10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 29, 2012

Or

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

For the transition period from                          to                        

Commission file number:  1-32266

POLYPORE INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	43-2049334
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

11430 North Community House Road, Suite 350 Charlotte, North Carolina	28277
(Address of Principal Executive Offices)	(Zip Code)

(704) 587-8409

(Registrant’s Telephone Number, Including Area Code)

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

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.

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o

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

There were 46,579,444 shares of the registrant’s common stock outstanding as of October 24, 2012.

Polypore International, Inc.

Index to Quarterly Report on Form 10-Q

For the Three Months Ended September 29, 2012

		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	30
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 5.	Other Information	30
Item 6.	Exhibits	31
SIGNATURES		32

In this Quarterly Report on Form 10-Q, the words “Polypore International,” “Company,” “we,” “us” and “our” refer to Polypore International, Inc. together with its subsidiaries, unless the context indicates otherwise.

2

Forward-looking Statements

This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included in this Quarterly Report on Form 10-Q that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements, including, in particular, the statements about Polypore 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 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” or “Controls and Procedures,” the Company’s financial statements or the notes thereto or elsewhere in this Quarterly Report on Form 10-Q.

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 Quarterly Report on Form 10-Q, including the risks outlined under the caption entitled “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, 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:

·the highly competitive nature of the markets in which we sell our products;

·the failure to continue to develop innovative products;

·the loss of our customers;

·the vertical integration by our customers of the production of our products into their own manufacturing process;

·increases in prices for raw materials or the loss of key supplier contracts;

·our substantial indebtedness;

·interest rate risk related to our variable rate indebtedness;

·our inability to generate cash;

·restrictions related to the senior secured credit agreement;

·employee slowdowns, strikes or similar actions;

·product liability claims exposure;

·risks in connection with our operations outside the United States, including compliance with applicable anti-corruption laws;

·the incurrence of substantial costs to comply with, or as a result of violations of, or liabilities under environmental laws;

·the failure to protect our intellectual property;

·the loss of senior management;

·the incurrence of additional debt, contingent liabilities and expenses in connection with future acquisitions;

·the failure to effectively integrate newly acquired operations;

·the absence of expected returns from the intangible assets we have recorded;

·the adverse impact from legal proceedings on our financial condition; and

·natural disasters, epidemics, terrorist acts and other events beyond our control.

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 Quarterly Report on Form 10-Q. We do not undertake any obligation to update these forward-looking statements to reflect new information, future events or otherwise, except as may be required under federal securities laws.

3

PART I — FINANCIAL INFORMATION

Item 1.  Financial Statements

Polypore International, Inc.

Condensed consolidated balance sheets

	September 29, 2012
(in thousands, except share data)	(unaudited)			December 31, 2011*
Assets
Current assets:
Cash and cash equivalents	$	52,589		$	92,574
Accounts receivable, net	128,128			134,016
Inventories	118,354			90,444
Deferred income taxes	3,168			3,171
Prepaid and other	22,888			21,560
Total current assets	325,127			341,765
Property, plant and equipment, net	630,155			527,778
Goodwill	469,319			469,319
Intangibles and loan acquisition costs, net	125,064			133,586
Other	8,395			9,431
Total assets	$	1,558,060		$	1,481,879
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	33,437		$	34,332
Accrued liabilities	53,484			61,907
Income taxes payable	—			5,881
Current portion of debt	65,000			3,682
Total current liabilities	151,921			105,802
Debt, less current portion	646,250			705,836
Pension obligations, less current portion	80,587			78,086
Deferred income taxes	86,947			76,601
Other	24,452			16,161
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, 46,579,444 and 46,499,180 issued and outstanding at September 29, 2012and December 31, 2011	466			465
Paid-in capital	540,223			527,243
Retained earnings (accumulated deficit)	38,303			(15,183		)
Accumulated other comprehensive loss	(14,803		)	(17,127		)
Total Polypore shareholders’ equity	564,189			495,398
Noncontrolling interest	3,714			3,995
Total shareholders’ equity	567,903			499,393
Total liabilities and shareholders’ equity	$	1,558,060		$	1,481,879

* Derived from audited consolidated financial statements

See notes to condensed consolidated financial statements

4

Polypore International, Inc.

Condensed consolidated statements of income (unaudited)

	Three Months Ended					Nine Months Ended
(in thousands, except per share data)	September 29, 2012		October 1, 2011			September 29, 2012			October 1, 2011
Net sales	$	177,618	$	190,062		$	537,137		$	572,112
Cost of goods sold	118,376		113,158			336,631			328,228
Gross profit	59,242		76,904			200,506			243,884
Selling, general and administrative expenses	29,569		33,086			95,485			98,129
Operating income	29,673		43,818			105,021			145,755
Other (income) expense:
Interest expense, net	9,478		8,504			26,438			25,866
Foreign currency and other	655		(357		)	(759		)	347
Write-off of loan acquisition costs associated with refinancing of senior credit agreement	—		—			2,478			—
	10,133		8,147			28,157			26,213
Income before income taxes	19,540		35,671			76,864			119,542
Income taxes	5,308		12,066			23,378			40,749
Net income	$	14,232	$	23,605		$	53,486		$	78,793
Net income per share:
Basic	$	0.31	$	0.51		$	1.15		$	1.71
Diluted	$	0.30	$	0.50		$	1.13		$	1.67
Weighted average shares outstanding:
Basic	46,550,852		46,434,965			46,527,292			46,079,584
Diluted	47,211,245		47,215,037			47,211,168			47,050,245

See notes to condensed consolidated financial statements

5

Polypore International, Inc.

Condensed consolidated statements of comprehensive income

(unaudited)

	Three Months Ended						Nine Months Ended
(in thousands)	September 29, 2012			October 1, 2011			September 29, 2012		October 1, 2011
Net income	$	14,232		$	23,605		$	53,486	$	78,793
Other comprehensive income (loss):
Foreign currency translation adjustment	8,970			(18,746		)	2,119		(3,561		)
Change in net actuarial loss and prior service credit	(272		)	443			33		(73		)
Income tax benefit (expense) related to other comprehensive income	(438		)	2,299			172		(22		)
Other comprehensive income (loss)	8,260			(16,004		)	2,324		(3,656		)
Comprehensive income	$	22,492		$	7,601		$	55,810	$	75,137

See notes to condensed consolidated financial statements

6

Polypore International, Inc.

Condensed consolidated statements of cash flows

(unaudited)

	Nine Months Ended
(in thousands)	September 29, 2012			October 1, 2011
Operating activities:
Net income	$	53,486		$	78,793
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	30,972			25,244
Amortization expense	10,386			12,419
Amortization of loan acquisition costs	1,852			1,837
Stock-based compensation	12,346			4,552
Loss on disposal of property, plant and equipment	937			175
Foreign currency (gain) loss	389			(116		)
Deferred income taxes	9,984			22,762
Write-off of loan acquisition costs associated with refinancing of senior credit agreement	2,478			—
Changes in operating assets and liabilities:
Accounts receivable	5,419			(6,577		)
Inventories	(27,620		)	(11,783		)
Prepaid and other current assets	2,535			(2,318		)
Accounts payable and accrued liabilities	(9,635		)	(1,105		)
Income taxes payable	(7,702		)	45
Other, net	770			(1,752		)
Net cash provided by operating activities	86,597			122,176
Investing activities:
Purchases of property, plant and equipment, net	(123,682		)	(111,319		)
Net cash used in investing activities	(123,682		)	(111,319		)
Financing activities:
Proceeds from new senior credit agreement	350,000			—
Principal payments in connection with refinancing of senior creditagreement	(342,291		)	—
Principal payments on debt	(4,674		)	(3,598		)
Loan acquisition costs	(6,223		)	(627		)
Proceeds from stock option exercises	635			6,639
Noncontrolling interest	(300		)	540
Net cash provided by (used in) financing activities	(2,853		)	2,954
Effect of exchange rate changes on cash and cash equivalents	(47		)	426
Net increase (decrease) in cash and cash equivalents	(39,985		)	14,237
Cash and cash equivalents at beginning of period	92,574			89,955
Cash and cash equivalents at end of period	$	52,589		$	104,192

See notes to condensed consolidated financial statements

7

Polypore International, Inc.

Notes to condensed consolidated financial statements

(unaudited)

1.             Description of Business and Basis of Presentation

Description of Business

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.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries after elimination of intercompany accounts and transactions.  The unaudited condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles for interim financial information. Accordingly, the unaudited condensed consolidated financial statements and notes do not contain certain information included in the Company’s annual financial statements. In the opinion of management, all normal and recurring adjustments that are necessary for a fair presentation have been made. Certain amounts previously presented in the condensed consolidated financial statements for prior periods have been reclassified to conform to current classifications. Operating results for the three months ended September 29, 2012 are not necessarily indicative of the results that may be expected for the fiscal year ending December 29, 2012. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

2.             Recent Accounting Pronouncements

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. The Company will adopt this guidance in performing its annual goodwill impairment test as of the first day of the fourth quarter of 2012.  The adoption of this guidance is not expected to have an impact on the Company’s financial condition or results of operations.

In July 2012, the FASB issued guidance on the testing of indefinite-lived intangible assets for impairment. The guidance will allow companies the option to perform a qualitative assessment to determine if it is more likely than not that an indefinite-lived intangible asset might be impaired and whether it is necessary to perform the quantitative impairment test required under current accounting standards. The guidance is effective for impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. The adoption of this guidance is not expected to have an impact on the Company’s financial condition or results of operations.

3.             Inventories

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

(in thousands)	September 29, 2012		December 31, 2011
Raw materials	$	44,674	$	35,423
Work-in-process	31,609		18,351
Finished goods	42,071		36,670
	$	118,354	$	90,444

8

Polypore International, Inc.

Notes to condensed consolidated financial statements

(unaudited)

4.             Debt

Debt, in order of priority, consists of:

(in thousands)	September 29, 2012		December 31, 2011
Senior credit agreement:
Revolving credit facility	$	50,000	$	—
Term loan facility	296,250		344,518
	346,250		344,518
7.5% senior notes	365,000		365,000
	711,250		709,518
Less current portion, including borrowings under therevolving credit facility	65,000		3,682
Long-term debt	$	646,250	$	705,836

On June 29, 2012, the Company refinanced its previous senior secured credit agreement with a new senior secured credit agreement.  The proceeds from the new credit agreement were used to pay outstanding principal and interest under the previous credit agreement and loan acquisition costs of $6,223,000, which were capitalized and will be amortized over the life of the new credit agreement. In connection with the refinancing, the Company wrote-off unamortized loan acquisition costs of $2,478,000 associated with the previous credit agreement.

The new credit agreement provides for a $300,000,000 term loan facility and a $150,000,000 revolving credit facility.  Interest rates under the 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’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.  The Company is also subject to certain financial covenants, including a maximum senior leverage ratio and a minimum interest coverage ratio.  The Company was in compliance with all covenants as of September 29, 2012.

The revolving credit facility matures in June 2017.  At September 29, 2012, the Company had $50,000,000 outstanding under the revolving credit facility and $100,000,000 available for borrowing.  The Company intends to pay back outstanding borrowings under the revolving credit facility within the next twelve months and accordingly, has included these borrowings in “Current portion of debt” in the accompanying condensed consolidated balance sheets.

The term loan matures in June 2017.  Minimum scheduled principal repayments of the term loan are as follows:

(in thousands)
2012	$	3,750
2013	15,000
2014	18,750
2015	26,250
2016	37,500
2017	195,000
	$	296,250

5.             Fair Value of Financial Instruments

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

9

Polypore International, Inc.

Notes to condensed consolidated financial statements

(unaudited)

market interest rates. The fair value of the 7.5% senior notes, based on a quoted market price and classified as level one in the fair value hierarchy, was $393,288,000 at September 29, 2012.

6.             Income Taxes

The income tax provision for the interim periods presented is computed at the effective rate expected to be applicable in each respective full year using the statutory rates on a country-by-country basis. Income tax expense recorded in the financial statements differs from the federal statutory income tax rate due to a variety of factors, including state income taxes, the mix of income between U.S. and foreign jurisdictions taxed at varying rates and changes in estimates of permanent differences and valuation allowances.

7.             Pension Plans

The Company and its subsidiaries sponsor multiple defined benefit pension plans based in subsidiaries located outside of the United States. The following table provides the components of net periodic benefit cost:

	Three Months Ended						Nine Months Ended
(in thousands)	September 29, 2012			October 1, 2011			September 29, 2012			October 1, 2011
Service cost	$	405		$	395		$	1,241		$	1,174
Interest cost	1,153			1,276			3,544			3,803
Expected return on plan assets	(205		)	(231		)	(631		)	(689		)
Amortization of prior service cost	(12		)	(14		)	(38		)	(41		)
Recognized net actuarial loss	114			19			350			58
Net periodic benefit cost	$	1,455		$	1,445		$	4,466		$	4,305

8.             Environmental Matters

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 $8,850,000 and $11,957,000 at September 29, 2012 and December 31, 2011, respectively. The Company anticipates the expenditures associated with the reserve will be made in the next twelve months. At September 29, 2012, the reserve was included in “Accrued liabilities” in the accompanying condensed 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

10

Polypore International, Inc.

Notes to condensed consolidated financial statements

(unaudited)

Company receives indemnification payments under the indemnification agreements after expenditures are made against approved claims. At September 29, 2012 and December 31, 2011, the amounts receivable under the indemnification agreements were $7,774,000 and $12,099,000, respectively. At September 29, 2012, the receivable under the indemnification agreements was included in “Prepaid and other” in the accompanying condensed consolidated balance sheets.

9.             Government Grants

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 September 29, 2012, the Company has recognized and received the entire amount of 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 $2,236,000 and $18,693,000 for the nine months ended September 29, 2012 and October 1, 2011, respectively. The Company recognized grant awards for expenses of $1,497,000 and $2,819,000 for the nine months ended September 29, 2012 and October 1, 2011, respectively.

10.          Related Party Transactions

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 $634,000 and $588,000 at September 29, 2012 and December 31, 2011, respectively. Charges from the affiliates for work performed were $245,000 and $930,000 for the three and nine months ended September 29, 2012, respectively. Charges from the affiliates for work performed were $284,000 and $797,000 for the three and nine months ended October 1, 2011, respectively. Amounts due to the affiliates were $92,000 and $107,000 at September 29, 2012 and December 31, 2011, respectively.

11.          Noncontrolling Interest

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 started production during the third quarter of 2012. In accordance with the joint venture agreement, the Company made cash contributions of $7,370,000 for a 65% ownership interest in the joint venture, and Camel contributed cash of $2,554,000 and land for a 35% ownership interest. In exchange for notes payable, Daramic Xiangyang purchased a building from Camel and production equipment from the Company, which was previously located at the Company’s former facility in Potenza, Italy. The notes payable and related interest will be paid by Daramic Xiangyang using available free cash flow, as defined in the joint venture agreement.  The building note payable to Camel has a principal balance of $5,910,000 and is included in “Other” non-current liabilities in the accompanying condensed consolidated balance sheet, and the equipment note payable to the Company eliminates in consolidation.

12.          Federal Trade Commission Litigation

On September 9, 2008, the Federal Trade Commission (the “FTC”) issued an administrative complaint against the Company alleging that the February 29, 2008 acquisition of Microporous Holding Corporation, the parent company of Microporous Products L.P. (“Microporous”), and the Company’s related actions have substantially lessened competition in North American markets for lead-acid battery separators. After challenging the complaint before an Administrative Law Judge of the FTC and subsequently before the Commissioners of the FTC, the Company was ordered to divest substantially all of the Microporous assets that were acquired in February 2008.

On January 28, 2011, the Company filed a petition with the U.S. Court of Appeals for the 11th Circuit to review the FTC’s November 5, 2010 order and opinion. On July 11, 2012, the 11th Circuit affirmed the FTC’s decision. 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. Therefore, the Company plans to seek further review by the U.S. Supreme Court.

The Company believes that a final judicial resolution to the challenge by the FTC to the Microporous acquisition could take several months to a year. Although it is difficult to predict the outcome, timing or impact of this matter at this time, the

11

Polypore International, Inc.

Notes to condensed consolidated financial statements

(unaudited)

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 electronics 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 fiscal 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 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.

13.          Segment Information

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:

·Electronics and EDVs - produces and markets membranes for lithium-ion batteries that are used in portable electronic devices, cordless power tools and electric drive vehicles (“EDVs”).

·Transportation and industrial - 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 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 stock-based compensation and certain non-recurring and other costs.

12

Polypore International, Inc.

