##### Table of Contents









UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, DC 20549


Form 10-K


|  |  |                                                                                             
|- |  | --------------------------------------------------------------------------------------------
|þ |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
| 
|  |  | For the fiscal year ended December 31, 2005                                                 
| 
|  |  | or                                                                                          
| 
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
| 
|  |  | For the transition period
    from           to                                             

Commission File Number 1-32266


Polypore International, Inc.




|                                                                                              |  |                                      
|--------------------------------------------------------------------------------------------- |  | -------------------------------------
|Delaware                                                                                      |  | 43-2049334                           
|(State or Other Jurisdiction of
    Incorporation or Organization)                            |  | (IRS Employer
    Identification No.)
|                                                                                             
|13800 South Lakes Drive
    Charlotte, North Carolina(Address of Principal Executive Offices) |  | 28273(Zip Code)                      













o þ


þ o


þ o


S-K 10-K 10-K. þ


12b-2


o o þ


12b-2 o þ












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##### 










Polypore International, Inc.


Index to Annual Report on
Form 10-K




|           |  |                                                                                                                      |    |      |    | 
|---------- |  | -------------------------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|           | 
|           |  |                                                                                                                      |    | Page |   
|           | 
|Part I     |  |                                                                                                                      |    |      |    | 
|Item 1.    |  | Business                                                                                                             |    |      | 4  | 
|Item 1A.   |  | Risk Factors                                                                                                         |    |      | 13 | 
|Item 1B.   |  | Unresolved Staff Comments                                                                                            |    |      | 19 | 
|Item 2.    |  | Properties                                                                                                           |    |      | 19 | 
|Item 3.    |  | Legal Proceedings                                                                                                    |    |      | 19 | 
|Item 4.    |  | Submission of Matters to a Vote of Security
    Holders                                                              |    |      | 19 | 
|Part II    |  |                                                                                                                      |    |      |    | 
|Item 5.    |  | Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities |    |      | 20 | 
|Item 6.    |  | Selected Financial Data                                                                                              |    |      | 20 | 
|Item 7.    |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                            |    |      | 22 | 
|Item 7A.   |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                       |    |      | 36 | 
|Item 8.    |  | Financial Statements and Supplementary
    Data                                                                      |    |      | 37 | 
|Item 9.    |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure                             |    |      | 70 | 
|Item 9A.   |  | Controls and Procedures                                                                                              |    |      | 70 | 
|Item 9B.   |  | Other Information                                                                                                    |    |      | 70 | 
|Part III   |  |                                                                                                                      |    |      |    | 
|Item 10.   |  | Directors and Executive Officers of the
    Registrant                                                               |    |      | 70 | 
|Item 11.   |  | Executive Compensation                                                                                               |    |      | 72 | 
|Item 12.   |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters                   |    |      | 79 | 
|Item 13.   |  | Certain Relationships and Related
    Transactions                                                                   |    |      | 80 | 
|Item 14.   |  | Principal Accountant Fees and Services                                                                               |    |      | 82 | 
|Part IV    |  |                                                                                                                      |    |      |    | 
|Item 15.   |  | Exhibits and Financial Statement
    Schedules                                                                       |    |      | 83 | 
|Signatures |  |                                                                                                                      | 86 |     
|          
|Ex-10.15  
|Ex-12.1   
|Ex-21.1   
|Ex-31.1   
|Ex-31.2   
|Ex-32.1   
|Ex-32.2   



10-K,




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Forward-looking Statements


10-K 10-K


10-K,




| |   |                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------
| |  | the highly competitive nature of the markets in which we sell
    our products;                                                  
|
| |  | the failure to continue to develop innovative products;                                                                          
|
| |  | the failure to successfully manage the transition in
    hemodialysis from cellulosic to synthetic filtration membranes;         
|
| |  | the loss of our customers;                                                                                                       
|
| |  | the vertical integration by our customers of the production of
    our products into their own manufacturing process;            
|
| |  | increases in prices for raw materials or the loss of key
    supplier contracts;                                                 
|
| |  | employee slowdowns, strikes or similar actions;                                                                                  
|
| |  | product liability claims exposure;                                                                                               
|
| |  | risks in connection with our operations outside the United
    States;                                                           
|
| |  | the incurrence of substantial costs to comply with, or as a
    result of violations of, or liabilities under environmental laws;
|
| |  | the failure to protect our intellectual property;                                                                                
|
| |  | the failure to replace lost senior management;                                                                                   
|
| |  | the incurrence of additional debt, contingent liabilities and
    expenses in connection with future acquisitions;               
|
| |  | the failure to effectively integrate newly acquired
    operations; and                                                          
|
| |  | the absence of expected returns from the amount of intangible
    assets we have recorded.                                       



2



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10-K.


10-K, 10-Q 8-K, 1-800-SEC-0330. http://www.polypore.net


3



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|        |         
|------- | --------
|Item 1. | Business

General


















|  |                                                                                                             
|- | ------------------------------------------------------------------------------------------------------------
| | productivity gains through improved and integrated business
    processes,                                  
| 
| | employee empowerment by encouraging quick decision-making at the
    lowest practical management levels, and
| 
| | overhead reduction through continued cost focus and control.                                                

4



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Products, markets and customers




|                  |  |                                               |  |                                                                 |  |                                                                                                                              
|----------------- |  | --------------------------------------------- |  | --------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------
|                 
|Segment           |  | Applications                                  |  | Major brands                                                    |  | End-uses and markets                                                                                                         
|                 
|Energy storage    |  | Lead-acid batteries                           |  | DARAK®
    Daramic®                                             |  | Transportation and industrial batteries                                                                                      
|                  |  | Rechargeable and disposable lithium batteries |  | CELGARD®                                                        |  | Electronics products such as laptop computers, mobile
    telephones, cameras and military equipment                         
|Separations media |  | Hemodialysis                                  |  | CUPROPHAN®
    DIAPES®
    HEMOPHAN®
    SMC®
    PUREMA®       |  | Hemodialysis dialyzers which replicate function of healthy
    kidneys                                                       
|                  |  | Blood oxygenation                             |  | CELGARD®
    HEX
    PET®
    OXYPHAN®
    OXYPLUS®             |  | Heart-lung machine oxygenation unit for open-heart surgical
    procedures                                                   
|                  |  | Plasmapheresis                                |  | FRACTIO
    PES®
    MICRO
    PES®   Capillary
    PLASMAPHAN® |  | Blood cell and plasma separation equipment                                                                                   
|                  |  | Industrial and specialty applications         |  | Accurel®
    PP                                                 |  | Microelectronics manufacturing and chemical filtration                                                                       
|                  |  |                                               |  | Accurel
    Systems®                                            |  | Polymer additives carrier                                                                                                    
|                  |  |                                               |  | Artisyn®                                                        |  | Printing media/graphic arts                                                                                                  
|                  |  |                                               |  | Liqui-Cel®                                                      |  | Water degasification, semiconductor and microelectronics
    manufacturing, beverage processing and pharmaceutical production
|                  |  |                                               |  | MicroPES®                                                       |  | Water/chemical filtration for drinking water treatment and food
    and beverage processing                                  
|                  |  |                                               |  | SuperPhobic®                                                    |  | Solvent/ink de-bubbling for ink jet printers and semiconductor
    manufacturing                                             
|                  |  |                                               |  | Liqui-Flux®                                                     |  | Food, beverage and water filtration                                                                                          
|                  |  |                                               |  | UltraPES®                                                       |  | Prefiltration for reverse osmosis, water filtration                                                                          
|                 



| |               
| | --------------
| | Energy storage



5



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Transportation and industrial applications.




Electronics applications. E-One




| |                  
| | -----------------
| | Separations media



Hemodialysis.






6



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® best-in


Blood oxygenation.


Plasmapheresis.


Industrial and specialty applications. ® ®






|  |                                                                                                                                                                                                                                                                                                                                                                                                                                 
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | MicroPES®
    is a polyethersulfone flat sheet or hollow fiber microfiltration
    membrane with broad chemical and low protein binding
    characteristics, properties which are attractive to end-users
    who desire minimal absorption of their product. This membrane is
    primarily used in tap water filtration and miscellaneous food
    and beverage filtration applications.                                      
| 
| | Accurel®
    PP is a polypropylene membrane which can be used in a wide range
    of pH conditions. This membrane is an economical choice for many
    applications compared to certain higher priced products, and is
    primarily used for chemical filtration in semiconductor
    processing applications.                                                                                                                 
| 
| | UltraPES®
    is a hollow fiber, ultrafiltration polyethersulfone membrane
    used for reverse osmosis systems pretreatment, the filtration of
    drinking water and municipal city wastewater and the separation
    of oil content from industrial process water streams.                                                                                                                                                   
| 
| | Liqui-Cel®
    membrane contactors are modular products incorporating
    hydrophobic hollow fiber membranes and are used in a wide
    variety of industries including semiconductor and
    microelectronics manufacturing, beverages and pharmaceuticals.
    This purification technology is also used for flat panel display
    manufacturing and in power plants.                                                        
| 
| | SuperPhobic®
    membrane contactors are a special type of membrane contactor
    which can treat liquids which otherwise penetrate the membrane
    pores of conventional
    Liqui-Cel®
    membrane contactors. Typical applications involve the
    elimination of microbubbles in liquids which, upon occurrence,
    negatively impact customer production processes, quality and
    yield. Some applications include the

7



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| |                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | degassing of inks, paper coating solutions, photoemulsion and
    alcohol debubbling. This membrane is primarily used for ink
    degassing for ink jet delivery systems and semiconductor
    photoresist solutions.





| |                        
| | -----------------------
| | New product development





End-market overview




Wards
Motor Vehicles Facts and Figures,




8



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back-up




Sales and marketing










Manufacturing and operations




| |        
| | -------
| | General





9



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| |                        
| | -----------------------
| | Manufacturing processes

®


Battery separators. ® ®


® ®


Hemodialysis, blood oxygenation, and plasmapheresis
membranes.


10



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Competition








|  |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We have developed significant proprietary manufacturing know-how
    by producing specialized products over many years that, in
    certain cases, we believe cannot be reproduced in the market
    and, in other cases, would be prohibitively expensive for a
    competitor to replicate.                                                                                                                                               
| 
| | Most of our products require years of development and extensive
    testing and, in the case of our healthcare products, regulatory
    approval prior to the marketing of our customers products.                                                                                                                                                                                                                                         
| 
| | We have continually improved manufacturing efficiency and
    expanded capacity through equipment modifications, process
    improvement and capital expenditures.                                                                                                                                                                                                                                                                          
| 
| | We believe we are one of the top three companies in global
    market share in most of our product lines as a result of the
    superior performance characteristics of our products, our
    well-known brands within the industries we serve and our ability
    to develop and manufacture new generations of value-added
    products at competitive costs.                                                                             
| 
| | Our research and development team works closely with our
    customers, and we often partner with our customers on product
    development and end-use testing. As a result, many of our
    products have been customized to our customers
    manufacturing and end-use specifications. In addition, we are
    often selected as a customers exclusive supplier for our
    microporous membrane products.                             
| 
| | We produce a variety of separation and filtration products
    addressing niche end-markets, some of which provide us with a
    stable and recurring revenue base, while other end-markets
    provide us with strong growth potential.                                                                                                                                                                                                    
| 
| | We are committed to innovation. We have introduced many of the
    major innovations in the market for separators for use in
    batteries, including the first polyethylene separator for
    lead-acid batteries and the first multilayer separator for
    lithium batteries. In addition, we have introduced major
    innovations within the healthcare market including the first
    membrane-based technology used for hemodialysis.
| 
| | We manufacture, market and service our products in 10 facilities
    throughout North America, Europe and Asia. By strategically
    positioning our manufacturing, sales and marketing and technical
    service personnel near our customers, we can respond to their
    needs more effectively and provide a higher level of service.                                                                                                   
| 
| | We believe we have
    state-of-the-art
    manufacturing facilities and capabilities.                                                                                                                                                                                                                                                                                                                                                      

Raw materials




11



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Seasonality




Employees




|            |       |           |     |       |            |  |                  |               |  |  |              |  | 
|----------- | ----- | --------- | --- | ----- | ---------- |  | ---------------- | ------------- |  |  | ------------ |  | 
|            |      
|            |       | Number of |     |       |           
|            |       | unionized |     |       |            |  | Date of contract |              
|Location    |       | employees |     |       | % of Total |  |                  | renegotiation | 
|            |      
|Corydon     |       |           | 85  |       |            |  | 78               |               |  |  | January 2007 | 
|Obernberg   |       |           | 17  |       |            |  | 74               |               |  |  | Annual       | 
|Owensboro   |       |           | 169 |       |            |  | 71               |               |  |  | April 2008   | 
|Potenza     |       |           | 138 |       |            |  | 99               |               |  |  | Annual       | 
|Sélestat    |       |           | 140 |       |            |  | 80               |               |  |  | Annual       | 
|Wuppertal   |       |           | 517 |       |            |  | 90               |               |  |  | Annual       | 
|Norderstedt |       |           | 47  |       |            |  | 58               |               |  |  | Annual       | 
|            |       |           |     |       |            |  |                  |               | 
|            | Total |           |     | 1,113 |            |  |                  |               |  |  |              |  | 
|            |       |           |     |       |            |  |                  |               | 
|           

Environmental matters


on-site off-site


on-site


12



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on-site


Intellectual property rights









|          |             
|--------- | ------------
|Item 1.A. | Risk Factors

10-Q 10-K




| |                             
| | ----------------------------
| | Risks Related to Our Company



| |                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our substantial indebtedness could harm our ability to react
    to changes to our business or market developments and prevent us
    from fulfilling our obligations under our indebtedness.







| |                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------
| | Our variable rate indebtedness subjects us to interest rate
    risk, which could cause our debt service obligations to increase
    significantly.



13



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| |                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------
| | To service our indebtedness, we will require a significant
    amount of cash. Our ability to generate cash depends on many
    factors beyond our control.





| |                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The terms of Polypores senior secured credit facilities
    and the Indentures may restrict our current and future
    operations, particularly our ability to respond to market
    changes or to take certain actions.









| |                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Polypore International is the sole obligor of the
    10.5% senior discount notes and our subsidiaries do not
    guarantee the obligations under, and do not have any obligation
    with respect to, such indebtedness.



14



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| |                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Because a majority of our employees are represented under
    collective bargaining agreements, any employee slowdowns,
    strikes or failure to renew our collective bargaining agreements
    could disrupt our business.







| |                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We generate most of our revenue from manufacturing products
    that are used in a wide variety of industries and the potential
    for product liability exposure for our products could be
    significant.







| |                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------
| | Our operations outside the United States pose risks to our
    business that are not present with our domestic business.





| |                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We could incur substantial costs to comply with environmental
    laws and violations of such laws may increase our costs or
    require us to change certain business practices.



15



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clean-up










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





| |                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Due to the unique products that we produce and the particular
    industry in which we operate, the loss of our senior management
    could disrupt our business.



16



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| |                                                                                                                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We may pursue future acquisitions. If we incur contingent
    liabilities and expenses or additional debt in connection with
    future acquisitions or if we cannot effectively integrate newly
    acquired operations, our business could be disrupted.







| |                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------
| | We have recorded a significant amount of intangible assets,
    which may never generate the returns we expect.







| |                            
| | ---------------------------
| | Warburg Pincus controls us.



17



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| |                              
| | -----------------------------
| | Risks Related to Our Industry



| |                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| | Because the specialized markets in which we sell our products
    are highly competitive, we may have difficulty growing our
    business year after year.





| |                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We must continue to invest significant resources in
    developing innovative products in order to maintain a
    competitive edge in the highly specialized markets in which we
    operate.





| |                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we do not successfully manage the transition in
    hemodialysis from cellulosic to synthetic filtration membranes,
    our revenues and profits could decline.





| |                                                                                                
| | -----------------------------------------------------------------------------------------------
| | The loss of only a few of our large volume customers could
    reduce our revenues and profits.





| |                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Vertical integration by our customers of the production of
    our products into their own manufacturing processes could reduce
    our revenues and our profits.





| |                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------
| | Increases in prices for raw materials or the loss of key
    supplier contracts could reduce our profit margins.



18



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|         |                          
|-------- | -------------------------
|Item 1B. | Unresolved Staff Comments








|        |           
|------- | ----------
|Item 2. | Properties



|                          |  |            |           |  |                  |                                     |                   |               |                     |                             |                     | 
|------------------------- |  | ---------- | --------- |  | ---------------- | ----------------------------------- | ----------------- | ------------- | ------------------- | --------------------------- | ------------------- | 
|                          | 
|                          |  | Floor Area |           |  |                 
|Location(1)               |  | (sq. ft.)  |           |  | Business Segment |                                     |                   | Certification |                    
|                          | 
|Owensboro, Kentucky       |  |            | 213,000   |  |                  |                                     | Energy Storage    |               |                     | ISO 14001, ISO9001, QS 9000
|Corydon, Indiana(2)       |  |            | 161,095   |  |                  |                                     | Energy Storage    |               |                     | ISO 14001, ISO9001, QS 9000
|Selestat, France          |  |            | 110,000   |  |                  |                                     | Energy Storage    |               |                     | ISO 14001, ISO9001, QS 9000
|Norderstedt, Germany      |  |            | 124,000   |  |                  |                                     | Energy Storage    |               |                     | ISO 14001, ISO9001, QS 9000
|Potenza, Italy            |  |            | 143,000   |  |                  |                                     | Energy Storage    |               |                     | ISO 14001, ISO9001, QS 9000
|Prachinburi, Thailand     |  |            | 42,000    |  |                  |                                     | Energy Storage    |               |                     | ISO 14001, ISO9001, QS 9000
|Charlotte, North Carolina |  |            | 141,650   |  |                  | Energy Storage andSeparations Media |                   |               | ISO 14001, ISO 9001 |                            
|Shanghai, China(3)        |  |            | 29,386    |  |                  | Energy Storage andSeparations Media |                   |               |                    |                            
|Wuppertal, Germany        |  |            | 1,592,480 |  |                  |                                     | Separations Media |               |                     |                             | ISO 14001, ISO 9001 | 
|Obernberg, Germany(3)     |  |            | 23,064    |  |                  |                                     | Separations Media |               |                     |                             | ISO 9001            | 
|                         



|    |                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------
|(1) | Excludes leased sales offices in Shanghai, China; Tokyo, Japan;
    and Sao Paulo, Brazil.         
|   
|(2) | Polypore owns the land and building and subleases the
    manufacturing equipment at this facility.
|   
|(3) | Polypore owns the equipment and leases the facility.                                               










|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings



19



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|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders






Part II







|        |                                                                                                                 
|------- | ----------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity Securities



1 2







|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data







20



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|                                                                                       |  |             |       |             |           |   |             |            |  |   |        |   |  |      |       |   |      |   |       |   |  |   |       |  
|-------------------------------------------------------------------------------------- |  | ----------- | ----- | ----------- | --------- | - | ----------- | ---------- |  | - | ------ | - |  | ---- | ----- | - | ---- | - | ----- | - |  | - | ----- | -
|                                                                                       | 
|                                                                                       |  | Predecessor |       |             | Successor |  
|                                                                                       |  |             |       |             |           |  
|                                                                                       |  |             |       | Period from |           |   | Period from |            |  |  
|                                                                                       |  |             |       | January 4,  |           |   | May 2,      |            |  |  
|                                                                                       |  | Fiscal Year |       |             | 2004 to   |   |             | 2004 to    |  |   | Fiscal |  
|                                                                                       |  |             |       |             | May 1,    |   |             | January 1, |  |   | Year   |  
|(in millions)                                                                          |  | 2001        |       |             | 2002      |   |             | 2003       |  |   | 2004   |   |  | 2005 |       |   | 2005 |  
|                                                                                       | 
|Statement of operations data:                                                          |  |             |       |             |           |   |             |            |  |   |        |   |  |      |       |   |      |   |       |   |  |   |       |  
|Net sales                                                                              |  | $           | 245.7 |             |           | $ | 345.4       |            |  | $ | 441.1  |   |  | $    | 179.3 |   |      | $ | 311.1 |   |  | $ | 432.5 |  
|                                                                                       |  |             |       |             |           |   |             |            |  |   |        |   |  |      |       |   |      |  
|Gross profit                                                                           |  |             | 91.3  |             |           |   | 102.0       |            |  |   | 155.4  |   |  |      | 69.1  |   |      |   | 85.2  |   |  |   | 150.2 |  
|Selling, general and administrative expenses                                           |  |             | 33.5  |             |           |   | 48.9        |            |  |   | 69.7   |   |  |      | 24.9  |   |      |   | 50.2  |   |  |   | 75.5  |  
|Business restructuring                                                                 |  |             |      |             |           |   |            |            |  |   |       |   |  |      |      |   |      |   | 13.9  |   |  |   | 8.7   |  
|In process research and development                                                    |  |             |      |             |           |   |            |            |  |   |       |   |  |      |      |   |      |   | 5.3   |   |  |   |      |  
|Other                                                                                  |  |             |      |             |           |   |            |            |  |   |       |   |  |      | (1.5  | ) |      |   |      |   |  |   |      |  
|                                                                                       |  |             |       |             |           |   |             |            |  |   |        |   |  |      |       |   |      |  
|Operating income                                                                       |  |             | 57.8  |             |           |   | 53.1        |            |  |   | 85.7   |   |  |      | 45.7  |   |      |   | 15.8  |   |  |   | 66.0  |  
|Interest expense, net                                                                  |  |             | 14.1  |             |           |   | 20.9        |            |  |   | 21.5   |   |  |      | 6.0   |   |      |   | 42.1  |   |  |   | 82.0  |  
|Foreign currency and other                                                             |  |             | 1.0   |             |           |   | 1.5         |            |  |   | 2.4    |   |  |      | 0.5   |   |      |   | 1.7   |   |  |   | (4.4  | )
|Unrealized (gain) loss on derivative instrument                                        |  |             | 3.1   |             |           |   | 2.5         |            |  |   | (2.3   | ) |  |      | (1.3  | ) |      |   |      |   |  |   |      |  
|                                                                                       |  |             |       |             |           |   |             |            |  |   |        |   |  |      |       |   |      |  
|Income before income taxes and cumulative effect of change in
    accounting principle |  |             | 39.6  |             |           |   | 28.2        |            |  |   | 64.1   |   |  |      | 40.5  |   |      |   | (28.0 | ) |  |   | (11.6 | )
|Income taxes                                                                           |  |             | 16.0  |             |           |   | 11.4        |            |  |   | 18.8   |   |  |      | 13.7  |   |      |   | (8.7  | ) |  |   | (8.7  | )
|Cumulative effect of change in accounting principle, net                               |  |             | 1.2   |             |           |   |            |            |  |   |       |   |  |      |      |   |      |   |      |   |  |   |      |  
|                                                                                       |  |             |       |             |           |   |             |            |  |   |        |   |  |      |       |   |      |  
|Net income (loss)                                                                      |  | $           | 22.4  |             |           | $ | 16.8        |            |  | $ | 45.3   |   |  | $    | 26.8  |   |      | $ | (19.3 | ) |  | $ | (2.9  | )
|                                                                                       |  |             |       |             |           |   |             |            |  |   |        |   |  |      |       |   |      |  
|                                                                                      

|                                                                        |  |      |       |  |      |   |       |      |  |   |       |  |  |      |         |  |  |   |         | 
|----------------------------------------------------------------------- |  | ---- | ----- |  | ---- | - | ----- | ---- |  | - | ----- |  |  | ---- | ------- |  |  | - | ------- | 
|                                                                        | 
|                                                                        |  | 2001 |       |  | 2002 |   |       | 2003 |  |   | 2004  |  |  | 2005 |        
|                                                                        | 
|Balance sheet data (at end of period):                                  |  |      |       |  |      |   |       |      |  |   |       |  |  |      |         |  |  |   |         | 
|Total assets                                                            |  | $    | 360.4 |  |      | $ | 633.1 |      |  | $ | 730.6 |  |  | $    | 1,490.8 |  |  | $ | 1,364.6 | 
|Total debt and capital lease obligations, including current
    portion |  |      | 187.7 |  |      |   | 311.0 |      |  |   | 284.1 |  |  |      | 1,065.3 |  |  |   | 1,002.8 | 
|Redeemable preferred stock and cumulative dividends payable             |  |      | 46.8  |  |      |   | 15.0  |      |  |   | 16.2  |  |  |      |        |  |  |   |        | 
|Shareholders equity                                                    |  |      | 60.6  |  |      |   | 97.6  |      |  |   | 189.8 |  |  |      | 105.9   |  |  |   | 93.3    | 
|                                                                       

