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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

(Mark One)
ý	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2007
o	Transition report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
For the transition period from to

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

For the quarterly period ended April 2, 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)

(Exact Name of Registrant as Specified in Its Charter)

Delaware (State or Other Jurisdiction of Incorporation or Organization)		57-1006871 (IRS Employer Identification No.)
11430 North Community House Road, Suite 350 Charlotte, North Carolina (Address of Principal Executive Offices)		28277 (Zip Code)
(704) 587-8409 (Registrant's Telephone Number, Including Area Code)

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

~~(704) 587~~Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-~~8409~~accelerated filer. See definition of "accelerated filer and large accelerated filer" in rule 12b-2 of the Exchange Act. (Check one):

~~(Registrant’s~~o Large accelerated ~~Telephone~~filer o Accelerated filer ý Non-accelerated filer ~~Number, Including Area Code)~~

Indicate by check mark whether the registrant ~~(1) has~~is ~~filed~~a ~~all~~shell ~~reports~~company ~~required~~(as defined toin ~~be filed by Section~~Rule 1312b-2 ~~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~~Act)~~, and (2) has been subject to such filing requirements for the past 90 days~~. o Yes þ ý No o

~~Indicate~~The byCompany ~~check~~currently ~~mark~~has ~~whether~~100 shares ~~the~~of ~~registrant~~common isstock anoutstanding, ~~accelerated~~all ~~filer~~of ~~(as~~which ~~defined~~are inowned ~~Rule 12b-2~~indirectly ~~of the~~by ~~Exchange~~Polypore ~~Act)~~International, Inc. ~~Yes o No þ~~

~~The~~ ~~Company currently has 100 shares of common stock outstanding, all of which are owned indirectly~~ by Polypore ~~International~~, Inc. Index ~~Because~~to noQuarterly ~~public~~Report ~~market~~on ~~exists for such shares, the aggregate market value of the common stock held by non~~Form 10-~~affiliates~~Q For of the ~~Company~~Three isMonths ~~not~~Ended ~~determinable.~~ March 31, 2007

Polypore, Inc. Index to Quarterly Report on Form 10-Q For the Quarter Ended April 2, 2005

		Page

PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	33
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 6.	Exhibits	35
SIGNATURES		36

		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements		4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		26
Item 4.	Controls and Procedures		28
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings		28
Item 6.	Exhibits		28
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.

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.

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~~"Controls ~~financial~~and ~~statements~~Procedures" or the ~~notes~~Company's ~~thereto.~~consolidated ~~These~~financial ~~forward-looking~~ statements ~~are~~or 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~~notes ~~10-K for the fiscal year ended January 1, 2005, will be important in determining future results~~thereto. 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:

• These forward-looking ~~the~~statements ~~highly~~are ~~competitive~~based ~~nature~~on ofcurrent ~~the~~expectations ~~markets~~about infuture ~~which~~events weaffecting ~~sell~~us ~~our~~and ~~products;~~are •subject ~~the failure~~ to ~~continue~~uncertainties toand ~~develop~~factors ~~innovative~~relating ~~products;~~to ~~• the increased use of synthetic hemodialysis filtration membranes by~~ our ~~customers;~~operations •and ~~the~~business environment, ~~loss~~all of ~~our~~which ~~customers;~~are •difficult ~~the~~to ~~vertical~~predict ~~integration~~and bymany ~~our customers~~ of ~~the~~which ~~production~~are ofbeyond our ~~products~~control. ~~into~~Many ~~their~~factors ~~own~~mentioned ~~manufacturing~~in ~~process;~~our •discussion ~~increases~~ in ~~prices~~this ~~for~~Quarterly ~~raw~~Report ~~materials~~on orForm 10-Q, including the ~~loss~~risks ofoutlined ~~key~~under ~~supplier~~the ~~contracts;~~caption •entitled ~~employee~~"Item 1A. ~~slowdowns,~~Risk ~~strikes~~Factors" ~~or similar actions; • product liability claims exposure; • risks~~ in ~~connection with~~ our ~~operations~~Annual ~~outside~~Report ~~the~~on ~~United~~Form 10-K ~~Sates; •~~ for the ~~incurrence~~fiscal ofyear ~~substantial~~ended ~~costs~~December 30, ~~to comply with~~2006, will orbe asimportant ain ~~result~~determining offuture ~~violations~~results. ~~of,~~Although orwe ~~liabilities~~believe ~~under~~that ~~environmental laws; •~~ the ~~failure~~expectations toreflected ~~protect~~in our ~~intellectual~~forward-looking ~~property;~~statements •are ~~the~~reasonable, ~~failure~~we todo ~~replace~~not ~~lost~~know ~~senior~~whether ~~management;~~our •expectations ~~the~~will prove ~~incurrence~~correct. ofThey ~~additional~~can ~~debt,~~be ~~contingent~~affected ~~liabilities~~by ~~and~~inaccurate ~~expenses~~assumptions inwe ~~connection~~might ofmake ~~future~~or ~~acquisitions;~~by •known ~~the~~or ~~failure~~unknown torisks ~~effectively integrate newly acquired operations;~~ and •uncertainties, ~~the~~including ~~absence~~with ofrespect ~~expected~~to ~~returns~~Polypore, ~~from~~ the ~~amount~~following, ofamong other things: ~~intangible assets we have recorded.~~

•: the highly competitive nature of the markets in which we sell our products;
•: the failure to continue to develop innovative products;
•: 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;
•: our substantial indebtedness;
•: interest rate risk related to our variable rate indebtedness;
•: our inability to generate cash;
•: restrictions related to the senior secured credit facilities;
•: 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;

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.

•: the incurrence of additional debt, contingent liabilities and expenses in connection with future acquisitions;
•: the adverse impact on our financial condition from past restructuring activities;
•: the failure to effectively integrate newly acquired operations;
•: the absence of expected returns from the amount of intangible assets we have recorded; and
•: natural disasters, epidemics, terrorist acts and other events beyond our control.

~~PART~~ Because our Iactual –results, ~~FINANCIAL~~performance ~~INFORMATION~~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 on Polypore's results of operations and financial condition. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. We do not undertake any obligation to update these forward-looking statement to reflect new information, future events or otherwise, except as may be required under federal securities laws.

~~Item 1. Financial Statements~~4

~~Polypore,~~PART ~~Inc. Condensed~~I—FINANCIAL ~~Consolidated Balance Sheets~~ INFORMATION

	April 2, 2005			January 1, 2005
(in thousands)	(unaudited)
Assets
Current assets:
Cash and equivalents	$	29,578		$	31,684
Accounts receivable, net		99,109			106,296
Inventories		61,928			61,789
Refundable income taxes		3,030			8,238
Deferred income taxes		3,253			7,954
Prepaid and other		6,989			5,288
Total current assets		203,887			221,249
Property, plant and equipment, net		422,136			441,350
Goodwill		537,713			535,844
Intangibles and loan acquisition costs, net		237,879			244,256
Environmental indemnification receivable		19,281			20,125
Other		1,143			1,142
Total assets	$	1,422,039		$	1,463,966
Liabilities and shareholders’ equity
Current liabilities:
Revolving credit obligations	$	—		$	—
Accounts payable		19,743			20,581
Accrued liabilities		52,775			50,464
Current portion of debt-optional prepayment		—			25,000
Current portion of debt		1,830			2,260
Current portion of capital lease obligation		1,285			1,272
Total current liabilities		75,633			99,577
Debt, less current portion		812,900			824,939
Capital lease obligations, less current portion		7,018			7,344
Pension and postretirement benefits		48,165			48,652
Post employment benefits		9,307			10,119
Environmental reserve, less current portion		25,241			24,394
Deferred income taxes		130,447			138,566
Other		2,904			3,033
Commitments and contingencies
Shareholders’ equity:
Common stock		—			—
Paid-in capital		321,516			321,516
Retained (deficit)		(9,416	)		(14,870	)
Accumulated other comprehensive income (loss)		(1,676	)		696
		310,424			307,342
Total liabilities and shareholders’ equity	$	1,422,039		$	1,463,966

Item 1. Financial Statements

~~See~~ ~~notes~~ to Polypore, ~~condensed~~Inc. Condensed ~~consolidated~~Consolidated ~~financial~~Balance ~~statements~~ Sheets

		March 31, 2007			December 30, 2006*
		(unaudited)
		(in thousands)
Assets
Current assets:
	Cash and cash equivalents	$	69,068		$	54,164
	Accounts receivable, net		104,058			102,110
	Inventories		66,144			67,741
	Refundable income taxes		2,351			—
	Prepaid and other		10,781			13,686

Total current assets			252,402			237,701
Property, plant and equipment, net			371,378			363,526
Goodwill			568,505			567,587
Intangibles and loan acquisition costs, net			199,206			204,064
Environmental indemnification receivable			16,808			15,236
Other			1,389			917

Total assets		$	1,409,688		$	1,389,031

Liabilities and shareholder's equity
Current liabilities:
	Accounts payable	$	24,901		$	25,494
	Accrued liabilities		58,054			55,210
	Income taxes payable		—			3,689
	Current portion of debt		3,792			3,938
	Current portion of capital lease obligation		1,391			1,377

Total current liabilities			88,138			89,708
Debt, less current portion			790,191			787,990
Capital lease obligation, less current portion			4,401			4,754
Pension and postretirement benefits			62,895			61,219
Postemployment benefits			4,273			4,451
Environmental reserve, less current portion			23,819			22,935
Deferred income taxes			107,564			110,310
Other			14,013			3,274
Commitments and contingencies
Shareholder's equity:
	Common stock		—			—
	Paid-in capital		322,131			321,989
	Retained deficit		(7,511	)		(13,550	)
	Accumulated other comprehensive loss		(226	)		(4,049	)

			314,394			304,390

Total liabilities and shareholder's equity		$	1,409,688		$	1,389,031

*: Derived from audited consolidated financial statements

~~Polypore,~~See ~~Inc. Condensed~~notes ~~Consolidated~~to ~~Statements~~condensed ofconsolidated ~~Income~~financial ~~(Unaudited)~~ statements

	Post-Transactions			Pre-Transactions
	Three Months			Three Months
	Ended			Ended
(in thousands)	April 2, 2005			April 3, 2004
Net sales	$	112,498		$	140,120
Cost of goods sold		73,609			86,261
Gross profit		38,889			53,859
Selling, general and administrative expenses		18,390			17,493
Operating income		20,499			36,366
Other (income) expense:
Interest expense, net		14,930			4,531
Foreign currency and other		(1,571	)		427
Unrealized gain on derivative instrument		—			(13	)
		13,359			4,945
Income before income taxes		7,140			31,421
Income taxes		1,687			10,683
Net income	$	5,453		$	20,738

~~See~~ ~~notes~~ to Polypore, ~~condensed~~Inc. Condensed ~~consolidated~~Consolidated ~~financial~~Statements ~~statements~~ of Operations (Unaudited)

		Three Months Ended
		March 31, 2007			April 1, 2006
		(in thousands)
Net sales		$	129,781		$	115,293
Cost of goods sold			81,500			74,980

Gross profit			48,281			40,313
Selling, general and administrative expenses			23,597			22,498
Business restructuring			53			772

Operating income			24,631			17,043
Other (income) expense:
	Interest expense, net		17,130			16,283
	Foreign currency and other		(133	)		699
	Change in accounting principle related to postemployment benefits		—			(2,593	)

			16,997			14,389

Income before income taxes			7,634			2,654
Income taxes			1,341			(711	)

Net income		$	6,293		$	3,365

~~Polypore,~~See ~~Inc. Condensed~~notes ~~Consolidated~~to ~~Statements~~condensed ofconsolidated ~~Cash~~financial ~~Flows (unaudited)~~ statements

	Post-Transactions			Pre-Transactions
	Three Months			Three Months
	Ended			Ended
(in thousands)	April 2, 2005			April 3, 2004
Operating activities:
Net income	$	5,453		$	20,738
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense		9,856			10,923
Amortization expense		4,460			617
Amortization of loan acquisition costs		657			464
Gain on disposal of property, plant and equipment		—			(1,549	)
Foreign currency and other		(1,618	)		(1,375	)
Changes in operating assets and liabilities:
Accounts receivable		4,638			(12,238	)
Inventories		(1,702	)		630
Prepaid and other current assets		(1,852	)		(1,272	)
Accounts payable and accrued liabilities		9,195			327
Other, net		133			(118	)
Net cash provided by operating activities		29,220			17,147
Investing activities:
Purchases of property, plant and equipment		(3,097	)		(4,216	)
Proceeds from sale of property, plant and equipment		—			1,923
Net cash used in investing activities		(3,097	)		(2,293	)
Financing activities:
Proceeds from debt		—			610
Principal payments on debt		(26,924	)		(7,036	)
Loan acquisition costs		—			(59	)
Net cash used in financing activities		(26,924	)		(6,485	)
Effect of exchange rate changes on cash and equivalents		(1,305	)		(1,164	)
Net (decrease) increase in cash and equivalents		(2,106	)		7,205
Cash and equivalents at beginning of period		31,684			20,063
Cash and equivalents at end of the period	$	29,578		$	27,268

~~See~~ ~~notes~~ to Polypore, ~~condensed~~Inc. Condensed ~~consolidated~~Consolidated ~~financial~~Statements ~~statements~~ of Cash Flows (unaudited)

			Three Months Ended
			March 31, 2007			April 1, 2006
			(in thousands)
Operating activities:
Net income			$	6,293		$	3,365
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation expense			7,661			10,160
	Amortization expense			4,452			4,400
	Amortization of loan acquisition costs			725			725
	Stock compensation related to stock options issued by Polypore International to Company employees			142			—
	Loss on disposal of property, plant and equipment			567			33
	Foreign currency gain			(74	)		(1,068	)
	Deferred income taxes			(1,672	)		(2,561	)
	Business restructuring			53			772
	Change in accounting principle related to postemployment benefits			—			(2,593	)
	Changes in operating assets and liabilities:
		Accounts receivable		(815	)		(7,701	)
		Inventories		2,391			(2,097	)
		Prepaid and other current assets		2,464			(1,510	)
		Accounts payable and accrued liabilities		950			13,485
		Income taxes payable		1,291			508
		Other, net		(1,411	)		452

Net cash provided by operating activities				23,017			16,370
Investing activities:
Purchases of property, plant and equipment				(2,663	)		(3,989	)
Acquisition of business				(5,181	)		—

Net cash used in investing activities				(7,844	)		(3,989	)
Financing activities:
Principal payments on debt				(1,286	)		(303	)
Loan acquisition costs				(31	)		—

Net cash used in financing activities				(1,317	)		(303	)
Effect of exchange rate changes on cash and cash equivalents				1,048			372

Net increase in cash and cash equivalents				14,904			12,450
Cash and cash equivalents at beginning of period				54,164			27,580

Cash and cash equivalents at end of the period			$	69,068		$	40,030

~~Polypore,~~See ~~Inc. Notes~~notes to ~~Condensed~~condensed ~~Consolidated~~consolidated ~~Financial~~financial ~~Statements Three Months Ended April 2, 2004 (unaudited)~~ statements

~~1. Description of Business and Transactions~~ 7

~~Description~~ of ~~Business —~~ Polypore, Inc. Notes ~~(the~~to ~~“Company”~~Condensed orConsolidated ~~“Polypore”),~~Financial ~~a wholly owned subsidiary of Polypore International, Inc.~~ Statements (~~“Parent” or “Polypore International”~~unaudited), 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~~. Description ~~In connection with the Transactions, PP Acquisition obtained a new credit facility with initial borrowings~~ of ~~approximately~~ ~~$414,920,000,~~Business ~~issued 8.75% senior subordinated notes with a face amount of $405,915,000~~ and ~~received~~Basis ~~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 Class A common stock of the Company. Presentation

~~The~~Description ~~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 purchase price allocation is based on preliminary estimates and may be adjusted based on the finalization of certain accruals recorded in connection with the Transactions. 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~~ Polypore, Inc. ~~following~~(the "Company" ~~table~~or ~~summarizes~~"Polypore"), ~~the~~a ~~purchase~~wholly ~~price~~owned ~~allocation~~subsidiary ~~based~~of ~~upon~~Polypore ~~the~~International, Inc. ~~estimated~~("Parent" ~~fair~~or ~~value of~~"Polypore ~~the~~International"), ~~assets~~is ~~acquired~~a leading global high technology filtration company that develops, manufactures and ~~liabilities~~markets ~~assumed~~specialized atmicroporous membranes used in separation and filtration processes. The Company has a global presence in the ~~date~~major geographic markets of ~~acquisition~~North America, South America, Western Europe and Asia.

(in thousands)
Current assets	$	201,405
Property, plant and equipment		406,934
Intangible assets		253,005
Goodwill		537,713
Other assets		23,933
Total assets acquired	$	1,422,990
Current liabilities		85,028
Debt, less current portion		819,790
Pension, postretirement and post employment benefits		54,027
Deferred income taxes		121,296
Other		22,464
Total liabilities assumed		1,102,605
Net assets acquired	$	320,385

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, issued 8.75% senior subordinated notes and received equity contributions from its shareholders. PP Acquisition used the net proceeds from the new credit facility, the issuance of senior subordinated debt and equity contributions to pay the 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 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 Class A common stock of the Company.

~~The~~Basis ~~excess~~ of the purchase price over the fair value of the net assets purchased, as adjusted for the change discussed in Note 11, was approximately $537,713,000 and was allocated to goodwill. The goodwill was assigned to the Energy Storage and Separations Media segments in the amounts of $373,664,000 and $164,049,000, respectively. The goodwill is not deductible for income tax purposes. Presentation

7 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 months ended March 31, 2007 are not necessarily indicative of the results that may be expected for the fiscal year ending December 29, 2007. The unaudited condensed consolidated financial statements should be read in conjunction with the annual audited financial statements for the fiscal year ended December 30, 2006.

