begins until the end of the active service period. Additionally, the portion of the salary that is deferred under a Type II arrangement should be discounted if payment is expected to be deferred for a period longer than one year. In addition, the EITF reached a consensus that the bonus feature and the additional contributions into the German government pension scheme (collectively, the additional compensation) under a Type II ATZ arrangement should be accounted for as a post employment benefit under Statement 112. An entity should recognize the additional compensation over the period from the point at which the employee signs the ATZ contract until the end of the active service period. The EITF also concluded that the employer should recognize the government subsidy when it meets the necessary criteria and is entitled to the subsidy. The consensus in this Issue is effective for fiscal years beginning after December 15, 2005, and reported as a change in accounting estimate affected by a change in accounting principle as described in paragraph 19 of FAS 154. The Company is currently evaluating the provisions of this standard to determine the impact of adopting this statement.

In December 2004, the FASB issued Statement No. 153,Exchanges of Nonmonetary Assets(“FAS 153”), an amendment of APB Opinion No. 29,Accounting for Nonmonetary Transactions(“APB 29”). The amendments made by FAS 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have commercial substance. Previously, APB 29 required that the accounting for an exchange of a productive asset for a similar productive asset or an equivalent interest in the same or similar productive asset should be based on the recorded amount of the asset relinquished. The Statement is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. Earlier application is permitted for nonmonetary asset exchanges occurring in fiscal periods beginning after the date of issuance. Management does not believe there will be a significant impact as a result of adopting this Statement.

In November 2004, the FASB issued Statement No. 151,Inventory Costs(“FAS 151”). This statement amends Accounting Research Bulletin No. 43, Chapter 4,Inventory Pricing, to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). FAS 151 requires that idle facility

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expense, excess spoilage, double freight and re-handling costs be recognized as current-period charges regardless of whether they meet the criterion of “so abnormal”. FAS 151 also requires that allocation of fixed production overhead expenses to the costs of conversion be based on the normal capacity of the production facilities. FAS 151 is effective for all fiscal years beginning after June 15, 2005. Management does not believe there will be a significant impact as a result of adopting this Statement.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to various market risks due to potential losses arising from adverse changes in market rates and prices, such as interest rates and foreign exchange fluctuations. We do not enter into derivatives or other financial instruments for trading or speculative purposes.

Interest rate risk

At October 1, 2005, we had fixed rate debt, including capital lease obligations, of approximately $416.0 million and variable rate debt of approximately $368.4 million. The pre-tax earnings and cash flow impact resulting from a 100 basis point increase in interest rates on variable rate debt, holding other variables constant, would be approximately $3.7 million per year. We currently are not a party to any interest rate hedging arrangements. Our hedging arrangements were terminated in connection with the closing of the Transactions. We may decide in the future to enter into interest rate hedging arrangements.

Prior to the closing of the Transactions, we used an interest rate swap as required by our then existing senior credit facility to reduce the risk of interest rate volatility. In March 2000, we entered into an interest rate hedge agreement with a major U.S. bank. The hedge agreement contained a collar that provided a ceiling and a floor interest rate above or below which the interest rate on the hedged portion of the term debt would not vary. Upon adoption of FASB Statement No. 133, as amended,Accounting for Derivatives and Hedging Activity(“FAS 133”), we determined the interest rate hedge agreement did not qualify for hedge accounting as defined in FAS 133. Accordingly, the fair value of the financial instrument was recorded in the financial statements and subsequent changes in fair value were recorded in earnings in the period of change. At December 28, 2002, the fair value of the interest rate hedge agreement was approximately $7.6 million and was included in accrued liabilities. During 2002, the three month LIBO rate fell below the floor rate in the collar agreement and we made payments to the bank of approximately $2.6 million.

On December 31, 2002, the interest rate hedge agreement expired and the bank exercised its option to enter into a swap agreement. The swap agreement effectively converted the variable interest rate on $57.2 million of the term debt to a fixed rate of 6.55%. The swap agreement did not qualify for hedge accounting treatment as defined in FAS 133. Accordingly, the fair value of the financial instrument was recorded as a liability and subsequent changes in fair value were recorded in earnings in the period of change. At January 3, 2004, the fair value of the swap agreement was approximately $5.4 million and was included in accrued liabilities. During 2004 (prior to the Transaction) and fiscal year 2003, Polypore made payments to the bank of $0.9 million and $4.0 million, respectively, representing the difference between the fixed interest rate on the swap and the variable interest rate paid on the debt. The swap agreement was terminated in connection with the closing of the Transaction.

