Polypore International, Inc.
(Exact Name of Registrant as Specified in Its Charter)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ý Yes o No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o Yes ý No

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ý Yes o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

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

The aggregate market value of the voting common stock of the registrant held by non-affiliates at July 1, 2011 was $2,776,368,000, as computed by reference to the closing price of such stock on such date. For purposes of this calculation, executive officers, directors and 5% shareholders are deemed to be affiliates of the registrant.

There were 46,499,180 shares of the registrant's common stock outstanding as of February 20, 2012.

Portions of the registrant's definitive proxy statement for the 2012 Annual Meeting of Stockholders, which will be filed within 120 days of December 31, 2011, are incorporated by reference into Part III.

Polypore International, Inc.
Index to Annual Report on Form 10-K
For the Fiscal Year Ended December 31, 2011

In this Annual Report on Form 10-K, the words "Polypore International," "Company," "we," "us" and "our" refer to Polypore International, Inc. together with its subsidiaries, unless the context indicates otherwise. References to "fiscal year" mean the 52- or 53-week period ending on the Saturday that is closest to December 31. The fiscal years ended December 31, 2011, or "fiscal 2011," January 1, 2011, or "fiscal 2010," and January 2, 2010, or "fiscal 2009," included 52 weeks.

This Annual Report on Form 10-K includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included in this Annual Report on Form 10-K that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements, including, in particular, the statements about Polypore International's plans, objectives, strategies and prospects regarding, among other things, the financial condition, results of operations and business of Polypore International and its subsidiaries. We have identified some of these forward-looking statements with words like "believe," "may," "will," "should," "expect," "intend," "plan," "predict," "anticipate," "estimate" or "continue" and other words and terms of similar meaning. These forward-looking statements may be contained under the captions entitled "Business," "Properties," "Controls and Procedures," "Management's Discussion and Analysis of Financial Condition and Results of Operations" or "Risk Factors," the Company's financial statements or the notes thereto or elsewhere in this Annual Report on Form 10-K.

These forward-looking statements are based on current expectations about future events affecting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Many factors mentioned in our discussion in this Annual Report on Form 10-K, including the risks outlined under the caption below entitled "Item 1A. Risk Factors," will be important in determining future results. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties, including with respect to Polypore International, the following, among other things:

Because our actual results, performance or achievements could differ materially from those expressed in, or implied by, the forward-looking statements, we cannot give any assurance that any of the events anticipated by the forward-looking statements will occur or, if any of them do, what impact they will have on Polypore International's results of operations and financial condition. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. We do not undertake any obligation to update these forward-looking statements or the factors set forth in the caption below entitled "Item 1A. Risk Factors" to reflect new information, future events or otherwise, except as may be required under federal securities laws.

Polypore International, Inc., a Delaware corporation, is a leading global high technology filtration company that develops, manufactures and markets specialized microporous membranes used in separation and filtration processes. The microporous membranes we produce are highly engineered polymeric structures that contain millions of pores per square inch, enabling the management of ions, gases and particles that range in size from the cellular to the nano or molecular level.

Our products and technologies are used in two primary businesses: energy storage and separations media. The energy storage business produces and markets membranes that provide the critical function of separating the cathode and anode in a variety of battery markets and is comprised of two reportable segments. The electronics and EDVs segment produces and markets membranes for lithium-ion batteries that are used in portable electronic devices, cordless power tools, electric drive vehicles ("EDVs") and emerging applications such as energy storage systems ("ESS"). The transportation and industrial segment produces and markets membranes for lead-acid batteries that are used in automobiles, other motor vehicles, forklifts and uninterruptible power supply systems. The separations media business, which is a reportable segment, produces and markets membranes and membrane modules used in hemodialysis, blood oxygenation, plasmapheresis and various high-performance microfiltration, ultrafiltration and gasification/degasification applications.

Information concerning segments and geographic information appears under "Note 18—Segment Information" in the notes to consolidated financial statements for the year ended December 31, 2011 included in Item 8 of this Report, which is incorporated herein by reference.

We produce a variety of separation and filtration products for end markets with attractive growth characteristics, which in many cases are supported by a growing recurring revenue base.

We believe that we are well positioned in each of the markets in which we compete. For example, in terms of market share (based on revenue and volume):

We believe, based on the information above and other company estimates, that we are among the top three in terms of market share (based on revenue and volume) in products comprising a total of approximately 80% of our fiscal 2011 net sales. These products include lead-acid battery separators, lithium battery separators, blood oxygenation membranes and membrane contactors for gasification/degasification of liquids.

We have established our leading market positions through our ability to utilize core technical expertise and broad product and process capabilities to develop customized solutions that meet demanding requirements in specific applications. Over time, we have demonstrated a commitment to innovation, developing technical expertise and a high level of customer service. As of December 31, 2011, our research and development effort is supported by approximately 100 engineers, scientists, PhDs and other personnel, who work directly with our manufacturing and marketing groups to commercialize innovative products that address market needs. We also maintain technical centers strategically located in Asia, Europe and North America.

We have leveraged our established filtration and separation technology and membrane expertise to supply a broad portfolio of membranes based on flat sheet, hollow fiber and tubular technology. We are able to draw upon our experiences across multiple end markets and various membrane technologies to create innovative solutions in new niche applications in addition to our existing markets. For example, our Liqui-Cel® Membrane Contactor product line, which combines our blood oxygenation membrane technology with patented module design features, provides superior performance to conventional gasification/degasification methods in multiple sectors such as semiconductor and flat panel display manufacturing, pharmaceutical processing and power and boiler feedwater applications. We believe that our capabilities in product innovation, which combine multiple technologies, a global technical infrastructure and extensive experience in microporous membrane development and manufacturing, are difficult to replicate.

We have cultivated strong, collaborative relationships with a diverse base of customers worldwide who are among the leaders in their respective industries. Our research and development, technical service and application development teams are closely involved with our customers. We often enter into joint agreements in which we partner with our customers on product development and end-use testing.

As a result, many of our products have been customized to our customers' exacting manufacturing and end-use specifications. In addition, we are often selected as a customer's exclusive supplier for our microporous membrane products.

As of December 31, 2011, we manufacture, market and service our products through 14 manufacturing sites and 14 sales and service locations throughout the Americas, Europe and Asia, with sales relatively balanced across these regions. In the energy storage business, we remain focused on growth in the Asia Pacific region and on driving worldwide improvements in production efficiency. For example, to better serve our growing lithium battery customers in Asia, we added lithium battery separator finishing capacity in Shanghai, China, and acquired a South Korean lithium battery membrane separator manufacturer, where we completed a capacity expansion in the third quarter of 2011. In our lead-acid battery membrane separator business, we expanded capacity at our Prachinburi, Thailand facility; acquired battery separator manufacturing assets and subsequently expanded our operations in Bangalore, India; acquired a production facility in Tianjin, China; established an Asian Technical center in Thailand; and entered into a joint venture with a customer, Camel Group Co., Ltd. ("Camel"), to produce lead-acid battery separators in China beginning in 2012. We are currently adding additional capacity at our Prachinburi, Thailand facility that is expected to begin production in the second half of 2012.

By strategically positioning our manufacturing, sales and marketing, and technical service personnel near our customers, we can respond to their needs more effectively, provide a higher level of service, reduce shipping costs and improve delivery and response times. In addition, our global presence enables us to participate in faster growth markets in developing regions of the world.

We believe we have state-of-the-art manufacturing facilities and capabilities. Our equipment, manufacturing techniques and process technologies have been developed over many years with significant intellectual property, know-how and capital investments. Our wide range of manufacturing processes enables us to produce specialized products that are difficult and costly to replicate in the market. We continually evaluate projects that will improve or enhance our global manufacturing capabilities.

Our senior management team has significant experience leading high technology companies, driving growth through development of new applications and technologies and cultivating strong relationships with existing customers. Management has also demonstrated a track record of successfully leading companies larger in size and scope than ours. The team has an average of more than 20 years of management experience.

Our two businesses, energy storage and separations media, are organized into three reportable segments. The following table describes our key products and end markets served:

Segment	Applications	Major brands	End markets

Energy storage— transportation and industrial	Lead-acid batteries	Daramic® Duralife® DARAK® FLEX-SIL® CellForce® ACE-SIL®	Transportation and industrial batteries
Energy storage— electronics and EDVs	Rechargeable and disposable lithium batteries	CELGARD®	Consumer electronics devices (such as mobile phones, audio/video players, notebook computers, tablets and cameras), large format applications (such as power tools), EDVs (bikes, scooters, cars, trucks, buses and industrial utility vehicles) and emerging applications such as energy storage systems
Separations media	Hemodialysis	PUREMA® DIAPES®	Hemodialysis dialyzers which replicate function of healthy kidneys
	Blood oxygenation	CELGARD® HEXPET® OXYPHAN® OXYPLUS®	Heart-lung machine oxygenation unit for open-heart surgical procedures and intensive care artificial lung applications
	Plasmapheresis	MicroPES® PLASMAPHAN® SYNCLEAR® FractioPES®	Blood cell and plasma separation equipment
	Industrial and specialty filtration applications	Liqui-Cel®	Liquid gasification/degasification for beverage, pharmaceutical, semiconductor and flat panel display manufacturing, and power and boiler feedwater applications
		MicroPES® DuraPES®	Specialty filtration applications including ultrapure water, cold sterile filtration of beverages, ultrapure chemicals for the electronics industry and pharmaceutical processing
		SuperPhobic®	Solvent/ink deaeration for ink jet printers, paper coating processes and semiconductor manufacturing
		MicroModule® MiniModule®	Liquid degasification in laboratory, biotechnology and analytical testing equipment and ink degasification for ink jet printers
		Accurel®	Specialty filtration applications including ultrapure chemicals for the electronics industry, vent and process air cleaning, industrial wastewater treatment and pharmaceutical processing
		Liqui-Flux®	Water and beverage filtration, process water treatment and prefiltration for reverse osmosis

In the energy storage business, our membrane separators are a critical performance component in lithium and lead-acid batteries, performing the core function of regulating ion exchange and thus allowing the charge and discharge process to occur between a battery's positive and negative electrodes. These membrane separators require specialized technical engineering and must be manufactured to extremely demanding requirements and specifications including thickness, porosity, mechanical strength and chemical and electrical resistance. For example, membrane pores must be large enough to allow ions to pass through, but small enough to prevent contamination from conductive particles that cause short circuits. The energy storage business is comprised of two reportable segments, as described below.

We develop, manufacture and market a broad line of patented polypropylene and polyethylene monolayer and multilayer membrane separators for lithium batteries that are used in numerous applications such as portable electronic devices, EDVs, cordless power tools and ESS. According to the Institute of Information Technology, unit sales of lithium batteries for consumer electronic devices are expected to experience average annual growth in excess of 8% through 2015. Lithium batteries provide critical performance advantages relative to alternative battery technologies, such as faster charging rates, improved battery life and higher power density, which results in more compact, lightweight batteries. These advantages create the potential for expansion by lithium batteries into additional product designs. Because many new applications are incorporating large-format lithium batteries that require much greater membrane separator volume per battery, we believe that membrane separator growth will exceed battery unit sales growth.

We believe, based on independent industry research, that we are among the top three lithium battery separator providers, serving the entire breadth of lithium battery applications, and have been among the top three since the market's first development in the early 1990s. Major lithium battery manufacturers include Automotive Energy Supply Corporation (AESC), Amperex Technology Limited, BYD Company Limited, LG Chem Ltd., Panasonic Corporation, Saft Groupe SA, Samsung SDI Co. Ltd., Sanyo Electric Company Limited (a Panasonic Corporation member company), Sony Corporation and Tianjin Lishen Battery Joint Stock Co., Ltd.

We develop, manufacture and market a complete line of high-performance polymer-based membrane separators for lead-acid batteries. Approximately 80% of our lead-acid battery separators are used in batteries for automobiles and other motor vehicles. The remaining approximately 20% are used in industrial battery applications such as forklifts, submarines and uninterruptible power supply systems. We believe that over 80% of lead-acid battery unit sales for motor vehicles are aftermarket batteries. Aftermarket sales are primarily driven by the size of the worldwide vehicle fleet rather than by new motor vehicle sales. According to WardsAuto.com, the worldwide fleet of motor vehicles has averaged 3% annual growth for over 25 years, providing us with a growing recurring revenue base. We believe another factor contributing to market growth is the worldwide conversion from alternative separator materials to the higher performance polyethylene-based membrane separators such as those we produce. Lead-acid battery separator growth is strongest in the Asia Pacific region due, we believe, to increasing penetration of automobile ownership, growth in industrial and manufacturing sectors, export incentives and ongoing conversion to polyethylene-based membrane separators.

We believe we are the global market leader in the lead-acid battery separator market. Major lead-acid battery manufacturers include Camel, East Penn Manufacturing Co., Inc., EnerSys, Exide Technologies, Johnson Controls, Inc. and Trojan Battery Company.

In the separations media business, our filtration membranes and modules are used in healthcare and high-performance filtration and specialty applications. These membranes perform the critical function of removing sub-micron particulates from fluids and introducing or removing gases (gasification/degasification) within liquids. Both healthcare and specialty filtration applications require membranes with precisely controlled pore size, structure, distribution and uniformity. Our supply relationships with customers in healthcare and certain filtration applications such as pharmaceutical manufacturing are reinforced by the rigorous testing, clinical studies and/or regulatory approval that our membranes undergo prior to end-product commercialization. In some cases, several years of development and qualification are required. The separations media business is one reportable segment serving two broad application end markets.

We develop, manufacture and market a complete line of patented polyethersulfone membranes for the hemodialysis market. Hemodialysis is the artificial process that performs the function of a healthy kidney for patients with permanent kidney failure, a condition known as End Stage Renal Disease ("ESRD"). In a healthy person, the kidney carries out certain excretory and endocrine functions, including filtering toxins from the blood and controlling blood pressure. For an ESRD patient on dialysis, the dialyzer membrane performs these critical filtering functions. The membranes consist of thousands of fibers that resemble hollow straws slightly larger than a human hair. These fibers have nanopores in their walls at a density of millions of pores per square inch. The size and distribution of these nanopores are designed to separate harmful toxins from the healthy blood passing through the dialyzer. Growth in demand for dialyzers and dialyzer membranes is driven by several factors, including the aging population in developed countries, longer life expectancy of treated ESRD patients, improving access to treatment in developing countries and the trend in the United States towards single-use rather than multiple-use dialyzers. According to the European Renal Association—European Dialysis and Transplant Association, the number of worldwide ESRD patients has historically grown by approximately 6% per year. We estimate that continued patient population growth combined with conversion to single-use dialyzers and increasing treatment frequency will result in overall annual dialyzer market growth in excess of 6%.

Our synthetic membrane, PUREMA®, is superior in performance compared to other synthetic membranes on the market. Dialyzers containing PUREMA® have been classified in the highest level (category 5) of Japan's dialyzer reimbursement rate system, reflecting the efficacy of our PUREMA® membrane. We believe an example of the increasing customer acceptance of PUREMA® is our entry into several long-term supply agreements with customers in the United States, Japan and Europe. We are currently marketing PUREMA®'s performance advantages, such as by co-branding our customers' dialyzers with the PUREMA® logo.

We believe, based on independent industry research, that we are uniquely positioned as the leading independent supplier of synthetic hemodialysis membranes (i.e., not a supplier of dialyzers). Major dialyzer manufacturers include Asahi Kasei Kuraray Medical Co., Ltd., Bellco S.r.l., Fresenius Medical Care AG, Gambro AB and Nipro Corp.

We develop, manufacture and market polypropylene and polymethylpentene membranes for the blood oxygenation market. As a component of heart-lung machines, blood oxygenators temporarily replace the functions of the lungs during on-pump open-heart surgery. The oxygenator contains highly specialized membranes which remove carbon dioxide from the blood while oxygen is diffused into the blood. We estimate that growth in the blood oxygenation market is modest as a result of the use of less-invasive alternative heart treatments. However, we believe that the market could grow as the number of patients receiving on-pump open-heart surgery increases due to the saturation of alternative

heart treatments. Because blood oxygenators are designed to utilize a specific membrane technology and require regulatory approval, an oxygenator manufacturer's relationship with its membrane supplier is vital and switching costs can be substantial. We believe, based on independent industry research, that we are the world's leading supplier of membranes for blood oxygenation. Major blood oxygenator producers include Maquet Cardiopulmonary AG, Medtronic, Inc., Sorin Group S.r.l. and Terumo Medical Corp. Polymethylpentene membranes are increasingly used in intensive care applications to serve as an artificial lung for patients with severe lung trauma or lung failure following sepsis, multi-organ failure, or infectious diseases. Major producers of such artificial lungs are Sorin Group S.r.l., Maquet Cardiopulomnary AG, Terumo Medical Corp. and Medtronic, Inc.

We develop, manufacture and market polypropylene and polyethersulfone membranes for the plasmapheresis market. In plasmapheresis, plasma is separated from the blood and either retained for the production of therapeutic proteins or filtered and returned to the blood as a treatment for various autoimmune disorders. We believe that the plasmapheresis market is growing and that new treatment methodologies based on blood filtration may lead to additional growth. We believe we are a leading supplier of extracorporeal therapeutic plasmapheresis membranes. Major manufacturers of plasmapheresis equipment include Asahi Kasei Kuraray Medical Co., Ltd., Fresenius Medical Care AG, Gambro AB and B. Braun AG.

We produce a wide range of membranes and membrane-based elements for microfiltration and ultrafiltration as well as gasification/degasification of liquids, covering a broad range of applications in the filtration market. According to independent industry research, the U.S. microfiltration and ultrafiltration membrane element market is approximately $1.8 billion and growing in excess of 8% annually. Market growth is being driven by several factors, including end-market growth in various water treatment applications. Displacement of conventional filtration media by membrane filtration due to membranes' superior cost and performance attributes and increasing purity requirements in industrial and other applications are also important to the end-market growth. We currently serve a variety of filtration end markets, including water treatment, food and beverage processing and pharmaceutical, semiconductor and flat panel display manufacturing, and we are working closely with current and potential customers to develop innovative new products based on our technology and capabilities.

We believe, based on internal company estimates, that we are the world leader in membrane gasification/degasification for liquids, and, based on internal company estimates, that we are uniquely positioned as the leading independent supplier of polyethersulfone flat sheet membranes.

We have focused our research and development efforts on developing products for new markets based on existing technologies and developing new process technologies to enhance existing businesses and allow entry into new businesses. We spent $17.6 million (2% of our net sales), $14.8 million (2% of our net sales) and $16.8 million (3% of our net sales) in fiscal 2011, fiscal 2010 and fiscal 2009, respectively, on research and development.

Our transportation and industrial research and development is performed at technical centers at our facilities in Owensboro, Kentucky; Prachinburi, Thailand; and Selestat, France. Our electronics and EDVs research and development is performed at technical centers at our facilities in Charlotte, North Carolina; Concord, North Carolina; and Ochang, South Korea. Our separations media research and development is performed at technical centers at our facilities in Wuppertal, Germany and Charlotte, North Carolina. All of the products that we develop are subject to multiple levels of extensive and rigorous testing. The qualification of membrane separators for use in transportation and industrial

applications, for instance, may require one or more years of testing by our staff and battery manufacturers.

We sell our products and services to customers in both the domestic and international marketplace. We sell primarily to manufacturers and converters that incorporate our products into their finished goods. We employ a direct worldwide sales force and utilize approximately 90 people with extensive experience who manage major customer relationships. Many of our sales representatives are engineers or similarly trained technical personnel who have advanced knowledge of our products and the applications for which they are used. Our sales representatives are active in new product development efforts and are strategically located in the major geographic regions in which our products are sold. In certain geographic areas, we use distributors or other agents. We typically seek to enter into supply contracts with our major customers. These contracts typically describe the volume and selling price. In addition, these contracts reflect our close collaborative relationships with our customers, which are driven by our customers' need to develop new separators and membranes directly with us. In fiscal 2011, sales to our top five customers represented approximately 25% of our total net sales.

We have manufacturing facilities in the major geographic markets of North America, Europe and Asia. We manufacture our lead-acid battery membrane separators at our facilities in Owensboro, Kentucky; Corydon, Indiana; Piney Flats, Tennessee; Selestat, France; Norderstedt, Germany; Feistritz, Austria; Prachinburi, Thailand; and Tianjin, China. We own a 65% interest in a joint venture that is constructing a new lead-acid battery separator facility in China that is expected to start production in 2012. We also have a finishing operation in Bangalore, India. We manufacture our lithium battery separators at our facilities in Charlotte, North Carolina, and Ochang, South Korea, and have a finishing operation in Shanghai, China. We have a new lithium battery separator facility under construction in Concord, North Carolina, that will begin manufacturing in 2012. We manufacture our healthcare membranes and industrial and specialty filtration membranes and membrane modules at facilities in Wuppertal and Obernburg, Germany, and Charlotte, North Carolina.

In fiscal 2011, fiscal 2010 and fiscal 2009, we generated net sales from customers outside the United States of approximately 80%, 80% and 77%, respectively. We typically sell our products in the currency of the country in which the products are manufactured rather than the local currency of our customers.