Notes to condensed consolidated financial statements

(unaudited)

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

	Three Months Ended						Nine Months Ended
(in thousands)	September 29, 2012			October 1, 2011			September 29, 2012			October 1, 2011
Net sales to external customers (by major product group):
Electronics and EDVs	$	43,477		$	56,070		$	133,261		$	149,035
Transportation and industrial	92,912			89,887			271,182			281,309
Energy storage	136,389			145,957			404,443			430,344
Healthcare	26,025			27,986			82,094			88,442
Filtration and specialty	15,204			16,119			50,600			53,326
Separations media	41,229			44,105			132,694			141,768
Total net sales to external customers	$	177,618		$	190,062		$	537,137		$	572,112
Operating income:
Electronics and EDVs	$	10,540		$	26,521		$	41,843		$	68,683
Transportation and industrial	19,075			20,954			60,793			73,580
Energy storage	29,615			47,475			102,636			142,263
Separations media	9,712			9,227			36,533			41,142
Corporate and other	(5,645		)	(10,249		)	(20,353		)	(32,447		)
Segment operating income	33,682			46,453			118,816			150,958
Stock-based compensation	3,914			2,459			12,346			4,552
Non-recurring and other costs	95			176			1,449			651
Total operating income	29,673			43,818			105,021			145,755
Reconciling items:
Interest expense, net	9,478			8,504			26,438			25,866
Foreign currency and other	655			(357		)	(759		)	347
Write-off of loan acquisition costs associated with refinancing of senior credit agreement	—			—			2,478			—
Income before income taxes	$	19,540		$	35,671		$	76,864		$	119,542
Depreciation and amortization:
Electronics and EDVs	$	4,404		$	2,410		$	11,715		$	6,248
Transportation and industrial	3,202			2,961			9,111			8,861
Energy storage	7,606			5,371			20,826			15,109
Separations media	3,291			3,562			10,003			9,937
Corporate and other	2,999			4,208			10,529			12,617
Total depreciation and amortization	$	13,896		$	13,141		$	41,358		$	37,663

13

Polypore International, Inc.

Notes to condensed consolidated financial statements

(unaudited)

14.          Financial Statements of Guarantors

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.

Condensed consolidating balance sheet
September 29, 2012

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries		The Company		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	—	$	42,662	$	9,927	$	—		$	52,589
Accounts receivable, net	42,221		85,907		—		—			128,128
Inventories	43,421		74,933		—		—			118,354
Prepaid and other	5,742		19,658		656		—			26,056
Total current assets	91,384		223,160		10,583		—			325,127
Due from affiliates	521,076		332,759		469,469		(1,323,304		)	—
Investment in subsidiaries	190,888		322,309		619,995		(1,133,192		)	—
Property, plant and equipment, net	329,754		300,401		—		—			630,155
Goodwill	—		—		469,319		—			469,319
Intangibles and loan acquisition costs, net	—		—		125,064		—			125,064
Other	157		8,238		—		—			8,395
Total assets	$	1,133,259	$	1,186,867	$	1,694,430	$	(2,456,496	)	$	1,558,060
Liabilities and shareholders’ equity
Accounts payable and accrued liabilities	$	30,595	$	46,072	$	10,254	$	—		$	86,921
Current portion of debt	—		—		65,000		—			65,000
Total current liabilities	30,595		46,072		75,254		—			151,921
Due to affiliates	601,127		317,301		404,876		(1,323,304		)	—
Debt, less current portion	—		—		646,250		—			646,250
Pension obligations, less current portion	—		80,587		—		—			80,587
Deferred income taxes and other	58,624		52,628		147		—			111,399
Shareholders’ equity	442,913		690,279		567,903		(1,133,192		)	567,903
Total liabilities and shareholders’ equity	$	1,133,259	$	1,186,867	$	1,694,430	$	(2,456,496	)	$	1,558,060

14

Polypore International, Inc.

Notes to condensed consolidated financial statements

(unaudited)

Condensed consolidating balance sheet
December 31, 2011

(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 obligations, less current portion	—		78,086		—		—			78,086
Deferred income taxes and other	47,140		45,476		146		—			92,762
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

15

Polypore International, Inc.

Notes to condensed consolidated financial statements

(unaudited)

Condensed consolidating statement of income
For the three months ended September 29, 2012

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Net sales	$	54,322		$	123,296	$	—		$	—		$	177,618
Cost of goods sold	24,626			93,750		—			—			118,376
Gross profit	29,696			29,546		—			—			59,242
Selling, general and administrative expenses	14,914			10,708		3,947			—			29,569
Operating income (loss)	14,782			18,838		(3,947		)	—			29,673
Interest expense and other	(2,219		)	2,894		9,458			—			10,133
Equity in earnings of subsidiaries	—			—		(21,086		)	21,086			—
Income before income taxes	17,001			15,944		7,681			(21,086		)	19,540
Income taxes	8,052			3,807		(6,551		)	—			5,308
Net income	$	8,949		$	12,137	$	14,232		$	(21,086	)	$	14,232

Condensed consolidating statement of income
For the three months ended October 1, 2011

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Net sales	$	71,842		$	118,220	$	—		$	—		$	190,062
Cost of goods sold	23,200			89,958		—			—			113,158
Gross profit	48,642			28,262		—			—			76,904
Selling, general and administrative expenses	18,315			12,629		2,142			—			33,086
Operating income (loss)	30,327			15,633		(2,142		)	—			43,818
Interest expense and other	(3,007		)	1,949		9,205			—			8,147
Equity in earnings of subsidiaries	—			—		(26,439		)	26,439			—
Income before income taxes	33,334			13,684		15,092			(26,439		)	35,671
Income taxes	15,809			4,770		(8,513		)	—			12,066
Net income	$	17,525		$	8,914	$	23,605		$	(26,439	)	$	23,605

16

Polypore International, Inc.

Notes to condensed consolidated financial statements

(unaudited)

Condensed consolidating statement of income
For the nine months ended September 29, 2012

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Net sales	$	163,766		$	373,371	$	—		$	—		$	537,137
Cost of goods sold	62,757			273,874		—			—			336,631
Gross profit	101,009			99,497		—			—			200,506
Selling, general and administrative expenses	48,906			34,133		12,446			—			95,485
Operating income (loss)	52,103			65,364		(12,446		)	—			105,021
Interest expense and other	(8,517		)	6,595		27,601			—			25,679
Write-off of loan acquisition costs associated with refinancing of senior credit agreement	—			—		2,478			—			2,478
Equity in earnings of subsidiaries	—			—		(79,598		)	79,598			—
Income before income taxes	60,620			58,769		37,073			(79,598		)	76,864
Income taxes	26,537			13,254		(16,413		)	—			23,378
Net income	$	34,083		$	45,515	$	53,486		$	(79,598	)	$	53,486

Condensed consolidating statement of income
For the nine months ended October 1, 2011

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Net sales	$	206,760		$	365,352	$	—		$	—		$	572,112
Cost of goods sold	64,821			263,407		—			—			328,228
Gross profit	141,939			101,945		—			—			243,884
Selling, general and administrative expenses	54,447			39,313		4,369			—			98,129
Operating income (loss)	87,492			62,632		(4,369		)	—			145,755
Interest expense and other	(5,921		)	5,524		26,610			—			26,213
Equity in earnings of subsidiaries	—			—		(92,852		)	92,852			—
Income before income taxes	93,413			57,108		61,873			(92,852		)	119,542
Income taxes	40,106			17,563		(16,920		)	—			40,749
Net income	$	53,307		$	39,545	$	78,793		$	(92,852	)	$	78,793

17

Polypore International, Inc.

Notes to condensed consolidated financial statements

(unaudited)

Condensed consolidating statement of comprehensive income
For the three months ended September 29, 2012

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net income	$	8,949	$	12,137		$	14,232		$	(21,086	)	$	14,232
Foreign currency translation adjustment, net of income tax expense of $438	—		9,365			(644		)	(189		)	8,532
Change in net actuarial loss and prior service credit	—		(272		)	—			—			(272		)
Equity in earnings of subsidiaries	—		—			8,904			(8,904		)	—
Comprehensive income	$	8,949	$	21,230		$	22,492		$	(30,179	)	$	22,492

Condensed consolidating statement of comprehensive income
For the three months ended October 1, 2011

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net income	$	17,525	$	8,914		$	23,605		$	(26,439	)	$	23,605
Foreign currency translation adjustment, net of income tax benefit of $2,299	—		(19,197		)	1,387			1,363			(16,447		)
Change in net actuarial loss and prior service credit	—		443			—			—			443
Equity in earnings of subsidiaries	—		—			(17,391		)	17,391			—
Comprehensive income (loss)	$	17,525	$	(9,840	)	$	7,601		$	(7,685	)	$	7,601

18

Polypore International, Inc.

Notes to condensed consolidated financial statements

(unaudited)

Condensed consolidating statement of comprehensive income
For the nine months ended September 29, 2012

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries		The Company		Eliminations			Consolidated
Net income	$	34,083	$	45,515	$	53,486	$	(79,598	)	$	53,486
Foreign currency translation adjustment, net of income tax benefit of $172	—		3,072		138		(919		)	2,291
Change in net actuarial loss and prior service credit	—		33		—		—			33
Equity in earnings of subsidiaries	—		—		2,186		(2,186		)	—
Comprehensive income	$	34,083	$	48,620	$	55,810	$	(82,703	)	$	55,810

Condensed consolidating statement of comprehensive income
For the nine months ended October 1, 2011

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net income	$	53,307	$	39,545		$	78,793		$	(92,852	)	$	78,793
Foreign currency translation adjustment, net of income tax expense of $22	—		(2,687		)	(747		)	(149		)	(3,583		)
Change in net actuarial loss and prior service credit	—		(73		)	—			—			(73		)
Equity in earnings of subsidiaries	—		—			(2,909		)	2,909			—
Comprehensive income	$	53,307	$	36,785		$	75,137		$	(90,092	)	$	75,137

19

Polypore International, Inc.

Notes to condensed consolidated financial statements

(unaudited)

Condensed consolidating statement of cash flows
For the nine months ended September 29, 2012

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	72,194		$	35,600		$	(20,398	)	$	(799	)	$	86,597
Investing activities:
Purchases of property, plant and equipment, net	(107,691		)	(15,991		)	—			—			(123,682		)
Net cash used in investing activities	(107,691		)	(15,991		)	—			—			(123,682		)
Financing activities:
Proceeds from new senior credit agreement	—			—			350,000			—			350,000
Principal payments in connection with refinancing of senior credit agreement	—			(41,865		)	(300,426		)	—			(342,291		)
Principal payments on debt	—			(117		)	(4,557		)	—			(4,674		)
Proceeds from stock option exercises	—			—			635			—			635
Intercompany transactions, net	35,497			(413		)	(35,883		)	799			—
Other	—			—			(6,523		)	—			(6,523		)
Net cash provided by (used in) financing activities	35,497			(42,395		)	3,246			799			(2,853		)
Effect of exchange rate changes on cash and cash equivalents	—			(47		)	—			—			(47		)
Net decrease in cash and cash equivalents	—			(22,833		)	(17,152		)	—			(39,985		)
Cash and cash equivalents at beginning of period	—			65,495			27,079			—			92,574
Cash and cash equivalents at end of period	$	—		$	42,662		$	9,927		$	—		$	52,589

Condensed consolidating statement of cash flows
For the nine months ended October 1, 2011

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	97,315		$	46,692		$	(23,627	)	$	1,796		$	122,176
Investing activities:
Purchases of property, plant and equipment, net	(74,901		)	(36,418		)	—			—			(111,319		)
Net cash used in investing activities	(74,901		)	(36,418		)	—			—			(111,319		)
Financing activities:
Principal payments on debt	—			(369		)	(3,229		)	—			(3,598		)
Proceeds from stock option exercises	—			—			6,639			—			6,639
Intercompany transactions, net	(22,414		)	3,996			20,214			(1,796		)	—
Other	—			—			(87		)	—			(87		)
Net cash provided by (used in) financing activities	(22,414		)	3,627			23,537			(1,796		)	2,954
Effect of exchange rate changes on cash and cash equivalents	—			426			—			—			426
Net increase (decrease) in cash and cashequivalents	—			14,327			(90		)	—			14,237
Cash and cash equivalents at beginning of period	—			58,172			31,783			—			89,955
Cash and cash equivalents at end of period	$	—		$	72,499		$	31,693		$	—		$	104,192

20

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

The following discussion of our financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

Overview

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 $473.2 million for fiscal 2011.

Energy Storage

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”).  Demand for lithium batteries is driven by the need for increased mobility in consumer electronics and the need to provide fuel efficiency to meet mileage standards, reduce CO2 emissions in Europe and address many other increasing transportation needs in developing economies in EDVs. Since late 2009, we have announced $334.0 million of capacity expansions and as of September 29, 2012, have completed substantially all of the expenditures associated with these expansions.  We completed the Charlotte, North Carolina and Ochang, Korea expansions and the first phase of the new Concord, North Carolina facility. The Charlotte expansion and the first phase of the new Concord facility were partially funded by a grant from the U.S. Department of Energy (“DOE”) of $49.3 million.  In mid-2012, we completed the second phase of expansion at the Concord facility and initial capacity has been qualified for commercial sales.  For the final phase of the expansion at Concord, equipment installation is substantially complete.  During 2012, demand for lithium separators has been impacted by lower than expected production of EDVs and economic weakness in consumer electronics. Although we believe the long-term growth drivers are positive, our sales have and may continue to be impacted by these factors in the near term.  Accordingly, production from the second and final phases of the Concord expansions will ramp up as needed based on the timing of customer qualification and demand.

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 are meeting growing demand in this region by investing in Asia and exporting from our U.S. and European facilities. Our investments in Asia have included completing three capacity expansions at our Prachinburi, Thailand facility, the most recent of which started production in the second quarter of 2012; 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 Xiangyang, China, primarily for Camel’s use. The joint venture started production during the third quarter of 2012.

Separations Media

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

21

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 late 2011, we completed an expansion of our PUREMA® hemodialysis membrane production capacity to support future market growth.

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

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 the uncertainty inherent in such estimates, actual results may differ from these estimates. These policies are critical to the understanding of our operating results and financial condition and include policies related to the allowance for doubtful accounts, impairment of intangibles and goodwill, pension benefits, environmental matters and repairs and maintenance. For a discussion of each of these policies, please see the discussion entitled “Critical Accounting Policies” under Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2011.

Results of Operations

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

						Percentage of Net Sales
	Three Months Ended					Three Months Ended
($’s in millions)	September 29, 2012		October 1, 2011			September 29, 2012		October 1, 2011
Net sales	$	177.6	$	190.1		100.0	%	100.0	%
Gross profit	59.2		76.9			33.3		40.5
Selling, general and administrative expenses	29.5		33.1			16.6		17.5
Operating income	29.7		43.8			16.7		23.0
Interest expense, net	9.5		8.5			5.3		4.4
Other	0.7		(0.4		)	0.4		(0.2	)
Income before income taxes	19.5		35.7			11.0		18.8
Income taxes	5.3		12.1			3.0		6.4
Net income	$	14.2	$	23.6		8.0	%	12.4	%

					Percentage of Net Sales
	Nine Months Ended				Nine Months Ended
($’s in millions)	September 29, 2012		October 1, 2011		September 29, 2012		October 1, 2011
Net sales	$	537.1	$	572.1	100.0	%	100.0	%
Gross profit	200.5		243.9		37.3		42.6
Selling, general and administrative expenses	95.5		98.1		17.8		17.1
Operating income	105.0		145.8		19.5		25.5
Interest expense, net	26.4		25.9		4.9		4.5
Other	1.7		0.4		0.3		0.1
Income before income taxes	76.9		119.5		14.3		20.9
Income taxes	23.4		40.7		4.3		7.1
Net income	$	53.5	$	78.8	10.0	%	13.8	%

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Comparison of the three months ended September 29, 2012 with the three months ended October 1, 2011

Net sales.  Net sales for the three months ended September 29, 2012 were $177.6 million, a decrease of $12.5 million, or 6.6%, from the same period in the prior year. The decrease was primarily due to lower sales in the electronics and EDVs segment and the negative impact of foreign currency translation of $8.6 million.

Gross profit. Gross profit was $59.2 million, a decrease of $17.7 million, or 23.0%, from the same period in the prior year.  Gross profit as a percent of net sales was 33.3% for the three months ended September 29, 2012 compared to 40.5% for the three months ended October 1, 2011.  The decrease in consolidated gross profit and gross profit margin was primarily due to lower sales and the costs associated with growth investments, including non-cash depreciation expense. We expect gross profit and gross profit margins to improve as the costs associated with our capacity expansions are offset by higher sales.