~~Polypore, Inc~~2. ~~Notes~~ Recent toAccounting ~~Condensed Consolidated Financial Statements Three Months Ended April 2, 2004 (unaudited)~~ Pronouncements

~~The~~ On ~~following~~January 1, ~~unaudited~~2006, ~~pro~~the ~~forma~~Company ~~financial~~adopted ~~data~~EITF ~~summarizes~~Issue ~~the~~No. 05-5, ~~results~~Accounting ~~of operations~~ for Early ~~the~~Retirement ~~three~~or ~~months~~Postemployment ~~ended~~Programs ~~April~~with Specific Features (Such As Terms Specified in Altersteilzeit Early Retirement Arrangements) ("EITF 305-5"). Under EITF 05-5, ~~2004~~the assalary ifcomponents of Type I and Type II ATZ arrangements (excluding the ~~Transactions~~bonus ~~had~~and ~~occurred~~additional ascontributions ofinto the ~~beginning~~German ofgovernment pension scheme) should be recognized over the period~~. Unaudited~~ ~~pro~~from ~~forma~~the ~~results~~point ~~below~~at ~~are~~which ~~based~~the onATZ ~~historical~~period ~~results~~begins until the end of ~~operations~~the ~~and~~active ~~include adjustments~~service ~~for~~period. ~~depreciation,~~The ~~amortization~~bonus feature and ~~interest~~the ~~expense~~additional ~~associated~~contributions ~~with~~into the ~~Transactions~~German ~~and~~government ~~the~~pension ~~related~~scheme ~~income~~(collectively, ~~tax~~the ~~effects~~additional ofcompensation) ~~these~~under ~~adjustments.~~a ~~The~~Type II ~~pro~~ATZ ~~forma~~arrangement ~~amounts~~should dobe ~~not~~accounted ~~necessarily reflect~~for ~~actual~~as ~~results~~a ~~that~~postemployment ~~would~~benefit ~~have~~under ~~occurred~~Statement 112. An entity

	Three Months Ended
(in thousands)	April 3, 2004
Net sales	$	140,120
Net income	$	12,877

2.should recognize ~~Basis~~the additional compensation over the period from the point at which the employee signs the ATZ contract until the end of ~~Presentation~~the active service period. In connection with an acquisition in 2002, the Company implemented a restructuring plan that included Type II ATZ arrangements. The Company accrued in the opening balance sheet the estimated amounts to be paid to employees during the passive phase, plus the bonus feature of the plan. Salary paid to employees during their active phase was expensed as incurred. As a result of adopting this consensus, which was treated as a change in accounting estimate effected by a change in accounting principle, the Company reduced the accrual for postemployment benefits and recognized $2,593,000 in other income in the three months ended April 1, 2006. The reduction in the postemployment benefits accrual decreased the net loss for the three months ended April 1, 2006 by $1,634,000.

~~The~~ On January 1, ~~accompanying~~2006, ~~unaudited~~the ~~condensed~~Company ~~consolidated~~adopted ~~financial~~FASB ~~statements~~Statement ofNo. 123 ~~the~~(R), ~~Company~~Share-Based ~~are~~Payment ~~prepared~~("FAS 123(R)"). inFAS 123(R) ~~accordance~~generally ~~with~~requires, ~~U.S.~~among ~~generally~~other ~~accepted~~things, ~~accounting~~that ~~principles~~all ~~for~~employee ~~interim~~share-based ~~financial~~compensation ~~information. Accordingly,~~be ~~the~~measured ~~unaudited~~using ~~condensed~~a ~~consolidated~~fair ~~financial~~value ~~statements~~method and ~~notes~~that dothe ~~not~~resulting ~~contain certain~~compensation ~~information~~cost ~~included~~be recognized in the ~~Company’s annual~~ financial statements. InFAS 123(R) ~~the~~also ~~opinion~~requires ~~of management, all normal and recurring adjustments that are necessary for~~ a ~~fair~~subsidiary ~~presentation~~to ~~have been~~recognize ~~made.~~compensation ~~Operating~~expense ~~results~~ for ~~the~~stock ~~period~~options ~~ended~~issued ~~April 2,~~by ~~2005~~its ~~are~~parent ~~not necessarily indicative of the results~~ that ~~may~~are begranted ~~expected~~to ~~for~~subsidiary ~~the fiscal year ended December 31, 2005~~employees. The ~~unaudited~~adoption of ~~condensed~~FAS 123(R) ~~consolidated~~had ~~financial~~no ~~statements~~impact ~~should~~on ~~be read in conjunction with~~ the ~~annual~~Company's ~~audited~~ financial statements ~~for the year ended January 1, 2005~~.

3 On December 31, 2006, the Company adopted FASB Interpretation No. 48, Accounting ~~Pronouncements~~for Uncertainty in Income Taxes—an Interpretation of FASB Statement 109 ("FIN 48"), which clarifies the accounting for uncertain tax positions. FIN 48 allows the tax effects from an uncertain tax position to be recognized in the Company's financial statements if the position is more likely than not to be sustained upon audit, based on the technical merits of the position. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Upon adoption of FIN 48, the Company increased the existing reserves for uncertain tax positions by $854,000, recorded a deferred tax asset of $643,000, decreased goodwill by $43,000 and decreased retained earnings by $254,000 for the cumulative effect of adopting FIN 48.

In ~~December~~ September ~~2004~~2006, the FASB issued FASB Statement No. ~~153~~158, ~~Exchanges~~Employers' ofAccounting ~~Nonmonetary~~for ~~Assets~~Defined ~~(“FAS~~Benefit ~~153”),~~Pension and Other Postretirement Plans—an amendment of ~~APB~~FASB ~~Opinion~~Statements No. 2987, ~~Accounting~~88, ~~for~~106, ~~Nonmonetary~~and ~~Transactions~~ 132(~~“APB~~R) ~~29”~~("FAS 158"). ~~The amendments made by~~ FAS 158 ~~153~~requires ~~are~~an ~~based~~employer onto recognize the ~~principle~~funded ~~that~~status ~~exchanges~~ of ~~nonmonetary assets should~~a bedefined ~~measured~~benefit ~~based~~postretirement onplan ~~the~~as ~~fair~~an ~~value~~asset ofor ~~the~~liability ~~assets~~in ~~exchanged.~~its ~~Further,~~balance ~~the~~sheet ~~amendments~~and ~~eliminate~~to ~~the narrow~~recognize ~~exception~~changes ~~for~~in ~~nonmonetary~~that ~~exchanges~~funded ofstatus ~~similar~~through ~~productive~~comprehensive ~~assets~~income ~~and~~in ~~replace~~the ityear ~~with~~in ~~a broader~~which ~~exception~~the ~~for~~changes ~~exchanges of nonmonetary assets that do not have commercial substance~~occur. ~~Previously,~~This ~~APB~~requirement 29will ~~required~~be ~~that~~effective ~~the accounting~~ for anfiscal ~~exchange~~years ofending aafter ~~productive~~June 15, ~~asset~~2007. ~~for~~FAS 158 aalso ~~similar productive~~requires ~~asset or~~ an ~~equivalent~~employer ~~interest~~to inmeasure ~~the~~defined ~~same~~benefit orplan ~~similar~~assets ~~productive~~and ~~asset~~obligations ~~should~~as beof ~~based on~~ the ~~recorded~~date ~~amount~~ of its ~~the~~fiscal ~~asset~~year-end, ~~relinquished~~with limited exceptions. ~~The~~This ~~Statement~~requirement is effective for ~~nonmonetary asset exchanges occurring in~~ fiscal ~~periods~~years ~~beginning~~ending after ~~June~~December 15, ~~2005~~2008. ~~Earlier~~The ~~application~~Company is ~~permitted~~ ~~for~~currently ~~nonmonetary~~evaluating ~~asset exchanges occurring in fiscal periods beginning after~~ the ~~date~~impact ofadoption ~~issuance.~~of ~~Management~~FAS 158 ~~does not believe there~~ will behave aon ~~significant~~its ~~impact~~consolidated asfinancial ~~a result of adopting this Statement~~statements.

In ~~November~~ February ~~2004~~2007, the FASB issued Statement No. ~~151~~159, ~~Inventory~~The ~~Costs~~Fair ~~(“FAS~~Value ~~151”).~~Option ~~This statement amends Accounting Research Bulletin No. 43, Chapter 4, Inventory Pricing, to clarify the accounting~~ for ~~abnormal~~Financial ~~amounts~~Assets ~~of idle facility expense, freight, handling costs,~~ and ~~wasted~~Financial ~~material~~Liabilities (~~spoilage~~"FAS 159"). FAS 159 ~~151~~permits ~~requires~~entities ~~that~~to ~~idle~~choose ~~facility~~to ~~expense,~~measure ~~excess~~eligible ~~spoilage,~~items ~~double~~at ~~freight~~fair ~~and~~value ~~re-handling~~at ~~costs be~~specified ~~recognized~~election asdates ~~current-period~~and ~~charges~~report ~~regardless~~unrealized ofgains ~~whether~~and ~~they~~losses ~~meet~~on ~~the~~items ~~criterion~~for ofwhich ~~“so abnormal”. FAS 151 also requires that allocation of fixed production overhead expenses to~~ the fair ~~costs~~value ofoption ~~conversion~~has bebeen ~~based~~elected onin ~~the~~earnings ~~normal~~at ~~capacity~~each ofsubsequent ~~the~~reporting ~~production facilities~~date. FAS 159 ~~151~~ is effective for ~~all~~ fiscal years beginning after ~~June~~November 15, ~~2005~~2007. ~~(2006~~The ~~for~~Company ~~the~~is ~~Company).~~currently ~~Management~~evaluating ~~does~~the ~~not~~impact ~~believe~~adoption ~~there~~of FAS 159 will behave aon ~~significant~~its ~~impact~~consolidated asfinancial ~~a result of adopting this Statement~~statements.

~~4. Inventories~~ 9

~~Inventories are carried at the lower of cost or market using the first-in, first-out (“FIFO”) method of accounting~~3. Inventories

8 Inventories are carried at the lower of cost or market using the first-in, first-out ("FIFO") method of accounting and consist of:

Polypore, Inc. Notes to Condensed Consolidated Financial Statements Three Months Ended April 2, 2004 (unaudited)

	March 31, 2007		December 30, 2006
	(in thousands)
Raw materials	$	22,533	$	21,714
Work-in-process		11,155		10,679
Finished goods		32,456		35,348

Total	$	66,144	$	67,741

~~Inventories consist of the following:~~ 4. Debt

(in thousands)	April 2, 2005		January 1, 2005
Raw materials	$	22,272	$	22,243
Work-in-process		8,340		6,395
Finished goods		31,316		33,151
Total	$	61,928	$	61,789

Debt, in order of priority, consists of:

5. Debt

		March 31, 2007		December 30, 2006
		(in thousands)
Senior credit facilities:
	Revolving credit facility	$	—	$	—
	Term loan facilities		368,740		369,163
	8.75% senior subordinated notes		425,025		422,550
	Other		218		215

			793,983		791,928
	Less current maturities		3,792		3,938

Long-term debt		$	790,191	$	787,990

~~Debt,~~5. Employee inBenefit ~~order of priority, consists of:~~ Plans

(in thousands)	April 2, 2005		January 1, 2005
Senior credit facilities:
Revolving credit facility	$	—	$	—
Term loan facilities		389,876		416,941
8.75% senior subordinated notes		420,750		429,315
Other		4,104		5,943
		814,730		852,199
Less optional prepayment		—		25,000
Less current maturities		1,830		2,260
Long-term debt	$	812,900	$	824,939

The Company and its subsidiaries sponsor multiple defined benefit pension plans and an other postretirement benefit plan. The following table provides the components of net periodic benefit cost:

On March 1, 2005, the Company made an optional prepayment of $25,000,000 on the term loans. In accordance with the credit agreement, the prepayment was applied first to the quarterly payments due for the next twelve months and second, pro rata against the remaining scheduled installments of principal. After giving effect to the prepayment, the term loans will require quarterly payments of principal at the end of each fiscal quarter beginning on April 1, 2006.

	Pension Plans						Other Postretirement Benefits
	Three Months Ended						Three Months Ended
	March 31, 2007			April 1, 2006			March 31, 2007		April 1, 2006
	(in thousands)
Service cost	$	786		$	719		$	8	$	8
Interest cost		812			763			28		29
Expected return on plan assets		(236	)		(192	)		—		—
Recognized net actuarial loss		90			9			—		1

Net periodic benefit cost	$	1,452		$	1,299		$	36	$	38

~~6. Pension and Other Postretirement Benefits~~ 10

~~The Company and its subsidiaries sponsor multiple defined benefit pension plans, which are primarily located at subsidiaries outside of the U~~6.~~S.,~~ Environmental ~~and an other postretirement benefit plan located in the U.S.~~ Matters

The ~~following~~Company ~~table~~accrues ~~provides~~for environmental obligations when such expenditures are probable and reasonably estimable. The amount of liability recorded is based on currently available information, including the ~~components~~progress of ~~net~~remedial ~~periodic~~investigations, ~~benefit~~current ~~cost:~~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. Environmental reserves were $27,927,000 and $27,995,000 as of March 31, 2007 and December 30, 2006, respectively.

	Pension Plans						Other Postretirement Benefits
	Post-						Post-
	Transactions			Pre-Transactions			Transactions		Pre-Transactions
	Three Months			Three Months			Three Months		Three Months
	Ended			Ended			Ended		Ended
(in thousands)	April 2, 2005			April 3, 2004			April 2, 2005		April 3, 2004
Service cost	$	578		$	453		$	7	$	7
Interest cost		759			668			29		29
Expected return on plan assets		(213	)		(196	)		—		—
Amortization of prior service cost		—			43			—		(12	)
Recognized net actuarial loss		14			36			—		1
Net periodic benefit cost	$	1,138		$	1,004		$	36	$	25

In connection with the Transactions, the Company identified potential environmental contamination at its manufacturing facility in Potenza, Italy. Based on environmental studies and the initial remediation plan presented to local authorities, the Company recorded a liability of $3,261,000 in connection with the application of purchase accounting for the Transactions. During the three months ended December 30, 2006, the Company further refined the remediation plan based on management's analysis of facts and circumstances and consultations with local authorities, resulting in an increase in the estimated environmental liability of $1,078,000 that was recorded through a charge to earnings. The Company anticipates that expenditures will be made over the next seven to ten years.

9 In the three months ended December 30, 2006, as part of an internal self-audit of its Corydon, IN and Owensboro, KY facilities, the Company identified instances of potential non-compliance with its environmental operating permits at these facilities. The Company self-reported these issues to the proper state and federal agencies and is taking steps to resolve these issues. Although the agencies have the authority and discretion to issue substantial fines that could be material, based upon management's analysis of facts and circumstances and consideration of recent cases addressed by the agencies involved, the Company does not believe that the maximum penalty will be assessed and that penalties, if any, resulting from this matter will not have a material adverse effect on the business, financial condition or results of operations of the Company.

~~Polypore~~ In connection with the acquisition of Membrana in 2002, ~~Inc~~the Company recorded a reserve for environmental obligations. The reserve provides for costs to remediate known environmental ~~Notes~~issues and operational upgrades which are required in order for the Company to ~~Condensed~~remain ~~Consolidated~~in ~~Financial~~compliance ~~Statements Three~~with ~~Months~~local ~~Ended~~regulations. ~~April 2,~~The ~~2004~~Company anticipates that expenditures will continue to be made over the ~~(unaudited)~~ 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 the acquisition.

7 The Company has indemnification agreements for certain environmental matters from Acordis A.G. ~~Income~~("Acordis") ~~Taxes~~and Akzo Nobel ("Akzo"), the prior owners 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. In addition to the Akzo indemnification, Acordis provides separate indemnification of claims incurred

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 difference between income tax expense using statutory rates and income tax expense reflected in the financial statements is due primarily to the effect of permanent differences related to foreign tax credits, exclusions from taxable income related to export sales and the mix of income between U.S. and foreign jurisdictions. 11

~~The~~from December 1999 ~~American~~through ~~Jobs~~February 2002, ~~Creation Act (~~the ~~“Act”)~~acquisition ~~was~~date. ~~enacted~~At ~~on October~~March 2231, ~~2004.~~2007 ~~The~~and ~~Act~~December 30, ~~contains~~2006, ~~a temporary~~amounts ~~provision~~receivable ~~that~~under ~~encourages~~the ~~companies~~indemnification toagreement ~~repatriate~~were $18,903,000 ~~foreign earnings~~ and a$18,669,000, ~~deduction~~respectively. ~~from federal~~The ~~taxable~~current ~~income~~portion ~~related~~of tothe ~~certain~~indemnification ~~qualifying~~receivable ~~domestic~~is ~~production~~included ~~manufacturing~~in ~~activities~~other current assets.

~~The Company is still in the process of evaluating the effects of the repatriation provision which allows companies to repatriate foreign earnings to the U~~7.S. Business 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. Restructuring

~~The~~2006 ~~impact~~Restructuring 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 provide 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. Plan

8 In response to a significant decline in demand for cellulosic hemodialysis membranes driven by a shift in industry demand toward synthetic membranes, the Company's separations media segment decided to exit the production of cellulosic membranes and realign its cost structure at its Wuppertal, Germany facility. ~~Segment~~On ~~Information~~August 24, 2006, the Company announced a layoff of approximately 150 employees. Production of cellulosic hemodialysis membranes ceased on December 27, 2006 and the majority of the employees were laid off effective January 1, 2007. The total cost of the plan is expected to be approximately $17,040,000, consisting of $11,403,000 for the employee layoffs and $5,637,000 for other costs related to the shutdown of portions of the Wuppertal facility that will no longer be used. The other costs included in the restructuring plan are related to local regulations surrounding complete or partial shutdowns of a facility. The Company expects to complete these activities by the end of the second quarter of 2008. The timing, scope and costs of these restructuring measures are subject to change as the Company proceeds with its restructuring plans and further evaluates its business needs and costs. The restructuring charge also included a non-cash impairment charge of $17,492,000 for buildings and equipment used in the production of cellulosic hemodialysis membranes.

