UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q
(Mark One)

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended December 31, 2004

                                       OR
[ ]             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 333-116676

                                 AEARO COMPANY I

             (Exact name of registrant as specified in its charter)



            Delaware                                      13-3840356
(State or other jurisdiction of incorporation (IRS Employer Identification No.)
            or organization)

       5457 West 79th Street                                  46268
       Indianapolis, Indiana                               (Zip Code)
(Address of principal executive offices)

                                 (317) 692-6666
             Registrant's telephone number, including area code)

                             _______________________

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes No X

The number of shares of the registrant's common stock, par value $.01 per share,
outstanding as of February 14, 2005 was 100.
<PAGE>
                                 AEARO COMPANY I
                                TABLE OF CONTENTS
           Form 10-Q for the Quarterly Period Ended December 31, 2004

PART I-FINANCIAL INFORMATION..................................................3

Item 1.Financial Statements...................................................3
Consolidated Balance Sheets - Assets..........................................3
Consolidated Balance Sheets - Liabilities and Stockholder's Equity............4
Consolidated Statements of Operations.........................................5
Consolidated Statement of Stockholder's Equity................................6
Consolidated Statements of Cash Flows.........................................7
Notes to Consolidated Financial Statements....................................8
Item 2.Management's Discussion and Analysis of Financial Condition and Results
        of Operations........................................................22
Item 3.Quantitative and Qualitative Disclosures About Market Risk ...........28
Item 4.Controls and Procedures...............................................30
PART II - OTHER INFORMATION..................................................31

Item 6.Exhibits and Reports on Form 8-K......................................31
SIGNATURES...................................................................32

EXHIBIT INDEX................................................................33
<PAGE>


                                                                   7
                          PART I-FINANCIAL INFORMATION
     Item 1.      Financial Statements




                        AEARO COMPANY I AND SUBSIDIARIES
                      Consolidated Balance Sheets - Assets
                                 (In Thousands)

                                                December 31,   September 30,
                                                     2004           2004
                                              --------------- --------------
                                                Unaudited)
CURRENT ASSETS:
  Cash and cash equivalents                       $  27,445         $ 27,724
  Accounts receivable (net of allowance
       for doubtful accounts of
  $1,464 and $1,358, respectively)                   52,375           54,159
Inventories                                          42,818           40,849
Deferred and prepaid expenses                         7,437            4,146
                                                 --------------   ----------
                  Total current assets                130,075        126,878
                                                ---------------   ----------

LONG TERM ASSETS:
  Property, plant and equipment, net                   54,599         54,750
  Goodwill, net                                       122,802        133,745
  Other intangible assets, net                        184,578        185,855
  Other assets                                         16,202         15,144
                                                 --------------   ----------
                  Total assets                   $    508,256      $ 516,372
                                                ---------------  -----------





  The accompanying notes are an integral part of these consolidated financial
                                   statements

<PAGE>

                        AEARO COMPANY I AND SUBSIDIARIES

       Consolidated Balance Sheets - Liabilities and Stockholder's Equity
             (In Thousands, Except for Per Share and Share Amounts)



                                              ---------------   ------------
                                                December 31,   September 30,
                                                   2004            2004
                                              ---------------  -------------
                                                (Unaudited)
CURRENT LIABILITIES:
   Current portion of long-term debt            $     1,673       $    1,639
   Accounts payable and accrued liabilities          46,132           46,730
   Accrued interest                                   3,066            6,996
   U.S. and foreign income taxes                      2,174            1,648
                                               ------------       ----------
                                              -------------       ----------
         Total current liabilities                   53,045           57,013
                                              -------------       ----------

LONG TERM LIABILITIES:
   Long-term debt                                   306,815          302,842
   Deferred income taxes                             44,369           59,699
   Other liabilities                                 14,565           14,726
                                              --------------      ----------
         Total liabilities                          418,794          434,280
                                              --------------      ----------

STOCKHOLDER'S EQUITY:
   Common stock, $.01 par value-
    Authorized--100 shares
    Issued and outstanding--100 shares                    -                -
   Paid in capital                                  101,620          101,610
   Accumulated deficit                              (14,397)        (19,415)
   Accumulated other comprehensive income (loss)      2,239            (103)
                                              ---------------     ----------
         Total stockholder's equity                  89,462           82,092
                                              ---------------     ----------

Total liabilities and stockholder's equity    $     508,256       $  516,372
                                             ===============    ============


The accompanying notes are an integral part of these consolidated financial
statements

<page>

                      Consolidated Statements of Operations
                                 (In Thousands)
                                   (Unaudited)



                               Three Months Ended
                                  December 31,

                                                        2004       2003
                                                     Successor   Predecessor
   Net sales                                        $ 95,761   | $ 79,201
                                                               |
   Cost of sales                                      48,705   |   41,776
                                                    --------   |---------
   Gross profit                                       47,056   |   37,425
                                                               |
Selling and administrative                            31,731   |   27,471
                                                               |
Research and technical services                        2,220   |    1,741
                                                               |
Amortization                                           1,318   |      108
                                                               |
Other income, net                                       (68)   |  (1,042)
                                                  ----------    ---------

  Operating income                                    11,855   |    9,147
                                                               |
      Interest expense, net                            5,241   |    5,466
                                                               |
      Income before provision for income taxes         6,614   |    3,681
                                                               |
           Provision for income taxes                  1,596   |      791
                                                ------------   |---------
                                                               |
              Net income                             $ 5,018   |  $ 2,890
                                                ------------    ---------




  The accompanying notes are an integral part of these consolidated financial
                                   statements

<page>

                        AEARO COMPANY I AND SUBSIDIARIES

                 Consolidated Statement of Stockholder's Equity
                      (In Thousands, Except Share Amounts)
<TABLE>
<CAPTION>

                                                        Additional             Accumulated
                                                          Paid      Retained      Other                   Comprehensive
                                        Common             In       Earnings   Comprehensive                 Income
                                                                                  Income
Predecessor                         Shares  Amount       Capital   (Deficit)      (Loss)      Total          (Loss)
<S>                                 <C>      <C>        <C>        <C>         <C>           <C>          <C>
                                    ------- --------    ---------- ----------- ------------- ---------    -------------
Balance, October 1, 2003               100   $          $32,531     $    7,713  $   (6,786)   $ 33,458


  Net income                             -        -             -       8,564             -     8,564     $       8,564
  Foreign currency translation
adjustment                                                                            1,688     1,688             1,688
  Net minimum pension liability
adjustment                                                                                4         4                 4
                                                                                                          -------------
  Comprehensive income                                                                                    $      10,256
                                                                                                          =============

                                    ------- --------    ---------- ----------- ------------- ---------
Balance, March 31, 2004                100  $     -     $  32,531  $   16,277  $    (5,094)  $ 43,714
                                    ======= ========    ========== =========== ============= =========



-----------------------------------------------------------------------------------------------------------------------
  Successor
                                                  $
  Capital contribution                 100  -           $ 101,610  $        -  $             $101,610
  Net loss                               -        -             -      (5,110)             -   (5,110)         (5,110)
  Foreign currency translation
adjustment                               -        -             -           -         (103)     (130)     $     (390)
  Dividend to parent for
repayment of debt                                                     (14,305)             -  (14,305)               -
                                                                                                          -------------
  Comprehensive loss                     -        -             -           -             -               $   (5,213)
                                    ------- -------- -- ---------- ----------- ------------- ---------    =============
Balance, September 30, 2004            100                 101,610    (19,415)         (103)    82,092
                                    ------- -------- -- ---------- ----------- ------------- ---------


  Net income                             -        -             -       5,018             -     5,018     $     5,018
  Foreign currency translation
adjustment                               -        -             -           -         2,342     2,342           2,342
  Vesting of restricted stock            -        -            10                         -        10               -
                                                                                                          -------------
  Comprehensive income                   -        -             -           -             -         -      $    7,360
                                                                                                          =============
                                    ------- --------    ---------- ----------- ------------- ---------
Balance, December 31, 2004             100  $     -     $ 101,620  $(14,397)   $     2,239   $ 89,462
                                    ======= ========    ========== =========== ============= =========
</TABLE>



<PAGE>
                        AEARO COMPANY I AND SUBSIDIARIES
                     Consolidated Statements of Cash Flows
                                 (In Thousands)
                                  (Unaudited)
<TABLE>
<CAPTION>

                                                                          For the Three Months Ended
                                                                              December 31,
                                                                     --------------------------------
                                                                             2004     |    2003
                                                                     -----------------|---------------