Our manufacturing facilities in North America accounted for 42% of total sales for fiscal 2011, with facilities in Europe and Asia accounting for 38% and 20%, respectively. Our foreign operations are subject to certain risks that could materially affect our sales, profits, cash flows and financial position. These risks include fluctuations in foreign currency exchange rates, inflation, economic or political instability, shipping delays, changes in applicable laws and regulatory policies and various trade restrictions, all of which could have a significant impact on our ability to deliver products on a competitive and timely basis. The future imposition of, or significant increases in the level of, customs duties, import quotas or other trade restrictions could also have a material adverse effect on our business, financial condition and results of operations.

All of our membrane manufacturing processes involve an extrusion process. To produce our flat sheet and hollow fiber membranes, we use one of three basic membrane processes that begin with an

extrusion step. These include phase separation (thermally-induced, solvent-induced, or reaction-induced), dry stretch and extrusion/extraction processes. Each process, and its resulting product properties, is well suited to the various membrane requirements for our target markets. To produce Liqui-Cel® Membrane Contactors and Liqui-Flux® membrane modules, hollow fibers are bonded together into a cartridge form by extruding either a polyolefin resin or using an epoxy or polyurethane adhesive before final assembly into a finished module.

Membrane separators for batteries. We manufacture Daramic®, our principal lead-acid battery separator used in industrial and automotive applications, using a composite extrusion/extraction process. The process stages are fully automated, although the process requires some handling as material is transferred from stage to stage. Initially, an ultra-high molecular weight polyethylene is mixed with porous silica and oil, which are heated and extruded into a film. The film is passed through an extraction bath to remove the excess oil from the silica pores to create the proper microporosity and film stiffness prior to drying.

We manufacture our lithium battery separators using two processes, both of which begin with an extrusion step. Membrane porosity is created either during a thermal stretching process or during a solvent induced process. Some special coated and non-woven laminate products are also manufactured for specialty battery and other applications.

Hemodialysis, blood oxygenation, plasmapheresis and filtration membranes. Membranes for hemodialysis, blood oxygenation, plasmapheresis and filtration are produced using phase separation processes. For these phase separation processes, the polymer spinning solution is prepared by dissolving the polymer in a solvent prior to extrusion. A porous membrane is formed by separating the solvent and polymer phases using temperature (thermally-induced) or a "non-solvent" (solvent-induced), and then the solvent phase is extracted and the porous polymer membrane is dried. For the blood oxygenation market and certain filtration markets, hollow fiber and flat sheet membranes are also produced using our "dry stretch" process. We rely on the molecular behavior of semi-crystalline polymers (polyolefins) to create the microporous structure. By controlling the extrusion process under which the film or fiber is formed, we create a crystalline structure that allows the formation of microvoids in a subsequent stretching step. After extrusion, our products can be stored or immediately processed on annealing and stretching lines that create the final porous form.

Our markets are highly competitive. Within our energy storage business, we face competition throughout the world. Our primary competitors in the market for membrane separators used in lead-acid batteries for transportation and industrial applications are Entek International LLC ("Entek") in North America and Europe, Baoding Fengfan Rising Battery Separator Co., Ltd. in China and Nippon Sheet Glass Co., Ltd. in Japan. In addition, we have a number of smaller competitors in South Korea, Indonesia, China and Taiwan. Our primary competitors in the market for membrane separators used in lithium batteries are Asahi Kasei Chemicals Corporation, Toray Battery Separator Film Godo Kaisha (a subsidiary of Toray Industries, Inc.), SK Innovation Co., Ltd. (a subsidiary of SK Holdings Co., Ltd.) and Ube Industries Limited, as well as a number of smaller competitors.

Within our separations media business, we compete in the market for dialysis membranes with Asahi Kasei Kuraray Medical Co., Ltd., Fresenius Medical Care, Gambro AB and Toyobo Co. Ltd. In addition, our primary competitor in the blood oxygenation market is Terumo Medical Corp. and in the plasmapheresis market, our competitors are Asahi Kasei Kuraray Medical Co., Ltd. and Fresenius Medical Care. Our industrial and specialty filtration business competes across multiple markets and applications. Principal competitors include Dainippon Ink and Chemicals, Inc., Koch Membrane Systems (a division of Koch Industries), Norit B.V., Millipore (a division of Merck Group) and Pall Corporation. Product innovation and performance, quality, service, utility and cost are the primary competitive factors, with technical support being highly valued by our customers. We believe that we are well positioned in our end markets for the reasons set forth under "Competitive strengths" above.

We employ a global purchasing strategy to achieve pricing leverage on our purchases of major raw materials. The major polyethylene and polypropylene resins we use are specialized petroleum-based products that are less affected by commodity pricing cycles than other petroleum-based products. In the event of future price increases for these major raw materials, we believe that we will generally be able to pass these increases on to our customers. The primary raw materials we use to manufacture most of our products are polyethylene and polypropylene resins, silica and oil. Our major supplier of polyethylene resins is Ticona LLC and our major suppliers of polypropylene resins are Bamberger Polymers, Inc. and NEXEO Solutions. Our major suppliers of silica are PPG Industries, Inc. and Evonik Degussa GmbH, while our major suppliers of oil are Calumet Lubricants, Shell Chemical LP and Shell Company of Thailand (subsidiaries of Royal Dutch/Shell).

We believe that the loss of any one or more of our suppliers would not have a long-term material adverse effect on us because other suppliers with whom we conduct business or have conducted business in the past would be able to fulfill our requirements. However, the loss of one of our key suppliers could, in the short term, adversely affect our business until we secure alternative supply arrangements. In addition, we cannot assure you that any new supply arrangements we enter into will have terms as favorable as those contained in current supply arrangements. We have never experienced any significant disruptions in supply as a result of shortages in raw materials.

At December 31, 2011, we had approximately 2,500 employees worldwide. Employees at six of our 14 facilities are unionized and account for approximately 32% of our total employees. The following summarizes those employees represented by unions as of December 31, 2011:

We are subject to a broad range of federal, state, local and foreign environmental laws and regulations which govern, among other things, air emissions, wastewater discharges and the handling, storage disposal and release of wastes and hazardous substances. It is our policy to comply with applicable environmental requirements at all of our facilities. We are also subject to laws, such as the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), that may impose liability retroactively and without fault for releases or threatened releases of hazardous substances at on-site or off-site locations. From time to time, we have identified environmental compliance issues at our facilities.

We have conducted some cleanup of on-site releases at some facilities and we will be conducting additional cleanups of on-site contamination at other facilities under regulatory supervision or voluntarily. Costs for such work and related measures (such as eliminating sources of contamination) could be substantial, particularly at our Wuppertal, Germany facility. We have established reserves for

environmental liabilities at our Wuppertal, Germany facility of $12.0 million as of December 31, 2011. We do not anticipate that the remediation activities will disrupt operations at our facilities or have a material adverse effect on our business, financial condition or results of operations. In addition, we have asserted claims under an indemnity from Akzo Nobel N.V., the prior owners of Membrana GmbH ("Membrana"). Indemnification payments are received after expenditures are made against approved claims. The amount receivable under the indemnification agreement at December 31, 2011 was $12.1 million. To date we have not had any significant disagreement with Akzo Nobel N.V. over its environmental indemnity obligations to us.

We consider our patents and trademarks, in the aggregate, to be important to our business and seek to protect our tradenames, trademarks, brandnames, proprietary technology and know-how in part through United States and foreign patents and trademark registrations and applications. However, no individual patent is material to our business, and the expiration or invalidation of any one patent would not have a material impact on our business. We own approximately 140 active unique patents and patent applications relating to our separator, membrane and module technologies. In general, the term of each of our U.S. patents depends on when the patent was filed. If the application for a U.S. utility patent was filed prior to June 8, 1995, the patent will expire either 20 years from the application filing date or 17 years from the patent issuance date, whichever is longer; if the application was filed on or after June 8, 1995, the patent will expire 20 years from the earliest date the application was filed.

In general, trademarks are valid as long as they are in use and/or their registrations are properly maintained, and trademark registrations can generally be renewed indefinitely so long as the marks are in use. Some of our registered marks include CELGARD®, Liqui-Cel®, Daramic® and PUREMA®.

In addition, we maintain certain trade secrets for which, in order to maintain the confidentiality of such trade secrets, we have not sought patent protection. Our policies require our employees to assign their intellectual property rights to us and to treat all proprietary technology as our confidential information.

We have granted security interests or liens on some of our patents to financial institutions, including lenders under our senior secured credit agreement.

If we fail to adequately protect and enforce our intellectual property rights, competitors may manufacture and market products similar to ours. The loss of protection for or enforcement of our intellectual property rights could reduce the market value of our products, reduce product sales, lower our profits or impair our financial condition. See "Item 1A. Risk Factors." If we are unable to adequately protect, police or enforce our intellectual property, we could lose a significant competitive advantage.

You may obtain free copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports, as filed with or furnished to the Securities and Exchange Commission ("SEC"), as soon as reasonably practicable after such material is filed with or furnished to the SEC on our website at www.polypore.net.

Our business faces many risks. As such, prospective investors and shareholders should carefully consider and evaluate all of the risk factors described below. These risk factors may change from time to time and may be amended, supplemented, or superseded by updates to the risk factors contained in

periodic reports on Form 10-Q and Form 10-K that we file with the SEC in the future. These risks include the following:

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

The markets in which we sell our products are highly competitive. Many of these markets require highly specialized products that are time and cost intensive to design and develop. In addition, innovative products, quality, service, utility, cost and technical support are the primary competitive factors in the separation and filtration membrane industry. Some of our competitors are much larger companies that have greater financial, technological, manufacturing and marketing resources than we do. Many of these competitors are also better established as suppliers to the markets that we serve. As a result, a reduction in overall demand or increased costs to design and produce our products within these markets could cause us to reduce our prices, which could lower our profit margins and impair our ability to grow our business.

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.

Our continued success depends, in part, upon our ability to maintain our technological capabilities and to continue to identify, develop and commercialize innovative products for the separation and filtration membrane industry. For example, products for some consumer electronics applications have a short lifecycle and require constant development. If we fail to continue to develop products for those markets or keep pace with technological developments by our competitors generally, we may lose market share which could result in reduced sales and impair our financial condition.

The loss of large volume customers could impact our sales and our profits.

Our products are often sold to a relatively small number of large volume customers. The loss of large volume customers could impact our sales and our profits. In fiscal 2011, sales to our top five customers represented approximately 25% of our total net sales.

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

Our future sales and profits will depend to a significant extent upon whether our customers choose in the future to manufacture the separation and filtration membranes used in their products instead of purchasing these components from us. If any of our existing customers choose to vertically integrate the production of our products in such a manner, the loss of sales to these customers could reduce our sales and our profits.

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

The primary raw materials we use in the manufacture of most of our products are polyethylene and polypropylene resins, silica and oil. In fiscal 2011, raw materials accounted for approximately 40% of our cost of sales. Although our major customer contracts generally allow us to pass increased costs on to our customers, we may not be able to pass on all raw material price increases to our customers in each case or without delay. The loss of any of our key suppliers could disrupt our business until we secure alternative supply arrangements. Furthermore, any new supply agreement we enter into may not have terms as favorable as those contained in our current supply arrangements.

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

We have incurred a significant amount of indebtedness. As of December 31, 2011, our consolidated indebtedness is $709.5 million. Our cash interest requirements for the next twelve months are estimated to be $36.1 million.

Our substantial level of indebtedness, as well as any additional borrowings we may make under the unused portions of the senior secured credit agreement, increases the possibility that we may be unable to generate cash sufficient to pay, when due, the principal of, interest on or other amounts due in respect of our indebtedness. Our substantial debt could increase our vulnerability to general economic downturns and adverse competitive and industry conditions by limiting our flexibility to plan for, or to react to, changes in our business and in the industry in which we operate. This limitation could place us at a competitive disadvantage compared to competitors that have less debt and more cash to insulate their operations from market downturns and to finance new business opportunities.

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

At December 31, 2011, we had variable rate debt of $344.5 million. An interest rate increase would result in an increase in interest expense. Our earnings may not be sufficient to allow us to meet any such increases in interest rate expense and to pay principal and interest on our debt and meet our other obligations. If we do not have sufficient earnings, we may be required to refinance all or part of our existing debt, sell assets, borrow more money or sell more securities, none of which we can guarantee we will be able to do based on terms favorable to the Company or at all.

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

Our ability to make payments on and to refinance our indebtedness and to fund our operations will depend on our ability to generate cash in the future. However, our business may not generate sufficient cash flow from operations for a variety of reasons, including those mentioned elsewhere in this "Risk Factors" section. Without sufficient cash flow, future borrowings may not be available to us under the senior secured credit agreement in amounts sufficient to enable us to service our indebtedness or to fund our other liquidity or capital needs. If we cannot generate sufficient cash to service our debt, we will have to take such actions as reducing or delaying capital investments, selling assets, restructuring or refinancing our debt or seeking additional equity capital. Any of these actions may not be effected on commercially reasonable terms, or at all. In addition, the indenture for the 7.5% senior notes and the senior secured credit agreement may restrict us from adopting any of these alternatives.

The terms of the senior secured credit agreement and the indenture related to the 7.5% senior notes may restrict our current and future operations, particularly our ability to respond to market changes or to take certain actions.

The senior secured credit agreement and the indenture related to the 7.5% senior notes contain a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interests. For example, the senior secured credit agreement includes covenants restricting, among other things, our ability to incur, assume or permit to exist additional indebtedness or guarantees; engage in mergers, acquisitions and other business combinations; or amend or otherwise alter terms of our indebtedness, including the 7.5% senior notes, and other material agreements. The senior secured credit agreement also includes

financial covenants requiring that we maintain a maximum senior leverage ratio at all times when loans or letters of credit are outstanding under the revolving credit facility.

The indenture related to the 7.5% senior notes also contains numerous negative covenants including, among other things, restrictions on our ability to incur or guarantee additional debt, issue preferred stock of restricted subsidiaries, pay dividends or make other equity distributions, or purchase or redeem capital stock.

A breach of any of these covenants or the inability to comply with financial covenants could result in a default under the senior secured credit agreement or the indenture governing the 7.5% senior notes. If any such default occurs, the lenders and the holders of the 7.5% senior notes may elect to declare all outstanding borrowings, together with accrued interest and other amounts payable thereunder, to be immediately due and payable. The lenders under the credit agreement also have the right in these circumstances to terminate any commitments they have to provide further borrowings and to proceed against all collateral granted to them to secure the debt. If collateral (such as available cash) is repossessed by the lenders or holders of the 7.5% senior notes, we will be unable to access the capital and other resources necessary to operate our business, and we could incur immediate and significant losses.

Some 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.

Approximately 32% of our employees are represented under collective bargaining agreements. A majority of those employees are located in France and Germany and are represented under industry-wide agreements that are subject to national and local government regulations. Many of these collective bargaining agreements must be renewed annually. Labor unions also represent our employees in Owensboro, Kentucky, and Corydon, Indiana.

Labor organizing activities could result in additional employees becoming unionized. We may not be able to maintain constructive relationships with these labor unions or successfully negotiate new collective bargaining agreements in the future. The loss of a substantial number of these employees or a prolonged labor dispute could disrupt our business. Any such disruption could in turn reduce our sales, increase our costs to bring products to market and result in significant losses.

We generate most of our sales 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.

We manufacture a wide variety of products that are used in healthcare and consumer applications. Several of these products are used in medical devices that some consumers require in order to sustain their lives. As a result, we may face exposure to product liability claims in the event that the failure of our products results, or is alleged to result, in bodily injury and/or death. In addition, if any of our products are, or are alleged to be, defective, we may be required to make warranty payments or to participate in a recall involving those products.

Consequently, end users of our products may look to us for contribution when faced with product recalls, product liability or warranty claims. The future costs associated with defending product liability claims or providing product warranties could be material and we may experience material losses in the future as a result. A successful product liability claim brought against us in excess of available insurance coverage or a requirement to participate in any product recall could substantially reduce our available cash from operations. Reduced cash could in turn reduce our profits or impair our financial condition.

Our operations outside the United States pose risks to our business that are not present with our domestic business, including compliance with applicable anti-trust laws.

Our manufacturing facilities in the United States accounted for 42% of total net sales for fiscal 2011, with facilities in Europe and Asia accounting for 38% and 20%, respectively. Typically, we sell our products in the currency of the country where the manufacturing facility that produced the products is located. In addition, as part of our growth and acquisition strategy, we may expand our operations in these or other foreign countries. Our foreign operations are, and any future foreign operations will be, subject to certain risks that are unique to doing business in foreign countries. These risks include fluctuations in foreign currency exchange rates, inflation, economic or political instability, shipping delays, changes in applicable laws and regulatory policies and inconsistent enforcement of such laws and policies and various trade restrictions. All of these risks could have a negative impact on our ability to deliver products to customers on a competitive and timely basis. This could reduce or impair our sales, profits, cash flows and financial position. The future imposition of, or significant increases in the level of, customs duties, import quotas or other trade restrictions could also increase our costs and reduce our profits.

Countries around the world are increasingly enacting anti-corruption laws, many of which are patterned after the United States' Foreign Corrupt Practices Act ("FCPA"). The FCPA generally prohibits companies and their intermediaries from giving, or offering to give, anything of value to foreign officials with the intent of obtaining an improper business advantage. The FCPA's foreign counterparts contain similar prohibitions, although varying in both scope and jurisdiction. Our internal policies prohibit corruption in all forms and expressly mandate compliance with the FCPA in particular. Despite such policies and the FCPA training we provide to our employees, we cannot guarantee that our employees' or intermediaries' conduct will not periodically violate the anti-corruption laws of a particular nation. Our continued overseas expansion, especially in the aforementioned emerging markets, naturally increases the risk of such violations and consequently could cause a material adverse effect on our operations or financial condition.

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.

We use and generate a variety of chemicals and other hazardous by-products in our manufacturing operations. As a result, we are subject to a broad range of federal, state, local and foreign environmental laws and regulations. These environmental laws govern, among other things, air emissions, wastewater discharges and the handling, storage and release of wastes and hazardous substances. Such laws and regulations can be complex and change often. We regularly incur costs to comply with environmental requirements, and such costs could increase significantly with changes in legal requirements or their interpretation or enforcement. Some of our manufacturing facilities have been the subject of actions to enforce environmental requirements. We could incur substantial costs, including clean-up costs, fines and sanctions and third-party property damage or personal injury claims, as a result of violations of environmental laws. Failure to comply with environmental requirements could also result in enforcement actions that materially limit or otherwise affect the operations of the facilities involved.

Under certain environmental laws, a current or previous owner or operator of an environmentally contaminated site may be held liable for the entire cost of investigation, removal or remediation of hazardous materials at such property. This liability could result whether or not the owner or operator knew of, or was responsible for, the presence of any hazardous materials.

Contaminants have been detected at some of our present facilities, principally in connection with historical operations. Investigations and/or clean-ups of these contaminants have been undertaken by us or by former owners of the sites. The costs of investigating and remediating environmental conditions

at some of our facilities may be substantial. Although we believe we are entitled to contractual indemnification for a portion of these costs, if we do not receive expected indemnification payments, or if our remediation costs are higher than expected, our exposure to these costs would increase. This exposure could reduce our cash available for operations, consume valuable management time and reduce our profits or impair our financial condition.

We anticipate additional investigations and clean-ups of on-site contamination under regulatory supervision or voluntarily at some of our sites. In addition, the imposition of more stringent clean-up requirements, the discovery of additional contaminants or the discovery of off-site contamination at or from one or more of our facilities could result in significant additional costs to us.

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

Our success with our products depends, in part, on our ability to protect our unique technologies and products against competitive pressure and to defend our intellectual property rights. If we fail to adequately protect our intellectual property rights, competitors may manufacture and market products similar to ours.

Even though we have filed patent applications, we may not be granted patents for those applications. Our failure to secure these patents may limit our ability to protect the intellectual property rights that these applications were intended to cover. Moreover, even if we are granted a patent, that does not prove conclusively that the patent is valid and enforceable. Our existing or future patents that we receive or license may not provide competitive advantages for our products. Our competitors may invalidate, narrow or avoid the scope of any existing or future patents, trademarks, or other intellectual property rights that we receive or license. In addition, patent rights may not prevent our competitors from developing, using or selling products that are similar or functionally equivalent to our products. Patent rights are territorial; thus, the patent protection we do have will only extend to those countries in which we have issued patents. Even so, the laws of certain countries do not protect our intellectual property rights to the same extent as do the laws of the United States and various European countries. The loss of protection for our intellectual property could reduce the market value of our products, reduce product sales and lower our profits or impair our financial condition.

We intend to enforce our intellectual property rights vigorously, and from time to time we may initiate claims against third parties that we believe are infringing our intellectual property rights if we are unable to resolve matters satisfactorily through negotiation or we may be required to participate in other administrative proceedings. Lawsuits brought to protect and enforce our intellectual property rights could be expensive, time-consuming and distracting to management and could result in the impairment or loss of portions of our intellectual property. Our failure to secure, protect and enforce our intellectual property rights could seriously harm our business.

Security interests or liens have been granted to financial institutions on some of our patents. If we fail to satisfy our obligations, the financial institutions have rights to those patents.

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.