~~The~~2005 ~~Company’s~~Restructuring 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. 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 transferred certain assets from Europe and the United States to its facilities in Thailand and China. The capacity realignment plan included the closure of the Company's ~~evaluates~~facility in Feistritz, Austria, the ~~performance~~downsizing of ~~segments~~its Norderstedt, Germany facility and ~~allocates~~the ~~resources~~relocation of certain assets from these two plants to ~~segments~~the ~~based~~Company's onfacilities in Prachinburi, ~~operating~~Thailand. ~~income~~During ~~before~~the ~~interest,~~three ~~income~~months ~~taxes~~ended September 30, ~~depreciation~~2006, the Company completed installation and ~~amortization~~started production with the assets relocated to Thailand. Additionally, finishing equipment from the Company's facility in Charlotte, North Carolina was relocated to its facility in Shanghai, China. The total cost of the realignment plan is expected to be approximately $8,831,000, of which $8,798,000 was recognized through March 31, 2007. The remaining expenses will be recognized in 2007. In addition to the benefit of realigning capacity with market growth, the Company expects to realize the full impact of cost 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.

10 2004 Restructuring Plan

~~Polypore,~~ In ~~Inc. Notes~~an effort to ~~Condensed~~manage ~~Consolidated~~costs ~~Financial~~and ~~Statements Three~~in ~~Months~~response ~~Ended~~to ~~April 2~~the decision of a customer to outsource its dialyzer production, ~~2004~~the Company implemented a number of cost ~~(unaudited)~~ reduction measures in 2004 relating to the

~~Financial information relating to the reportable operating segments is presented below:~~ 12

	Post-Transactions			Pre-Transactions
	Three Months			Three Months
	Ended			Ended
(in thousands)	April 2, 2005			April 3, 2004
Net sales to external customers:
Energy storage	$	76,259		$	94,923
Separations media		36,239			45,197
Total net sales to external customers	$	112,498		$	140,120
Operating income:
Energy storage	$	12,914		$	28,453
Separations media		7,585			7,913
Total operating income		20,499			36,366
Reconciling items:
Interest expense		14,930			4,531
Other		(1,571	)		414
Total consolidated income before income taxes	$	7,140		$	31,421
Depreciation and amortization:
Energy storage	$	8,400		$	5,214
Separations media		5,916			6,326
Total depreciation and amortization	$	14,316		$	11,540

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. All activities and charges relating to the 2004 Restructuring Plan have been completed as of December 30, 2006.

9. Restructuring activity ~~Related~~during ~~Party~~the ~~Transactions~~ three months ended March 31, 2007 consisted of:

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 Company’s equity investment account balance was $199,000 and $154,000 at April 2, 2005 and January 1, 2005, respectively. Charges from the affiliate for work performed were $431,000 and $264,000 for the three months ended April 2, 2005 and April 3, 2004, respectively. Amounts due to the affiliate were approximately $88,000 and $357,000 at April 2, 2005 and January 1, 2005, respectively.

		Balance at December 30, 2006		Restructuring Charges		Cash Payments			Foreign Currency Translation		Balance at March 31, 2007
		(in thousands)
2006 Restructuring Plan:
	Severance and benefit costs	$	11,559	$	—	$	(2,764	)	$	94	$	8,889
	Other		5,684		—		(1,733	)		39		3,990

			17,243		—		(4,497	)		133		12,879
2005 Restructuring Plan:
	Severance and benefit costs		876		53		(154	)		10		785
2004 Restructuring Plan:
	Severance and benefit costs		1,152		—		(334	)		8		826

Total		$	19,271	$	53	$	(4,985	)	$	151	$	14,490

~~The Company’s corporate headquarters were housed in space leased by a former shareholder of the Company from an affiliate of the former shareholder~~8. Stock AOption portion of the lease payments and other expenses, primarily insurance and allocated other direct costs, were charged to the Company. Charges from the affiliate were $28,000 and $130,000 for the three months ended April 2, 2005 and April 3, 2004, respectively. Plans

10 On June 15, 2006, Polypore International adopted the Polypore International, Inc. 2006 ~~Comprehensive~~Stock ~~Income~~Option Plan. In accordance with FAS 123R, the Company recorded stock compensation expense of $142,000 for the three months ended March 31, 2007 and was treated as a capital contribution from its Parent. Stock compensation expense is recognized as a component of "Selling, general and administrative expenses" in the accompanying consolidated statements of operations.

~~Comprehensive~~9. Income ~~income is as follows:~~ Taxes

	Post-Transactions			Pre-Transactions
	Three Months			Three Months
	Ended			Ended
(in thousands)	April 2, 2005			April 3, 2004
Net income	$	5,453		$	20,738
Other comprehensive loss, primarily foreign currency translation		(2,372	)		(11,693	)
Comprehensive income	$	3,081		$	9,045

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. 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, 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. The impact of these factors on the effective tax rate is exacerbated by the relatively low consolidated income before income taxes.

11 As of March 31, 2007 and December 31, 2006, the Company had unrecognized tax benefits of $8,428,000 and $8,377,000, respectively. The unrecognized tax benefits include uncertain tax positions of $1,450,000 that may affect the Company's annual effective income tax rate upon resolution.

~~Polypore, Inc. Notes to Condensed Consolidated Financial Statements Three Months Ended April 2, 2004 (unaudited)~~ 13

11 The Company recognizes accrued interest and penalties related to unrecognized tax positions as a component of income tax expense in its financial statements. ~~Environmental~~As ~~Matters~~of March 31, 2007 and December 31, 2006, the Company had accrued $402,000 and $375,000, respectively, for the potential payment of penalties and interest.

The Company ~~accrues~~files ~~for~~numerous ~~environmental~~tax ~~obligations~~returns ~~when~~in ~~such~~approximately ~~expenditures~~10 different ~~are~~tax ~~probable~~jurisdictions including North America, Europe and Asia. Generally, the Company is not subject to income ~~reasonably~~tax ~~estimable~~adjustments in the U.S. for ~~The~~tax ~~amount~~years ofbefore ~~liability~~2002 ~~recorded~~and isin ~~based~~foreign onjurisdictions ~~currently~~for ~~available~~tax ~~information, including~~years ~~the~~prior ~~progress~~to of2000. ~~remedial~~The ~~investigations,~~Company ~~current~~is ~~status~~currently ofundergoing ~~discussions~~income ~~with~~tax ~~regulatory~~audits in two tax jurisdictions. ~~authorities~~The ~~regarding~~U.S. tax authority is currently examining the ~~method~~Company's ~~and~~Federal ~~extent~~income oftax ~~remediation,~~returns ~~presently~~for ~~enacted~~tax ~~laws~~years 2003 and ~~existing technology~~2004. ~~Accruals~~The ~~for~~German ~~estimated~~tax ~~losses~~authority ~~from~~has ~~environmental~~informed ~~obligations~~the ~~are~~Company ~~adjusted~~that asthey ~~further~~will audit the ~~information~~2001, ~~develops~~2002 orand ~~circumstances~~2003 ~~change.~~tax ~~Costs~~years of ~~future~~one ~~expenditures~~of ~~for~~the ~~environmental obligations~~Company's ~~are~~German ~~not~~subsidiaries. ~~discounted~~Because toaudit ~~their~~outcomes ~~present~~and ~~value.~~the ~~Recoveries~~timing of ~~environmental~~audit ~~costs~~settlements ~~from~~are ~~other~~subject to significant uncertainty, the Company cannot make a ~~parties~~reasonable ~~are~~estimate ~~recognized~~of asthe ~~assets~~impact ~~when~~on ~~their~~earnings ~~receipt~~in isthe ~~deemed~~next ~~probable~~twelve months from these audits.

~~In connection with the Transactions, the Company identified a potential enforcement issue with the United States Environmental Protection Agency (“EPA”)~~10. Comprehensive 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. When the Company met with the EPA, the Agency indicated their intent to request additional information. The Company is currently developing information responsive to that request. During the three months ended April 2, 2004, the Company has recorded its best estimate of potential penalties as an adjustment to the preliminary allocation of purchase price for the Transactions. Although the EPA has the authority and discretion to issue substantial fines that could be material, based upon management’s analysis of the facts and circumstances, in consideration of prior cases and the EPA’s published civil penalty policies, and supported by discussions with third party advisors, we do not believe that the maximum penalty will be assessed and that penalties, if any, resulting from this matter will not have a material adverse effect on the business, financial condition or results of operations of the Company. Income

In Comprehensive ~~connection~~income 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 and an initial estimate of the liability of $1,392,000 was recorded in the preliminary allocation of purchase price at January 1, 2005. During the three months ended April 2, 2004, the accrual was increased by $1,869,000 through further adjustment to the preliminary allocation of purchase price. The Company has reported the matter to the proper authorities and the initial remediation plan is ~~currently~~as ~~under~~follows: ~~review. 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.

	Three Months Ended
	March 31, 2007		April 1, 2006
	(in thousands)
Net income	$	6,293	$	3,365
Other comprehensive income, primarily foreign currency translation		3,823		1,540

Comprehensive income	$	10,116	$	4,905

~~The Company has indemnification agreements for certain environmental matters from Acordis A~~11.~~G. (“Acordis”)~~ Related ~~and~~Party 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 ($2,608,000 U.S. dollars at April 2, 2005). In addition to the Akzo indemnification, Acordis provides separate indemnification of claims incurred from December 1999 through February 2002, the acquisition date. At April 2, 2005, amounts receivable under the indemnification agreement were $19,575,000. Transactions

12 The Company's German subsidiary has equity investments in two companies that provide patent, trademark and research services for the Company and other companies that have invested in them. ~~Business~~The ~~Restructuring~~Company's investments represent 25% ownership in each of the firms and are accounted for by the equity method of accounting. The Company's equity investment account balance was $178,000 and $177,000 at March 31, 2007 and December 30, 2006, respectively. Charges from the affiliates for work performed were $347,000 and $200,000 for the three months ended March 31, 2007 and April 1, 2006, respectively. Amounts due to the affiliates were approximately $64,000 and $59,000 at March 31, 2007 and December 30, 2006, respectively.

In connection with continued efforts to manage costs and in response to the decision of a customer to outsource its dialyzer production, the Company is implementing a number of cost reduction measures 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 reductions12. The timing and scope of these restructuring measures are subject to change as the Company further evaluates its business needs and costs. As a first step in these cost reduction efforts, on September 3, 2004, the Company announced a Acquisition

12 Effective January 1, 2007, the Company purchased from Nippon Sheet Glass Company, Limited ("NSG") a 60% share in Daramic NSG Tianjin PE Separator Co., LTD ("DNPET") for $5,181,000. DNPET is a lead-acid battery separator manufacturing facility located in Tianjin, China. The acquisition supports the Company's strategy of expanding capacity in the high growth Asia-Pacific region. Beginning January 1, 2007, DNPET's assets, liabilities, results of operations and cash flows are consolidated with those of the Company and NSG's interest in DNPET is included in the Company's

~~Polypore, Inc. Notes to Condensed Consolidated Financial Statements Three Months Ended April 2, 2004 (unaudited)~~ 14

~~layoff of~~consolidated ~~approximately~~balance ~~200~~sheet ~~employees~~as atminority ~~its Wuppertal, Germany facility~~interest. ~~During~~The ~~the~~Company ~~year~~is ~~ended~~entitled ~~January 1, 2005,~~to aall ~~charge~~ of ~~$13,899,000~~the ~~was~~earnings ~~recorded~~and ascash anflow ~~estimate~~from ofDNPET ~~the~~for ~~costs associated with~~ the ~~layoff. The~~first ~~Company~~two ~~expects~~years toand ~~make~~after ~~most~~that, ofearnings ~~the payments~~ and ~~realize~~cash aflows ~~portion~~are ~~of the cost savings related~~allocated tobased ~~the~~on ~~layoffs~~ownership ~~during fiscal 2005~~percentages. InOn ~~connection~~January 1, ~~with~~2009 aand ~~customer’s~~January 1, ~~outsourcing of its dialyzer production~~2012, the Company ~~also~~can ~~recorded~~exercise a ~~charge~~call ~~for~~option ~~raw~~and ~~materials,~~NSG can exercise a ~~portion~~put ofoption ~~which~~for the Company ~~is obligated~~ to purchase ~~under~~NSG's an40% ownership ~~existing~~interest ~~purchase~~for ~~commitment, of~~ $13,~~788~~600,000. inAfter ~~cost~~2012, ofthe ~~goods~~exercise ~~sold during~~price of the ~~year~~call ~~ended~~and ~~January 1,~~put ~~2005.~~options ~~Finally,~~will inbe ~~connection~~equal ~~with~~to the ~~relocation~~fair ofmarket ~~our~~value ~~research and~~of ~~development~~the ~~operations~~shares, ~~the~~as ~~Company~~determined ~~expects~~by toan ~~record~~independent aappraiser. ~~charge~~The acquisition towas ~~earnings~~accounted offor ~~approximately $2,600,000~~as a purchase in ~~the~~conformity ~~third~~with ~~quarter~~FASB ofStatement ~~2005~~No. 141, ~~The~~Business ~~Company~~Combinations ~~does~~and ~~not~~FASB ~~expect~~Statement toNo. 142, Goodwill ~~record any impairment to~~and Other ~~long-lived~~Intangible ~~assets~~Assets. inThe ~~connection~~excess ~~with~~of the ~~relocation.~~purchase ~~The~~price ~~current~~over ~~portion of~~ the ~~reserve~~fair ~~for business~~value ~~restructuring~~of ~~costs~~the isnet ~~included~~assets inpurchased ~~accrued~~was ~~liabilities~~approximately $946,000 and ~~the~~was ~~non-current~~allocated ~~portion~~to goodwill. DNPET is included in ~~other~~the ~~non-current~~Company's ~~liabilities~~energy storage segment.

~~The~~13. Segment ~~restructuring reserve is comprised of the following:~~ Information

						Foreign
	Balance at					Currency			Balance at
(in thousands)	January 1, 2005		Cash Payments			Translation			April 2, 2005
Severance and benefit costs	$	14,944	$	(4,249	)	$	(562	)	$	10,133
Raw materials		1,256		—			(53	)		1,203
Total	$	16,200	$	(4,249	)	$	(615	)	$	11,336

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.

~~13.~~ The Company ~~Financial~~evaluates ~~Statements~~the performance of ~~Guarantors~~ segments and allocates resources to segments based on operating income before interest, income taxes, depreciation and amortization.

As noted in Note 1, 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. 15

~~Payment of the Notes is unconditionally guaranteed, jointly and severally, on a senior basis by~~ Financial ~~certain~~information ofrelating ~~the~~to ~~Company’s wholly-owned subsidiaries (“Guarantors”). Management has determined that separate complete financial statements of~~ the ~~Guarantors~~reportable ~~would~~operating ~~not~~segments beis ~~material~~presented tobelow: ~~users of the financial statements.~~

The following sets forth condensed consolidating financial statements of the Guarantors and non-Guarantor subsidiaries.

		Three Months Ended
		March 31, 2007			April 1, 2006
		(in thousands)
Net sales to external customers:
	Energy storage	$	93,898		$	83,155
	Separations media		35,883			32,138

Total net sales to external customers		$	129,781		$	115,293

Operating income:
	Energy storage	$	21,271		$	15,357
	Separations media		3,413			2,458

Segment operating income			24,684			17,815
Business restructuring			53			772

Total operating income			24,631			17,043
Reconciling items:
	Interest expense, net		17,130			16,283
	Change in accounting principle related to postemployment benefits		—			(2,593	)
	Foreign currency and other		(133	)		699

Income before income taxes		$	7,634		$	2,654

Depreciation and amortization:
	Energy storage	$	8,185		$	8,006
	Separations media		3,928			6,554

Total depreciation and amortization		$	12,113		$	14,560

13 14. Financial Statements of Guarantors

~~Polypore,~~ The ~~Inc. Notes~~Company's tosenior ~~Condensed~~subordinated ~~Consolidated~~notes ~~Financial~~are ~~Statements Three~~unconditionally ~~Months~~guaranteed, ~~Ended~~jointly ~~April 2~~and severally, ~~2004~~on a senior basis by certain of the Company's wholly owned subsidiaries (~~unaudited~~"Guarantors") . Management has determined that separate complete financial statements of the Guarantors would not be material to users of the financial statements.

~~Condensed Consolidating Balance Sheet As of April 2, 2005~~ 16

			Combined
	Combined		Non-				Reclassifications
	Guarantor		Guarantor		The		and
(in thousands)	Subsidiaries		Subsidiaries		Company		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	86	$	16,096	$	13,396	$	—		$	29,578
Accounts receivable, net		34,610		64,499		—		—			99,109
Inventories		18,286		43,642		—		—			61,928
Other		3,871		6,149		3,252		—			13,272
Total current assets		56,853		130,386		16,648		—			203,887
Due from affiliates		189,475		227,676		297,388		(714,539	)		—
Investment in subsidiaries		173,024		206,645		253,341		(633,010	)		—
Property, plant and equipment, net		111,068		311,068		—		—			422,136
Other		939		19,565		775,512		—			796,016
Total assets	$	531,359	$	895,340	$	1,342,889	$	(1,347,549	)	$	1,422,039
Liabilities and shareholders’ equity
Accounts payable, accrued liabilities and other	$	10,325	$	47,230	$	14,963	$	—		$	72,518
Current portion of debt		94		747		989		—			1,830
Current portion of capital lease obligation		1,285		—		—		—			1,285
Total current liabilities		11,704		47,977		15,952		—			75,633
Due to affiliates		302,494		255,966		156,079		(714,539	)		—
Debt, less current portion		—		3,263		809,637		—			812,900
Capital lease obligations, less current portion		7,018		—		—		—			7,018
Pension and postretirement benefits		2,228		45,937		—		—			48,165
Post employment benefits		—		9,307		—		—			9,307
Environmental reserve, less current portion		—		25,241		—		—			25,241
Deferred income taxes and other		3,359		65,270		64,722		—			133,351
Shareholders’ equity		204,556		442,379		296,499		(633,010	)		310,424
Total liabilities and shareholder’s equity	$	531,359	$	895,340	$	1,342,889	$	(1,347,549	)	$	1,422,039

The following sets forth condensed consolidating financial statements of the Guarantors and non-Guarantor subsidiaries.