CASH FLOWS FROM OPERATING ACTIVITIES:                                   Successor     |    Predecessor
<S>                                                                    <C>              <C>
Net income                                                             $      5,018   | $     2,890
Adjustments to reconcile net income to cash provided by operating                     |
   activities-                                                                        |
   Depreciation                                                               2,577   |       2,929
   Amortization of intangible assets and deferred financing costs             1,660   |       1,263
   Deferred income taxes                                                        240   |         (7)
   Other, net                                                                    67   |         107
   Changes in assets and liabilities-                                                 |
      Accounts receivable                                                     3,027   |       5,067
      Inventories                                                            (1,060)  |     (4,304)
      Income taxes payable                                                      843   |          28
      Interest payable                                                       (3,930)  |       2,956
      Accounts payable and accrued liabilities                               (4,144)  |      (5,957)
      Other, net                                                             (2,935)  |       2,003
       Net cash provided by operating activities                              1,363   |       6,975
                                                                                      |
CASH FLOWS FROM FINANCING ACTIVITIES:                                                 |
   Additions to property, plant and equipment                                (1,494)  |      (2,353)
   Proceeds provided by disposals of property, plant and equipment                1   |          12
       Net cash used by investing activities                                 (1,493)  |      (2,341)
                                                                                      |
CASH FLOWS FROM INVESTING ACTIVITIES:                                                 |
   Repayment of revolving credit facility, net                                   --   |      (1,100)
   Repayment of term loans                                                     (325)  |      (4,466)
   Repayment of capital lease obligations                                       (65)  |         (61)
   Repayment of long term debt                                                 (224)  |         (82)
   Other                                                                         --   |         (11)
                                                                                      |
       Net cash used for financing activities                                  (614)  |      (5,720)
                                                                                      |
EFFECT OF EXCHANGE RATE ON CASH                                                 465   |      (1,545)
                                                                                      |
DECREASE IN CASH AND CASH EQUIVALENTS                                          (279)  |      (2,631)
                                                                                      |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                               27,724   |       7,301
                                                                                      |
CASH AND CASH EQUIVALENTS, END OF PERIOD                               $     27,445   |$      4,670
                                                                                      |
                                                                                      |
                                                                                      |
                                                                                      |
CASH PAID FOR:                                                                        |
   Interest                                                            $      9,265   |$      1,325
   Income taxes                                                        $      1,026   |$        953



</TABLE>
<PAGE>


                        AEARO COMPANY I AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                DECEMBER 31, 2004

                                   (Unaudited)

Consolidated Financial Statements

In the opinion of management,  the accompanying unaudited consolidated financial
statements  of Aearo  Company I (the  "Company")  contain all normal,  recurring
adjustments   necessary  to  present  fairly,   in  accordance  with  accounting
principles  generally  accepted in the United  States of America,  the financial
position,  results  of  operations  and  cash  flows  for  the  interim  periods
presented.  The  results of  operations  for the interim  periods  shown in this
report are not  necessarily  indicative of results for any future interim period
or for the entire year. These consolidated  financial  statements do not include
all disclosures  associated with annual financial  statements,  and accordingly,
should be read in conjunction  with the  consolidated  financial  statements and
notes thereto included in the Company's Annual Report on Form 10-K.

2)       Company Background, Merger and Basis of Presentation

The Company  manufactures and sells products under the brand names  AOSafety(R),
E-A-R(R),  Peltor(R)  and  SafeWaze(TM).  These  products are sold through three
reportable segments, which are Safety Products,  Safety Prescription Eyewear and
Specialty  Composites.  On March 10, 2004,  Aearo  Corporation  ("Parent"),  the
Company's parent,  entered into a merger agreement ("Merger  Agreement") with AC
Safety Holding Corp. and its subsidiary, AC Safety Acquisition Corp. that closed
on April 7, 2004 (the "Merger").  Pursuant to the terms of the Merger Agreement,
on April 7, 2004  ("Acquisition  Date"), AC Safety Acquisition Corp. merged with
and into Aearo  Corporation  with Aearo  Corporation  surviving  the Merger as a
wholly-owned  subsidiary of AC Safety Holding Corp. The aggregate purchase price
was approximately  $409.2 million,  including fees and expenses.  The Merger was
financed with approximately  $303.7 million of debt as discussed in Note 6, $3.7
million of which was assumed, $4.2 million of cash and $101.3 million of equity.
The Company  continues to be wholly-owned by Aearo Corporation after the Merger.
The  purpose  of the  Merger  was to  effect  a change  of  control  from  Aearo
Corporation   to  the  Company's   ultimate   parent  AC  Safety  Holding  Corp.
Approximately  $87.0 million of proceeds from the Merger was  distributed to our
Parent  and used to pay the  shareholders  of the  Parent to effect  the  merger
transaction.  An additional $14.3 million  distributed to our Parent was used to
pay the  outstanding  debt of the Parent as of April 7,  2004.  The Merger was a
business  combination  under  SFAS No.  141,  "Business  Combinations,"  and the
purchase  price  paid  for our  Parent  reflects  the  push  down of 100% of the
purchase price resulting from the Merger. Accordingly, the results of operations
subsequent  to the  Acquisition  Date  are  presented  on a  different  basis of
accounting than the results of operations  prior to the  Acquisition  Date, and,
therefore are not directly  comparable.  The sale was accounted for as if it had
occurred on March 31, 2004, as management  determined that results of operations
were not  significant  and no material  transactions  occurred during the period
from April 1, 2004 to April 7, 2004.  The  periods  prior to April 7, 2004,  are
referred to as predecessor  financial  statements and the periods after April 7,
2004, are referred to as successor financial  statements.  The purchase price is
allocated to the Company's  tangible and intangible assets and liabilities based
upon estimated fair values as of the date of the Merger.  The purchase price has
been preliminarily allocated as follows (dollars in thousands):

     Working capital                                        $  77,357
     Fixed assets                                              55,139
     Other assets and liabilities                              16,073
     Deferred tax liabilities                                 (45,258)
     Finite lived intangible asset                             74,104
     Indefinite lived intangible assets                       114,300
     Goodwill                                                 117,444
                                                            ---------
     Purchase price                                         $  409,159
                                                            ---------
3)       Significant Accounting Policies

Use of Estimates.  The preparation of the consolidated  financial  statements in
conformity with accounting principles generally accepted in the United States of
America  requires  management to make estimates and assumptions  that affect the
reported  amounts of assets and liabilities and disclosure of contingent  assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses  during the  reporting  periods.  Actual  results could
differ from those  estimates.  Revenue  Recognition  and  Allowance for Doubtful
Accounts.  The Company  recognizes  revenue when title and risk  transfer to the
customer,  which is generally  when the product is shipped to customers.  At the
time revenue is recognized,  certain  provisions may also be recorded  including
pricing  discounts  and  incentives.  An  allowance  for  doubtful  accounts  is
generally  recorded  based  on  a  percentage  of  aged  receivables.   However,
management  judgment is involved with the final  determination  of the allowance
based on several  factors  including  specific  analysis of a customer's  credit
worthiness,  historical  bad debt  experience,  changes in payment  history  and
general  economic and market trends.  Foreign Currency  Translation.  Assets and
liabilities of the Company's  foreign  subsidiaries are translated at period-end
exchange rates.  Income and expenses are translated at the  approximate  average
exchange rate during the period.  Foreign currency  translation  adjustments are
recorded as a separate  component  of  stockholder's  equity.  Foreign  Currency
Transactions. Foreign currency gains and losses arising from transactions by any
of the  Company's  subsidiaries  are  reflected  in net  income.  Income  Taxes.
Deferred  tax assets and  liabilities  are  determined  based on the  difference
between the financial  statement and tax bases of assets and  liabilities  using
currently  enacted tax rates.  The effective tax rate for the three months ended
December 31, 2004 and 2003 was different  from the statutory rate due to the mix
of income between the Company's foreign and domestic subsidiaries. The Company's
foreign subsidiaries had taxable income in their foreign jurisdictions while the
Company's  domestic  subsidiaries  had operating losses for income tax purposes.
Due to the  uncertainty  of  realizing  the tax  benefits  of the net  operating
losses,  the tax benefits have been partially  offset by a valuation  allowance.
The  Company  is  included  in  the  consolidated  tax  return  filed  by  Aearo
Corporation.  All taxes are  recorded as if separate,  stand alone  returns were
filed.  Deferred taxes are based on preliminary  purchase price  allocations and
may  be  subsequently  adjusted.  Goodwill  and  Other  Intangibles.  Under  the
provisions  of SFAS No. 142,  "Goodwill  and Other  Intangibles",  goodwill  and
intangible  assets that have  indefinite  useful lives are not amortized but are
tested at least  annually  for  impairment.  Intangible  assets that have finite
useful lives are amortized  over their useful lives and reviewed for  impairment
at each reporting date. The following  presents a summary of intangibles  assets
as of  September  30, 2004 and  December  31,  2004,  before  final  allocations
resulting from the Merger:

<page>
<TABLE>
<CAPTION>

                                            Gross        Accumulated
     September 30, 2004                     Amount        Amortization    Additions  Carrying Amount
<S>                                      <C>            <C>               <C>         <C>
     Trademarks                          $    114,300   $            --   $       --  $   114,300
     Customer Relationship List                73,000            (2,433)          --       70,567
     Patents                                      719              (122)          82          679
     Other                                        385               (76)          --          309
                                         ------------   ---------------   ----------- ------------
     Total Intangibles                   $    188,404   $        (2,631)  $       82  $   185,855
                                         ------------   ---------------   ----------- ------------


                                             Gross        Accumulated
     December 31, 2004 (Unaudited)          Amount        Amortization    Additions  Carrying Amount

     Trademarks                          $    114,300   $            --   $       --  $   114,300
     Customer Relationship List                73,000            (3,650)          --       69,350
     Patents                                      801              (185)          41          657
     Other                                        385              (114)          --          271
                                         ------------   ---------------   ----------- ------------
    Total Intangibles                   $    188,486   $        (3,949)  $       41  $   184,578
                                         ------------   ---------------   ----------- ------------
</TABLE>


     Estimate of Aggregate Amortization Expense:


         Year ending September 30, 2005                        $          5,230
         Year ending September 30, 2006                                   5,225
         Year ending September 30, 2007                                   5,114
         Year ending September 30, 2008                                   4,904
         Year ending September 30, 2009                                   4,913


The following presents the preliminary allocation of goodwill resulting from the
Merger and the changes in the  carrying  amount of goodwill for the three months
ended December 31, 2004 (dollars in thousands):



                                                              Three Months Ended
                                                               December 31, 2004