Our senior management is important to the success of our business. There is significant competition for executive personnel with unique experience in the separation and filtration membrane industry. As a result of this unique need and the competition for a limited pool of industry-based executive experience, we may not be able to retain our existing senior management. In addition, we may not be able to fill new positions or vacancies created by expansion or turnover or attract additional senior management personnel. All of our executive officers are free to pursue other business opportunities (other than our chief executive officer, who is bound by a non-compete provision of his employment agreement), including those that may compete with us. The loss of any member of our senior management without retaining a suitable replacement (either from inside or outside our existing management team) could disrupt our business.

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.

Acquisitions involve risks that the businesses acquired will not perform in accordance with expectations or that business judgments concerning the value, strengths and weaknesses of businesses acquired will prove incorrect. Future acquisitions would likely result in the incurrence of debt and contingent liabilities. Such acquisitions could also increase our interest and amortization expenses as well as periodic impairment charges related to goodwill and other intangible assets. Acquisitions could also result in significant charges relating to integration costs. We may not be able to integrate successfully any business we acquire into our existing business. Any acquired businesses may not be profitable or as profitable as we had expected. The successful integration of new businesses depends on our ability to manage these new businesses and cut excess costs. The successful integration of future acquisitions may also require substantial attention from our senior management and the management of the acquired business. This could decrease the time that they have to service and attract customers and develop new products and services. In addition, because we may actively pursue a number of opportunities simultaneously, we may encounter unforeseen expenses, complications and delays. Such expenses and delays could include difficulties in employing sufficient staff and maintaining operational and management oversight. Our inability to complete the integration of new businesses in a timely and orderly manner could increase costs, reduce our profits and ultimately disrupt our business.

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

Our net identifiable intangible assets at December 31, 2011 were approximately 9% of our total assets. Such assets include trademarks and trade names, license agreements and technology acquired in acquisitions. Goodwill, which relates to the excess of cost over the fair value of the net assets of the businesses acquired, was approximately 32% of our total assets at December 31, 2011. Goodwill and identifiable intangible assets are recorded at fair value on the date of acquisition and are reviewed at least annually for impairment. Impairment may result from, among other things, deterioration in the performance of the acquired business, adverse market conditions and adverse changes in applicable laws or regulations. We may never realize the full value of our intangible assets. Any future determination requiring the write-off of a significant portion of intangible assets would reduce our profits for the fiscal period in which the write-off occurs. In fiscal 2009, we recorded a non-cash impairment charge to goodwill of $131.5 million.

Legal proceedings could have an adverse impact on our financial condition.

From time to time, we are party to legal proceedings including matters involving personnel and employment issues, personal injury, intellectual property, acquisitions and other proceedings arising in the ordinary course of business.

On September 9, 2008, the United States Federal Trade Commission ("FTC") issued an administrative complaint against us alleging that our actions and the acquisition of Microporous Holding Corporation, the parent company of Microporous Products L.P. ("Microporous") have substantially lessened competition in North American markets for lead-acid battery separators. We filed an answer to the complaint on October 15, 2008 denying the material allegations of the complaint. The matter was presented before an Administrative Law Judge ("ALJ") of the FTC and the hearing concluded on June 12, 2009. In October 2009, the ALJ granted our request to re-open the record to take additional evidence. On February 22, 2010, the FTC's ALJ issued an initial decision in which he recommended to the FTC that it order us to divest substantially all of the acquired Microporous assets, which include the manufacturing facilities located in Piney Flats, Tennessee, and Feistritz, Austria, and restore the competitive environment to that which existed prior to the acquisition, while ruling in our favor on other portions of the complaint. On March 15, 2010, we filed a Notice of Appeal with the

FTC. On November 5, 2010, we were notified that the FTC commissioners ("Commissioners") affirmed the relief initially granted by the FTC's ALJ issued on February 22, 2010. The Commissioners ordered that we proceed with the ALJ's recommendations to divest substantially all of the Microporous assets acquired in February 2008.

On January 28, 2011, we filed a petition with the U.S. Court of Appeals for the 11^th Circuit to review the FTC's November 5, 2010 order and opinion. It is not possible to predict with certainty whether we will be successful in the appellate process or the timing of a final decision. If the appellate court affirms the FTC's decision, and we choose not to seek Supreme Court review or the Supreme Court denies our petition seeking review of the case, then we will be required to divest substantially all of the assets acquired in the Microporous acquisition, and we will be subject to some prospective restrictions on our future conduct.

Our operations are vulnerable to interruption or loss due to natural disasters, epidemics, terrorist acts and other events beyond our control, which could adversely affect our business.

Our operations may be subject to significant interruption if any of our facilities are damaged or destroyed. For example, certain of our products are manufactured at a single facility location for which we do not maintain a backup manufacturing facility. A natural or other disaster, such as a fire or flood, could significantly disrupt our operations, delay or prevent product manufacture and shipment for the time required to repair, rebuild or replace our manufacturing facilities, which could be lengthy, and result in large expenses to repair or replace the facilities. In addition, concerns about terrorism or an outbreak of epidemic diseases, especially in our major markets of North America, Europe and Asia could have a negative effect on travel and our business operations, and result in adverse consequences on our sales and financial performance.

Our manufacturing facilities are strategically located to serve our customers globally. We believe our facilities are suitable and adequate for our present purposes.

Location		Business segment	Certification

Owensboro, Kentucky(1)	277,000	Transportation and Industrial	ISO 14001, ISO 9001
Prachinburi, Thailand	166,000	Transportation and Industrial	ISO 14001, ISO 9001
Corydon, Indiana(1)	161,000	Transportation and Industrial	ISO 14001, ISO 9001
Selestat, France	153,000	Transportation and Industrial	ISO 14001, ISO 9001
Norderstedt, Germany	124,000	Transportation and Industrial	ISO 14001, ISO 9001
Piney Flats, Tennessee(1)	121,000	Transportation and Industrial	ISO 9001
Bangalore, India(2)	65,000	Transportation and Industrial	ISO 14001, ISO 9001, OHSAS 18001
Feistritz, Austria	52,000	Transportation and Industrial	ISO 14001, ISO 9001
Tianjin, China	47,000	Transportation and Industrial	ISO 14001, ISO 9001
Ochang, South Korea	105,000	Electronics and EDVs	ISO 14001, ISO 9001, OHSAS 18001, KOSHA 18001
Shanghai, China(2)	41,000	Electronics and EDVs	ISO 9001
Charlotte, North Carolina(1)	350,000	Electronics and EDVs and Separations Media	ISO 14001, ISO 9001
Wuppertal, Germany	1,503,000	Separations Media	ISO 14001, ISO 9001
Obernburg, Germany(2)	23,000	Separations Media	ISO 9001

Our corporate headquarters are located in leased office space in Charlotte, North Carolina, and we have leased sales offices in Shanghai and Shenzhen, China; Tokyo, Japan; and Sao Paulo, Brazil. We are constructing a new lithium battery separator facility for our electronics and EDVs segment in Concord, North Carolina, that is expected to begin production in 2012.

On March 20, 2008, we received a letter from the United States Federal Trade Commission (the "FTC") requesting that we voluntarily provide certain documents and information to the FTC regarding our acquisition of Microporous Holding Corporation, the parent company of Microporous Products L.P. ("Microporous"), which was completed on February 29, 2008. The letter stated that the FTC was conducting an investigation to determine whether the Microporous acquisition will substantially lessen competition in any relevant market and thereby violate federal antitrust laws. We voluntarily responded to the letter in writing and through supplemental telephone conversations and meetings.

On April 7, 2008, we and our wholly-owned subsidiary, Daramic LLC, each received from the FTC a subpoena and interrogatories requesting substantially similar documents and information as requested in the FTC's initial letter, as well as additional documents and information. We responded fully to this request and met on several occasions with various members of the FTC staff and FTC commissioners ("Commissioners") in an effort to answer their questions and resolve the investigation.

On September 9, 2008, the FTC issued an administrative complaint against us alleging that our actions and the acquisition of Microporous have substantially lessened competition in North American

markets for lead-acid battery separators. We filed an answer to the complaint on October 15, 2008 denying the material allegations of the complaint. The matter was presented before an Administrative Law Judge ("ALJ") of the FTC and the hearing concluded on June 12, 2009. In October 2009, the ALJ granted our request to re-open the record to take additional evidence. On February 22, 2010, the FTC's ALJ issued an initial decision in which he recommended to the FTC that it order us to divest substantially all of the acquired Microporous assets, which include the manufacturing facilities located in Piney Flats, Tennessee, and Feistritz, Austria, and restore the competitive environment to that which existed prior to the acquisition, while ruling in our favor on other portions of the complaint. On March 15, 2010, we filed a Notice of Appeal with the FTC. On November 5, 2010, we were notified that the Commissioners affirmed the relief initially granted by the FTC's ALJ issued on February 22, 2010. The Commissioners ordered that we proceed with the ALJ's recommendations to divest substantially all of the Microporous assets acquired in February 2008.

We believe that this decision is inconsistent with the law and the facts presented at the hearing and that the Microporous acquisition is and will continue to be beneficial to our customers and the industry. On January 28, 2011, we filed a petition with the U.S. Court of Appeals for the 11^th Circuit to review the FTC's November 5, 2010 order and opinion. It is not possible to predict with certainty whether we will be successful in the appellate process or the timing of a final decision. If the appellate court affirms the FTC's decision, and we choose not to seek Supreme Court review or the Supreme Court denies our petition seeking review of the case, then we will be required to divest substantially all of the assets acquired in the Microporous acquisition, and we will be subject to some prospective restrictions on our future conduct.

We believe that a final judicial resolution to the challenge by the FTC to the Microporous acquisition could take one or more years. Although it is difficult to predict the outcome, timing or impact of this matter at this time, we believe that the final resolution will not have a material adverse impact on our business, financial condition or results of operations.

Our core energy storage business produces polymer-based membrane battery separators used in transportation, industrial and consumer electronic applications. The acquisition of the Microporous business extended our product portfolio into the niche, mature deep cycle market for rubber-based battery separators, with considerable overlap to customers we currently serve with other products. We do not believe that a required divestiture of all or a portion of the Microporous assets would significantly impact our core energy storage business or the long-term growth drivers impacting this business, including growth in Asia, strong demand for consumer electronics and growing demand for electric drive vehicles.

For the year ended December 31, 2011, the Microporous business represented approximately 10% of consolidated revenue and operating income, including the facility that we completed and shifted production to in Feistritz, Austria post-acquisition. At December 31, 2011, Microporous assets were less than 5% of consolidated assets. Our core energy storage and separations media businesses are experiencing strong demand, operating at high rates of capacity utilization and have initiated significant capacity expansions. Based on the growth in revenues and profits that we have experienced in the last two years, as well as the impact of new capacity expansions that are underway, we expect that the percentage of consolidated revenues and total assets represented by Microporous will continue to decline. The impact of a final resolution to this matter may be affected by a number of uncertainties, including, but not limited to, whether we are required to divest all or a portion of the Microporous assets, the timing of a potential divestiture, the proceeds of such a divestiture and the incremental growth in our core businesses. If we were required to divest of all or a portion of the Microporous assets, we would intend to sell the assets at fair market value and the proceeds of such a sale would be available to support continued investments in the faster growing and more profitable core energy storage and separations media businesses.

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

Our common stock is listed on the New York Stock Exchange ("NYSE") under the symbol "PPO" and has been traded on the NYSE since our initial public offering on June 28, 2007. As of February 17, 2012, there were approximately 25,100 holders of our common stock, representing primarily persons whose stock is held in nominee or "street name" accounts through brokers.

We did not declare or pay any dividends on our common stock in fiscal 2011 or 2010, and we do not expect to pay any such dividends in fiscal 2012. The indenture relating to our $365.0 million aggregate principal amount of 7.5% senior notes due 2017 and our senior secured credit agreement restrict or limit our ability to, among other things, declare dividends and make payments on or redeem or repurchase capital stock.

The low and high sales prices for the Company's common stock for each full quarterly period within the two most recent fiscal years were as follows:

The following table summarizes information about the options under our equity compensation plans as of December 31, 2011.

The following graph compares the total shareholder return of our common stock for the periods indicated with the total return of the Russell 2000 Index and the Standard & Poor's Index of Industrial Machinery Companies ("S&P Industrial Machinery Index"). The graph assumes $100 invested on June 28, 2007 (the date of our initial public offering) in the Company, the Russell 2000 Index and the S&P Industrial Machinery Index. Total return represents stock price changes and assumes the reinvestment of dividends.

The following table presents selected historical consolidated financial data of Polypore International for the fiscal years ended December 31, 2011, January 1, 2011, January 2, 2010, January 3, 2009 and December 29, 2007. The selected historical consolidated financial data has been derived from Polypore International's audited consolidated financial statements.

The information presented below should be read together with "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and the notes thereto included in "Item 8. Financial Statements and Supplementary Data."

Statement of operations data (in millions, except share data):	Fiscal 2011			Fiscal 2010			Fiscal 2009			Fiscal 2008			Fiscal 2007

Net sales	$	763.1		$	616.6		$	516.9		$	610.5		$	534.7

Gross profit		322.1			246.9			195.8			215.7			197.0
Selling, general and administrative expenses		132.6			114.8			100.4			108.3			93.6
Business restructuring		—			(0.8	)		21.3			59.9			(0.9	)
Goodwill impairment		—			—			131.5			—			—

Operating income (loss)		189.5			132.9			(57.4	)		47.5			104.3
Interest expense, net		34.4			46.7			57.1			60.7			81.0
Gain on sale of Italian subsidiary		—			(3.3	)		—			—			—
Gain on sale of synthetic paper business		—			—			—			(3.8	)		—
Foreign currency and other		(2.0	)		(1.4	)		(0.7	)		1.3			1.6
Costs related to purchase of 8.75% senior subordinated notes		—			2.3			—			—			—
Costs related to purchase of 10.5% senior discount notes		—			—			—			—			30.1
Write-off of loan acquisition costs associated with refinancing of senior secured credit facilities		—			—			—			—			7.2

Income (loss) from continuing operations before income taxes		157.1			88.6			(113.8	)		(10.7	)		(15.6	)
Income taxes		51.9			25.0			3.5			6.8			(16.0	)

Income (loss) from continuing operations		105.2			63.6			(117.3	)		(17.5	)		0.4
Income from discontinued operations, net of income taxes		—			—			—			2.3			0.1

Net income (loss)	$	105.2		$	63.6		$	(117.3	)	$	(15.2	)	$	0.5

Net income (loss) per share—basic:
Continuing operations	$	2.28		$	1.43		$	(2.64	)	$	(0.41	)	$	0.02
Discontinued operations		—			—			—			0.06			—

Net income (loss) per share	$	2.28		$	1.43		$	(2.64	)	$	(0.36	)	$	0.02

Net income (loss) per share—diluted:
Continuing operations	$	2.23		$	1.39		$	(2.64	)	$	(0.41	)	$	0.02
Discontinued operations		—			—			—			0.06			—

Net income (loss) per share	$	2.23		$	1.39		$	(2.64	)	$	(0.36	)	$	0.02

Weighted average shares outstanding:
Basic		46,182,204			44,562,421			44,385,552			42,777,531			32,942,214
Diluted		47,119,997			45,748,058			44,385,552			42,777,531			33,237,230

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our consolidated financial statements and the notes thereto included in "Item 8. Financial Statements and Supplementary Data." Some of the information contained in this discussion and analysis or included elsewhere in this report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. Please see "Forward-looking Statements" for more information. You should review "Risk Factors" for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained herein.

We are a leading global high technology filtration company that develops, manufactures and markets specialized microporous membranes used in separation and filtration processes. In fiscal 2011, we generated total net sales of $763.1 million. We operate in two primary businesses: energy storage and separations media. We manufacture our products at facilities in North America, Europe and Asia. Net sales from foreign locations were $490.6 million for fiscal 2011.

Since August 2009, we have initiated significant capacity expansions in all of our businesses. Capacity from these expansions started to come online during 2011 and will continue to come online throughout 2012 and 2013. We believe long-term demand drivers in our businesses remain positive, and we will continue to assess capacity needs and make investments to capitalize on these future growth opportunities.

In the energy storage business, our membrane separators are a critical performance component in lithium batteries, which are primarily used in consumer electronics and electric drive vehicle ("EDV") applications, and lead-acid batteries, which are used globally in transportation and numerous industrial applications. We believe that the long-term growth drivers for the energy storage business—growth in Asia, strong demand for consumer electronics and growing demand for EDVs—are positive. The energy storage business is comprised of two reportable segments, as described below.

Electronics and EDVs. Lithium batteries are the power source in a wide variety of applications, including consumer electronics applications such as notebook computers, tablets, mobile phones and cordless power tools; EDVs; and emerging applications such as energy storage systems ("ESS").

Growth in lithium batteries is being driven by demand in consumer electronics and EDVs. A summary of our lithium capacity expansions is as follows:

Transportation and industrial. In the lead-acid battery market, the high proportion of aftermarket replacement sales and the steady growth of the worldwide fleet of motor vehicles provide us with a growing recurring revenue base in lead-acid battery separators. Worldwide demand for lead-acid battery separators is expected to continue to grow at slightly more than annual economic growth. The Asia-Pacific region is the fastest growing market for lead-acid battery separators. Growth in this region is driven by the increasing penetration of automobile ownership, growth in industrial and manufacturing sectors, export incentives and ongoing conversion to the polyethylene-based membrane separators we produce. We have positioned ourselves to benefit from growth in Asia by expanding capacity at our Prachinburi, Thailand facility; acquiring battery separator manufacturing assets and subsequently expanding our operations in Bangalore, India; acquiring a production facility in Tianjin, China; establishing an Asian Technical Center in Thailand; and entering into a joint venture with a customer, Camel Group Co., Ltd. ("Camel"), to produce lead-acid battery separators in China, that is expected to start production in mid-2012. In February 2011, we started an additional expansion at our Prachinburi, Thailand facility that is expected to begin production in the second half of 2012.

In the separations media business, our filtration membranes and modules are used in healthcare and high-performance filtration and specialty applications. We believe that the separations media business will continue to benefit from continued growth in demand for higher levels of purity in a growing number of applications. The separations media business is a reportable segment.

For healthcare applications, we produce membranes used in blood filtration applications for hemodialysis, blood oxygenation and plasmapheresis. Growth in demand for hemodialysis membranes is driven by the increasing worldwide population of end-stage renal disease patients. We believe that conversion to single-use dialyzers and increasing treatment frequency will result in additional dialyzer market growth. In the third quarter of 2011, we completed the expansion of our PUREMA ® hemodialysis membrane production capacity.

For filtration and specialty applications, we produce a wide range of membranes and membrane-based elements for micro-, ultra- and nanofiltration and gasification/degasification of liquids. Micro-, ultra-and nanofiltration membrane element market growth is being driven by several factors, including end-market growth in applications such as water treatment and pharmaceutical processing, displacement of conventional filtration media by membrane filtration due to membranes' superior cost and performance attributes and increasing purity requirements in industrial and other applications.

Critical accounting policies are those accounting policies that can have a significant impact on the presentation of our financial condition and results of operations, and that require the use of complex and subjective estimates based on past experience and management's judgment. Because of uncertainty inherent in such estimates, actual results may differ from these estimates. Below are those policies that we believe are critical to the understanding of our operating results and financial condition. Management has discussed the development and selection of these critical accounting policies with the Audit Committee of our Board of Directors. For additional accounting policies, see Note 2 of the consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data."

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

Identified intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Goodwill and indefinite-lived intangible assets are not amortized, but are subject to annual impairment testing unless circumstances dictate more frequent assessments. We perform our annual impairment assessment for goodwill and indefinite-lived intangibles as of the first day of the fourth quarter of each fiscal year and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than the carrying amount. Goodwill impairment testing is a two-step process performed at the reporting unit level. Our reporting units are at the operating segment level. Step one compares the fair value of our reporting units to their carrying amount. The fair value of the reporting unit is determined using the income approach, corroborated by comparison to market capitalization and key multiples of comparable companies. Under the income approach, we determine fair value based on estimated future cash flows of each reporting unit, discounted by an estimated weighted-average cost of capital. If the fair value of the reporting unit is greater than its carrying amount, there is no impairment. If the reporting unit's carrying amount exceeds its fair value, then the second step must be completed to measure the amount of impairment, if any. Step two calculates the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets of the reporting unit from the fair value of the reporting unit as calculated in step one. In this step, the fair value of the reporting unit is allocated to all of the reporting unit's assets and liabilities in a hypothetical purchase price allocation as if the reporting unit had been acquired on that date. If the carrying amount of goodwill exceeds the implied fair value of goodwill, an impairment loss will be recognized in an amount equal to the excess.

Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates, strategic plans and future market conditions, among others. There can be no assurance that our estimates and assumptions made for purposes of the goodwill impairment testing will prove to be accurate predictions of the future. If our assumptions regarding forecasted revenue or margin growth rates of certain reporting units are not achieved or changes in strategy or market conditions occur, we may be required to record goodwill impairment charges in future periods. It is not possible at this time to determine if any such future impairment charge would result or, if it does, whether such charge would be material.

In 2011, our annual impairment test indicated that the fair value of the reporting units exceeded their respective carrying amounts by substantially more than 10%.

