Polypore 8-K Polypore Announces Second Quarter and Year to Date Results

Polypore Announces Second Quarter and Year to Date Results

CHARLOTTE, N.C. — August 14, 2006 —Polypore, Inc. today announced net sales of $123.1 million for the quarter ended July 1, 2006, representing a 9% increase over second quarter 2005.

Second quarter operating income was $22.1 million, compared to $16.9 million in the prior year. Operating income includes restructuring charges in both periods of $0.6 million and $5.4 million, respectively. The additional change was driven primarily by higher sales volumes and production efficiencies, which were partially offset by the timing of certain SG&A expenses aimed at driving growth.

Net income in second quarter was $4.0 million, compared to a net income of $3.3 million in the same period of the prior year.

For the six months ended July 1, 2006, compared to the six months ended July 2, 2005:

• Net sales were $238.4 million, up from $225.1 million;

• Operating income was $39.2 million, an increase from $37.4; and

• Net income was $7.4 million, down from $8.8 million.

Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), which is a key measurement in Polypore’s credit agreement, was $38.2 million for the second quarter of 2006 compared to $37.1 million reported in the second quarter of 2005. Adjusted EBITDA for the twelve months ended July 1, 2006 was $132.9 million. EBITDA and Adjusted EBITDA are defined and reconciled to GAAP as noted below.

“Our continued focus on execution of business priorities is driving Polypore’s improved performance,” said Robert Toth, President and Chief Executive Officer of Polypore, Inc. “While we’re pleased with our progress, we have more work to do to ensure that we meet our 2006 goals, including targeted efforts on growth and operational efficiency.”

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Energy Storage
Net sales for the energy storage segment in second quarter 2006 were $87.8 million, an increase of $6.2 million from the prior year. In the lead acid battery separator business, the increase was primarily related to strong sales volume, particularly in Asia. In the lithium separator business, revenue gains were driven primarily by volume growth in rechargeable lithium battery separators.

Second quarter gross profit in energy storage was $34.5 million, an increase of $3.4 million from the same period in 2005. The increase in gross profit was driven by higher sales and production efficiencies.

Separations Media
Second quarter net sales in separations media were $35.3 million, up $4.3 million from the second quarter of 2005. The increase was primarily due to strong sales volume in the filtration and industrial separations markets where Polypore continues to expand on its core competency in microporous technology, as well as in synthetic hemodialysis membranes.

Gross profit for second quarter 2006 was $10.1 million, an increase of $0.7 million from the same period in the prior year. The increase was largely driven by higher sales volumes partially offset by customer mix.

Polypore, Inc. will hold a conference call to discuss second quarter 2006 results on Tuesday, August 15^th at 9:00 AM Eastern time. You are invited to listen to a live broadcast via the internet at www.polypore.net. Additionally, a replay of the call will be available until 11:59 PM Eastern time on August 19^th, 2006 at 800-642-1687 (in the U.S.) or 706-645-9291 (outside the U.S.), access number 3324496. The call will also be archived onwww.polypore.net.

Polypore, Inc., a wholly owned subsidiary of Polypore International, Inc., is a worldwide developer, manufacturer and marketer of highly specialized polymer-based membranes used in separation and filtration processes. Polypore’s products and technologies target specialized applications and markets that require the removal or separation of various materials from liquids, with concentration in the ultrafiltration and microfiltration markets. Polypore has manufacturing facilities or sales offices in ten countries serving five continents. Polypore’s corporate offices are located in Charlotte, N.C.