     Beginning balance                                         $         133,745
     Allocation adjustment                                             (15,696)
     Translation adjustment                                               4,753
                                                               -----------------
     Ending balance                                            $        122,802


Stock-based  Compensation.  The Company  accounts for  stock-based  compensation
under the recognition and measurement  principles of Accounting Principals Board
("APB") No. 25,  "Accounting  for Stock Issued to  Employees".  Accordingly,  no
compensation  expense  for stock  options  has been  recognized  as all  options
granted  had an  exercise  price  equal to or above the price of the  underlying
common  stock on the grant date.  The Company  recognizes  compensation  expense
related to  restricted  stock awards and  amortizes the expense over the vesting
period based on the estimated fair value of the stock at the date of grant.  The
following table  illustrates the effect on net income if the Company had applied
the  fair  value  recognition  provisions  of  SFAS  No.  123,  "Accounting  for
Stock-Based Compensation" as amended by SFAS No. 148 "Accounting for Stock-Based
Compensation - Transition and Disclosure," to stock-based employee  compensation
(dollars in thousands):


                                                          Three Months Ended
                                                             December 31,
                                                           2004    |      2003
                                                        -------    |    -------
                                                      Successor    | Predecessor
Net Income as reported                                $  5,018     | $     2,890
 Stock based compensation expense recorded under APB               |
   No. 25, net of tax                                       --     |         --
 Stock-based compensation expense determined under                 |
   the fair value method, net of tax                       (31)    |        (37)
                                                        -------    |    -------
Proforma net income                                   $  4,987     |  $    2,853
                                                        -------    |    -------



Accounting  for Derivative  Instruments  and Hedging  Activities.  SFAS No. 133,
"Accounting  for Derivative  Instruments and Hedging  Activities"  requires that
every derivative  instrument be recorded in the balance sheet as either an asset
or a liability  measured at its fair value. The Company has formally  documented
its hedging relationships,  including  identification of the hedging instruments
and the hedge items,  as well as its risk  management  objectives and strategies
for  undertaking  each hedge  transaction.  From time to time the Company enters
into foreign  currency  exchange  contracts and interest  rate swap  agreements,
which are  derivatives  as defined by SFAS No.  133.  The  Company  enters  into
forward foreign currency contracts to mitigate the effects of changes in foreign
currency rates on profitability and enters into interest rate swap agreements to
hedge its variable  interest rate risk. These  derivatives are cash flow hedges.
For all  qualifying and highly  effective  cash flow hedges,  the changes in the
fair  value of the  derivatives  are  recorded  in other  comprehensive  income.
Amounts  accumulated  in other  comprehensive  income  will be  reclassified  as
earnings  when the related  product  sales affect  earnings for forward  foreign
currency  contracts  or when  related  interest  payments  affect  earnings  for
interest rate swaps.  At December 31, 2004,  the Company had no forward  foreign
currency  contracts or interest rate  derivatives as defined under SFAS No. 133.
For the three month periods ended  December 31, 2003,  the Company  reclassified
into earnings net losses of $0.2 million  resulting from the exercise of forward
foreign  currency  contracts.   All  forward  foreign  currency  contracts  were
determined to be highly  effective  whereby no  ineffectiveness  was recorded in
earnings.  The Company had  approximately  $30.5  million of variable  rate debt
protected  under an interest rate cap  arrangement,  which expired  December 31,
2004. The Company did not elect hedge accounting treatment for the interest rate
cap as defined under SFAS No. 133, and, as a result,  any fair value  adjustment
was charged  directly to other  charges  (income),  net.  There was no impact on
earnings for each of the periods ended  December 31, 2003 and 2004.  The Company
also  executes  forward  foreign  currency  contracts  for up to 30 day terms to
protect against the adverse effects that exchange rate  fluctuations may have on
the  foreign-currency-denominated  trade activities  (receivables,  payables and
cash) of foreign  subsidiaries.  These  contracts  have not been  designated  as
hedges  under SFAS No. 133,  and  accordingly,  the gains and losses on both the
derivative  and  foreign-currency-denominated  trade  activities are recorded as
transaction adjustments in current earnings. For the three months ended December
31, 2003 and 2004, the impact on earnings for trade activities was a net loss of
$0.1 million and $0.1 million,  respectively.  The Company's Senior Subordinated
Notes contain an embedded call option that requires  bifurcation  because it was
determined to not be clearly and closely related to the debt host contract. As a
result of the valuation of the embedded call option,  the Company has recorded a
derivative asset of approximately $2.0 million and a corresponding  liability as
of September 30, 2004 and December 31, 2004, respectively.  The derivative asset
will be marked to market each quarter with a corresponding (gain) or loss to the
statement of  operations.  The  corresponding  liability is amortized  using the
effective  interest method over the term of the senior  subordinated  notes. For
the three month period ended December 31, 2004,  the mark to market  revaluation
of the embedded call option was  immaterial.  The resulting  amortization of the
corresponding liability resulted in a reduction in interest expense of less than
$0.1 million for the three months ended December 31, 2004.


4) Comprehensive Income

Comprehensive income consisted of the following (dollars in thousands):







                                                          Three Months Ended
                                                               December 31,
                                                   ----------------------------
                                                       2004       |      2003
                                                   ---------------|-------------
                                                   Successor      |  Predecessor
                                                   Unaudited)     |  (Unaudited)
     Net Income                                    $  5,018       |   $    2,890
                                                                  |
     Foreign currency translation adjustment          2,342       |        2,636
     Unrealized loss on derivative instruments            -       |        (389)
                                                  ---------       |    ---------
     Comprehensive income                          $  7,360       |   $    5,137
                                                  ---------            ---------
5) Inventories

   Inventories consisted of the following (dollars in thousands):



                                                December 31,       September 30,
                                                   2004                2004
                                               --------------      -------------
                                                (Unaudited)

     Raw materials                              $    10,578        $      9,302
     Work in process                                  9,706              12,087
     Finished goods                                  22,534              19,460
                                                -----------        ------------
                                                $    42,818        $     40,849
                                                ===========       =============


Inventories,  which include  materials,  labor and manufacturing  overhead,  are
stated at the lower of cost or market, cost being determined using the first-in,
first-out method.

<PAGE>


6)       Debt

The  Company's  debt  structure  includes:  (a) $175.0  million of 8.25%  Senior
Subordinated  Notes  ("8.25%  Notes")  due  2012,  which are  publicly  held and
redeemable  at the  option  of the  Company,  in  whole  or in part  at  various
redemption  prices,  (b) up to an aggregate of $175.0  million  under its Credit
Agreement  with various  banks  comprised  of (i) a secured  term loan  facility
consisting  of  loans   providing  for  up  to  $125.0  million  of  term  loans
(collectively  the "Term Loans") with a portion of the Term Loans denominated in
Euros,  (ii) a secured revolving credit facility  ("Revolving  Credit Facility")
providing  for up to $50.0  million of  revolving  loans for  general  corporate
purposes,  and (iii) an uncommitted  incremental term loan facility of up to $60
million for  acquisitions  (collectively,  the "Senior  Bank  Facilities").  The
amounts outstanding on the Term Loans and Revolving Credit Facility at September
30, 2004,  were  approximately  $126.0 and $0 million,  respectively.  Since the
Acquisition  Date,  the  Company's  debt has been  negatively  impacted  by $6.3
million  related to the fluctuation of the euro relative to the U.S dollar as of
December  31,  2004.  The amounts  outstanding  on the Term Loans and  Revolving
Credit Facility at December 31, 2004, were approximately  $130.3 and $0 million,
respectively. The Revolving Credit Facility provides for the issuance of letters
of credit in an aggregate  face amount of up to $15.0  million.  The Company had
approximately  $1.4 million and $1.6 million of letters of credit outstanding at
September 30, 2004 and December 31, 2004, respectively.  The Term Loans amortize
quarterly over a seven year period.  Amounts repaid or prepaid in respect of the
Term  Loans may not be  re-borrowed.  Loans  and  letters  of  credit  under the
Revolving  Credit  Facility will be available  until the Revolving Loan Maturity
Date, which is April 7, 2010. The Term Loans mature on April 7, 2011.  Effective
December 31, 2004, the Company  received a 0.25%  reduction in the interest rate
paid on its Term Loans for meeting certain financial covenants.  The Company was
in compliance with all financial  covenants and  restrictions as of December 31,
2004.