21



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|                                      |                      |             |      |             |           |   |             |            |   |   |        |       |   |      |      |      |      |   |      |        |   |   |      |       |  
|------------------------------------- | -------------------- | ----------- | ---- | ----------- | --------- | - | ----------- | ---------- | - | - | ------ | ----- | - | ---- | ---- | ---- | ---- | - | ---- | ------ | - | - | ---- | ----- | -
|                                      |                     
|                                      |                      | Predecessor |      |             | Successor |  
|                                      |                      |             |      |             |           |  
|                                      |                      |             |      | Period from |           |   | Period from |            |   |  
|                                      |                      |             |      | January 4,  |           |   | May 2,      |            |   |  
|                                      |                      | Fiscal Year |      |             | 2004 to   |   |             | 2004 to    |   |   | Fiscal |      
|                                      |                      |             |      |             | May 1,    |   |             | January 1, |   |   | Year   |      
|(in millions)                         |                      | 2001        |      |             | 2002      |   |             | 2003       |   |   | 2004   |       |   | 2005 |      |      | 2005 |  
|                                      |                     
|Other financial data:                 |                      |             |      |             |           |   |             |            |   |   |        |       |   |      |      |      |      |   |      |        |   |   |      |      
|Depreciation and amortization         |                      | $           | 16.7 |             |           | $ | 30.8        |            |   | $ | 38.7   |       |   | $    | 15.2 |      |      | $ | 33.8 |        |   | $ | 54.1 |      
|Capital expenditures                  |                      |             | 26.3 |             |           |   | 28.8        |            |   |   | 33.8   |       |   |      | 5.5  |      |      |   | 9.9  |        |   |   | 13.0 |      
|Net cash provided by (used in):       |                      |             |      |             |           |   |             |            |   |   |        |       |   |      |      |      |      |   |      |        |   |   |      |      
|                                      | Operating activities |             |      | 29.4        |           |   |             | 83.5       |   |   |        | 56.5  |   |      |      | 28.9 |      |   |      | 21.0   |   |   |      | 64.2  |  
|                                      | Investing activities |             |      | (36.5       | )         |   |             | (141.4     | ) |   |        | (33.8 | ) |      |      | (3.6 | )    |   |      | (877.2 | ) |   |      | (13.0 | )
|                                      | Financing activities |             |      | 3.9         |           |   |             | 83.0       |   |   |        | (28.3 | ) |      |      | (7.4 | )    |   |      | 849.8  |   |   |      | (52.8 | )
|Ratio of earnings to fixed charges(1) |                      |             | 3.6  | x           |           |   | 2.3         | x          |   |   | 3.8    | x     |   |      | 7.2  | x    |      |   | 0.4  | x      |   |   | 0.9  | x    
|                                     



|    |                                                                                                                                                                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | For purposes of computing the ratio of earnings to fixed
    charges, earnings consist of earnings before income taxes plus
    fixed charges. Fixed charges consist of interest expense,
    amortization of debt issuance costs and the portion of rental
    expense that management believes is representative of the
    interest component of rental expense.






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

The following discussions of our financial condition and
results of operations should be read together with
Item 6. Selected Financial Data and our audited
consolidated financial statements and the related notes included
in Item 8. Financial Statements and Supplementary
Data.


Overview




Wards Motor Vehicles Facts and
Figures




22



---



##### Table of Contents









Critical accounting policies


10-K.




| |                                
| | -------------------------------
| | Allowance for doubtful accounts





| |                                       
| | --------------------------------------
| | Impairment of Intangibles and Goodwill

Goodwill and Other Intangible Assets




| |                                          
| | -----------------------------------------
| | Pension and other postretirement benefits



23



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| |                      
| | ---------------------
| | Environmental Matters







Results of operations






|                                             |  |             |       |   |         |   |       |      |  |   |       |  
|-------------------------------------------- |  | ----------- | ----- | - | ------- | - | ----- | ---- |  | - | ----- | -
|                                             | 
|                                             |  | Fiscal Year |      
|                                             |  |             |      
|(in millions)                                |  | 2003        |       |   | 2004(1) |   |       | 2005 | 
|                                             | 
|Net sales                                    |  | $           | 441.1 |   |         | $ | 490.4 |      |  | $ | 432.5 |  
|                                             |  |            
|Gross profit                                 |  |             | 155.4 |   |         |   | 176.8 |      |  |   | 150.2 |  
|Selling, general and administrative expenses |  |             | 69.7  |   |         |   | 80.2  |      |  |   | 75.5  |  
|Business restructuring                       |  |             |      |   |         |   | 13.9  |      |  |   | 8.7   |  
|Other                                        |  |             |      |   |         |   | (1.5  | )    |  |   |      |  
|                                             |  |            
|Operating income                             |  |             | 85.7  |   |         |   | 84.2  |      |  |   | 66.0  |  
|Interest expense, net                        |  |             | 21.5  |   |         |   | 60.9  |      |  |   | 82.0  |  
|Foreign currency and other                   |  |             | 2.4   |   |         |   | 2.1   |      |  |   | (4.4  | )
|Unrealized gain on derivative instrument     |  |             | (2.3  | ) |         |   |      |      |  |   |      |  
|                                             |  |            
|Income before income taxes                   |  |             | 64.1  |   |         |   | 21.2  |      |  |   | (11.6 | )
|Income taxes                                 |  |             | 18.8  |   |         |   | 8.0   |      |  |   | (8.7  | )
|                                             |  |            
|Net income                                   |  | $           | 45.3  |   |         | $ | 13.2  |      |  | $ | (2.9  | )
|                                             |  |            
|                                            

24



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|                                             |  |             |       |   |         |  |       |      |  |  |       |   
|-------------------------------------------- |  | ----------- | ----- | - | ------- |  | ----- | ---- |  |  | ----- | --
|                                             | 
|                                             |  | Fiscal Year |      
|                                             |  |             |      
|(percent)                                    |  | 2003        |       |   | 2004(1) |  |       | 2005 | 
|                                             | 
|Net sales                                    |  |             | 100.0 | % |         |  | 100.0 | %    |  |  | 100.0 | % 
|                                             |  |            
|Gross profit                                 |  |             | 35.2  |   |         |  | 36.1  |      |  |  | 34.7  |   
|Selling, general and administrative expenses |  |             | 15.8  |   |         |  | 16.4  |      |  |  | 17.5  |   
|Business restructuring                       |  |             |      |   |         |  | 2.8   |      |  |  | 2.0   |   
|Other                                        |  |             |      |   |         |  | (0.3  | )    |  |  |      |   
|                                             |  |            
|Operating income                             |  |             | 19.4  |   |         |  | 17.2  |      |  |  | 15.3  |   
|Interest expense, net                        |  |             | 4.9   |   |         |  | 12.4  |      |  |  | 19.0  |   
|Foreign currency and other                   |  |             | 0.5   |   |         |  | 0.4   |      |  |  | (1.0  | ) 
|Unrealized gain on derivative instrument     |  |             | (0.5  | ) |         |  |      |      |  |  |      |   
|                                             |  |            
|Income before income taxes                   |  |             | 14.5  |   |         |  | 4.3   |      |  |  | (2.7  | ) 
|Income taxes                                 |  |             | 4.3   |   |         |  | 1.6   |      |  |  | (2.0  | ) 
|                                             |  |            
|Net income                                   |  |             | 10.3  | % |         |  | 2.7   | %    |  |  | (0.7  | )%
|                                             |  |            
|                                            



|    |                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Unaudited pro forma financial information as if the Transactions
    had occurred on January 4, 2004, the first day of the year
    ending January 1, 2005.



| |                                                
| | -----------------------------------------------
| | Fiscal 2005 compared with pro forma fiscal 2004

Net sales.




25



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##### Table of Contents



Gross Profit.




Selling,general and administrative expenses.


Interest expense, net.


Income taxes, net.




| |                                                
| | -----------------------------------------------
| | Pro forma fiscal 2004 compared with fiscal 2003

Net sales.


26



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##### Table of Contents





Gross Profit.




Selling, general and administrative expenses. Interest expense,
net. 3 4


Income taxes, net.




| |                       
| | ----------------------
| | Business restructuring



|                         |                                 |            |      |      |               |   |         |          |   |            |          |      |   |             |       |      |              |   |      |      |   |   |     |     | 
|------------------------ | ------------------------------- | ---------- | ---- | ---- | ------------- | - | ------- | -------- | - | ---------- | -------- | ---- | - | ----------- | ----- | ---- | ------------ | - | ---- | ---- | - | - | --- | --- | 
|                         |                                
|                         |                                 | Balance at |      |      |               |   | Foreign |          |   | Balance at |         
|                         |                                 | January 1, |      |      | Restructuring |   |         | Non-cash |   |            | Cash     |      |   | Currency    |       |      | December 31, |  
|(in millions)            |                                 | 2005       |      |      | Charges       |   |         | Charges  |   |            | Payments |      |   | Translation |       |      | 2005         |  
|                         |                                
|2005 Restructuring Plan: |                                 |            |      |      |               |   |         |          |   |            |          |      |   |             |       |      |              |   |      |      |   |   |     |    
|                         | Severance and benefit costs     |            | $    |     |               |   | $       | 4.9      |   |            | $        |     |   |             | $     | (3.2 | )            |   | $    | (0.2 | ) |   | $   | 1.5 | 
|                         | Asset disposals and impairments |            |      |     |               |   |         | 1.3      |   |            |          | (1.3 | ) |             |       |     |              |   |      |     |   |   |     |    | 
|                         | Other                           |            |      |     |               |   |         | 0.7      |   |            |          |     |   |             |       | (0.7 | )            |   |      |     |   |   |     |    | 
|                         |                                 |           
|                         |                                 |            |     |      |               |   | 6.9     |          |   |            | (1.3     | )    |   |             | (3.9  | )    |              |   | (0.2 | )    |   |   | 1.5 |    
|2004 Restructuring Plan: |                                 |            |      |      |               |   |         |          |   |            |          |      |   |             |       |      |              |   |      |      |   |   |     |    
|                         | Severance and benefit costs     |            |      | 14.9 |               |   |         | (0.1     | ) |            |          |     |   |             |       | (9.7 | )            |   |      | (1.0 | ) |   |     | 4.1 | 
|                         | Raw materials                   |            |      | 1.3  |               |   |         | (0.2     | ) |            |          |     |   |             |       | (0.9 | )            |   |      | (0.2 | ) |   |     |    | 
|                         | Other                           |            |      |     |               |   |         | 2.1      |   |            |          |     |   |             |       | (1.8 | )            |   |      |     |   |   |     | 0.3 | 
|                         |                                 |           
|                         |                                 |            | 16.2 |      |               |   | 1.8     |          |   |            |         |      |   |             | (12.4 | )    |              |   | (1.2 | )    |   |   | 4.4 |    
|                         |                                 |           
|Total                    |                                 | $          | 16.2 |      |               | $ | 8.7     |          |   | $          | (1.3     | )    |   | $           | (16.3 | )    |              | $ | (1.4 | )    |   | $ | 5.9 |    
|                         |                                 |           
|                        

27



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##### Table of Contents





|                         |                             |               |      |      |            |   |     |          |   |   |             |     |   |            |     |     |  |   |      |      | 
|------------------------ | --------------------------- | ------------- | ---- | ---- | ---------- | - | --- | -------- | - | - | ----------- | --- | - | ---------- | --- | --- |  | - | ---- | ---- | 
|                         |                            
|                         |                             | Foreign       |      |      | Balance at |  
|                         |                             | Restructuring |      |      | Non-cash   |   |     | Cash     |   |   | Currency    |     |   | January 1, |    
|(in millions)            |                             | Charges       |      |      | Charges    |   |     | Payments |   |   | Translation |     |   | 2005       |    
|                         |                            
|2004 Restructuring Plan: |                             |               |      |      |            |   |     |          |   |   |             |     |   |            |     |     |  |   |      |     
|                         | Severance and benefit costs |               | $    | 13.9 |            |   | $   |         |   |   | $           | (.4 | ) |            | $   | 1.4 |  |   | $    | 14.9 | 
|                         | Raw materials               |               |      | 1.8  |            |   |     | (.7      | ) |   |             |    |   |            |     | 0.2 |  |   |      | 1.3  | 
|                         |                             |              
|Total                    |                             | $             | 15.7 |      |            | $ | (.7 | )        |   | $ | (.4         | )   |   | $          | 1.6 |     |  | $ | 16.2 |     
|                         |                             |              
|                        

2005 Restructuring Plan.




Accounting for the
Impairment or Disposal of Long-Lived Assets


Accounting for
Costs Associated with Exit or Disposal Activities


2004 Restructuring Plan.




28



---



##### Table of Contents





| |                   
| | ------------------
| | Foreign Operations





| |            
| | -----------
| | Seasonality



Liquidity and Capital Resources






Operating activities.




29



---



##### Table of Contents





Investing activities.


Financing activities.


3 4 3 4


3 4















30



---



##### Table of Contents





|                |                                                           |             |      |       |      |   |      |       |  
|--------------- | --------------------------------------------------------- | ----------- | ---- | ----- | ---- | - | ---- | ----- | -
|                |                                                          
|                |                                                           | Fiscal Year |     
|                |                                                           |             |     
|                |                                                           | 2004(1)     |      |       | 2005 |  
|                |                                                          
|Net income      |                                                           | $           | 11.9 |       |      | $ | 14.0 |      
|Add:            |                                                           |             |      |       |      |   |      |      
|                | Depreciation and amortization                             |             |      | 49.0  |      |   |      | 54.1  |  
|                | Interest expense, net                                     |             |      | 43.9  |      |   |      | 59.9  |  
|                | Provision for income taxes                                |             |      | 7.0   |      |   |      | (2.1  | )
|                |                                                           |             |      |       |      |  
|                | EBITDA                                                    |             |      | 111.8 |      |   |      | 125.9 |  
|Add/(Subtract): |                                                           |             |      |       |      |   |      |      
|                | Foreign currency (gain) loss                              |             |      | 3.3   |      |   |      | (3.7  | )
|                | Unrealized hedging gain(2)                                |             |      | (1.3  | )    |   |      |      |  
|                | Salary and bonus paid to former officers(3)               |             |      | 0.4   |      |   |      |      |  
|                | Inventory purchase accounting adjustments(4)              |             |      | 19.0  |      |   |      |      |  
|                | In process research and development(5)                    |             |      | 5.3   |      |   |      |      |  
|                | Transaction costs(6)                                      |             |      | 1.6   |      |   |      |      |  
|                | Operating lease payments on leases to be refinanced(7)    |             |      | 3.9   |      |   |      | 2.8   |  
|                | Business restructuring(8)                                 |             |      | 15.7  |      |   |      | 8.7   |  
|                | (Gain) loss on disposal of property, plant, and equipment |             |      | (0.9  | )    |   |      | .6    |  
|                |                                                           |             |      |       |      |  
|                | Adjusted EBITDA                                           |             | $    | 158.8 |      |   | $    | 134.3 |  
|                |                                                           |             |      |       |      |  
|               



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



|                                                                  |  |              |       |  
|----------------------------------------------------------------- |  | ------------ | ----- | -
|                                                                  | 
|                                                                  |  | Twelve       |      
|                                                                  |  | Months       |      
|                                                                  |  | Ended        |      
|                                                                  |  | December 31, |      
|(in millions)                                                     |  | 2005         |      
|                                                                  | 
|Adjusted EBITDA                                                   |  | $            | 134.3 |  
|Consolidated interest expense, as defined in the Credit Agreement |  | $            | 57.2  |  
|Actual interest coverage ratio                                    |  |              | 2.35  | x
|Permitted minimum interest coverage ratio                         |  |              | 1.90  | x
|                                                                 

31



---



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|                                                 |  |       |              | 
|------------------------------------------------ |  | ----- | ------------ | 
|                                                 | 
|Date or Period                                   |  | Ratio |             
|                                                 | 
|December 31, 2005                                |  |       | 1.90 to 1.00 | 
|April 1, 2006 through March 31, 2007             |  |       | 1.70 to 1.00 | 
|June 30, 2007                                    |  |       | 1.75 to 1.00 | 
|September 29, 2007 through June 28, 2008         |  |       | 1.90 to 1.00 | 
|September 27, 2008 through January 3, 2009       |  |       | 2.00 to 1.00 | 
|January 4, 2009 through January 2, 2010          |  |       | 2.75 to 1.00 | 
|April 3, 2010 and each fiscal quarter thereafter |  |       | 3.00 to 1.00 | 
|                                                



|                                                 |  |              |       |  
|------------------------------------------------ |  | ------------ | ----- | -
|                                                 | 
|                                                 |  | Twelve       |      
|                                                 |  | Months       |      
|                                                 |  | Ended        |      
|                                                 |  | December 31, |      
|(in millions)                                    |  | 2005         |      
|                                                 | 
|Indebtedness, as defined in the Credit Agreement |  | $            | 776.3 |  
|Adjusted EBITDA                                  |  | $            | 134.3 |  
|Actual leverage ratio                            |  |              | 5.78  | x
|Permitted maximum leverage ratio                 |  |              | 6.50  | x
|                                                



|                                                   |  |       |              | 
|-------------------------------------------------- |  | ----- | ------------ | 
|                                                   | 
|Date or Period                                     |  | Ratio |             
|                                                   | 
|December 31, 2005                                  |  |       | 6.50 to 1.00 | 
|April 1, 2006 through March 31, 2007               |  |       | 6.90 to 1.00 | 
|June 30, 2007                                      |  |       | 6.75 to 1.00 | 
|September 29, 2007                                 |  |       | 6.50 to 1.00 | 
|December 29, 2007                                  |  |       | 6.25 to 1.00 | 
|March 29, 2008                                     |  |       | 6.00 to 1.00 | 
|June 28, 2008                                      |  |       | 5.75 to 1.00 | 
|September 27, 2008 through January 3, 2009         |  |       | 5.50 to 1.00 | 
|January 4, 2009 through October 3, 2009            |  |       | 4.25 to 1.00 | 
|January 2, 2010 and each fiscal quarter thereafter |  |       | 4.00 to 1.00 | 
|                                                  







3 4


32



---



##### Table of Contents



3 4 3 4


1 2 1 2 1 2 1 2 1 2


10-K.