14Condensed Consolidating Balance Sheet As of March 31, 2007

Polypore, Inc. Notes to Condensed Consolidated Financial Statements Three Months Ended April 2, 2004 (unaudited)

	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			The Company			Reclassifications and Eliminations			Consolidated
	(in thousands)
Assets
Cash and cash equivalents	$	—	$	38,766		$	30,302		$	—		$	69,068
Accounts receivable, net		38,342		65,716			—			—			104,058
Inventories		17,314		48,830			—			—			66,144
Refundable income taxes		—		—			—			2,351			2,351
Other		2,610		7,961			210			—			10,781

Total current assets		58,266		161,273			30,512			2,351			252,402
Due from affiliates		208,754		262,934			287,696			(759,384	)		—
Investment in subsidiaries		252,128		300,168			226,294			(778,590	)		—
Property, plant and equipment, net		105,515		265,863			—			—			371,378
Goodwill		—		985			567,520			—			568,505
Intangibles and loan acquisition costs, net		54		—			199,152			—			199,206
Other		1,012		17,114			71			—			18,197

Total assets	$	625,729	$	1,008,337		$	1,311,245		$	(1,535,623	)	$	1,409,688

Liabilities and shareholder's equity
Accounts payable and accrued liabilities	$	16,621	$	52,219		$	14,115		$	—		$	82,955
Income taxes payable		5,966		(8,317	)		—			2,351			—
Current portion of debt		—		—			3,792			—			3,792
Current portion of capital lease obligation		1,391		—			—			—			1,391

Total current liabilities		23,978		43,902			17,907			2,351			88,138
Due to affiliates		317,797		252,518			189,069			(759,384	)		—
Debt, less current portion		—		218			789,973			—			790,191
Capital lease obligation, less current portion		4,401		—			—			—			4,401
Pension and postretirement benefits		2,305		60,590			—			—			62,895
Postemployment benefits		—		4,273			—			—			4,273
Environmental reserve, less current portion		—		23,819			—			—			23,819
Deferred income taxes and other		67,922		53,753			(98	)		—			121,577
Shareholder's equity		209,326		569,264			314,394			(778,590	)		314,394

Total liabilities and shareholder's equity	$	625,729	$	1,008,337		$	1,311,245		$	(1,535,623	)	$	1,409,688

~~13. Financial Statements of Guarantors (continued)~~ 17

Condensed Consolidating Balance Sheet As of ~~January 1~~December 30, ~~2005~~ 2006

	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			The Company			Reclassifications and Eliminations			Consolidated
				Combined
	Combined			Non-
	(in thousands)
	Guarantor			Guarantor				The				Reclassifications
Assets
(in thousands)	Subsidiaries			Subsidiaries				Company				and Eliminations			Consolidated
Cash and cash equivalents	$	—	$	30,807		$	23,357		$	—		$	54,164
Assets
Accounts receivable, net		37,287		64,823			—			—			102,110
Cash and cash equivalents	$	2,263		$	20,244			$	9,177			$	—		$	31,684
Inventories		16,211		51,530			—			—			67,741
Accounts receivable, net		37,237			69,059				—				—			106,296
Other		3,435		10,062			189			—			13,686
Inventories		19,265			42,524				—				—			61,789
Total current assets		56,933		157,222			23,546			—			237,701
Other		1,561			9,985				9,934				—			21,480
Due from affiliates		199,196		256,327			284,658			(740,181	)		—
Total current assets		60,326			141,812				19,111				—			221,249
Investment in subsidiaries		252,129		304,592			220,743			(777,464	)		—
Due from affiliates		178,805			253,225				300,797				(732,827	)		—
Property, plant and equipment, net		107,050		256,476			—			—			363,526
Investment in subsidiaries		172,531			206,645				247,400				(626,576	)		—
Goodwill		—		—			567,587			—			567,587
Property, plant and equipment, net		113,048			328,302				—				—			441,350
Intangibles and loan acquisition costs, net		57		—			204,007			—			204,064
Other		~~879~~645		15,437	~~20,470~~		71		~~780,018~~	—			—16,153			~~801,367~~
Total assets	$	~~525~~616,~~589~~010	$	$990,054	~~950,454~~	$	1,300,612	$	~~1,347,326~~$	(1,517,645	)	$	(1,~~359~~389,~~403~~031	)	$	~~1,463,966~~
Liabilities and shareholders’ equity
Liabilities and shareholder's equity
Accounts payable, accrued liabilities and other	$	8,857		$	54,561			$	7,627			$	—		$	71,045
Accounts payable and accrued liabilities	$	13,769	$	53,741		$	13,194		$	—		$	80,704
Current portion of debt		97			2,163				25,000				—			27,260
Income taxes payable		13,447		(9,758	)		—			—			3,689
Current portion of capital lease obligation		1,272			—				—				—			1,272
Current portion of debt		—		152			3,786			—			3,938
Total current liabilities		10,266			56,724				32,627				—			99,577
Current portion of capital lease obligation		1,377		—			—			—			1,377
Due to affiliates		306,530			281,718				144,579				(732,827	)		—
Total current liabilities		28,593		44,135			16,980			—			89,708
Debt, less current portion		—			3,683				821,256				—			824,939
Due to affiliates		290,183		258,683			191,315			(740,181	)		—
Capital lease obligations, less current portion		7,344			—				—				—			7,344
Debt, less current portion		—		63			787,927			—			787,990
Pension and postretirement benefits		2,231			46,421				—				—			48,652
Capital lease obligations, less current portion		4,754		—			—			—			4,754
Post employment benefits		—			10,119				—				—			10,119
Pension and postretirement benefits		2,302		58,917			—			—			61,219
Environmental reserve, less current portion		—			24,394				—				—			24,394
Post employment benefits		—		4,451			—			—			4,451
Deferred income taxes and other		3,359			71,073				67,167				—			141,599
Environmental reserve, less current portion		—		22,935			—			—			22,935
Shareholders’ equity		195,899			456,322				281,697				(626,576	)		307,342
Deferred income taxes and other		63,593		49,991			—			—			113,584
Total liabilities and shareholder’s equity	$	525,589		$	950,454			$	1,347,326			$	(1,359,403	)	$	1,463,966
Shareholder's equity		226,585		550,879			304,390			(777,464	)		304,390
Total liabilities and shareholder's equity	$	616,010	$	990,054		$	1,300,612		$	(1,517,645	)	$	1,389,031

15 18

~~Polypore,~~Condensed ~~Inc. Notes~~Consolidating toStatement ~~Condensed~~of ~~Consolidated~~Operations For ~~Financial~~the ~~Statements Three~~three ~~Months~~months ~~Ended~~ended ~~April 2~~March 31, ~~2004 (unaudited)~~ 2007

13. Financial Statements of Guarantors (continued)

	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Reclassifications and Eliminations			Consolidated
	(in thousands)
Net sales	$	48,556		$	81,225	$	—		$	—		$	129,781
Cost of goods sold		20,827			60,673		—			—			81,500

Gross profit		27,729			20,552		—			—			48,281
Selling, general and administrative expenses		15,413			8,042		142			—			23,597
Business restructuring		—			53		—			—			53

Operating income (loss)		12,316			12,457		(142	)		—			24,631
Other (income) expense, net		(1,713	)		1,649		17,061			—			16,997
Equity in earnings of subsidiaries		—			—		(14,781	)		14,781			—

Income (loss) before income taxes		14,029			10,808		(2,422	)		(14,781	)		7,634
Income taxes		7,837			2,219		(8,715	)		—			1,341

Net income	$	6,192		$	8,589	$	6,293		$	(14,781	)	$	6,293

Condensed Consolidating Statement of ~~Income~~Operations For the three months ended April 2 1, ~~2005~~ 2006

	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			The Company			Reclassifications and Eliminations			Consolidated
					Combined
	Combined				Non-
	(in thousands)
	Guarantor				Guarantor				The				Reclassifications
Net sales	$	45,848		$	69,445		$	—		$	—		$	115,293
(in thousands)	Subsidiaries				Subsidiaries				Company				and Eliminations			Consolidated
Cost of goods sold		22,458			52,522			—			—			74,980
Net sales	$	40,392			$	72,106			$	—			$	—		$	112,498
Gross profit		23,390			16,923			—			—			40,313
Cost of goods sold		21,695				51,914				—				—			73,609
Selling, general and administrative expenses		13,598			8,900			—			—			22,498
Gross profit		18,697				20,192				—				—			38,889
Business restructuring		—			772			—			—			772
Selling, general and administrative expenses		11,010				7,380				—				—			18,390
Operating income		9,792			7,251			—			—			17,043
Operating income		7,687				12,812				—				—			20,499
Other (income) expense, net		(636	)		(1,627	)		16,652			—			14,389
Other (income) expense, net		(517	)			(59	)			13,935				—			13,359
Equity in earnings of subsidiaries		—			—			(13,412	)		13,412			—
Equity in earnings of subsidiaries		—				—				(15,364	)			15,364			—
Income (loss) before income taxes		10,428			8,878			(3,240	)		(13,412	)		2,654
Income before income taxes		8,204				12,871				1,429				(15,364	)		7,140
Income taxes		6,625			(731	)		(6,605	)		—			(711	)
Income taxes		4,211				1,500				(4,024	)			—			1,687
Net income	$	3,803		$	9,609		$	3,365		$	(13,412	)	$	3,365
Net income	$	3,993			$	11,371			$	5,453			$	(15,364	)	$	5,453

~~Condensed Consolidating Statement of Income For the three months ended April 3, 2004~~ 19

				Combined
	Combined			Non-
	Guarantor			Guarantor		The			Reclassifications
(in thousands)	Subsidiaries			Subsidiaries		Company			and Eliminations			Consolidated
Net sales	$	58,727		$	81,393	$	—		$	—		$	140,120
Cost of goods sold		26,951			59,310		—			—			86,261
Gross profit		31,776			22,083		—			—			53,859
Selling, general and administrative expenses		9,864			7,629		—			—			17,493
Operating income		21,912			14,454		—			—			36,366
Other (income) expense, net		(265	)		813		4,397			—			4,945
Equity in earnings of subsidiaries		—			—		(23,063	)		23,063			—
Income before income taxes		22,177			13,641		18,666			(23,063	)		31,421
Income taxes		8,365			4,390		(2,072	)		—			10,683
Net income	$	13,812		$	9,251	$	20,738		$	(23,063	)	$	20,738

Condensed Consolidating Statement of Cash Flows
For the three months ended March 31, 2007

	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			The Company			Reclassifications and Eliminations			Consolidated
	(in thousands)
Net cash provided by operating activities	$	13,647		$	17,032		$	7,161		$	(14,823	)	$	23,017
Investing activities:
Purchases of property, plant and equipment		(948	)		(1,715	)		—			—			(2,663	)
Purchase of 60% share in manufacturing facility		—			(5,181	)		—			—			(5,181	)

Net cash used in investing activities		(948	)		(6,896	)		—			—			(7,844	)
Financing activities:
Principal payments on debt		(339	)		—			(947	)		—			(1,286	)
Loan acquisition costs		—			—			(31	)		—			(31	)
Intercompany transactions, net		(12,384	)		(3,201	)		762			14,823			—

Net cash provided by (used in) financing activities		(12,723	)		(3,201	)		(216	)		14,823			(1,317	)
Effect of exchange rate changes on cash and cash equivalents		24			1,024			—			—			1,048

Net increase in cash and cash equivalents		—			7,959			6,945			—			14,904
Cash and cash equivalents at beginning of period		—			30,807			23,357			—			54,164

Cash and cash equivalents at end of period	$	—		$	38,766		$	30,302		$	—		$	69,068

~~Polypore, Inc. Notes to Condensed Consolidated Financial Statements Three Months Ended April 2, 2004 (unaudited)~~ 20

~~13.~~Condensed ~~Financial~~Consolidating ~~Statements~~Statement of ~~Guarantors~~Cash ~~(continued)~~Flows For the three months ended April 1, 2006

Condensed Consolidating Statement of Cash Flows For the three months ended April 2, 2005

	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			The Company			Reclassifications and Eliminations			Consolidated
	(in thousands)
Net cash provided by operating activities	$	11,587		$	5,357		$	12,838		$	(13,412	)	$	16,370
Investing activities:
Purchases of property, plant and equipment		(2,235	)		(1,754	)		—			—			(3,989	)

Net cash used in investing activities		(2,235	)		(1,754	)		—			—			(3,989	)
Financing activities:
Principal payments on debt		(303	)		—			—			—			(303	)
Intercompany transactions, nets		(9,003	)		(740	)		(3,669	)		13,412			—

Net cash provided by (used in) financing activities		(9,306	)		(740	)		(3,669	)		13,412			(303	)
Effect of exchange rate changes on cash and cash equivalents		(3	)		375			—			—			372

Net increase (decrease) in cash and cash equivalents		43			3,238			9,169			—			12,450
Cash and cash equivalents at beginning of period		20			18,173			9,387			—			27,580

Cash and cash equivalents at end of period	$	63		$	21,411		$	18,556		$	—		$	40,030

				Combined
	Combined			Non-
	Guarantor			Guarantor			The			Reclassifications
(in thousands)	Subsidiaries			Subsidiaries			Company			and Eliminations			Consolidated
Net cash provided by operating activities	$	12,075		$	18,562		$	—		$	(1,417	)	$	29,220
Investing activities:
Purchases of property, plant and equipment		(794	)		(2,303	)		—			—			(3,097	)
Net cash used in investing activities		(794	)		(2,303	)		—			—			(3,097	)
Financing activities:
Principal payments on debt		(313	)		(1,592	)		(25,019	)		—			(26,924	)
Intercompany transactions, net		(13,109	)		(17,547	)		29,239			1,417			—
Net cash provided by (used) in financing activities		(13,422	)		(19,139	)		4,220			1,417			(26,924	)
Effect of exchange rate changes on cash and equivalents		53			(1,358	)		—			—			(1,305	)
Net increase (decrease) in cash and equivalents		(2,088	)		(4,238	)		4,220			—			(2,106	)
Cash and equivalents at beginning of period		2,174			20,334			9,176			—			31,684
Cash and equivalents at end of period	$	86		$	16,096		$	13,396		$	—		$	29,578

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

~~Polypore,~~ The ~~Inc. Notes~~following todiscussion ~~Condensed~~of ~~Consolidated~~our ~~Financial~~financial ~~Statements~~condition and results of operations should be read together with our unaudited consolidated ~~Three~~financial ~~Months~~statements ~~Ended~~and ~~April~~the related notes included elsewhere in this Quarterly Report on Form 2,10-Q ~~2004~~and our audited consolidated financial statements and the related notes ~~(unaudited)~~ included in our Annual Report on Form 10-K for the fiscal year ended December 30, 2006.

~~13. Financial Statements of Guarantors (continued)~~ Overview

~~Condensed~~ We ~~Consolidating~~are ~~Statement~~a ofleading ~~Cash~~global ~~Flows~~high technology filtration company that develops, manufactures and markets specialized microporous membranes used in separation and ~~For~~filtration processes. We operate in two business segments: (i) the ~~three~~energy ~~months~~storage ~~ended~~segment ~~April~~and (ii) 3,the ~~2004~~separations media segment. We manufacture our products at facilities in North America, Europe and Asia.

				Combined
	Combined			Non-
	Guarantor			Guarantor			The			Reclassifications
(in thousands)	Subsidiaries			Subsidiaries			Company			and Eliminations			Consolidated
Net cash provided by operating activities	$	9,328		$	10,440		$	—		$	(2,621	)	$	17,147
Investing activities:
Purchases of property, plant and equipment		(2,145	)		(2,071	)		—			—			(4,216	)
Proceeds from sale of property, plant and equipment		—			1,923			—			—			1,923
Net cash used in investing activities		(2,145	)		(148	)		—			—			(2,293	)
Financing activities:
Proceeds from debt		—			610			—			—			610
Principal payments on debt		—			(2,891	)		(4,145	)		—			(7,036	)
Loan acquisition costs		—			—			(59	)		—			(59	)
Intercompany transactions, nets		(7,467	)		1,297			3,549			2,621			—
Net cash used in financing activities		(7,467	)		(984	)		(655	)		2,621			(6,485	)
Effect of exchange rate changes on cash and equivalents		238			(1,402	)		—			—			(1,164	)
Net increase (decrease) in cash and equivalents		(46	)		7,906			(655	)		—			(7,205	)
Cash and equivalents at beginning of period		1,531			13,762			4,770			—			20,063
Cash and equivalents at end of period	$	1,485		$	21,668		$	4,115		$	—		$	27,268

In the energy storage segment, our membrane separators are a critical performance component in lithium batteries, which are used in consumer electronic applications, and lead-acid batteries, which are used in transportation and industrial applications. The energy storage segment has benefited from the overall increase in demand by consumers for mobile power which we believe will continue.

18 Lithium batteries are the power source in a wide variety of electronics applications ranging from laptop computers and mobile phones to power tools. In addition, many new applications, such as consumer power tools and electric bikes and developing applications such as hybrid electric vehicles incorporate large-format batteries that require much greater membrane separator volume per battery. As a result, we believe that membrane separator growth will exceed battery unit sales growth.

~~Item~~ In the 2.motor ~~Management’s~~vehicle ~~Discussion~~battery market, the high proportion of aftermarket sales and ~~Analysis~~the steady growth of ~~Financial~~the ~~Condition~~worldwide fleet of motor vehicles provide us with a growing, recurring revenue base in lead-acid battery membrane separators. We believe we will also benefit from the worldwide conversion of alternative separator materials to the higher-performance polyethylene-based membrane separators such as those we produce. Growth is strongest in the Asia-Pacific region as a result of increasing per capita penetration of automobiles, growth in the industrial and ~~Results~~manufacturing sectors, and a high rate of ~~Operations~~conversion to polyethylene-based membrane separators. We have positioned ourselves to benefit from this growth by expanding capacity at our Prachinburi, Thailand facility, acquiring a 60% stake in a production facility in Tianjin, China, and establishing an Asian Technical Center in Thailand.