     7)    Commitments and Contingencies

Lease Commitments. The Company leases certain transportation vehicles, warehouse
facilities,  office space,  and machinery and  equipment  under  cancelable  and
non-cancelable  leases,  most of which expire within 10 years and may be renewed
by the Company.  Contingencies.  Various  lawsuits and claims arise  against the
Company in the  ordinary  course of its  business.  Most of these  lawsuits  and
claims  are  products  liability  matters  that  arise  out of the use of safety
eyewear and  respiratory  product lines  manufactured  by the Company as well as
products  purchased  for  resale.  The  Company is a  defendant  in  lawsuits by
plaintiffs alleging that they suffer from respiratory  medical conditions,  such
as  asbestosis or  silicosis,  relating to exposure to asbestos and silica,  and
that  such  conditions  result,  in  part,  from  the use of  respirators  that,
allegedly,  were negligently  designed or manufactured.  The defendants in these
lawsuits are often  numerous,  and  include,  in addition to  manufacturers  and
distributors of respirators, manufacturers,  distributors and installers of sand
(used in sand  blasting),  asbestos and  asbestos-containing  products.  Most of
these claims are covered by the Asset  Transfer  Agreement  entered into on June
13,  1995 by the  Company  and Aearo  Corporation,  on the one  hand,  and Cabot
Corporation and certain of its subsidiaries  (the "Sellers"),  on the other hand
(the "1995 Asset Transfer Agreement").  In the 1995 Asset Transfer Agreement, so
long as Aearo  Corporation  makes an annual  payment of $400,000  to Cabot,  the
Sellers  agreed  to  retain,  and  Cabot and the  Sellers  agreed to defend  and
indemnify  Aearo  Corporation  and its  subsidiaries  against,  any liability or
obligation  relating to or otherwise arising under any proceeding or other claim
against Aearo  Corporation  and its  subsidiaries  or Cabot or their  respective
affiliates  or other parties with whom any Seller  directly or indirectly  has a
contractual  liability sharing  arrangement which sounds in product liability or
related  causes of action arising out of actual or alleged  respiratory  medical
conditions  caused or  allegedly  caused by the use of  respirators  or  similar
devices  sold by  Sellers  or their  predecessors  (including  American  Optical
Corporation  and its  predecessors)  prior to July  11,  1995.  To  date,  Aearo
Corporation  has elected to pay the annual fee and intends to continue to do so.
In addition,  under the terms of the Merger Agreement with AC Safety Acquisition
Corp.,  Aearo  Corporation  agreed  to make the  annual  payment  to Cabot for a
minimum of seven years from the  Acquisition  Date.  Aearo  Corporation  and its
subsidiaries  could  potentially  be liable for  claims  currently  retained  by
Sellers if Aearo  Corporation  elects to cease paying the annual fee or if Cabot
and the Sellers no longer are able to perform their  obligations  under the 1995
Asset Transfer Agreement.  Cabot acknowledged in a stock purchase agreement that
it and Aearo  Corporation  entered into on June 27, 2003 (providing for the sale
by Cabot to Aearo  Corporation of all of the common and preferred stock of Aearo
Corporation  owned by Cabot)  that the  foregoing  provisions  of the 1995 Asset
Transfer  Agreement remain in effect. The 1995 Asset Transfer Agreement does not
apply to claims relating to the business of Eastern Safety Equipment,  the stock
of which the Company  acquired in 1996.  At December 31, 2004 and  September 30,
2004,  the Company has recorded  liabilities of  approximately  $4.0 million and
$5.4  million,  respectively,  which  represents  reasonable  estimates  of  its
probable liabilities for product liabilities  substantially  related to asbestos
and  silica-related  claims as determined by the Company in consultation with an
independent consultant. This reserve is re-evaluated periodically and additional
charges or credits to results of operations may result as additional information
becomes available.  Consistent with the current environment being experienced by
companies involved in asbestos and silica-related litigation,  there has been an
increase in the number of asserted claims that could  potentially  involve Aearo
Corporation  and  its  subsidiaries,  including  the  Company.  Various  factors
increase the difficulty in determining  the Company's  potential  liability,  if
any, in such claims,  including the fact that the  defendants in these  lawsuits
are often numerous and the claims generally do not specify the amount of damages
sought.  Additionally,  the bankruptcy  filings of other companies with asbestos
and  silica-related  litigation  could increase the Company's cost over time. In
light of these and other uncertainties inherent in making long-term projections,
the Company has determined that the five-year  period through fiscal 2010 is the
most reasonable time period for projecting  asbestos and  silica-related  claims
and defense costs.  It is possible that the Company may incur  liabilities in an
amount in excess of amounts  currently  reserved.  However,  taking into account
currently  available  information,  historical  experience,  and the 1995  Asset
Transfer Agreement, but recognizing the inherent uncertainties in the projection
of any future  events,  it is  management's  opinion  that these suits or claims
should not result in final  judgments or  settlements in excess of the Company's
reserve that, in the  aggregate,  would have a material  effect on the Company's
financial  condition,  liquidity or results of operations.  8) Segment Reporting
The Company  manufactures and sells products under the brand names  AOSafety(R),
E-A-R(R),  Peltor(R)  and  SafeWaze(TM).  These  products are sold through three
reportable segments, which are Safety Products,  Safety Prescription Eyewear and
Specialty Composites. The Safety Products segment manufactures and sells hearing
protection devices,  communication  headsets,  non-prescription  safety eyewear,
face shields,  reusable and disposable  respirators,  hard hats, fall protection
and first aid kits. The Safety  Prescription  Eyewear segment  manufactures  and
sells  prescription  eyewear products that are designed to protect the eyes from
the  typical  hazards  encountered  in  the  industrial  work  environment.  The
Company's Safety Prescription  Eyewear segment purchases component parts (lenses
and the  majority of its frames)  from  various  suppliers,  grinds,  shapes and
applies  coatings to the lenses in accordance with the customer's  prescription,
and then  assembles  the  glasses  using the  customer's  choice  of frame.  The
Specialty  Composites  segment  manufactures  a wide  array of  energy-absorbing
materials that are incorporated  into other  manufacturers'  products to control
noise, vibration and shock.


     Net Sales by Business Segment (dollars in thousands):





                                             Three Months Ended
                                                December 31,
                                       -------------------------------
                                              2004           2003
                                       -------------------------------
                                           Successor  |   Predecessor
                                         (Unaudited)  |  (Unaudited)
     Safety Products                     $     71,153 |   $    59,780
     Safety Prescription Eyewear                8,974 |         9,464
     Specialty Composites                      15,634 |         9,957
                                         ------------ |   -----------
     Total                               $     95,761 |   $    79,201
                                         ------------ |   -----------


Inter-segment sales from the Specialty Composites segment to the Safety Products
segment  totaled  $1.2  million  and $0.7  million  for the three  months  ended
December  31,  2004 and 2003,  respectively.  The  inter-segment  sales value is
determined at fully absorbed inventory cost at standard rates plus 25%.

Profit (loss) by business segment and  reconciliation to income before provision
for income taxes (dollars in thousands):




                                                        Three Months Ended
                                                           December 31,
                                                -------------------------------
                                                      2004              2003
                                                --------------------------------
                                                  Successor      |   Predecessor
                                                   (Unaudited)   |   (Unaudited)
     Safety Products                              $       12,214 |  $     11,230
     Safety Prescription Eyewear                            (325)|         (214)
     Specialty Composites                                  3,861 |         1,168
                                                   ------------- |  ------------
     Segment profit                                       15,750 |        12,184
                                                   ------------- |  ------------
                                                                 |
     Depreciation                                          2,577 |         2,929
     Amortization of intangibles                           1,318 |           108
     Interest                                              5,241 |         5,466
                                                   ------------- |  ------------
     Income before provision for income taxes      $        6,614|   $     3,681
                                                   ------------- |  ------------

Segment  profit is defined  as  operating  income  (loss)  before  depreciation,
amortization,  interest expense and income taxes and represents the measure used
by the chief  operating  decision maker to assess segment  performance  and make
decisions about the allocation of resources to business segments.



9)       Pension

The following table presents the components of net periodic pension cost for the
three month periods ended December 31, 2004 and 2003,  respectively  (dollars in
thousands):



                                                    Three Months Ended
                                                       December 31,

                                               -----------------------------
                                                Successor    Predecessor
                                               -----------------------------
                                                   2004      |    2003
     Service cost                                $     364   |  $      335
     Interest cost                                     206   |         186
     Expected return on plan assets                   (184)  |        (167)
     Amortization of prior service cost                 --   |           2
                                               ------------- |  -----------
     Total                                       $     386   |  $       356
                                               ------------- |  ------------


The Company previously  disclosed in its Annual Report on Form 10-K for the year
ended  September 30, 2004,  that it expected to  contribute  $1.2 million to its
pension  plan in 2005.  As of December  31,  2004,  the Company has not made any
contributions  to its  pension  plan and plans to  contribute  the  entire  $1.2
million in the fourth quarter of fiscal 2005.

10)      Summarized Financial Information

The  Company's  8.25%  Senior   Subordinated   Notes  due  2012  are  fully  and
unconditionally  guaranteed,  on a joint and several basis, by substantially all
of the Company's wholly-owned domestic subsidiaries  ("Subsidiary  Guarantors").
The  non-guarantor  subsidiaries  are the Company's  foreign  subsidiaries.  The
following  financial  information  illustrates  the  composition of the combined
Subsidiary Guarantors based on the preliminary allocation of purchase price. The
Company  believes  that  the  separate,  complete  financial  statements  of the
respective  guarantors would not provide additional  material  information which
would be  useful  in  assessing  the  financial  composition  of the  Subsidiary
Guarantors  (dollars  in  thousands).
<page>
Consolidated   Statement  of  Operations(Unaudited)
Three Months Ended December 31, 2004

<TABLE>
<CAPTION>

                                                                        Successor
                                               -------------------------------------------------------------
                                                                           Non-
                                                  Aearo     Guarantor   Guarantor
                                                Company I  SubsidiariesSubsidiariesEliminationsConsolidated

<S>                                              <C>         <C>         <C>         <C>         <C>
     Net Sales.................................  $ 71,699    $     --    $ 35,044    $ (10,982)  $  95,761
     Cost of sales.............................    40,434          --      19,245      (10,974)     48,705
                                                 --------    --------    --------    ----------  ----------
       Gross profit............................    31,265          --      15,799           (8)     47,056