Contractual Obligations




|                                                |  |                       |         |  |      |   |      |           |  |   |           |  |  |            |     |  |  |   |         | 
|----------------------------------------------- |  | --------------------- | ------- |  | ---- | - | ---- | --------- |  | - | --------- |  |  | ---------- | --- |  |  | - | ------- | 
|                                                | 
|                                                |  | Payment due by Period |        
|                                                |  |                       |        
|(in millions)                                   |  | Total                 |         |  | 2006 |   |      | 2007-2008 |  |   | 2009-2010 |  |  | Thereafter |    
|                                                | 
|Long-term debt, including current portion(1)(2) |  | $                     | 367.0   |  |      | $ | 1.2  |           |  | $ | 3.9       |  |  | $          | 3.9 |  |  | $ | 358.0   | 
|83/4% Notes(3)(4)                               |  |                       | 402.0   |  |      |   |     |           |  |   |          |  |  |            |    |  |  |   | 402.0   | 
|101/2% senior discount notes(5)                 |  |                       | 300.0   |  |      |   |     |           |  |   |          |  |  |            |    |  |  |   | 300.0   | 
|Capital lease obligations(6)                    |  |                       | 8.2     |  |      |   | 1.6  |           |  |   | 3.2       |  |  |            | 3.2 |  |  |   | .2      | 
|Operating lease obligations(7)                  |  |                       | 4.5     |  |      |   | 3.6  |           |  |   | .9        |  |  |            |    |  |  |   |        | 
|Business restructuring                          |  |                       | 5.9     |  |      |   | 5.2  |           |  |   | .7        |  |  |            |    |  |  |   |        | 
|                                                |  |                      
|                                                |  | $                     | 1,087.6 |  |      | $ | 11.6 |           |  | $ | 8.7       |  |  | $          | 7.1 |  |  | $ | 1,060.2 | 
|                                                |  |                      
|                                               



|    |                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Included in long-term debt are amounts owed under
    Polypores term loan facilities and other debt. The term
    loan facilities include euro denominated debt held in the
    U.S. The table assumes that the

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | euro/dollar exchange rate is the rate at December 31, 2005
    for all periods presented and that the debt is held to maturity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(2) | The table does not include accrued interest under the long-term
    debt. Interest rates under the term loan facilities are, at
    Polypores option, equal to either an alternate base rate
    or an adjusted LIBO rate, plus an applicable margin percentage.
    The applicable margin percentage under the amended credit
    agreement is equal to 2.00% for alternate base rate loans or
    3.00% for adjusted LIBO rate loans.                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(3) | The
    83/4% Notes
    are due 2012. This senior subordinated debt includes
     150.0 million euro denominated debt held in
    the U.S. The table assumes that the euro/dollar exchange
    rate is the rate at December 31, 2005 for all periods
    presented and that the debt is held to maturity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(4) | The table does not include accrued interest under the
    83/4% Notes.
    Interest is accrued from the issue date at
    83/4% and paid semi-annually.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|(5) | The
    101/2% senior discount notes are included in the table at
    the undiscounted, principal at maturity balance of
    $300.0 million. Beginning in October 1, 2008, cash
    interest on the notes will accrue at a rate of 10.5% per
    annum and will be payable semi-annually beginning in April 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(6) | We lease manufacturing equipment under a capital lease
    agreement. The lease agreement expires in February 2011 and
    contains an early buyout option in October 2009. The capital
    lease payments include interest under the capital lease
    agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(7) | We lease certain equipment and facilities under operating
    leases. Some lease agreements provide us with the option to
    renew the lease agreement. Our future operating lease
    obligations would change if we exercised these renewal options
    and if we entered into additional operating lease agreements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(8) | As discussed in the notes to consolidated financial statements
    included in Item 8. Financial Statements and
    Supplementary Data, we have long-term liabilities for
    pension, other postretirement and post employment benefits.
    Company contributions for these benefit plans are not included
    in the table above since the timing and amount of payments are
    dependent upon many factors, including when an employee retires
    or leaves the Company, certain benefit elections by employees,
    return on plan assets, minimum funding requirements and foreign
    currency exchange rates. We estimate that contributions to the
    pension and post retirement plans in 2006 will be
    $0.8 million, as compared to 2005 actual contributions of
    $1.1 million.                                                                
|   
|(9) | As discussed in the notes to the consolidated financial
    statements included in Item 8. Financial Statements
    and Supplementary Data, we have environmental obligations
    and related indemnification receivables. Payments related to
    these obligations and the related amounts to be indemnified
    under indemnification agreements are not included in the table
    above since the timing of payments and indemnifications is not
    known. We estimate that we will make payments, net of
    indemnification amounts, of $2.3 million in 2006. Payments
    against environmental obligations in 2005 were
    $1.1 million, net of indemnification receipts of
    $0.3 million. We expect payments for environmental
    obligations and amounts received under indemnification
    agreements will occur over the next seven to ten years.

Off Balance Sheet Arrangements




New Accounting Standards


Accounting Changes and Error Corrections


34



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Accounting for Early Retirement or
Postemployment Programs with Specific Features (Such As Terms
Specified in Altersteilzeit Early Retirement Arrangements).


Exchanges of Nonmonetary Assets Accounting for Nonmonetary Transactions


Share-Based Payment Accounting for Stock Issued to Employees.


Share-Based Payment,


Inventory Costs Inventory Pricing,


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|         |                                                           
|-------- | ----------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market Risk





| |                   
| | ------------------
| | Interest rate risk











| |              
| | -------------
| | Currency risk



36



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|                    |  |             |        |  |      |  |        |      |  |  |        | 
|------------------- |  | ----------- | ------ |  | ---- |  | ------ | ---- |  |  | ------ | 
|                    | 
|                    |  | Fiscal Year |       
|                    |  |             |       
|                    |  | 2003        |        |  | 2004 |  |        | 2005 | 
|                    | 
|Period end rate     |  |             | 1.2630 |  |      |  | 1.3621 |      |  |  | 1.1797 | 
|Period average rate |  |             | 1.1179 |  |      |  | 1.2411 |      |  |  | 1.2567 | 
|                   








|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data

10-K.


37



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Report of Independent Registered Public Accounting Firm
















38



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##### Table of Contents



Polypore International, Inc.


Consolidated balance sheets


|                                                                                                                                                                                         |                                                                                                                                                              |                   |           |         |                 |   |           |         |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------- | --------- | ------- | --------------- | - | --------- | ------- | -
|                                                                                                                                                                                         |                                                                                                                                                             
|(in thousands, except share data)                                                                                                                                                        |                                                                                                                                                              | December 31, 2005 |           |         | January 1, 2005 |  
|                                                                                                                                                                                         |                                                                                                                                                             
|Assets                                                                                                                                                                                   |                                                                                                                                                              |                   |           |         |                 |   |           |        
|Current assets:                                                                                                                                                                          |                                                                                                                                                              |                   |           |         |                 |   |           |        
|                                                                                                                                                                                         | Cash and equivalents                                                                                                                                         |                   | $         | 28,060  |                 |   | $         | 33,149  |  
|                                                                                                                                                                                         | Accounts receivable, net                                                                                                                                     |                   |           | 88,347  |                 |   |           | 106,296 |  
|                                                                                                                                                                                         | Inventories                                                                                                                                                  |                   |           | 60,539  |                 |   |           | 61,789  |  
|                                                                                                                                                                                         | Refundable income taxes                                                                                                                                      |                   |           |        |                 |   |           | 8,850   |  
|                                                                                                                                                                                         | Deferred income taxes                                                                                                                                        |                   |           | 410     |                 |   |           | 7,954   |  
|                                                                                                                                                                                         | Prepaid and other                                                                                                                                            |                   |           | 8,625   |                 |   |           | 5,288   |  
|                                                                                                                                                                                         |                                                                                                                                                              |                  
|Total current assets                                                                                                                                                                     |                                                                                                                                                              |                   | 185,981   |         |                 |   | 223,326   |        
|Property, plant and equipment, net                                                                                                                                                       |                                                                                                                                                              |                   | 370,871   |         |                 |   | 435,349   |        
|Goodwill                                                                                                                                                                                 |                                                                                                                                                              |                   | 567,587   |         |                 |   | 565,914   |        
|Intangibles and loan acquisition costs, net                                                                                                                                              |                                                                                                                                                              |                   | 222,666   |         |                 |   | 244,629   |        
|Environmental indemnification receivable                                                                                                                                                 |                                                                                                                                                              |                   | 16,366    |         |                 |   | 20,125    |        
|Other                                                                                                                                                                                    |                                                                                                                                                              |                   | 1,105     |         |                 |   | 1,427     |        
|                                                                                                                                                                                         |                                                                                                                                                              |                  
|Total assets                                                                                                                                                                             |                                                                                                                                                              | $                 | 1,364,576 |         |                 | $ | 1,490,770 |        
|                                                                                                                                                                                         |                                                                                                                                                              |                  
|                                                                                                                                                                                        
|Liabilities and shareholders equity                                                                                                                                                     |                                                                                                                                                              |                   |           |         |                 |   |           |        
|Current liabilities:                                                                                                                                                                     |                                                                                                                                                              |                   |           |         |                 |   |           |        
|                                                                                                                                                                                         | Revolving credit obligations                                                                                                                                 |                   | $         |        |                 |   | $         |        |  
|                                                                                                                                                                                         | Accounts payable                                                                                                                                             |                   |           | 23,209  |                 |   |           | 20,581  |  
|                                                                                                                                                                                         | Accrued liabilities                                                                                                                                          |                   |           | 32,804  |                 |   |           | 51,229  |  
|                                                                                                                                                                                         | Income taxes payable                                                                                                                                         |                   |           | 4,284   |                 |   |           |        |  
|                                                                                                                                                                                         | Current portion of debt  optional prepayment                                                                                                                |                   |           |        |                 |   |           | 25,000  |  
|                                                                                                                                                                                         | Current portion of debt                                                                                                                                      |                   |           | 1,224   |                 |   |           | 2,260   |  
|                                                                                                                                                                                         | Current portion of capital lease obligation                                                                                                                  |                   |           | 1,326   |                 |   |           | 1,272   |  
|                                                                                                                                                                                         |                                                                                                                                                              |                  
|Total current liabilities                                                                                                                                                                |                                                                                                                                                              |                   | 62,847    |         |                 |   | 100,342   |        
|Debt, less current portion                                                                                                                                                               |                                                                                                                                                              |                   | 994,270   |         |                 |   | 1,029,391 |        
|Capital lease obligations, less current portion                                                                                                                                          |                                                                                                                                                              |                   | 6,018     |         |                 |   | 7,344     |        
|Pension and postretirement benefits                                                                                                                                                      |                                                                                                                                                              |                   | 51,386    |         |                 |   | 48,652    |        
|Post employment benefits                                                                                                                                                                 |                                                                                                                                                              |                   | 7,096     |         |                 |   | 10,119    |        
|Environmental reserve, less current portion                                                                                                                                              |                                                                                                                                                              |                   | 22,264    |         |                 |   | 24,394    |        
|Deferred income taxes                                                                                                                                                                    |                                                                                                                                                              |                   | 125,501   |         |                 |   | 161,594   |        
|Other                                                                                                                                                                                    |                                                                                                                                                              |                   | 1,862     |         |                 |   | 3,033     |        
|Commitments and contingencies                                                                                                                                                            |                                                                                                                                                              |                   |          |         |                 |   |          |        
|Series A nonconvertible preferred stock (Successor),
    $.01 par value ($100,000 liquidation preference per
    share)  authorized 15,000 shares, no shares
    issued and outstanding |                                                                                                                                                              |                   |          |         |                 |   |          |        
|Shareholders equity:                                                                                                                                                                    |                                                                                                                                                              |                   |           |         |                 |   |           |        
|                                                                                                                                                                                         | Common stock, $.01 par value (Successor) 
    350,000 shares authorized, 171,421 issued and outstanding
    at January 1, 2005 Common Stock, $.01 par value |                   |           | 2       |                 |   |           | 2       |  
|                                                                                                                                                                                         | Paid-in capital                                                                                                                                              |                   |           | 124,924 |                 |   |           | 124,468 |  
|                                                                                                                                                                                         | Retained earnings (deficit)                                                                                                                                  |                   |           | (22,207 | )               |   |           | (19,265 | )
|                                                                                                                                                                                         | Accumulated other comprehensive income                                                                                                                       |                   |           | (9,387  | )               |   |           | 696     |  
|                                                                                                                                                                                         |                                                                                                                                                              |                  
|                                                                                                                                                                                         |                                                                                                                                                              |                   | 93,332    |         |                 |   | 105,901   |        
|                                                                                                                                                                                         |                                                                                                                                                              |                  
|Total liabilities and shareholders equity                                                                                                                                               |                                                                                                                                                              | $                 | 1,364,576 |         |                 | $ | 1,490,770 |        
|                                                                                                                                                                                         |                                                                                                                                                              |                  
|                                                                                                                                                                                        

See accompanying notes.


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Polypore International, Inc.


Consolidated statements of operations


|                                                       |                                                 |                   |         |             |                 |   |                 |             |  |   |                 |        |   |   |         |        |  
|------------------------------------------------------ | ----------------------------------------------- | ----------------- | ------- | ----------- | --------------- | - | --------------- | ----------- |  | - | --------------- | ------ | - | - | ------- | ------ | -
|                                                       |                                                
|                                                       |                                                 | Successor         |         |             | Predecessor     |  
|                                                       |                                                 |                   |         |             |                 |  
|                                                       |                                                 |                   |         | May 2, 2004 |                 |   | January 4, 2004 |             |  |  
|                                                       |                                                 | Year Ended        |         |             | through         |   |                 | through     |  |   | Year ended      |       
|(in thousands, except share and per share data)        |                                                 | December 31, 2005 |         |             | January 1, 2005 |   |                 | May 1, 2004 |  |   | January 3, 2004 |       
|                                                       |                                                
|Net sales                                              |                                                 | $                 | 432,504 |             |                 | $ | 311,089         |             |  | $ | 179,273         |        |   | $ | 441,076 |       
|Cost of goods sold                                     |                                                 |                   | 282,270 |             |                 |   | 225,918         |             |  |   | 110,166         |        |   |   | 285,631 |       
|                                                       |                                                 |                  
|Gross profit                                           |                                                 |                   | 150,234 |             |                 |   | 85,171          |             |  |   | 69,107          |        |   |   | 155,445 |       
|Selling, general and administrative expenses           |                                                 |                   | 75,539  |             |                 |   | 50,186          |             |  |   | 24,895          |        |   |   | 69,684  |       
|Business restructuring                                 |                                                 |                   | 8,693   |             |                 |   | 13,899          |             |  |   |                |        |   |   |        |       
|In process research and development                    |                                                 |                   |        |             |                 |   | 5,250           |             |  |   |                |        |   |   |        |       
|Other                                                  |                                                 |                   |        |             |                 |   |                |             |  |   | (1,514          | )      |   |   |        |       
|                                                       |                                                 |                  
|Operating income                                       |                                                 |                   | 66,002  |             |                 |   | 15,836          |             |  |   | 45,726          |        |   |   | 85,761  |       
|Other (income) expense:                                |                                                 |                   |         |             |                 |   |                 |             |  |   |                 |        |   |   |         |       
|                                                       | Interest expense, net                           |                   |         | 81,988      |                 |   |                 | 42,098      |  |   |                 | 6,048  |   |   |         | 21,521 |  
|                                                       | Foreign currency and other                      |                   |         | (4,418      | )               |   |                 | 1,656       |  |   |                 | 481    |   |   |         | 2,433  |  
|                                                       | Unrealized (gain) loss on derivative instrument |                   |         |            |                 |   |                 |            |  |   |                 | (1,321 | ) |   |         | (2,287 | )
|                                                       |                                                 |                  
|                                                       |                                                 |                   | 77,570  |             |                 |   | 43,754          |             |  |   | 5,208           |        |   |   | 21,667  |       
|                                                       |                                                 |                  
|Income (loss) before income taxes                      |                                                 |                   | (11,568 | )           |                 |   | (27,918         | )           |  |   | 40,518          |        |   |   | 64,094  |       
|Income taxes                                           |                                                 |                   | (8,626  | )           |                 |   | (8,653          | )           |  |   | 13,685          |        |   |   | 18,781  |       
|                                                       |                                                 |                  
|Net income (loss)                                      |                                                 |                   | (2,942  | )           |                 |   | (19,265         | )           |  |   | 26,833          |        |   |   | 45,313  |       
|Redeemable preferred stock dividends                   |                                                 |                   |        |             |                 |   |                |             |  |   | (424            | )      |   |   | (1,260  | )     
|                                                       |                                                 |                  
|Net income (loss) applicable to common stock           |                                                 | $                 | (2,942  | )           |                 | $ | (19,265         | )           |  | $ | 26,409          |        |   | $ | 44,053  |       
|                                                       |                                                 |                  
|Net income (loss) per common share  basic and diluted |                                                 | $                 | (17.16  | )           |                 | $ | (112.48         | )           |  | $ | 170.29          |        |   | $ | 284.06  |       
|Weighted average shares outstanding                    |                                                 |                   | 171,421 |             |                 |   | 171,281         |             |  |   | 155,086         |        |   |   | 155,086 |       
|                                                      

See accompanying notes.


40



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Polypore International, Inc.


Consolidated statements of shareholders equity


|                                                                                                                                         |  |             |   |  |               |   |         |           |  |               |         |   |  |       |         |        |        |   |         |   |  |   |         |  
|---------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- | - |  | ------------- | - | ------- | --------- |  | ------------- | ------- | - |  | ----- | ------- | ------ | ------ | - | ------- | - |  | - | ------- | -
|                                                                                                                                         | 
|                                                                                                                                         |  | Accumulated |   |  |              
|                                                                                                                                         |  | Other       |   |  |              
|                                                                                                                                         |  | Retained    |   |  | Comprehensive |   |         |           |  | Comprehensive |        
|                                                                                                                                         |  | Common      |   |  | Paid-in       |   |         | Earnings  |  |               | Income  |   |  |       |         | Income |       
|(in thousands, except per share data)                                                                                                    |  | Stock       |   |  | Capital       |   |         | (Deficit) |  |               | (Loss)  |   |  | Total |         |        | (Loss) |  
|                                                                                                                                         | 
|Predecessor                                                                                                                              |  |             |   |  |               |   |         |           |  |               |         |   |  |       |         |        |        |   |         |   |  |   |         |  
|Balance at December 28, 2002                                                                                                             |  | $           | 2 |  |               | $ | 1,718   |           |  | $             | 80,466  |   |  | $     | 15,399  |        |        | $ | 97,585  |   |  |   |         |  
|Net income for the year ended January 3, 2004                                                                                            |  |             |  |  |               |   |        |           |  |               | 45,313  |   |  |       |        |        |        |   | 45,313  |   |  | $ | 45,313  |  
|Foreign currency translation adjustment, net of income tax
    expense of $520                                                           |  |             |  |  |               |   |        |           |  |               |        |   |  |       | 49,914  |        |        |   | 49,914  |   |  |   | 49,914  |  
|Foreign currency translation gains reclassified into earnings
    from other comprehensive income, net of income tax benefit of
    $524 |  |             |  |  |               |   |        |           |  |               |        |   |  |       | (1,456  | )      |        |   | (1,456  | ) |  |   | (1,456  | )
|Additional minimum pension liability, net of income tax benefit
    of $225                                                              |  |             |  |  |               |   |        |           |  |               |        |   |  |       | (339    | )      |        |   | (339    | ) |  |   | (339    | )
|Cumulative dividends on Class A Preferred Stock 
    $90.01 per share                                                                   |  |             |  |  |               |   |        |           |  |               | (1,260  | ) |  |       |        |        |        |   | (1,260  | ) |  |   |        |  
|                                                                                                                                         |  |            
|Balance at January 3, 2004                                                                                                               |  |             | 2 |  |               |   | 1,718   |           |  |               | 124,519 |   |  |       | 63,518  |        |        |   | 189,757 |   |  |   |         |  
|Comprehensive income for the year ended January 3, 2004                                                                                  |  |             |   |  |               |   |         |           |  |               |         |   |  |       |         |        |        |   |         |   |  | $ | 93,432  |  
|                                                                                                                                         |  |             |   |  |               |   |         |           |  |               |         |   |  |       |         |        |        |  
|Net income for the period from January 4, 2004 through
    May 1, 2004                                                                   |  |             |  |  |               |   |        |           |  |               | 26,833  |   |  |       |        |        |        |   | 26,833  |   |  | $ | 26,833  |  
|Foreign currency translation adjustment, net of income tax
    expense of $0                                                             |  |             |  |  |               |   |        |           |  |               |        |   |  |       | (19,883 | )      |        |   | (19,883 | ) |  |   | (19,883 | )
|Additional minimum pension liability, net of income tax benefit
    of $18                                                               |  |             |  |  |               |   |        |           |  |               |        |   |  |       | 35      |        |        |   | 35      |   |  |   | 35      |  
|Cumulative dividends on Class A Preferred Stock 
    $30.27 per share                                                                   |  |             |  |  |               |   |        |           |  |               | (424    | ) |  |       |        |        |        |   | (424    | ) |  |   |        |  
|                                                                                                                                         |  |            
|Balance at May 1, 2004                                                                                                                   |  |             | 2 |  |               |   | 1,718   |           |  |               | 150,928 |   |  |       | 43,670  |        |        |   | 196,318 |   |  |   |         |  
|Comprehensive income for the period from January 4, 2004
    through May 1, 2004                                                         |  |             |   |  |               |   |         |           |  |               |         |   |  |       |         |        |        |   |         |   |  | $ | 6,985   |  
|                                                                                                                                         |  |             |   |  |               |   |         |           |  |               |         |   |  |       |         |        |        |  
|Successor                                                                                                                                |  |             |   |  |               |   |         |           |  |               |         |   |  |       |         |        |        |   |         |   |  |   |         |  
|Issuance of common stock in connection with the Transactions                                                                             |  |             | 2 |  |               | $ | 170,383 |           |  |               |        |   |  |       |        |        |        |   | 170,385 |   |  |   |         |  
|Issuance of common stock                                                                                                                 |  |             |  |  |               |   | 1,036   |           |  |               |        |   |  |       |        |        |        |   | 1,036   |   |  |   |         |  
|Net loss for the period from May 2, 2004 through
    January 1, 2005                                                                     |  |             |  |  |               |   |        |           |  |               | (19,265 | ) |  |       |        |        |        |   | (19,265 | ) |  | $ | (19,265 | )
|Stock compensation                                                                                                                       |  |             |  |  |               |   | 239     |           |  |               |        |   |  |       |        |        |        |   | 239     |   |  |   |        |  
|Dividends on Series A Common Stock 
    $275.29 per share                                                                               |  |             |  |  |               |   | (47,190 | )         |  |               |        |   |  |       |        |        |        |   | (47,190 | ) |  |   |        |  
|Foreign currency translation adjustment, net of income tax
    expense of $0                                                             |  |             |  |  |               |   |        |           |  |               |        |   |  |       | 696     |        |        |   | 696     |   |  |   | 696     |  
|                                                                                                                                         |  |            
|Balance at January 1, 2005                                                                                                               |  |             | 2 |  |               |   | 124,468 |           |  |               | (19,265 | ) |  |       | 696     |        |        |   | 105,901 |   |  |   |         |  
|Comprehensive loss for the period from May 2, 2004 through
    January 1, 2005                                                           |  |             |   |  |               |   |         |           |  |               |         |   |  |       |         |        |        |   |         |   |  | $ | (18,569 | )
|                                                                                                                                         |  |             |   |  |               |   |         |           |  |               |         |   |  |       |         |        |        |  
|Net loss for the year ended December 31, 2005                                                                                            |  |             |  |  |               |   |        |           |  |               | (2,942  | ) |  |       |        |        |        |   | (2,942  | ) |  |   | (2,942  | )
|Stock compensation                                                                                                                       |  |             |  |  |               |   | 456     |           |  |               |        |   |  |       |        |        |        |   | 456     |   |  |   |        |  
|Additional minimum pension liability, net of income tax of $2,304                                                                        |  |             |  |  |               |   |        |           |  |               |        |   |  |       | (3,453  | )      |        |   | (3,453  | ) |  |   | (3,453  | )
|Foreign currency translation adjustment, net of income tax of $0                                                                         |  |             |  |  |               |   |        |           |  |               |        |   |  |       | (6,630  | )      |        |   | (6,630  | ) |  |   | (6,630  | )
|                                                                                                                                         |  |            
|Balance at December 31, 2005                                                                                                             |  | $           | 2 |  |               | $ | 124,924 |           |  | $             | (22,207 | ) |  | $     | (9,387  | )      |        | $ | 93,332  |   |  |   |         |  
|                                                                                                                                         |  |             |   |  |              
|Comprehensive loss for the year ended December 31, 2005                                                                                  |  |             |   |  |               |   |         |           |  |               |         |   |  |       |         |        |        |   |         |   |  | $ | (13,025 | )
|                                                                                                                                         |  |             |   |  |               |   |         |           |  |               |         |   |  |       |         |        |        |  
|                                                                                                                                        

See accompanying notes.