Selling, general and administrative expenses.Selling, general and administrative expenses decreased $3.6 million for the three months ended September 29, 2012 compared to the prior year, primarily due to a $3.4 million decrease in performance-based incentive compensation expense and $1.2 million lower amortization expense, partially offset by a $1.5 million increase in stock-based compensation expense.

Segment operating income.  Segment operating income, which excludes stock-based compensation and certain non-recurring and other costs, was $33.7 million, a decrease of $12.7 million, or 27.4%, from the same period in the prior year. Segment operating income as a percent of net sales was 19.0% for the three months ended September 29, 2012 compared to 24.4% for the three months ended October 1, 2011.  The decrease in segment operating income and segment operating income margin was the result of lower sales and the costs associated with growth investments, including $2.0 million of additional non-cash depreciation expense, partially offset by a decline in performance-based incentive compensation expense. We expect segment operating income and segment operating income margins to improve as the costs associated with our capacity expansions are offset by higher sales.

Interest expense.  Interest expense for the three months ended September 29, 2012 decreased by $1.0 million from the same period in the prior year, primarily due to lower capitalized interest associated with capacity expansion projects.

Income taxes.  Income tax expense for the interim periods presented is computed at the effective rate expected to be applicable in each respective full year using the statutory rates on a country-by-country basis. The effective tax rate was 27.2% for the three months ended September 29, 2012 compared to 33.8% for the same period in the prior year. 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%.

The components of our effective tax rate are as follows:

	Three Months Ended
	September 29, 2012		October 1, 2011
U.S. federal statutory rate	35.0	%	35.0	%
State income taxes	0.7		1.1
Mix of income in taxing jurisdictions	(7.7	)	(3.6	)
Other	(0.8	)	1.3
Total effective tax rate	27.2	%	33.8	%

Comparison of the nine months ended September 29, 2012 with the nine months ended October 1, 2011

Net sales.  Net sales for the nine months ended September 29, 2012 were $537.1 million, a decrease of $35.0 million, or 6.1%, from the same period in the prior year. The decrease was primarily due to lower sales in the electronics and EDVs segment and the negative impact of foreign currency translation of $20.8 million.

Gross profit. Gross profit was $200.5 million, a decrease of $43.4 million, or 17.8%, from the same period in the prior year.  Gross profit as a percent of net sales was 37.3% for the nine months ended September 29, 2012 compared to 42.6% for the nine months ended October 1, 2011.  The decrease in consolidated gross profit and gross profit margin was primarily due to lower sales and the costs associated with growth investments, including non-cash depreciation expense. We expect gross profit and gross profit margins to improve as the costs associated with our capacity expansions are offset by higher sales.

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Selling, general and administrative expenses.Selling, general and administrative expenses decreased $2.6 million for the nine months ended September 29, 2012 compared to the prior year, primarily due to a $9.0 million decrease in performance-based incentive compensation expense and $2.0 million lower amortization expense, partially offset by a $7.8 million increase in stock-based compensation expense.

Segment operating income.  Segment operating income, which excludes stock-based compensation and certain non-recurring and other costs, was $118.8 million, a decrease of $32.2 million, or 21.3%, from the same period in the prior year. Segment operating income as a percent of net sales was 22.1% for the nine months ended September 29, 2012 compared to 26.4% for the nine months ended October 1, 2011.  The decrease in segment operating income and segment operating income margin was the result of lower sales and the costs associated with growth investments, including $5.7 million of additional non-cash depreciation expense, partially offset by a decline in performance-based incentive compensation expense.  We expect segment operating income and segment operating income margins to improve as the costs associated with our capacity expansions are offset by higher sales.

Interest expense.  Interest expense for the nine months ended September 29, 2012 was $26.4 million, which was comparable to the same period in the prior year.

Income taxes.  Income tax expense for the interim periods presented is computed at the effective rate expected to be applicable in each respective full year using the statutory rates on a country-by-country basis. The effective tax rate was 30.4% for the nine months ended September 29, 2012 compared to 34.1% for the same period in the prior year. 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%.

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

	Nine Months Ended
	September 29, 2012		October 1, 2011
U.S. federal statutory rate	35.0	%	35.0	%
State income taxes	0.7		1.1
Mix of income in taxing jurisdictions	(5.3	)	(3.6	)
Other	—		1.6
Total effective tax rate	30.4	%	34.1	%

Financial reporting segments

Electronics and EDVs

Comparison of the three months ended September 29, 2012 with the three months ended October 1, 2011

Net sales.  Net sales for the three months ended September 29, 2012 were $43.5 million, a decrease of $12.6 million, or 22.5%, from the same period in the prior year.  The decrease was primarily due to lower production levels of EDVs and economic weakness in consumer electronics.

Segment operating income.  Segment operating income was $10.5 million, a decrease of $16.0 million, or 60.4%, from the same period in the prior year.  Segment operating income as a percent of net sales was 24.1% for the three months ended September 29, 2012, compared to 47.2% for the three months ended October 1, 2011.  The decrease in segment operating income and segment operating income margin was due to lower sales, the costs associated with new capacity, including an additional $2.0 million of non-cash depreciation expense, and customer and product mix.  We expect segment operating income and segment operating income margins to improve as the costs associated with our capacity expansions are offset by higher sales.

Comparison of the nine months ended September 29, 2012 with the nine months ended October 1, 2011

Net sales.  Net sales for the nine months ended September 29, 2012 were $133.2 million, a decrease of $15.8 million, or 10.6%, from the same period in the prior year.  The decrease was due to economic weakness in consumer electronics, offset to some extent by higher year-to-date sales for EDV applications.

Segment operating income.  Segment operating income was $41.8 million, a decrease of $26.9 million, or 39.2%, from the same period in the prior year.  Segment operating income as a percent of net sales was 31.4% for the nine months ended

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September 29, 2012, compared to 46.1% for the nine months ended October 1, 2011. The decrease in segment operating income and segment operating income margin was due to lower sales and the costs associated with new capacity, including an additional $5.5 million of non-cash depreciation expense.  We expect segment operating income and segment operating income margins to improve as the costs associated with our capacity expansions are offset by higher sales.

Transportation and Industrial

Comparison of the three months ended September 29, 2012 with the three months ended October 1, 2011

Net sales.  Net sales for the three months ended September 29, 2012 were $92.9 million, an increase of $3.0 million, or 3.3%, from the same period in the prior year, including the $4.7 million negative effect of foreign currency translation.  The increase was primarily due to growth in Asia, offset to some extent by economic weakness in Europe.

Segment operating income.  Segment operating income was $19.1 million, a decrease of $1.9 million, or 9.0%, from the same period in the prior year.  Segment operating income as a percent of net sales was 20.6% for the three months ended September 29, 2012, compared to 23.4% for the three months ended October 1, 2011.  The decrease in segment operating income and segment operating income margin was due to the costs of exporting goods from our U.S. and European manufacturing facilities to meet growing demand in Asia and the costs associated with growth investments in Asia.

Comparison of the nine months ended September 29, 2012 with the nine months ended October 1, 2011

Net sales.  Net sales for the nine months ended September 29, 2012 were $271.2 million, a decrease of $10.1 million, or 3.6%, from the same period in the prior year, primarily due to the $11.0 million negative effect of foreign currency translation.  Sales volume growth in Asia was offset by mild winter weather in North America and Europe, which temporarily impacted replacement battery sales in the first quarter of 2012, and economic weakness in Europe.

Segment operating income.  Segment operating income was $60.8 million, a decrease of $12.8 million, or 17.4%, from the same period in the prior year.  Segment operating income as a percent of net sales was 22.4% for the nine months ended September 29, 2012, compared to 26.2% for the nine months ended October 1, 2011.  The decrease in segment operating income and segment operating income margin was due to the costs of exporting goods from our U.S. and European manufacturing facilities to meet growing demand in Asia and the costs associated with growth investments in Asia.

Separations Media

Comparison of the three months ended September 29, 2012 with the three months ended October 1, 2011

Net sales.  Net sales for the three months ended September 29, 2012 were $41.2 million, a decrease of $2.9 million, or 6.6%, from the same period in the prior year, primarily due to the negative effect of foreign currency translation of $3.9 million. Healthcare sales include the impact of production shutdowns at three customers due to the May earthquakes in Italy. The customers affected by the earthquakes in Italy resumed production by the end of the third quarter.

Segment operating income.  Segment operating income was $9.7 million, an increase of $0.5 million, or 5.4%, from the same period in the prior year.  Segment operating income as a percent of net sales was 23.5% for the three months ended September 29, 2012, compared to 20.9% for the three months ended October 1, 2011. The increase in segment operating income and segment operating income margin was primarily due to the production timing and product mix.

Comparison of the nine months ended September 29, 2012 with the nine months ended October 1, 2011

Net sales.  Net sales for the nine months ended September 29, 2012 were $132.7 million, a decrease of $9.1 million, or 6.4%, from the same period in the prior year, primarily due to the negative effect of foreign currency translation of $9.8 million. Healthcare sales include the impact of production shutdowns at three customers due to the May earthquakes in Italy. The customers affected by the earthquakes in Italy resumed production by the end of the third quarter.

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Segment operating income.  Segment operating income was $36.5 million, a decrease of $4.6 million, or 11.2%, from the same period in the prior year.  Segment operating income as a percent of net sales was 27.5% for the nine months ended September 29, 2012, compared to 29.0% for the nine months ended October 1, 2011. The decrease in segment operating income and segment operating income margin was due to production timing and product mix.

Corporate and other costs

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.

Comparison of the three months ended September 29, 2012 with the three months ended October 1, 2011

Corporate and other costs for the three months ended September 29, 2012 were $5.6 million, compared to $10.3 million for the three months ended October 1, 2011. The decrease was primarily due to lower performance-based incentive compensation expense and a decline in amortization expense as certain intangible assets became fully amortized in the second quarter of 2012.

Comparison of the nine months ended September 29, 2012 with the nine months ended October 1, 2011

Corporate and other costs for the nine months ended September 29, 2012 were $20.3 million, compared to $32.4 million for the nine months ended October 1, 2011. The decrease was primarily due to lower performance-based incentive compensation expense and a decline in amortization expense as certain intangible assets became fully amortized.

Liquidity and Capital Resources

Cash and cash equivalents decreased by $40.0 million during the nine months ended September 29, 2012, as cash generated from operations and cash on hand were used to fund growth investments.

Operating activities.  Net cash provided by operating activities was $86.6 million in the nine months ended September 29, 2012, consisting of cash generated from operations of $122.8 million, partially offset by changes in operating assets and liabilities. Accounts receivable and days sales outstanding are 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 increased based on production and capacity planning for expected customer order patterns. 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.  Accounts payable and accrued liabilities decreased primarily due to lower accrued variable incentive compensation under performance-based compensation plans.

Investing activities.  In the nine months ended September 29, 2012, total capital expenditures were $123.7 million, net of DOE grant awards of $2.2 million. Capital expenditures were primarily related to capacity expansions in our electronics and EDVs segment, which have been substantially completed. We expect total capital expenditures for fiscal 2012 to be approximately $140.0 million. As of September 29, 2012, we had $147.5 million of construction in progress which was primarily related to the capacity expansion projects.

Financing activities.  On June 29, 2012, we refinanced our senior secured credit agreement with a new senior secured credit agreement.  We received total proceeds from the new credit agreement of $350.0 million, which were used to repay outstanding principal and interest under the previous credit agreement and pay loan acquisition costs of $6.2 million. Scheduled principal payments on debt were $4.7 million for the nine months ended September 29, 2012.

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 September 29, 2012, approximately 80% 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.

The new credit agreement provides for a $300.0 million term loan facility ($296.3 million outstanding at September 29, 2012) and a $150.0 million revolving credit facility ($50.0 million outstanding at September 29, 2012). At September 29, 2012, the Company had $100.0 million of borrowings available under the revolving credit facility. The term loan facility and the revolving credit facility mature in June 2017. Because we intend to pay back outstanding borrowings under the revolving credit facility within the next twelve months, we have classified these borrowings as current liabilities.

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Interest rates under the senior secured credit agreement are, at our option, equal to either an alternate base rate or Eurocurrency base rate plus a specified margin.  At September 29, 2012, the interest rate on borrowings under the senior secured credit agreement was 2.72%.

Under the credit agreement, we are required to maintain a maximum ratio of indebtedness to Adjusted EBITDA and a minimum ratio of Adjusted EBITDA to cash interest expense.  Adjusted EBITDA, as defined under the senior secured credit agreement, was as follows:

(in millions)	Twelve Months Ended  September 29, 2012
Net income	$	79.9
Add/Subtract:
Depreciation and amortization expense	55.0
Interest expense, net	35.0
Income taxes	34.5
Stock-based compensation	17.1
Foreign currency gain	(2.5		)
Loss on disposal of property, plant and equipment	1.1
Costs related to the FTC litigation	0.2
Write-off of loan acquisition costs associated with refinancing of senior credit agreement	2.5
Adjusted EBITDA	$	222.8

As of September 29, 2012, the calculation of the senior leverage ratio, as defined under the senior secured credit agreement, was as follows:

(in millions)
Indebtedness (1)	$	296.3
Adjusted EBITDA	$	222.8
Actual senior leverage ratio	1.33x
Required maximum senior leverage ratio	2.50x

(1)Calculated as the sum of outstanding borrowings under the senior secured credit agreement, less cash on hand (not to exceed $50.0 million).

As of September 29, 2012, the calculation of the interest coverage ratio, as defined under the senior secured credit agreement, was as follows:

(in millions)
Adjusted EBITDA	$	222.8
Interest expense, net (1)	$	35.9
Actual interest coverage ratio	6.20x
Required minimum interest coverage ratio	3.00x

(1)Calculated as cash interest expense, as defined under the senior secured credit agreement, for the twelve months ended September 29, 2012.

The senior secured credit agreement contains certain restrictive covenants which, among other things, limit 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.

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.

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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 $37.3 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 and 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 our most recent 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.

Foreign Operations

As of September 29, 2012, we manufacture our products at 16 strategically located facilities in North America, Europe and Asia. Net sales from the foreign locations were approximately $353.0 million and $354.5 million for the nine months ended September 29, 2012 and October 1, 2011, 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.

Seasonality

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.  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.

Environmental matters

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. However, 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 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. The environmental reserve for the Membrana facility, which is denominated in euros, was $8.9 million at September 29, 2012.  We anticipate the expenditures associated with the reserve will be made in the next twelve months.

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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 September 29, 2012, amounts receivable under the indemnification agreements were $7.8 million.

Off-Balance Sheet Arrangements

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.

New Accounting Standards

See Note 2 to the condensed consolidated financial statements for information related to new accounting standards.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

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.

Interest rate risk

At September 29, 2012, we had fixed rate debt of $365.0 million and variable rate debt of $346.3 million. To reduce the interest rate risk inherent in our variable rate debt, we may utilize interest rate derivatives. As of September 29, 2012, 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 $3.5 million per year.

Currency risk

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 periods ended as set forth below were as follows:

	September 29, 2012	October 1, 2011
Period end rate	1.2908	1.3508
Period average rate for the three months ended	1.2521	1.4167
Period average rate for the nine months ended	1.2824	1.4075

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 September 29, 2012, we did not have any foreign currency derivatives outstanding.

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Item 4.  Controls and Procedures

An evaluation of the effectiveness of our 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, our management, including our Chief Executive Officer and Chief Financial Officer. Our 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 September 29, 2012 to ensure that information required to be disclosed in the reports that we file or submit 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.

During the three months ended September 29, 2012, there has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) promulgated under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1.  Legal Proceedings

On September 9, 2008, the Federal Trade Commission (the “FTC”) issued an administrative complaint against us alleging that our February 29, 2008 acquisition of Microporous Holding Corporation, the parent company of Microporous Products L.P. (“Microporous”), and our related actions have substantially lessened competition in North American markets for lead-acid battery separators. After challenging the compliant before an Administrative Law Judge of the FTC and subsequently before the Commissioners of the FTC, we were ordered to divest substantially all of the Microporous assets that were acquired in February 2008.

On January 28, 2011, we filed a petition with the U.S. Court of Appeals for the 11th Circuit to review the FTC’s November 5, 2010 order and opinion. On July 11, 2012, the 11th Circuit affirmed the FTC’s decision. 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.  Therefore, we plan to seek further review of this decision by the U.S. Supreme Court.

We believe that a final judicial resolution to the challenge by the FTC to the Microporous acquisition could take several months to a year. 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 electronics 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 fiscal 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.  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.