     Selling and administrative................    21,778       2,400       7,553           --      31,731
     Research and technical services...........     1,343          --         877           --       2,220
     Amortization..............................       934          64         320           --       1,318
     Other charges (income), net...............     3,979      (6,459)      2,412           --         (68)
                                                 --------    --------    --------    ----------  ----------
        Operating income (loss)................     3,231       3,995       4,637           (8)     11,855
     Interest expense (income).................     5,118        (347)        470           --       5,241
                                                 --------    --------    --------    ----------  ----------
     Income (loss) before taxes................    (1,887)      4,342       4,167           (8)      6,614
     Income tax provision (benefit)............    (1,778)      2,043       1,331           --       1,596
     Equity in subsidiaries....................     5,135       2,836                   (7,971)         --
                                                 --------    --------    --------    ----------  ----------
        Net income.............................  $  5,026    $  5,135    $  2,836    $  (7,979)  $   5,018
                                                 --------    --------    --------    ----------  ----------
</TABLE>

<page>

Consolidated Statement of Operations (Unaudited)
Three Months Ended December 31, 2003


<TABLE>
<CAPTION>

                                                                       Predecessor
                                               -------------------------------------------------------------
                                                                           Non-
                                                  Aearo     Guarantor   Guarantor
                                                Company I  SubsidiariesSubsidiariesEliminationsConsolidated

<S>                                              <C>         <C>         <C>         <C>         <C>
     Net Sales.................................  $ 58,187    $     --    $ 30,642    $  (9,628)  $  79,201
     Cost of Sales.............................    33,515          --      17,841       (9,580)     41,776
                                                 --------    --------    --------    ----------  ----------
        Gross profit...........................    24,672          --      12,801          (48)     37,425

     Selling and administrative................    20,537         229       6,705           --      27,471
     Research and technical services...........     1,157          --         584           --       1,741
     Amortization..............................        84          24          --           --         108
     Other charges (income), net...............     3,086      (6,565)      2,437           --      (1,042)
                                                 --------    --------    --------    ----------  ----------
        Operating income.......................      (192)      6,312       3,075          (48)      9,147
     Interest expense (income).................     5,129        (535)        872           --       5,466
                                                 --------    --------    --------    ----------  ----------
     Income (loss) before taxes................    (5,321)      6,847       2,203          (48)      3,681
     Income tax provision (benefit)............    (2,749)      2,944         596           --         791
     Equity in subsidiaries....................     5,510       1,607                   (7,117)         --
                                                 --------    --------    --------    ----------  ----------
        Net income.............................  $  2,938    $  5,510    $  1,607    $  (7,165)  $   2,890
                                                 --------    --------    --------    ----------  ----------
</TABLE>


     Consolidated Balance Sheet (Unaudited)
     December 31, 2004


<TABLE>
<CAPTION>


                                                                           Non-
                                                  Aearo     Guarantor   Guarantor
                                                Company I  SubsidiariesSubsidiariesEliminationsConsolidated

     Current Assets:
<S>                                              <C>         <C>         <C>         <C>         <C>
        Cash and cash equivalents..............  $ 21,640    $    351    $  5,454    $      --   $  27,445
        Receivables, net.......................    31,978       1,672      18,725           --      52,375
        Inventories............................    30,431          --      12,703         (316)     42,818
        Deferred and prepaid expenses..........     6,232          --       1,205           --       7,437
                                                 --------    --------    --------    ----------  ----------
     Total current assets......................    90,281       2,023      38,087         (316)    130,075
                                                 --------    --------    --------    ----------  ----------

     Long Term Assets:
        Property plan and equipment............    38,924          --      15,675           --      54,599
        Goodwill and other intangibles, net....    91,860     122,294      93,226           --     307,380
        Inter-company receivables (payables)      (52,651)     98,155     (45,504)          --          --
        Investment in subsidiaries ............   251,506      67,292        (778)    (318,020)         --
        Other assets...........................    16,191          --          11           --      16,202
                                                 --------    --------    --------    ----------  ----------
     Total assets..............................  $436,111    $289,764    $100,717    $(318,336)  $ 508,256
                                                 --------    --------    --------    ----------  ----------

     Current Liabilities:
        Current portion of long term debt......  $  1,673    $     --    $     --    $      --   $   1,673
        Accounts payable and accrued
        liabilities............................    28,431       3,959      13,742           --      46,132
        Accrued interest.......................     3,066          --          --           --       3,066
        Income tax payables (receivables)......     2,523      (2,564)      2,215                    2,174
                                                 --------    --------    --------    ----------  ----------
     Total current liabilities.................    35,693       1,395      15,957           --      53,045
                                                 --------    --------    --------    ----------  ----------
     Long Term Liabilities:
        Long term debt.........................   306,815          --          --           --     306,815
        Deferred income taxes..................     7,863      23,860      12,646           --      44,369
        Other liabilities......................    14,565          --          --           --      14,565
                                                 --------    --------    --------    ----------  ----------
     Total liabilities.........................   364,936      25,255      28,603           --     418,794
                                                 --------    --------    --------    ----------  ----------
     Stockholder's Equity:
        Common.................................        --          --       4,222       (4,222)         --
        Paid in capital........................   101,620     267,796      41,765     (309,561)    101,620
        Accumulated deficit....................   (24,934)     (9,484)     29,004       (8,983)    (14,397)
        Accumulated other comprehensive income
        (loss).................................    (5,511)      6,197      (2,877)       4,430       2,239
                                                 --------    --------    --------    ----------  ----------
     Total stockholder's equity................    71,175     264,509      72,114     (318,336)     89,462
                                                 --------    --------    --------    ----------  ----------
     Total liabilities and stockholder's equity  $436,111    $289,764    $100,717    $(318,336)  $ 508,256
                                                 --------    --------    --------    ----------  ----------
</TABLE>

<page>
     Consolidated Balance Sheet
     September 30, 2004

<TABLE>
<CAPTION>



                                                                           Non-
                                                  Aearo     Guarantor   Guarantor
                                                Company I  SubsidiariesSubsidiariesEliminationsConsolidated

     Current Assets:
<S>                                              <C>         <C>         <C>         <C>         <C>
        Cash and cash equivalents..............  $ 18,309    $    140    $  9,275    $      --   $  27,724
        Receivables, net.......................    34,823          --      19,336           --      54,159
        Inventories............................    29,956          --      11,202         (309)     40,849
        Deferred and prepaid expenses..........     3,014          --       1,132           --       4,146
                                                 --------    --------    --------    ----------  ----------
     Total current assets......................    86,102         140      40,945         (309)    126,878
                                                 --------    --------    --------    ----------  ----------

     Long Term Assets:
        Property plan and equipment............    40,040          --      14,710           --      54,750
        Goodwill and other intangibles, net....   134,567     131,786      53,247           --     319,600
        Inter-company receivables (payables)       64,478     (12,147)    (52,331)          --          --
        Investment in subsidiaries ............   154,350      40,981        (713)    (194,618)         --
        Other assets...........................    15,133          --          11           --      15,144
                                                 --------    --------    --------    ----------  ----------
     Total Assets..............................  $494,670    $160,760    $ 55,869    $(194,927)  $ 516,372
                                                 --------    --------    --------    ----------  ----------

     Current Liabilities:
        Current portion of long term debt......  $  1,618    $     --    $     21    $      --   $   1,639
        Accounts payable and accrued
        liabilities............................    32,623         577      13,530           --      46,730
        Accrued interest.......................     6,996          --          --           --       6,996
        Income tax payables (receivables)......     2,324      (2,317)      1,641           --       1,648
                                                 --------    --------    --------    ----------  ----------
     Total current liabilities.................    43,561      (1,740)     15,192           --      57,013
                                                 --------    --------    --------    ----------  ----------
     Long Term Liabilities:
        Long term debt.........................   302,662          --         180           --     302,842
        Deferred income taxes..................    58,073          --       1,626           --      59,699
        Other liabilities......................    14,726          --          --           --      14,726
                                                 --------    --------    --------    ----------  ----------
     Total liabilities.........................   419,022      (1,740)     16,998           --     434,280
                                                 --------    --------    --------    ----------  ----------
     Stockholder's Equity:
        Common.................................        --          --       7,396       (7,396)         --
        Paid in capital........................   101,610     167,519      12,280     (179,799)    101,610
        Accumulated deficit....................   (24,824)     (8,664)     26,168      (12,095)    (19,415)
        Accumulated other comprehensive income
        (loss).................................    (1,138)      3,645      (6,973)       4,363        (103)
                                                 --------    --------    --------    ----------  ----------
     Total stockholder's equity................    75,648     162,500      38,871     (194,927)     82,092
                                                 --------    --------    --------    ----------  ----------
     Total liabilities and stockholder's equity  $494,670    $160,760    $ 55,869    $(194,927)  $ 516,372
                                                 --------    --------    --------    ----------  ----------

</TABLE>


<page>

     Consolidating Statement of Cash Flows (Unaudited)
     Three Months Ended December 31, 2004


<TABLE>
<CAPTION>

                                                                  Successor
                                               -------------------------------------------------
                                                                           Non-
                                                  Aearo     Guarantor   Guarantor
                                                Company I  SubsidiariesSubsidiariesConsolidated

     Net cash provided by (used for) operating
<S>                                              <C>         <C>         <C>         <C>
        activities.............................  $  1,262    $    780    $   (679)   $   1,363

     Net cash used for investing activities....      (886)         --        (607)      (1,493)

     Net cash provided by (used for) financing
        activities.............................     2,706      (3,120)       (200)        (614)

     Effect of exchange rate on cash...........       249       2,551      (2,335)         465
                                                 --------    --------    --------    ----------
     Increase (decrease) in cash and cash
        equivalents............................     3,331         211      (3,821)        (279)