41



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Polypore International, Inc.


Consolidated statements of cash flows


|                                                                                      |                                                          |                                          |         |             |                 |   |                 |             |         |   |                 |        |         |   |         |        |         |  
|------------------------------------------------------------------------------------- | -------------------------------------------------------- | ---------------------------------------- | ------- | ----------- | --------------- | - | --------------- | ----------- | ------- | - | --------------- | ------ | ------- | - | ------- | ------ | ------- | -
|                                                                                      |                                                         
|                                                                                      |                                                          | Successor                                |         |             | Predecessor     |  
|                                                                                      |                                                          |                                          |         |             |                 |  
|                                                                                      |                                                          |                                          |         | May 2, 2004 |                 |   | January 4, 2004 |             |         |  
|                                                                                      |                                                          | Year Ended                               |         |             | through         |   |                 | through     |         |   | Year ended      |       
|(in thousands)                                                                        |                                                          | December 31, 2005                        |         |             | January 1, 2005 |   |                 | May 1, 2004 |         |   | January 3, 2004 |       
|                                                                                      |                                                         
|Operating activities:                                                                 |                                                          |                                          |         |             |                 |   |                 |             |         |   |                 |        |         |   |         |       
|Net income (loss)                                                                     |                                                          | $                                        | (2,942  | )           |                 | $ | (19,265         | )           |         | $ | 26,833          |        |         | $ | 45,313  |       
|Adjustments to reconcile net income to net cash provided by
    operating activities: |                                                          |                                          |         |             |                 |   |                 |             |         |   |                 |        |         |   |         |       
|                                                                                      | Depreciation expense                                     |                                          |         | 36,396      |                 |   |                 | 21,962      |         |   |                 | 14,409 |         |   |         | 36,222 |        
|                                                                                      | Amortization expense                                     |                                          |         | 17,703      |                 |   |                 | 11,775      |         |   |                 | 808    |         |   |         | 2,471  |        
|                                                                                      | Amortization of loan acquisition costs                   |                                          |         | 2,755       |                 |   |                 | 1,724       |         |   |                 | 632    |         |   |         | 1,691  |        
|                                                                                      | Amortization of debt discount                            |                                          |         | 22,058      |                 |   |                 | 4,262       |         |   |                 |       |         |   |         |       |        
|                                                                                      | Stock compensation                                       |                                          |         | 456         |                 |   |                 | 239         |         |   |                 |       |         |   |         |       |        
|                                                                                      | Inventory purchase accounting                            |                                          |         |            |                 |   |                 | 19,007      |         |   |                 |       |         |   |         |       |        
|                                                                                      | (Gain) loss on disposal of property, plant and equipment |                                          |         | 595         |                 |   |                 | 488         |         |   |                 | (1,432 | )       |   |         |       |        
|                                                                                      | Foreign currency (gain) loss                             |                                          |         | (2,818      | )               |   |                 | 2,602       |         |   |                 | 334    |         |   |         | 1,265  |        
|                                                                                      | Unrealized gain on derivative instrument                 |                                          |         |            |                 |   |                 |            |         |   |                 | (1,321 | )       |   |         | (2,287 | )      
|                                                                                      | Deferred income taxes                                    |                                          |         | (17,597     | )               |   |                 | 5,867       |         |   |                 | (2,080 | )       |   |         | (1,842 | )      
|                                                                                      | Business restructuring                                   |                                          |         | 8,693       |                 |   |                 | 15,687      |         |   |                 |       |         |   |         |       |        
|                                                                                      | Changes in operating assets and liabilities:             |                                          |         |             |                 |   |                 |             |         |   |                 |        |         |   |         |        |        
|                                                                                      |                                                          | Accounts receivable                      |         |             | 10,400          |   |                 |             | 737     |   |                 |        | (13,189 | ) |         |        | (14,528 | )
|                                                                                      |                                                          | Inventories                              |         |             | (4,307          | ) |                 |             | 1,943   |   |                 |        | (1,434  | ) |         |        | (6,790  | )
|                                                                                      |                                                          | Prepaid and other current assets         |         |             | (3,885          | ) |                 |             | 694     |   |                 |        | (107    | ) |         |        | (293    | )
|                                                                                      |                                                          | Accounts payable and accrued liabilities |         |             | (19,384         | ) |                 |             | (23,730 | ) |                 |        | 6,066   |   |         |        | (470    | )
|                                                                                      |                                                          | Income taxes payable                     |         |             | 12,078          |   |                 |             | (16,276 | ) |                 |        | 233     |   |         |        | (1,584  | )
|                                                                                      |                                                          | Other, net                               |         |             | 3,988           |   |                 |             | (6,712  | ) |                 |        | (841    | ) |         |        | (2,697  | )
|                                                                                      |                                                          |                                         
|Net cash provided by operating activities                                             |                                                          |                                          | 64,189  |             |                 |   | 21,004          |             |         |   | 28,911          |        |         |   | 56,471  |       
|Investing activities:                                                                 |                                                          |                                          |         |             |                 |   |                 |             |         |   |                 |        |         |   |         |       
|Purchases of property, plant and equipment                                            |                                                          |                                          | (13,017 | )           |                 |   | (9,882          | )           |         |   | (5,497          | )      |         |   | (33,797 | )     
|Proceeds from sale of property, plant and equipment                                   |                                                          |                                          | 24      |             |                 |   | 62              |             |         |   | 1,923           |        |         |   |        |       
|Acquisitions, net of cash acquired                                                    |                                                          |                                          |        |             |                 |   | (867,369        | )           |         |   |                |        |         |   |        |       
|                                                                                      |                                                          |                                         
|Net cash used in investing activities                                                 |                                                          |                                          | (12,993 | )           |                 |   | (877,189        | )           |         |   | (3,574          | )      |         |   | (33,797 | )     
|Financing activities:                                                                 |                                                          |                                          |         |             |                 |   |                 |             |         |   |                 |        |         |   |         |       
|Proceeds from debt                                                                    |                                                          |                                          |        |             |                 |   | 1,020,982       |             |         |   | 610             |        |         |   | 1,738   |       
|Principal payments on debt                                                            |                                                          |                                          | (50,389 | )           |                 |   | (265,024        | )           |         |   | (7,923          | )      |         |   | (39,756 | )     
|Borrowings on revolving credit agreement                                              |                                                          |                                          |        |             |                 |   | 1,500           |             |         |   |                |        |         |   | 15,500  |       
|Payments on revolving credit agreement                                                |                                                          |                                          |        |             |                 |   | (11,500         | )           |         |   |                |        |         |   | (5,500  | )     
|Loan acquisition costs                                                                |                                                          |                                          | (2,400  | )           |                 |   | (20,392         | )           |         |   | (59             | )      |         |   | (311    | )     
|Issuance of common stock                                                              |                                                          |                                          |        |             |                 |   | 171,421         |             |         |   |                |        |         |   |        |       
|Issuance of nonconvertible preferred stock                                            |                                                          |                                          |        |             |                 |   | 150,000         |             |         |   |                |        |         |   |        |       
|Redemption of nonconvertible preferred stock                                          |                                                          |                                          |        |             |                 |   | (150,000        | )           |         |   |                |        |         |   |        |       
|Payment of dividends                                                                  |                                                          |                                          |        |             |                 |   | (47,190         | )           |         |   |                |        |         |   |        |       
|                                                                                      |                                                          |                                         
|Net cash provided by (used in) financing activities                                   |                                                          |                                          | (52,789 | )           |                 |   | 849,797         |             |         |   | (7,372          | )      |         |   | (28,329 | )     
|Effect of exchange rate changes on cash and cash equivalents                          |                                                          |                                          | (3,496  | )           |                 |   | 3,665           |             |         |   | (2,156          | )      |         |   | 1,112   |       
|                                                                                      |                                                          |                                         
|Net increase (decrease) in cash and equivalents                                       |                                                          |                                          | (5,089  | )           |                 |   | (2,723          | )           |         |   | 15,809          |        |         |   | (4,543  | )     
|Cash and equivalents at beginning of year                                             |                                                          |                                          | 33,149  |             |                 |   | 35,872          |             |         |   | 20,063          |        |         |   | 24,606  |       
|                                                                                      |                                                          |                                         
|Cash and equivalents at end of year                                                   |                                                          | $                                        | 28,060  |             |                 | $ | 33,149          |             |         | $ | 35,872          |        |         | $ | 20,063  |       
|                                                                                      |                                                          |                                         
|Supplemental cash flow information                                                    |                                                          |                                          |         |             |                 |   |                 |             |         |   |                 |        |         |   |         |       
|Cash paid for interest                                                                |                                                          | $                                        | 57,296  |             |                 | $ | 30,897          |             |         | $ | 5,921           |        |         | $ | 26,931  |       
|Cash paid for income taxes                                                            |                                                          |                                          | (3,108  | )           |                 |   | 9,550           |             |         |   | 7,607           |        |         |   | 21,852  |       
|Supplemental non-cash financing activities                                            |                                                          |                                          |         |             |                 |   |                 |             |         |   |                 |        |         |   |         |       
|Unpaid dividends on preferred stock                                                   |                                                          |                                          |        |             |                 |   |                |             |         |   | 424             |        |         |   | 1,260   |       
|Accrued interest converted to debt                                                    |                                                          |                                          |        |             |                 |   |                |             |         |   |                |        |         |   | 592     |       
|Equipment financed under capital lease                                                |                                                          |                                          |        |             |                 |   | 8,823           |             |         |   |                |        |         |   |        |       
|Acquisitions                                                                          |                                                          |                                          |         |             |                 |   |                 |             |         |   |                 |        |         |   |         |       
|Fair value of assets acquired                                                         |                                                          |                                          |        |             |                 |   | 1,421,121       |             |         |   |                |        |         |   |        |       
|Liabilities assumed and incurred                                                      |                                                          |                                          |        |             |                 |   | 553,752         |             |         |   |                |        |         |   |        |       
|Cash paid                                                                             |                                                          |                                          |        |             |                 |   | 867,369         |             |         |   |                |        |         |   |        |       
|                                                                                     

See accompanying notes.


42



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##### Table of Contents



Polypore International, Inc.


Notes to consolidated financial statements




|   |                                         
|-- | ----------------------------------------
|1. | Description of Business and Transactions

Description of Business




Transactions




Business Combinations Goodwill and Other Intangible Assets




|                                                     |  |   |           | 
|---------------------------------------------------- |  | - | --------- | 
|                                                     | 
|(in thousands)                                       |  |  
|                                                     | 
|Current assets                                       |  | $ | 201,323   | 
|Property, plant and equipment                        |  |   | 401,720   | 
|Intangible assets                                    |  |   | 253,005   | 
|Goodwill                                             |  |   | 567,587   | 
|Other                                                |  |   | 23,932    | 
|                                                     |  |   |          
|Total assets acquired                                |  |   | 1,447,567 | 
|Current liabilities                                  |  |   | 85,831    | 
|Debt, less current portion                           |  |   | 819,790   | 
|Pension, postretirement and post employment benefits |  |   | 54,027    | 
|Deferred income taxes                                |  |   | 145,070   | 
|Other                                                |  |   | 22,464    | 
|                                                     |  |   |          
|Total liabilities assumed                            |  |   | 1,127,182 | 
|                                                     |  |   |          
|Net assets acquired                                  |  | $ | 320,385   | 
|                                                     |  |   |          
|                                                    

Applicability


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##### Table of Contents



Polypore International, Inc.


Notes to consolidated financial statements (continued)




|   |                                                     
|-- | ----------------------------------------------------
|1. | Description of Business and Transactions (continued)

of FASB Statement No. 2 to Business Combinations
Accounted for by the Purchase Method.






|                                              |  |            |         | 
|--------------------------------------------- |  | ---------- | ------- | 
|                                              | 
|                                              |  | Year Ended |        
|                                              |  | January 1, |        
|(in thousands, except per share data)         |  | 2005       |        
|                                              | 
|Net sales                                     |  | $          | 490,362 | 
|Net income                                    |  | $          | 13,107  | 
|Net income per common share-basic and diluted |  | $          | 76.66   | 
|                                             



|   |                    
|-- | -------------------
|2. | Accounting Policies

Basis of Presentation and Use of Estimates






Accounting Period


53-week


44



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##### Table of Contents



Polypore International, Inc.


Notes to consolidated financial statements (continued)




|   |                                
|-- | -------------------------------
|2. | Accounting Policies (continued)

Revenue Recognition




Cash Equivalents




Inventories


first-in,


|                |  |                   |        |  |                 |   |        | 
|--------------- |  | ----------------- | ------ |  | --------------- | - | ------ | 
|                | 
|(in thousands)  |  | December 31, 2005 |        |  | January 1, 2005 |  
|                | 
|Raw materials   |  | $                 | 21,485 |  |                 | $ | 22,243 | 
|Work-in-process |  |                   | 7,171  |  |                 |   | 6,395  | 
|Finished goods  |  |                   | 31,883 |  |                 |   | 33,151 | 
|                |  |                  
|Total           |  | $                 | 60,539 |  |                 | $ | 61,789 | 
|                |  |                  
|               



Property, Plant and Equipment




Intangibles and Loan Acquisition Costs




Impairment of Long-Lived Assets




45



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##### Table of Contents



Polypore International, Inc.


Notes to consolidated financial statements (continued)




|   |                                
|-- | -------------------------------
|2. | Accounting Policies (continued)



Goodwill


Goodwill and
Other Intangible Assets


Research and Development




Income Taxes


Accounting for Income Taxes


Foreign Currency Translation


Foreign Currency Translation




Stock-based Compensation


Accounting for Stock Based Compensation Accounting for Stock-Based Compensation  
Transition and Disclosure


46



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##### Table of Contents



Polypore International, Inc.


Notes to consolidated financial statements (continued)




|   |                                
|-- | -------------------------------
|2. | Accounting Policies (continued)

Net Income (Loss) Per Share




Accounts Receivable and Concentrations of Credit Risk


Disclosure of Information about Financial
Instruments with Off-Balance Sheet Risk and Financial
Instruments with Concentration of Credit Ris


Derivatives


Accounting for Derivatives
and Hedging Activity






Fair Value of Financial Instruments




47



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##### Table of Contents



Polypore International, Inc.


Notes to consolidated financial statements (continued)




|   |                                
|-- | -------------------------------
|2. | Accounting Policies (continued)



Other Accounting Pronouncements


Accounting Changes and Error Corrections


Accounting for Early Retirement or
Postemployment Programs with Specific Features (Such As Terms
Specified in Altersteilzeit Early Retirement Arrangements).


Exchanges of Nonmonetary Assets Accounting for Nonmonetary Transactions


Share-Based Payment Accounting for Stock


48



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##### Table of Contents



Polypore International, Inc.


Notes to consolidated financial statements (continued)




|   |                                
|-- | -------------------------------
|2. | Accounting Policies (continued)

Issued to Employees.


Share-Based Payment,


Inventory Costs Inventory Pricing,


3. Property, Plant and Equipment




|                              |                                 |                   |         |         |                 |   |         |         | 
|----------------------------- | ------------------------------- | ----------------- | ------- | ------- | --------------- | - | ------- | ------- | 
|                              |                                
|(in thousands)                |                                 | December 31, 2005 |         |         | January 1, 2005 |  
|                              |                                
|Cost:                         |                                 |                   |         |         |                 |   |         |        
|                              | Land                            |                   | $       | 14,531  |                 |   | $       | 16,116  | 
|                              | Buildings and land improvements |                   |         | 105,692 |                 |   |         | 116,041 | 
|                              | Machinery and equipment         |                   |         | 288,974 |                 |   |         | 299,248 | 
|                              | Construction in progress        |                   |         | 19,078  |                 |   |         | 28,545  | 
|                              |                                 |                  
|                              |                                 |                   | 428,275 |         |                 |   | 459,950 |        
|Less accumulated depreciation |                                 |                   | 57,404  |         |                 |   | 24,601  |        
|                              |                                 |                  
|                              |                                 | $                 | 370,871 |         |                 | $ | 435,349 |        
|                              |                                 |                  
|                             

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##### Table of Contents



Polypore International, Inc.


Notes to consolidated financial statements (continued)


4.     Intangibles,
Loan Acquisition and Other Costs




|                                                     |                        |                   |  |            |                 |   |         |              |  |       |          |        |  |              |         |         |  |   |        |       | 
|---------------------------------------------------- | ---------------------- | ----------------- |  | ---------- | --------------- | - | ------- | ------------ |  | ----- | -------- | ------ |  | ------------ | ------- | ------- |  | - | ------ | ----- | 
|                                                     |                       
|                                                     |                        | December 31, 2005 |  |            | January 1, 2005 |  
|                                                     |                        | Weighted          |  |            |                 |   |         |              | 
|                                                     |                        | Average           |  |            | Gross           |   |         |              |  | Gross |          |        | 
|                                                     |                        | Life              |  |            | Carrying        |   |         | Accumulated  |  |       | Carrying |        |  | Accumulated  |        
|(in thousands)                                       |                        | (years)           |  |            | Amount          |   |         | Amortization |  |       | Amount   |        |  | Amortization |        
|                                                     |                       
|Intangible and other assets subject to amortization: |                        |                   |  |            |                 |   |         |              |  |       |          |        |  |              |         |         |  |   |        |      
|                                                     | Supply agreement       |                   |  | 5          |                 |   | $       | 9,070        |  |       | $        | 3,167  |  |              | $       | 9,070   |  |   | $      | 1,267 | 
|                                                     | Customer relationships |                   |  | 16         |                 |   |         | 179,111      |  |       |          | 18,338 |  |              |         | 180,467 |  |   |        | 7,395 | 
|                                                     | Technology and patents |                   |  | 8          |                 |   |         | 35,475       |  |       |          | 7,741  |  |              |         | 37,615  |  |   |        | 3,277 | 
|                                                     | Loan acquisition costs |                   |  | 8          |                 |   |         | 22,792       |  |       |          | 4,478  |  |              |         | 20,392  |  |   |        | 1,723 | 
|Intangible assets not subject to amortization:       |                        |                   |  |            |                 |   |         |              |  |       |          |        |  |              |         |         |  |   |        |      
|                                                     | Trade names            |                   |  | Indefinite |                 |   |         | 9,942        |  |       |          |       |  |              |         | 10,747  |  |   |        |      | 
|                                                     |                        |                   |  |            |                
|                                                     |                        |                   |  |            |                 | $ | 256,390 |              |  | $     | 33,724   |        |  | $            | 258,291 |         |  | $ | 13,662 |      
|                                                     |                        |                   |  |            |                
|                                                    



|               |  |   |        | 
|-------------- |  | - | ------ | 
|               | 
|(in thousands) |  |  
|               | 
|2006           |  | $ | 20,797 | 
|2007           |  |   | 20,775 | 
|2008           |  |   | 20,768 | 
|2009           |  |   | 18,985 | 
|2010           |  |   | 18,742 | 
|              



|   |         
|-- | --------
|5. | Goodwill



|                                                                                        |  |         |         |   |             |   |         |       |  |   |         |  
|--------------------------------------------------------------------------------------- |  | ------- | ------- | - | ----------- | - | ------- | ----- |  | - | ------- | -
|                                                                                        | 
|                                                                                        |  | Energy  |         |   | Separations |   |         |      
|(in thousands)                                                                          |  | Storage |         |   | Media       |   |         | Total | 
|                                                                                        | 
|Balance as of January 3, 2004                                                           |  | $       | 32,200  |   |             | $ |        |       |  | $ | 32,200  |  
|Foreign currency translation adjustment                                                 |  |         | (748    | ) |             |   |        |       |  |   | (748    | )
|                                                                                        |  |        
|Balance as of May 2, 2004                                                               |  |         | 31,452  |   |             |   |        |       |  |   | 31,452  |  
|Additional goodwill recognized in accounting for the Transactions                       |  |         | 357,504 |   |             |   | 176,958 |       |  |   | 534,462 |  
|                                                                                        |  |        
|Balance as of January 1, 2005                                                           |  |         | 388,956 |   |             |   | 176,958 |       |  |   | 565,914 |  
|Purchase accounting adjustments related to the Transactions                             |  |         | 1,673   |   |             |   |        |       |  |   | 1,673   |  
|Purchase accounting adjustments to finalize allocation of
    goodwill between segments |  |         | (34,456 | ) |             |   | 34,456  |       |  |   |        |  
|                                                                                        |  |        
|Balance as of December 31, 2005                                                         |  | $       | 356,173 |   |             | $ | 211,414 |       |  | $ | 567,587 |  
|                                                                                        |  |        
|                                                                                       



50



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Polypore International, Inc.