Certain assumptions are used in the calculation of the actuarial valuation of our defined benefit pension plans and other postretirement benefits. Two critical assumptions, discount rate and expected return on assets, are important elements of plan expense and/or liability measurement and differences between actual results and these two actuarial assumptions can materially affect our projected benefit obligation or the valuation of our plan assets. Other assumptions involve demographic factors such as retirement, expected increases in compensation, mortality and turnover. The discount rate enables us to state expected future cash flows at a present value on the measurement date. The discount rate assumptions are based on the market rate for high quality fixed income investments. At December 31, 2011, a 1% decrease in the discount rate would increase our projected benefit obligations and the unfunded status of our pension plans by $14.3 million. The expected rates of return on our pension plans' assets are based on the asset allocation of each plan and the long-term projected return of those assets. For 2011, if the expected rate of return on pension plan assets were reduced by 1%, the result would have increased our net periodic benefit expense for fiscal 2011 by $0.1 million. At December 31, 2011, if the actual plan assets were reduced by 1%, the unfunded status of our pension plans would increase by $0.2 million.

Environmental obligations are accrued when such expenditures are probable and reasonably estimable. The amount of liability recorded is based on currently available information, including the progress of remedial investigations, current status of discussions with regulatory authorities regarding the method and extent of remediation, presently enacted laws and existing technology. Accruals for estimated losses from environmental obligations are adjusted as further information develops or circumstances change. We do not currently anticipate any material loss in excess of the amounts accrued. Future remediation expenses may be affected by a number of uncertainties including, but not limited to, the difficulty in estimating the extent and method of remediation, the evolving nature of environmental regulations and the availability and application of technology. Recoveries of environmental costs from other parties are recognized as assets when their receipt is deemed probable.

In connection with the acquisition of Membrana GmbH ("Membrana") in 2002, we recorded a reserve for environmental obligations. The reserve provides for costs to remediate known environmental issues and operational upgrades which are required in order for us to remain in compliance with local regulations. The initial estimate and subsequent finalization of the reserve was included in the allocation of purchase price at the date of acquisition. At December 31, 2011, the environmental reserve for the Membrana facility, which is denominated in euros, was $12.0 million. We anticipate that the majority of expenditures associated with the reserve will be made in the next twelve months.

We have indemnification agreements for certain environmental matters from Acordis A.G. ("Acordis") and Akzo Nobel N.V. ("Akzo"), the prior owners of Membrana. Akzo originally provided broad environmental protections to Acordis with the right to assign such indemnities to Acordis's successors. Akzo's indemnifications relate to conditions existing prior to December 1999, which is the date that Membrana was sold to Acordis. In addition to the Akzo indemnification, Acordis provides separate indemnification of claims incurred from December 1999 through February 2002, the acquisition date. We will receive indemnification payments under the indemnification agreements after expenditures are made against approved claims. At December 31, 2011, amounts receivable under the indemnification agreements were $12.1 million.

Repairs and maintenance costs, which include indirect labor and employee benefits associated with maintenance personnel and utility, maintenance and repair costs for equipment and facilities utilized in the manufacturing process, are treated as inventoriable costs. Repairs and maintenance costs as a percent of cost of goods sold have been consistent for fiscal 2011, 2010 and 2009. Major planned maintenance activities outside of the normal production process are capitalized as property, plant and equipment if the costs are expected to provide future benefits by increasing the service potential of the asset to which the repair or maintenance applies. We have not had any major planned maintenance activities or capitalized significant repairs and maintenance costs as property, plant and equipment in the last three fiscal years.

The following table sets forth, for the fiscal years indicated, certain of our historical operating data in amount and as a percentage of net sales:

	Fiscal Year

(in millions)	2011			2010			2009
Net sales	$	763.1		$	616.6		$	516.9

Gross profit		322.1			246.9			195.8
Selling, general and administrative expenses		132.6			114.8			100.4
Business restructuring		—			(0.8	)		21.3
Goodwill impairment		—			—			131.5

Operating income (loss)		189.5			132.9			(57.4	)
Interest expense, net		34.4			46.7			57.1
Other		(2.0	)		(2.4	)		(0.7	)

Income (loss) before income taxes		157.1			88.6			(113.8	)
Income taxes		51.9			25.0			3.5

Net income (loss)	$	105.2		$	63.6		$	(117.3	)

	Fiscal Year

(percent of sales)	2011			2010			2009
Net sales		100.0	%		100.0	%		100.0	%

Gross profit		42.2			40.0			37.9
Selling, general and administrative expenses		17.4			18.5			19.4
Business restructuring		—			(0.1	)		4.1
Goodwill impairment		—			—			25.5

Operating income (loss)		24.8			21.6			(11.1	)
Interest expense, net		4.5			7.6			11.0
Other		(0.3	)		(0.4	)		(0.1	)

Income (loss) before income taxes		20.6			14.4			(22.0	)
Income taxes		6.8			4.1			0.7

Net income (loss)		13.8	%		10.3	%		(22.7	)%

Net sales. Net sales for fiscal 2011 were $763.1 million, an increase of $146.5 million, or 23.8%, from fiscal 2010. The increase was due to higher sales across all segments and the positive impact of

foreign currency translation of $13.3 million. By segment, electronics and EDVs increased $70.0 million, transportation and industrial increased $57.2 million and separations media increased $19.3 million. As described more fully in the discussion of segment operating results, net sales in the first quarter of 2012 will be negatively impacted by the following: electronics and EDVs—weakness in consumer electronics and the production schedule of two EDV models; transportation and industrial—delay in lead-acid replacement battery sales due to mild weather conditions in North America and Europe; and separations media—order timing in healthcare.

Gross profit. Gross profit was $322.1 million, an increase of $75.2 million, or 30.5%, from fiscal 2010. Gross profit as a percent of net sales was 42.2% for fiscal 2011, compared to 40.0% for fiscal 2010. The increase in consolidated gross profit and gross profit margin was primarily due to higher production volumes and production efficiencies in the electronics and EDVs segment, which has the highest gross profit margin of our segments, and the transportation and industrial segment.

Selling, general and administrative expenses. Selling, general and administrative expenses increased $17.8 million in fiscal 2011 compared to fiscal 2010, primarily due to growth investments associated with capacity expansions and higher stock-based compensation expense. Selling, general and administrative expenses were 17.4% of consolidated net sales in fiscal 2011, a decrease from 18.5% in fiscal 2010.

Segment operating income. Segment operating income, which excludes business restructuring and certain non-recurring and other costs, was $199.4 million, an increase of $62.8 million, or 46.0%, from fiscal 2010. Segment operating income as a percent of net sales was 26.1% for fiscal 2011, compared to 22.2% for fiscal 2010. The increase in segment operating income and segment operating income margin was the result of higher production volumes and production efficiencies, offset to some extent by higher costs associated with growth investments.

Interest expense. Interest expense for fiscal 2011 decreased by $12.3 million from fiscal 2010, due to the repayment and refinancing of our senior notes in late 2010 and capitalized interest associated with capacity expansion projects in 2011.

Income taxes. Income taxes as a percentage of pre-tax income for fiscal 2011 were 33.0%, compared to 28.2% for fiscal 2010. The income tax expense recorded in the financial statements fluctuates between years due to a variety of factors, including state income taxes, the mix of income between U.S. and foreign jurisdictions taxed at varying rates, changes in estimates of permanent differences and valuation allowances and the relative size of our consolidated income (loss) before income taxes.

The mix of earnings between the tax jurisdictions has a significant impact on the effective tax rate. Each tax jurisdiction has its own set of tax laws and tax rates, and income earned by our subsidiaries is taxed independently by these various jurisdictions. Currently, the applicable statutory income tax rates in the jurisdictions in which we operate range from 0% to 39%. Therefore, the amount of income tax expense in each jurisdiction relative to our consolidated income (loss) before income taxes has a significant impact on our annual effective tax rate.

The effect of each of these items on our effective tax rate is quantified in the table below:

Net sales. Net sales for fiscal 2010 were $616.6 million, an increase of $99.7 million, or 19.3%, from fiscal 2009. The increase was due to higher sales across all segments, offset by the $6.1 million negative impact of foreign currency translation. By segment, electronics and EDVs increased $44.9 million, transportation and industrial increased $33.2 million and separations media increased $21.6 million.

Gross profit. Gross profit was $246.9 million, an increase of $51.1 million, or 26.1%, from fiscal 2009. Gross profit as a percent of net sales was 40.0% for fiscal 2010, compared to 37.9% for fiscal 2009. The increase in consolidated gross profit and gross profit margin was due to higher production volumes and production efficiencies, offset to some extent by increased costs associated with growth investments.

Selling, general and administrative expenses. Selling, general and administrative expenses increased $14.4 million in fiscal 2010 compared to fiscal 2009, primarily due to growth investments associated with capacity expansions and the accrual of variable incentives under performance-based compensation plans. Selling, general and administrative expenses were 18.5% of consolidated net sales, a decrease from 19.4% in fiscal 2009.

Segment operating income. Segment operating income, which excludes business restructuring, goodwill impairment and certain non-recurring and other costs, was $136.6 million, an increase of $35.1 million, or 34.6%, from fiscal 2010. Segment operating income as a percent of net sales was 22.2% for fiscal 2010, compared to 19.6% for fiscal 2009. The increase in segment operating income and segment operating income margin was the result of higher production volumes and production efficiencies, offset to some extent by higher costs associated with growth investments.

Interest expense. Interest expense for fiscal 2010 decreased by $10.4 million from fiscal 2009 due to $6.7 million of additional interest expense recognized under interest rate swap agreements that expired in fiscal 2009 and the capitalization of interest expense related to capacity expansions.

Income taxes. Income taxes as a percentage of pre-tax income from continuing operations for fiscal 2010 were 28.2%, compared to (3.1)% for fiscal 2009. The income tax expense recorded in the financial statements fluctuates between years due to a variety of factors, including state income taxes, the mix of income between U.S. and foreign jurisdictions taxed at varying rates, changes in estimates of permanent differences and valuation allowances and the relative size of our consolidated income (loss) before income taxes. In fiscal 2009, the effective tax rate was also impacted by the goodwill impairment charge, which decreased pre-tax income with no material corresponding income tax benefit.

The mix of earnings between the tax jurisdictions has a significant impact on the effective tax rate. Each tax jurisdiction has its own set of tax laws and tax rates and income earned by our subsidiaries is taxed independently by these various jurisdictions. Currently, the applicable statutory income tax rates in the jurisdictions in which we operate range from 0% to 39%. Therefore, the amount of income tax expense in each jurisdiction relative to our consolidated income (loss) before income taxes has a significant impact on our annual effective tax rate.

The effect of each of these items on our effective tax rate is quantified in the table below:

Net sales. Net sales for fiscal 2011 were $201.0 million, an increase of $70.0 million, or 53.4%, from fiscal 2010. Net sales increased by $76.8 million due to higher volumes, offset by $6.8 million of customer mix, product mix and lower sales prices. The increase in sales volume was driven primarily by growing demand for EDV applications, continued growth in consumer electronics and the benefit of new capacity from the first phase of our Charlotte, North Carolina expansion. During the fourth quarter of 2011, we experienced some weakness in consumer electronics demand which we expect to continue into the first quarter of 2012. In addition, the first quarter of 2012 will be impacted by lower sales for EDV applications due to the production schedules of two specific EDV models. As a result of these short-term issues, first quarter 2012 lithium sales could be similar to the same period in the prior year, which would represent a decline of approximately $10.0 million from the fourth quarter of 2011. However, we expect fiscal 2012 sales for electronics and EDVs to be in excess of fiscal 2011. Pricing for lithium battery separators is volume based, with higher volume customers receiving lower sales prices. The decline in sales relating to mix and price was due to the increase in sales to larger volume customers. During 2011, sales to EDV customers increased from approximately 24% in the prior year to 40% of total lithium separator sales, a trend that is expected to continue as demand for EDVs grows and our EDV-targeted capacity expansions continue to come online.

Segment operating income. Segment operating income was $91.1 million, an increase of $39.7 million, or 77.2%, from fiscal 2010. Segment operating income as a percent of net sales was 45.3% for fiscal 2011, compared to 39.2% for fiscal 2010. The increase in segment operating income and segment operating income margin was due to higher production volumes and production efficiencies, offset to some extent by growth investments associated with new capacity.

Net sales. Net sales for fiscal 2010 were $131.0 million, an increase of $44.9 million, or 52.1%, from fiscal 2009. Net sales increased by $48.0 million due to higher volumes, offset by $3.1 million of customer mix, product mix and lower sales prices. Pricing for lithium battery separators is volume based, with higher volume customers receiving lower sales prices. The decline in sales relating to mix and price was due to the increase in sales to larger volume customers. During 2010, sales to EDV customers were approximately 24% of total lithium separator sales.

Segment operating income. Segment operating income was $51.4 million, an increase of $22.3 million, or 76.6%, from fiscal 2009. Segment operating income as a percent of net sales was 39.2% for fiscal 2010, compared to 33.8% for fiscal 2009. The increase in segment operating income

and segment operating income margin was due to higher production volumes and production efficiencies, offset to some extent by growth investments associated with new capacity.

Net sales. Net sales for fiscal 2011 were $371.9 million, an increase of $57.2 million, or 18.2%, from fiscal 2010. The increase was primarily due to an increase in sales volume with strong demand across all geographic regions, higher sales prices to offset higher raw material costs and the $6.7 million positive effect of foreign currency translation. We believe that the short-term impact in the second half of 2011 on sales in China from the government mandate requiring lead-acid battery producers to demonstrate the proper handling of lead has improved. During the fourth quarter of 2011, we started to see the impact of mild winter weather in North America and Europe, which will temporarily impact replacement battery sales in the first quarter of 2012 if it continues.

Segment operating income. Segment operating income was $96.1 million, an increase of $17.0 million, or 21.5%, from fiscal 2010. Segment operating income as a percent of net sales was 25.8% for fiscal 2011, compared to 25.1% for fiscal 2010. The increase in segment operating income and segment operating income margin was due to higher production volumes and production efficiencies, offset to some extent by higher costs associated with growth investments. Higher raw material costs were offset with price increases.

Net sales. Net sales for fiscal 2010 were $314.7 million, an increase of $33.2 million, or 11.8%, from fiscal 2009. The increase in net sales, which includes the impact of 2009 advance purchases of approximately $13.0 million by a North American customer, was due to continued growth in Asia and global economic improvement. Sales in Asia, which is the fastest growing market for lead-acid separators, increased 38.8% in fiscal 2010. The impact of foreign currency translation was not significant for fiscal 2010.

Segment operating income. Segment operating income was $79.1 million, an increase of $11.1 million, or 16.3%, from fiscal 2009. Segment operating income as a percent of net sales was 25.1% for fiscal 2010, compared to 24.2% for fiscal 2009. The increase in segment operating income and segment operating income margin was due to higher production volumes and production efficiencies.

Net sales. Net sales for fiscal 2011 were $190.2 million, an increase of $19.3 million, or 11.3%, from fiscal 2010, including the positive effect of foreign currency translation of $6.6 million. Healthcare sales increased by 12.1% due to growth in hemodialysis and blood oxygenation applications and foreign currency translation. We expect hemodialysis sales in the first quarter of 2012 to be lower than the same period in the prior year due to two customers shifting production from the first quarter to the remainder of the year, primarily the third and fourth quarters of 2012. Because purchase volumes to these two customers are contractually defined, the shift in timing should not impact total fiscal 2012 sales. Filtration and specialty product sales increased by 9.9% due to growth across all key applications and foreign currency translation.

Segment operating income. Segment operating income was $54.7 million, an increase of $4.0 million, or 7.9%, from fiscal 2010. Segment operating income as a percent of net sales was 28.8%

for fiscal 2011, compared to 29.7% for fiscal 2010. The increase in segment operating income was due to higher sales, offset to some extent by higher energy costs and costs associated with our new capacity.

Net sales. Net sales for fiscal 2010 were $170.9 million, an increase of $21.6 million, or 14.5%, from fiscal 2009, including the negative effect of foreign currency translation of $6.4 million. Healthcare sales increased by 5.2% as demand in hemodialysis and blood oxygenation applications was somewhat offset by the effect of foreign currency translation. Filtration and specialty product sales increased by 34.5% due to economic improvement and strong demand in all key applications, somewhat offset by the effect of foreign currency translation.

Segment operating income. Operating income was $50.7 million, an increase of $14.9 million, or 41.6%, from fiscal 2009. Operating income as a percent of net sales was 29.7% for fiscal 2010, compared to 24.0% for fiscal 2009. The increase in segment operating income and segment operating income margin was due to the higher sales. In addition, filtration production was reduced in the third and fourth quarters of 2009 due to lower sales related to the macro-economic environment at that time.

Corporate and other costs include costs associated with the corporate office and other costs that are not allocated to the reporting segments for segment reporting purposes, including amortization of identified intangible assets and performance-based incentive compensation.

Fiscal 2011 compared with fiscal 2010. Corporate and other costs for fiscal 2011 were $42.5 million, compared to $44.6 million for fiscal 2010. The decrease was due primarily to a decrease in the accrual of variable incentives under performance-based compensation plans.

Fiscal 2010 compared with fiscal 2009. Corporate and other costs for fiscal 2010 were $44.6 million, compared to $31.4 million for fiscal 2009. The increase was due primarily to the accrual of variable incentives under performance-based compensation plans.

As of December 31, 2011, we manufacture our products at 14 strategically located facilities in North America, Europe and Asia. Net sales from the foreign locations were $490.6 million, $415.3 million and $351.5 million for fiscal 2011, 2010 and 2009, respectively. Typically, we sell our products in the currency of the country where the manufacturing facility that produces the product is located. Sales to foreign customers are subject to numerous additional risks, including the impact of foreign government regulations, currency fluctuations, political uncertainties and differences in business practices. There can be no assurance that foreign governments will not adopt regulations or take other actions that would have a direct or indirect adverse impact on our business or market opportunities within such governments' countries. Furthermore, there can be no assurance that the political, cultural and economic climate outside the United States will be favorable to our operations and growth strategy.

Operations at our European production facilities are traditionally subject to shutdowns for approximately one month during the third quarter of each year for employee vacations. As a result, operating income during the third quarter of any fiscal year may be lower than operating income in other quarters during the same fiscal year. Because of the seasonal fluctuations, comparisons of our operating results for the third quarter of any fiscal year with those of the other quarters during the same fiscal year may be of limited relevance in predicting our future financial performance.

Cash and cash equivalents increased by $2.6 million since January 1, 2011, as cash generated from operations was used to fund growth investments.

Operating activities. Net cash provided by operating activities was $144.8 million in fiscal 2011, consisting of cash generated from operations of $181.1 million, offset by an increase in accounts receivable and inventory associated with our sales growth. Accounts receivable days sales outstanding is consistent with the prior year, and we have not experienced significant changes in accounts receivable aging or customer payment terms and believe that we have adequately provided for potential bad debts. Inventory is generally not subject to obsolescence and does not have a shelf life, and we do not believe there is a significant risk of inventory impairment.

Investing activities. In fiscal 2011, total capital expenditures were $156.3 million, net of DOE grant awards of $23.6 million, compared to $68.8 million for fiscal 2010. Capital expenditures in 2011 were primarily related to capacity expansions across all of our businesses, especially for lithium battery separators targeted for EDV applications. The capacity expansion projects will continue in 2012 and 2013. Based on currently approved projects, total capital spending for fiscal 2012 is expected to be similar to fiscal 2011 and will be funded by cash from operations. As of December 31, 2011, we had $101.8 million of construction in progress which was primarily related to the capacity expansion projects.

Financing activities. During fiscal 2011, financing activities consisted primarily of scheduled principal payments under our credit agreement and proceeds from the exercise of stock options.

We intend to fund our ongoing operations with cash on hand, cash generated by operations and borrowings under the senior secured credit agreement. As of December 31, 2011 and January 1, 2011, approximately 70% of our cash and cash equivalents were held by foreign subsidiaries. There were no significant restrictions on our ability to transfer funds with and among subsidiaries, or any material adverse tax consequences that would impact our ability to transfer funds held by foreign subsidiaries to the U.S.

Our senior secured credit agreement provides for a U.S. dollar term loan facility ($301.2 million outstanding at December 31, 2011), a euro term loan facility ($43.3 million outstanding at December 31, 2011) and a $90.0 million revolving credit facility. At December 31, 2011, we had no borrowings or undrawn standby letters of credit outstanding on the revolving credit facility. The term loans mature in July 2014 and the revolving credit facility matures in July 2013. Interest rates under the senior secured credit agreement are, at our option, equal to either an alternate base rate or the Eurocurrency base rate plus a specified margin. At December 31, 2011, interest rates on the U.S. dollar term loan and euro term loan were 2.30% and 3.02%, respectively.