~~The~~ Expansion of ~~following~~the ~~discussions~~Thailand offacility ~~our~~occurred ~~financial~~as ~~condition~~part ~~and~~of ~~results~~larger ofrestructuring ~~operations~~activities. ~~should~~In be2005, ~~read together~~we ~~with~~closed our ~~unaudited~~Austrian ~~consolidated~~lead-acid ~~financial~~battery ~~statements~~separator ~~and~~facility, ~~the~~downsized ~~related notes included~~our ~~elsewhere~~German infacility ~~this Quarterly Report on Form 10-Q~~ and ~~our~~transferred ~~audited~~certain ~~consolidated~~assets ~~financial~~from ~~statements and~~these ~~the~~facilities ~~related~~to ~~notes included in~~ our ~~Annual~~facility ~~Report on Form 10-K for the fiscal year ended January 1, 2005~~in Thailand.

~~Overview~~ In the separations media segment, our filtration membranes and modules are used in healthcare and high-performance industrial and specialty filtration applications. Healthcare applications include hemodialysis, blood oxygenation, and plasmapheresis. Growth in demand for hemodialysis membranes is driven by the increasing worldwide population of end-stage renal disease patients. We estimate that conversion to single-use dialyzers and increasing treatment frequency will result in additional dialyzer market growth.

We produce ~~are~~ a ~~leading~~wide ~~worldwide~~range ~~developer,~~of ~~manufacturer~~membranes and ~~marketer of highly specialized polymer~~membrane-based ~~membranes~~ ~~used~~elements infor ~~separation~~ micro—and ~~filtration~~ultrafiltration ~~processes~~and ingasification/degasification ~~terms~~ of ~~market share~~liquids. ~~Our~~Micro- ~~products~~ and ~~technologies~~ ~~target~~ultrafiltration ~~specialized~~membrane element ~~applications~~market ~~and~~growth ~~markets~~is ~~that~~being ~~require~~driven ~~the~~by ~~removal~~several ~~or separation of various materials from liquids~~factors, ~~with~~including ~~such~~end-market ~~materials~~growth ~~ranging~~ in ~~size~~applications ~~from~~such ~~microscopic~~as towater ~~those visible~~treatment ~~to the human eye. We manage our operations under two business segments: energy storage~~ and ~~separations~~pharmaceutical ~~media. The energy storage segment~~processing, ~~which~~displacement ~~accounts for approximately two-thirds~~ of conventional ~~our~~filtration ~~total~~media ~~sales,~~by ~~produces~~membrane ~~different~~filtration ~~types~~due ofto membranes' ~~that~~superior ~~function~~cost ~~as separators in lead-acid batteries used in transportation~~ and ~~industrial~~performance ~~applications~~attributes and ~~lithium~~increasing ~~batteries~~purity ~~used~~requirements 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~~ In ~~separators~~separations ~~serve the stable and predictable market for transportation and industrial applications~~media, ~~with~~ ~~approximately~~we ~~80%~~engaged ofin ~~sales~~certain ~~for~~restructuring ~~transportation~~activities ~~applications coming from replacement batteries~~ in ~~the~~each ~~aftermarket. This replacement market is primarily driven by the growing size~~ of ~~the worldwide~~2004 ~~fleet of motor vehicles, which according to Ward’s Motor Vehicles Facts~~ and ~~Figures,~~2006 ~~has been growing approximately 3% per year. According to industry analysts, sales~~ in ~~the~~response ~~rechargeable lithium battery market are expected~~ to ~~grow~~changing ~~at a compound annual growth rate of approximately 16% through 2011~~customer, ~~driven~~industry ~~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 membranesdemands. InOur ~~our~~2004 ~~industrial~~restructuring ~~and specialty~~plan ~~filtration~~was ~~markets,~~enacted 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. 22

Weto manage ~~serve~~costs ~~our~~and ~~customers~~to ~~globally~~respond ~~with~~to ~~strategically~~the ~~located~~decision ~~manufacturing~~of ~~facilities~~a customer to outsource its dialyzer production. We implemented a number of cost reduction measures in 2004 relating to the ~~major~~separations media segment, ~~geographic~~including ~~markets~~employee layoffs and the relocation and consolidation of ~~North~~certain ~~America~~research and development operations. All activities and charges relating to this plan were completed as of December 30, ~~Europe~~2006. In 2005 and ~~Asia~~2006, we experienced a significant decline in demand for cellulosic hemodialysis membranes, primarily driven by a shift in industry demand toward higher performing synthetic membranes. In response, in 2006 we ceased production of cellulosic hemodialysis membranes and realigned the cost structure of our separations media segment at our Wuppertal, Germany facility.

~~Historically,~~Critical ~~our~~accounting 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 policies

~~materials~~ Critical ~~possessing~~accounting ~~specialized~~policies ~~filtration~~are ~~and~~those ~~separation~~accounting ~~functions.~~policies ~~The~~that ~~large~~can have a significant impact on the presentation of our financial condition and ~~extremely~~results of ~~fragmented~~operations, ~~filtration~~and that require the use of complex and ~~separation~~subjective ~~market~~estimates ~~presents~~based anon ~~opportunity~~past ~~for~~experience ~~further~~and ~~consolidation~~management's ~~into~~judgment. Because of uncertainty inherent in such estimates, actual results may differ from these estimates. These policies are critical to the understanding of our ~~already~~operating ~~diverse~~results ~~markets~~and financial condition and ~~leading~~include ~~platform~~the policies related to the allowance for doubtful accounts, the impairment of ~~technologies~~intangibles and goodwill, pension and other postretirement benefits and environmental matters. For a discussion of each of these policies, please see the discussion entitled "Critical Accounting Policies" under Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 30, 2006.

OnResults ~~May 13, 2004, Polypore and its shareholders 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 related costs, was approximately $1,150.1 million in cash. In connection with these transactions, PP Acquisition (i) obtained a new credit facility with initial borrowings of approximately $414.9 million, Operations

19 The following table sets forth, for the periods indicated, certain operating data in amount and as a percentage of net sales:

(ii) issued $225.0 million aggregate principal amount of 8 3/4% senior subordinated dollar notes due 2012 and €150.0 million aggregate principal amount of 8 3/4% senior subordinated euro notes due 2012 (collectively, the “83/4% 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 new credit facility, the issuance of the 8 3/4% 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”).

	Three Months Ended						Percentage of Sales Three Months Ended
	March 31, 2007			April 1, 2006			March 31, 2007		April 1, 2006
	(in millions)
Net sales	$	129.8		$	115.3		100.0	%	100.0	%
Gross profit		48.3			40.3		37.2	%	35.0	%
Selling, general and administrative expenses		23.6			22.5		18.2	%	19.5	%
Business restructuring		0.1			0.8		0.0	%	0.7	%

Operating income		24.6			17.0		19.0	%	14.7	%
Interest expense, net		17.1			16.3		13.2	%	14.1	%
Change in accounting principle related to postemployment benefits		—			(2.6	)	—		(2.3	)%
Foreign currency and other		(0.1	)		0.7		(0.1	)%	0.6	%

		17.0			14.4		13.1	%	12.5	%

Income before income taxes		7.6			2.7		5.9	%	2.3	%
Income taxes		1.3			(0.7	)	1.0	%	(0.6	)%

Net income	$	6.3		$	3.4		4.9	%	2.9	%

~~The~~ ~~acquisition~~Comparison of the ~~Company~~three bymonths PPended ~~Acquisition was accounted for as a purchase in conformity with FASB Statement No.~~March ~~141~~31, ~~Business~~2007 ~~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~~three ~~has~~months 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 purchase price allocation is based on preliminary estimates and may be adjusted based on the finalization of certain accruals recorded in connection with the Transactions. The excess of the purchase price over the fair value of the net assets purchased was approximately $537.7 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~~April 1, ~~2004, which is the closest fiscal month end to May~~ ~~13, 2004, the closing date of the Transactions.~~ 2006

~~Critical~~ Net ~~accounting~~sales. Net ~~policies~~sales for the three months ended March 31, 2007 were $129.8 million, an increase of $14.5 million, or 12.6%, from the three months ended April 1, 2006. Energy storage sales for the three months ended March 31, 2007 were $93.9 million, an increase of $10.7 million, or 12.9%. The

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. 23

~~Allowance~~increase in energy storage sales was primarily due to higher lead-acid and lithium battery separator sales volume, higher average sales prices for ~~doubtful~~lead-acid ~~accounts~~battery separators and the positive impact of dollar/euro exchange rate fluctuations of $2.5 million. Lead-acid separator volume growth of 6.6% was driven by the increasing size of the automotive market, particularly in Asia, and the trend of conversion from alternative separator materials to superior performing polyethylene-based separators. In addition, average sales prices increased due to global price increases implemented in the three months ended December 30, 2006 to offset higher raw material and energy costs. The increase in sales volumes of 15.3% for lithium battery separators was driven by strong demand for consumer electronic products and expanding applications for lithium batteries.

~~Accounts~~ Separations media ~~receivable~~sales ~~are~~for ~~primarily~~the ~~composed~~three ofmonths ~~amounts~~ended ~~owed~~March 31, to2007 uswere ~~through~~$3.8 million, ~~our~~an ~~operating~~increase ~~activities and~~of ~~are~~$35.9 million, ~~presented~~or ~~net~~11.8% offrom anthe ~~allowance~~same ~~for~~period ~~doubtful~~in ~~accounts~~the prior year. The Weincrease ~~establish~~in anseparations ~~allowance~~media ~~for doubtful~~sales ~~accounts~~was ~~based~~due ~~upon~~to ~~factors~~higher ~~surrounding~~sales of industrial and specialty filtration products and the ~~credit~~positive ~~risk~~impact of ~~specific~~dollar/euro ~~customers,~~exchange ~~historical trends~~rate ~~and~~fluctuations ~~other information~~of $2.2 million. WeThe ~~charge~~29.8% ~~accounts~~growth ~~receivables~~in ~~off~~sales ~~against~~of ~~our~~industrial ~~allowance~~and ~~for doubtful~~specialty ~~accounts~~filtration ~~when~~products wewas ~~deem~~due ~~them~~ to becontinued ~~uncollectible~~growth onin ademand ~~specific~~for ~~identification~~high ~~basis~~performance filtration applications. ~~The~~In total, ~~determination~~hemodialysis ofsales for the ~~amount~~three ofmonths ended March 31, 2007 were comparable to the ~~allowance~~three ~~for~~months ~~doubtful~~ended ~~accounts~~April 1, is2006. ~~subject~~Synthetic membrane sales volumes increased due to ~~judgment~~continued ~~and~~market ~~estimated~~growth byfor ~~management~~synthetic membranes. IfThe ~~circumstances~~increase orin ~~economic~~synthetic ~~conditions~~membrane ~~deteriorate~~sales was offset by the decline in cellulosic membrane sales. During 2006, we ~~may~~produced ~~need~~sufficient toquantities of cellulosic membranes ~~increase~~to meet our customer needs and ceased production of cellulosic membranes. We expect to sell the ~~allowance~~majority ~~for~~of ~~doubtful~~our ~~accounts~~remaining quantities of cellulosic membranes during 2007.

~~Impairment~~ Gross Profit. Gross profit as a percent of ~~Intangibles~~net ~~and~~sales ~~Goodwill~~was 37.2% for the three months ended March 31, 2007, as compared to 35.0% in the same period of the prior year. Energy storage gross profit as a percent of net sales increased to 39.4% for the three months ended March 31, 2007 from 36.8% in the same period of the prior year due to lower production costs per unit as increased production volumes resulted in fixed costs being applied to higher production volumes. Raw material and energy cost increases were largely offset by internal cost saving actions and the global price increase for lead-acid battery separators.

~~Identified~~ Separations media ~~intangible~~gross ~~assets~~profit ~~are~~as ~~reviewed~~a ~~for~~percent ~~impairment~~of ~~whenever~~net ~~events~~sales orincreased ~~changes~~to ~~in circumstances~~31.5% ~~indicate~~for ~~that~~ the ~~carrying~~three ~~amount~~months ~~may~~ended ~~not be recoverable. In accordance with FASB Statement No.~~March ~~142~~31, ~~Goodwill~~2007 ~~and~~which ~~Other~~was ~~Intangible~~consistent ~~Assets~~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~~30.2% ~~The~~for ~~determination of undiscounted cash flows is based on~~ the ~~Company’s~~same ~~strategic~~period ~~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~~prior ~~of future cash flows and recognition of an impairment loss might be required~~year.

~~Pension~~ Selling, general and ~~other~~administrative ~~postretirement~~expenses. Selling, ~~benefits~~general and administrative expenses as a percent of net sales was 18.2% for the three months ended March 31, 2007, which was consistent with 19.5% for the same period in the prior year.

~~Certain~~ Interest ~~assumptions~~expense. The ~~are~~$0.8 million ~~used~~increase in ~~the~~interest ~~calculation~~expense ofwas ~~the~~primarily ~~actuarial~~due ~~valuation~~to ~~of our defined benefit pension plans and other post retirement benefits. These assumptions include~~ the ~~weighted average discount rate, rates of~~ increase in ~~compensation~~the ~~levels, expected long-term~~ interest rates ~~of return~~ on ~~assets~~ ~~and~~our ~~increases~~variable orrate ~~trends~~debt indriven ~~healthcare costs. If actual results are less favorable than those projected~~ by ~~management,~~increases wein ~~may~~the beunderlying ~~required~~base torates ~~recognize~~over ~~additional~~the ~~expense and liabilities~~past year.

20 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 effective tax rate was 17.6% for the three months ended March 31, 2007, as compared to (26.8)% for the same period in the prior year. Our effective tax rates fluctuate due to a variety of factors, including state income taxes, the mix of income between U.S. and foreign jurisdictions taxed at varying rates, certain export sales that are excluded from taxable income, various changes in estimates of permanent differences and valuation allowances, and the relative size of our consolidated income or loss before income taxes.

~~Environmental Matters~~ 24

InBusiness 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. Restructuring

~~We accrue for environmental obligations when such expenditures are probable and reasonably estimable.~~ The ~~amount~~pre-tax ofcomponents ~~liability recorded is based on currently available information, including the progress~~ of ~~remedial~~restructuring ~~investigations,~~activity ~~current~~in ~~status of discussions with regulatory authorities regarding~~ the ~~method~~three ~~and~~months ~~extent~~ended ~~of remediation~~March 31, ~~presently~~2007 ~~enacted~~were ~~laws and existing technology. Accruals for estimated losses from environmental obligations are adjusted~~ as follows: ~~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.

		Balance at December 30, 2006		Restructuring Charges		Cash Payments			Foreign Currency Translation		Balance at March 31, 2007
		(in millions)
2006 Restructuring Plan:
	Severance and benefit costs	$	11.6	$	—	$	(2.8	)	$	0.1	$	8.9
	Other		5.7		—		(1.7	)		—		4.0

			17.3		—		(4.5	)		0.1		12.9
2005 Restructuring Plan:
	Severance and benefit costs		0.9		0.1		(0.2	)		—		0.8
2004 Restructuring Plan:
	Severance and benefit costs		1.1		—		(0.3	)		—		0.8

Total		$	19.3	$	0.1	$	(5.0	)	$	0.1	$	14.5

~~Results~~ The Company expects to make payments against the restructuring reserve of ~~Operations~~approximately $17.2 million in 2007, with the remaining payments expected to be made in 2008 and 2009.

~~The~~ 2006 ~~following~~Restructuring ~~table~~Plan. In ~~sets~~response ~~forth,~~to a significant decline in demand for cellulosic hemodialysis membranes driven by a shift in industry demand toward synthetic membranes, our separations media segment decided to exit the ~~periods~~production ~~indicated~~of cellulosic membranes and realign its cost structure at its Wuppertal, ~~certain~~Germany facility. ~~historical~~On ~~operating~~August 24, ~~data~~2006, we announced a layoff of approximately 150 employees. Production of cellulosic hemodialysis membranes ceased on December 27, 2006 and the majority of ~~Polypore~~the inemployees ~~amount~~were laid off effective January 1, 2007. The total cost of the plan is expected to be approximately $17.0 million, consisting of $11.4 million for the employee layoffs and as$5.6 million for other costs related to the shutdown of portions of the Wuppertal facility that will no longer be used. The other costs included in the restructuring plan are related to local regulations surrounding complete or partial shutdowns of a ~~percentage~~facility. We expect to complete these activities by the end of ~~net~~the ~~sales:~~second quarter of 2008. The timing, scope and costs of these restructuring measures are subject to change as we proceed with our restructuring plans and further evaluates our business needs and costs. The restructuring charge also included a non-cash impairment charge of $17.5 million for buildings and equipment used in the production of cellulosic hemodialysis membranes.

	Three months ended
(in millions)	April 2, 2005			April 3, 2004
Net sales	$	112.5		$	140.1
Gross profit		38.9			53.9
Selling, general and administrative expenses		18.4			17.5
Operating income		20.5			36.4
Interest expense, net		14.9			4.5
Foreign currency and other		(1.6	)		0.5
Income before income taxes		7.2			31.4
Income taxes		1.7			10.7
Net income	$	5.5		$	20.7

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, our energy storage segment transferred certain assets from Europe and the United States to its facilities in Thailand and China. The capacity realignment plan included the closure of our facility in Feistritz, Austria, the downsizing of our Norderstedt, Germany facility and the relocation of certain assets from these two plants to our facilities in Prachinburi, Thailand. During the three months ended September 30, 2006, we completed installation and started production with the assets relocated to Thailand. Additionally, finishing equipment from our facility in Charlotte, North Carolina was relocated to our facility in Shanghai, China. The total cost of the realignment plan is expected to be approximately $8.8 million, which has been substantially recognized through March 31, 2007. In addition to the benefit of realigning capacity with market growth, we expect to realize the full impact of cost savings in 2007. The timing and scope of these restructuring measures are subject to change as we further evaluate our business needs and costs.