Notes to consolidated financial statements (continued)




|   |                    
|-- | -------------------
|6. | Accrued Liabilities



|                                          |  |                   |        |  |                 |   |        | 
|----------------------------------------- |  | ----------------- | ------ |  | --------------- | - | ------ | 
|                                          | 
|(in thousands)                            |  | December 31, 2005 |        |  | January 1, 2005 |  
|                                          | 
|Business restructuring                    |  | $                 | 5,150  |  |                 | $ | 14,502 | 
|Salaries, wages and other fringe benefits |  |                   | 10,104 |  |                 |   | 14,161 | 
|Accrued interest                          |  |                   | 4,480  |  |                 |   | 4,994  | 
|Current portion of environmental reserve  |  |                   | 3,304  |  |                 |   | 4,014  | 
|Taxes other than income                   |  |                   | 1,037  |  |                 |   | 2,378  | 
|Other                                     |  |                   | 8,729  |  |                 |   | 11,180 | 
|                                          |  |                  
|                                          |  | $                 | 32,804 |  |                 | $ | 51,229 | 
|                                          |  |                  
|                                         



|   |     
|-- | ----
|7. | Debt



|                          |                                                                                                                   |                   |         |         |                 |   |           |         | 
|------------------------- | ----------------------------------------------------------------------------------------------------------------- | ----------------- | ------- | ------- | --------------- | - | --------- | ------- | 
|                          |                                                                                                                  
|(in thousands)            |                                                                                                                   | December 31, 2005 |         |         | January 1, 2005 |  
|                          |                                                                                                                  
|Senior credit facilities: |                                                                                                                   |                   |         |         |                 |   |           |        
|                          | Revolving credit facility                                                                                         |                   | $       |        |                 |   | $         |        | 
|                          | Term loan facilities                                                                                              |                   |         | 365,735 |                 |   |           | 416,941 | 
|                          | 8.75% senior subordinated notes                                                                                   |                   |         | 401,955 |                 |   |           | 429,315 | 
|                          | 10.50% senior discount notes, net of unamortized original
    issue discount of $73,489 and $95,548, respectively |                   |         | 226,511 |                 |   |           | 204,452 | 
|                          | Other                                                                                                             |                   |         | 1,293   |                 |   |           | 5,943   | 
|                          |                                                                                                                   |                  
|                          |                                                                                                                   |                   | 995,494 |         |                 |   | 1,056,651 |        
|                          | Less optional prepayment made on March 1, 2005                                                                    |                   |         |        |                 |   |           | 25,000  | 
|                          | Less current maturities                                                                                           |                   |         | 1,224   |                 |   |           | 2,260   | 
|                          |                                                                                                                   |                  
|Long-term debt            |                                                                                                                   | $                 | 994,270 |         |                 | $ | 1,029,391 |        
|                          |                                                                                                                   |                  
|                         










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Polypore International, Inc.


Notes to consolidated financial statements (continued)




|   |                 
|-- | ----------------
|7. | Debt (continued)












:


|               |  |   |           | 
|-------------- |  | - | --------- | 
|               | 
|(in thousands) |  |  
|               | 
|2005           |  | $ | 1,224     | 
|2006           |  |   | 3,948     | 
|2007           |  |   | 3,922     | 
|2008           |  |   | 3,865     | 
|2009           |  |   | 3,865     | 
|Thereafter     |  |   | 1,052,159 | 
|               |  |   |          
|               |  | $ | 1,068,983 | 
|               |  |   |          
|              



|   |                              
|-- | -----------------------------
|8. | Commitments and Contingencies

Leases




52



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##### Table of Contents



Polypore International, Inc.


Notes to consolidated financial statements (continued)




|   |                                          
|-- | -----------------------------------------
|8. | Commitments and Contingencies (continued)





|                                        |  |                |       |  |                  |   |       | 
|--------------------------------------- |  | -------------- | ----- |  | ---------------- | - | ----- | 
|                                        | 
|(in thousands)                          |  | Capital Leases |       |  | Operating Leases |  
|                                        | 
|2006                                    |  | $              | 1,604 |  |                  | $ | 3,606 | 
|2007                                    |  |                | 1,604 |  |                  |   | 671   | 
|2008                                    |  |                | 1,604 |  |                  |   | 171   | 
|2009                                    |  |                | 1,604 |  |                  |   | 36    | 
|2010                                    |  |                | 1,604 |  |                  |   | 8     | 
|Thereafter                              |  |                | 159   |  |                  |   |      | 
|                                        |  |               
|                                        |  |                | 8,179 |  |                  | $ | 4,492 | 
|                                        |  |                |       |  |                  |  
|Less amounts representing interest      |  |                | 835   |  |                  |   |       | 
|                                        |  |                |       |  |                  |  
|Present value of minimum lease payments |  |                | 7,344 |  |                  |   |       | 
|Less current portion                    |  |                | 1,326 |  |                  |   |       | 
|                                        |  |                |       |  |                  |  
|                                        |  | $              | 6,018 |  |                  |   |       | 
|                                        |  |                |       |  |                  |  
|                                       



| |              
| | -------------
| | Raw Materials





| |                                 
| | --------------------------------
| | Collective Bargaining Agreements





| |      
| | -----
| | Other



53



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##### Table of Contents



Polypore International, Inc.


Notes to consolidated financial statements (continued)




|   |             
|-- | ------------
|9. | Income Taxes



|                               |                                     |                   |          |         |                 |   |          |          |  
|------------------------------ | ----------------------------------- | ----------------- | -------- | ------- | --------------- | - | -------- | -------- | -
|                               |                                    
|(in thousands)                 |                                     | December 31, 2005 |          |         | January 1, 2005 |  
|                               |                                    
|Deferred tax assets:           |                                     |                   |          |         |                 |   |          |         
|                               | Pension and postretirement benefits |                   | $        | 17,666  |                 |   | $        | 14,820   |  
|                               | Vacation pay                        |                   |          | 603     |                 |   |          | 523      |  
|                               | Foreign tax credits                 |                   |          | 1,850   |                 |   |          | 6,288    |  
|                               | State tax credits                   |                   |          | 941     |                 |   |          | 944      |  
|                               | Net operating loss carryforwards    |                   |          | 6,220   |                 |   |          | 2,701    |  
|                               | Environmental reserve               |                   |          | 4,546   |                 |   |          | 3,718    |  
|                               | Interest expense                    |                   |          | 9,201   |                 |   |          | 3,811    |  
|                               | Other                               |                   |          | 4,294   |                 |   |          | 3,410    |  
|                               |                                     |                  
|Total deferred tax assets      |                                     |                   | 45,321   |         |                 |   | 36,215   |         
|Valuation allowance            |                                     |                   | (4,037   | )       |                 |   | (2,245   | )       
|                               |                                     |                  
|Net deferred tax assets        |                                     |                   | 41,284   |         |                 |   | 33,970   |         
|Deferred tax liabilities:      |                                     |                   |          |         |                 |   |          |         
|                               | Property, plant and equipment       |                   |          | (94,315 | )               |   |          | (100,968 | )
|                               | Intangibles                         |                   |          | (68,731 | )               |   |          | (80,982  | )
|                               | Other                               |                   |          | (3,329  | )               |   |          | (5,660   | )
|                               |                                     |                  
|Total deferred tax liabilities |                                     |                   | (166,375 | )       |                 |   | (187,610 | )       
|                               |                                     |                  
|Net deferred taxes             |                                     | $                 | (125,091 | )       |                 | $ | (153,640 | )       
|                               |                                     |                  
|                              





|                                   |  |                   |          |   |                 |   |          |  
|---------------------------------- |  | ----------------- | -------- | - | --------------- | - | -------- | -
|                                   | 
|(in thousands)                     |  | December 31, 2005 |          |   | January 1, 2005 |  
|                                   | 
|Current deferred tax asset         |  | $                 | 410      |   |                 | $ | 7,954    |  
|Non-current deferred tax liability |  |                   | (125,501 | ) |                 |   | (161,594 | )
|                                   |  |                  
|Net deferred taxes                 |  | $                 | (125,091 | ) |                 | $ | (153,640 | )
|                                   |  |                  
|                                  



|                      |  |                   |         |             |                 |   |                 |             |  |   |                 |  |  |   |        | 
|--------------------- |  | ----------------- | ------- | ----------- | --------------- | - | --------------- | ----------- |  | - | --------------- |  |  | - | ------ | 
|                      | 
|                      |  | Successor         |         |             | Predecessor     |  
|                      |  |                   |         |             |                 |  
|                      |  |                   |         | May 2, 2004 |                 |   | January 4, 2004 |             |  |  
|                      |  | Year ended        |         |             | through         |   |                 | through     |  |   | Year ended      | 
|(in thousands)        |  | December 31, 2005 |         |             | January 1, 2005 |   |                 | May 1, 2004 |  |   | January 3, 2004 | 
|                      | 
|Pretax income (loss): |  |                   |         |             |                 |   |                 |             |  |   |                 |  |  |   |        | 
|United States         |  | $                 | (37,652 | )           |                 | $ | (28,293         | )           |  | $ | 22,706          |  |  | $ | 27,918 | 
|Foreign               |  |                   | 26,084  |             |                 |   | 375             |             |  |   | 17,812          |  |  |   | 36,176 | 
|                      |  |                  
|                      |  | $                 | (11,568 | )           |                 | $ | (27,918         | )           |  | $ | 40,518          |  |  | $ | 64,094 | 
|                      |  |                  
|                     

54



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##### Table of Contents



Polypore International, Inc.


Notes to consolidated financial statements (continued)




|   |                         
|-- | ------------------------
|9. | Income Taxes (continued)



|               |                               |                   |         |             |                 |   |                 |             |   |   |                 |        |   |   |        |        |  
|-------------- | ----------------------------- | ----------------- | ------- | ----------- | --------------- | - | --------------- | ----------- | - | - | --------------- | ------ | - | - | ------ | ------ | -
|               |                              
|               |                               | Successor         |         |             | Predecessor     |  
|               |                               |                   |         |             |                 |  
|               |                               |                   |         | May 2, 2004 |                 |   | January 4, 2004 |             |   |  
|               |                               | Year ended        |         |             | through         |   |                 | through     |   |   | Year ended      |       
|(in thousands) |                               | December 31, 2005 |         |             | January 1, 2005 |   |                 | May 1, 2004 |   |   | January 3, 2004 |       
|               |                              
|Current:       |                               |                   |         |             |                 |   |                 |             |   |   |                 |        |   |   |        |       
|               | U.S. taxes on domestic income |                   | $       | (721        | )               |   | $               | (12,071     | ) |   | $               | 10,805 |   |   | $      | 4,854  |  
|               | Foreign taxes                 |                   |         | 9,692       |                 |   |                 | (2,449      | ) |   |                 | 4,960  |   |   |        | 15,769 |  
|               |                               |                  
|Total current  |                               |                   | 8,971   |             |                 |   | (14,520         | )           |   |   | 15,765          |        |   |   | 20,623 |       
|Deferred:      |                               |                   |         |             |                 |   |                 |             |   |   |                 |        |   |   |        |       
|               | U.S. taxes on domestic income |                   |         | (13,234     | )               |   |                 | 3,736       |   |   |                 | (3,145 | ) |   |        | 2,777  |  
|               | Foreign taxes                 |                   |         | (4,363      | )               |   |                 | 2,131       |   |   |                 | 1,065  |   |   |        | (4,619 | )
|               |                               |                  
|Total deferred |                               |                   | (17,597 | )           |                 |   | 5,867           |             |   | $ | (2,080          | )      |   |   | (1,842 | )     
|               |                               |                  
|               |                               | $                 | (8,626  | )           |                 | $ | (8,653          | )           |   | $ | 13,685          |        |   | $ | 18,781 |       
|               |                               |                  
|              





|                                                     |  |                   |        |             |                 |   |                 |             |  |   |                 |   |  |   |        |  
|---------------------------------------------------- |  | ----------------- | ------ | ----------- | --------------- | - | --------------- | ----------- |  | - | --------------- | - |  | - | ------ | -
|                                                     | 
|                                                     |  | Successor         |        |             | Predecessor     |  
|                                                     |  |                   |        |             |                 |  
|                                                     |  |                   |        | May 2, 2004 |                 |   | January 4, 2004 |             |  |  
|                                                     |  | Year ended        |        |             | through         |   |                 | through     |  |   | Year ended      |  
|(in thousands)                                       |  | December 31, 2005 |        |             | January 1, 2005 |   |                 | May 1, 2004 |  |   | January 3, 2004 |  
|                                                     | 
|Computed income taxes at the expected statutory rate |  | $                 | (4,049 | )           |                 | $ | (9,771          | )           |  | $ | 14,181          |   |  | $ | 22,433 |  
|In process research and development                  |  |                   |       |             |                 |   | 1,953           |             |  |   |                |   |  |   |       |  
|Extraterritorial income exclusion                    |  |                   | (1,300 | )           |                 |   | (1,256          | )           |  |   | (688            | ) |  |   | (1,607 | )
|State and local taxes                                |  |                   | (1,562 | )           |                 |   | (1,082          | )           |  |   | 681             |   |  |   | 756    |  
|Foreign taxes                                        |  |                   | (4,654 | )           |                 |   | 584             |             |  |   | (1,306          | ) |  |   | (1,616 | )
|Subpart F income inclusion                           |  |                   | 337    |             |                 |   |                |             |  |   |                |   |  |   |       |  
|Interest expense disallowed                          |  |                   | 1,154  |             |                 |   |                |             |  |   |                |   |  |   |       |  
|Valuation allowance                                  |  |                   | 1,792  |             |                 |   | 256             |             |  |   |                |   |  |   |       |  
|Other                                                |  |                   | (344   | )           |                 |   | 663             |             |  |   | 817             |   |  |   | (1,185 | )
|                                                     |  |                  
|Income tax provision (benefit)                       |  | $                 | (8,626 | )           |                 | $ | (8,653          | )           |  | $ | 13,685          |   |  | $ | 18,781 |  
|                                                     |  |                  



55



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##### Table of Contents



Polypore International, Inc.


Notes to consolidated financial statements (continued)




|   |                         
|-- | ------------------------
|9. | Income Taxes (continued)









56



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##### Table of Contents



Polypore International, Inc.


Notes to consolidated financial statements (continued)




|    |                       
|--- | ----------------------
|10. | Employee Benefit Plans

Pension and Other Postretirement Benefits




|                                                 |  |                   |         |   |                 |   |         |             |  |   |         |  
|------------------------------------------------ |  | ----------------- | ------- | - | --------------- | - | ------- | ----------- |  | - | ------- | -
|                                                 | 
|                                                 |  | Pension Plans     |        
|                                                 |  |                   |        
|                                                 |  | Successor         |         |   | Predecessor     |  
|                                                 |  |                   |         |   |                 |  
|(in thousands)                                   |  | December 31, 2005 |         |   | January 1, 2005 |   |         | May 1, 2004 | 
|                                                 | 
|Change in Benefit Obligation                     |  |                   |         |   |                 |   |         |             |  |   |         |  
|Benefit obligation at beginning of period        |  | $                 | (68,375 | ) |                 | $ | (56,786 | )           |  | $ | (58,022 | )
|Service cost                                     |  |                   | (3,039  | ) |                 |   | (1,708  | )           |  |   | (604    | )
|Interest cost                                    |  |                   | (3,221  | ) |                 |   | (2,144  | )           |  |   | (891    | )
|Plan amendments                                  |  |                   | (182    | ) |                 |   |        |             |  |   |        |  
|Actuarial gain                                   |  |                   | (11,052 | ) |                 |   | (1,085  | )           |  |   | (516    | )
|Benefit payments                                 |  |                   | 1,529   |   |                 |   | 915     |             |  |   | 453     |  
|Foreign currency translation and other           |  |                   | 9,226   |   |                 |   | (7,567  | )           |  |   | 2,794   |  
|                                                 |  |                  
|Projected benefit obligation at end of period    |  |                   | (75,114 | ) |                 |   | (68,375 | )           |  |   | (56,786 | )
|Change in Plan Assets                            |  |                   |         |   |                 |   |         |             |  |   |         |  
|Fair value of plan assets at beginning of period |  |                   | 21,648  |   |                 |   | 17,672  |             |  |   | 17,723  |  
|Actual return on plan assets                     |  |                   | 1,269   |   |                 |   | 1,175   |             |  |   | 583     |  
|Company contributions                            |  |                   | 990     |   |                 |   | 844     |             |  |   | 217     |  
|Benefit payments                                 |  |                   | (970    | ) |                 |   | (289    | )           |  |   | (143    | )
|Foreign currency translation and other           |  |                   | (2,681  | ) |                 |   | 2,246   |             |  |   | (708    | )
|                                                 |  |                  
|Fair value of plan assets at end of period       |  |                   | 20,256  |   |                 |   | 21,648  |             |  |   | 17,672  |  
|Funded Status                                    |  |                   |         |   |                 |   |         |             |  |   |         |  
|Funded status at end of period                   |  |                   | (54,858 | ) |                 |   | (46,727 | )           |  |   | (39,114 | )
|Unrecognized net actuarial loss                  |  |                   | 10,931  |   |                 |   |        |             |  |   | 223     |  
|Foreign currency translation                     |  |                   |        |   |                 |   |        |             |  |   | (135    | )
|Unrecognized prior service cost                  |  |                   | 182     |   |                 |   |        |             |  |   | (707    | )
|Unrecognized net loss                            |  |                   |        |   |                 |   |        |             |  |   | 5,030   |  
|                                                 |  |                  
|Net amount recognized                            |  | $                 | (43,745 | ) |                 | $ | (46,727 | )           |  | $ | (34,703 | )
|                                                 |  |                  
|                                                

57



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Polypore International, Inc.


Notes to consolidated financial statements (continued)




|    |                                   
|--- | ----------------------------------
|10. | Employee Benefit Plans (continued)

|                                              |  |                               |        |   |                 |   |        |             |  |   |        |  
|--------------------------------------------- |  | ----------------------------- | ------ | - | --------------- | - | ------ | ----------- |  | - | ------ | -
|                                              | 
|                                              |  | Other Postretirement Benefits |       
|                                              |  |                               |       
|                                              |  | Successor                     |        |   | Predecessor     |  
|                                              |  |                               |        |   |                 |  
|(in thousands)                                |  | December 31, 2005             |        |   | January 1, 2005 |   |        | May 1, 2004 | 
|                                              | 
|Change in Benefit Obligation                  |  |                               |        |   |                 |   |        |             |  |   |        |  
|Benefit obligation at beginning of period     |  | $                             | (1,925 | ) |                 | $ | (1,843 | )           |  | $ | (1,851 | )
|Service cost                                  |  |                               | (31    | ) |                 |   | (19    | )           |  |   | (9     | )
|Interest cost                                 |  |                               | (114   | ) |                 |   | (77    | )           |  |   | (38    | )
|Plan amendments                               |  |                               |       |   |                 |   |       |             |  |   |       |  
|Participant contributions                     |  |                               | (40    | ) |                 |   | (28    | )           |  |   | (14    | )
|Actuarial gain/(loss)                         |  |                               | (29    | ) |                 |   | (236   | )           |  |   | 12     |  
|Benefit payments                              |  |                               | 150    |   |                 |   | 115    |             |  |   | 57     |  
|Other                                         |  |                               |       |   |                 |   | 163    |             |  |   |       |  
|                                              |  |                              
|Projected benefit obligation at end of period |  |                               | (1,989 | ) |                 |   | (1,925 | )           |  |   | (1,843 | )
|Change in Plan Assets                         |  |                               |        |   |                 |   |        |             |  |   |        |  
|Company contributions                         |  |                               | 110    |   |                 |   | 87     |             |  |   | 43     |  
|Participant contributions                     |  |                               | 40     |   |                 |   | 28     |             |  |   | 14     |  
|Benefit payments                              |  |                               | (150   | ) |                 |   | (115   | )           |  |   | (57    | )
|                                              |  |                              
|Fair value of plan assets at end of period    |  |                               |       |   |                 |   |       |             |  |   |       |  
|Funded Status                                 |  |                               |        |   |                 |   |        |             |  |   |        |  
|Funded status at end of period                |  |                               | (1,989 | ) |                 |   | (1,925 | )           |  |   | (1,843 | )
|Unrecognized prior service cost               |  |                               |       |   |                 |   |       |             |  |   | 332    |  
|Unrecognized net loss                         |  |                               | 105    |   |                 |   |       |             |  |   | 236    |  
|                                              |  |                              
|Net amount recognized                         |  | $                             | (1,884 | ) |                 | $ | (1,925 | )           |  | $ | (1,275 | )
|                                              |  |                              
|                                             



|                                              |  |                   |         |   |                               |   |         |                   |  |   |                 |   |  |   |        |  
|--------------------------------------------- |  | ----------------- | ------- | - | ----------------------------- | - | ------- | ----------------- |  | - | --------------- | - |  | - | ------ | -
|                                              | 
|                                              |  | Pension Plans     |         |   | Other Postretirement Benefits |  
|                                              |  |                   |         |   |                               |  
|(in thousands)                                |  | December 31, 2005 |         |   | January 1, 2005               |   |         | December 31, 2005 |  |   | January 1, 2005 |  
|                                              | 
|Accrued benefit cost                          |  | $                 | (43,745 | ) |                               | $ | (46,727 | )                 |  | $ | (1,884          | ) |  | $ | (1,925 | )
|Accumulated other comprehensive income (loss) |  |                   | (5,757  | ) |                               |   |        |                   |  |   |                |   |  |   |       |  
|                                              |  |                  
|Net amount recognized                         |  | $                 | (49,502 | ) |                               | $ | (46,727 | )                 |  | $ | (1,884          | ) |  | $ | (1,925 | )
|                                              |  |                  
|                                             







58



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##### Table of Contents



Polypore International, Inc.