See Part II, Item 1. Legal Proceedings, of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 for prior disclosure regarding the FTC proceeding.

Item 5.  Other Information

The following information is included herein in lieu of filing it in Item 5.03 (Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year) of Form 8-K: On October 30, 2012, the Board of Directors of Polypore International amended and restated the Company’s Amended and Restated Bylaws (the “Bylaws”) to adopt a change to Article IV, Section 5 that was effective immediately upon approval.  The Bylaws were revised to change the required Board committee quorum requirement from at least a majority to at least half of committee members (but in no event less than two) in order to be able to increase the size of a committee from three members to four members without increasing the difficulty of achieving a quorum. This description of the change to the Bylaws is qualified in its entirety by reference to the full text of the Bylaws, which is attached to this Form 10-Q as Exhibit 3.1 and incorporated into this Form 10-Q by reference.

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Item 6.    Exhibits

Exhibit No.	Exhibit Description
3.1	Second Amended and Restated Bylaws of Polypore International Inc., adopted on October 30, 2012
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

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November 1, 2012		POLYPORE INTERNATIONAL, INC.
		(Registrant)
	By:	/s/ Robert B. Toth
		Robert B. Toth
		President and Chief Executive Officer
		(principal executive officer)
	By:	/s/ Lynn Amos
		Lynn Amos
		Chief Financial Officer
		(principal financial officer and principal accounting officer)

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EX-3.1

Exhibit 3.1

POLYPORE INTERNATIONAL, INC.

SECOND AMENDED AND RESTATED BYLAWS

ARTICLE I
OFFICES

The registered office of Polypore International, Inc. (the “Corporation”) in the State of Delaware shall be at 2711 Centerville Road, Suite 400, Wilmington, County of New Castle, Delaware 19808, and The Corporation Service Company will be the resident agent of the Corporation in charge thereof.  The Corporation may also have such other offices at such other places, within or without the State of Delaware, as the Board of Directors of the Corporation (the “Board of Directors”) may from time to time designate or the business of the Corporation may require.

ARTICLE II
STOCKHOLDERS

Section 1.               Annual Meeting.  The annual meeting of stockholders for the election of directors and for the transaction of any other business properly brought before the annual meeting will be held on such day in such month, at such time and in such place within or without the State of Delaware as may be designated by the Board of Directors and set forth in the notice of such meeting.

Section 2.               Special Meetings.  A special meeting of the stockholders for any purpose or purposes (a) may be called at any time by the Board of Directors or by its Chairman, or by the Chief Executive Officer and President, and (b) will be called by the Chief Executive Officer and President at the request in writing of stockholders owning shares of the Corporation’s capital stock entitled to a majority of the total number of votes entitled to be cast by the entire capital stock of the corporation issued and outstanding and entitled to vote.  Any request pursuant to (b) will state the purpose or purposes of the proposed meeting.  Special meetings shall be held at such place within or without the State of Delaware as may be designated by the Board of Directors and set forth in the notice of such meeting.  At a special meeting no business shall be transacted and no corporate action shall be taken other than that stated in the notice of the meeting.

Section 3.               Notice of Meetings.  Not less than ten (10) days nor more than sixty (60) days before the date of every stockholder’s meeting, the Secretary shall give to each stockholder entitled to vote at such meeting and each other stockholder entitled to notice of the meeting, written or printed notice stating the time and place of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, either by mail or by presenting it to him or her personally or by leaving it at his or her residence or usual place of business.  If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at his or her post office address as it appears on the records of the Corporation, with postage thereon prepaid.  Notice of any adjourned meeting need not be given except by announcement at the meeting so adjourned, unless otherwise ordered in connection with such adjournment.  Such further notice, if any, shall be given as may be required by law.

Section 4.               Waiver of Notice.  Any stockholder may waive notice of any stockholder’s meeting before or after the meeting.  The waiver must be in writing, signed by the stockholder and delivered to the Corporation for inclusion in the minutes or filing with the corporate records.  A stockholder’s attendance, in person or by proxy, at a meeting (a) waives objection to lack of notice or defective notice of the meeting, unless the stockholder or his or her proxy at the beginning of the meeting objects to holding the meeting or transacting business at the meeting, and (b) waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the stockholder or his or her proxy objects to considering the matter before it is voted upon.

Section 5.               Advance Notice.

(a)           Annual Meetings.

(1)           Only persons who are nominated in accordance with the provisions set forth in this Section 5(a) shall be eligible to be elected as a director at an annual meeting of stockholders.  Nominations of persons for election to the Board of Directors at an annual meeting of stockholders may be made (i) by or at the direction of the Board of Directors, or (ii) as otherwise properly brought before such annual meeting by any stockholder of the Corporation who is a stockholder of record at the time of giving of notice as provided for in Section 5(a)(2), who shall be entitled to vote for the election of directors at such annual meeting and who complies with the notice procedures set forth in Section 5(a)(2).

(2)           Nominations of directors under Section 5(a)(1), other than those made by or at the direction of the Board of Directors, shall be made by timely notice of such nomination in writing to the Secretary.  Such notice:

(i)            Shall be delivered to, or mailed and received at, the principal executive offices of the Corporation not less than sixty (60) days nor more than ninety (90) days prior to the first anniversary of the preceding year’s annual meeting; provided, however, in the event the date of the annual meeting is advanced by more than thirty (30) days or delayed by more than sixty (60) days from such anniversary date, then to be timely notice by a stockholder must be so delivered not earlier than the 90th day prior to such annual meeting and not later than the later of the 60th day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such annual meeting is first made; and

(ii)           Shall set forth as to each person whom the stockholder proposes to nominate for election or reelection as a director:

a.             Such person’s name, age, address (business and residence) and principal occupation or employment (present and for the past five years);

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b.             The number of shares of the Corporation such person beneficially owns (as such term is defined by Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) and any other ownership interest in the securities of the Corporation, whether economic or otherwise, including derivatives and hedges;

c.             Any other information relating to such person that would be required to be disclosed in a definitive proxy statement to stockholders prepared in connection with an election of directors pursuant to Section 14(a) of the Exchange Act;

d.             Such person’s written consent to being named as nominee and to serving as a director if elected; and

e.             Such person’s written consent to provide information that the Board of Directors reasonably requests to determine the qualifications of such person to serve as a director of the Corporation, including, but not limited to, whether such person qualifies as an independent director under the Corporation’s categorical standards; and

(iii)          Shall set forth as to the stockholder giving the notice:

a.             The name and address (business and residence) of such person and of any of such person’s Stockholder Associated Persons (as defined in Section 5(a)(5) below);

b.             The number of shares of the Corporation such person and any of such person’s Stockholder Associated Persons beneficially own (as such term is defined by Section 13(d) of the Exchange Act) and any other ownership interest in the securities of the Corporation, whether economic or otherwise, including derivatives and hedges (including whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding has been made, the effect or intent of which is to increase or decrease the voting power of, such person or any of such person’s Stockholder Associated Persons with respect to the Corporation’s securities).

(3)           At any annual meeting of stockholders, only business that is properly brought before such annual meeting may be presented to and acted upon by the stockholders.  To be properly brought before an annual meeting of stockholders, business must be (i) specified in the notice of annual meeting (or in any supplement thereto) given by or at the direction of the Board of Directors, (ii) otherwise properly brought before such annual meeting by or at the direction of the Board of Directors, or (iii) otherwise properly brought before such annual meeting by any stockholder of the Corporation who is a stockholder of record at

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the time of giving of notice as provided for in Section 5(a)(4), who shall be entitled to vote for the proposed action at such annual meeting and who complies with the notice procedures set forth in Section 5(a)(4).

(4)           In addition to any other applicable requirements for business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice of such business in writing to the Secretary.  Such notice:

(i)            Shall be delivered to, or mailed and received at, the principal executive offices of the Corporation not less than sixty (60) days nor more than ninety (90) days prior to the first anniversary of the preceding year’s annual meeting; provided, however, in the event the date of the annual meeting is advanced by more than thirty (30) days or delayed by more than sixty (60) days from such anniversary date, then to be timely notice by a stockholder must be so delivered not earlier than the 90th day prior to such annual meeting and not later than the later of the 60th day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such annual meeting is first made; and

(ii)           Shall set forth as to each matter the stockholder proposes to bring before the meeting:

a.             A brief description of the business desired to be brought before the meeting; and

b.             The reason for bringing such business before the meeting; and

(iii)          Shall set forth as to the stockholder giving the notice:

a.             The name and address (business and residence) of such person and of any such person’s Stockholder Associated Persons;

b.             The number of shares of the Corporation such person and any of such person’s Stockholder Associated Persons beneficially own (as such term is defined by Section 13(d) of the Exchange Act) and any other ownership interest in the securities of the Corporation, whether economic or otherwise, including derivatives and hedges (including whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding has been made, the effect or intent of which is to increase or decrease the voting power of, such person or any of such person’s Stockholder Associated Persons with respect to the Corporation’s securities); and

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c.             Any material interest of such person or any of such person’s Stockholder Associated Persons in such business other than his interest as stockholder of the Corporation.

(5)           For the purposes of this Section 5, “Stockholder Associated Person” of any stockholder means (i) any person controlling, directly or indirectly, or acting in concert with, such stockholder, (ii) any owner of shares of stock of the Corporation owned of record or beneficially by such stockholder, and (iii) any person controlling, controlled by or under common control with such Stockholder Associated Person.

(6)           Notwithstanding anything in these Bylaws to the contrary, (i) no person shall be eligible for election as a director of the Corporation at an annual meeting of stockholders unless nominated in accordance with the procedures set forth in this Section 5(a), and (ii) no business will be conducted at an annual meeting of stockholders except in accordance with the procedures set forth in this Section 5(a).  In the event that a stockholder attempts to nominate a person for election as a director at an annual meeting of stockholders or bring business before an annual meeting of stockholders without complying with the provisions of this Section 5(a), the chairman of the meeting may, if the facts warrant, determine that the nomination was not properly made or that the business was not properly brought before the meeting in accordance with the foregoing procedures, declare the same at the meeting and declare that such defective nomination shall be disregarded or that such business will not be transacted.

(7)           Notwithstanding any notice of the annual meeting of stockholders sent to stockholders on behalf of the Corporation, a stockholder must comply with this Section 5(a) to make any nomination of a person for election as a director or to conduct business at any annual meeting of stockholders.  If the stockholder’s proposed business, including nomination of a person for election as a director, is the same or relates to business brought by the Corporation and included in its annual meeting notice, the stockholder is nevertheless required to comply and give its own separate and timely written notice to the Secretary pursuant to this Section 5(a).

(8)           Nothing in this Section 5(a) will be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act and nothing in Section 5(a) is modified by Rule 14a-8 under the Exchange Act.

(b)          Special Meetings.

(1)           Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (i) by or at the direction of the Board of Directors, or (ii) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the corporation who is a stockholder of record at the time of giving of notice as provided for in Section 5(b)(2), who shall be entitled to vote for the election of

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directors at the meeting and who complies with the notice procedures set forth in Section 5(b)(2).

(2)           Nominations of directors under Subparagraph (ii) in Section 5(b)(1) shall be made by timely notice of such nomination in writing to the Secretary.  Such notice shall contain the information required by Sections 5(a)(2)(ii) and 5(a)(2)(iii) and shall be delivered to, or mailed and received at, the principal offices of the corporation not earlier than the 90th day prior to such special meeting and not later than the later of the 60th day prior to such special meeting or the tenth day following the day on which public announcement of the date of such special meeting and of the nominees proposed by the Board of Directors to be elected at such special meeting is first made.

(3)           Notwithstanding anything in these Bylaws to the contrary, no person shall be eligible for election as a director of the corporation at a special meeting of stockholders unless nominated in accordance with the procedures set forth in this Section 5(b).  In the event that a stockholder attempts to nominate a person for election as a director at a special meeting of stockholders without complying with the provisions of this Section 5(b), the chairman of the meeting may, if the facts warrant, determine that the nomination was not properly made in accordance with the foregoing procedures, declare the same at the meeting and declare that such defective nomination shall be disregarded.

Section 6.               Quorum.  Any number of stockholders, together holding at least a majority of the capital stock of the Corporation issued and outstanding and entitled to vote, who will be present in person or represented by proxy at any meeting duly called, shall constitute a quorum for the transaction of all business, except as otherwise provided by law, by the Corporation’s Amended and Restated Certificate of Incorporation (as the same may be amended from time to time, including by any certificate of designation, the “Certificate of Incorporation”) or by these Bylaws.

Section 7.               Adjournment of Meetings.  If less than a quorum is in attendance at the time for which a meeting is called, the meeting may adjourn by a majority vote of the stockholders present or represented by proxy and entitled to vote at the meeting, without notice other than announcement at such meeting, until a quorum is in attendance.  Any meeting at which a quorum is present may also be adjourned in like manner and for the amount of time as may be determined by a majority vote of the stockholders present or represented by proxy and entitled to vote.  At any adjourned meeting at which a quorum is present, any business may be transacted and any corporate action may be taken which might have been transacted at the meeting as originally called.

Section 8.               Voting List.  The Secretary will have made, at least ten (10) days before every election of directors, a complete list of the stockholders entitled to vote, arranged in alphabetical order and showing the address of each stockholder and the number of shares of each stockholder.  The list will be open at either (a) a place within the city where the meeting is to be held, which place shall be specified in the notice of such meeting, or (b) if not so specified, at the place the meeting is to be held, for said ten (10) days, as well as at the time and place of such meeting, and will be subject to the inspection of any stockholder.

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Section 9.               Voting.  Each stockholder entitled to vote at any meeting may vote either in person or by proxy, but no proxy shall be voted on or after three years from its date, unless the proxy provides for a longer period.  Each stockholder entitled to vote will at every meeting of the stockholders be entitled to one vote for each share of stock (or such other number of votes as shall be provided in the Certificate of Incorporation, including any certificate of designation, with respect to any class or series of stock) registered in his or her name on the record of stockholders.  At all meetings of stockholders, all matters will be determined by the affirmative vote of the majority of shares present in person or by proxy and entitled to vote on the subject matter, except as otherwise provided by statute and except that directors shall be elected by a plurality vote.  Voting at meetings of stockholders need not be by written ballot.

Section 10.             Record Date of Stockholders.  The Board of Directors is authorized to fix in advance a date not exceeding sixty (60) days nor less than ten (10) days preceding the date of any meeting of stockholders, or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock will go into effect, or a date in connection with obtaining the consent of stockholders for any purpose, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any meeting of stockholders, and any adjournment of a meeting of stockholders, or entitled to receive payment of any dividend, or to any allotment of rights, or to exercise the rights in respect of any change, conversion or exchange of capital stock, or to give consent.  Only the stockholders that are stockholders of record on the date so fixed shall be entitled to notice of, and to vote at, the meeting of stockholders, and any adjournment of the meeting, or to receive payment of the dividend, or to receive the allotment of rights, or to exercise the rights, or to give the consent, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation, after the record date fixed in accordance with this Section 10.

Section 11.             Action Without Meeting.  Any action required or permitted to be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken (a) is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take the action at a meeting at which all shares entitled to vote on the action were present and voted, and (b) is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded.  Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested.  Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent will be given to those stockholders who have not consented in writing.

Section 12.             Conduct of Meetings.  The Chairman of the Board of Directors, or in his or her absence the Chief Executive Officer or any Vice President designated by the Chairman of the Board of Directors, shall preside at all regular or special meetings of stockholders.  To the maximum extent permitted by law, the presiding person will have the power to set procedural rules, including but not limited to rules respecting the time allotted to stockholders to speak, governing all aspects of the conduct of the meetings.  The Secretary of the Corporation will act as secretary of each meeting. In the absence of the Secretary, the chairman of the meeting will appoint any person to act as secretary of the meeting.

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ARTICLE III
DIRECTORS

Section 1.               Number and Qualifications.  The Board of Directors will consist of the number as may be fixed from time to time by resolution of the Board of Directors; provided, however, that such number shall be no fewer than three (3) and no more than fifteen (15).  The directors need not be stockholders.  No reduction in the number of directors constituting the Board of Directors shall result in the removal of any director from the board during such director’s term of office in the absence of stockholder action required by Section 3 of this Article III.