	Three months ended
(in millions)	April 2, 2005			April 3, 2004
Net sales		100.0	%		100.0	%
Gross profit		34.6	%		38.5	%
Selling, general and administrative expenses		16.4	%		12.5	%
Operating income		18.2	%		25.9	%
Interest expense, net		13.2	%		3.2	%
Foreign currency and other		-1.4	%		0.4	%
Income before income taxes		6.4	%		22.4	%
Income taxes		1.5	%		7.6	%
Net income		4.9	%		14.8	%

21 2004 Restructuring Plan. In an effort to manage costs and in response to the decision of a customer to outsource its dialyzer production, we 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. All activities and charges relating to the 2004 Restructuring Plan have been completed as of December 30, 2006.

~~Three~~Liquidity ~~month~~and ~~period~~Capital ~~ended April 2, 2005 (Post-Transaction) with the three month period ended April 3, 2004~~ Resources

~~Net~~ Cash ~~sales.~~and ~~Net~~cash ~~sales~~equivalents ~~for~~increased ~~the~~to ~~three months ended April 2, 2005 were~~ $~~112~~69.51 million, aat ~~decrease of $27.6~~March ~~million~~31, or2007 ~~19.7%,~~ from ~~the three months ended April 3, 2004. For the energy storage segment, net sales for the three months ended April 2, 2005 were~~ $7654.32 million, aat ~~decrease of $18.6 million, or 19.6%, from the three months ended April~~December 330, ~~2004. The decrease in energy storage sales was due to lower sales for both the lithium and lead-acid battery markets. Lithium battery separator sales in the three months ended April 2~~2006, ~~2005 decreased from the same period in the prior year by $15.6 million~~ due ~~to higher than expected growth rates,~~ primarily in China, that occurred during the first half of 2004. While we believe there will be continued long-term growth in the market, the decline in ordering patterns that occurred in the second half of 2004 continued into the first quarter of 2005. Although we are unable to ~~predict the timing, we expect lithium battery~~cash ~~market~~flows ~~conditions~~from inoperations ~~China to improve in 2005. Lead-acid battery separator sales decreased by $4.0 million due primarily to timing~~ of ~~orders. Energy storage sales include~~ $123.60 million ~~from the positive impact of the dollar/euro exchange rate. For the separations media segment~~, ~~net~~partially ~~sales~~offset ~~for the~~by ~~three~~cash ~~months~~used ~~ended~~in ~~April 2,~~investing ~~2005~~activities ~~were $36.2 million, a decrease~~ of $97.08 million, orand ~~19.9%,~~cash ~~from the~~used ~~three months ended April 3, 2004. The decrease~~ in ~~separations~~financing ~~media~~activities ~~sales was primarily due to the loss~~ of ~~a hemodialysis customer that made the decision to outsource the manufacturing of its dialyzers to another company that does not currently source membranes from us. Separations media net sales include~~ $1.83 million ~~from the positive impact of the dollar/euro exchange rate~~.

~~Gross~~ Operating ~~Profit~~activities. Net ~~Gross~~cash ~~profit~~provided ~~for~~by operations was $23.0 million in the three months ended ~~April~~March 231, ~~2005 was $38.9 million~~ 2007, aas ~~decrease of~~compared to $1516.04 million, orin ~~27.8%, from~~ the three months ended April 31, ~~2004~~2006. ~~Gross~~Cash ~~profit~~provided asby aoperations ~~percent of sales~~ for the three months ended ~~April~~March 231, ~~2005~~2007 ~~decreased~~consisted toof ~~34.6%~~net ~~from~~income 38before non-cash expenses of $18.5%1 million and an increase in ~~the~~working ~~prior~~capital ~~year~~of $4. ~~For~~9 million, excluding the ~~energy~~impact ~~storage~~of ~~segment,~~foreign ~~gross~~exchange ~~profit~~rate ~~for~~fluctuations. ~~the~~Accounts ~~three~~receivable increased ~~months~~from ~~ended April~~December 230, ~~2005~~2006 ~~was~~to ~~$25.7 million~~March 31, a2007 ~~decrease~~by ofapproximately $130.28 million, or(excluding 34the $1.~~0%,~~1 million ~~from~~increase ~~the~~due ~~same~~to ~~period~~movements in the ~~prior~~dollar ~~year.~~/ ~~Gross profit~~euro inexchange ~~the~~rate) and ~~energy~~days ~~storage~~sales ~~segment~~outstanding asremained acomparable ~~percent~~to ofprior ~~sales~~periods. ~~for~~Inventories ~~the~~decreased ~~three~~approximately ~~months~~$2.4 million ~~ended~~(excluding ~~April~~an $0.8 2,million ~~2005 decreased~~increase due to ~~33.7%~~movements ~~from~~in ~~41.0%.~~the ~~The~~dollar ~~decrease~~/ euro ~~was~~exchange ~~the~~rate) ~~result~~due ofto the ~~decrease~~reduction inof ~~production~~cellulosic ~~volumes related~~hemodialysis tomembrane ~~the~~inventories ~~slowdown~~as inwe ~~lithium~~began ~~sales~~making ~~and~~final ashipments ~~change~~out inof ~~product~~inventory ~~mix~~to our customers. ~~For~~During ~~the~~2006, ~~separations~~we ~~media~~built up cellulosic ~~segment,~~inventories ~~gross~~in ~~profit~~preparation for the ~~three~~shutdown ~~months~~of ~~ended~~production ~~April~~on December 227, ~~2005~~2006. ~~was~~Accounts payable and accrued liabilities increased approximately $131.2 million, a(excluding ~~decrease of~~the $1.81 million, orincrease ~~12.0%,~~due ~~from~~to ~~the~~movements ~~same period~~ in the ~~prior~~dollar ~~year.~~/ ~~Gross~~euro ~~profit~~exchange ~~in the separations media segment as a percent of sales for the three months ended April 2~~rate), ~~2005~~primarily ~~increased~~due to ~~36.5% from~~an ~~33.2%~~ increase in ~~the~~accrued ~~same~~interest ~~period~~on of the ~~prior year~~8.75% ~~The~~Notes, ~~increase~~partially ~~was~~offset ~~due~~by toa ~~the~~reduction ~~benefits~~in of the ~~business~~ restructuring inaccrual. ~~Europe~~Interest ~~and~~for ~~lower~~the ~~depreciation~~8.75% ~~expense~~Notes asis apaid ~~result~~semi-annually ofin the ~~application~~second ~~of purchase~~and ~~accounting~~fourth quarters.

~~Selling,~~ Cash provided ~~general~~by ~~and~~operations ~~administrative expenses. Selling, general and administrative expenses~~ for the three months ended April 21, ~~2005~~2006 ~~were~~consisted of net income before non-cash expenses of $1813.42 million, anand ~~increase~~a decrease in working capital of $03.91 million,. orAccounts ~~5.1%,~~receivable increased from ~~the three~~December 31, ~~months~~2005 ~~ended~~to April 31, ~~2004~~2006 by approximately $7.7 million ~~The~~(excluding the $1.6 million increase ~~was~~due to movements in the dollar / euro exchange rate) primarily due to athe increase in sales during the quarter as compared to the same period in the prior year, while days sales outstanding remained comparable to prior periods. Inventories increased approximately $32.81 million (excluding the $1.2 million increase due to movements in ~~amortization~~the dollar / euro exchange rate) primarily due to ~~expense~~increased asinventory alevels ~~result~~necessary ofto support higher sales. Days in inventory were comparable to prior year levels. Accounts payable and accrued liabilities increased approximately $13.5 million (excluding the ~~application~~$2.8 million ofincrease ~~purchase~~due ~~accounting~~to movements in the dollar / euro exchange rate), ~~offset~~primarily ~~somewhat~~due byto ~~lower~~an ~~expenses~~increase in ~~connection~~ ~~with~~accrued ~~cost~~interest ~~reduction~~on ~~measures~~the 8.75% Notes and an increase in accrued personnel costs, including the performance-based incentive compensation plan accrual.

~~Business~~ Investing ~~restructuring~~activities. Capital Inexpenditures ~~connection~~were with our continued efforts to manage costs and in response to the decision of one of our customers to outsource its dialyzer production, we are currently implementing a number of cost reduction measures relating to our 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$2.7 million ~~The timing~~ and ~~scope of these restructuring measures are subject to change as we further evaluate our business needs and costs~~$4.0 million ~~As a first step~~ in ~~these cost~~the ~~reduction~~three ~~efforts,~~months ~~on September~~ended March 331, ~~2004,~~2007 weand ~~announced a layoff of approximately 200 employees at our Wuppertal, Germany facility. During the year ended January~~April 1, ~~2005~~2006, ~~we recorded a charge of $13~~respectively.~~9 million~~ ~~as an estimate of the costs associated with the layoff. The employee layoffs will occur throughout 2005.~~ We ~~expect~~are tocurrently ~~make~~evaluating ~~most~~a ofnumber ~~the payments and realize some cost savings related to the layoffs during fiscal 2005. After completion~~ of ~~the~~growth ~~layoffs,~~opportunities wewhich ~~expect~~could toresult ~~realize annual~~in ~~cost~~capital ~~savings~~expenditures in ~~cost~~excess of ~~goods sold and selling, general and administrative expenses of~~the ~~approximately~~ $1024.0 million. Inthat ~~connection with our customer’s outsourcing of its dialyzer production,~~ we ~~also~~spent ~~recorded~~in ~~a charge for raw materials, a portion of which we are obligated to purchase under an existing purchase commitment, of $1.8~~fiscal ~~million~~2006. inDuring ~~cost~~the ofthree ~~goods~~months ~~sold during the year~~ ended ~~January~~March 131, ~~2005. Finally~~2007, ~~in connection with~~ the ~~relocation~~Company ofpurchased ~~our research and development operations, we expect to record~~ a ~~charge~~60% ofshare ~~approximately $2.6 million to earnings~~ in ~~fiscal~~ ~~2005.~~a ~~We do not expect to record any impairment to long~~lead-~~lived~~acid ~~assets~~battery inseparator ~~connection~~manufacturing ~~with the~~facility ~~relocation.~~in ~~The~~Tianjin, ~~costs~~China offor ~~the restructuring are expected to be funded from cash generated from operations~~$5. 2 million.

~~Interest~~ Financing ~~expense, net~~activities. Cash ~~Interest~~used ~~expense,~~in ~~net~~financing activities was $141.93 million ~~for~~and ~~the three months ended April 2, 2005, an increase of~~ $100.43 million ~~from~~in the three months ended ~~April~~March 331, ~~2004.~~2007 ~~The~~and ~~increase~~April 1, ~~in interest~~2006, ~~expense~~respectively, isand ~~attributable~~consisted toprimarily ~~the increase in senior debt and issuance~~ of ~~the~~scheduled 8principal ~~3/4%~~payments ~~Notes~~on ~~in connection with the Transactions~~our debt.

Income taxes, net. Income tax expense as a percentage of income before income taxes for the three months ended April 2, 2005 was 23.6%, as compared to 34.0% for the three months ended April 3, 2004. The decrease in the effective tax rate for 2005 is due primarily to lower taxable income in the U.S. as a result of higher interest expense, which will provide a tax benefit in the current year. As U.S. taxable income decreases 26

22 We intend to fund our ongoing operations through cash generated by operations and availability under the credit agreement relating to the senior secured credit facilities. As part of the 2004 Transactions, we incurred substantial debt under the credit agreement and from the issuance of the 8.75% senior subordinated notes, with interest payments on this indebtedness substantially increasing our liquidity requirements. As of March 31, 2007, our cash interest requirements for the next 12 months are expected to be approximately $65.0 million.

The credit agreement for the senior secured credit facilities is comprised of a $370.0 million term loan ($326.5 million outstanding at March 31, 2007), and ~~foreign~~a €36.0 million ~~taxable~~term ~~income~~loan ~~relative~~facility to($42.3 million ~~total~~outstanding at March 31, 2007) each due in 2011 and a $90.0 million revolving credit facility due in 2010 ~~taxable~~(no amounts ~~income~~were ~~increases~~outstanding at March 31, ~~our~~2007). ~~effective~~The ~~tax~~credit ~~rate~~agreement ~~declines~~permits ~~because~~us to incur additional senior secured debt at the option of ~~lower~~participating ~~overall~~lenders, ~~effective~~subject ~~tax~~to the ~~rates~~satisfaction inof ~~foreign~~certain ~~jurisdictions~~conditions.

~~Liquidity~~ Borrowings under the credit agreement bear interest at our choice of the Eurodollar rate or adjusted base rate, in each case, plus an applicable margin, subject to adjustment based on a pricing grid. At March 31, 2007, the applicable margin percentage was 2.00% for alternate base rate loans and ~~Capital~~3.00% ~~Resources~~for adjusted LIBO rate loans. At March 31, 2007, the interest rates on our U.S. dollar term loan and Eurodollar term loan facilities were 8.32% and 6.73%, respectively.

~~Operating activities. Net cash provided by operations was $29.2 million in the three months ended~~ The ~~April 2,~~credit ~~2005,~~agreement asrequires ~~compared~~us to ~~$17.1 million~~meet ina ~~the~~minimum ~~three~~interest ~~months~~coverage ~~ended April 3~~ratio, ~~2004.~~a ~~Cash~~maximum ~~provided by~~leverage ~~operations~~ratio ~~for the three months ended April 2, 2005 consisted of net income before non-cash expenses~~ and a ~~decrease~~maximum ~~in working~~ capital. ~~Accounts~~expenditures ~~receivable decreased approximately $7~~limitation.~~2 million~~ ~~due~~Under ~~to a 14.0% decrease in days sales in receivables and a decrease in~~ the ~~dollar/euro exchange~~credit ~~rate of $2.7 million. Inventory was consistent with the prior year~~agreement, ~~as an 8.8% increase~~compliance inwith ~~inventory days was offset by a decrease in~~ the ~~dollar/euro~~minimum ~~exchange rate. Accounts payable and accrued liabilities increased due to a $9.2 million increase in accrued~~ interest ~~related~~coverage toratio ~~the new senior~~ and ~~subordinated~~maximum ~~debt~~leverage ~~issued~~ratio intests ~~connection~~is ~~with~~determined ~~the~~based ~~Transactions~~on ~~(interest~~a ~~for~~calculation ~~the subordinated~~of ~~debt~~Adjusted isEBITDA ~~paid~~over ~~semi-annually in~~ the ~~second~~preceding ~~and~~twelve ~~fourth~~months ~~quarters), offset somewhat by $4.2 million~~ in ~~cash~~which ~~payments related to the business restructuring, timing of~~ certain ~~payments~~items ~~and~~are ~~a decrease~~added ~~in the dollar/euro exchange rate of $2.0~~back to ~~million~~EBITDA.

~~Cash~~ Adjusted EBITDA ~~provided~~as bydefined ~~operations~~in ~~for~~ the ~~three~~credit ~~months~~agreement ~~ended~~for ~~April 3,~~the ~~2004~~senior ~~consisted~~secured ofcredit ~~net income before non-cash expenses~~facilities, ~~offset~~is ~~somewhat~~calculated byas follows: ~~an increase in working capital. Accounts receivable increased due to higher sales of lithium battery separators and hemodialysis membranes during this period.~~

Investing activities. Capital expenditures were $3.1 million and $4.2 in the three months ended April 2, 2005 and April 3, 2004, respectively. We expect to spend approximately $20.0 million for capital expenditures in fiscal 2005. In the three months ended April 3, 2004, we received proceeds of $1.9 million from the sale of undeveloped land at our French facility.

		Twelve Months Ended March 31, 2007
		(in millions)
Net loss		$	(9.7	)
Add:
	Depreciation and amortization		57.7
	Interest expense, net		68.7
	Income taxes		(13.5	)
	Stock compensation expense from Polypore International, Inc.(1)		0.6
	Foreign currency loss		2.6
	Loss on disposal of property, plant and equipment		1.9
	Environmental expenses(2)		1.1
	Asset impairment(3)		17.5
	Business restructuring(4)		16.8
	Other non-cash charges(5)		0.5

Adjusted EBITDA		$	144.2

(1): Represents compensation expense for stock options issued by Polypore International, Inc. to our employees.
(2): Represents an increase in the existing environmental reserves at our manufacturing facility in Potenza, Italy.

Financing activities. Cash used in financing activities was $26.9 million and $6.5 million in the three months ended April 2, 2005 and April 3, 2004, respectively. During the three months ended April 2, 2005, we made an optional prepayment of $25.0 million on the term loans under the Credit Facility. In accordance with the Credit Facility, the prepayment was applied first to the quarterly payments due for the next twelve months and second, pro rata against the remaining scheduled installments of principal. After giving effect to the prepayment, the term loans will require quarterly payments of principal of approximately $1.0 million at the end of each fiscal quarter beginning on April 1, 2006. 27

(3): Represents the non-cash asset impairment recognized in connection with the 2006 restructuring plan.
(4): Represents business restructuring costs incurred for the 2004, 2005 and 2006 restructuring plans. For the 2006 restructuring plan, the credit agreement limits the add-back of cash charges to Adjusted EBITDA to $15.0 million, which is $2.0 million less than the actual costs incurred during the twelve months ended March 31, 2007.
(5): Represents compensation expense recorded under EITF 05-5, Accounting for Early Retirement or Postemployment Programs with Specific Features (Such As Terms Specified in Altersteilzeit Early Retirement Arrangements) and other non-cash items.

~~We intend to fund our ongoing operations through cash generated by operations and availability~~ The ~~under~~calculation ~~our Credit Facility. As part~~ of the ~~Transactions,~~minimum ~~we incurred substantial debt under our Credit Facility and from the issuance of the 8 3/4% Notes, with~~ interest ~~payments~~coverage onratio ~~this~~is ~~indebtedness substantially~~as ~~increasing~~follows: ~~our liquidity requirements.~~

Our Credit Facility is comprised of a $370.0 million term loan facility and a €36.0 million term loan facility each due in 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.