Use of hedging contracts would allow us to reduce our overall exposure to interest rate changes, since gains and losses on these contracts would offset losses and gains on the transactions being hedged. We formally document all hedged transactions and hedging instruments, and assess, both at inception of the contract and on an ongoing basis, whether the hedging instruments are effective in offsetting changes in cash flows of the hedged transaction. The fair values of the interest rate agreements are estimated by obtaining quotes from brokers and are the estimated amounts that we would receive or pay to terminate the agreements at the reporting date, taking into consideration current interest rates and the current creditworthiness of the counterparties.

Currency risk

Outside the United States, we maintain assets and operations in Europe and, to a much lesser extent, Asia. The results of operations and financial position of our foreign operations are principally measured in their respective currency and translated into U.S. dollars. As a result, exposure to foreign currency gains and losses exists. The reported income of these subsidiaries will be higher or lower depending on a weakening or strengthening of the U.S. dollar against the respective foreign currency. Our subsidiaries and affiliates also purchase and sell products and services in various currencies. As a result, we may be exposed to cost increases relative to the local currencies in the

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markets in which we sell. Because a different percentage of our revenues are in a foreign currency other than our costs, a change in the relative value of the U.S. dollar could have a disproportionate impact on our revenues compared to our costs, which could impact our margins. A portion of our assets are based in our foreign locations and are translated into U.S. dollars at foreign currency exchange rates in effect as of the end of each period, with the effect of such translation reflected in other comprehensive income (loss). In connection with the Transactions, we obtained euro-denominated senior secured and senior subordinated notes that effectively hedge the Company’s net investment in foreign subsidiaries. Therefore, foreign currency gains and losses resulting from the translation of the euro-denominated debt are included in accumulated other comprehensive income (loss). Accordingly, our consolidated shareholders’ equity will fluctuate depending upon the weakening or strengthening of the U.S. dollar against the respective foreign currency, primarily the euro.

The dollar/euro exchange rates used in our financial statements for the periods ended as set forth below were as follows:

	Three Months Ended				Nine months Ended
	October 1,		October 2,		October 1,		October 2,
	2005		2004		2005		2004
Period end rate		1.2225		1.2245		1.2225		1.2245
Period average rate		1.2128		1.2238		1.2761		1.2312

Our strategy for management of currency risk relies primarily on conducting our operations in a country’s respective currency and may, from time to time, involve currency derivatives. As of October 1, 2005, we did not have any foreign currency derivatives outstanding.

Item 4. Controls and Procedures

As of October 1, 2005, an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13(a)-15(e) and 15(d)-15(e) promulgated under the Exchange Act) was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective, as of October 1, 2005, to ensure that information required to be disclosed by the Company in its reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.

During the three months ended October 1, 2005, there has been no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

We are currently a party to various claims and legal actions that arise in the ordinary course of business. We believe such claims and legal actions, individually and in the aggregate, will not have a material adverse effect on our business, financial condition or results of operations.

In connection with the Transactions, the Company identified a potential enforcement issue with the United States Environmental Protection Agency (“EPA”). On April 5, 2005, the Company received a Finding of Violation (“FOV”) dated March 28, 2005 from the EPA alleging a noncompliance with the Title V Air Operating Permit at its Corydon, Indiana facility relating to the control of fugitive emissions at the facility. The Company recorded its best estimate of potential penalties through adjustment to the allocation of purchase price. On October 21, 2005, the Company received a formal offer for settlement of the matter from the EPA. Although a final agreement has not been reached, management does not believe that penalties resulting from this matter will have a material adverse effect on the business, financial condition or results of operations of the Company.

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Item 6. Exhibits

Exhibit No.	Exhibit Description
10.1	Employment Agreement, dated as of July 6, 2005, by and between Polypore International, Inc. and Robert B. Toth
10.2	Employment Agreement, dated as of August 15, 2005, by and between Polypore International, Inc. and Frank Nasisi
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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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.

Date: November 15, 2005	POLYPORE, INC. (Registrant)
	By:	/s/ Robert B. Toth
		Robert B. Toth           President and Chief Executive Officer
		(principal executive officer)
	By:	/s/ Lynn Amos
		Lynn Amos           Chief Financial Officer
		(principal financial officer and principal           accounting officer)

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