Section 2.               Election and Duration of Office.  Upon the effectiveness of the Corporation’s Amended and Restated Certificate of Incorporation by filing with the Secretary of State of the State of Delaware at or about the time of the closing of the Corporation’s initial public offering of its Common Stock, $0.01 par value per share (the “Effective Time”), the Board of Directors shall be divided into three classes to be designated as Class I, Class II and Class III.  The number of directorships shall be apportioned among the classes so as to maintain the classes as nearly equal in number as possible.  The Board of Directors, by resolution, shall designate the class in which each of the directors then in office shall serve upon such classification.  To the extent any additional directors are elected or appointed prior to the Corporation’s first annual meeting of stockholders after the Effective Time, the Board of Directors, by resolution, shall determine the class of such additional directors.  The directors in Class I shall be elected for a term expiring at the first annual meeting of stockholders after the Effective Time, the directors in Class II shall be elected for a term expiring at the second annual meeting of stockholders after the Effective Time, and the directors in Class III shall be elected for a term expiring at the third annual meeting of stockholders after the Effective Time.  Commencing at the first annual meeting of stockholders after the Effective Time, and at each annual meeting of stockholders thereafter, directors elected to succeed those directors whose terms expire in connection with such annual meeting of stockholders shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election.  All directors shall hold office until the expiration of their respective terms of office and until their successors shall have been elected and qualified.  A director whose term has expired may be re-elected for additional terms.

Section 3.               Removal and Resignation of Directors.  A director may be removed from office only for cause and only by vote of at least a majority of the outstanding stock entitled to vote in an election of directors.  A director may resign at any time upon written notice to the Corporation. Such resignation will take effect at the time specified in the resignation, or, if no time is specified, at the time of its receipt by the Chairman of the Board of Directors, Chief Executive Officer, President or Secretary.  The acceptance of a resignation will not be necessary to make it effective unless so specified in the resignation.

Section 4.               Filling of Vacancies.  Any vacancy on the Board of Directors, however resulting, may be filled only by a majority of the directors then in office, even if less than a quorum, or by a sole remaining director.  Any director elected to fill a vacancy shall hold office for a term that shall coincide with the of the class to which such director shall have been elected.  Any person elected to fill a vacancy will hold office, subject to the right of removal as provided in these Bylaws, until his or her successor is elected and qualified.

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Section 5.               Chairman of the Board of Directors.  The Chairman of the Board of Directors (if one is elected) will be a director and will preside at all meetings of the Board of Directors at which he or she is present, and will have the powers and perform the duties as may from time to time be assigned to him or her by the Board of Directors.  A director that is not otherwise an officer of the Corporation that is elected to be Chairman of the Board of Directors shall not be deemed an officer of the Corporation by virtue of such election.

Section 6.               Regular Meetings.  The Board of Directors will hold an annual meeting for the purpose of organization and the transaction of any business immediately after the annual meeting of the stockholders, provided a quorum of directors is present. Other regular meetings may be held at any time as may be determined from time to time by resolution of the Board of Directors.

Section 7.               Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board of Directors or by the Chief Executive Officer or President.

Section 8.               Notice and Place of Meetings.  Meetings of the Board of Directors may be held at the principal office of the Corporation, or at any other place as is stated in the notice of such meeting. Notice of any special meeting will be provided upon at least two (2) hours notice to each director, either personally, by telephone, mail, telecopy or e-mail, which notice shall set forth the date, time and place of such special meeting.  No notice of the annual meeting of the Board of Directors will be required if it is held immediately after the annual meeting of the stockholders and if a quorum is present and no notice of regular meetings will be required if set by the Board of Directors at least one week prior to such meeting.

Section 9.               Business Transacted at Meetings, etc.  Any business may be transacted and any corporate action may be taken at any regular or special meeting of the Board of Directors at which a quorum is present, whether the business or proposed action is stated in the notice of that meeting or not, unless special notice of such business or proposed action is required by statute.

Section 10.             Quorum.  A majority of the Board of Directors at any time in office will constitute a quorum.  At any meeting at which a quorum is present, the vote of a majority of the members present will be the act of the Board of Directors unless the act of a greater number is specifically required by law or by the Certificate of Incorporation or these Bylaws.  The members of the Board will act only as the Board and the individual members of the Board will not have any powers in their individual capacities.

Section 11.             Compensation.  The directors may receive a fixed annual fee for their services as directors, which will be set from time to time by resolution of the Board of Directors.  The Board of Directors may also receive a fixed fee and expenses for attendance at each meeting, as set from time to time by resolution of the Board of Directors.  Nothing herein contained shall preclude any director from serving the Corporation in any other capacity, as an officer, agent or otherwise, and receiving compensation therefor.

Section 12.             Action Without a Meeting.  Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee of the Board of Directors, may be taken without a meeting if all members of the Board of Directors or committee, as the case may

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be, consent to the action in writing, and the writing or writings are filed with the minutes of the proceedings of the Board of Directors or committee.

Section 13.             Meetings Through Use of Communications Equipment.  Members of the Board of Directors, or any committee designated by the Board of Directors, will, except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, have the power to participate in a meeting of the Board of Directors, or any committee, by means of a conference telephone or similar communications equipment by means of which all persons participating in  the meeting can hear each other, and this participation will constitute presence in person at the meeting.

ARTICLE IV
COMMITTEES

Section 1.               Executive Committee.  The Board of Directors may, by resolution passed by a majority of the entire Board, designate two or more of their number to constitute an Executive Committee to hold office at the pleasure of the Board of Directors, which committee will, during the intervals between meetings of the Board of Directors, have and exercise all of the powers of the Board of Directors in the management of the business and affairs of the Corporation, subject only to restrictions or limitations as the Board of Directors may from time to time specify, or as limited by the General Corporation Law of the state of Delaware, and will have power to authorize the seal of the Corporation to be affixed to all papers that may require it.

Any member of the Executive Committee may be removed at any time, with or without cause, by a resolution of a majority of the entire Board of Directors.

Any person ceasing to be a director shall ipso facto cease to be a member of the Executive Committee.

Any vacancy in the Executive Committee occurring from any cause whatsoever may be filled from among the directors by a resolution of a majority of the entire Board of Directors.

Section 2.               Audit Committee.  The Board of Directors shall, by resolution passed by a majority of the entire Board of Directors, designate the directors to constitute an Audit Committee.  The composition, responsibilities and procedures of the Audit Committee shall be as set forth in the Audit Committee Charter, as in effect from time to time pursuant to the resolution of the Board of Directors.

Any member of the Audit Committee may be removed at any time, with or without cause, by a resolution of a majority of the entire Board of Directors.

Any person ceasing to be a director shall ipso facto cease to be a member of the Audit Committee.

Any vacancy in the Audit Committee occurring from any cause whatsoever may be filled from among the directors by a resolution of a majority of the entire Board of Directors.

Section 3.               Other Committees.  Other committees, whose members need not be directors, may be appointed by the Board of Directors or the Executive Committee, which

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committees shall hold office for an amount of time and have powers and perform duties as may from time to time be assigned to them by the Board of Directors or the Executive Committee.

Any member of these committees may be removed at any time, with or without cause, by the Board of Directors or the Executive Committee.  Any vacancy in a committee occurring from any cause whatsoever may be filled by the Board of Directors or the Executive Committee.

Section 4.               Resignation.  Any member of a committee may resign at any time.  This resignation will be made in writing and will take effect at the time specified in the resignation, or, if no time is specified, at the time of its receipt by the Chairman of the Board of Directors, Chief Executive Officer, President or Secretary.  The acceptance of a resignation will not be necessary to make it effective unless so specified in the resignation.

Section 5.               Quorum.  One half of the members of a committee, but in no event less than two, shall constitute a quorum.  The act of a majority of the members of a committee present at any meeting at which a quorum is present shall be the act of such committee.  The members of a committee shall act only as a committee, and the individual members thereof shall not have any powers as such.

Section 6.               Record of Proceedings, etc.  Each committee will keep a record of its acts and proceedings, and will report the same to the Board of Directors when and as required by the Board of Directors.

Section 7.               Organization, Meetings, Notices, etc.  A committee may hold its meetings at the principal office of the Corporation, or at any other place that a majority of the committee may at any time agree upon.  Each committee may make rules as it deems expedient for the regulation and carrying on of its meetings and proceedings.  Unless otherwise ordered by the Executive Committee, or stated in a written charter for the committee, any notice of a meeting of a committee may be given in the manner described in Article III, Section 8 above.

Section 8.               Compensation.  The members of any committee will be entitled to such compensation as may be allowed them by resolution of the Board of Directors.

ARTICLE V
OFFICERS

Section 1.               Number.  The officers of the Corporation shall be a Chief Executive Officer and a President, and may include a Chief Financial Officer, one or more Vice Presidents, a Secretary, one or more Assistant Secretaries, a Treasurer, and one or more Assistant Treasurers, and such other officers as may be appointed in accordance with the provisions of Section 3 of this Article V.  The Board of Directors in its discretion may also elect a Chairman of the Board of Directors.

Section 2.               Election, Term of Office and Qualifications.  The officers, except as provided in Section 3 of this Article V, will be chosen annually by the Board of Directors.  Each officer will, except as otherwise provided in the Bylaws, hold office until his or her successor is chosen and qualified.  The Chairman of the Board of Directors, if any, will be a director of the Corporation, and should he or she cease to be a director, he or she shall ipso facto cease to be

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Chairman.  Except as otherwise provided by law, any number of offices may be held by the same person.

Section 3.               Other Officers.  Other officers, including one or more additional Vice Presidents, Assistant Secretaries or Assistant Treasurers, may from time to time be appointed by the Board of Directors, which other officers shall have powers and perform duties as may be assigned to them by the Board of Directors or the officer or committee appointing them.

Section 4.               Removal of Officers.  Any officer of the Corporation may be removed from office, with or without cause, by a vote of a majority of the Board of Directors.

Section 5.               Resignation.  Any officer of the Corporation may resign at any time.  This resignation shall be in writing and take effect at the time specified in the resignation, or if no time is specified, at the time of its receipt by the Chief Executive Officer, President or Secretary.  The acceptance of a resignation shall not be necessary in order to make it effective, unless so specified in the resignation.

Section 6.               Filling of Vacancies.  A vacancy in any office may be filled by the Board of Directors or by the authority appointing the predecessor in such office.  The Board of Directors may choose not to fill any office for any period as it may deem advisable.

Section 7.               Compensation.  The compensation of the officers will be fixed by the Board of Directors, or by any committee upon whom power in that regard may be conferred by the Board of Directors.

Section 8.               Chief Executive Officer.  The Chief Executive Officer will, when present, preside at all meetings of the stockholders.  The Chief Executive Officer will have power to call special meetings of the stockholders or of the Board of Directors or of the Executive Committee at any time.  He or she will be the chief executive officer of the Corporation, and will have the general direction of the business, affairs and property of the Corporation, and of its several officers, and will have and exercise all the powers and discharge the duties as usually pertain to the office of Chief Executive Officer including such duties as may be prescribed from time to time by the Board of Directors.

Section 9.               President.  The President will, when present, preside at all meetings of the stockholders at which the Chief Executive Officer is not present.  The President will have power to call special meetings of the stockholders or of the Board of Directors or of the Executive Committee at any time.  He or she will assist the Chief Executive Officer (and, in the Chief Executive Officer’s absence, act as Chief Executive Officer) in the general direction of the business, affairs and property of the Corporation, and of its several officers, and will have and exercise all the powers and discharge the duties as usually pertain to the office of President, subject to the direction of the Chief Executive Officer.

Section 10.             Vice Presidents.  The Vice Presidents, or any of them, will, subject to the direction of the Board of Directors, at the request of the Chief Executive Officer or in the absence of both the Chief Executive Officer and the President, or in case of their inability to perform their duties from any cause, perform the duties of the Chief Executive Officer and, when so acting, will have all the powers of, and be subject to all restrictions upon, the Chief Executive Officer.  The Vice Presidents will also perform the other duties that may be assigned to them by

12

the Board of Directors, and the Board of Directors may determine the order of priority among them.

Section 11.             Chief Financial Officer.  Subject to the direction of the Board of Directors, the Chief Executive Officer and the President, the Chief Financial Officer will have and exercise all the powers and discharge the duties as usually pertain to the office of Chief Financial Officer.

Section 12.             Secretary.  The Secretary will keep the minutes of all meetings of the stockholders and all meetings of the Board of Directors and any committee in books provided for that purpose.  He or she may affix the seal of the Corporation to all instruments to be executed on behalf of the Corporation under its seal.  The Secretary will perform the duties and have all other powers that are incident to the office of Secretary, or as may from time to time be assigned to him or her by the Board of Directors, or as are prescribed by these Bylaws.

Section 13.             Treasurer.  The Treasurer will have custody of all the funds and securities of the Corporation which may be delivered into his or her possession.  He or she may endorse on behalf of the Corporation for collection, checks, notes and other obligations and will deposit the same to the credit of the Corporation in a depository or depositories of the Corporation, and may sign all receipts and vouchers for payments made to the Corporation.  He or she will enter or cause to be entered regularly in the books of the Corporation kept for that purpose, full and accurate accounts of all monies received and paid on account of the Corporation and whenever required by the Board of Directors will render statements of the accounts.  The Treasurer will perform the duties and have all other powers that are incident to the office of Treasurer or that are assigned to him or her by the Board of Directors.

ARTICLE VI
CAPITAL STOCK

Section 1.               Issue of Certificates of Stock.  The shares of capital stock of the Corporation may be certificated or uncertificated, as provided under the General Corporation Law of the State of Delaware.  Each stockholder, upon written request to the transfer agent or registrar of the Corporation, shall be entitled to a certificate of capital stock of the Corporation.  Certificates of capital stock will be in the form approved by the Board of Directors.  Certificates will be numbered in the order of their issue and will be signed by the Chairman of the Board of Directors, or the President or a Vice-President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, and the seal of the Corporation or a facsimile of the seal will be impressed or affixed or reproduced on the certificates, provided, however, that the signature of the Chairman of the Board of Directors, President, Vice President, Secretary, Assistant Secretary, Treasurer or Assistant Treasurer may be facsimile.  In case any officer or officers who have signed, or whose facsimile signature or signatures have been used on any certificate or certificates ceases to be an officer of the Corporation, whether because of death, resignation or otherwise, before that certificate or certificates are delivered by the Corporation, that certificate or certificates may nevertheless be adopted by the Corporation and be issued and delivered as though the person or persons who signed that certificate or certificates, or whose facsimile signature or signatures is used thereon have not ceased to be an officer or officers of the Corporation.

Section 2.               Registration and Transfer of Shares.  The shares of capital stock of the Corporation shall be issued in registered form.  The name of each person owning a share of the

13

capital stock of the Corporation shall be entered on the books of the Corporation together with the number of shares held by him, and, if such shares are certificated, the numbers of the certificates covering such shares and the dates of issue of such certificates.  The shares of stock of the Corporation shall be transferable on the books of the Corporation by the holders thereof in person, or by their duly authorized attorneys or legal representatives, if such shares are certificated, on surrender and cancellation of certificates for a like number of shares, accompanied by an assignment or power of transfer endorsed thereon or attached thereto, duly executed, or upon proper instructions from the holder of uncertificated shares, in each case with such proof of the authenticity of the signature as the Corporation or its agents may reasonably require.  A record shall be made of each transfer.  A person in whose name shares of stock stand on the books of the Corporation shall be deemed the owner thereof as regards the Corporation, and the Corporation shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Delaware.

Section 3.               Lost, Destroyed and Mutilated Certificates.  The holder of any stock of the Corporation, if such shares are certificated, will immediately notify the Corporation of any loss, theft, destruction or mutilation of the certificates.  The Corporation may issue a new certificate of stock in the place of any certificate previously issued by it and alleged to have been lost, stolen or destroyed, and the Board of Directors may, in its discretion, require the owner of the lost, stolen or destroyed certificate, or his or her legal representatives, to give the Corporation a bond, in such sum not exceeding double the value of the stock and with such surety or sureties as they may require, to indemnify it against any claim that may be made against it by reason of the issue of the new certificate and against all other liability in the premises, or may remit the owner to any remedy or remedies he or she may have under the laws of the State of Delaware.

Section 4.               Transfer Agent and Registrar; Regulations.  The Corporation shall, if and whenever the Board of Directors shall so determine, maintain one or more transfer offices or agencies, each in the charge of a transfer agent designated by the Board of Directors, where the shares of the capital stock of the Corporation shall be directly transferable, and also one or more registry offices, each in the charge of a registrar designated by the Board of Directors, where such shares of stock shall be registered, and no certificate for shares of the capital stock of the Corporation, in respect of which a Registrar and/or Transfer Agent shall have been designated, shall be valid unless countersigned by such Transfer Agent and registered by such Registrar, if any.  The Board of Directors shall also make such additional rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates for shares of the capital stock of the Corporation.

Section 5.               Beneficial Owners.  The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or whether or not it shall have express or other notice thereof, except as otherwise provided by law.