When loans are outstanding under the revolving credit facility, we are required to maintain a senior leverage ratio of indebtedness to Adjusted EBITDA of less than 3.00 to 1.00. At December 31, 2011, our senior leverage ratio was 1.17 to 1.00 and therefore, had no effect on borrowings available

under the revolving credit facility. Adjusted EBITDA, as defined under the senior secured credit agreement, was as follows:

(in millions)	Fiscal 2011

Net income	$	105.2
Add/Subtract:
Depreciation and amortization expense		51.3
Interest expense, net		34.4
Income taxes		51.9
Stock-based compensation		9.3
Foreign currency gain		(1.9	)
Loss on disposal of property, plant and equipment		0.3
Costs related to the FTC litigation		0.5
Other non-cash or non-recurring charges		(0.2	)

Adjusted EBITDA	$	250.8

As of December 31, 2011, the calculation of the senior leverage ratio, as defined under the senior secured credit agreement, was as follows:

The senior secured credit agreement contains certain restrictive covenants which, among other things, limit capital spending, the incurrence of additional indebtedness, investments, dividends, transactions with affiliates, asset sales, acquisitions, mergers and consolidations, prepayments of other indebtedness, liens and encumbrances and other matters customarily restricted in such agreements. The agreement also contains certain customary events of default, subject to grace periods, as appropriate. We believe that limitations imposed by the senior secured credit agreement will not significantly inhibit us from meeting our ongoing capital expenditure needs.

The 7.5% senior notes mature on November 15, 2017 and are guaranteed by most of our existing and future domestic restricted subsidiaries, subject to certain exceptions. Except under certain circumstances, the 7.5% senior notes do not require principal payments prior to their maturity in 2017. Interest on the 7.5% senior notes is payable semi-annually on May 15 and November 15. The 7.5% senior notes contain customary covenants and events of default, including covenants that limit our ability to incur debt, pay dividends and make investments.

Future debt service payments are expected to be paid out of cash flows from operations, borrowings on our revolving credit facility and future refinancing of our debt. Our cash interest requirements for the next twelve months are estimated to be $36.1 million.

We believe we have sufficient liquidity to meet our cash requirements over both the short (next twelve months) and long term (in relation to our debt service requirements). In evaluating the sufficiency of our liquidity, we considered cash on hand, expected cash flow to be generated from operations and available borrowings under our senior secured credit agreement compared to our anticipated cash requirements for debt service, working capital, cash taxes, capital expenditures and funding requirements for long-term liabilities. We anticipate that our cash on hand and operating cash

flow, together with borrowings under the revolving credit facility, will be sufficient to meet our anticipated future operating expenses, capital expenditures and debt service obligations as they become due for at least the next twelve months. However, our ability to make scheduled payments of principal, to pay interest on or to refinance our indebtedness and to satisfy our other debt obligations will depend upon our future operating performance, which will be affected by general economic, financial, competitive, legislative, regulatory, business and other factors beyond our control. See "Item 1A. Risk Factors" in this Annual Report on Form 10-K.

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

Environmental obligations are accrued when such expenditures are probable and reasonably estimable. The amount of liability recorded is based on currently available information, including the progress of remedial investigations, current status of discussions with regulatory authorities regarding the method and extent of remediation, presently enacted laws and existing technology. Accruals for estimated losses from environmental obligations are adjusted as further information develops or circumstances change. Costs of future expenditures for environmental obligations are not discounted to their present value. We do not currently anticipate any material loss in excess of the amounts accrued. Future remediation expenses may be affected by a number of uncertainties including, but not limited to, the difficulty in estimating the extent and method of remediation, the evolving nature of environmental regulations and the availability and application of technology. We do not expect the resolution of such uncertainties to have a material adverse effect on our consolidated financial position or liquidity. Recoveries of environmental costs from other parties are recognized as assets when their receipt is deemed probable.

In connection with the acquisition of Membrana in 2002, we recorded a reserve for environmental obligations. The reserve provides for costs to remediate known environmental issues and operational upgrades which are required in order for us to remain in compliance with local regulations. The initial estimate and subsequent finalization of the reserve was included in the allocation of purchase price at the date of acquisition. The environmental reserve for the Membrana facility, which is denominated in euros, was $12.0 million at December 31, 2011. We anticipate that that majority of expenditures associated with the reserve will be made in the next twelve months.

We have indemnification agreements for certain environmental matters from Acordis and Akzo, the prior owners of Membrana. Akzo originally provided broad environmental protections to Acordis with the right to assign such indemnities to Acordis's successors. Akzo's indemnifications relate to conditions existing prior to December 1999, which is the date that Membrana was sold to Acordis. In addition to the Akzo indemnification, Acordis provides separate indemnification of claims incurred from December 1999 through February 2002, the acquisition date. We will receive indemnification payments under the indemnification agreements after expenditures are made against approved claims. At December 31, 2011, amounts receivable under the indemnification agreements were $12.1 million.

The following table sets forth our contractual obligations at December 31, 2011. Some of the amounts included in this table are based on management's estimates and assumptions about these obligations, including their duration, anticipated actions by third parties and other actions. Because

these estimates and assumptions are necessarily subjective, the timing and amount of payments under these obligations may vary from those reflected in this table. For more information on these obligations, see the notes to consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data."

(1): The term loan facilities include euro-denominated debt held by one of our foreign subsidiaries. The table assumes that the dollar/euro exchange rate is the rate at December 31, 2011 for all periods presented and that the debt is held to its stated maturity.
(2): Includes cash interest requirements on long-term debt and the 7.5% senior notes. Interest rates under the term loan facilities are variable and the table assumes that these rates are the same rates that were in effect at December 31, 2011. For the euro-denominated debt, the table assumes that the dollar/euro exchange rate is the rate at December 31, 2011 for all periods presented.
(3): 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. For euro-denominated leases, the table assumes that the dollar/euro exchange rate is the period average rate for 2011 and for all periods presented.
(4): 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 and postretirement benefits of $80.9 million as of December 31, 2011. Our 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 postretirement plans in fiscal 2012 will be $1.8 million.
(5): As discussed in the notes to consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data," we have recorded a liability at December 31, 2011 of $9.4 million for unrecognized tax benefits. Payments related to this liability are not included in the table above since the timing and actual amounts of the payments, if any, are not known.
(6): As discussed in the notes to consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data," we have a net environmental receivable of $0.1 million, consisting of an environmental obligation of $12.0 million offset by the related indemnification receivable of $12.1 million. Indemnification payments are received after expenditures are made against approved claims. As a result, we expect to make environmental obligation payments over the next twelve months and receive indemnification payments over the next two years.

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

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

At December 31, 2011, we had fixed rate debt of $365.0 million and variable rate debt of $344.5 million. To reduce the interest rate risk inherent in our variable rate debt, we may utilize interest rate derivatives. As of December 31, 2011, there were no outstanding interest rate derivatives. The pre-tax earnings and cash flow impact resulting from a 100 basis point increase in interest rates on our variable rate debt, holding other variables constant, would be $3.4 million per year.

Outside of the United States, we maintain assets and operations in Europe and Asia. The results of operations and financial position of our foreign operations are principally measured in their respective currency and translated into U.S. dollars. As a result, exposure to foreign currency fluctuations exists. The reported income of these subsidiaries will be higher or lower depending on a weakening or strengthening of the U.S. dollar against the respective foreign currency. Our subsidiaries and affiliates also purchase and sell products and services in various currencies. As a result, we may be exposed to cost increases relative to the local currencies in the markets in which we sell. Because the percentage of our sales in foreign currencies differs from the percentage of our costs in foreign currencies, a change in the relative value of the U.S. dollar could have a disproportionate impact on our sales compared to our costs, which could impact our margins. A portion of our assets are based in our foreign locations and are translated into U.S. dollars at foreign currency exchange rates in effect as of the end of each period, with the effect of such translation reflected in accumulated other comprehensive income (loss). Accordingly, our consolidated shareholders' equity will fluctuate depending upon the weakening or strengthening of the U.S. dollar against the respective foreign currency, primarily the euro.

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

Our strategy for management of currency risk relies primarily on conducting our operations in a country's respective currency and may, from time to time, involve foreign currency derivatives. As of December 31, 2011, we did not have any foreign currency derivatives outstanding.

The Company's report of independent registered public accounting firm and consolidated financial statements and related notes appear on the following pages of this Annual Report on Form 10-K.

We have audited the accompanying consolidated balance sheets of Polypore International, Inc. as of December 31, 2011 and January 1, 2011, and the related consolidated statements of operations, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2011. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Polypore International, Inc. at December 31, 2011 and January 1, 2011, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2011, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Polypore International, Inc.'s internal control over financial reporting as of December 31, 2011 based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2012 expressed an unqualified opinion thereon.

We have audited Polypore International, Inc.'s internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Polypore International, Inc.'s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Polypore International, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the accompanying consolidated balance sheets of Polypore International, Inc. as of December 31, 2011 and January 1, 2011, and the related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2011 of Polypore International, Inc. and our report dated February 27, 2012 expressed an unqualified opinion thereon.

(in thousands, except share data)	December 31, 2011			January 1, 2011

Assets
Current assets:
Cash and cash equivalents	$	92,574		$	89,955
Accounts receivable, net		134,016			116,716
Inventories		90,444			76,954
Deferred income taxes		3,171			2,241
Prepaid and other		21,560			14,958

Total current assets		341,765			300,824
Property, plant and equipment, net		527,778			415,297
Goodwill		469,319			469,319
Intangibles and loan acquisition costs, net		133,586			152,556
Other		9,431			10,500

Total assets	$	1,481,879		$	1,348,496

Liabilities and shareholders' equity
Current liabilities:
Accounts payable	$	34,332		$	29,585
Accrued liabilities		61,907			67,099
Income taxes payable		5,881			5,262
Current portion of debt		3,682			3,696

Total current liabilities		105,802			105,642
Debt, less current portion		705,836			711,636
Pension and postretirement benefits, less current portion		80,871			71,986
Deferred income taxes		76,601			66,158
Other		13,376			15,024
Commitments and contingencies
Shareholders' equity:
Preferred stock—15,000,000 shares authorized, no shares issued and outstanding		—			—
Common stock, $.01 par value—200,000,000 shares authorized, 46,499,180 and 45,582,557 issued and outstanding at December 31, 2011 and January 1, 2011		465			456
Paid-in capital		527,243			497,160
Accumulated deficit		(15,183	)		(120,423	)
Accumulated other comprehensive income (loss)		(17,127	)		269

Total Polypore shareholders' equity		495,398			377,462
Noncontrolling interest		3,995			588

Total shareholders' equity		499,393			378,050

Total liabilities and shareholders' equity	$	1,481,879		$	1,348,496

(in thousands, except per share data)	Year ended December 31, 2011			Year ended January 1, 2011			Year ended January 2, 2010

Net sales	$	763,074		$	616,625		$	516,855
Cost of goods sold		441,013			369,767			321,056

Gross profit		322,061			246,858			195,799
Selling, general and administrative expenses		132,596			114,714			100,411
Business restructuring		—			(776	)		21,324
Goodwill impairment		—			—			131,450

Operating income (loss)		189,465			132,920			(57,386	)
Other (income) expense:
Interest expense, net		34,384			46,747			57,097
Gain on sale of Italian subsidiary		—			(3,327	)		—
Foreign currency and other		(2,018	)		(1,347	)		(704	)
Costs related to purchase of 8.75% senior subordinated notes		—			2,263			—

		32,366			44,336			56,393

Income (loss) before income taxes		157,099			88,584			(113,779	)
Income taxes		51,859			25,009			3,548

Net income (loss)	$	105,240		$	63,575		$	(117,327	)

Net income (loss) per share:
Basic	$	2.28		$	1.43		$	(2.64	)
Diluted	$	2.23		$	1.39		$	(2.64	)
Weighted average shares outstanding:
Basic		46,182,204			44,562,421			44,385,552
Diluted		47,119,997			45,748,058			44,385,552

(in thousands, except share data)		Common Stock		Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Non- controlling Interest			Total			Comprehensive Income (Loss)

Balance at January 3, 2009	44,377,560	$	444	$	479,442		$	(66,671	)	$	(20,352	)	$	2,950		$	395,813
Net loss for the year ended January 2, 2010	—		—		—			(117,327	)		—			—			(117,327	)	$	(117,327	)
Stock-based compensation	—		—		2,265			—			—			—			2,265			—
Stock option exercises	36,602		—		191			—			—			—			191			—
Restricted stock grants	3,164		—		—			—			—			—			—			—
Noncontrolling interest	—		—		(650	)		—			—			(2,950	)		(3,600	)		—
Reversal of unrealized loss on interest rate swap agreements, net of income tax expense of $2,035	—		—		—			—			3,442			—			3,442			3,442
Change in net actuarial loss and prior service credit, net of income tax expense of $1,398	—		—		—			—			3,197			—			3,197			3,197
Foreign currency translation adjustment, net of income tax expense of $978	—		—		—			—			364			—			364			364

Balance at January 2, 2010	44,417,326		444		481,248			(183,998	)		(13,349	)		—			284,345
Comprehensive loss for the year ended January 2, 2010																			$	(110,324	)

Net income for the year ended January 1, 2011	—		—		—			63,575			—			—			63,575		$	63,575
Stock-based compensation	—		—		2,295			—			—			—			2,295			—
Stock option exercises	1,161,815		12		6,848			—			—			—			6,860			—
Excess tax benefit from stock-based compensation	—		—		6,769			—			—			—			6,769			—
Restricted stock grants	3,416		—		—			—			—			—			—			—
Noncontrolling interest	—		—		—			—			—			581			581			—
Change in net actuarial loss and prior service credit, net of income tax benefit of $2,311	—		—		—			—			(5,165	)		—			(5,165	)		(5,165	)
Foreign currency translation adjustment, net of income tax benefit of $2,008	—		—		—			—			18,783			7			18,790			18,783

Balance at January 1, 2011	45,582,557		456		497,160			(120,423	)		269			588			378,050
Comprehensive income for the year ended January 1, 2011																			$	77,193

Net income for the year ended December 31, 2011	—		—		—			105,240			—			—			105,240		$	105,240
Stock-based compensation	—		—		9,298			—			—			—			9,298			—
Stock option exercises	912,243		9		6,649			—			—			—			6,658			—
Excess tax benefit from stock-based compensation	—		—		14,136			—			—			—			14,136			—
Restricted stock grants	4,380		—		—			—			—			—			—			—
Noncontrolling interest	—		—		—			—			—			3,350			3,350			—
Change in net actuarial loss and prior service credit, net of income tax benefit of $2,187	—		—		—			—			(4,812	)		—			(4,812	)		(4,812	)
Foreign currency translation adjustment, net of income tax benefit of $895	—		—		—			—			(12,584	)		57			(12,527	)		(12,584	)

Balance at December 31, 2011	46,499,180	$	465	$	527,243		$	(15,183	)	$	(17,127	)	$	3,995		$	499,393

Comprehensive income for the year ended December 31, 2011																			$	87,844

(in thousands)	Year ended December 31, 2011			Year ended January 1, 2011			Year ended January 2, 2010

Operating activities:
Net income (loss)	$	105,240		$	63,575		$	(117,327	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation expense		34,812			31,492			34,616
Amortization expense		16,530			16,415			16,779
Amortization of loan acquisition costs		2,454			2,621			2,588
Stock-based compensation		9,298			2,295			2,265
Loss on disposal of property, plant and equipment		375			1,120			341
Foreign currency gain		(2,065	)		(1,416	)		(747	)
Excess tax benefit from stock-based compensation		(14,136	)		(6,769	)		—
Deferred income taxes		28,640			4,292			(10,406	)
Business restructuring		—			(776	)		21,324
Gain on sale of Italian subsidiary		—			(3,327	)		—
Costs related to purchase of 8.75% senior subordinated notes		—			2,263			—
Goodwill impairment		—			—			131,450
Changes in operating assets and liabilities:
Accounts receivable		(18,795	)		(11,984	)		(6,174	)
Inventories		(15,614	)		(6,198	)		(1,148	)
Prepaid and other current assets		(2,046	)		3,805			538
Accounts payable and accrued liabilities		(661	)		22,626			(20,156	)
Income taxes payable		245			2,597			6,919
Other, net		556			4,576			(7,731	)

Net cash provided by operating activities		144,833			127,207			53,131
Investing activities:
Purchases of property, plant and equipment, net		(156,330	)		(68,787	)		(16,265	)
Payments associated with the stock sale of Italian subsidiary, net		—			(21,519	)		—

Net cash used in investing activities		(156,330	)		(90,306	)		(16,265	)
Financing activities:
Principal payments on debt		(4,519	)		(10,017	)		(7,041	)
Proceeds from stock option exercises		6,658			6,860			191
Excess tax benefit from stock-based compensation		14,136			6,769			—
Noncontrolling interest		1,936			581			(3,600	)
Payments for loan acquisition costs		(627	)		(7,954	)		—
Proceeds from issuance of 7.5% senior notes		—			365,000			—
Purchase of 8.75% senior subordinated notes		—			(422,549	)		—

Net cash provided by (used in) financing activities		17,584			(61,310	)		(10,450	)
Effect of exchange rate changes on cash and cash equivalents		(3,468	)		(611	)		5,538

Net increase (decrease) in cash and cash equivalents		2,619			(25,020	)		31,954
Cash and cash equivalents at beginning of year		89,955			114,975			83,021

Cash and cash equivalents at end of year	$	92,574		$	89,955		$	114,975

Supplemental cash flow information
Cash paid for interest, net of capitalized interest	$	32,174		$	46,468		$	55,573
Cash paid for income taxes, net of refunds		22,975			16,323			7,035

Polypore International, Inc. (the "Company") is a leading global high technology filtration company that develops, manufactures and markets specialized microporous membranes used in separation and filtration processes. The Company has a global presence in the major geographic markets of North America, South America, Europe and Asia.

The accompanying consolidated financial statements include the accounts of the Company and all majority owned subsidiaries after elimination of intercompany accounts and transactions. The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles. Certain amounts previously presented in the consolidated financial statements for prior periods have been reclassified to conform to current classifications. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

The Company's fiscal year is the 52- or 53-week period ending the Saturday nearest to December 31. The fiscal years ended December 31, 2011, January 1, 2011 and January 2, 2010 included 52 weeks.

Revenue from product sales is recognized when a firm sales agreement is in place, delivery of the product has occurred and collectibility of the fixed and determinable sales price is reasonably assured. Amounts billed to customers for shipping and handling are recorded in "Net sales" in the accompanying consolidated statements of operations. Shipping and handling costs incurred by the Company for the delivery of goods to customers are included in "Cost of goods sold" in the accompanying consolidated statements of operations. Estimates for sales returns and allowances and product returns are recognized in the period in which the revenue is recorded. Product returns and warranty expenses were not material for all periods presented.

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Accounts receivable potentially expose the Company to concentrations of credit risk. The Company provides credit in the normal course of business and performs ongoing credit evaluations on certain of its customers' financial condition, but generally does not require collateral to support such receivables. Accounts receivable, net of allowance for doubtful accounts, are carried at cost which approximates fair value. The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information. The allowance for doubtful

accounts was $2,681,000 and $2,521,000 at December 31, 2011 and January 1, 2011, respectively. The Company believes that the allowance for doubtful accounts is adequate to provide for potential losses resulting from uncollectible accounts. The Company charges accounts receivables off against the allowance for doubtful accounts when it deems them to be uncollectible on a specific identification basis. Exide Technologies, a customer of the Company's transportation and industrial segment, accounted for less than 10% of the Company's sales in 2011 and 2010 and approximately 13% in 2009.

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

Property, plant and equipment are stated at cost. Depreciation is computed for financial reporting purposes on the straight-line method over the estimated useful lives of the related assets. The estimated useful lives for buildings and land improvements range from 20 to 40 years and the estimated useful lives for machinery and equipment range from 5 to 15 years. Repairs and maintenance costs, which include indirect labor and employee benefits associated with maintenance personnel and utility, maintenance and repair costs for equipment and facilities utilized in the manufacturing process, are treated as inventoriable costs. Major planned maintenance activities outside of the normal production process are capitalized as property, plant and equipment if the costs are expected to provide future benefits by increasing the service potential of the asset to which the repair or maintenance applies. Costs of the construction of certain long-term assets include capitalized interest which is amortized over the estimated useful life of the related asset. The Company capitalized interest of $3,344,000 and $1,432,000 in 2011 and 2010, respectively.

Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the sum of the expected undiscounted cash flows is less than the carrying value of the related asset or group of assets, a loss is recognized for the difference between the fair value and carrying value of the asset or group of assets.

Goodwill and indefinite-lived intangible assets are not amortized, but are subject to annual impairment testing unless circumstances dictate more frequent assessments. The Company performs its annual impairment assessment as of the first day of the fourth quarter of each fiscal year and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than the carrying amount.

Goodwill impairment testing is a two-step process performed at the reporting unit level. The Company's reporting units are at the operating segment level. Step one compares the fair value of the Company's reporting units to their carrying amount. The fair value of the reporting unit is determined using the income approach, corroborated by comparison to market capitalization and key multiples of comparable companies. Under the income approach, the Company determines fair value based on estimated future cash flows of each reporting unit, discounted by an estimated weighted-average cost of capital. If the fair value of the reporting unit is greater than its carrying amount, there is no impairment. If the reporting unit's carrying amount exceeds its fair value, the second step must be completed to measure the amount of impairment, if any. Step two calculates the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets of the reporting unit from the fair value of the reporting unit as calculated in step one. In this step, the fair value of the reporting unit is allocated to all of the reporting unit's assets and liabilities in a hypothetical purchase price allocation as if the reporting unit had been acquired on that date. If the carrying amount of goodwill exceeds the implied fair value of goodwill, an impairment loss will be recognized in an amount equal to the excess.