     Cash and cash equivalents at the
        beginning of the period................    18,309         140       9,275       27,724
                                                 --------    --------    --------    ----------
     Cash and cash equivalents at the end of
        the period.............................  $ 21,640    $    351    $  5,454    $  27,445
                                                 --------    --------    --------    ----------
</TABLE>


<page>
     Consolidating Statement of Cash Flows (Unaudited)
     Three Months Ended December 31, 2003


<TABLE>
<CAPTION>

                                                                 Predecessor
                                               -------------------------------------------------
                                                                           Non-
                                                  Aearo     Guarantor   Guarantor
                                                Company I  SubsidiariesSubsidiariesConsolidated

<S>                                              <C>         <C>         <C>         <C>
     Net cash provided by operating activities.  $  2,765    $  2,379    $  1,831    $   6,975

     Net cash used for investing activities....    (1,199)         --      (1,142)      (2,341)

     Net cash used for financing activities....    (1,264)     (3,600)       (856)      (5,720)

     Effect of exchange rate on cash...........      (388)      1,453      (2,610)      (1,545)
                                                 --------    --------    --------    ----------
     Increase (decrease) in cash and cash
        equivalents............................       (86)        232      (2,777)      (2,631)

     Cash and cash equivalents at the
        beginning of the period................     1,544         206       5,551        7,301
                                                 --------    --------    --------    ----------
     Cash and cash equivalents at the end of
        the period.............................  $  1,458    $    438    $  2,774    $   4,670
                                                 --------    --------    --------    ----------

</TABLE>





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

This  report  contains  forward-looking  statements  within  the  meaning of the
federal  securities laws.  Statements that are not historical  facts,  including
statements about the Company's  beliefs and  expectations,  are  forward-looking
statements. Forward-looking statements included statements preceded by, followed
by or that  include the words  "may,"  "could,"  "would,"  "should,"  "believe,"
"expect,"  "anticipate,"  "plan," "estimate,"  "target," "project," "intend," or
similar  expressions.   These  statements  include,  among  others,   statements
regarding the Company's  expected  business outlook,  anticipated  financial and
operating  results,  the Company's  business strategy and means to implement the
strategy,  the  Company's  objectives,  the amount and timing of future  capital
expenditures,  future  acquisitions,  the likelihood of the Company's success in
developing and introducing  new products and expanding its business,  the timing
of the introduction of new and modified  products or services,  financing plans,
working capital needs and sources of liquidity.  Forward-looking  statements are
only  predictions  and are not guarantees of performance.  These  statements are
based on  management's  beliefs  and  assumptions,  which  in turn are  based on
currently  available   information.   Important   assumptions  relating  to  the
forward-looking  statements include, among others,  assumptions regarding demand
for our  products,  the cost,  timing and  success of product  upgrades  and new
product  introductions,  expected pricing levels, the timing and cost of planned
capital  expenditures and expected  synergies  relating to  acquisitions.  These
assumptions  could prove  inaccurate.  Forward-looking  statements  also involve
risks and  uncertainties,  which could cause actual results to differ materially
from those contained in any  forward-looking  statements.  Many of these factors
are beyond the  Company's  ability to control or  predict.  You should read this
report in  conjunction  with the more detailed  risks  included in the Company's
Annual  Report on Form 10-K for the fiscal year ended  September  30,2004..  The
Company believes these forward-looking statements are reasonable; however, undue
reliance should not be placed on any forward-looking statements, which are based
on current expectations.  Further,  forward-looking  statements speak only as of
the date  they are  made,  and  except  as  otherwise  required  by the  federal
securities  laws,  the Company  undertakes  no  obligation to update any of them
publicly in light of new information or future events.
     Merger Agreement

On March 10, 2004, Aearo Corporation  ("Parent"),  the Company's parent, entered
into a Merger  Agreement  with AC Safety Holding Corp.  and its  subsidiary,  AC
Safety  Acquisition Corp. that closed on April 7, 2004 (the "Merger").  Pursuant
to the terms of the Merger  Agreement,  AC Safety  Acquisition Corp. merged with
and into Aearo  Corporation  with Aearo  Corporation  surviving  the Merger as a
wholly-owned  subsidiary of AC Safety Holding Corp. The aggregate purchase price
was approximately  $409.2 million,  including  estimated fees and expenses.  The
Merger was financed  with  approximately  $303.7  million of debt, of which $3.7
million was  assumed,  $4.2  million of cash and $101.3  million of equity.  The
merger was a business  combination under SFAS No. 141, "Business  Combinations,"
and the  purchase  price paid for our Parent  was  pushed  down to the  Company.
Accordingly, the results of operations (unaudited) subsequent to the Acquisition
Date are  presented  on a  different  basis of  accounting  than the  results of
operations  (unaudited)  prior to the Acquisition  Date, and therefore,  are not
directly  comparable.  The sale was accounted for as if it had occurred on March
31,  2004,  as  management  determined  that  results  of  operations  were  not
significant and no material  transactions  occurred during the period from April
1. 2004 to April 7, 2004.


Results of Operations -- Three Months Ended  December 31, 2004 Compared to Three
Months Ended December 31, 2003.

The following  discussion provides a comparison of the results of operations for
the successor  company and that of the predecessor  company for the three months
ended December 31, 2004 and 2003,  respectively.  The discussion is provided for
comparative  purposes  only,  but the value of such  comparison  may be limited.
Material  variances  that are caused by the different  basis of accounting  have
been  disclosed  where  applicable.  The  following  table  sets forth the major
components of the Company's consolidated statements of operations expressed as a
percentage of net sales.

                              Results of Operations
                             (Dollars in Thousands)
                                   (Unaudited)



                                            Three Months Ended December 31,
                                     2004 (1)     %          2003         %
Net sales:                          Successor             Predecessor
   Safety Products                $   71,153    74.3 |   $ 59,780         75.5
   Safety Prescription Eyewear         8,974     9.4 |      9,464         11.9
   Specialty Composites               15,634    16.3 |      9,957         12.6
                                  ----------    ---- |   --------         ----
      Total net sales                 95,761   100.0 |     79,201        100.0
Cost of sales                         48,705    50.9 |     41,776         52.7
                                  ----------    ---- |   --------         ----
Gross profit                          47,056    49.1 |     37,425         47.3
                                  ----------    ---- |   --------         ----
                                                     |
Operating expenses:                                  |
   Selling and administrative         31,731    33.1 |     27,471         34.7
   Research and technical services     2,220     2.3 |      1,741          2.2
   Amortization                        1,318     1.4 |        108          0.1
   Other income, net                     (68)   (0.1)|     (1,042)        (1.3)
                                  ----------    ---- |   --------         ----
      Total operating expense         35,201    36.7 |     28,278         35.7
Operating income                      11,855    12.4 |      9,147         11.6
Interest expense, net                  5,241     5.5 |      5,466          6.9
                                  ----------    ---- |   --------         ----
   Income before taxes                 6,614     6.9 |      3,681          4.6
Provision for income taxes             1,596     1.7 |        791          1.0
                                  ----------    ---- |   --------         ----
   Net income                     $    5,018     5.2 |   $  2,890          3.6
                                  ----------    ---- |   --------         ----

(1) Reflects a new basis of accounting subsequent to April 7, 2004 due to the
Merger.