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ARTICLE VII
DIVIDENDS, SURPLUS, ETC.

Section 1.               General Discretion of Directors.  The Board of Directors will have power to fix and vary the amount to be set aside or reserved as working capital of the Corporation, or as reserves, or for other proper purposes of the Corporation, and, subject to the requirements of the Certificate of Incorporation, to determine whether any part of the surplus or net profits of the Corporation will be declared as dividends and paid to the stockholders, and to fix the date or dates for the payment of dividends.

ARTICLE VIII
MISCELLANEOUS PROVISIONS

Section 1.               Fiscal Year.  The fiscal year of the Corporation shall consist of 52 or 53 weeks ending on the Saturday closest to December 31 in each year.

Section 2.               Corporate Seal.  The corporate seal will be in the form approved by the Board of Directors and may be altered at their pleasure.  The corporate seal may be used by causing it or a facsimile of the seal to be impressed or affixed or reproduced or otherwise.

Section 3.               Notices.  Except as otherwise expressly provided, any notice required to be given by these Bylaws will be sufficient if given by depositing the same in a post office or letter box in a sealed postpaid wrapper addressed to the person entitled to the notice at his or her address, as the same appears upon the books of the Corporation, or by telegraphing or cabling the same to that person at that address, or by facsimile transmission to a number designated upon the books of the Corporation, if any; and the notice will be deemed to be given at the time it is mailed, telegraphed or cabled, or sent by facsimile.

Section 4.               Waiver of Notice.  Any stockholder or director may at any time, by writing or by telegraph, cable or facsimile transmission, waive any notice required to be given under these Bylaws, and if any stockholder or director is present at any meeting his or her presence will constitute a waiver of notice.

Section 5.               Checks, Drafts, etc.  All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation, will be signed by an officer or officers, agent or agents of the Corporation, and in such manner, as will from time to time be designated by resolution of the Board of Directors.

Section 6.               Voting Stock of Other Corporations.  Except as otherwise ordered by the Board of Directors or the Executive Committee, the Chief Executive Officer, the President and the Treasurer have full power and authority on behalf of the Corporation to attend and to act and to vote at any meeting of the stockholders of any corporation of which the Corporation is a stockholder, and to execute a proxy to any other person to represent the Corporation at any meeting, and at any meeting of the stockholders of any corporation of which the Corporation is a stockholder.  The Chief Executive Officer, the President or the Treasurer or the holder of any proxy, as the case may be, will possess and may exercise any and all rights and powers incident to ownership of the stock which the Corporation might have possessed and exercised if present.  The Board of Directors or the Executive Committee may from time to time confer like powers upon any other person or persons.

15

ARTICLE IX
AMENDMENTS

The Board of Directors will have the power to make, rescind, alter, amend and repeal these Bylaws, provided, however, that the stockholders will have power to rescind, alter, amend or repeal any Bylaws made by the Board of Directors, and to enact Bylaws that will not be rescinded, altered, amended or repealed by the Board of Directors.  Notice of the proposal to make, amend or repeal any provision of these Bylaws will be included in the notice of any meeting of the stockholders or the Board of Directors at which the action is to be considered.

Dated:  October 30, 2012

16

EX-31.1

Exhibit 31.1

POLYPORE INTERNATIONAL, INC.

CHIEF EXECUTIVE OFFICER CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert B. Toth, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Polypore International, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 1, 2012	/s/ Robert B. Toth
	Robert B. Toth
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

POLYPORE INTERNATIONAL, INC.

CHIEF FINANCIAL OFFICER CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Lynn Amos, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Polypore International, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 1, 2012	/s/ Lynn Amos
	Lynn Amos
	Chief Financial Officer

EX-32.1

Exhibit 32.1

POLYPORE INTERNATIONAL, INC.

CHIEF EXECUTIVE OFFICER CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Polypore International, Inc. (the “Company”) on Form 10-Q for the period ended September 29, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Robert B. Toth, President and Chief Executive Officer of the Company, does hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 1, 2012	/s/ Robert B. Toth
	Robert B. Toth
	President and Chief Executive Officer

EX-32.2

Exhibit 32.2

POLYPORE INTERNATIONAL, INC.

CHIEF FINANCIAL OFFICER CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Polypore International, Inc. (the “Company”) on Form 10-Q for the period ended September 29, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Lynn Amos, Chief Financial Officer of the Company, does hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 1, 2012	/s/ Lynn Amos
	Lynn Amos
	Chief Financial Officer

XML

Financial Statements of Guarantors (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 29, 2012	Oct. 01, 2011	Sep. 29, 2012	Oct. 01, 2011
Net income	$ 14,232	$ 23,605	$ 53,486	$ 78,793
Foreign currency translation adjustment	8,532	(16,447)	2,291	(3,583)
Foreign currency translation adjustment, income tax benefit (expense)	(438)	2,299	172	(22)
Change in net actuarial loss and prior service credit	(272)	443	33	(73)
Comprehensive income	22,492	7,601	55,810	75,137
Combined Guarantor Subsidiaries
Net income	8,949	17,525	34,083	53,307
Comprehensive income	8,949	17,525	34,083	53,307
Combined Non-Guarantor Subsidiaries
Net income	12,137	8,914	45,515	39,545
Foreign currency translation adjustment	9,365	(19,197)	3,072	(2,687)
Change in net actuarial loss and prior service credit	(272)	443	33	(73)
Comprehensive income	21,230	(9,840)	48,620	36,785
The Company
Net income	14,232	23,605	53,486	78,793
Foreign currency translation adjustment	(644)	1,387	138	(747)
Equity in earnings of subsidiaries	8,904	(17,391)	2,186	(2,909)
Comprehensive income	22,492	7,601	55,810	75,137
Eliminations
Net income	(21,086)	(26,439)	(79,598)	(92,852)
Foreign currency translation adjustment	(189)	1,363	(919)	(149)
Equity in earnings of subsidiaries	(8,904)	17,391	(2,186)	2,909
Comprehensive income	$ (30,179)	$ (7,685)	$ (82,703)	$ (90,092)

XML

Related Party Transactions (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 29, 2012	Oct. 01, 2011	Sep. 29, 2012	Oct. 01, 2011	Dec. 31, 2011
Related party transactions
Ownership percentage in related party	100.00%		100.00%
German Subsidiary | All related parties
Related party transactions
Equity method investment	$ 634,000		$ 634,000		$ 588,000
Charges from the affiliates for work performed	245,000	284,000	930,000	797,000
Amounts due to the affiliates	$ 92,000		$ 92,000		$ 107,000
German Subsidiary | Patent and trademark service provider
Related party transactions
Ownership percentage in related party	33.00%		33.00%
German Subsidiary | Research company
Related party transactions
Ownership percentage in related party	25.00%		25.00%

XML

Financial Statements of Guarantors (Tables)

9 Months Ended

Sep. 29, 2012

Financial Statements of Guarantors

Condensed consolidating balance sheet

Condensed consolidating balance sheet
September 29, 2012

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries		The Company		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	—	$	42,662	$	9,927	$	—		$	52,589
Accounts receivable, net	42,221		85,907		—		—			128,128
Inventories	43,421		74,933		—		—			118,354
Prepaid and other	5,742		19,658		656		—			26,056
Total current assets	91,384		223,160		10,583		—			325,127
Due from affiliates	521,076		332,759		469,469		(1,323,304		)	—
Investment in subsidiaries	190,888		322,309		619,995		(1,133,192		)	—
Property, plant and equipment, net	329,754		300,401		—		—			630,155
Goodwill	—		—		469,319		—			469,319
Intangibles and loan acquisition costs, net	—		—		125,064		—			125,064
Other	157		8,238		—		—			8,395
Total assets	$	1,133,259	$	1,186,867	$	1,694,430	$	(2,456,496	)	$	1,558,060
Liabilities and shareholders’ equity
Accounts payable and accrued liabilities	$	30,595	$	46,072	$	10,254	$	—		$	86,921
Current portion of debt	—		—		65,000		—			65,000
Total current liabilities	30,595		46,072		75,254		—			151,921
Due to affiliates	601,127		317,301		404,876		(1,323,304		)	—
Debt, less current portion	—		—		646,250		—			646,250
Pension obligations, less current portion	—		80,587		—		—			80,587
Deferred income taxes and other	58,624		52,628		147		—			111,399
Shareholders’ equity	442,913		690,279		567,903		(1,133,192		)	567,903
Total liabilities and shareholders’ equity	$	1,133,259	$	1,186,867	$	1,694,430	$	(2,456,496	)	$	1,558,060

Condensed consolidating balance sheet
December 31, 2011

(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 obligations, less current portion	—		78,086		—		—			78,086
Deferred income taxes and other	47,140		45,476		146		—			92,762
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

Condensed consolidating statement of income

Condensed consolidating statement of income
For the three months ended September 29, 2012

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Net sales	$	54,322		$	123,296	$	—		$	—		$	177,618
Cost of goods sold	24,626			93,750		—			—			118,376
Gross profit	29,696			29,546		—			—			59,242
Selling, general and administrative expenses	14,914			10,708		3,947			—			29,569
Operating income (loss)	14,782			18,838		(3,947		)	—			29,673
Interest expense and other	(2,219		)	2,894		9,458			—			10,133
Equity in earnings of subsidiaries	—			—		(21,086		)	21,086			—
Income before income taxes	17,001			15,944		7,681			(21,086		)	19,540
Income taxes	8,052			3,807		(6,551		)	—			5,308
Net income	$	8,949		$	12,137	$	14,232		$	(21,086	)	$	14,232

Condensed consolidating statement of income
For the three months ended October 1, 2011

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Net sales	$	71,842		$	118,220	$	—		$	—		$	190,062
Cost of goods sold	23,200			89,958		—			—			113,158
Gross profit	48,642			28,262		—			—			76,904
Selling, general and administrative expenses	18,315			12,629		2,142			—			33,086
Operating income (loss)	30,327			15,633		(2,142		)	—			43,818
Interest expense and other	(3,007		)	1,949		9,205			—			8,147
Equity in earnings of subsidiaries	—			—		(26,439		)	26,439			—
Income before income taxes	33,334			13,684		15,092			(26,439		)	35,671
Income taxes	15,809			4,770		(8,513		)	—			12,066
Net income	$	17,525		$	8,914	$	23,605		$	(26,439	)	$	23,605

Condensed consolidating statement of income
For the nine months ended September 29, 2012

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Net sales	$	163,766		$	373,371	$	—		$	—		$	537,137
Cost of goods sold	62,757			273,874		—			—			336,631
Gross profit	101,009			99,497		—			—			200,506
Selling, general and administrative expenses	48,906			34,133		12,446			—			95,485
Operating income (loss)	52,103			65,364		(12,446		)	—			105,021
Interest expense and other	(8,517		)	6,595		27,601			—			25,679
Write-off of loan acquisition costs associated with refinancing of senior credit agreement	—			—		2,478			—			2,478
Equity in earnings of subsidiaries	—			—		(79,598		)	79,598			—
Income before income taxes	60,620			58,769		37,073			(79,598		)	76,864
Income taxes	26,537			13,254		(16,413		)	—			23,378
Net income	$	34,083		$	45,515	$	53,486		$	(79,598	)	$	53,486

Condensed consolidating statement of income
For the nine months ended October 1, 2011

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Net sales	$	206,760		$	365,352	$	—		$	—		$	572,112
Cost of goods sold	64,821			263,407		—			—			328,228
Gross profit	141,939			101,945		—			—			243,884
Selling, general and administrative expenses	54,447			39,313		4,369			—			98,129
Operating income (loss)	87,492			62,632		(4,369		)	—			145,755
Interest expense and other	(5,921		)	5,524		26,610			—			26,213
Equity in earnings of subsidiaries	—			—		(92,852		)	92,852			—
Income before income taxes	93,413			57,108		61,873			(92,852		)	119,542
Income taxes	40,106			17,563		(16,920		)	—			40,749
Net income	$	53,307		$	39,545	$	78,793		$	(92,852	)	$	78,793

Condensed consolidating statement of comprehensive income

Condensed consolidating statement of comprehensive income
For the three months ended September 29, 2012

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net income	$	8,949	$	12,137		$	14,232		$	(21,086	)	$	14,232
Foreign currency translation adjustment, net of income tax expense of $438	—		9,365			(644		)	(189		)	8,532
Change in net actuarial loss and prior service credit	—		(272		)	—			—			(272		)
Equity in earnings of subsidiaries	—		—			8,904			(8,904		)	—
Comprehensive income	$	8,949	$	21,230		$	22,492		$	(30,179	)	$	22,492

Condensed consolidating statement of comprehensive income
For the three months ended October 1, 2011

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net income	$	17,525	$	8,914		$	23,605		$	(26,439	)	$	23,605
Foreign currency translation adjustment, net of income tax benefit of $2,299	—		(19,197		)	1,387			1,363			(16,447		)
Change in net actuarial loss and prior service credit	—		443			—			—			443
Equity in earnings of subsidiaries	—		—			(17,391		)	17,391			—
Comprehensive income (loss)	$	17,525	$	(9,840	)	$	7,601		$	(7,685	)	$	7,601

Condensed consolidating statement of comprehensive income
For the nine months ended September 29, 2012

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries		The Company		Eliminations			Consolidated
Net income	$	34,083	$	45,515	$	53,486	$	(79,598	)	$	53,486
Foreign currency translation adjustment, net of income tax benefit of $172	—		3,072		138		(919		)	2,291
Change in net actuarial loss and prior service credit	—		33		—		—			33
Equity in earnings of subsidiaries	—		—		2,186		(2,186		)	—
Comprehensive income	$	34,083	$	48,620	$	55,810	$	(82,703	)	$	55,810

Condensed consolidating statement of comprehensive income
For the nine months ended October 1, 2011

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net income	$	53,307	$	39,545		$	78,793		$	(92,852	)	$	78,793
Foreign currency translation adjustment, net of income tax expense of $22	—		(2,687		)	(747		)	(149		)	(3,583		)
Change in net actuarial loss and prior service credit	—		(73		)	—			—			(73		)
Equity in earnings of subsidiaries	—		—			(2,909		)	2,909			—
Comprehensive income	$	53,307	$	36,785		$	75,137		$	(90,092	)	$	75,137

Condensed consolidating statement of cash flows

Condensed consolidating statement of cash flows
For the nine months ended September 29, 2012

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	72,194		$	35,600		$	(20,398	)	$	(799	)	$	86,597
Investing activities:
Purchases of property, plant and equipment, net	(107,691		)	(15,991		)	—			—			(123,682		)
Net cash used in investing activities	(107,691		)	(15,991		)	—			—			(123,682		)
Financing activities:
Proceeds from new senior credit agreement	—			—			350,000			—			350,000
Principal payments in connection with refinancing of senior credit agreement	—			(41,865		)	(300,426		)	—			(342,291		)
Principal payments on debt	—			(117		)	(4,557		)	—			(4,674		)
Proceeds from stock option exercises	—			—			635			—			635
Intercompany transactions, net	35,497			(413		)	(35,883		)	799			—
Other	—			—			(6,523		)	—			(6,523		)
Net cash provided by (used in) financing activities	35,497			(42,395		)	3,246			799			(2,853		)
Effect of exchange rate changes on cash and cash equivalents	—			(47		)	—			—			(47		)
Net decrease in cash and cash equivalents	—			(22,833		)	(17,152		)	—			(39,985		)
Cash and cash equivalents at beginning of period	—			65,495			27,079			—			92,574
Cash and cash equivalents at end of period	$	—		$	42,662		$	9,927		$	—		$	52,589

Condensed consolidating statement of cash flows
For the nine months ended October 1, 2011

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	97,315		$	46,692		$	(23,627	)	$	1,796		$	122,176
Investing activities:
Purchases of property, plant and equipment, net	(74,901		)	(36,418		)	—			—			(111,319		)
Net cash used in investing activities	(74,901		)	(36,418		)	—			—			(111,319		)
Financing activities:
Principal payments on debt	—			(369		)	(3,229		)	—			(3,598		)
Proceeds from stock option exercises	—			—			6,639			—			6,639
Intercompany transactions, net	(22,414		)	3,996			20,214			(1,796		)	—
Other	—			—			(87		)	—			(87		)
Net cash provided by (used in) financing activities	(22,414		)	3,627			23,537			(1,796		)	2,954
Effect of exchange rate changes on cash and cash equivalents	—			426			—			—			426
Net increase (decrease) in cash and cash equivalents	—			14,327			(90		)	—			14,237
Cash and cash equivalents at beginning of period	—			58,172			31,783			—			89,955
Cash and cash equivalents at end of period	$	—		$	72,499		$	31,693		$	—		$	104,192