For indefinite-lived intangible assets, the fair value of the assets is compared to the carrying value and if the carrying value is greater, an impairment loss is recognized for the difference.

Intangible assets with finite lives are amortized over their respective estimated useful lives using the straight-line method. The useful life of customer relationships is based upon historical customer attrition rates and represents the estimated economic life of those relationships. Loan acquisition costs are amortized over the term of the related debt. Amortization expense for loan acquisition costs is classified as interest expense. Intangible assets with finite lives are reviewed for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable. If the sum of the expected undiscounted cash flows is less than the carrying value of the related asset, a loss is recognized for the difference between the fair value and carrying value of the intangible asset.

Derivative instruments are recorded at fair value on the balance sheet and changes in fair value are recorded to earnings or to shareholders' equity in "Accumulated other comprehensive income (loss)," depending on whether a derivative is designated as part of a hedge transaction and the type of hedge transaction. Ineffective portions of hedges, if any, are recognized in current earnings. The Company does not use derivatives for trading or speculative purposes.

Deferred tax assets and liabilities are based on temporary differences between the basis of certain assets and liabilities for income tax and financial reporting purposes. A valuation allowance is recognized if it is more likely than not that a portion of the deferred tax assets will not be realized in the future. The tax effects from unrecognized tax benefits are recognized in the financial statements if the position is more likely than not to be sustained upon audit, based on the technical merits of the position.

The Company records stock-based compensation based on the fair value of the award at the grant date. Stock-based compensation expense is recorded over the requisite service period using the straight-line method for service-based awards and in the service period corresponding to the performance target for performance based awards. Excess tax benefits from employee stock option exercises are recorded as an increase to additional paid-in capital if an incremental tax benefit is realized following the ordering provisions of the tax law. Excess tax benefits are reported as a financing cash inflow rather than as a reduction of income taxes paid in the statement of cash flows.

The cost of research and development is charged to expense as incurred and is included in "Selling, general and administrative expenses" in the accompanying consolidated statements of operations. Research and development expense was $17,555,000, $14,752,000 and $16,789,000 in 2011, 2010 and 2009, respectively.

Grant awards are recognized when there is reasonable assurance that the Company will receive the grant and comply with the conditions attached to the grant. For capital expenditures, the Company deducts grant awards from the cost of the related asset. For expense reimbursements, the Company deducts grant awards from the related expenses. In 2010, the Company was awarded a $49,264,000 grant from the U.S. Department of Energy ("DOE") to help fund an expansion of its U.S. lithium battery separator production capacity. As of December 31, 2011, the Company has recognized $46,217,000 from the DOE grant. The Company has also been awarded state and local grants in connection with certain of its U.S. expansions.

The Company recognized grant awards for capital expenditures of $23,550,000 and $13,762,000 in 2011 and 2010, respectively. The Company recognized grant awards for expenses of $4,715,000 and $2,731,000 in 2011 and 2010, respectively. At December 31, 2011 and January 1, 2011, amounts due from government agencies were $1,483,000 and $2,546,000, respectively.

Basic net income (loss) per common share is based on the weighted-average number of common shares outstanding in each year. Diluted net income per common share considers the impact of dilution from stock options and unvested restricted stock shares as measured under the treasury stock method. Potential common shares that would increase net income per share amounts or decrease net loss per share amounts are antidilutive and excluded from the diluted net income (loss) per common share computation. For 2009, no stock options or restricted stock shares were included in the computation because the Company reported a net loss.

The local currencies of the Company's foreign subsidiaries are the functional currencies. Assets and liabilities of the Company's foreign subsidiaries are translated into United States dollars at current exchange rates and resulting translation adjustments are reported in "Accumulated other comprehensive

income (loss)." Income statement amounts are translated at weighted average exchange rates prevailing during the period. Transaction gains and losses are included in the determination of net income.

The Company's financial instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and long-term debt. The carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximates their fair value due to the short-term maturities of these assets and liabilities. The carrying amount of borrowings under the senior secured credit agreement approximates fair value because the interest rates adjust to market interest rates. The fair value of the 7.5% senior notes, based on a quoted market price, was $377,775,000 at December 31, 2011.

Authoritative guidance establishes the following hierarchy that prioritizes the inputs to valuation methodologies used to measure fair value:

As of December 31, 2011, the Company did not have any financial assets and liabilities required to be measured at fair value on a recurring basis. See Note 9 for pension assets measured at fair value on a recurring basis. See Note 4 for goodwill measured at fair value in 2009 on a nonrecurring basis.

In June 2011, the FASB issued guidance on the disclosure and presentation requirements for comprehensive income. This new guidance requires comprehensive income to be presented in either a single continuous financial statement or in two separate but consecutive financial statements. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company's financial statements.

In September 2011, the FASB amended the guidance on the annual testing of goodwill for impairment. The amended guidance will allow companies to assess qualitative factors to determine if it is more likely than not that goodwill might be impaired and whether it is necessary to perform the two-step goodwill impairment test required under current accounting standards. The guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company's financial statements.

There were no changes in the carrying amount of goodwill for the years ended December 31, 2011 and January 1, 2011, and the carrying amount of goodwill at those dates was as follows:

In 2009, because of the economic environment and estimates of future lead-acid demand in North America, the Company determined that the carrying value of the transportation and industrial reporting unit exceeded its implied fair value and recorded a goodwill impairment charge of $131,450,000. Goodwill impairment was measured on a nonrecurring basis using the income approach, which utilizes inputs classified as level three in the fair value hierarchy.

			December 31, 2011				January 1, 2011

(in thousands)	Weighted Average Life (years)		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Intangible and other assets subject to amortization:
Customer relationships		18	$	193,462	$	86,567	$	193,754	$	75,172
Technology and patents		9		40,338		35,563		40,780		31,231
Loan acquisition costs		7		17,252		6,895		17,018		4,441
Trade names		15		400		102		400		76
Intangible assets not subject to amortization:
Trade names		Indefinite		11,261		—		11,524		—

			$	262,713	$	129,127	$	263,476	$	110,920

Amortization expense, including amortization of loan acquisition costs classified as interest expense, was $18,984,000, $19,036,000 and $19,367,000 in 2011, 2010 and 2009, respectively. The Company's estimate of amortization expense for the next five years is as follows:

The senior secured credit agreement provides for a U.S. dollar term loan facility ($301,233,000 outstanding at December 31, 2011), a euro term loan facility ($43,285,000 outstanding at December 31, 2011) and a $90,000,000 revolving credit facility. At December 31, 2011, the entire amount of the revolving credit facility was available for borrowing. Interest rates under the senior secured credit agreement are, at the Company's option, equal to either an alternate base rate or the Eurocurrency base rate plus a specified margin. The Company is subject to limitations on capital spending and, when loans are outstanding under the revolving credit facility, a maximum net senior leverage ratio. The term loans mature in July 2014 and the revolving credit facility matures in July 2013.

The Company's domestic subsidiaries guarantee indebtedness under the credit agreement. Substantially all assets of the Company and its domestic subsidiaries and a first priority pledge of 66% of the voting capital stock of its foreign subsidiaries secure indebtedness under the credit agreement. The Company's ability to pay dividends on its common stock is limited under the terms of the credit agreement.

In the fourth quarter of 2010, the Company issued $365,000,000 aggregate principal amount of 7.5% senior notes due 2017. Interest on the notes is payable semi-annually on May 15 and November 15. The notes are effectively subordinated to all of the Company's existing and future secured debt and will rank senior to any of the Company's existing and future senior subordinated debt. The Company's domestic subsidiaries, subject to certain exceptions, guarantee the notes. At any time prior to November 15, 2013, the Company may redeem the notes, in whole or in part, at a price equal to 100% of the principal amount of the notes plus a make-whole premium. On or after November 15, 2013, the Company may redeem some or all of the notes at redemption prices specified in the indenture governing the notes. In addition, the Company may on any one or more occasions redeem up to 35% of the notes using the proceeds of certain equity offerings completed before

November 15, 2013 at the redemption price defined in the indenture. The Company incurred loan acquisition costs of $8,581,000 in connection with the issuance of the notes.

The Company used proceeds from the issuance of the 7.5% senior notes and cash on hand to purchase and retire all of the previously outstanding 8.75% senior subordinated notes through tender offer or redemption. The total purchase price for the notes was $422,549,000, consisting of principal of $421,801,000 and tender premiums and expenses of $748,000. In connection with the purchase, the Company incurred a $2,263,000 charge to income, comprised of the tender premiums and expenses and write-off of unamortized loan acquisition costs of $1,515,000.

(in thousands)	December 31, 2011			January 1, 2011

Deferred tax assets:
Pension and postretirement benefits	$	23,528		$	20,165
Net operating loss carryforwards		36,070			43,421
Other		15,531			11,440

Total deferred tax assets		75,129			75,026
Valuation allowance		(9,580	)		(8,613	)

Net deferred tax assets		65,549			66,413
Deferred tax liabilities:
Property, plant and equipment		(87,458	)		(73,988	)
Goodwill and intangibles		(47,957	)		(52,971	)
Other		(3,564	)		(3,371	)

Total deferred tax liabilities		(138,979	)		(130,330	)

Net deferred taxes	$	(73,430	)	$	(63,917	)

The valuation allowance increased by $967,000 due to net operating losses in foreign countries for which the benefit may never be realized.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits, which are included in "Other" non-current liabilities in the accompanying consolidated balance sheets, is as follows:

The amount of unrecognized tax benefits that, if recognized, would affect the annual effective tax rate is $8,045,000 and $7,812,000 as of December 31, 2011 and January 1, 2011, respectively. Accrued interest and penalties related to unrecognized tax benefits are recognized as a component of income tax expense and were $362,000 and $337,000 at December 31, 2011 and January 1, 2011, respectively.

The Company has operations in North America, Europe and Asia and files tax returns in numerous tax jurisdictions. The Company is not subject to income tax adjustments in the U.S. for tax years prior to 2005 and in foreign jurisdictions for tax years prior to 2004. Tax audits are currently being conducted on a German subsidiary for the tax years 2004 through 2008. Although the outcome of tax audits is uncertain, management believes that adequate provisions have been made for potential liabilities resulting from such audits. Because audit outcomes and the timing of audit settlements are subject to significant uncertainty, the Company cannot make a reasonable estimate of the impact on earnings in the next twelve months from these audits. Management is not aware of any issues for open tax years that upon final resolution will have a material adverse effect on the Company's consolidated financial position, cash flows or operating results.

At December 31, 2011, the Company has net operating loss carryforwards in the United States of $87,209,000 that expire beginning in 2026. The Company also has foreign net operating losses of $30,126,000 that expire at various dates beginning in 2015. The Company utilized approximately $14,428,000 of net operating losses during 2011.

Income taxes at the Company's effective tax rate differed from income taxes at the statutory rate as follows:

Taxes have been provided on earnings distributed and expected to be distributed by the Company's foreign subsidiaries. All other foreign earnings are undistributed and considered to be indefinitely reinvested and, accordingly, no provision for U.S. federal and state income taxes has been provided thereon. The Company has not provided additional U.S. federal and state income taxes on an estimated $155,000,000 of undistributed earnings of consolidated foreign subsidiaries. Upon distribution of these earnings in the form of dividends or otherwise, the Company would be subject to both U.S. income taxes and withholding taxes payable to the various foreign countries. Determination of the amount of unrecognized deferred U.S. income tax liability is not practicable because of the complexities associated with this hypothetical calculation.

The Company has entered into an agreement with the Board of Investment in Thailand under which, subject to certain limitations, 100% of the Company's income from manufacturing activities in Thailand was tax-free through 2010 and portions of income will be tax-free for the following eleven years. The income tax benefits recognized from this tax holiday were $2,300,000, $2,128,000 and $2,094,000 in 2011, 2010 and 2009, respectively.

The Company and its subsidiaries sponsor multiple defined benefit pension plans and an other postretirement benefit plan. The Company's pension plans are based in subsidiaries located outside of

the United States. The following table sets forth the funded status of the defined benefit pension plans and the postretirement plan.

	Pension Plans						Other Postretirement Benefits

(in thousands)	December 31, 2011			January 1, 2011			December 31, 2011			January 1, 2011
Change in benefit obligation
Benefit obligation at beginning of year	$	(90,881	)	$	(90,459	)	$	(2,649	)	$	(2,501	)
Service cost		(1,552	)		(1,357	)		(15	)		(14	)
Interest cost		(5,021	)		(4,752	)		(136	)		(136	)
Participant contributions		—			—			(20	)		(22	)
Actuarial loss		(6,962	)		(6,426	)		(197	)		(85	)
Benefit payments		3,440			3,140			90			109
Sale of Italian subsidiary		—			3,022			—			—
Foreign currency translation and other		3,309			5,951			—			—

Benefit obligation at end of year		(97,667	)		(90,881	)		(2,927	)		(2,649	)
Change in plan assets
Fair value of plan assets at beginning of year		19,729			22,591			—			—
Actual return on plan assets		241			51			—			—
Company contributions		1,848			1,773			70			87
Participant contributions		—			—			20			22
Benefit payments		(3,440	)		(3,140	)		(90	)		(109	)
Foreign currency translation and other		(483	)		(1,546	)		—			—

Fair value of plan assets at end of year		17,895			19,729			—			—

Funded status at end of year	$	(79,772	)	$	(71,152	)	$	(2,927	)	$	(2,649	)

Amounts recognized in the consolidated balance sheet consist of:
Accrued liabilities	$	(1,686	)	$	(1,661	)	$	(142	)	$	(154	)
Pension and postretirement benefits liabilities		(78,086	)		(69,491	)		(2,785	)		(2,495	)

Net amount recognized	$	(79,772	)	$	(71,152	)	$	(2,927	)	$	(2,649	)

Amounts recognized in accumulated other comprehensive income (loss), pre-tax, consist of:
Net actuarial loss	$	15,637		$	8,873		$	655		$	479
Prior service credit		(229	)		(288	)		—			—

Net amount recognized	$	15,408		$	8,585		$	655		$	479

The accumulated benefit obligation for all defined benefit pension plans was $90,931,000 and $84,762,000 at December 31, 2011 and January 1, 2011, respectively. Each of the Company's defined benefit pension plans had accumulated benefit obligations in excess of plan assets at December 31, 2011.

Weighted average assumptions used to determine the benefit obligation and net periodic benefit costs consist of:

The Company's pension plan assets are invested to obtain a reasonable long-term rate of return at an acceptable level of investment risk. Risk tolerance is established through consideration of plan liabilities, plan funded status and corporate financial condition. Investment risk is measured and monitored on an ongoing basis through periodic investment portfolio reviews, liability measurements and asset/liability studies. The Company's expected return on plan assets is based on historical market data for each asset class and expected market conditions. The assets in the pension plans are diversified across equity and fixed income investments, except for certain pension plans funded by insurance

contracts. The investment portfolio has target allocations of approximately 23% equity and 77% fixed income. The actual portfolio allocation was 18% equity, 45% bonds and 37% insurance contracts at December 31, 2011 and was 24% equity, 44% bonds and 32% insurance contracts at January 1, 2011. The equity securities are considered level one securities in the fair value hierarchy and primarily include investments in European companies. The bonds, which are primarily investment grade European bonds, and insurance contracts are level two securities.

The weighted-average annual assumed rate of increase in the per capita cost of covered benefits (i.e., health care cost trend rate for the medical plan) is 7.9% for 2012 and is assumed to trend down to 4.5% by 2028 and thereafter. A one-percentage-point change in the health care trend rates would not have a material effect on the post-retirement benefit obligation.

In 2012, the Company expects to contribute $1,686,000 and $142,000 to its pension and postretirement benefit plans, respectively.

The estimated future benefit payments expected to be paid for each of the next five years and the sum of payments expected for the next five years thereafter are:

The Company sponsors a 401(k) plan for U.S. salaried employees. Salaried employees are eligible to participate in the plan on January 1, April 1, July 1 or October 1 after their date of employment. Under the plan, employer contributions are defined as 5% of a participant's base salary plus a matching of employee contributions allowing for a maximum matching contribution of 3% of a participant's earnings. The cost of the plan recognized as expense was $3,540,000, $2,557,000 and $2,661,000 in 2011, 2010 and 2009, respectively.

The Company sponsors a 401(k) plan for U.S. hourly employees subject to collective bargaining agreements. Depending on the applicable collective bargaining agreement, employer basic contributions are defined as 3.00% or 3.50% of a participant's base earnings plus a matching of employee contributions allowing for a maximum matching contribution of 3.80% or 3.50% of a participant's earnings. The Company also makes a separate contribution for employees who were hired prior to January 1, 2000 and who are not eligible for the postretirement benefit plan. The cost of the plan recognized as expense was $664,000, $592,000 and $503,000 in 2011, 2010 and 2009, respectively.

Environmental obligations are accrued when such expenditures are probable and reasonably estimable. The amount of liability recorded is based on currently available information, including the

progress of remedial investigations, current status of discussions with regulatory authorities regarding the method and extent of remediation, presently enacted laws and existing technology. Accruals for estimated losses from environmental obligations are adjusted as further information develops or circumstances change. Costs of future expenditures for environmental obligations are not discounted to their present value. The Company does not currently anticipate any material loss in excess of the amounts accrued. However, the Company's future remediation expenses may be affected by a number of uncertainties including, but not limited to, the difficulty in estimating the extent and method of remediation, the evolving nature of environmental regulations and the availability and application of technology. The Company does not expect the resolution of such uncertainties to have a material adverse effect on its consolidated financial position or liquidity. Recoveries of environmental costs from other parties are recognized as assets when their receipt is deemed probable.

In connection with the acquisition of Membrana GmbH ("Membrana") in 2002, the Company recorded a reserve for environmental obligations. The reserve provides for costs to remediate known environmental issues and operational upgrades which are required in order for the Company to remain in compliance with local regulations. The initial estimate and subsequent finalization of the reserve was included in the allocation of purchase price at the date of acquisition. The environmental reserve for the Membrana facility, which is denominated in euros, was $11,957,000 and $15,202,000 at December 31, 2011 and January 1, 2011, respectively. The Company anticipates that the majority of expenditures associated with the reserve will be made in the next twelve months. The current portion of the reserve is classified in "Accrued liabilities" in the accompanying consolidated balance sheets.

The Company has indemnification agreements for certain environmental matters from Acordis A.G. ("Acordis") and Akzo Nobel N.V. ("Akzo"), the prior owners of Membrana. Akzo originally provided broad environmental protections to Acordis with the right to assign such indemnities to Acordis's successors. Akzo's indemnifications relate to conditions existing prior to December 1999, which is the date that Membrana was sold to Acordis. In addition to the Akzo indemnification, Acordis provides separate indemnification of claims incurred from December 1999 through February 2002, the acquisition date. The Company receives indemnification payments under the indemnification agreements after expenditures are made against approved claims. At December 31, 2011 and January 1, 2011, amounts receivable under the indemnification agreements were $12,099,000 and $12,465,000, respectively. The current portion of the indemnification receivable was $10,183,000 and $5,373,000 at December 31, 2011 and January 1, 2011, respectively, and is included in "Prepaid and other" in the accompanying consolidated balance sheets.

The Company leases certain equipment and facilities under operating leases. Rent expense was $2,750,000, $2,279,000 and $1,508,000 in 2011, 2010 and 2009, respectively.

The Company employs a global purchasing strategy to achieve pricing leverage on its purchases of major raw materials. Accordingly, the Company purchases the majority of each type of raw material from one primary supplier with additional suppliers having been qualified to supply the Company if an interruption in supply were to occur. The Company believes that alternative sources of raw materials are readily available and the loss of any particular supplier would not have a material impact on the results of operations. However, the loss of raw material supply sources could, in the short term, adversely affect the Company's business until alternative supply arrangements were secured.

On December 31, 2011, approximately 32% of the Company's employees were represented under collective bargaining agreements. A majority of those employees are located in Germany and France and are represented under industry-wide agreements that are subject to national and local government regulations. Labor unions also represent the Company's employees in Owensboro, Kentucky, and Corydon, Indiana.

On September 9, 2008, the United States Federal Trade Commission (the "FTC") issued an administrative complaint against the Company alleging that its actions and the acquisition of Microporous Holding Corporation, the parent company of Microporous Products L.P. ("Microporous") have substantially lessened competition in North American markets for lead-acid battery separators. The Company filed an answer to the complaint on October 15, 2008 denying the material allegations of the complaint. The matter was presented before an Administrative Law Judge ("ALJ") of the FTC and the hearing concluded on June 12, 2009. In October 2009, the ALJ granted the Company's request to re-open the record to take additional evidence. On February 22, 2010, the FTC's ALJ issued an initial decision in which he recommended to the FTC that it order the Company to divest substantially all of the acquired Microporous assets, which include the manufacturing facilities located in Piney Flats, Tennessee, and Feistritz, Austria, and restore the competitive environment to that which existed prior to the acquisition, while ruling in the Company's favor on other portions of the complaint. On March 15, 2010, the Company filed a Notice of Appeal with the FTC. On November 5, 2010, the Company was notified that the FTC commissioners ("Commissioners") affirmed the relief initially granted by the FTC's ALJ issued on February 22, 2010. The Commissioners ordered that the Company proceed with

the ALJ's recommendations to divest substantially all of the Microporous assets acquired in February 2008.