Net sales for the three months ended December 31, 2004 increased  20.9% to $95.8
million  from $79.2  million in the three months  ended  December 31, 2003.  The
increase  in net sales was  primarily  driven by  organic  growth in the  Safety
Products and Specialty Composites segments and foreign currency translation. The
weakness of the U.S. dollar  favorably  impacted net sales by $2.8 million.  The
Safety  Products  segment net sales for the three months ended December 31, 2004
increased  19.0% to $71.2  million from $59.8  million in the three months ended
December 31, 2003.  The increase in net sales  resulted from a 14.6% increase in
organic growth and a 4.4% increase due to foreign currency translation.  Organic
sales  growth for the  Safety  Products  segment,  defined as net sales less the
impact of foreign currency  translation and acquisitions,  has increased for ten
consecutive quarters.  The Company attributes this growth to an improved economy
and its  ability to  successfully  introduce  new  products  into the markets it
serves. The Safety  Prescription  Eyewear segment net sales for the three months
ended December 31, 2004 decreased 5.2% to $9.0 million from $9.5 million for the
three months ended  December 31, 2003. The decrease in net sales resulted from a
6.1% reduction in volume partially offset by 0.9% increase from foreign currency
translation. Specialty Composites' net sales for the three months ended December
31, 2004  increased  57.0% to $15.6  million from $10.0  million in three months
ended December 31, 2003. The increase was primarily driven by market share gains
and an improving economy driving volume increases in the precision  electronics,
truck,  aircraft and industrial  markets.  The Company  tracks  measures such as
computer  and  electronic  production  data and truck  build  rates to gauge the
momentum  in the  Specialty  Composites  segment,  which  has been  experiencing
positive  sales  trends in the last six  quarters.  Gross  profit  for the three
months  ended  December  31, 2004  increased  25.7% to $47.1  million from $37.4
million  for the  three  months  ended  December  31,  2003.  Gross  profit as a
percentage  of net sales for the three months ended  December 31, 2004 was 49.1%
as  compared  to 47.3%  for the  three  months  ended  December  31,  2003.  The
improvement in the gross profit percentage is primarily due to favorable product
mix,  productivity  improvements and the impact of foreign currency translation.
The Safety Products  segment gross profit in the three months ended December 31,
2004  increased  22.3% to $36.0  million from $29.4  million in the three months
ended  December  31, 2003.  The increase in gross profit is primarily  due to an
improvement in sales volume due to an improved economy and the Company's ability
to successfully introduce new products into the markets it serves,  productivity
improvements and the favorable impact of foreign  currency  translation.  Volume
and productivity  improvements contributed  approximately 17% of the increase in
gross profit with foreign currency translation  contributing the remaining 5% of
the increase.  The Safety Prescription Eyewear segment gross profit in the three
months ended  December 31, 2004 decreased 7.4% to $4.1 million from $4.4 million
in the three months ended  December 31,  2003.  The decrease was  primarily  the
result  of a 6.1%  reduction  due  to a  decrease  in  sales  volume  and a 1.3%
reduction  due to sales mix.  Specialty  Composites'  gross  profit in the three
months ended December 31, 2004 increased 93.0% to $7.0 million from $3.6 million
in the three months ended December 31, 2003.  The increase was primarily  driven
by market share gains and an improving  economy driving volume  increases in the
precision  electronics,   truck,  aircraft  and  industrial  markets,  aided  by
productivity and improved manufacturing  absorption.  Approximately 74.0% of the
increase in the Specialty  Composites  gross profit was due to volume  increases
and  favorable  product  mix  with  the  remaining  19% of the  increase  due to
productivity  improvements.  Operating  expenses  for  the  three  months  ended
December 31, 2004  increased  24.5% to $35.2  million from $28.3 million for the
three months ended  December  31, 2003.  The increase in operating  expenses was
primarily  driven by an  increase  in selling  and  administrative  amortization
expense and other charges,  net. Selling and  administrative  expenses  included
approximately $0.7 million due to foreign currency translation, $1.3 million due
to performance  based incentives  related to the increase in sales volume,  $0.4
million  related  to  freight  and  distribution  with  the  remaining  increase
consistent  with  the  increase  in sales  volume.  Selling  and  administrative
expenses as a  percentage  of net sales  improved to 33.1% for the three  months
ended December 31, 2004 as compared to 34.7% for the three months ended December
31, 2003.  Amortization expense increased  approximately $1.2 million due to the
preliminary  allocation  of purchase  price to finite  lived  intangible  assets
required  by SFAS No. 141 due to the Merger  Agreement.  The  increase  in other
charges,  net was  attributed to the less favorable  impact of foreign  currency
transaction  expenses in the three months ended December 31, 2004 as compared to
December 31, 2003.  Interest  expense,  net, for the three months ended December
31, 2004  decreased to $5.2 million from $5.5 million for the three months ended
December 31, 2003. The decrease is due to lower weighted  average interest rates
under the Company's new credit facility and the 8.25% senior subordinated notes,
partially  offset  by the  increase  in the  level of the  Company's  debt.  The
provision for income taxes for the three months ended December 31, 2004 was $1.6
million  compared to $0.8 million for the three months ended  December 31, 2003.
The effective tax rate for the three months ended December 31, 2004 and 2003 was
different from the statutory rate due to the mix of income between the Company's
foreign and  domestic  subsidiaries.  The  Company's  foreign  subsidiaries  had
taxable  income in their  foreign  jurisdictions  while the  Company's  domestic
subsidiaries have net losses for income tax purposes.  Due to the uncertainty of
realizing  these tax benefits,  the tax benefits for net  operating  losses have
been partially offset by a valuation allowance.

     Effects of Changes in Exchange Rates

In general,  the  Company's  results of  operations  are  affected by changes in
exchange rates. Subject to market conditions, the Company prices its products in
Europe and Canada in local  currency.  While many of the  Company's  selling and
distribution costs are also denominated in these currencies,  a large portion of
product costs are U.S. Dollar  denominated.  As a result, a decline in the value
of the U.S. Dollar relative to other  currencies can have a favorable  impact on
the  profitability  of the  Company,  and an  increase  in the value of the U.S.
Dollar  relative to these  other  currencies  can have a negative  effect on the
profitability of the Company. The Company's Swedish operations are also affected
by changes in exchange rates  relative to the Swedish Krona.  In contrast to the
above, a decline in the value of the Krona relative to other currencies can have
a favorable  impact on the  profitability  of the Company and an increase in the
value of the Krona relative to other  currencies  can have a negative  impact on
the profitability of the Company.  The Company,  from time to time, will utilize
forward foreign currency contracts and other hedging instruments to mitigate the
effects of changes in foreign currency rates on profitability.

     Effects of Inflation

In recent  years,  inflation  has been modest and has not had a material  impact
upon the results of the Company's operations.

     Liquidity and Capital Resources

The Company's  sources of funds have consisted  primarily of operating cash flow
and debt  financing.  The Company's  uses of those funds consist  principally of
debt service, capital expenditures and acquisitions.

The  Company's  debt  structure  includes:  (a) $175.0  million of 8.25%  Senior
Subordinated  Notes ("8.25%  Notes") due 2012,  (b) up to an aggregate of $175.0
million under its Credit Agreement with various banks comprised of (i) a secured
term loan  facility  consisting of loans  providing for up to $125.0  million of
term  loans  (collectively  the "Term  Loans")  with a portion of the Term Loans
denominated  in Euros,  (ii) a secured  revolving  credit  facility  ("Revolving
Credit  Facility")  providing  for up to $50.0  million of  revolving  loans for
general  corporate  purposes,  and (iii) an  uncommitted  incremental  term loan
facility of up to $60 million for acquisitions  (collectively,  the "Senior Bank
Facilities").  The amounts  outstanding  on the Term Loans and Revolving  Credit
Facility  at  September  30,  2004,  were  approximately  $126.0 and $0 million,
respectively.  The Company's debt has been  negatively  impacted by $6.3 million
related to the fluctuation of the euro relative to the U.S dollar as of December
31,  2004.  The  amounts  outstanding  on the Term  Loans and  Revolving  Credit
Facility  at  December  31,  2004,  were  approximately  $130.3 and $0  million,
respectively. The Revolving Credit Facility provides for the issuance of letters
of credit in an aggregate  face amount of up to $15.0  million.  The Company had
approximately  $1.4 million and $1.6 million of letters of credit outstanding at
September 30, 2004 and December 31, 2004, respectively.  The Term Loans amortize
quarterly over a seven-year period.  Amounts repaid or prepaid in respect of the
Term  Loans may not be  re-borrowed.  Loans  and  letters  of  credit  under the
Revolving  Credit  Facility will be available  until the Revolving Loan Maturity
Date, which is April 7, 2010. The Term Loans mature on April 7, 2011.  Effective
December 31, 2004, the Company  received a 0.25%  reduction in the interest rate
paid on its Term Loans for meeting certain financial covenants.  The Company was
in compliance with all financial  covenants and  restrictions as of December 31,
2004.

The Company  typically  makes  capital  expenditures  related  primarily  to the
maintenance and improvement of manufacturing facilities. The Company's principal
source of cash to fund these capital  requirements is cash from operations.  The
Company  spent  $1.5  million  and  $2.4  million,   respectively   for  capital
expenditures   for  the  three  months   ended   December  31,  2004  and  2003,
respectively.  The Company anticipates it will spend approximately $11.0 million
for capital expenditures in its fiscal year ending September 30, 2005.

The  Company's net cash  provided by operating  activities  for the three months
ended December 31, 2004 totaled $1.4 million as compared to $7.0 million for the
three months ended December 31, 2003. The decrease of $5.6 million was primarily
due to an $8.6  million  decrease  related  to the net  changes  in  assets  and
liabilities,  partially  offset  by a $2.9  million  improvement  in net  income
adjusted for cash and non-cash  charges  (depreciation,  amortization,  deferred
taxes and  other).  The  Company's  net  changes in assets and  liabilities  was
primarily driven by a decrease in cash from interest payable of $6.9 million due
to the change in timing of the  payment for the senior  subordinated  notes as a
result  of  the  merger.  The  remaining  change  was  due  to a  decrease  from
receivables,  accounts payable and accrued liabilities and other, net, partially
offset by an increase in cash from inventories and income taxes payable.

Net cash used for  investing  activities  was $1.5  million for the three months
ended  December  31, 2004 as compared to $2.3 million for the three months ended
December 31, 2003.  The  decrease in net cash used by  investing  activities  is
primarily attributed to reduced spending for property, plant and equipment.

Net cash used for financing  activities  for the three months ended December 31,
2004 was $0.6  million  compared  with $5.7  million for the three  months ended
December  31,  2003.  The change is  primarily  due to the lower debt  servicing
requirement  under the  Company's  new credit  facility  as compared to the debt
servicing requirements under the old credit facility.

The Company  maintains a  non-contributory  defined benefit cash balance pension
plan. The Company utilizes an outside actuarial firm to estimate pension expense
and funding  based on various  assumptions  including  the discount rate and the
expected  long-term  rate of return on plan  assets.  To  develop  the  expected
long-term rate of return on assets assumption, the Company considered historical
returns and future expectations for returns for each asset class, as well as the
target asset allocation of the pension portfolio.  Over the 11 year period ended
September 30, 2004,  the returns on the  portfolio,  assuming it was invested at
the current target asset allocation in prior periods, would have been a compound
annual average return of 9.3%.  Considering  this  information and the potential
for lower future returns due to the generally  lower interest rate  environment,
the  Company  selected an 8.0% rate of return on plan asset  assumption.  Actual
asset  returns for the  Company's  pension plan  improved in the last two fiscal
years after two years of negative  returns.  The estimated effect of a 1% change
in the  expected  long-term  rate of return  on plan  assets  results  in a $0.1
million impact on annual pension  expense.  The discount rate was also unchanged
at 6.0% for the fiscal year ended  September  30,  2004.  The Company  bases the
discount  rate on the AA Corporate  bond yields.  The  estimated  impact of a 1%
change in the discount rate results in a $0.1 million  impact on annual  pension
expense.