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Financial Statements of Guarantors (Details) (USD $) In Thousands, unless otherwise specified	Sep. 29, 2012	Dec. 31, 2011	Oct. 01, 2011	Jan. 01, 2011
Financial Statements of Guarantors
Ownership percentage in domestic subsidiaries	100.00%
Assets
Cash and cash equivalents	$ 52,589	$ 92,574	$ 104,192	$ 89,955
Accounts receivable, net	128,128	134,016
Inventories	118,354	90,444
Prepaid and other	26,056	24,731
Total current assets	325,127	341,765
Property, plant and equipment, net	630,155	527,778
Goodwill	469,319	469,319
Intangibles and loan acquisition costs, net	125,064	133,586
Other	8,395	9,431
Total assets	1,558,060	1,481,879
Liabilities and shareholders' equity
Accounts payable and accrued liabilities	86,921	96,239
Income taxes payable		5,881
Current portion of debt	65,000	3,682
Total current liabilities	151,921	105,802
Debt, less current portion	646,250	705,836
Pension obligations, less current portion	80,587	78,086
Deferred income taxes and other	111,399	92,762
Shareholders' equity	567,903	499,393
Total liabilities and shareholders' equity	1,558,060	1,481,879
Combined Guarantor Subsidiaries
Assets
Accounts receivable, net	42,221	51,831
Inventories	43,421	31,603
Prepaid and other	5,742	6,345
Total current assets	91,384	89,779
Due from affiliates	521,076	549,943
Investment in subsidiaries	190,888	177,143
Property, plant and equipment, net	329,754	235,051
Other	157	157
Total assets	1,133,259	1,052,073
Liabilities and shareholders' equity
Accounts payable and accrued liabilities	30,595	41,301
Total current liabilities	30,595	41,301
Due to affiliates	601,127	554,230
Deferred income taxes and other	58,624	47,140
Shareholders' equity	442,913	409,402
Total liabilities and shareholders' equity	1,133,259	1,052,073
Combined Non-Guarantor Subsidiaries
Assets
Cash and cash equivalents	42,662	65,495	72,499	58,172
Accounts receivable, net	85,907	82,185
Inventories	74,933	58,841
Prepaid and other	19,658	18,324
Total current assets	223,160	224,845
Due from affiliates	332,759	282,244
Investment in subsidiaries	322,309	321,215
Property, plant and equipment, net	300,401	292,727
Other	8,238	9,274
Total assets	1,186,867	1,130,305
Liabilities and shareholders' equity
Accounts payable and accrued liabilities	46,072	51,391
Income taxes payable		5,231
Current portion of debt		453
Total current liabilities	46,072	57,075
Due to affiliates	317,301	247,424
Debt, less current portion		42,832
Pension obligations, less current portion	80,587	78,086
Deferred income taxes and other	52,628	45,476
Shareholders' equity	690,279	659,412
Total liabilities and shareholders' equity	1,186,867	1,130,305
The Company
Assets
Cash and cash equivalents	9,927	27,079	31,693	31,783
Prepaid and other	656	62
Total current assets	10,583	27,141
Due from affiliates	469,469	377,981
Investment in subsidiaries	619,995	570,456
Goodwill	469,319	469,319
Intangibles and loan acquisition costs, net	125,064	133,586
Total assets	1,694,430	1,578,483
Liabilities and shareholders' equity
Accounts payable and accrued liabilities	10,254	3,547
Income taxes payable		650
Current portion of debt	65,000	3,229
Total current liabilities	75,254	7,426
Due to affiliates	404,876	408,514
Debt, less current portion	646,250	663,004
Deferred income taxes and other	147	146
Shareholders' equity	567,903	499,393
Total liabilities and shareholders' equity	1,694,430	1,578,483
Eliminations
Assets
Due from affiliates	(1,323,304)	(1,210,168)
Investment in subsidiaries	(1,133,192)	(1,068,814)
Total assets	(2,456,496)	(2,278,982)
Liabilities and shareholders' equity
Due to affiliates	(1,323,304)	(1,210,168)
Shareholders' equity	(1,133,192)	(1,068,814)
Total liabilities and shareholders' equity	$ (2,456,496)	$ (2,278,982)

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Inventories

9 Months Ended

Sep. 29, 2012

Inventories

Inventories

3.             Inventories

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

(in thousands)	September 29, 2012		December 31, 2011
Raw materials	$	44,674	$	35,423
Work-in-process	31,609		18,351
Finished goods	42,071		36,670
	$	118,354	$	90,444

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Fair Value of Financial Instruments (Details) (7.5% senior notes, USD $)	Sep. 29, 2012	Dec. 31, 2011
Fair Value of Financial Instruments
Debt instrument, interest rate (as a percent)	7.50%	7.50%
Level one
Fair Value of Financial Instruments
Debt instrument, interest rate (as a percent)	7.50%	7.50%
Fair value of 7.5% senior notes	393,288,000

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Debt (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 29, 2012	Dec. 31, 2011
Minimum scheduled principal repayments of the term loan
Principal repayments of the term loan	$ 711,250	$ 709,518
Term loan facility
Minimum scheduled principal repayments of the term loan
2012	3,750
2013	15,000
2014	18,750
2015	26,250
2016	37,500
2017	195,000
Principal repayments of the term loan	$ 296,250	$ 344,518

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Pension Plans (Details) (Pension Plans, USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 29, 2012	Oct. 01, 2011	Sep. 29, 2012	Oct. 01, 2011
Pension Plans
Components of net periodic benefit cost:
Service cost	$ 405	$ 395	$ 1,241	$ 1,174
Interest cost	1,153	1,276	3,544	3,803
Expected return on plan assets	(205)	(231)	(631)	(689)
Amortization of prior service cost	(12)	(14)	(38)	(41)
Recognized net actuarial loss	114	19	350	58
Net periodic benefit cost	$ 1,455	$ 1,445	$ 4,466	$ 4,305

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Environmental Matters (Details) (Membrana GmbH, USD $)	9 Months Ended
	Sep. 29, 2012	Dec. 31, 2011
Membrana GmbH
Environmental Matters
Environmental reserve	$ 8,850,000	$ 11,957,000
Period over which expenditures will be made (in months)	P12M
Amounts receivable under the indemnification agreements	$ 7,774,000	$ 12,099,000

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Recent Accounting Pronouncements

9 Months Ended

Sep. 29, 2012

Recent Accounting Pronouncements

Recent Accounting Pronouncements

2.             Recent Accounting Pronouncements

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. The Company will adopt this guidance in performing its annual goodwill impairment test as of the first day of the fourth quarter of 2012.  The adoption of this guidance is not expected to have an impact on the Company’s financial condition or results of operations.

In July 2012, the FASB issued guidance on the testing of indefinite-lived intangible assets for impairment. The guidance will allow companies the option to perform a qualitative assessment to determine if it is more likely than not that an indefinite-lived intangible asset might be impaired and whether it is necessary to perform the quantitative impairment test required under current accounting standards. The guidance is effective for impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. The adoption of this guidance is not expected to have an impact on the Company’s financial condition or results of operations.

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Government Grants (Details) (USD $)	9 Months Ended		12 Months Ended
	Sep. 29, 2012	Oct. 01, 2011	Jan. 01, 2011
Government Grants
Grant awarded by DOE			$ 49,264,000
Grant offset to property, plant and equipment	2,236,000	18,693,000
Grant offset to operating expenses	$ 1,497,000	$ 2,819,000

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Financial Statements of Guarantors (Details 4) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 29, 2012	Oct. 01, 2011
Operating activities:
Net cash provided by (used in) operating activities	$ 86,597	$ 122,176
Investing activities:
Purchases of property, plant and equipment, net	(123,682)	(111,319)
Net cash used in investing activities	(123,682)	(111,319)
Financing activities:
Proceeds from new senior credit agreement	350,000
Principal payments in connection with refinancing of senior credit agreement	(342,291)
Principal payments on debt	(4,674)	(3,598)
Proceeds from stock option exercises	635	6,639
Other	(6,523)	(87)
Net cash provided by (used in) financing activities	(2,853)	2,954
Effect of exchange rate changes on cash and cash equivalents	(47)	426
Net increase (decrease) in cash and cash equivalents	(39,985)	14,237
Cash and cash equivalents at beginning of period	92,574	89,955
Cash and cash equivalents at end of period	52,589	104,192
Combined Guarantor Subsidiaries
Operating activities:
Net cash provided by (used in) operating activities	72,194	97,315
Investing activities:
Purchases of property, plant and equipment, net	(107,691)	(74,901)
Net cash used in investing activities	(107,691)	(74,901)
Financing activities:
Intercompany transactions, net	35,497	(22,414)
Net cash provided by (used in) financing activities	35,497	(22,414)
Combined Non-Guarantor Subsidiaries
Operating activities:
Net cash provided by (used in) operating activities	35,600	46,692
Investing activities:
Purchases of property, plant and equipment, net	(15,991)	(36,418)
Net cash used in investing activities	(15,991)	(36,418)
Financing activities:
Principal payments in connection with refinancing of senior credit agreement	(41,865)
Principal payments on debt	(117)	(369)
Intercompany transactions, net	(413)	3,996
Net cash provided by (used in) financing activities	(42,395)	3,627
Effect of exchange rate changes on cash and cash equivalents	(47)	426
Net increase (decrease) in cash and cash equivalents	(22,833)	14,327
Cash and cash equivalents at beginning of period	65,495	58,172
Cash and cash equivalents at end of period	42,662	72,499
The Company
Operating activities:
Net cash provided by (used in) operating activities	(20,398)	(23,627)
Financing activities:
Proceeds from new senior credit agreement	350,000
Principal payments in connection with refinancing of senior credit agreement	(300,426)
Principal payments on debt	(4,557)	(3,229)
Proceeds from stock option exercises	635	6,639
Intercompany transactions, net	(35,883)	20,214
Other	(6,523)	(87)
Net cash provided by (used in) financing activities	3,246	23,537
Net increase (decrease) in cash and cash equivalents	(17,152)	(90)
Cash and cash equivalents at beginning of period	27,079	31,783
Cash and cash equivalents at end of period	9,927	31,693
Eliminations
Operating activities:
Net cash provided by (used in) operating activities	(799)	1,796
Financing activities:
Intercompany transactions, net	799	(1,796)
Net cash provided by (used in) financing activities	$ 799	$ (1,796)

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Condensed consolidated balance sheets (USD $) In Thousands, unless otherwise specified	Sep. 29, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 52,589	$ 92,574
Accounts receivable, net	128,128	134,016
Inventories	118,354	90,444
Deferred income taxes	3,168	3,171
Prepaid and other	22,888	21,560
Total current assets	325,127	341,765
Property, plant and equipment, net	630,155	527,778
Goodwill	469,319	469,319
Intangibles and loan acquisition costs, net	125,064	133,586
Other	8,395	9,431
Total assets	1,558,060	1,481,879
Current liabilities:
Accounts payable	33,437	34,332
Accrued liabilities	53,484	61,907
Income taxes payable		5,881
Current portion of debt	65,000	3,682
Total current liabilities	151,921	105,802
Debt, less current portion	646,250	705,836
Pension obligations, less current portion	80,587	78,086
Deferred income taxes	86,947	76,601
Other	24,452	16,161
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, 46,579,444 and 46,499,180 issued and outstanding at September 29, 2012 and December 31, 2011	466	465
Paid-in capital	540,223	527,243
Retained earnings (accumulated deficit)	38,303	(15,183)
Accumulated other comprehensive loss	(14,803)	(17,127)
Total Polypore shareholders' equity	564,189	495,398
Noncontrolling interest	3,714	3,995
Total shareholders' equity	567,903	499,393
Total liabilities and shareholders' equity	$ 1,558,060	$ 1,481,879

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Condensed consolidated statements of cash flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 29, 2012	Oct. 01, 2011
Operating activities:
Net income	$ 53,486	$ 78,793
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	30,972	25,244
Amortization expense	10,386	12,419
Amortization of loan acquisition costs	1,852	1,837
Stock-based compensation	12,346	4,552
Loss on disposal of property, plant and equipment	937	175
Foreign currency (gain) loss	389	(116)
Deferred income taxes	9,984	22,762
Write-off of loan acquisition costs associated with refinancing of senior credit agreement	2,478
Changes in operating assets and liabilities:
Accounts receivable	5,419	(6,577)
Inventories	(27,620)	(11,783)
Prepaid and other current assets	2,535	(2,318)
Accounts payable and accrued liabilities	(9,635)	(1,105)
Income taxes payable	(7,702)	45
Other, net	770	(1,752)
Net cash provided by operating activities	86,597	122,176
Investing activities:
Purchases of property, plant and equipment, net	(123,682)	(111,319)
Net cash used in investing activities	(123,682)	(111,319)
Financing activities:
Proceeds from new senior credit agreement	350,000
Principal payments in connection with refinancing of senior credit agreement	(342,291)
Principal payments on debt	(4,674)	(3,598)
Loan acquisition costs	(6,223)	(627)
Proceeds from stock option exercises	635	6,639
Noncontrolling interest	(300)	540
Net cash provided by (used in) financing activities	(2,853)	2,954
Effect of exchange rate changes on cash and cash equivalents	(47)	426
Net increase (decrease) in cash and cash equivalents	(39,985)	14,237
Cash and cash equivalents at beginning of period	92,574	89,955
Cash and cash equivalents at end of period	$ 52,589	$ 104,192

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Federal Trade Commission Litigation (Details)	Dec. 31, 2011
Federal Trade Commission Litigation
Microporous revenues as percent of consolidated revenues	10.00%
Microporous operating income as percent of consolidated operating income	10.00%
Microporous assets as percent of consolidated assets, maximum	5.00%

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Debt (Tables)

9 Months Ended

Sep. 29, 2012

Debt

Schedule of debt

(in thousands)	September 29, 2012		December 31, 2011
Senior credit agreement:
Revolving credit facility	$	50,000	$	—
Term loan facility	296,250		344,518
	346,250		344,518
7.5% senior notes	365,000		365,000
	711,250		709,518
Less current portion, including borrowings under the revolving credit facility	65,000		3,682
Long-term debt	$	646,250	$	705,836

Schedule of minimum scheduled principal repayments of the term loan

(in thousands)
2012	$	3,750
2013	15,000
2014	18,750
2015	26,250
2016	37,500
2017	195,000
	$	296,250

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Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended
	Sep. 29, 2012	Oct. 01, 2011	Sep. 29, 2012 business segment	Oct. 01, 2011	Sep. 29, 2012 Reportable segments	Oct. 01, 2011 Reportable segments	Sep. 29, 2012 Reportable segments	Oct. 01, 2011 Reportable segments	Sep. 29, 2012 Energy Storage	Oct. 01, 2011 Energy Storage	Sep. 29, 2012 Energy Storage	Oct. 01, 2011 Energy Storage	Sep. 29, 2012 Electronics and EDVs	Oct. 01, 2011 Electronics and EDVs	Sep. 29, 2012 Electronics and EDVs	Oct. 01, 2011 Electronics and EDVs	Sep. 29, 2012 Transportation and industrial	Oct. 01, 2011 Transportation and industrial	Sep. 29, 2012 Transportation and industrial	Oct. 01, 2011 Transportation and industrial	Sep. 29, 2012 Separations Media	Oct. 01, 2011 Separations Media	Sep. 29, 2012 Separations Media segment	Oct. 01, 2011 Separations Media	Sep. 29, 2012 Healthcare	Oct. 01, 2011 Healthcare	Sep. 29, 2012 Healthcare	Oct. 01, 2011 Healthcare	Sep. 29, 2012 Filtration and specialty	Oct. 01, 2011 Filtration and specialty	Sep. 29, 2012 Filtration and specialty	Oct. 01, 2011 Filtration and specialty	Sep. 29, 2012 Corporate and other	Oct. 01, 2011 Corporate and other	Sep. 29, 2012 Corporate and other	Oct. 01, 2011 Corporate and other	Sep. 29, 2012 Unallocated amount to segment	Oct. 01, 2011 Unallocated amount to segment	Sep. 29, 2012 Unallocated amount to segment	Oct. 01, 2011 Unallocated amount to segment
Segment Information
Number of primary businesses			2
Financial information relating to the reportable segments
Number of reportable segments			3																				1
Total net sales to external customers	$ 177,618	$ 190,062	$ 537,137	$ 572,112	$ 177,618	$ 190,062	$ 537,137	$ 572,112	$ 136,389	$ 145,957	$ 404,443	$ 430,344	$ 43,477	$ 56,070	$ 133,261	$ 149,035	$ 92,912	$ 89,887	$ 271,182	$ 281,309	$ 41,229	$ 44,105	$ 132,694	$ 141,768	$ 26,025	$ 27,986	$ 82,094	$ 88,442	$ 15,204	$ 16,119	$ 50,600	$ 53,326
Operating income (loss)	29,673	43,818	105,021	145,755	33,682	46,453	118,816	150,958	29,615	47,475	102,636	142,263	10,540	26,521	41,843	68,683	19,075	20,954	60,793	73,580	9,712	9,227	36,533	41,142									(5,645)	(10,249)	(20,353)	(32,447)
Stock-based compensation																																					3,914	2,459	12,346	4,552
Non-recurring and other costs																																					95	176	1,449	651
Interest expense, net	9,478	8,504	26,438	25,866
Foreign currency and other	655	(357)	(759)	347
Write-off of loan acquisition costs associated with refinancing of senior credit agreement			2,478
Income before income taxes	19,540	35,671	76,864	119,542
Depreciation and amortization	$ 13,896	$ 13,141	$ 41,358	$ 37,663					$ 7,606	$ 5,371	$ 20,826	$ 15,109	$ 4,404	$ 2,410	$ 11,715	$ 6,248	$ 3,202	$ 2,961	$ 9,111	$ 8,861	$ 3,291	$ 3,562	$ 10,003	$ 9,937									$ 2,999	$ 4,208	$ 10,529	$ 12,617