The Company believes that this decision is inconsistent with the law and the facts presented at the hearing and that the Microporous acquisition is and will continue to be beneficial to its customers and the industry. On January 28, 2011, the Company filed a petition with the U.S. Court of Appeals for the 11^th Circuit to review the FTC's November 5, 2010 order and opinion. It is not possible to predict with certainty whether the Company will be successful in the appellate process or the timing of a final decision. If the appellate court affirms the FTC's decision, and the Company chooses not to seek Supreme Court review or the Supreme Court denies its petition seeking review of the case, then the Company will be required to divest substantially all of the assets acquired in the Microporous acquisition, and the Company will be subject to some prospective restrictions on its future conduct.

The Company believes that a final judicial resolution to the challenge by the FTC to the Microporous acquisition could take one or more years. Although it is difficult to predict the outcome, timing or impact of this matter at this time, the Company believes that the final resolution will not have a material adverse impact on its business, financial condition or results of operations.

The Company's core energy storage business produces polymer-based membrane battery separators used in transportation, industrial and consumer electronic applications. The acquisition of the Microporous business extended the Company's product portfolio into the niche, mature deep cycle market for rubber-based battery separators, with considerable overlap to customers it currently serves with other products. The Company does not believe that a required divestiture of all or a portion of the Microporous assets would significantly impact its core energy storage business or the long-term growth drivers impacting this business, including growth in Asia, strong demand for consumer electronics and growing demand for electric drive vehicles.

For the year ended December 31, 2011, the Microporous business represented approximately 10% of consolidated revenue and operating income, including the facility that the Company completed and shifted production to in Feistritz, Austria post-acquisition. At December 31, 2011, Microporous assets were less than 5% of consolidated assets. The Company's core energy storage and separations media businesses are experiencing strong demand, operating at high rates of capacity utilization and have initiated significant capacity expansions. Based on the growth in revenues and profits that the Company has experienced in the last two years, as well as the impact of new capacity expansions that are underway, the Company expects that the percentage of consolidated revenues and total assets represented by Microporous will continue to decline. The impact of a final resolution to this matter may be affected by a number of uncertainties, including, but not limited to, whether the Company is required to divest all or a portion of the Microporous assets, the timing of a potential divestiture, the proceeds of such a divestiture and the incremental growth in its core businesses. If the Company was required to divest of all or a portion of the Microporous assets, it would intend to sell the assets at fair market value and the proceeds of such a sale would be available to support continued investments in the faster growing and more profitable core energy storage and separations media businesses.

The Company is from time to time subject to various claims and other matters arising out of the normal conduct of business. The amount recorded for identified contingent liabilities is based on estimates. Amounts recorded are reviewed periodically and adjusted to reflect additional information

that becomes available. Actual costs to be incurred in future periods may vary from the estimates, given the inherent uncertainties in evaluating certain exposures. Subject to the imprecision in estimating future contingent liability costs, the Company believes that based on present information, it is unlikely that a liability, if any, exists that would have a material adverse effect on the consolidated operating results, financial position or cash flows of the Company.

The Company offers stock-based compensation plans to attract, retain, motivate and reward key officers, non-employee directors and employees. Stock-based compensation expense includes costs associated with stock options and restricted stock and is classified as "Selling, general and administrative expenses" in the accompanying consolidated statements of operations.

On May 12, 2011, the Company amended and restated the 2007 Stock Incentive Plan ("2007 Plan") to allow for the issuance of up to an additional 3,000,000 shares of common stock. After the amendment, the 2007 Plan allows for the grant of stock options, restricted stock and other instruments for up to a total of 4,751,963 shares of common stock. Stock options granted under the 2007 Plan have 10-year terms and are issued with an exercise price not less than the fair market value of the Company's stock on the grant date. Stock options granted under the 2007 Plan may vest based on satisfaction of certain annual performance criteria or may vest over time. Stock options granted under the 2006 Stock Option Plan ("2006 Plan") have a 10-year term and are fully vested as of January 1, 2011.

Stock option expense was $9,206,000, $2,254,000 and $2,236,000 in 2011, 2010 and 2009, respectively. The income tax benefit related to stock option expense was $3,242,000, $850,000 and $838,000 in 2011, 2010 and 2009, respectively. As of December 31, 2011, the Company had $44,397,000 of total pre-tax unrecognized stock option expense, net of estimated forfeitures, which is expected to be recognized over a weighted average period of 2.8 years.

Exercise prices for options outstanding at December 31, 2011 ranged from $5.24 to $56.98. The intrinsic value is based on the Company's closing stock price of $43.99 at December 31, 2011, which would have been received by the option holder had the options been exercised at that date. The total intrinsic value of options exercised during 2011, 2010 and 2009 amounted to $48,063,000, $35,805,000 and $193,000, respectively.

The Company is required to estimate the fair value of stock options on the grant date using an option-pricing model. The weighted average grant-date fair value of options granted during 2011, 2010 and 2009 amounted to $26.73, $9.40 and $4.03 per share, respectively. The fair value of each stock option granted was estimated on the date of grant based on the Black-Scholes option pricing model with the following weighted-average assumptions:

The potential expected term of the stock options ranges from the vesting period of the options (three years to four years) to the contractual term of the options of ten years. The Company determines the expected term of the options based on historical experience, vesting periods, structure of the option plans and contractual term of the options. The Company's risk-free interest rate is based on the interest rate of U.S. Treasury bills with a term approximating the expected term of the options and is measured at the date of the stock option grant. Expected volatility is estimated based on the Company's historical stock prices and implied volatility from traded options. The Company does not anticipate paying dividends.

The total fair value of options vested during 2011, 2010 and 2009 was $4,014,000, $2,098,000 and $2,038,000, respectively.

Under the 2007 Plan, the Company granted restricted shares of 4,380, 3,416 and 3,164 in 2011, 2010 and 2009, respectively, to members of its Board of Directors for service to the Company.

The cost associated with these restricted stock grants, which vest over three years, was $92,000, $41,000 and $29,000 in 2011, 2010 and 2009, respectively.

The components of accumulated other comprehensive income (loss) were as follows:

The Company's German subsidiary has a 33% equity investment in a patent and trademark service provider and a 25% equity investment in a research company. The investments are accounted for under the equity method of accounting and were $588,000 and $585,000 at December 31, 2011 and January 1, 2011, respectively. Charges from the affiliates for work performed were $979,000, $1,269,000 and $1,250,000 in 2011, 2010 and 2009, respectively. Amounts due to the affiliates were $107,000 and $99,000 at December 31, 2011 and January 1, 2011, respectively.

In 2010, the Company entered into a joint venture agreement with a customer, Camel Group Co., Ltd ("Camel"), a leading battery manufacturer in China, to produce lead-acid battery separators primarily for Camel's use. The joint venture, Daramic Xiangyang Battery Separator Co., Ltd. ("Daramic Xiangyang"), is located at Camel's facility and is expected to start production in 2012. In accordance with the joint venture agreement, the Company has made cash contributions of $7,370,000 for a 65% ownership, and Camel has contributed cash of $2,554,000 and land for a 35% ownership interest. In exchange for notes payable, Daramic Xiangyang has purchased production assets from the Company's former facility in Potenza, Italy, and will purchase a building currently under construction from Camel.

In December 2009, the Company acquired the remaining 40% noncontrolling interest in Daramic NSG Tianjin PE Separator Co., LTD, a lead-acid battery separator manufacturing facility located in Tianjin, China, for $3,600,000. The purchase price in excess of the carrying amount of the noncontrolling interest was recorded as additional paid-in capital.

Business restructuring relates primarily to the 2009 idling of capacity and reduction in headcount at the Company's lead-acid battery manufacturing facility in Owensboro, Kentucky. The capacity was idled because of excess capacity in the North American market at that time. Total costs in connection with the idling were $20,417,000, consisting of $521,000 for severance and benefits and other exit costs and a non-cash impairment of $19,896,000 for buildings and equipment. Because of economic improvement and an increase in demand in Asia, worldwide demand for battery separators has improved and the previously idled capacity is being utilized.

On March 9, 2010, the Company sold 100% of the stock of its wholly-owned Italian subsidiary, Daramic S.r.l., for €13,385,000 ($18,175,000 at March 9, 2010). The Company recognized a gain of $3,327,000 on the sale, net of direct transaction costs. As a result of the stock sale, the buyer acquired all of the assets and liabilities of Daramic S.r.l., including the Potenza, Italy facility, which was closed in 2008, and environmental and restructuring obligations associated with the Potenza site. In addition to assuming all assets and liabilities, the buyer fully indemnified the Company with regard to all environmental, health and safety matters related to this site. In connection with the sale, the Company was required to make net cash payments to the buyer of €16,047,000, consisting of the settlement of an acquired intercompany receivable due to Daramic S.r.l. from affiliates of the Company, reduced by the purchase price of Daramic S.r.l. due from the buyer. The Company paid €11,047,000 ($14,908,000) at closing and the remaining €5,000,000 ($6,611,000) on December 15, 2010.

The Company's operations are principally managed on a products basis and are comprised of three reportable segments for financial reporting purposes. The Company's three reportable segments are presented in the context of its two primary businesses—energy storage and separations media.

The energy storage business produces and markets membranes that provide the critical function of separating the cathode and anode in a variety of battery markets and is comprised of the following reportable segments:

The separations media business is one reportable segment and produces and markets membranes used as the high technology filtration element in various medical and industrial applications.

The Company evaluates the performance of segments and allocates resources to segments based on operating income before depreciation and amortization. In addition, it evaluates business segment performance before business restructuring, goodwill impairment and certain non-recurring and other costs.

The electronics and EDVs operating segment and transportation and industrial operating segment were previously reported together as energy storage. In the fourth quarter of 2011, as a result of the significant growth and accelerating demand in the electronics and EDVs operating segment, the Company disaggregated the two operating segments of its energy storage business into two reporting segments. In addition, certain costs that were previously allocated to energy storage and separations media for internal reporting and financial statement reporting purposes, but were not allocated internally to the two operating segments included in energy storage, have been reclassified to "Corporate and other" in the following tables.

	Year ended

(in thousands)	December 31, 2011			January 1, 2011			January 2, 2010
Net sales to external customers (by major product group):
Electronics and EDVs	$	200,991		$	131,036		$	86,136
Transportation and industrial		371,847			314,727			281,456

Energy storage		572,838			445,763			367,592
Healthcare		120,387			107,345			102,088
Filtration and specialty		69,849			63,517			47,175

Separations media		190,236			170,862			149,263

Total net sales to external customers	$	763,074		$	616,625		$	516,855

Operating income:
Electronics and EDVs	$	91,130		$	51,412		$	29,098
Transportation and industrial		96,058			79,121			67,981

Energy storage		187,188			130,533			97,079
Separations media		54,680			50,654			35,824
Corporate and other		(42,447	)		(44,590	)		(31,378	)

Segment operating income		199,421			136,597			101,525
Stock-based compensation		9,298			2,295			2,265
Business restructuring		—			(776	)		21,324
Goodwill impairment		—			—			131,450
Non-recurring and other costs		658			2,158			3,872

Total operating income (loss)		189,465			132,920			(57,386	)
Reconciling items:
Interest expense, net		34,384			46,747			57,097
Gain on sale of Italian subsidiary		—			(3,327	)		—
Foreign currency and other		(2,018	)		(1,347	)		(704	)
Costs related to purchase of 8.75% senior subordinated notes		—			2,263			—

Income (loss) before income taxes	$	157,099		$	88,584		$	(113,779	)

Depreciation and amortization:
Electronics and EDVs	$	9,395		$	6,460		$	6,796
Transportation and industrial		11,787			12,722			14,196

Energy storage		21,182			19,182			20,992
Separations media		13,360			12,033			13,378
Corporate and other		16,800			16,692			17,025

Total depreciation and amortization	$	51,342		$	47,907		$	51,395

Capital expenditures:
Electronics and EDVs	$	116,208		$	50,699		$	9,762
Transportation and industrial		17,671			4,144			2,697

Energy storage		133,879			54,843			12,459
Separations media		22,451			13,944			3,806

Total capital expenditures	$	156,330		$	68,787		$	16,265

Assets:
Electronics and EDVs	$	291,451		$	179,158		$	117,320
Transportation and industrial		283,292			258,488			274,127

Energy storage		574,743			437,646			391,447
Separations media		273,631			260,207			255,348
Corporate and other		633,505			650,643			705,798

Total assets	$	1,481,879		$	1,348,496		$	1,352,593

Net sales by geographic location, based on the country from which the product is shipped, were as follows:

(in thousands, except per share data)	First Quarter		Second Quarter		Third Quarter		Fourth Quarter

Fiscal year ended December 31, 2011:
Net sales	$	185,674	$	196,376	$	190,062	$	190,962
Gross profit		79,466		87,514		76,904		78,177
Net income		25,681		29,507		23,605		26,447
Net income per share—basic	$	0.56	$	0.64	$	0.51	$	0.57

Net income per share—diluted	$	0.55	$	0.63	$	0.50	$	0.56

Fiscal year ended January 1, 2011:
Net sales	$	145,339	$	150,118	$	151,650	$	169,518
Gross profit		58,339		61,138		57,288		70,093
Net income		17,548		15,942		12,372		17,713
Net income per share—basic	$	0.39	$	0.36	$	0.28	$	0.40

Net income per share—diluted	$	0.38	$	0.34	$	0.27	$	0.38

The Company's senior notes are unconditionally guaranteed, jointly and severally, on a senior basis by certain of the Company's 100% owned subsidiaries ("Guarantors"). Management has determined that separate complete financial statements of the Guarantors would not be material to users of the financial statements.

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

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries		The Company		Eliminations			Consolidated

Assets
Cash and cash equivalents	$	—	$	65,495	$	27,079	$	—		$	92,574
Accounts receivable, net		51,831		82,185		—		—			134,016
Inventories		31,603		58,841		—		—			90,444
Prepaid and other		6,345		18,324		62		—			24,731

Total current assets		89,779		224,845		27,141		—			341,765
Due from affiliates		549,943		282,244		377,981		(1,210,168	)		—
Investment in subsidiaries		177,143		321,215		570,456		(1,068,814	)		—
Property, plant and equipment, net		235,051		292,727		—		—			527,778
Goodwill		—		—		469,319		—			469,319
Intangibles and loan acquisition costs, net		—		—		133,586		—			133,586
Other		157		9,274		—		—			9,431

Total assets	$	1,052,073	$	1,130,305	$	1,578,483	$	(2,278,982	)	$	1,481,879

Liabilities and shareholders' equity
Accounts payable and accrued liabilities	$	41,301	$	51,391	$	3,547	$	—		$	96,239
Income taxes payable		—		5,231		650		—			5,881
Current portion of debt		—		453		3,229		—			3,682

Total current liabilities		41,301		57,075		7,426		—			105,802
Due to affiliates		554,230		247,424		408,514		(1,210,168	)		—
Debt, less current portion		—		42,832		663,004		—			705,836
Pension and postretirement benefits, less current portion		2,928		77,943		—		—			80,871
Deferred income taxes and other		44,212		45,619		146		—			89,977
Shareholders' equity		409,402		659,412		499,393		(1,068,814	)		499,393

Total liabilities and shareholders' equity	$	1,052,073	$	1,130,305	$	1,578,483	$	(2,278,982	)	$	1,481,879

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries		The Company		Eliminations			Consolidated

Assets
Cash and cash equivalents	$	—	$	58,172	$	31,783	$	—		$	89,955
Accounts receivable, net		45,695		71,021		—		—			116,716
Inventories		29,571		47,383		—		—			76,954
Prepaid and other		7,296		9,804		99		—			17,199

Total current assets		82,562		186,380		31,882		—			300,824
Due from affiliates		409,124		270,060		301,211		(980,395	)		—
Investment in subsidiaries		177,296		302,297		455,914		(935,507	)		—
Property, plant and equipment, net		174,717		240,580		—		—			415,297
Goodwill		—		—		469,319		—			469,319
Intangibles and loan acquisition costs, net		5		—		152,551		—			152,556
Other		1,769		8,731		—		—			10,500

Total assets	$	845,473	$	1,008,048	$	1,410,877	$	(1,915,902	)	$	1,348,496

Liabilities and shareholders' equity
Accounts payable and accrued liabilities	$	38,286	$	54,555	$	3,843	$	—		$	96,684
Income taxes payable		—		5,032		230		—			5,262
Current portion of debt		—		467		3,229		—			3,696

Total current liabilities		38,286		60,054		7,302		—			105,642
Due to affiliates		413,554		214,588		352,253		(980,395	)		—
Debt, less current portion		—		44,595		667,041		—			711,636
Pension and postretirement benefits, less current portion		3,544		68,442		—		—			71,986
Deferred income taxes and other		26,012		48,939		6,231		—			81,182
Shareholders' equity		364,077		571,430		378,050		(935,507	)		378,050

Total liabilities and shareholders' equity	$	845,473	$	1,008,048	$	1,410,877	$	(1,915,902	)	$	1,348,496

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated

Net sales	$	272,521		$	490,553	$	—		$	—		$	763,074
Cost of goods sold		85,050			355,963		—			—			441,013

Gross profit		187,471			134,590		—			—			322,061
Selling, general and administrative expenses		73,171			52,518		6,907			—			132,596

Operating income (loss)		114,300			82,072		(6,907	)		—			189,465
Interest expense and other		(8,936	)		5,535		35,767			—			32,366
Equity in earnings of subsidiaries		—			—		(123,890	)		123,890			—

Income before income taxes		123,236			76,537		81,216			(123,890	)		157,099
Income taxes		54,975			20,908		(24,024	)		—			51,859

Net income	$	68,261		$	55,629	$	105,240		$	(123,890	)	$	105,240

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated

Net sales	$	213,491		$	403,134		$	—		$	—		$	616,625
Cost of goods sold		87,714			282,053			—			—			369,767

Gross profit		125,777			121,081			—			—			246,858
Selling, general and administrative expenses		74,493			38,174			2,047			—			114,714
Business restructuring		233			(1,009	)		—			—			(776	)

Operating income (loss)		51,051			83,916			(2,047	)		—			132,920
Interest expense and other		(8,631	)		7,775			46,256			—			45,400
Gain on sale of Italian subsidiary		—			(3,327	)		—			—			(3,327	)
Costs related to purchase of 8.75% senior subordinated notes		—			—			2,263			—			2,263
Equity in earnings of subsidiaries		—			—			(85,932	)		85,932			—

Income before income taxes		59,682			79,468			35,366			(85,932	)		88,584
Income taxes		35,882			17,336			(28,209	)		—			25,009

Net income	$	23,800		$	62,132		$	63,575		$	(85,932	)	$	63,575

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated

Net sales	$	171,736		$	345,119	$	—		$	—		$	516,855
Cost of goods sold		79,977			241,079		—			—			321,056

Gross profit		91,759			104,040		—			—			195,799
Selling, general and administrative expenses		63,590			34,988		1,833			—			100,411
Business restructuring		20,101			1,223		—			—			21,324
Goodwill impairment		—			—		131,450			—			131,450

Operating income (loss)		8,068			67,829		(133,283	)		—			(57,386	)
Interest expense and other		(4,800	)		7,291		53,902			—			56,393
Equity in earnings of subsidiaries		—			—		(43,700	)		43,700			—

Income (loss) before income taxes		12,868			60,538		(143,485	)		(43,700	)		(113,779	)
Income taxes		11,455			18,251		(26,158	)		—			3,548

Net income (loss)	$	1,413		$	42,287	$	(117,327	)	$	(43,700	)	$	(117,327	)

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated

Net cash provided by (used in) operating activities	$	145,862		$	50,084		$	(53,039	)	$	1,926		$	144,833
Investing activities:
Purchases of property, plant and equipment, net		(113,648	)		(42,682	)		—			—			(156,330	)

Net cash used in investing activities		(113,648	)		(42,682	)		—			—			(156,330	)
Financing activities:
Principal payments on debt		—			(485	)		(4,034	)		—			(4,519	)
Proceeds from stock option exercises		—			—			6,658			—			6,658
Excess tax benefit from stock-based compensation		—			—			14,136			—			14,136
Noncontrolling interest		—			—			1,936			—			1,936
Payments for loan acquisition costs		—			—			(627	)		—			(627	)
Intercompany transactions, net		(32,214	)		3,874			30,266			(1,926	)		—

Net cash provided by (used in) financing activities		(32,214	)		3,389			48,335			(1,926	)		17,584
Effect of exchange rate changes on cash and cash equivalents		—			(3,468	)		—			—			(3,468	)

Net increase (decrease) in cash and cash equivalents		—			7,323			(4,704	)		—			2,619
Cash and cash equivalents at beginning of year		—			58,172			31,783			—			89,955

Cash and cash equivalents at end of year	$	—		$	65,495		$	27,079		$	—		$	92,574

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated

Net cash provided by (used in) operating activities	$	96,565		$	78,646		$	(52,953	)	$	4,949		$	127,207
Investing activities:
Purchases of property, plant and equipment, net		(52,679	)		(16,108	)		—			—			(68,787	)
Payments associated with the stock sale of Italian subsidiary, net		—			(21,519	)		—			—			(21,519	)