This release contains statements that are forward-looking in nature. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” and similar expressions are forward-looking

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statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results and performance to be materially different from any future results or performance expressed or implied by these forward-looking statements. These factors include the following: the highly competitive nature of the markets in which we sell our products; the failure to successfully manage the transition in hemodialysis from cellulosic to synthetic filtration membranes; 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. Additional information concerning these and other important factors can be found in Item 1A. “Risk Factors” of our most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission. Statements in this release should be evaluated in light of these important factors. Although we believe that these statements are based upon reasonable assumptions, we cannot guarantee future results. Given these uncertainties, the forward-looking statements discussed in this press release might not occur.
Investor Contact: Polypore Investor Relations — 704-587-8886 orinvestorrelations@polypore.net

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Polypore, Inc.
Condensed Consolidated Statements of Income
(unaudited, in thousands)

	Three Months Ended						Six Months Ended
	July 1, 2006			July 2, 2005			July 1, 2006			July 2, 2005
Net sales	$	123,094		$	112,614		$	238,387		$	225,112
Cost of goods sold		78,461			72,105			153,441			145,714
Gross profit		44,633			40,509			84,946			79,398
Selling, general and administrative expenses		21,940			18,202			44,438			36,592
Business restructuring		553			5,402			1,325			5,402
Operating income		22,140			16,905			39,183			37,404
Other (income) expense:
Interest expense, net		17,503			14,817			33,786			29,747
Change in accounting principle related to postemployment benefits		—			—			(2,593	)		—
Foreign currency and other		1,282			(1,834	)		1,981			(3,405	)
		18,785			12,983			33,174			26,342
Income before income taxes		3,355			3,922			6,009			11,062
Income taxes		(638	)		613			(1,349	)		2,300
Net income	$	3,993		$	3,309		$	7,358		$	8,762

Polypore, Inc.
Condensed Consolidated Balance Sheets
(in thousands)

	July 1, 2006
	(unaudited)		December 31, 2005(a)
Assets:
Cash and equivalents	$	39,767	$	27,580
Other current assets		179,975		157,823
Property, plant and equipment, net		380,867		370,871
Goodwill		567,587		567,587
Intangibles and loan acquisition costs, net		213,562		222,006
Other		18,886		17,471
Total assets	$	1,400,644	$	1,363,338
Liabilities and shareholders’ equity:
Current liabilities	$	75,366	$	61,887
Debt and capital lease obligations, less current portion		788,188		773,777
Other		215,240		216,395
Shareholders’ equity		321,850		311,279
Total liabilities and shareholders’ equity	$	1,400,644	$	1,363,338

^(a)Derived from audited consolidated financial statements

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EBITDA
EBITDA represents net income before interest, taxes, depreciation and amortization. EBITDA is not a recognized term under generally accepted accounting principles (“GAAP”) and does not purport to be an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Additionally, EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments, debt service requirements and capital expenditures. Management believes that such non-GAAP information is useful to investors because it provides meaningful information to assess the Company’s core operations and perform financial analysis on comparative periods and peer group data. This non-GAAP information also is used by management to assess the Company’s core operations, allocate resources and make strategic decisions. Our calculation of EBITDA may not be comparable to the calculation of similarly titled measures reported by other companies. The following is a reconciliation of EBITDA to net income for the periods indicated.

Reconciliation of EBITDA
(in thousands)

	Three Months			Twelve Months
	Ended			Ended
	July 1, 2006			July 1, 2006
Net income	$	3,993		$	12,617
Add:
• Depreciation and amortization		14,582			54,880
• Interest expense		17,503			63,895
• Income taxes		(638	)		(5,700	)
EBITDA	$	35,440		$	125,692

Reconciliation of Adjusted EBITDA^(b)
(in thousands)

	Three Months		Twelve Months
	Ended		Ended
	July 1, 2006		July 1, 2006
EBITDA	$	35,440	$	125,692
Adjustments:
• Foreign currency (gain) loss		1,113		1,089
• Operating lease		—		2,003
• Non-cash change in accounting principle		336		(1,898	)
• Business restructuring		553		4,615
• Loss on disposal of property, plant and equipment		739		1,385
Adjusted EBITDA	$	38,181	$	132,886

^(b)Under our senior 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. These items include non-cash charges, impairments and expenses other than depreciation and amortization, restructuring costs and payments under an operating lease agreement that was bought out during the second quarter 2006.

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