Notes to consolidated financial statements (continued)




|    |                                   
|--- | ----------------------------------
|10. | Employee Benefit Plans (continued)



|                                   |  |               |       |   |                 |   |       |                 |  |   |            |   |  |   |       |  
|---------------------------------- |  | ------------- | ----- | - | --------------- | - | ----- | --------------- |  | - | ---------- | - |  | - | ----- | -
|                                   | 
|                                   |  | Pension Plans |      
|                                   |  |               |      
|                                   |  | Successor     |       |   | Predecessor     |  
|                                   |  |               |       |   |                 |  
|                                   |  | Year ended    |       |   | May 2, 2004     |   |       | January 4, 2004 |  |   | Year ended |  
|                                   |  | December 31,  |       |   | through         |   |       | through         |  |   | January 3, |  
|(in thousands)                     |  | 2005          |       |   | January 1, 2005 |   |       | May 1, 2004     |  |   | 2004       |  
|                                   | 
|Service cost                       |  | $             | 3,039 |   |                 | $ | 1,708 |                 |  | $ | 604        |   |  | $ | 1,824 |  
|Interest cost                      |  |               | 3,221 |   |                 |   | 2,144 |                 |  |   | 891        |   |  |   | 2,607 |  
|Expected return on plan assets     |  |               | (803  | ) |                 |   | (589  | )               |  |   | (261       | ) |  |   | (866  | )
|Amortization of prior service cost |  |               |      |   |                 |   |      |                 |  |   | 57         |   |  |   | 178   |  
|Recognized net actuarial loss      |  |               | 35    |   |                 |   | 8     |                 |  |   | 48         |   |  |   | 273   |  
|                                   |  |              
|Net periodic benefit cost          |  | $             | 5,492 |   |                 | $ | 3,271 |                 |  | $ | 1,339      |   |  | $ | 4,016 |  
|                                   |  |              
|                                  

|                                     |  |                               |     |  |                 |   |    |                 |  |   |            |   |  |   |      |  
|------------------------------------ |  | ----------------------------- | --- |  | --------------- | - | -- | --------------- |  | - | ---------- | - |  | - | ---- | -
|                                     | 
|                                     |  | Other Postretirement Benefits |    
|                                     |  |                               |    
|                                     |  | Successor                     |     |  | Predecessor     |  
|                                     |  |                               |     |  |                 |  
|                                     |  | Year ended                    |     |  | May 2, 2004     |   |    | January 4, 2004 |  |   | Year ended |  
|                                     |  | December 31,                  |     |  | through         |   |    | through         |  |   | January 3, |  
|(in thousands)                       |  | 2005                          |     |  | January 1, 2005 |   |    | May 1, 2004     |  |   | 2004       |  
|                                     | 
|Service cost                         |  | $                             | 31  |  |                 | $ | 19 |                 |  | $ | 9          |   |  | $ |     |  
|Interest cost                        |  |                               | 114 |  |                 |   | 77 |                 |  |   | 38         |   |  |   | 122  |  
|Amortization of prior service cost   |  |                               |    |  |                 |   |   |                 |  |   | (15        | ) |  |   | (6   | )
|Recognized net actuarial loss (gain) |  |                               | 8   |  |                 |   |   |                 |  |   | 1          |   |  |   | (261 | )
|                                     |  |                              
|Net periodic benefit cost (income)   |  | $                             | 153 |  |                 | $ | 96 |                 |  | $ | 33         |   |  | $ | (145 | )
|                                     |  |                              
|                                    



|                                  |  |                      |               |          |                 |  |               |            |  |  |       |  |  |  |       | 
|--------------------------------- |  | -------------------- | ------------- | -------- | --------------- |  | ------------- | ---------- |  |  | ----- |  |  |  | ----- | 
|                                  | 
|                                  |  | Other Postretirement |              
|                                  |  |                      |               | Benefits |                
|                                  |  | Pension Plans        |               |          |                 | 
|                                  |  |                      |               |          | December 31,    |  |               | January 1, | 
|Assumptions as of the end of Year |  | December 31, 2005    |               |          | January 1, 2005 |  |               | 2005       |  |  | 2005  | 
|                                  | 
|Discount rate                     |  |                      | 2.95% - 5.75% |          |                 |  | 2.19% - 6.07% |            |  |  | 6.50% |  |  |  | 6.50% | 
|Expected return on plan assets    |  |                      | 4.00% - 8.00% |          |                 |  | 6.00% - 8.00% |            |  |  | N/A   |  |  |  | N/A   | 
|Rate of compensation increase     |  |                      | 2.00% - 3.50% |          |                 |  | 2.00% - 4.00% |            |  |  | N/A   |  |  |  | N/A   | 
|Increase in pension payments      |  |                      | 2.00%         |          |                 |  | 2.00%         |            |  |  | N/A   |  |  |  | N/A   | 
|Weighted average discount rate    |  |                      | 4.23%         |          |                 |  | 5.07%         |            |  |  | N/A   |  |  |  | N/A   | 
|                                 





59



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Polypore International, Inc.


Notes to consolidated financial statements (continued)




|    |                                   
|--- | ----------------------------------
|10. | Employee Benefit Plans (continued)





|                                                                                                                    |  |          |       |  |          |   |        |  
|------------------------------------------------------------------------------------------------------------------- |  | -------- | ----- |  | -------- | - | ------ | -
|                                                                                                                    | 
|                                                                                                                    |  | 1%       |       |  | 1%       |  
|(in thousands)                                                                                                      |  | Increase |       |  | Decrease |  
|                                                                                                                    | 
|Effect on total of service and interest cost components of net
    periodic postretirement health care benefit cost |  | $        | 734   |  |          | $ | (716   | )
|Effect on the health care component of the accumulated
    postretirement benefit obligation                        |  | $        | 7,967 |  |          | $ | (7,813 | )
|                                                                                                                   



|               |  |                |        |  |          |   |     | 
|-------------- |  | -------------- | ------ |  | -------- | - | --- | 
|               | 
|               |  | Other          |       
|               |  | Postretirement |       
|(in thousands) |  | Pension Plans  |        |  | Benefits |  
|               | 
|2006           |  | $              | 2,842  |  |          | $ | 207 | 
|2007           |  |                | 1,936  |  |          |   | 65  | 
|2008           |  |                | 2,065  |  |          |   | 119 | 
|2009           |  |                | 2,325  |  |          |   | 95  | 
|2010           |  |                | 2,689  |  |          |   | 44  | 
|2011-2015      |  |                | 16,080 |  |          |   | 475 | 
|              





Post Employment Benefits


Employers Accounting for Post
Employment Benefits Accounting for Early Retirement or Postemployment Programs
with Specific Features (Such As Terms Specified in
Altersteilzeit Early Retirement Arrangements)


60



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Polypore International, Inc.


Notes to consolidated financial statements (continued)




|    |                    
|--- | -------------------
|11. | Segment Information





61



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Polypore International, Inc.


Notes to consolidated financial statements (continued)




|    |                                
|--- | -------------------------------
|11. | Segment Information (continued)



|                                      |                                                      |                   |         |             |                 |   |                 |             |   |   |                 |         |   |   |         |         | 
|------------------------------------- | ---------------------------------------------------- | ----------------- | ------- | ----------- | --------------- | - | --------------- | ----------- | - | - | --------------- | ------- | - | - | ------- | ------- | 
|                                      |                                                     
|                                      |                                                      | Successor         |         |             | Predecessor     |  
|                                      |                                                      |                   |         |             |                 |  
|                                      |                                                      |                   |         | May 2, 2004 |                 |   | January 4, 2004 |             |   |  
|                                      |                                                      | Year Ended        |         |             | through         |   |                 | through     |   |   | Year Ended      |        
|(in thousands)                        |                                                      | December 31, 2005 |         |             | January 1, 2005 |   |                 | May 1, 2004 |   |   | January 3, 2004 |        
|                                      |                                                     
|Net sales to external customers:      |                                                      |                   |         |             |                 |   |                 |             |   |   |                 |         |   |   |         |        
|                                      | Energy storage                                       |                   | $       | 309,401     |                 |   | $               | 213,411     |   |   | $               | 119,436 |   |   | $       | 295,256 | 
|                                      | Separations media                                    |                   |         | 123,103     |                 |   |                 | 97,678      |   |   |                 | 59,837  |   |   |         | 145,820 | 
|                                      |                                                      |                  
|Total net sales to external customers |                                                      | $                 | 423,504 |             |                 | $ | 311,089         |             |   | $ | 179,273         |         |   | $ | 441,076 |        
|                                      |                                                      |                  
|Operating income:                     |                                                      |                   |         |             |                 |   |                 |             |   |   |                 |         |   |   |         |        
|                                      | Energy storage                                       |                   | $       | 62,914      |                 |   | $               | 42,148      |   |   | $               | 35,146  |   |   | $       | 64,490  | 
|                                      | Separations media                                    |                   |         | 13,186      |                 |   |                 | 15,794      |   |   |                 | 10,580  |   |   |         | 21,271  | 
|                                      | Corporate                                            |                   |         | (1,405      | )               |   |                 | (2,162      | ) |   |                 |        |   |   |         |        | 
|                                      |                                                      |                  
|Segment operating income              |                                                      |                   | 74,695  |             |                 |   | 55,780          |             |   |   | 45,726          |         |   |   | 85,761  |        
|Business restructuring                |                                                      |                   | (8,693  | )           |                 |   | (15,687         | )           |   |   |                |         |   |   |        |        
|In-process research and development   |                                                      |                   |        |             |                 |   | (5,250          | )           |   |   |                |         |   |   |        |        
|Inventory purchase accounting         |                                                      |                   |        |             |                 |   | (19,007         | )           |   |   |                |         |   |   |        |        
|                                      |                                                      |                  
|Total operating income                |                                                      |                   | 66,002  |             |                 |   | 15,836          |             |   |   | 45,726          |         |   |   | 85,761  |        
|Reconciling items:                    |                                                      |                   |         |             |                 |   |                 |             |   |   |                 |         |   |   |         |        
|                                      | Interest expense                                     |                   |         | 81,988      |                 |   |                 | 42,098      |   |   |                 | 6,048   |   |   |         | 21,521  | 
|                                      | Other                                                |                   |         | (4,418      | )               |   |                 | 1,656       |   |   |                 | (840    | ) |   |         | 146     | 
|                                      |                                                      |                  
|                                      | Total consolidated income (loss) before income taxes |                   | $       | (11,568     | )               |   | $               | (27,918     | ) |   | $               | 40,518  |   |   | $       | 64,094  | 
|                                      |                                                      |                  
|Depreciation and amortization:        |                                                      |                   |         |             |                 |   |                 |             |   |   |                 |         |   |   |         |        
|                                      | Energy storage                                       |                   | $       | 31,694      |                 |   | $               | 19,223      |   |   | $               | 7,208   |   |   | $       | 18,616  | 
|                                      | Separations media                                    |                   |         | 22,405      |                 |   |                 | 14,514      |   |   |                 | 8,009   |   |   |         | 20,077  | 
|                                      |                                                      |                  
|Total depreciation and amortization   |                                                      | $                 | 54,099  |             |                 | $ | 33,737          |             |   | $ | 15,217          |         |   | $ | 38,693  |        
|                                      |                                                      |                  
|Capital expenditures:                 |                                                      |                   |         |             |                 |   |                 |             |   |   |                 |         |   |   |         |        
|                                      | Energy storage                                       |                   | $       | 6,293       |                 |   | $               | 6,255       |   |   | $               | 3,289   |   |   | $       | 14,434  | 
|                                      | Separations media                                    |                   |         | 6,724       |                 |   |                 | 3,627       |   |   |                 | 2,208   |   |   |         | 19,363  | 
|                                      |                                                      |                  
|Total capital expenditures            |                                                      | $                 | 13,017  |             |                 | $ | 9,882           |             |   | $ | 5,497           |         |   | $ | 33,797  |        
|                                      |                                                      |                  
|                                     

|               |                   |                   |           |         |  |   |           |         | 
|-------------- | ----------------- | ----------------- | --------- | ------- |  | - | --------- | ------- | 
|(in thousands) |                   | December 31, 2005 |           |         | 
|               |                  
|               |                   | January 1,        |          
|               |                   | 2005              |          
|               |                  
|Assets:        |                   |                   |           |         |  |   |           |        
|               | Energy storage    |                   | $         | 828,281 |  |   | $         | 912,893 | 
|               | Separations media |                   |           | 499,156 |  |   |           | 543,770 | 
|               | Corporate assets  |                   |           | 37,139  |  |   |           | 34,107  | 
|               |                   |                  
|Total assets   |                   | $                 | 1,364,576 |         |  | $ | 1,490,770 |        
|               |                   |                  
|              

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Polypore International, Inc.


Notes to consolidated financial statements (continued)




|    |                                
|--- | -------------------------------
|11. | Segment Information (continued)



|                                     |               |                   |         |             |                 |   |                 |             |  |   |                 |        |  |   |         |         | 
|------------------------------------ | ------------- | ----------------- | ------- | ----------- | --------------- | - | --------------- | ----------- |  | - | --------------- | ------ |  | - | ------- | ------- | 
|                                     |              
|                                     |               | Successor         |         |             | Predecessor     |  
|                                     |               |                   |         |             |                 |  
|                                     |               |                   |         | May 2, 2004 |                 |   | January 4, 2004 |             |  |  
|                                     |               | Year ended        |         |             | through         |   |                 | through     |  |   | Year ended      |       
|(in thousands)                       |               | December 31, 2005 |         |             | January 1, 2005 |   |                 | May 1, 2004 |  |   | January 3, 2004 |       
|                                     |              
|Net sales to unaffiliated customers: |               |                   |         |             |                 |   |                 |             |  |   |                 |        |  |   |         |        
|                                     | United States |                   | $       | 159,822     |                 |   | $               | 125,134     |  |   | $               | 76,230 |  |   | $       | 181,655 | 
|                                     | Germany       |                   |         | 121,360     |                 |   |                 | 94,465      |  |   |                 | 59,972 |  |   |         | 145,820 | 
|                                     | France        |                   |         | 64,450      |                 |   |                 | 40,734      |  |   |                 | 18,959 |  |   |         | 53,402  | 
|                                     | Other         |                   |         | 86,872      |                 |   |                 | 50,756      |  |   |                 | 24,112 |  |   |         | 60,199  | 
|                                     |               |                  
|Total                                |               | $                 | 432,504 |             |                 | $ | 311,089         |             |  | $ | 179,273         |        |  | $ | 441,076 |        
|                                     |               |                  
|                                    



|               |         |                   |         |         |                 |   |         |         | 
|-------------- | ------- | ----------------- | ------- | ------- | --------------- | - | ------- | ------- | 
|               |        
|(in thousands) |         | December 31, 2005 |         |         | January 1, 2005 |  
|               |        
|United States  |         | $                 | 106,981 |         |                 | $ | 113,006 |        
|               | Germany |                   |         | 184,150 |                 |   |         | 228,191 | 
|               | France  |                   |         | 19,853  |                 |   |         | 24,018  | 
|               | Other   |                   |         | 59,887  |                 |   |         | 70,134  | 
|               |         |                  
|Total          |         | $                 | 370,871 |         |                 | $ | 435,349 |        
|               |         |                  
|              



|    |                
|--- | ---------------
|12. | Preferred Stock







63



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Polypore International, Inc.


Notes to consolidated financial statements (continued)




|    |                            
|--- | ---------------------------
|12. | Preferred Stock (continued)



|                                         |  |                 |         |   |                 |   |        |                 |  |   |        | 
|---------------------------------------- |  | --------------- | ------- | - | --------------- | - | ------ | --------------- |  | - | ------ | 
|                                         | 
|                                         |  | Successor       |         |   | Predecessor     |  
|                                         |  |                 |         |   |                 |  
|                                         |  | May 2, 2004     |         |   | January 4, 2004 |   |        |                
|                                         |  | through         |         |   | through May 1,  |   |        | Year ended      | 
|(in thousands)                           |  | January 1, 2005 |         |   | 2004            |   |        | January 3, 2004 | 
|                                         | 
|Balance at beginning of period           |  | $               | 16,645  |   |                 | $ | 16,221 |                 |  | $ | 14,961 | 
|Redemption of redeemable preferred stock |  |                 | (16,645 | ) |                 |   |       |                 |  |   |       | 
|Dividends earned                         |  |                 |        |   |                 |   | 424    |                 |  |   | 1,260  | 
|Dividends paid                           |  |                 |        |   |                 |   |       |                 |  |   |       | 
|                                         |  |                
|Balance at end of period                 |  | $               |        |   |                 | $ | 16,645 |                 |  | $ | 16,221 | 
|                                         |  |                
|                                        



|    |                                  
|--- | ---------------------------------
|13. | Other Comprehensive Income (Loss)



|                                                    |  |                   |        |   |                 |   |     | 
|--------------------------------------------------- |  | ----------------- | ------ | - | --------------- | - | --- | 
|                                                    | 
|(in thousands)                                      |  | December 31, 2005 |        |   | January 1, 2005 |  
|                                                    | 
|Foreign currency translation adjustment             |  | $                 | (5,934 | ) |                 | $ | 696 | 
|Minimum pension liability                           |  |                   | (3,453 | ) |                 |   |    | 
|                                                    |  |                  
|Total accumulated other comprehensive income (loss) |  | $                 | (9,387 | ) |                 | $ | 696 | 
|                                                    |  |                  
|                                                   



|    |                                            
|--- | -------------------------------------------
|14. | Quarterly Results of Operations (Unaudited)

|                                                       |  |           |         |  |         |   |         |         |  |   |         |   |  |   |         |  
|------------------------------------------------------ |  | --------- | ------- |  | ------- | - | ------- | ------- |  | - | ------- | - |  | - | ------- | -
|                                                       | 
|                                                       |  | Successor |        
|                                                       |  |           |        
|                                                       |  | First     |         |  | Second  |   |         | Third   |  |   | Fourth  |  
|(in thousands, except per share data)                  |  | Quarter   |         |  | Quarter |   |         | Quarter |  |   | Quarter |  
|                                                       | 
|Year ended December 31, 2005                           |  |           |         |  |         |   |         |         |  |   |         |   |  |   |         |  
|Net sales                                              |  | $         | 112,498 |  |         | $ | 112,614 |         |  | $ | 105,764 |   |  | $ | 101,628 |  
|Gross profit                                           |  |           | 38,889  |  |         |   | 40,509  |         |  |   | 31,448  |   |  |   | 39,388  |  
|Net income (loss)                                      |  |           | 1,641   |  |         |   | (1,915  | )       |  |   | (2,308  | ) |  |   | (360    | )
|Net income (loss) per common share  basic and diluted |  | $         | 9.57    |  |         | $ | (11.17  | )       |  | $ | (13.46  | ) |  | $ | (2.10   | )
|                                                      

|                                                       |  |             |         |               |             |   |             |              |  |   |         |  |  |         |         |   |  |   |         |  
|------------------------------------------------------ |  | ----------- | ------- | ------------- | ----------- | - | ----------- | ------------ |  | - | ------- |  |  | ------- | ------- | - |  | - | ------- | -
|                                                       | 
|                                                       |  | Predecessor |         |               | Successor   |  
|                                                       |  |             |         |               |             |  
|                                                       |  |             |         | April 3, 2004 |             |   | May 2, 2004 |              |  |  
|                                                       |  | First       |         |               | through     |   |             | through      |  |   | Third   |  |  | Fourth  |        
|(in thousands, except per share data)                  |  | Quarter     |         |               | May 1, 2004 |   |             | July 3, 2004 |  |   | Quarter |  |  | Quarter |        
|                                                       | 
|Year ended January 1, 2005                             |  |             |         |               |             |   |             |              |  |   |         |  |  |         |         |   |  |   |         |  
|Net sales                                              |  | $           | 140,120 |               |             | $ | 39,153      |              |  | $ | 88,729  |  |  | $       | 117,496 |   |  | $ | 104,864 |  
|Gross profit                                           |  |             | 53,859  |               |             |   | 15,248      |              |  |   | 30,579  |  |  |         | 25,663  |   |  |   | 28,929  |  
|Net income (loss)                                      |  |             | 20,738  |               |             |   | 6,095       |              |  |   | 2,641   |  |  |         | (12,436 | ) |  |   | (9,470  | )
|Net income (loss) per common share  basic and diluted |  | $           | 131.64  |               |             | $ | 38.65       |              |  | $ | 15.46   |  |  | $       | (72.55  | ) |  | $ | (55.24  | )
|                                                      



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Polypore International, Inc.


Notes to consolidated financial statements (continued)




|    |                                                        
|--- | -------------------------------------------------------
|14. | Quarterly Results of Operations (Unaudited) (continued)







|    |                           
|--- | --------------------------
|15. | Related Party Transactions







|    |                                      
|--- | -------------------------------------
|16. | Stock Option and Stock Incentive Plan

10-year


65



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Polypore International, Inc.


Notes to consolidated financial statements (continued)




|    |                                                  
|--- | -------------------------------------------------
|16. | Stock Option and Stock Incentive Plan (continued)



|                                       |  |                  |       |   |      |  |       |  
|-------------------------------------- |  | ---------------- | ----- | - | ---- |  | ----- | -
|                                       | 
|                                       |  | Weighted Average |      
|                                       |  | Assumptions      |      
|                                       |  |                  |      
|                                       |  | 2005             |       |   | 2004 | 
|                                       | 
|Weighted-average expected life (years) |  |                  | 4.00  |   |      |  | 5.00  |  
|Risk free interest rate                |  |                  | 3.86  | % |      |  | 3.96  | %
|Expected volatility                    |  |                  | 20.00 | % |      |  | 20.00 | %
|Dividend yield                         |  |                  |      | % |      |  |      | %
|                                      





|                                                                              |  |         |       |           |                  |   |     |         |           |  |                  |  |  |   |     | 
|----------------------------------------------------------------------------- |  | ------- | ----- | --------- | ---------------- | - | --- | ------- | --------- |  | ---------------- |  |  | - | --- | 
|                                                                              | 
|                                                                              |  | 2005    |       |           | 2004             |  
|                                                                              |  |         |       |           |                  |  
|                                                                              |  |         |       | Weighted- |                  |   |     |         | Weighted- | 
|                                                                              |  | Options |       |           | Average Exercise |   |     | Options |           |  | Average Exercise | 
|                                                                              |  | (000s) |       |           | Price            |   |     | (000s) |           |  | Price            | 
|                                                                              | 
|Outstanding at beginning of year                                              |  |         | 4,501 |           |                  | $ | 725 |         |           |  |                 |  |  | $ |    | 
|Granted                                                                       |  |         | 4,402 |           |                  |   | 874 |         |           |  | 4,501            |  |  |   | 725 | 
|Forfeited                                                                     |  |         | (162  | )         |                  |   | 725 |         |           |  |                 |  |  |   |    | 
|                                                                              |  |         |       |           |                  |   |     |         |           |  |                  | 
|Outstanding at end of year                                                    |  |         | 8,741 |           |                  |   | 800 |         |           |  | 4,501            |  |  |   | 725 | 
|                                                                              |  |         |       |           |                  |   |     |         |           |  |                  | 
|Exercisable at end of year                                                    |  |         | 1,497 |           |                  |   | 831 |         |           |  |                 |  |  |   |    | 
|Weighted average grant date fair value of options granted during
    the year |  |         |       |           |                  |   | 874 |         |           |  |                  |  |  |   | 725 | 
|                                                                             







|    |                      
|--- | ---------------------
|17. | Environmental Matters





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Polypore International, Inc.