The  variability of asset returns and discount rates may have either a favorable
or unfavorable  impact on the Company's pension expense and the funded status of
the  pension  plan.   Under  minimum  funding  rules,   no  additional   pension
contributions  were required to be made in fiscal 2004.  The  following  benefit
payments, which reflect expected future service, as appropriate, are expected to
be paid (in thousands of dollars):



     Fiscal year 2005                                                 $   1,121
     Fiscal year 2006                                                       466
     Fiscal year 2007                                                       618
     Fiscal year 2008                                                       830
     Fiscal year 2009                                                     1,214
     Fiscal year 2010 - 2014                                              6,784


The Company has a  substantial  amount of  indebtedness.  The Company  relies on
internally generated funds, and to the extent necessary, on borrowings under the
Revolving Credit Facility (subject to certain  customary drawing  conditions) to
meet its liquidity needs. The Company  anticipates that operating cash flow will
be  adequate  to meet its  operating,  capital  expenditures  and  debt  service
requirements  for the next several  years,  although  there can be no assurances
that existing levels of sales and normalized  profitability,  and therefore cash
flow, will be maintained.

     Contractual Obligations

The Company has the following minimum commitments under contractual  obligations
including purchase obligations by fiscal year, as defined by the U.S. Securities
and Exchange Commission as of December 31, 2004:



                                                              2010 and
                               2005     2006-2007  2008-2009  after       Total
Capital lease obligations    $    264 $    705  $    368 $       32  $    1,369
Operating lease obligations     2,650    5,815     5,064      5,546      19,075
Mortgage obligations              269    2,048        --         --       2,317
Purchase obligations            2,746    3,479     3,201         --       9,426
Respiratory commitment            300      800       800        800       2,700
Long term debt                 16,346   43,403    43,173    320,028     422,950
                            -------- --------  -------- ----------  -----------
Total                        $ 22,575 $ 56,250  $ 52,606 $  326,406  $  457,837
                            -------- --------  -------- ----------  -----------


The  amounts  for long term debt  above  include  both  interest  and  principal
payments.  The Company paid  approximately  $4.7 million for taxes  worldwide in
fiscal 2004 and does not anticipate  significant  changes to its tax obligations
in the future.  The Company has approximately  $1.4 million of letters of credit
outstanding as of December 31, 2004 and does not anticipate  significant changes
to its outstanding letters of credit in the future.

     Off-Balance Sheet Arrangements

The Company has no  off-balance  sheet  arrangements  or financing  arrangements
involving variable interest entities.

     Item 3.      Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market risks related to changes in foreign currencies,
interest rates and commodity  pricing.  The Company uses derivatives to mitigate
the impact of changes in foreign  currencies and interest rates. All derivatives
from time to time are for purposes other than trading.  The Company accounts for
derivatives pursuant to SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities", as amended. The Company has formally documented its hedging
relationships,  including  identification  of hedging  instruments and the hedge
items, as well as its risk management objectives.

     Foreign Currency Risk

The  Company's  results  of  operations  are  subject to risks  associated  with
operating in foreign  countries,  including  fluctuations  in currency  exchange
rates.   While  many  of  the  Company's  selling  and  distribution  costs  are
denominated  in Canadian and  European  currencies,  a large  portion of product
costs are U.S. Dollar  denominated.  As a result,  a decline in the value of the
U.S.  Dollar  relative to other  currencies  can have a favorable  impact on the
profitability  of the Company  and an  increase in the value of the U.S.  Dollar
relative  to  these  other   currencies  can  have  a  negative  effect  on  the
profitability of the Company. The Company's Swedish operations are also affected
by changes in exchange  rates  relative to the Swedish  Krona.  A decline in the
value of the Krona relative to other  currencies can have a favorable  impact on
the  profitability  of the  Company  and an  increase  in the value of the Krona
relative to other currencies can have a negative impact on the  profitability of
the Company.

To mitigate the effects of changes in foreign  currency rates on  profitability,
the Company executes two hedging programs,  one for transaction  exposures,  and
the other for cash flow exposures in foreign  operations.  The Company  utilizes
forward  foreign  currency  contracts  for  transaction  as well  as  cash  flow
exposures.  For  the  three  months  ended  December  31,  2004  and  2003,  net
transaction exposures were a loss of $0.1 million for each period. For the three
months ended  December 31, 2004 and 2003,  cash flow exposures were $0.0 million
and a loss of $0.2 million,  respectively.  In addition,  the Company limits the
foreign  exchange impact on the balance sheet with foreign  denominated  debt in
euros.

SFAS No. 133  requires  that every  derivative  instrument  be  recorded  in the
balance sheet as either an asset or liability  measured at its fair value. Since
the Company had no open forward  foreign  currency  contracts as of December 31,
2004, the Company had recorded no derivative  asset or liability at December 31,
2004. As a result of open forward foreign currency contracts,  the Company had a
derivative payable of $0.4 million as of September 30, 2004.

The Company may also  executes  forward  foreign  currency  contracts  for up to
30-day  terms  to  protect  against  the  adverse  effects  that  exchange  rate
fluctuations  may  have  on the  foreign-currency-denominated  trade  activities
(receivables,  payables and cash) of foreign subsidiaries.  These contracts have
not been designated as hedges under SFAS No. 133 and, accordingly, the gains and
losses on both the derivative and foreign-currency-denominated  trade activities
are recorded as transaction adjustments in results of operations.  The impact on
results of operations was a loss of  approximately  $0.1 million,  for the three
months ended December 31, 2004 and 2003, respectively.

Interest Rates

The Company is exposed to market  risk  changes in  interest  rates  through its
debt.  The Company  utilizes  interest rate  instruments to reduce the impact of
either increases or decreases in interest rates on its floating rate debt.

The Company had  approximately  $30.5  million of variable  rate debt  protected
under an interest rate cap  arrangement,  which expired  December 31, 2004.  The
Company had not elected hedge accounting  treatment for the interest rate cap as
defined  under SFAS No, 133 and,  as a result,  any fair  value  adjustment  was
charged directly to other charges  (income),  net. During the three months ended
December 31, 2004, there was no change in the value of the interest rate cap.

The  Company is of the opinion  that it is well  positioned  to manage  interest
exposures  in the short term.  The Company  continues to monitor  interest  rate
movements and has mitigated  the risks of potential  interest rate  fluctuations
through the use of the aforementioned interest rate instruments.

Commodity Risk

The Company is subject to market risks with respect to industry pricing in paper
and crude oil as it relates  to various  commodity  items.  The  Company is also
exposed to market  risks for  electricity,  fuel oil and natural gas consumed in
its  operations.  Items with potential risk of price  volatility are paperboard,
packaging films, nylons, resins, propylene,  ethylene,  plasticizer and freight.
The Company  manages  pricing  exposures on larger  volume  commodities  such as
polycarbonate,  polyols and polyvinyl chloride via price negotiations  utilizing
alternative  supplier competitive pricing. The Company sources some products and
parts  from Far East  sources  where  resource  availability,  competition,  and
infrastructure  stability has provided a favorable purchasing  environment.  The
Company does not enter into derivative instruments to manage commodity risks.


Item 4. Controls and Procedures

Disclosure  controls and  procedures  are defined by the Securities and Exchange
Commission as those  controls and other  procedures  that are designed to ensure
that  information  required to be disclosed in the  Company's  filings under the
Securities Act of 1934 is recorded,  processed,  summarized and reported  within
the time periods specified in the Securities and Exchange Commission's rules and
forms.  The Company's Chief Executive  Officer and Chief Financial  Officer have
evaluated the Company's  disclosure  controls and  procedures as of December 31,
2004,  and have  determined  that such  disclosure  controls and  procedures are
effective.

There  has been no change  in the  Company's  internal  control  over  financial
reporting  during the quarter  ended  December  31,  2004,  that has  materially
affected,  or is reasonably likely to materially  affect, the Company's internal
control over financial reporting.


                           PART II - OTHER INFORMATION

     Item 6.      Exhibits and Reports on Form 8-K

(a)      Exhibits
         See Index of Exhibits on page 33 hereof.

(b) Reports on Form 8-KOn  November 17, 2004, the Company filed a Current Report
on Form 8-K to announce the appointment of a new Director.

                                                              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:  February 14, 2005    AEARO COMPANY I


                                 /s/ Michael A. McLain

                                 _______________________________________
                                 Michael A. McLain
                                 Chairman and Chief Executive Officer
                                 (Principal Executive Officer)

                                 /s/ Jeffrey S. Kulka

                                 _______________________________________
                                 Jeffrey S. Kulka
                                 Senior Vice President, Chief Financial
                                 Officer and Secretary
                                 (Principal Financial and Accounting Officer)


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                                  EXHIBIT INDEX


                              EXHIBITS DESCRIPTION


31.1 Certification of Chief Executive  Officer pursuant to Rule 15d-14(a) of the
     Securities  Exchange Act of 1934, as adopted pursuant to Section 302 of the
     Sarbanes-Oxley Act of 2002.



31.2 Certification of Chief Financial  Officer pursuant to Rule 15d-14(a) of the
     Securities  Exchange Act of 1934, as adopted pursuant to Section 302 of the
     Sarbanes-Oxley Act of 2002.



32.1 Certification  of Chief  Executive  Officer  pursuant to 18 U.S.C.  Section
     1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



32.2 Certification  of Chief  Financial  Officer  pursuant to 18 U.S.C.  Section
     1350, as adopted pursuant to Section 906 of
                  the Sarbanes-Oxley Act of 2002.