	Twelve Months Ended March 31, 2007
	(in millions)
Adjusted EBITDA	$	144.2
Consolidated interest expense, as defined in the Credit Agreement(1)		65.8
Actual interest coverage ratio		2.19	x
Permitted minimum interest coverage ratio		1.70	x

(1): Calculated as interest expense for the past twelve months of $68.7 million less amortization of loan acquisition costs of $2.9 million.

~~Borrowings~~ Under the ~~under~~credit ~~our~~agreement ~~Credit~~for ~~Facility~~the ~~bear~~senior ~~interest~~secured atcredit ~~our~~facilities, ~~choice~~we ofare ~~the~~required ~~Eurodollar~~to ~~rate~~maintain orthe ~~adjusted base~~following ~~rate,~~ratios orof ~~“ABR,”~~Adjusted inEBITDA ~~each~~to ~~case,~~interest ~~plus~~expense anfor ~~applicable~~any ~~margin,~~four ~~subject~~consecutive fiscal toquarters ~~adjustment~~ending ~~based~~during onany ~~a pricing grid. As~~ of ~~April 2,~~the ~~2005,~~following ~~our~~periods ~~cash~~or ~~interest~~on ~~requirements~~any ~~for~~of the ~~next~~following ~~12 months~~dates: ~~are expected to be approximately $58.0 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.

Date or Period		Ratio
June 30, 2007		1.75 to 1.00
September 29, 2007 through June 28, 2008		1.90 to 1.00
September 27, 2008 through January 3, 2009		2.00 to 1.00
January 4, 2009 through January 2, 2010		2.75 to 1.00
April 3, 2010 and each fiscal quarter thereafter		3.00 to 1.00

23 The calculation of the maximum leverage ratio is as follows:

Adjusted EBITDA is calculated as follows:

	Twelve Months Ended March 31, 2007
	(in millions)
Indebtedness, as defined in the Credit Agreement(1)	$	799.8
Adjusted EBITDA		144.2
Actual leverage ratio		5.55x
Permitted maximum leverage ratio		6.90x

(1): Calculated as long-term debt of $794.0 million plus capital lease obligation of $5.8 million.

	Twelve Months			Three Months
	Ended			Ended
(in millions)	April 2, 2005			April 2, 2005 (1)
Net income	$	(3.3	)	$	5.5
Add:
Depreciation and amortization		51.7			14.3
Interest expense, net		54.3			14.9
Provision for income taxes		(2.0	)		1.7
EBITDA		100.7			36.4
Add:
Foreign currency (gain) loss		1.5			(1.3	)
Unrealized hedging gain (2)		(1.3	)		—
Salary and bonus paid to former officers (3)		(1.1	)		—
Inventory purchase accounting adjustments (4)		19.0			—
In-process research and development (5)		5.3			—
Transactions costs (6)		1.2			—
Operating lease payments on leases to be refinanced (7)		3.6			0.7
Business restructuring (8)		15.7			—
Loss on disposal of property, plant, and equipment		0.7			—
Adjusted EBITDA	$	145.3		$	35.8

(1)		Statement of operations data presented for the twelve months ended April 2, 2005 represents the combination of historical results for the period from April 3, 2004 through May 1, 2004 (Pre-Transaction) with the results for the period from May 2, 2004 through April 2, 2005 (Post-Transaction).
(2)		Represents the non-cash hedging gain for changes in the fair value of the derivative instruments used to manage interest rate risk as required by Polypore’s former credit agreement.
(3)		Represents the salary and bonus for former owners who are not involved with Polypore subsequent to the Transactions.
(4)		Represents the write-off of the inventory purchase accounting adjustment for inventory that was sold during the period.
(5)		Represents the one-time charge for purchased in-process research and development.
(6)		Represents non-recurring costs incurred in connection with the Transactions.
(7)		Represents payments under two operating lease agreements that the Company intends to refinance. On October 29, 2004, the Company refinanced one of the operating leases through a capital lease agreement. The Company intends to terminate the other operating lease and purchase the equipment from the lessor.
(8)		Represents business restructuring costs, including estimated costs of employee layoffs and loss on an inventory purchase commitment which is included in cost of goods sold.

Under the credit agreement, we are required to maintain a ratio not more than the following ratios 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:

Date or Period		Ratio
June 30, 2007		6.75 to 1.00
September 29, 2007		6.50 to 1.00
December 29, 2007		6.25 to 1.00
March 29, 2008		6.00 to 1.00
June 28, 2008		5.75 to 1.00
September 27, 2008 through January 3, 2009		5.50 to 1.00
January 4, 2009 through October 3, 2009		4.25 to 1.00
January 2, 2010 and each fiscal quarter thereafter		4.00 to 1.00

~~The~~ In addition, ~~calculation~~the ofcredit agreement contains certain restrictive covenants which, among other things, limit the ~~minimum~~incurrence ~~interest~~of ~~coverage~~additional ~~ratio~~indebtedness, isinvestments, asdividends, ~~follows:~~transactions with affiliates, asset sales, acquisitions, mergers and consolidations, prepayments of other indebtedness, liens and encumbrances, and other matters customarily restricted in such agreements. The facilities also contain certain customary events of defaults, subject to grace periods, as appropriate. We believe that annual capital expenditure limitations imposed by the senior credit facilities will not significantly inhibit us from meeting our ongoing capital expenditure needs.

	Twelve Months
	Ended
(in millions)	April 2, 2005
Adjusted EBITDA	$	145.3
Consolidated interest expense, as defined in the Credit Agreement		51.7
Actual interest coverage ratio		2.81	x
Permitted minimum interest coverage ratio		2.25	x

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.

~~The~~ Our 8.75% ~~calculation~~senior subordinated notes ($425.0 million outstanding at March 31, 2007) 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 ~~maximum~~8.75% ~~leverage~~senior ~~ratio~~subordinated notes do not require principal payments prior to their maturity in 2012. Interest on the 8.75% senior subordinated notes is aspayable ~~follows:~~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.

	Twelve Months
	Ended
(in millions)	April 2, 2005
Indebtedness, as defined in the Credit Agreement	$	823.0
Adjusted EBITDA		145.3
Actual leverage ratio		5.67	x
Permitted maximum leverage ratio		6.25	x

We believe we have sufficient liquidity to meet our cash requirements over both the short term (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 flow to be generated by our operations and the available borrowings under the credit agreement for our senior secured credit facilities compared to our anticipated cash requirements for debt service, working capital (including restructuring payments), cash taxes and capital expenditures as well as funding requirements for long-term liabilities. 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 12 months. 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 "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 30, 2006.

In From time ~~addition~~to time, ~~the~~we ~~Credit~~may ~~Facility~~explore ~~contains~~additional ~~certain~~financing ~~restrictive~~methods ~~covenants~~and ~~which,~~other ~~among~~means ~~other~~to ~~things, limit~~lower ~~the~~our ~~incurrence~~cost of ~~additional indebtedness~~capital, ~~investments,~~which ~~dividends,~~could ~~transactions~~include ~~with affiliates,~~stock ~~asset~~issuance ~~sales,~~or ~~acquisitions,~~debt ~~mergers~~financing and ~~consolidations,~~the ~~prepayments~~application of ~~other~~ ~~indebtedness,~~the ~~liens~~proceeds ~~and~~therefrom ~~encumbrances~~to ~~and~~the ~~other~~repayment ~~matters~~of ~~customarily~~bank ~~restricted~~debt inor ~~such~~other ~~agreements~~indebtedness. ~~The~~ ~~facilities~~In ~~also~~addition, ~~contain~~in ~~certain~~connection ~~customary~~with ~~events~~any offuture ~~defaults~~acquisitions, ~~subject~~we tomay ~~grace~~require ~~periods,~~additional asfunding which may be provided in the form ~~appropriate.~~ of additional

~~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.~~ 29

~~We believe we have sufficient liquidity to meet our cash requirements over both the short (next~~debt ~~twelve~~or ~~months)~~equity ~~and~~financing ~~long~~or ~~term~~a ~~(in~~combination ~~relation to our debt service requirements)~~thereof. InThere ~~evaluating~~can ~~the sufficiency of our liquidity for both the shorter and longer term, we considered the expected cash flow to~~ be ~~generated~~no byassurance ~~our~~that ~~operations~~any ~~and~~additional ~~the~~financing available borrowings under our credit facility compared to our anticipated cash requirements for 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~~available ~~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~~us ~~Annual Report~~ on ~~Form~~acceptable ~~10-K for fiscal 2004~~terms.

~~Our 8~~Foreign 3/4% 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, such notes do not require principal payments prior to their maturity in 2012. Interest on the 8 3/4% Notes is payable semi-annually in cash. The 8 3/4% Notes contain customary covenants and events of default, including covenants that limit our ability to incur debt, pay dividends and make investments. Operations

We ~~believe~~manufacture ~~that~~our ~~annual~~products ~~capital~~at ~~expenditure~~11 strategically ~~limitations~~located ~~imposed~~facilities byin North America, Europe and Asia. Net sales from the foreign locations were approximately $81.2 million and $67.9 million for the three months ended March 31, 2007 and April 1, 2006, respectively. Typically, we sell our ~~Credit~~products ~~Facility~~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 ~~significantly~~that ~~inhibit~~would ushave ~~from~~a ~~meeting~~direct or indirect adverse impact on our ~~ongoing~~business ~~capital~~or ~~expenditure~~market ~~needs~~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.

WeEnvironmental 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. matters

25 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. 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. Environmental reserves were $27.9 million and $28.0 million as of March 31, 2007 and December 30, 2006, respectively.

~~From~~ In connection ~~time~~with tothe ~~time~~Transactions, we ~~may~~identified ~~explore~~potential ~~additional~~environmental ~~financing~~contamination ~~methods~~at ~~and~~our ~~other~~manufacturing ~~means~~facility toin ~~lower~~Potenza, ~~our~~Italy. ~~cost~~Based ofon environmental studies and the initial ~~capital~~remediation plan presented to local authorities, ~~which~~we ~~could~~recorded ~~include~~a ~~stock~~liability ~~issuance~~of or$3.3 million ~~debt~~in ~~financing~~connection ~~and~~with the application of purchase accounting for the ~~proceeds therefrom~~Transactions. toDuring the ~~repayment~~three ofmonths ended ~~bank~~December 30, ~~debt~~2006, orwe ~~other~~further ~~indebtedness.~~refined Inthe ~~addition,~~remediation inplan ~~connection~~based ~~with~~on ~~any future~~management's ~~acquisitions,~~analysis weof ~~may~~facts ~~require~~and ~~additional~~circumstances ~~funding~~and ~~which~~consultations ~~may~~with belocal ~~provided~~authorities, resulting in ~~the~~an ~~form~~increase ofin ~~additional~~the ~~debt~~estimated orenvironmental ~~equity~~liability ~~financing~~of or$1.1 million athat ~~combination~~was ~~thereof.~~recorded ~~There~~through ~~can~~a becharge noto ~~assurance~~earnings. ~~that~~We ~~any additional~~anticipate ~~financing~~that expenditures will be ~~available~~made toover usthe onnext ~~acceptable~~seven ~~terms~~to ten years.

~~Foreign~~ In the ~~Operations~~three months ended December 30, 2006, as part of an internal self-audit of our Corydon, IN and Owensboro, KY facilities, we identified instances of potential non-compliance with our environmental operating permits at these facilities. We self-reported these issues to the proper state and federal agencies and are taking steps to resolve these issues. Although the agencies have the authority and discretion to issue substantial fines that could be material, based upon management's analysis of facts and circumstances and consideration of recent cases addressed by the agencies involved, we do not believe that the maximum penalty will be assessed and that penalties, if any, resulting from this matter will not have a material adverse effect on our business, financial condition or results of operations.

~~We manufacture our products at 11 strategically located facilities in North America, Europe and~~ In ~~Asia.~~connection ~~Net~~with ~~sales from~~ the ~~foreign~~acquisition ~~locations~~of ~~were~~Membrana ~~approximately~~in ~~$72.2 million and $81.4 million for the three months ended April 2~~2002, ~~2005 and April 3, 2004, respectively. Typically,~~ we ~~sell~~recorded ~~our products~~a inreserve ~~the~~for ~~currency~~environmental ~~of the country where the manufacturing facility that produces the product is located~~obligations. ~~Sales~~The toreserve ~~foreign~~provides ~~customers~~for ~~are~~costs ~~subject~~ to ~~numerous~~remediate ~~additional~~known ~~risks,~~environmental ~~including~~issues ~~the~~and ~~impact~~operational ofupgrades ~~foreign~~which ~~government~~are ~~regulations,~~required ~~currency fluctuations, political uncertainties and differences~~ in ~~business~~order ~~practices.~~for ~~There~~us ~~can~~to beremain noin ~~assurance~~compliance ~~that~~with ~~foreign~~local ~~governments will not adopt~~ regulations. orWe ~~take~~anticipate ~~other action~~ that ~~would~~expenditures ~~have~~will acontinue ~~direct~~to ~~or indirect adverse impact on our business or market opportunities within such governments’ countries. Furthermore, there can~~ be ~~no assurance~~made ~~that~~over the ~~political,~~next ~~cultural~~seven ~~and economic climate outside the United States will be favorable~~ to ~~our~~ten ~~operations and growth strategy~~years. The initial

~~Seasonality~~ 30

~~Historically, our results of operations have not been materially affected by seasonal fluctuations.~~estimate ~~However,~~and ~~operations~~subsequent atfinalization ~~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~~reserve ~~quarter~~was ofincluded ~~fiscal 2005 and~~ in ~~any fiscal year in~~ the ~~future~~allocation ~~may be impacted by these shutdowns. In view~~ of ~~the~~purchase ~~seasonal~~price ~~fluctuations,~~at ~~we believe that comparisons of our operating results for~~ the ~~third~~date ~~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~~acquisition.

~~Off-Balance~~ We have ~~Sheet~~indemnification ~~Arrangements~~agreements for certain environmental matters from Acordis A.G. ("Acordis") and Akzo Nobel ("Akzo"), the prior owners 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. In addition to the Akzo indemnification, Acordis provides separate indemnification of claims incurred from December 1999 through February 2002, the acquisition date. At March 31, 2007 and December 30, 2006, amounts receivable under the indemnification agreement were $18.9 million and $18.7 million, respectively. The current portion of the indemnification receivable is included in other current assets.

~~The Company is not a party to any off~~Off-~~balance~~Balance ~~sheet~~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. Arrangements

~~New~~ We ~~Accounting~~are ~~Standards~~not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

~~In December~~New ~~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 (fiscal 2006 for the Company). 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. Standards

In On ~~November~~January ~~2004~~1, ~~the~~2006, ~~FASB~~we ~~issued~~adopted ~~Statement~~EITF Issue No. ~~151~~05-5, ~~Inventory~~Accounting ~~Costs~~for Early Retirement or Postemployment Programs with Specific Features (~~“FAS~~Such ~~151”).~~As ~~This~~Terms ~~statement amends~~Specified ~~Accounting~~in ~~Research~~Altersteilzeit ~~Bulletin~~Early NoRetirement Arrangements) ("EITF 05-5"). Under EITF 4305-5, the ~~Chapter~~salary components of Type 4,I ~~Inventory~~and ~~Pricing,~~Type II toATZ ~~clarify~~arrangements (excluding the ~~accounting~~bonus and additional contributions into the German government pension scheme) should be recognized over the period from the point at ~~for~~which ~~abnormal~~the ~~amounts~~ATZ period begins until the end of ~~idle~~the ~~facility~~active ~~expense,~~service ~~freight,~~period. ~~handling~~The ~~costs,~~bonus feature and ~~wasted~~the ~~material (spoilage).~~additional ~~FAS~~contributions ~~151~~into ~~requires~~the ~~that~~German ~~idle~~government ~~facility~~pension ~~expense~~scheme (collectively, ~~excess~~the ~~spoilage,~~additional compensation) ~~double~~under ~~freight~~a ~~and re-handling~~Type II ~~costs~~ATZ arrangement should be ~~recognized~~accounted for as ~~current-period~~a ~~charges~~postemployment ~~regardless~~benefit ofunder ~~whether~~Statement ~~they~~112. ~~meet~~An entity should recognize the additional compensation over the period ~~criterion~~from the point at which the employee signs the ATZ contract until the end of ~~“so~~the ~~abnormal”~~active service period. ~~FAS~~In ~~151~~connection ~~also~~with ~~requires~~an ~~that~~acquisition ~~allocation~~in of2002, ~~fixed~~we ~~production~~implemented ~~overhead expenses~~a torestructuring ~~the~~plan ~~costs~~that ofincluded Type II ~~conversion~~ATZ bearrangements. ~~based~~We onaccrued in the ~~normal~~opening ~~capacity~~balance ofsheet the ~~production~~estimated ~~facilities. FAS~~amounts ~~151~~to isbe ~~effective~~paid ~~for~~to ~~all~~employees ~~fiscal~~during ~~years~~the ~~beginning~~passive ~~after June 15~~phase, ~~2005~~plus ~~(2006~~the ~~for~~bonus feature of the ~~Company)~~plan. ~~Management~~ ~~does~~Salary ~~not~~paid ~~believe~~to employees ~~there~~during ~~will~~their beactive aphase ~~significant~~was ~~impact~~expensed as incurred. As a result of adopting this consensus, which was treated as a change in accounting estimate effected by a change in accounting principle, ~~Statement~~we reduced the accrual for postemployment benefits and recognized $2.6 million in other income in the three months ended April 1, 2006. The reduction in the postemployment benefits accrual decreased the net loss in the three months ended April 1, 2006 by $1.6 million.

~~Item~~ On January 1, 32006, we adopted FASB Statement No. 123 ~~Quantitative~~(R), Share-Based Payment ("FAS 123(R)"). FAS 123(R) generally requires, among other things, that all employee share-based compensation be measured using a fair value method and ~~Qualitative~~that ~~Disclosures~~the ~~About~~resulting ~~Market~~compensation ~~Risk~~cost be recognized in the financial statements. FAS 123(R) also requires a subsidiary to recognize compensation expense for stock options issued by its parent that are granted to subsidiary employees. The adoption of FAS 123(R) had no impact on our financial statements.