Notes to consolidated financial statements (continued)




|    |                                  
|--- | ---------------------------------
|17. | Environmental Matters (continued)











|    |                       
|--- | ----------------------
|18. | Business Restructuring

2005 Restructuring Plan




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Polypore International, Inc.


Notes to consolidated financial statements (continued)




|    |                                   
|--- | ----------------------------------
|18. | Business Restructuring (continued)





Accounting for the Impairment
or Disposal of Long-Lived Assets


Accounting for Costs Associated with Exit or
Disposal Activities


2004 Restructuring Plan






68



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Polypore International, Inc.


Notes to consolidated financial statements (continued)




|    |                                   
|--- | ----------------------------------
|18. | Business Restructuring (continued)



|                         |                                 |            |        |        |               |   |         |          |   |            |          |        |   |             |         |        |              |   |        |        |   |   |       |       | 
|------------------------ | ------------------------------- | ---------- | ------ | ------ | ------------- | - | ------- | -------- | - | ---------- | -------- | ------ | - | ----------- | ------- | ------ | ------------ | - | ------ | ------ | - | - | ----- | ----- | 
|                         |                                
|                         |                                 | Balance at |        |        |               |   | Foreign |          |   | Balance at |         
|                         |                                 | January 1, |        |        | Restructuring |   |         | Non-cash |   |            | Cash     |        |   | Currency    |         |        | December 31, |  
|(in thousands)           |                                 | 2005       |        |        | Charges       |   |         | Charges  |   |            | Payments |        |   | Translation |         |        | 2005         |  
|                         |                                
|2005 Restructuring Plan: |                                 |            |        |        |               |   |         |          |   |            |          |        |   |             |         |        |              |   |        |        |   |   |       |      
|                         | Severance and benefit costs     |            | $      |       |               |   | $       | 4,890    |   |            | $        |       |   |             | $       | (3,178 | )            |   | $      | (206   | ) |   | $     | 1,506 | 
|                         | Asset disposals and impairments |            |        |       |               |   |         | 1,278    |   |            |          | (1,278 | ) |             |         |       |              |   |        |       |   |   |       |      | 
|                         | Other                           |            |        |       |               |   |         | 685      |   |            |          |       |   |             |         | (685   | )            |   |        |       |   |   |       |      | 
|                         |                                 |           
|                         |                                 |            |       |        |               |   | 6,853   |          |   |            | (1,278   | )      |   |             | (3,863  | )      |              |   | (206   | )      |   |   | 1,506 |      
|2004 Restructuring Plan: |                                 |            |        |        |               |   |         |          |   |            |          |        |   |             |         |        |              |   |        |        |   |   |       |      
|                         | Severance and benefit costs     |            |        | 14,944 |               |   |         | (112     | ) |            |          |       |   |             |         | (9,679 | )            |   |        | (1,084 | ) |   |       | 4,069 | 
|                         | Raw materials                   |            |        | 1,256  |               |   |         | (176     | ) |            |          |       |   |             |         | (911   | )            |   |        | (137   | ) |   |       | 32    | 
|                         | Other                           |            |        |       |               |   |         | 2,128    |   |            |          |       |   |             |         | (1,852 | )            |   |        | (11    | ) |   |       | 265   | 
|                         |                                 |           
|                         |                                 |            | 16,200 |        |               |   | 1,840   |          |   |            |         |        |   |             | (12,442 | )      |              |   | (1,232 | )      |   |   | 4,366 |      
|                         |                                 |           
|Total                    |                                 | $          | 16,200 |        |               | $ | 8,693   |          |   | $          | (1,278   | )      |   | $           | (16,305 | )      |              | $ | (1,438 | )      |   | $ | 5,872 |      
|                         |                                 |           
|                        



|                         |                             |               |        |        |            |   |      |          |   |   |             |      |   |            |       |       |  |   |        |        | 
|------------------------ | --------------------------- | ------------- | ------ | ------ | ---------- | - | ---- | -------- | - | - | ----------- | ---- | - | ---------- | ----- | ----- |  | - | ------ | ------ | 
|                         |                            
|                         |                             | Foreign       |        |        | Balance at |  
|                         |                             | Restructuring |        |        | Non-cash   |   |      | Cash     |   |   | Currency    |      |   | January 1, |      
|(in thousands)           |                             | Charges       |        |        | Charges    |   |      | Payments |   |   | Translation |      |   | 2005       |      
|                         |                            
|2004 Restructuring Plan: |                             |               |        |        |            |   |      |          |   |   |             |      |   |            |       |       |  |   |        |       
|                         | Severance and benefit costs |               | $      | 13,899 |            |   | $    |         |   |   | $           | (389 | ) |            | $     | 1,434 |  |   | $      | 14,944 | 
|                         | Raw materials               |               |        | 1,788  |            |   |      | (651     | ) |   |             |     |   |            |       | 119   |  |   |        | 1,256  | 
|                         |                             |              
|Total                    |                             | $             | 15,687 |        |            | $ | (651 | )        |   | $ | (389        | )    |   | $          | 1,553 |       |  | $ | 16,200 |       
|                         |                             |              
|                        





69



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|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements With Accountants on Accounting
    and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

13(a)-15(e) 15d-15(e)


13a-15(f) 15d-15(f)







|         |                  
|-------- | -----------------
|Item 9B. | Other Information






Part III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant



|                |  |     |    |  |          |                                                 
|--------------- |  | --- | -- |  | -------- | ------------------------------------------------
|               
|Name            |  | Age |    |  | Position
|               
|Robert B. Toth  |  |     | 45 |  |          | President, Chief Executive Officer and Director 
|Lynn Amos       |  |     | 40 |  |          | Chief Financial Officer, Treasurer and Secretary
|Stefan Geyler   |  |     | 49 |  |          | Vice President & General Manager, Membrana GmbH 
|Brad Reed       |  |     | 47 |  |          | Vice President & General Manager, Celgard LLC   
|Pierre Hauswald |  |     | 52 |  |          | Vice President & General Manager, Daramic LLC   
|Michael Graff   |  |     | 53 |  |          | Chairman of the Board of Directors              
|Frank Nasisi    |  |     | 66 |  |          | Vice Chairman of the Board of Directors         
|David A. Barr   |  |     | 41 |  |          | Director                                        
|Kevin Kruse     |  |     | 35 |  |          | Director                                        
|               

Robert B. Toth


Lynn Amos


Stefan Geyler


70



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##### Table of Contents





Brad Reed ® ®


Pierre Hauswald


Michael Graff


Frank Nasisi ®


David A. Barr


Kevin Kruse


Term of executive officers and directors




Code of Ethics




71



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##### Table of Contents



Board composition


see See


Board committees






| |                
| | ---------------
| | Audit committee





| |                       
| | ----------------------
| | Compensation committee








|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation

Compensation Committee Report








| |                                            
| | -------------------------------------------
| | 2005 Executive Officer Compensation Program







72



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##### Table of Contents





Chief Executive Officer Compensation








| |                         
| | ------------------------
| | Compensation Committee  
|
| | Michael Graff  Chairman
| | David A. Barr           

73



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##### Table of Contents



Summary Compensation Table




|                                  |  |                     |      |              |        |   |           |       |  |   |                 |  |  |                 |         |  |  |   |         | 
|--------------------------------- |  | ------------------- | ---- | ------------ | ------ | - | --------- | ----- |  | - | --------------- |  |  | --------------- | ------- |  |  | - | ------- | 
|                                  | 
|                                  |  | Annual Compensation |      |              |       
|                                  |  |                     |      |              |       
|                                  |  |                     |      | Other Annual |        |   | All Other |      
|Name and Principal Position       |  | Year                |      |              | Salary |   |           | Bonus |  |   | Compensation(1) |  |  | Compensation(2) |        
|                                  | 
|Robert B. Toth(3)                 |  |                     | 2005 |              |        | $ | 225,000   |       |  | $ | 225,000         |  |  | $               | 130,501 |  |  | $ | 4,327   | 
|President and Chief Executive     |  |                     | 2004 |              |        |   |          |       |  |   |                |  |  |                 |        |  |  |   |        | 
|Officer                           |  |                     | 2003 |              |        |   |          |       |  |   |                |  |  |                 |        |  |  |   |        | 
|Lynn Amos                         |  |                     | 2005 |              |        | $ | 250,000   |       |  | $ |                 |  |  | $               |        |  |  | $ | 14,808  | 
|Chief Financial Officer,          |  |                     | 2004 |              |        |   | 198,015   |       |  |   | 600,000         |  |  |                 |        |  |  |   | 478,822 | 
|Treasurer and Secretary           |  |                     | 2003 |              |        |   | 127,253   |       |  |   | 415,000         |  |  |                 | 24,787  |  |  |   | 9,964   | 
|Stefan Geyler                     |  |                     | 2005 |              |        | $ | 188,467   |       |  | $ | 1,372           |  |  | $               | 15,607  |  |  | $ |        | 
|Vice President & General Manager, |  |                     | 2004 |              |        |   | 179,835   |       |  |   | 197,862         |  |  |                 | 15,413  |  |  |   | 235,000 | 
|Membrana GmbH                     |  |                     | 2003 |              |        |   | 156,506   |       |  |   | 170,833         |  |  |                 | 13,883  |  |  |   |        | 
|Brad Reed                         |  |                     | 2005 |              |        | $ | 203,300   |       |  | $ |                |  |  | $               | 5,357   |  |  | $ | 14,496  | 
|Vice President & General Manager, |  |                     | 2004 |              |        |   | 198,477   |       |  |   | 310,000         |  |  |                 | 4,645   |  |  |   | 250,471 | 
|Celgard, LLC                      |  |                     | 2003 |              |        |   | 191,169   |       |  |   | 255,000         |  |  |                 | 5,654   |  |  |   | 14,659  | 
|Pierre Hauswald                   |  |                     | 2005 |              |        | $ | 250,821   |       |  | $ |                |  |  | $               | 60,698  |  |  | $ |        | 
|Vice President & General Manager, |  |                     | 2004 |              |        |   | 175,967   |       |  |   | 204,090         |  |  |                 |        |  |  |   | 4,056   | 
|Daramic, LLC                      |  |                     | 2003 |              |        |   | 145,146   |       |  |   | 167,326         |  |  |                 |        |  |  |   | 3,590   | 
|Frank Nasisi(4)                   |  |                     | 2005 |              |        | $ | 435,000   |       |  | $ | 145,000         |  |  | $               | 5,874   |  |  | $ | 16,778  | 
|Former President and Chief        |  |                     | 2004 |              |        |   | 404,600   |       |  |   | 609,000         |  |  |                 | 5,875   |  |  |   | 481,375 | 
|Executive Officer                 |  |                     | 2003 |              |        |   | 356,743   |       |  |   | 515,000         |  |  |                 | 8,225   |  |  |   | 16,000  | 
|                                 



|    |                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Amounts in this column represent relocation expenses or personal
    mileage amounts related to company-owned vehicles.                                                                                                                                                                                                                                                                                                  
|   
|(2) | Consists of employer 401(k) contributions or similar items for
    executives based outside the United States. In addition to
    bonuses paid pursuant to the Companys executive bonus
    plan, Mr. Nasisi, Mr. Amos, Mr. Geyler and
    Mr. Reed each received a one-time bonus in connection with
    the closing of the Transactions in the amounts of $465,000,
    $465,000, $235,000 and $235,000, respectively.
|   
|(3) | Mr. Toth became our President and Chief Executive Officer
    on July 6, 2005. Mr. Toths initial annual base
    salary was $450,000. Salary for Mr. Toth in the above table
    represents the portion of the annual base salary that was earned
    since July 6, 2005.                                                                                                                                               
|   
|(4) | Effective as of July 6, 2005, Mr. Nasisi retired from
    his position as the Companys Chief Executive Officer and
    President. Mr. Nasisi remains on the board of directors in
    his new capacity as the Vice Chairman of the board of directors.                                                                                                                                                                  

74



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Option Grants in 2005




Option Grants in Last Fiscal Year


|               |  |                      |       |  |                  |  |      |             |  |   |            |  |  |                    |            |  |  |   |         | 
|-------------- |  | -------------------- | ----- |  | ---------------- |  | ---- | ----------- |  | - | ---------- |  |  | ------------------ | ---------- |  |  | - | ------- | 
|               | 
|               |  | Individual Grants(1) |       |  |                 
|               |  |                      |       |  |                 
|               |  | Number of            |       |  |                  |  |     
|               |  | Securities           |       |  | Percent Of Total |  |      |            
|               |  | Underlying           |       |  | Options Granted  |  |      | Exercise Or |  |   |           
|               |  | Option               |       |  | To Employees     |  |      | Base Price  |  |   | Expiration |  |  | Grant Date Present |           
|Name           |  | Granted              |       |  | In Fiscal Year   |  |      | ($/Sh)      |  |   | Date       |  |  | Value($)(2)        |           
|               | 
|Robert B. Toth |  |                      | 4,152 |  |                  |  | 94.3 |             |  | $ | 875        |  |  |                    | 07/06/2015 |  |  | $ | 833,000 | 
|              



|    |                                                                                                                                                                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Stock options are issued at an exercise price not less than the
    fair market value of the underlying stock on the grant date. The
    options expire in ten years from the grant date and vest and
    become fully exercisable after five years based on satisfaction
    of certain performance criteria, or upon change in control as
    defined.
|   
|(2) | The fair value of the stock options was determined by the
    Black-Scholes option pricing model with a weighted-average
    expected life of five years, risk-free interest rate of 3.86%
    and expected volatility of 20%.                                                                                                                          

Aggregated Option Exercises In Last Fiscal Year and Fiscal
Year-End Option Values




|                |  |                     |   |  |                   |   |                    |  |  |               |             |  |  |   |                 | 
|--------------- |  | ------------------- | - |  | ----------------- | - | ------------------ |  |  | ------------- | ----------- |  |  | - | --------------- | 
|                | 
|                |  | Number Of           |   |  | Value of          |  
|                |  | Securities          |   |  | Unexercised       |  
|                |  | Underlying          |   |  | In-The-Money      |  
|                |  | Unexercised Options |   |  | Options At Fiscal |  
|                |  | Shares Acquired     |   |  |                   |   | At Fiscal Year-End |  |  | Year-End ($)  |            
|                |  | On                  |   |  | Value             |   | (#) Exercisable/   |  |  | Exercisable/  |            
|Name            |  | Exercise (#)        |   |  | Realized($)       |   | Unexercisable      |  |  | Unexercisable |            
|                | 
|Robert B. Toth  |  |                     |  |  |                   | $ |                   |  |  |               | 1,038/3,114 |  |  | $ | 18,427/$55,280  | 
|Frank Nasisi(1) |  |                     |  |  |                   |   |                   |  |  |               | 81/726      |  |  | $ | 13,561/$122,049 | 
|Lynn Amos       |  |                     |  |  |                   |   |                   |  |  |               | 48/436      |  |  | $ | 8,133/$73,199   | 
|Stefan Geyler   |  |                     |  |  |                   |   |                   |  |  |               | 45/404      |  |  | $ | 7,545/$67,906   | 
|Brad Reed       |  |                     |  |  |                   |   |                   |  |  |               | 45/404      |  |  | $ | 7,545/$67,906   | 
|Pierre Hauswald |  |                     |  |  |                   |   |                   |  |  |               | 45/404      |  |  | $ | 7,545/$67,906   | 
|               



|    |                                              
|--- | ---------------------------------------------
|(1) | Former Chief Executive Officer and President.

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Geyler Pension Plan




|              |         |                  |        |        |    |   |        |         |  |   |        |         |  |    |        |         |  |   |        |         | 
|------------- | ------- | ---------------- | ------ | ------ | -- | - | ------ | ------- |  | - | ------ | ------- |  | -- | ------ | ------- |  | - | ------ | ------- | 
|              |        
|              |         | Years of Service |       
|              |         |                  |       
|Annual Salary |         | 15               |        |        | 20 |   |        | 25      |  |   | 30     |         |  | 35 |       
|              |        
|$125,000      |         | $                | 14,366 |        |    | $ | 19,155 |         |  | $ | 23,944 |         |  | $  | 28,732 |         |  | $ | 33,521 |        
|              | 150,000 |                  |        | 18,550 |    |   |        | 24,733  |  |   |        | 30,916  |  |    |        | 37,100  |  |   |        | 43,283  | 
|              | 175,000 |                  |        | 22,733 |    |   |        | 30,311  |  |   |        | 37,889  |  |    |        | 45,467  |  |   |        | 53,045  | 
|              | 200,000 |                  |        | 26,917 |    |   |        | 35,889  |  |   |        | 44,862  |  |    |        | 53,834  |  |   |        | 62,806  | 
|              | 225,000 |                  |        | 31,101 |    |   |        | 41,468  |  |   |        | 51,835  |  |    |        | 62,201  |  |   |        | 72,568  | 
|              | 250,000 |                  |        | 35,284 |    |   |        | 47,046  |  |   |        | 58,807  |  |    |        | 70,569  |  |   |        | 82,330  | 
|              | 300,000 |                  |        | 43,652 |    |   |        | 58,202  |  |   |        | 72,753  |  |    |        | 87,303  |  |   |        | 101,854 | 
|              | 400,000 |                  |        | 60,386 |    |   |        | 80,515  |  |   |        | 100,644 |  |    |        | 120,772 |  |   |        | 140,901 | 
|              | 450,000 |                  |        | 68,753 |    |   |        | 91,671  |  |   |        | 114,589 |  |    |        | 137,507 |  |   |        | 160,425 | 
|              | 500,000 |                  |        | 77,121 |    |   |        | 102,828 |  |   |        | 128,534 |  |    |        | 154,241 |  |   |        | 179,948 | 
|             



Management investment






Indemnification agreements




76



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Stock plans






| |                       
| | ----------------------
| | 2004 Stock Option Plan





| |                     
| | --------------------
| | Stock Incentive Plan



Accounting
for Stock-Based Compensation.


Employment agreements




| |               
| | --------------
| | Robert B. Toth



77



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| |             
| | ------------
| | Frank Nasisi





78



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Director compensation




Compensation committee interlocks and insider
participation









|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters





|  |                                                                                                           
|- | ----------------------------------------------------------------------------------------------------------
| | each stockholder who we know beneficially owns more than 5% of
    our outstanding shares of common stock;
| 
| | each of our directors;                                                                                    
| 
| | each of our named executive officers; and                                                                 
| 
| | all of our directors and executive officers as a group.                                                   



|                                                                    |  |               |         |  |              |  |   |              |  |  |              |  |  |  |        |  
|------------------------------------------------------------------- |  | ------------- | ------- |  | ------------ |  | - | ------------ |  |  | ------------ |  |  |  | ------ | -
|                                                                    | 
|                                                                    |  | Percentage of |        
|                                                                    |  | common        |        
|                                                                    |  | Shares        |         |  | Total shares |  |   | stock        | 
|                                                                    |  | Shares        |         |  | subject to   |  |   | beneficially |  |  | beneficially | 
|Name of beneficial owner                                            |  | owned         |         |  | options      |  |   | owned        |  |  | owned        | 
|                                                                    | 
|Warburg Pincus Private Equity VIII, L.P.(1)                         |  |               | 156,421 |  |              |  |  |              |  |  | 156,421      |  |  |  | 91.25  | %
|Warburg Pincus International Partners, L.P.(2)                      |  |               | 156,421 |  |              |  |  |              |  |  | 156,421      |  |  |  | 91.25  | %
|PP Holding LLC(3)                                                   |  |               | 141,421 |  |              |  |  |              |  |  | 141,421      |  |  |  | 82.50  | %
|Robert B. Toth(4)                                                   |  |               |        |  |              |  |  |              |  |  |             |  |  |  | *      |  
|Frank Nasisi(3)                                                     |  |               |        |  |              |  |  |              |  |  |             |  |  |  | *      |  
|Lynn Amos(3)                                                        |  |               |        |  |              |  |  |              |  |  |             |  |  |  | *      |  
|Stefan Geyler(3)                                                    |  |               |        |  |              |  |  |              |  |  |             |  |  |  | *      |  
|Brad Reed(3)                                                        |  |               |        |  |              |  |  |              |  |  |             |  |  |  | *      |  
|David A. Barr(5)                                                    |  |               | 171,421 |  |              |  |  |              |  |  | 171,421      |  |  |  | 100.00 | %
|Michael Graff                                                       |  |               |        |  |              |  |  |              |  |  |             |  |  |  | *      |  
|Kevin Kruse                                                         |  |               |        |  |              |  |  |              |  |  |             |  |  |  | *      |  
|All directors and executive officers as a group
    (seven) persons |  |               | 171,421 |  |              |  |  |              |  |  | 171,421      |  |  |  | 100.00 | %
|                                                                   



|  |                                                                
|- | ---------------------------------------------------------------
|* | Less than one percent of the outstanding shares of common stock



|    |                                                                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes 15,000 shares owned directly and
    141,421 shares beneficially owned through PP Holding, LLC.
    Warburg Pincus Private Equity VIII, L.P., including two related
    limited partnerships (WP VIII), is one of two
    managing members of PP Holding, LLC and may be deemed to own