Net cash used in investing activities		(52,679	)		(37,627	)		—			—			(90,306	)
Financing activities:
Principal payments on debt		—			(456	)		(9,561	)		—			(10,017	)
Proceeds from stock option exercises		—			—			6,860			—			6,860
Excess tax benefit from stock-based compensation		—			—			6,769			—			6,769
Noncontrolling interest		—			—			581			—			581
Payments for loan acquisition costs		—			—			(7,954	)		—			(7,954	)
Proceeds from issuance of 7.5% senior notes		—			—			365,000			—			365,000
Purchase of 8.75% senior subordinated notes		—			—			(422,549	)		—			(422,549	)
Intercompany transactions, net		(45,100	)		(26,151	)		76,200			(4,949	)		—

Net cash provided by (used in) financing activities		(45,100	)		(26,607	)		15,346			(4,949	)		(61,310	)
Effect of exchange rate changes on cash and cash equivalents		1,214			(1,825	)		—			—			(611	)

Net increase (decrease) in cash and cash equivalents		—			12,587			(37,607	)		—			(25,020	)
Cash and cash equivalents at beginning of year		—			45,585			69,390			—			114,975

Cash and cash equivalents at end of year	$	—		$	58,172		$	31,783		$	—		$	89,955

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated

Net cash provided by (used in) operating activities	$	36,801		$	54,855		$	(27,176	)	$	(11,349	)	$	53,131
Investing activities:
Purchases of property, plant and equipment, net		(9,382	)		(6,883	)		—			—			(16,265	)

Net cash used in investing activities		(9,382	)		(6,883	)		—			—			(16,265	)
Financing activities:
Principal payments on debt		(3,319	)		(496	)		(3,226	)		—			(7,041	)
Proceeds from stock option exercises		—			—			191			—			191
Noncontrolling interest		—			—			(3,600	)		—			(3,600	)
Intercompany transactions, net		(24,474	)		(32,712	)		45,837			11,349			—

Net cash provided by (used in) financing activities		(27,793	)		(33,208	)		39,202			11,349			(10,450	)
Effect of exchange rate changes on cash and cash equivalents		374			5,164			—			—			5,538

Net increase in cash and cash equivalents		—			19,928			12,026			—			31,954
Cash and cash equivalents at beginning of year		—			25,657			57,364			—			83,021

Cash and cash equivalents at end of year	$	—		$	45,585		$	69,390		$	—		$	114,975

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

An evaluation of the effectiveness of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) promulgated under the Exchange Act) was performed under the supervision, and with the participation of, the Company's management, including the Chief Executive Officer and Chief Financial Officer. The Company's disclosure controls are designed to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Based upon our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2011 to ensure that information required to be disclosed in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Management is responsible for establishing and maintaining adequate internal control over financial reporting. Management has conducted an assessment of the effectiveness of the Company's internal control over financial reporting using the criteria in Internal Control—Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with United States generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on its assessment, management has concluded that the Company maintained effective internal control over financial reporting as of December 31, 2011, based on criteria in Internal Control—Integrated Framework issued by the COSO.

The effectiveness of the Company's internal control over financial reporting as of December 31, 2011 has been audited by Ernst & Young LLP, an independent registered public accounting firm. Ernst & Young LLP has issued an attestation report to the Company's internal control over financial reporting, which appears in Item 8 of Part II of this Annual Report on Form 10-K under the heading "Report of Independent Registered Public Accounting Firm."

During the Company's fourth fiscal quarter of fiscal year 2011, there has been no change in the Company's internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

The information required by this Item is incorporated by reference from the information contained in our Proxy Statement to be filed with the Securities and Exchange Commission in connection with our 2012 Annual Meeting of Stockholders to be held on May 9, 2012.

Members of our Board of Directors and all of our employees, including our Chief Executive Officer and Chief Financial Officer, are required to abide by our Code of Business Conduct and Ethics to ensure that our business is conducted in a consistently legal and ethical manner. The full text of the Code of Business Conduct and Ethics is published on our website at http://investor.polypore.net/governance.cfm. We will disclose any future amendments to, or waivers from, these ethical policies and standards for senior officers and directors on our website within four business days following the date of such amendment or waiver.

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

Item 13. Certain Relationships and Related Transactions, and Director Independence

1. Financial Statements. The following items, including Consolidated Financial Statements of the Company, are set forth in Item 8 of this Annual Report on Form 10-K:

2. Financial Statement Schedules. The following schedule is set forth on page S-1 of this Annual Report on Form 10-K.

Information required by other schedules has either been incorporated in the consolidated financial statements and accompanying notes or is not applicable to us.

Exhibit Number			Exhibit Description

	3.1		Form of Amended and Restated Certificate of Incorporation of Polypore International, Inc. (incorporated by reference to Exhibit 3.1 to Amendment No. 4 to the Company's Registration Statement on Form S-1 filed on June 15, 2007 (Commission File No. 333-141273))
	3.2		Form of Amended and Restated Bylaws of Polypore International, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K, filed on October 29, 2008)
	3.3		Certificate of Amendment to the Certificate of Incorporation of Polypore International, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K, filed on June 29, 2007)
	4.1		First Supplemental Indenture, dated as of November 30, 2010, among Polypore International, Inc., the guarantors named therein and the Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K, filed on December 2, 2010)
	4.2		Indenture, dated as of November 26, 2010 among Polypore International, Inc., the guarantors named therein and The Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K, filed on December 2, 2010) (the "7.5% Indenture")
	4.3		Form of 7.5% Senior Notes due 2017 (incorporated by reference to Exhibit B of the 7.5% Indenture)
	4.4		Registration Rights Agreement, dated as of November 26, 2010, among Polypore International, Inc., the guarantors named therein and J.P. Morgan Securities LLC for itself and on behalf of several purchasers listed therein (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K, filed on December 2, 2010)
	10.1		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))

		Exhibit Description

10.2	*	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))
10.3	*	Amended and Restated Employment Agreement, dated as of April 28, 2008, by and between Polypore International, Inc. and Robert B. Toth (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed on May 1, 2008)
10.4	*	Amendment to Employment Agreement, dated as of December 18, 2008, by and between Polypore International, Inc. and Robert B. Toth (incorporated by reference to Exhibit 10.8 to the company's Annual Report on Form 10-K filed on March 12, 2009)
10.5	*	Employment Agreement, dated as of April 7, 2006, by and between Polypore, Inc. and Mitchell J. Pulwer (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on August 15, 2006)
10.6	*	Amended Employment Agreement, dated as of December 18, 2008, by and between Polypore International, Inc. and Mitchell J. Pulwer (incorporated by reference to Exhibit 10.10 to the company's Annual Report on Form 10-K filed on March 12, 2009)
10.7	*	Employment Agreement, dated as of April 4, 2006, by and between Membrana GmbH, a subsidiary of Polypore, Inc. and Josef Sauer (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q filed on August 15, 2006)
10.8	*	Polypore International, Inc. 2006 Stock Option Plan (incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q filed on August 15, 2006)
10.9	*	Form of Executive Severance Plan Policy (incorporated by reference to Exhibit 10.13 to the company's Annual Report on Form 10-K filed on March 12, 2009)
10.10	*	Polypore International, Inc. 2007 Stock Incentive Plan (Amended and Restated effective as of May 12, 2011) (incorporated by reference to Exhibit 99.1 to the Company's Registration Statement on Form S-8, filed on May 13, 2011 (Commission File No. 333-174172))
10.11	*	Amendment to the Polypore International, Inc. 2007 Stock Incentive Plan, effective as of November 30, 2011
10.12	*	Form of Restricted Stock Grant Notice and Agreement under the Polypore International, Inc. 2007 Stock Incentive Plan (incorporated by reference to Exhibit 99.2 to the Company's Registration Statement on Form S-8 filed on May 13, 2011 (Commission File No. 333-174172))
10.13	*	Form of Option Grant Notice and Agreement under the Polypore International, Inc. 2007 Stock Incentive Plan
10.14		Amended and Restated Credit Agreement, dated as of July 3, 2007, among PP Holding Corporation, Polypore, Inc., Daramic Holding S.A.S., JPMorgan Chase Bank, N.A., as Administrative Agent, and the other agents and lenders named therein (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed on July 10, 2007)
10.15		First Amendment and Reaffirmation Agreement, dated as of July 3, 2007, among PP Holding Corporation, Polypore, Inc., all of Polypore, Inc.'s domestic restricted subsidiaries and J.P. Morgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K, filed on July 10, 2007)

		Exhibit Description

10.16		Underwriting Agreement, dated as of December 7, 2010, among certain stockholders of Polypore International, Inc. and Barclays Capital Inc. (incorporated by reference to Exhibit 1.1 to the Company's Current Report on Form 8-K, filed on December 13, 2010)
10.17		Underwriting Agreement, dated as of March 17, 2011, among certain stockholders of Polypore International, Inc. and Barclays Capital Inc. (incorporated by reference to Exhibit 1.1 to the Company's Current Report on Form 8-K, filed on March 23, 2011)
10.18	*	Employment Agreement, dated as of April 1, 2011, by and among Daramic LLC and certain of its affiliates, Polypore International, Inc. and Pierre Hauswald (incorporated by reference to Exhibit 10.1 to the Company's Periodic Report on Form 10-Q, filed on May 6, 2011)
10.19	*	Employment Contract, dated as of April 1, 2011, by and between Daramic SAS and Pierre Hauswald (incorporated by reference to Exhibit 10.2 to the Company's Periodic Report on Form 10-Q, filed on May 6, 2011)
10.20	*	Agreement Organizing the Extension of the Expatriation of Mr. Pierre Hauswald in P.R. China with a Local Employment Contract, dated April 1, 2011, between Daramic SAS and Pierre Hauswald (incorporated by reference to Exhibit 10.3 to the Company's Periodic Form on 10-Q, filed on May 6, 2011)
21.1		Subsidiaries of Polypore International, Inc.
23.1		Consent of Independent Registered Public Accounting Firm
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
101		Interactive Data Files

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Polypore International, Inc.
Financial statement schedule—Valuation and qualifying accounts

			Additions

(in thousands)	Balance at beginning of year		Charged to costs and expenses		Charged to other accounts			Deductions			Balance at end of year
Year ended December 31, 2011:
Allowance for doubtful accounts	$	2,521	$	295	$	(58	)(1)	$	(77	)(2)	$	2,681
Valuation allowance for deferred tax asset		8,613		967		—			—			9,580

	$	11,134	$	1,262	$	(58	)	$	(77	)	$	12,261

Year ended January 1, 2011:
Allowance for doubtful accounts	$	7,179	$	750	$	(995	)(1)	$	(4,413	)(2)	$	2,521
Valuation allowance for deferred tax asset		16,826		1,140		—			(9,353	)(3)		8,613

	$	24,005	$	1,890	$	(995	)	$	(13,766	)	$	11,134

Year ended January 2, 2010:
Allowance for doubtful accounts	$	7,742	$	237	$	198	(1)	$	(998	)(2)	$	7,179
Valuation allowance for deferred tax asset		15,423		829		574	(3)		—			16,826

	$	23,165	$	1,066	$	772		$	(998	)	$	24,005


(Mark One)
ý		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2011
Or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to


Delaware (State or Other Jurisdiction of Incorporation or Organization)		43-2049334 (IRS Employer Identification No.)
11430 North Community House Road, Suite 350 Charlotte, North Carolina (Address of Principal Executive Offices)		28277 (Zip Code)

Title of each class:		Name of each exchange on which registered:

Common stock, par value $0.01 per share		New York Stock Exchange


Large accelerated filer ý		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

	Fiscal 2011	Fiscal 2010

First Quarter	$39.45 - $61.75	$11.50 - $18.79
Second Quarter	$52.36 - $71.96	$16.70 - $25.10
Third Quarter	$50.62 - $74.21	$22.39 - $31.04
Fourth Quarter	$43.25 - $59.44	$29.33 - $45.88



Part I
Item 1.	Business	5
Item 1A.	Risk Factors	15
Item 1B.	Unresolved Staff Comments	22
Item 2.	Properties	23
Item 3.	Legal Proceedings	23
Item 4.	Mine Safety Disclosures	25
Part II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	25
Item 6.	Selected Financial Data	27
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	28
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 8.	Financial Statements and Supplementary Data	43
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	80
Item 9A.	Controls and Procedures	80
Item 9B.	Other Information	81
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	81
Item 11.	Executive Compensation	81
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	81
Item 13.	Certain Relationships and Related Transactions, and Director Independence	81
Item 14.	Principal Accountant Fees and Services	81
Part IV
Item 15.	Exhibits and Financial Statement Schedules	81
Signatures		85

Location			Date of contract renegotiation

Norderstedt, Germany	47	78	Annual
Obernburg, Germany	23	79	Annual
Wuppertal, Germany	400	86	Annual
Corydon, Indiana	89	74	August 2013
Selestat, France	136	70	June 2014
Owensboro, Kentucky	117	69	April 2017

Total	812

Plan Category		Weighted- average exercise price of outstanding options (b)

Equity compensation plans approved by security holders(1)	3,147,406	$	37.96	1,169,008
Equity compensation plans not approved by security holders(2)	94,416	$	5.24	—



Polypore International	100.00	97.06	41.93	66.00	225.90	243.98
Russell 2000	100.00	91.12	60.33	76.73	97.33	93.27
S&P Industrial Machinery Index	100.00	103.17	61.86	86.42	117.49	106.60

Balance sheet data (at end of period) (in millions):	Fiscal 2011		Fiscal 2010		Fiscal 2009		Fiscal 2008		Fiscal 2007

Total assets	$	1,481.9	$	1,348.5	$	1,352.6	$	1,498.9	$	1,429.0
Total debt, including current portion		709.5		715.3		803.4		803.3		822.8
Shareholders' equity		499.4		378.1		284.3		395.8		338.3

Other financial data (in millions):	Fiscal 2011			Fiscal 2010			Fiscal 2009			Fiscal 2008			Fiscal 2007

Depreciation and amortization	$	51.3		$	47.9		$	51.4		$	55.1		$	48.9
Capital expenditures		156.3			68.8			16.3			48.0			29.8
Net cash provided by (used in):
Operating activities		144.8			127.2			53.2			93.2			69.3
Investing activities		(156.3	)		(90.3	)		(16.3	)		(129.8	)		(35.3	)
Financing activities		17.6			(61.3	)		(10.4	)		67.2			(40.4	)

Facility	Estimated Cost (millions)			Actual or Expected Start-up Time*	Target Applications

Charlotte, NC/Concord, NC	$	102.0	**	1^st quarter 2011/Mid-2012	EDV
Charlotte, NC		32.0		Year-end 2011	EDV
Concord, NC		65.0		Late 2012	EDV
Concord, NC		105.0		Late 2013	EDV
Ochang, Korea		30.0		3^rd quarter 2011	Consumer electronics



U.S. federal statutory rate	35.0	%	35.0	%
State income taxes	1.1		0.7
Mix of income in taxing jurisdictions	(2.7	)	(7.7	)
Other permanent differences and valuation allowances	(0.4	)	0.2

Total effective tax rate	33.0	%	28.2	%

(in millions)	Fiscal 2011

Indebtedness(1)	$	294.5
Adjusted EBITDA		250.8
Actual leverage ratio		1.17x

	Payment due by Period

(in millions)	Total		2012		2013 - 2014		2015 - 2016		Thereafter
Long-term debt(1)	$	344.5	$	3.7	$	340.8	$	—	$	—
7.5% senior notes		365.0		—		—		—		365.0
Cash interest payments(2)		185.5		36.1		67.2		54.8		27.4
Operating lease obligations(3)		8.8		2.0		2.5		1.3		3.0

	$	903.8	$	41.8	$	410.5	$	56.1	$	395.4



Period end rate	1.2950	1.3342	1.4317
Period average rate	1.3935	1.3294	1.3939

(in thousands)

2012	$	15,809
2013		14,312
2014		13,683
2015		13,059
2016		13,059

(in thousands)	December 31, 2011		January 1, 2011

Raw materials	$	35,423	$	31,304
Work-in-process		18,351		13,434
Finished goods		36,670		32,216

	$	90,444	$	76,954

(in thousands)	December 31, 2011		January 1, 2011

Land	$	23,907	$	22,995
Buildings and land improvements		139,431		130,850
Machinery and equipment		475,107		387,397
Construction in progress		101,796		59,317

		740,241		600,559
Less accumulated depreciation		212,463		185,262

	$	527,778	$	415,297

(in thousands)	Transportation and Industrial			Electronics and EDVs		Separations Media		Total

Goodwill	$	352,154		$	36,336	$	212,279	$	600,769
Accumulated impairment charges		(131,450	)		—		—		(131,450	)

	$	220,704		$	36,336	$	212,279	$	469,319

(in thousands)	December 31, 2011		January 1, 2011

Compensation expense and other fringe benefits	$	26,449	$	27,803
Current portion of environmental reserve		11,873		13,058
Other		23,585		26,238

	$	61,907	$	67,099

(in thousands)	December 31, 2011		January 1, 2011

Senior credit agreement:
Revolving credit facility	$	—	$	—
Term loan facilities		344,518		350,332

		344,518		350,332
7.5% senior notes		365,000		365,000

		709,518		715,332
Less current maturities		3,682		3,696

Long-term debt	$	705,836	$	711,636

(in thousands)	December 31, 2011			January 1, 2011

Current deferred tax asset	$	3,171		$	2,241
Non-current deferred tax liability		(76,601	)		(66,158	)

Net deferred taxes	$	(73,430	)	$	(63,917	)

(in thousands)	December 31, 2011		January 1, 2011

Balance at beginning of year	$	8,103	$	7,230
Increase related to prior year positions		1,270		1,161
Decrease related to settlements with taxing authorities		—		(288	)

Balance at end of year	$	9,373	$	8,103

	Pension Plans						Other Postretirement Benefits

Weighted average assumptions as of the end of year	December 31, 2011			January 1, 2011			December 31, 2011			January 1, 2011
Discount rate used to determine the benefit obligation		4.90	%		5.40	%		4.50	%		5.25	%
Discount rate used to determine the net periodic benefit costs		5.40	%		6.00	%		5.25	%		5.75	%
Expected return on plan assets		4.00	%		4.98	%		N/A			N/A
Rate of compensation increase		2.53	%		2.52	%		N/A			N/A

(in thousands)	Pension Plans		Other Postretirement Benefits

2012	$	3,343	$	142
2013		3,510		129
2014		3,616		143
2015		3,784		152
2016		4,105		153
2017 - 2021		25,921		804

(in thousands)

2012	$	1,980
2013		1,330
2014		1,188
2015		736
2016		635
Thereafter		2,956

	$	8,825

			Weighted- average exercise price			Aggregate intrinsic value (in thousands)

Outstanding at January 1, 2011	2,306,565		$	9.69
Granted	1,847,500			56.57
Exercised	(912,243	)		7.55

Outstanding at December 31, 2011	3,241,822			37.01	8.6	$	22,641

Vested and exercisable at December 31, 2011	876,239			10.88	6.9		29,016
Expected to vest	2,314,856			46.56	9.2		—

			Weighted-average grant- date fair value

January 1, 2011	1,051,542		$	6.32
Granted	1,802,772			26.73
Vested	(539,458	)		7.44

December 31, 2011	2,314,856			21.95

			Weighted-average grant- date fair value

Unvested at January 1, 2011	6,073		$	26.36
Granted	4,380			54.80
Vested	(2,741	)		24.34

Unvested at December 31, 2011	7,712			43.23

(in thousands)	December 31, 2011			January 1, 2011

Foreign currency translation adjustment	$	(6,060	)	$	6,524
Net actuarial loss and prior service credit		(11,067	)		(6,255	)

Accumulated other comprehensive income (loss)	$	(17,127	)	$	269

(in thousands)	December 31, 2011		January 1, 2011

United States	$	235,051	$	133,268
Germany		154,586		149,340
Thailand		48,498		47,977
Other		89,643		84,712

Total	$	527,778	$	415,297


		POLYPORE INTERNATIONAL, INC.
		By:		/s/ ROBERT B. TOTH
				Robert B. Toth
				President and Chief Executive Officer


/s/ ROBERT B. TOTH Robert B. Toth	President, Chief Executive Officer and Chairman of the Board (Principal Executive Officer)	February 27, 2012
/s/ LYNN AMOS Lynn Amos	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	February 27, 2012
/s/ MICHAEL GRAFF Michael Graff	Lead Independent Director of the Board	February 27, 2012
/s/ DAVID A. ROBERTS David A. Roberts	Director	February 27, 2012
/s/ CHARLES L. COONEY Charles L. Cooney	Director	February 27, 2012
/s/ WILLIAM DRIES William Dries	Director	February 27, 2012
/s/ FREDERICK C. FLYNN, JR. Frederick C. Flynn, Jr.	Director	February 27, 2012
/s/ W. NICHOLAS HOWLEY W. Nicholas Howley	Director	February 27, 2012
/s/ KEVIN KRUSE Kevin Kruse	Director	February 27, 2012