We On December 31, ~~are~~2006, ~~exposed~~we toadopted ~~various~~FASB ~~market~~Interpretation ~~risks~~No. 48, ~~which~~Accounting ~~are~~for Uncertainty ~~potential~~in ~~losses~~Income ~~arising~~Taxes—an ~~from~~Interpretation ~~adverse~~of ~~changes in~~FASB ~~market~~Statement ~~rates~~109 ~~and prices~~("FIN 48"), ~~such~~which asclarifies ~~interest~~the ~~rates~~accounting ~~and~~for ~~foreign~~uncertain ~~exchange~~tax ~~fluctuations~~positions. WeFIN 48 doallows ~~not~~the ~~enter into~~tax ~~derivatives~~effects orfrom ~~other~~an ~~financial~~uncertain ~~instruments~~tax ~~for~~position ~~trading~~to orbe recognized ~~speculative~~in ~~purposes.~~

26 31

~~Interest~~our financial ~~rate~~statements ~~risk~~if the position is more likely than not to be sustained upon audit, based on the technical merits of the position. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Upon adoption of FIN 48, we increased the existing reserves for uncertain tax positions by $0.9 million, recorded a deferred tax asset of $0.6 million and decreased retained earnings by $0.3 million for the cumulative effect of adopting FIN 48.

~~At April~~ In September 22006, ~~2005,~~the weFASB ~~had~~issued ~~fixed~~FASB ~~rate~~Statement ~~debt~~No. 158, ofEmployers' ~~approximately~~Accounting ~~$420.8 million~~for Defined Benefit Pension and ~~variable~~Other ~~rate~~Postretirement Plans—an ~~debt~~amendment of ~~approximately~~ ~~$394~~FASB Statements No.0 ~~million~~87, 88, 106, and 132(R) ("FAS 158"). ~~The~~FAS 158 ~~pre-tax~~requires ~~earnings~~an ~~and~~employer ~~cash~~to ~~flow~~recognize ~~impact~~the ~~resulting~~funded ~~from~~status of a defined ~~100~~benefit ~~basis point~~postretirement ~~increase~~plan as an asset or liability in ~~interest~~its ~~rates~~balance onsheet ~~variable~~and ~~rate~~to ~~debt,~~recognize ~~holding~~changes ~~other~~in ~~variables~~that ~~constant,~~funded ~~would~~status ~~be approximately~~through ~~$3.9 million~~comprehensive ~~per~~income in the year in which the changes occur. This Werequirement ~~currently~~will ~~are~~be ~~not~~effective afor ~~party~~fiscal toyears ~~any~~ending ~~interest~~after ~~rate~~June 15, ~~hedging arrangements~~2007. ~~Our~~FAS 158 ~~hedging~~also ~~arrangements~~requires ~~were~~an ~~terminated~~employer into ~~connection~~measure ~~with~~defined ~~the~~benefit ~~closing~~plan assets and obligations as of the date of ~~Transactions~~its fiscal year-end, with limited exceptions. This requirement is effective for fiscal years ending after December 15, 2008. We ~~may~~are ~~decide~~currently inevaluating the ~~future~~impact toadoption ~~enter~~of ~~into~~FAS 158 ~~interest~~will ~~rate~~have ~~hedging~~on ~~arrangements~~our consolidated financial statements.

~~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~~ February ~~2000~~2007, ~~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~~FASB onissued ~~the hedged portion of the term debt would not vary. Upon adoption of FASB~~ Statement No. ~~133~~159, asThe ~~amended,~~Fair ~~Accounting~~Value Option for ~~Derivatives~~Financial Assets and ~~Hedging~~Financial ~~Activity~~ Liabilities (“"FAS ~~133”~~ 159"),. ~~we determined~~FAS 159 ~~the~~permits ~~interest~~entities ~~rate~~to ~~hedge~~choose ~~agreement~~to ~~did~~measure ~~not~~eligible ~~qualify~~items ~~for~~at ~~hedge~~fair ~~accounting~~value asat ~~defined~~specified inelection ~~FAS 133.~~dates ~~Accordingly,~~and ~~the~~report ~~fair~~unrealized ~~value~~gains ofand ~~the~~losses ~~financial~~on ~~instrument~~items ~~was~~for ~~recorded~~which in the ~~financial~~fair ~~statements~~value ~~and~~option ~~subsequent~~has ~~changes~~been inelected ~~fair value were recorded~~ in earnings inat ~~the~~each ~~period~~subsequent ofreporting ~~change~~date. At ~~December~~FAS ~~28,~~159 ~~2002,~~is ~~the~~effective ~~fair~~for ~~value~~fiscal ofyears ~~the~~beginning ~~interest~~after ~~rate~~November 15, ~~hedge agreement was approximately $7~~2007.~~6 million~~ ~~and~~We ~~was~~are ~~included~~currently inevaluating ~~accrued liabilities. During 2002,~~ the ~~three month LIBO rate fell below~~ ~~the~~impact ~~floor~~adoption ~~rate~~of inFAS 159 ~~the~~will ~~collar~~have ~~agreement~~on ~~and~~our weconsolidated ~~made~~financial ~~payments to the bank of approximately $2~~statements.~~6 million.~~

~~On December~~Item 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 liability and subsequent changes in fair value are recorded in earnings in the period of change. At January 3~~, 2004, the fair value of the swap agreement was approximately $5~~.~~4 million~~ Quantitative and ~~was~~Qualitative ~~included~~Disclosures inAbout ~~accrued~~Market 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. Risk

~~Use~~ We ofare ~~hedging~~exposed ~~contracts would allow us~~ to ~~reduce~~various ~~our~~market ~~overall exposure to interest rate changes~~risks, ~~since~~ ~~gains~~which ~~and~~are ~~losses~~potential ~~on these contracts would offset~~ losses ~~and~~arising ~~gains~~from onadverse ~~the~~changes ~~transactions~~in ~~being hedged.~~market Werates ~~formally document all hedged transactions~~ and ~~hedging instruments~~prices, ~~and~~such ~~assess,~~as ~~both~~interest ~~at inception~~rates ~~of the contract~~ and ~~on an ongoing basis, whether the hedging instruments are effective in~~foreign ~~offsetting~~exchange ~~changes in cash flows of the hedged transaction~~fluctuations. ~~The~~We ~~fair~~do ~~values~~not ofenter ~~the~~into ~~interest~~derivatives ~~rate agreements~~or ~~are~~other ~~estimated~~financial byinstruments ~~obtaining~~for ~~quotes~~trading ~~from brokers and are the estimated amounts that we would receive~~ or ~~pay~~speculative ~~to terminate the agreements at the reporting date, taking into consideration current interest rates and the current creditworthiness of the counterparties~~purposes.

~~Currency~~Interest rate risk

~~Outside~~ At ofMarch 31, ~~the United States~~2007, we ~~maintain~~had ~~assets~~fixed ~~and~~rate ~~operations~~debt ~~in Europe and, to a much lesser extent, Asia. The results~~ of ~~operations~~approximately ~~and financial position of our foreign operations are principally measured in their respective currency and translated into U~~$425.S.3 million ~~dollars. As a result, exposure to foreign currency gains~~ and ~~losses~~variable ~~exists.~~rate ~~The~~debt ~~reported income~~ of ~~these~~approximately ~~subsidiaries will be higher or lower depending on a weakening or strengthening of the U~~$368.S7 million. ~~dollar against the~~The ~~respective~~pre-tax ~~foreign~~earnings ~~currency. Our subsidiaries~~ and ~~affiliates~~cash ~~also~~flow ~~purchase~~impact ~~and~~resulting ~~sell~~from ~~products and services in various currencies. As~~ a ~~result,~~100 basis wepoint ~~may~~increase ~~be exposed to cost increases relative to the local currencies~~ in ~~the~~interest ~~markets~~rates ~~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~~variable ~~compared~~rate ~~to our cost~~debt, ~~which~~holding ~~could~~other ~~impact~~variables ~~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~~constant, ~~with~~would ~~the~~be ~~effect~~approximately ~~of such translation reflected in other comprehensive income (loss)~~$3.7 million Inper ~~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~~year. ~~Therefore,~~We ~~foreign currency~~currently ~~gains and losses resulting from the translation of the euro-denominated debt~~ are ~~included in~~not ~~accumulated~~a ~~other~~party ~~comprehensive~~to ~~income~~any ~~(loss).~~interest ~~Accordingly,~~rate ~~our~~hedging ~~consolidated shareholders’ equity will fluctuate depending upon the weakening or strengthening of the U~~arrangements.S. ~~dollar against the respective foreign currency, primarily the euro.~~

27 Currency risk

Outside of the United States, we maintain assets and operations in Europe and, to a 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~~/euro~~ ~~exchange~~against ~~rates~~the ~~used~~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 markets in which we sell. Because a different percentage of our ~~financial~~revenues ~~statements~~are ~~for~~in a foreign currency other than our costs, a change in the ~~periods~~relative ~~ended~~value asof ~~set~~the ~~forth~~U.S. dollar could have a disproportionate impact on our revenues compared to our ~~below~~cost, ~~were~~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 ~~follows:~~of the end of each period, with the effect of such translation reflected in other comprehensive income (loss). We have a euro-denominated term loan and senior subordinated notes that effectively hedge the

	Three Months Ended
	April 2, 2005		April 3, 2004
Period end rate		1.3050		1.2196
Period average rate		1.3040		1.2824

~~Our~~Company's net ~~strategy~~investment ~~for~~in ~~management~~foreign ofsubsidiaries. Therefore, foreign currency ~~risk~~gains ~~relies~~and ~~primarily~~losses onresulting ~~conducting~~from ~~our~~the ~~operations~~translation of the euro-denominated debt are included in aaccumulated other ~~country’s~~comprehensive ~~respective~~income ~~currency~~(loss). ~~and may~~Accordingly, ~~from~~our ~~time~~consolidated toshareholder's ~~time,~~equity ~~involve~~will ~~currency~~fluctuate ~~derivatives.~~depending Asupon ~~of April 2,~~the ~~2005,~~weakening weor ~~did~~strengthening ~~not~~of ~~have~~the ~~any~~U.S. dollar ~~foreign~~against the respective foreign currency, ~~derivatives~~primarily ~~outstanding~~the euro.

~~Item~~ The dollar/euro 4.exchange ~~Controls~~rates ~~and~~used ~~Procedures~~in our financial statements for the periods ended as set forth below were as follows:

As of April 2, 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 April 2, 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.

	Three Months Ended
	March 31, 2007	April 1, 2006
Period end rate	1.3335	1.2135
Period average rate	1.3094	1.2028

~~During~~ Our strategy ~~the~~for ~~three~~management ~~months~~of ~~ended~~currency ~~April 2,~~risk ~~2005,~~relies ~~there~~primarily ~~has~~on ~~been~~conducting noour ~~change~~operations in ~~the~~a ~~Company’~~country's ~~internal controls~~respective ~~over~~currency ~~financial~~and ~~reporting~~may, ~~(as~~from ~~defined~~time into ~~Rules 13a-15(f)~~time, ~~and~~involve ~~15d-15(f)~~currency ~~promulgated~~derivatives. ~~under~~As ~~the~~of ~~Exchange~~March 31, ~~Act) that has materially affected~~2007, orwe isdid ~~reasonably~~not ~~likely~~have toany ~~materially~~foreign ~~affect,~~currency ~~the Company’s~~derivatives ~~internal controls over financial reporting~~outstanding.

~~PART~~Item 4. Controls IIand ~~– OTHER INFORMATION~~ Procedures

~~Item~~ An 1evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) was performed under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer. ~~Legal~~Based ~~Proceedings~~on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective, as of March 31, 2007.

We During the ~~are~~three ~~currently~~months aended ~~party~~March 31, to2007, ~~various~~there ~~claims~~has ~~and~~been ~~legal~~no ~~actions~~change ~~that arise~~ in ~~the~~our ~~ordinary~~internal ~~course~~control ~~of business.~~over Wefinancial ~~believe~~reporting ~~such~~(as defined ~~claims~~in Rules 13a-15(f) and 15d-15(f) ~~legal~~promulgated ~~actions,~~under ~~individually~~the ~~and~~Exchange inAct) ~~the~~that ~~aggregate,~~has ~~will~~materially ~~not have~~affected, aor ~~material~~is ~~adverse~~reasonably ~~effect~~likely onto ~~our~~materially ~~business~~affect, ~~financial~~our ~~condition~~internal orcontrol ~~results~~over offinancial ~~operations~~reporting.

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. When the Company met with the EPA, the Agency indicated their intent to request additional information. The Company is currently developing information responsive to that request. During the three months ended April 2, 2004, the Company has recorded its best estimate of potential penalties as an adjustment to the preliminary allocation of purchase price for the Transactions. Although the EPA has the authority and discretion to issue substantial fines that could be material, based upon management’s analysis of the facts and circumstances, in consideration of prior cases and the EPA’s published civil penalty policies, and supported by discussions with third party advisors, we do not believe that the maximum penalty will be assessed and that penalties, if any, resulting from this matter will not have a material adverse effect on the business, financial condition or results of operations of the Company. 33

~~Item~~ PART 6.II—OTHER ~~Exhibits~~INFORMATION

Exhibit No.		Exhibit Description
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

Item 1. Legal Proceedings

28 As part of an internal self-audit of our Corydon, Indiana and Owensboro, Kentucky facilities, we recently identified instances of potential non-compliance with our environmental operating permits at these facilities. We self-reported these issues to the proper state and federal agencies and are taking steps to resolve these issues. Although the agencies have the authority and discretion to issue substantial fines that could be material, based upon management's analysis of the facts and circumstances and consideration of recent cases addressed by the agencies involved, we do not believe that the maximum penalty will be assessed or that penalties, if any, resulting from this matter will have an adverse effect on our business, financial condition or results of operations.

~~SIGNATURES~~ We received a Finding of Violation, dated March 28, 2005, from the EPA alleging a noncompliance with the Title V Air Operating Permit at our Corydon, Indiana facility relating to the control of fugitive emissions at the facility. We recorded a reserve in 2005 for our best estimate of potential penalties. During the three months ended April 1, 2006, we finalized an agreement with the EPA that was consistent with our original estimate, which required the payment of penalties and the installation of a supplemental environmental project intended to reduce our total emissions. We have completed the work required under the agreement and on April 16, 2007, we received a letter from the EPA confirming successful completion of all obligations under the agreement and final resolution of this matter.

~~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~~Item 1A. Risk Factors

Date: May 16, 2005		POLYPORE, INC.
		(Registrant)
	By:		/s/ Frank Nasisi
		Frank Nasisi
		President and Chief Executive Officer
		(principal executive officer)
	By:		/s/ Lynn Amos
		Lynn Amos
		Chief Financial Officer
		(principal financial officer and principal accounting officer)

Item 1A ("Risk Factors") of our Annual Report on Form 10-K for the year ended December 31, 2006 sets forth information relating to important risks and uncertainties that could materially adversely affect our business, financial condition or operating results. Those risk factors continue to be relevant to an understanding of our business, financial condition and operating results. Certain of those risk factors have been updated in this Form 10-Q to provide updated information, as set forth below.

If we are unable to adequately protect our intellectual property, we could lose a significant competitive advantage.

Our success with our products depends, in part, on our ability to protect our unique technologies and products against competitive pressure and to defend our intellectual property rights. If we fail to adequately protect our intellectual property rights, competitors may manufacture and market products similar to ours. Even though we have filed patent applications, we may not be granted patents for those applications. Moreover, even if we are granted a patent, that does not prove conclusively that the patent is valid and enforceable. Our existing or future patents that we receive or license may not provide competitive advantages for our products. Our competitors may invalidate, narrow or avoid the scope of any existing or future patents, trademarks, or other intellectual property rights that we receive or license. In addition, patent rights may not prevent our competitors from developing, using or selling products that are similar or functionally equivalent to our products. Patent rights are territorial; thus, the patent protection we do have will only extend to those countries in which we have issued patents. Even so, the laws of certain countries do not protect our intellectual property rights to the same extent as do the laws of the United States and various European countries. The loss of protection for our intellectual property could reduce the market value of our products, reduce product sales, and lower our profits or impair our financial condition. We intend to enforce our intellectual property rights vigorously, and from time to time we may initiate claims against third parties that we believe are infringing our intellectual property rights if we are unable to resolve matters satisfactorily through negotiation or we may be required to participate in other administrative proceedings. Lawsuits brought to protect and enforce our intellectual property rights could be expensive, time-consuming and distracting to management and could result in the impairment or loss of portions of our intellectual

property. Our failure to secure, protect and enforce our intellectual property rights could seriously harm our business. Security interests or liens have been granted to financial institutions on some of our patents. If we fail to satisfy our obligations, the financial institutions have rights to those patents.

Our past restructuring activities can have an adverse impact on our financial condition.

On August 24, 2006, in response to a significant decline in demand for cellulosic hemodialysis membranes driven by a shift in industry demand toward synthetic membranes, we decided to exit the production of cellulosic membranes and realign the cost structure at our Wuppertal, Germany facility. As a result, we incurred $34.5 million in restructuring charges in 2006. We also engaged in restructuring activities and incurred restructuring charges of $8.7 million and $15.7 million in 2005 and 2004, respectively. Our cost reduction measures have previously included the closure of facilities, employee layoffs and the relocation of assets and operations. The timing, scope and costs of any past restructuring measures are subject to change. As a result, our past restructuring activities could disrupt our business and have an adverse impact on our financial condition.

Item 6. Exhibits

Exhibit No.		Exhibit Description
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

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: May 10, 2007	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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Polypore, Inc. Index to Quarterly Report on Form 10-Q For the Three Months Ended March 31, 2007
Forward-looking Statements
Polypore, Inc. Condensed Consolidated Balance Sheets
Polypore, Inc. Condensed Consolidated Statements of Operations (Unaudited)
Polypore, Inc. Condensed Consolidated Statements of Cash Flows (unaudited)
Polypore, Inc. Notes to Condensed Consolidated Financial Statements (unaudited)
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