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | beneficially all of the shares owned by PP Holding, LLC. Warburg
    Pincus Partners LLC (WPP LLC) is the sole general
    partner of WP VIII. WPP LLC is managed by Warburg
    Pincus & Co., a New York general partnership
    (WP). WP VIII is managed by Warburg Pincus LLC, a
    Delaware limited liability company (WP LLC). The
    address of the Warburg Pincus entities is 466 Lexington Avenue,
    New York, New York 10017. See Note 3 below.                                                                                                                      
|   
|(2) | Includes 15,000 shares owned directly and
    141,421 shares beneficially owned through PP Holding, LLC.
    Warburg Pincus International Partners, L.P., including two
    related limited partnerships (WPIP), is one of the
    managing members of PP Holding, LLC and may be deemed to own
    beneficially all of the shares owned by PP Holding, LLC. WPP LLC
    is the sole general partner of each of these entities. WPIP is
    managed by WP LLC. The address of the Warburg Pincus entities is
    466 Lexington Avenue, New York, New York 10017. See Note 3
    below.
|   
|(3) | WP VIII and WPIP each own 70,000 Class A units of PP
    Holding, LLC, representing an aggregate of approximately 99% of
    the outstanding membership interests of PP Holding, LLC. Frank
    Nasisi, Lynn Amos, Stefan Geyler and Brad Reed own, in the
    aggregate, 785 Class A units of PP Holding, LLC,
    representing an aggregate of approximately 0.6% of the
    outstanding membership interests of PP Holding, LLC.                                                                                                                                                     
|   
|(4) | Mr. Toth, our Chief Executive Officer, will be entitled to
    purchase additional shares of the Companys stock during
    the first year of his employment term at $875 per unit.                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(5) | Mr. Barr, a director of Polypore International, is a
    general partner of WP and a managing director and member of WP
    LLC. All shares indicated as owned by Mr. Barr are included
    because of his affiliation with the Warburg Pincus entities.
    Mr. Barr owns no shares individually and disclaims
    beneficial ownership of all shares owned by the Warburg Pincus
    entities. His address is c/o Warburg Pincus LLC, 466
    Lexington Avenue, New York, NY 10017. See Notes 1 and 2
    above.                                                                      



|                                                           |       |                      |       |       |                   |   |     |                       |  |  |     |     | 
|---------------------------------------------------------- | ----- | -------------------- | ----- | ----- | ----------------- | - | --- | --------------------- |  |  | --- | --- | 
|                                                           |      
|                                                           |       | Number of securities |      
|                                                           |       | remaining available  |      
|                                                           |       | for future issuance  |      
|                                                           |       | Number of securities |       |       | Weighted-average  |   |     | under equity          | 
|                                                           |       | to be issued upon    |       |       | exercise price of |   |     | compensation plans    | 
|                                                           |       | exercise of          |       |       | outstanding       |   |     | (excluding securities | 
|                                                           |       | outstanding options, |       |       | options, warrants |   |     | reflected in column   | 
|                                                           |       | warrants and rights  |       |       | and rights        |   |     | (a)                   | 
|Plan Category                                              |       | (a)                  |       |       | (b)               |   |     | (c)                   | 
|                                                           |      
|Equity compensation plans approved by security holders(1)  |       |                      | 8,741 |       |                   | $ | 800 |                       |  |  | 227 |    
|Equity compensation plans not approved by security holders |       |                      |      |       |                   |   |    |                       |  |  |    |    
|                                                           |       |                     
|                                                           | Total |                      |       | 8,741 |                   |   | $   | 800                   |  |  |     | 227 | 
|                                                           |       |                     
|                                                          



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes shares issuable under the 2004 Stock Option Plan. In
    addition, as more fully described above in Item 11.
    Executive Compensation  Employment Agreements,
    our Chief Executive Officer is entitled to purchase additional
    shares of the Companys common stock during the first year
    of his employment term at $875 per unit. The shares that can be
    purchased by the Chief Executive Officer are not included in the
    table because the number of shares are not determined as of the
    date of this Annual Report on
    Form 10-K.






|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions

The Transactions





80



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##### Table of Contents



3 4 3 4


Tax sharing agreement




Management investments




Operating agreement






Stockholders agreement






81



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##### Table of Contents





Stockholders registration rights agreement




Transition services




German investments









|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services



|                      |  |      |     |  |      |   |       | 
|--------------------- |  | ---- | --- |  | ---- | - | ----- | 
|                      | 
|(in thousands)        |  | 2005 |     |  | 2004 |  
|                      | 
|Audit Fees(1)         |  | $    | 889 |  |      | $ | 1,537 | 
|Audit-Related Fees(2) |  |      | 84  |  |      |   | 302   | 
|Tax Fees(3)           |  |      | 595 |  |      |   | 1,891 | 
|All Other Fees        |  |      |    |  |      |   |      | 
|                     



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Audit Fees. This fee category consists of professional services
    rendered for the audit of our annual financial statements,
    review of our quarterly financial statements and services
    normally provided by the independent auditors in connection with
    statutory and regulatory filings, including services associated
    with SEC registration statements, other documents filed with the
    SEC and advice on audit and accounting matters that arose during
    the audit or review of our financial statements.
|   
|(2) | Audit-Related Fees. This fee category consists of assurance and
    related professional services rendered by Ernst & Young LLP
    that are reasonably related to performing the audit and review
    of our financial statements and are not reported above under
    Audit Fees. The services for these fees include
    audits of financial statements for the Companys employee
    benefit plans and Transaction related expenses.                                                                                         
|   
|(3) | Tax Fees. This fee category consists of professional services
    rendered by Ernst & Young LLP for tax return preparation,
    tax compliance and tax planning and advice.                                                                                                                                                                                                                                                                                                                                                         



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Part IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules



Financial Statements.




| |   |                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Report of Independent Registered Public Accounting Firm                                                                                                                                                                                          
|
| |  | Consolidated Balance Sheets as of December 31, 2005 and
    January 1, 2005                                                                                                                                                                      
|
| |  | Consolidated Statements of Operations for the year ended
    December 31, 2005, the period from May 2, 2004 through
    January 1, 2005, the period from January 4, 2004
    through May 1, 2004 and the year ended January 3, 2004              
|
| |  | Consolidated Statements of Shareholders Equity for the
    year ended December 31, 2005, the period from May 2,
    2004 through January 1, 2005, the period from
    January 4, 2004 through May 1, 2004 and the year ended
    January 3, 2004
|
| |  | Consolidated Statements of Cash Flows for the year ended
    December 31, 2005, the period from May 2, 2004 through
    January 1, 2005, the period from January 4, 2004
    through May 1, 2004 and the year ended January 3, 2004              
|
| |  | Notes to Consolidated Financial Statements                                                                                                                                                                                                       

Financial Statement Schedules.




| |                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Valuation and Qualifying Accounts for the year ended
    December 31, 2005, the period from May 2, 2004 through
    January 1, 2005, the period from January 4, 2004
    through May 1, 2004 and the year ended January 3, 2004



Exhibits.


|        |   |                     |  |                                                                                                                                                                                                                                                  
|------- | - | ------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       
|Exhibit
|Number  |   | Exhibit Description
|        |   |                    
|       
|        | 3 | .1                  |  | Certificate of Incorporation of Polypore International, Inc.
    (incorporated by reference to Exhibit 3.1 to the
    Companys Registration Statement on Form S-4 filed on
    April 18, 2005 (Commission File No. 333-124142))                 
|        | 3 | .2                  |  | Amendment to Certificate of Incorporation of Polypore
    International, Inc. (incorporated by reference to
    Exhibit 3.2 to the Companys Registration Statement on
    Form S-4 filed on April 18, 2005 (Commission File
    No. 333-124142))
|        | 3 | .3                  |  | Bylaws of Polypore International, Inc. (incorporated by
    reference to Exhibit 3.3 to the Companys Registration
    Statement on Form S-4 filed on April 18, 2005
    (Commission File No. 333-124142))                                       

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|        |    |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------- | -- | ------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       
|Exhibit
|Number  |    | Exhibit Description
|        |    |                    
|       
|        | 4  | .1                  |  | Indenture, dated as of May 13, 2004, by and among PP
    Acquisition Corporation (merged with and into Polypore, Inc.),
    the Guarantors (as defined therein) and The Bank of New York, as
    Trustee (incorporated by reference to Exhibit 10.7 to the
    Companys Registration Statement on Form S-4 filed on
    April 18, 2005 (Commission File No. 333-124142)) (the
    83/4% Indenture)                                                                                                                                                                                                                                                    
|        | 4  | .2                  |  | Form of
    83/4% Senior
    Subordinated Dollar Notes Due 2012 (incorporated by reference to
    Exhibit C of the
    83/4% Indenture)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 4  | .3                  |  | Form of
    83/4% Senior
    Subordinated Euro Notes Due 2012 (incorporated by reference to
    Exhibit D of the
    83/4% Indenture)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|        | 4  | .4                  |  | Indenture, dated as of October 18, 2004, by and among
    Polypore International, Inc. and The Bank of New York, as
    Trustee (incorporated by reference to Exhibit 4.1 to the
    Companys Registration Statement on Form S-4 filed on
    April 18, 2005 (Commission File No. 333-124142)) (the
    101/2% Indenture)                                                                                                                                                                                                                                                                                                                             
|        | 4  | .5                  |  | Form of
    101/2% Senior
    Discount Notes Due 2012 (incorporated by reference to
    Exhibit B of the
    101/2% Indenture)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|        | 10 | .1                  |  | Stock Purchase Agreement, dated as of January 30, 2004, by
    and among Polypore, Inc., PP Acquisition Corporation and the
    stockholders of Polypore, Inc. (incorporated by reference to
    Exhibit 10.1 to the Companys Registration Statement
    on Form S-4 filed on April 18, 2005 (Commission File
    No. 333-124142))                                                                                                                                                                                                                                                                                                                      
|        | 10 | .2                  |  | Credit Agreement, dated as of May 13, 2004, by and among PP
    Holding Corporation, PP Acquisition Corporation, as Borrower,
    the Several Lenders (as defined therein) from time to time
    parties thereto, General Electric Capital Corporation, Lehman
    Commercial Paper Inc. and UBS Securities LLC, as Documentation
    Agents, Bear Stearns Corporate Lending Inc., as Syndication
    Agent, and JPMorgan Chase Bank, as Administrative Agent
    (incorporated by reference to Exhibit 10.2 to the
    Companys Registration Statement on Form S-4 filed on
    April 18, 2005 (Commission File No. 333-124142))                       
|        | 10 | .3                  |  | First Amendment to Credit Agreement, dated as of May 13,
    2004, by and among PP Holding Corporation, PP Acquisition
    Corporation, as Borrower, the Several Lenders (as defined
    therein) from time to time parties thereto, General Electric
    Capital Corporation, Lehman Commercial Paper Inc. and UBS
    Securities LLC, as Documentation Agents, Bear Stearns Corporate
    Lending Inc., as Syndication Agent, and JPMorgan Chase Bank, as
    Administrative Agent (incorporated by reference to
    Exhibit 10.3 to the Companys Registration Statement
    on Form S-4 filed on April 18, 2005 (Commission File
    No. 333-124142))
|        | 10 | .4                  |  | Guarantee and Collateral Agreement, dated as of May 13,
    2004, by and among PP Holding Corporation, PP Acquisition
    Corporation and the subsidiaries of PP Acquisition Corporation
    identified therein (incorporated by reference to
    Exhibit 10.4 to the Companys Registration Statement
    on Form S-4 filed on April 18, 2005 (Commission File
    No. 333-124142))                                                                                                                                                                                                                                                                     
|        | 10 | .5                  |  | Tax Sharing Agreement, dated as of May 13, 2004, by and
    among Polypore International, Inc., PP Holding Corporation and
    Polypore, Inc. (incorporated by reference to Exhibit 10.5
    to the Companys Registration Statement on Form S-4
    filed on April 18, 2005 (Commission File
    No. 333-124142))                                                                                                                                                                                                                                                                                                                                       
|        | 10 | .6                  |  | Stockholders Agreement, dated as of May 13, 2004, by
    and among Warburg Pincus Private Equity VIII, L.P., Warburg
    Pincus International Partners, L.P., PP Holding, LLC and
    Polypore International, Inc. (incorporated by reference to
    Exhibit 10.6 to the Companys Registration Statement
    on Form S-4 filed on April 18, 2005 (Commission File
    No. 333-124142))                                                                                                                                                                                                                                                                 
|        | 10 | .7                  |  | Registration Rights Agreement, dated as of May 13, 2004, by
    and among Warburg Pincus Private Equity VIII, L.P., Warburg
    Pincus International Partners, L.P., PP Holding, LLC, Polypore
    International, Inc. and certain other persons a party thereto
    (incorporated by reference to Exhibit 10.8 to the
    Companys Registration Statement on Form S-4 filed on
    April 18, 2005 (Commission File No. 333-124142))                                                                                                                                                                                                                    
|        | 10 | .8*                 |  | Polypore International, Inc. 2004 Stock Option Plan
    (incorporated by reference to Exhibit 10.9 to the
    Companys Registration Statement on Form S-4 filed on
    April 18, 2005 (Commission File No. 333-124142))                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        | 10 | .9*                 |  | Polypore International, Inc. 2004 Stock Incentive Plan
    (incorporated by reference to Exhibit 10.10 to the
    Companys Registration Statement on Form S-4 filed on
    April 18, 2005 (Commission File No. 333-124142))                                                                                                                                                                                                                                                                                                                                                                                                                             

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|        |    |                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|------- | -- | ------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       
|Exhibit
|Number  |    | Exhibit Description
|        |    |                    
|       
|        | 10 | .10*                |  | Term Sheet for Employment Arrangement, dated as of January 2004,
    by and between Polypore, Inc. and Frank Nasisi (incorporated by
    reference to Exhibit 10.11 to the Companys
    Registration Statement on Form S-4 filed on April 18,
    2005 (Commission File No. 333-124142))                                                                                                                                                                                                                                                                                                                         
|        | 10 | .11*                |  | Form of Director and Officer Indemnification Agreement entered
    into between Polypore, Inc. and certain employees of Polypore,
    Inc. (incorporated by reference to Exhibit 10.12 to the
    Companys Registration Statement on Form S-4 filed on
    April 18, 2005 (Commission File No. 333-124142))                                                                                                                                                                                                                                                                                                      
|        | 10 | .12                 |  | Second Amendment to Credit Agreement, dated as of June 15,
    2005, by and among PP Holding Corporation, PP Acquisition
    Corporation, as Borrower, the Several Lenders (as defined
    therein) from time to time parties thereto, General Electric
    Capital Corporation, Lehman Commercial Paper Inc. and UBS
    Securities LLC, as Documentation Agents, Bear Stearns Corporate
    Lending Inc., as Syndication Agent, and JPMorgan Chase Bank, as
    Administrative Agent (incorporated by reference to
    Exhibit 10.1 to the Companys Quarterly Report on
    Form 10-Q filed on August 16, 2005)
|        | 10 | .13*                |  | Employment Agreement, dated as of July 6, 2005, by and
    between Polypore International, Inc. and Robert B. Toth
    (incorporated by reference to Exhibit 10.1 to the
    Companys Quarterly Report on Form 10-Q filed on
    November 15, 2005)                                                                                                                                                                                                                                                                                                                                                              
|        | 10 | .14*                |  | Employment Agreement, dated as of August 15, 2005, by and
    between Polypore International, Inc. and Frank Nasisi
    (incorporated by reference to Exhibit 10.2 to the
    Companys Quarterly Report on Form 10-Q filed on
    November 15, 2005)                                                                                                                                                                                                                                                                                                                                                             
|        | 10 | .15                 |  | Third Amendment to Credit Agreement, dated as of
    December 19, 2005, by and among PP Holding Corporation, PP
    Acquisition Corporation, as Borrower, the Several Lenders (as
    defined therein) from time to time parties thereto, General
    Electric Capital Corporation, Lehman Commercial Paper Inc. and
    UBS Securities LLC, as Documentation Agents, Bear Stearns
    Corporate Lending Inc., as Syndication Agent, and JPMorgan Chase
    Bank, as Administrative Agent                                                                                                                         
|        | 12 | .1                  |  | Statement Regarding Computation of Ratio of Earnings to Fixed
    Charges                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        | 21 | .1                  |  | Subsidiaries of Polypore International, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | 31 | .1                  |  | Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | 31 | .2                  |  | Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | 32 | .1                  |  | Certification of Chief Executive Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | 32 | .2                  |  | Certification of Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       



|  |                                                         
|- | --------------------------------------------------------
|* | Management contract or compensatory plan or arrangement.

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Signatures






| |                             
| | ----------------------------
| | POLYPORE INTERNATIONAL, INC.



| |     |                   
| | --- | ------------------
| | By: | /s/ Robert B. Toth

| |                                      
| | -------------------------------------
| |                                      
| | Robert B. Toth                       
| | President and Chief Executive Officer





|                                 |  |                                                                                            |  |                |  | 
|-------------------------------- |  | ------------------------------------------------------------------------------------------ |  | -------------- |  | 
|                                
|/s/ Robert B. TothRobert B. Toth |  | President, Chief Executive Officer and Director (Principal
    Executive Officer)          |  | March 31, 2006
|                                
|/s/ Lynn AmosLynn Amos           |  | Chief Financial Officer (Principal Financial Officer and
    Principal Accounting Officer) |  | March 31, 2006
|                                
|/s/ Michael GraffMichael Graff   |  | Chairman of the Board                                                                      |  | March 31, 2006
|                                
|/s/ Frank NasisiFrank Nasisi     |  | Vice Chairman of the Board                                                                 |  | March 31, 2006
|                                
|/s/ David BarrDavid Barr         |  | Director                                                                                   |  | March 31, 2006
|                                
|/s/ Kevin KruseKevin Kruse       |  | Director                                                                                   |  | March 31, 2006

SUPPLEMENTAL INFORMATION TO BE FURNISHED


WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT
BY REGISTRANTS


WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT




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##### Table of Contents



Polypore International, Inc.


Financial statement schedule  Valuation and
qualifying accounts








|                                                 |                                           |              |       |       |          |   |       |            |   |   |            |       |            |        |        |        |      |   |        |       | 
|------------------------------------------------ | ----------------------------------------- | ------------ | ----- | ----- | -------- | - | ----- | ---------- | - | - | ---------- | ----- | ---------- | ------ | ------ | ------ | ---- | - | ------ | ----- | 
|                                                 |                                          
|                                                 |                                           | Additions    |       |       |         
|                                                 |                                           |              |       |       |         
|                                                 |                                           | Charged      |       |       |          |   |      
|                                                 |                                           | Balance at   |       |       | to costs |   |       | Charged to |   |   |            |       | Balance at |       
|                                                 |                                           | beginning of |       |       | and      |   |       | other      |   |   |            |       | end of     |       
|(in thousands)                                   |                                           | period       |       |       | expenses |   |       | accounts   |   |   | Deductions |       |            | period |       
|                                                 |                                          
|Year ended December 31, 2005:                    |                                           |              |       |       |          |   |       |            |   |   |            |       |            |        |        |        |      |   |        |      
|                                                 | Allowance for doubtful accounts           |              | $     | 5,962 |          |   | $     | 1,873      |   |   | $          | (624  | )(1)       |        | $      | (396   | )(2) |   | $      | 6,815 | 
|                                                 | Valuation allowance of deferred tax asset |              |       | 2,245 |          |   |       | 1,792      |   |   |            |      |            |        | $      |       |      |   |        | 4,037 | 
|                                                 |                                           |              |       |       |          |   |       |            |   |   |            |       |            |        |       
|                                                 |                                           | $            | 8,207 |       |          | $ | 3,665 |            |   | $ | (624       | )     |            | $      | (396   | )      |      | $ | 10,852 |      
|Period from May 2, 2004 through January 1, 2005: |                                           |              |       |       |          |   |       |            |   |   |            |       |            |        |        |        |      |   |        |      
|                                                 | Allowance for doubtful accounts           |              | $     | 6,672 |          |   | $     | (959       | ) |   | $          | 633(1 | )          |        | $      | (384   | )(2) |   | $      | 5,962 | 
|                                                 | Valuation allowance of deferred tax asset |              |       | 2,258 |          |   |       | 334        |   |   |            |      |            |        |        | (347   | )(3) |   |        | 2,245 | 
|                                                 |                                           |              |       |       |          |   |       |            |   |   |            |       |            |        |       
|                                                 |                                           | $            | 8,930 |       |          | $ | (625  | )          |   | $ | 633        |       |            | $      | (731   | )      |      | $ | 8,207  |      
|Period from January 4, 2004 through May 1, 2004: |                                           |              |       |       |          |   |       |            |   |   |            |       |            |        |        |        |      |   |        |      
|                                                 | Allowance for doubtful accounts           |              | $     | 5,324 |          |   |       | 1,628      |   |   | $          | (280  | )(1)       |        |        |       |      |   | $      | 6,672 | 
|                                                 | Valuation allowance of deferred tax asset |              |       | 484   |          |   |       | 1,774      |   |   |            |      |            |        |        |       |      |   |        | 2,258 | 
|                                                 |                                           |              |       |       |          |   |       |            |   |   |            |       |            |        |       
|                                                 |                                           | $            | 5,808 |       |          | $ | 3,402 |            |   | $ | (280       | )     |            | $      |       |        |      | $ | 8,930  |      
|Year ended January 3, 2004:                      |                                           |              |       |       |          |   |       |            |   |   |            |       |            |        |        |        |      |   |        |      
|                                                 | Allowance for doubtful accounts           |              | $     | 3,059 |          |   |       | 1,985      |   |   | $          | 666(1 | )          |        | $      | (386   | )(2) |   | $      | 5,324 | 
|                                                 | Valuation allowance of deferred tax asset |              |       | 3,519 |          |   |       |           |   |   |            |      |            |        |        | (3,035 | )(3) |   |        | 484   | 
|                                                 |                                           |              |       |       |          |   |       |            |   |   |            |       |            |        |       
|                                                 |                                           | $            | 6,578 |       |          | $ | 1,985 |            |   | $ | 666        |       |            | $      | (3,421 | )      |      | $ | 5,808  |      
|                                                 |                                           |              |       |       |          |   |       |            |   |   |            |       |            |        |       
|                                                



|    |                                                                                                                                                                  
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Foreign currency translation adjustment.                                                                                                                         
|   
|(2) | The amount represents charge-offs net of recoveries.                                                                                                             
|   
|(3) | Utilization and expiration of foreign tax credits that were
    previously considered to be unrealizable and the utilization of
    foreign net operating losses.

S-1