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Segment Information (Tables)

9 Months Ended

Sep. 29, 2012

Segment Information

Schedule of financial information relating to the reportable operating segments

	Three Months Ended						Nine Months Ended
(in thousands)	September 29, 2012			October 1, 2011			September 29, 2012			October 1, 2011
Net sales to external customers (by major product group):
Electronics and EDVs	$	43,477		$	56,070		$	133,261		$	149,035
Transportation and industrial	92,912			89,887			271,182			281,309
Energy storage	136,389			145,957			404,443			430,344
Healthcare	26,025			27,986			82,094			88,442
Filtration and specialty	15,204			16,119			50,600			53,326
Separations media	41,229			44,105			132,694			141,768
Total net sales to external customers	$	177,618		$	190,062		$	537,137		$	572,112
Operating income:
Electronics and EDVs	$	10,540		$	26,521		$	41,843		$	68,683
Transportation and industrial	19,075			20,954			60,793			73,580
Energy storage	29,615			47,475			102,636			142,263
Separations media	9,712			9,227			36,533			41,142
Corporate and other	(5,645		)	(10,249		)	(20,353		)	(32,447		)
Segment operating income	33,682			46,453			118,816			150,958
Stock-based compensation	3,914			2,459			12,346			4,552
Non-recurring and other costs	95			176			1,449			651
Total operating income	29,673			43,818			105,021			145,755
Reconciling items:
Interest expense, net	9,478			8,504			26,438			25,866
Foreign currency and other	655			(357		)	(759		)	347
Write-off of loan acquisition costs associated with refinancing of senior credit agreement	—			—			2,478			—
Income before income taxes	$	19,540		$	35,671		$	76,864		$	119,542
Depreciation and amortization:
Electronics and EDVs	$	4,404		$	2,410		$	11,715		$	6,248
Transportation and industrial	3,202			2,961			9,111			8,861
Energy storage	7,606			5,371			20,826			15,109
Separations media	3,291			3,562			10,003			9,937
Corporate and other	2,999			4,208			10,529			12,617
Total depreciation and amortization	$	13,896		$	13,141		$	41,358		$	37,663

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Description of Business and Basis of Presentation

9 Months Ended

Sep. 29, 2012

Description of Business and Basis of Presentation

Description of Business and Basis of Presentation

1.             Description of Business and Basis of Presentation

Description of Business

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.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries after elimination of intercompany accounts and transactions.  The unaudited condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles for interim financial information. Accordingly, the unaudited condensed consolidated financial statements and notes do not contain certain information included in the Company’s annual financial statements. In the opinion of management, all normal and recurring adjustments that are necessary for a fair presentation have been made. Certain amounts previously presented in the condensed consolidated financial statements for prior periods have been reclassified to conform to current classifications. Operating results for the three months ended September 29, 2012 are not necessarily indicative of the results that may be expected for the fiscal year ending December 29, 2012. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

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Condensed consolidated balance sheets (Parenthetical) (USD $)	Sep. 29, 2012	Dec. 31, 2011
Condensed consolidated balance sheets
Preferred stock, shares authorized	15,000,000	15,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	46,579,444	46,499,180
Common stock, shares outstanding	46,579,444	46,499,180

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Noncontrolling Interest

9 Months Ended

Sep. 29, 2012

Noncontrolling Interest

Noncontrolling Interest

11.          Noncontrolling Interest

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 started production during the third quarter of 2012. In accordance with the joint venture agreement, the Company made cash contributions of $7,370,000 for a 65% ownership interest in the joint venture, and Camel contributed cash of $2,554,000 and land for a 35% ownership interest. In exchange for notes payable, Daramic Xiangyang purchased a building from Camel and production equipment from the Company, which was previously located at the Company’s former facility in Potenza, Italy. The notes payable and related interest will be paid by Daramic Xiangyang using available free cash flow, as defined in the joint venture agreement.  The building note payable to Camel has a principal balance of $5,910,000 and is included in “Other” non-current liabilities in the accompanying condensed consolidated balance sheet, and the equipment note payable to the Company eliminates in consolidation.

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Document and Entity Information	9 Months Ended
	Sep. 29, 2012	Oct. 24, 2012
Document and Entity Information
Entity Registrant Name	Polypore International, Inc.
Entity Central Index Key	0001292556
Document Type	10-Q
Document Period End Date	Sep. 29, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-29
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		46,579,444
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3

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Federal Trade Commission Litigation

9 Months Ended

Sep. 29, 2012

Federal Trade Commission Litigation

Federal Trade Commission Litigation

12.          Federal Trade Commission Litigation

On September 9, 2008, the Federal Trade Commission (the “FTC”) issued an administrative complaint against the Company alleging that the February 29, 2008 acquisition of Microporous Holding Corporation, the parent company of Microporous Products L.P. (“Microporous”), and the Company’s related actions have substantially lessened competition in North American markets for lead-acid battery separators. After challenging the complaint before an Administrative Law Judge of the FTC and subsequently before the Commissioners of the FTC, the Company was ordered to divest substantially all of the Microporous assets that were acquired in February 2008.

On January 28, 2011, the Company filed a petition with the U.S. Court of Appeals for the 11th Circuit to review the FTC’s November 5, 2010 order and opinion. On July 11, 2012, the 11th Circuit affirmed the FTC’s decision. 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. Therefore, the Company plans to seek further review by the U.S. Supreme Court.

The Company believes that a final judicial resolution to the challenge by the FTC to the Microporous acquisition could take several months to a year. 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 electronics 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 fiscal 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 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.

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Condensed consolidated statements of income (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 29, 2012	Oct. 01, 2011	Sep. 29, 2012	Oct. 01, 2011
Net sales	$ 177,618	$ 190,062	$ 537,137	$ 572,112
Cost of goods sold	118,376	113,158	336,631	328,228
Gross profit	59,242	76,904	200,506	243,884
Selling, general and administrative expenses	29,569	33,086	95,485	98,129
Operating income	29,673	43,818	105,021	145,755
Other (income) expense:
Interest expense, net	9,478	8,504	26,438	25,866
Foreign currency and other	655	(357)	(759)	347
Write-off of loan acquisition costs associated with refinancing of senior credit agreement			2,478
Other (income) expense total	10,133	8,147	28,157	26,213
Income before income taxes	19,540	35,671	76,864	119,542
Income taxes	5,308	12,066	23,378	40,749
Net income	$ 14,232	$ 23,605	$ 53,486	$ 78,793
Net income per share:
Basic (in dollars per share)	$ 0.31	$ 0.51	$ 1.15	$ 1.71
Diluted (in dollars per share)	$ 0.30	$ 0.50	$ 1.13	$ 1.67
Weighted average shares outstanding:
Basic (in shares)	46,550,852	46,434,965	46,527,292	46,079,584
Diluted (in shares)	47,211,245	47,215,037	47,211,168	47,050,245

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Income Taxes

9 Months Ended

Sep. 29, 2012

Income Taxes

Income Taxes

6.             Income Taxes

The income tax provision for the interim periods presented is computed at the effective rate expected to be applicable in each respective full year using the statutory rates on a country-by-country basis. Income tax expense recorded in the financial statements differs from the federal statutory income tax rate due to a variety of factors, including state income taxes, the mix of income between U.S. and foreign jurisdictions taxed at varying rates and changes in estimates of permanent differences and valuation allowances.

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Fair Value of Financial Instruments

9 Months Ended

Sep. 29, 2012

Fair Value of Financial Instruments

Fair Value of Financial Instruments

5.             Fair Value of Financial Instruments

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 and classified as level one in the fair value hierarchy, was $393,288,000 at September 29, 2012.

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Pension Plans (Tables)

9 Months Ended

Sep. 29, 2012

Pension Plans

Schedule of components of net periodic benefit cost

	Three Months Ended						Nine Months Ended
(in thousands)	September 29, 2012			October 1, 2011			September 29, 2012			October 1, 2011
Service cost	$	405		$	395		$	1,241		$	1,174
Interest cost	1,153			1,276			3,544			3,803
Expected return on plan assets	(205		)	(231		)	(631		)	(689		)
Amortization of prior service cost	(12		)	(14		)	(38		)	(41		)
Recognized net actuarial loss	114			19			350			58
Net periodic benefit cost	$	1,455		$	1,445		$	4,466		$	4,305

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Segment Information

9 Months Ended

Sep. 29, 2012

Segment Information

Segment Information

13.          Segment Information

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:

·Electronics and EDVs - produces and markets membranes for lithium-ion batteries that are used in portable electronic devices, cordless power tools and electric drive vehicles (“EDVs”).

·Transportation and industrial - 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 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 stock-based compensation and certain non-recurring and other costs.

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

	Three Months Ended						Nine Months Ended
(in thousands)	September 29, 2012			October 1, 2011			September 29, 2012			October 1, 2011
Net sales to external customers (by major product group):
Electronics and EDVs	$	43,477		$	56,070		$	133,261		$	149,035
Transportation and industrial	92,912			89,887			271,182			281,309
Energy storage	136,389			145,957			404,443			430,344
Healthcare	26,025			27,986			82,094			88,442
Filtration and specialty	15,204			16,119			50,600			53,326
Separations media	41,229			44,105			132,694			141,768
Total net sales to external customers	$	177,618		$	190,062		$	537,137		$	572,112
Operating income:
Electronics and EDVs	$	10,540		$	26,521		$	41,843		$	68,683
Transportation and industrial	19,075			20,954			60,793			73,580
Energy storage	29,615			47,475			102,636			142,263
Separations media	9,712			9,227			36,533			41,142
Corporate and other	(5,645		)	(10,249		)	(20,353		)	(32,447		)
Segment operating income	33,682			46,453			118,816			150,958
Stock-based compensation	3,914			2,459			12,346			4,552
Non-recurring and other costs	95			176			1,449			651
Total operating income	29,673			43,818			105,021			145,755
Reconciling items:
Interest expense, net	9,478			8,504			26,438			25,866
Foreign currency and other	655			(357		)	(759		)	347
Write-off of loan acquisition costs associated with refinancing of senior credit agreement	—			—			2,478			—
Income before income taxes	$	19,540		$	35,671		$	76,864		$	119,542
Depreciation and amortization:
Electronics and EDVs	$	4,404		$	2,410		$	11,715		$	6,248
Transportation and industrial	3,202			2,961			9,111			8,861
Energy storage	7,606			5,371			20,826			15,109
Separations media	3,291			3,562			10,003			9,937
Corporate and other	2,999			4,208			10,529			12,617
Total depreciation and amortization	$	13,896		$	13,141		$	41,358		$	37,663

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Government Grants

9 Months Ended

Sep. 29, 2012

Government Grants

Government Grants

9.             Government Grants

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 September 29, 2012, the Company has recognized and received the entire amount of 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 $2,236,000 and $18,693,000 for the nine months ended September 29, 2012 and October 1, 2011, respectively. The Company recognized grant awards for expenses of $1,497,000 and $2,819,000 for the nine months ended September 29, 2012 and October 1, 2011, respectively.

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Pension Plans

9 Months Ended

Sep. 29, 2012

Pension Plans

Pension Plans

7.             Pension Plans

The Company and its subsidiaries sponsor multiple defined benefit pension plans based in subsidiaries located outside of the United States. The following table provides the components of net periodic benefit cost:

	Three Months Ended						Nine Months Ended
(in thousands)	September 29, 2012			October 1, 2011			September 29, 2012			October 1, 2011
Service cost	$	405		$	395		$	1,241		$	1,174
Interest cost	1,153			1,276			3,544			3,803
Expected return on plan assets	(205		)	(231		)	(631		)	(689		)
Amortization of prior service cost	(12		)	(14		)	(38		)	(41		)
Recognized net actuarial loss	114			19			350			58
Net periodic benefit cost	$	1,455		$	1,445		$	4,466		$	4,305

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Environmental Matters

9 Months Ended

Sep. 29, 2012

Environmental Matters

Environmental Matters

8.             Environmental Matters

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 $8,850,000 and $11,957,000 at September 29, 2012 and December 31, 2011, respectively. The Company anticipates the expenditures associated with the reserve will be made in the next twelve months. At September 29, 2012, the reserve was included in “Accrued liabilities” in the accompanying condensed 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 September 29, 2012 and December 31, 2011, the amounts receivable under the indemnification agreements were $7,774,000 and $12,099,000, respectively. At September 29, 2012, the receivable under the indemnification agreements was included in “Prepaid and other” in the accompanying condensed consolidated balance sheets.

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Related Party Transactions

9 Months Ended

Sep. 29, 2012

Related Party Transactions

Related Party Transactions

10.          Related Party Transactions

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 $634,000 and $588,000 at September 29, 2012 and December 31, 2011, respectively. Charges from the affiliates for work performed were $245,000 and $930,000 for the three and nine months ended September 29, 2012, respectively. Charges from the affiliates for work performed were $284,000 and $797,000 for the three and nine months ended October 1, 2011, respectively. Amounts due to the affiliates were $92,000 and $107,000 at September 29, 2012 and December 31, 2011, respectively.

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Noncontrolling Interest (Details) (Daramic Xiangyang, USD $)	33 Months Ended
	Sep. 29, 2012
Noncontrolling Interest
Contributions to joint venture	$ 7,370,000
Ownership percentage of joint venture	65.00%
Principal balance of building note payable	5,910,000
Camel Group Co., Ltd, Co-Venturer
Noncontrolling Interest
Contributions to joint venture	$ 2,554,000
Ownership percentage of joint venture	35.00%

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Inventories (Tables)

9 Months Ended

Sep. 29, 2012

Inventories

Schedule of inventories

(in thousands)	September 29, 2012		December 31, 2011
Raw materials	$	44,674	$	35,423
Work-in-process	31,609		18,351
Finished goods	42,071		36,670
	$	118,354	$	90,444

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Inventories (Details) (USD $) In Thousands, unless otherwise specified	Sep. 29, 2012	Dec. 31, 2011
Inventories
Raw materials	$ 44,674	$ 35,423
Work-in-process	31,609	18,351
Finished goods	42,071	36,670
Inventories	$ 118,354	$ 90,444

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Condensed consolidated statements of comprehensive income (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 29, 2012	Oct. 01, 2011	Sep. 29, 2012	Oct. 01, 2011
Net income	$ 14,232	$ 23,605	$ 53,486	$ 78,793
Other comprehensive income (loss):
Foreign currency translation adjustment	8,970	(18,746)	2,119	(3,561)
Change in net actuarial loss and prior service credit	(272)	443	33	(73)
Income tax benefit (expense) related to other comprehensive income	(438)	2,299	172	(22)
Other comprehensive income (loss)	8,260	(16,004)	2,324	(3,656)
Comprehensive income	$ 22,492	$ 7,601	$ 55,810	$ 75,137

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Debt

9 Months Ended

Sep. 29, 2012

Debt

Debt

4.             Debt

Debt, in order of priority, consists of:

(in thousands)	September 29, 2012		December 31, 2011
Senior credit agreement:
Revolving credit facility	$	50,000	$	—
Term loan facility	296,250		344,518
	346,250		344,518
7.5% senior notes	365,000		365,000
	711,250		709,518
Less current portion, including borrowings under the revolving credit facility	65,000		3,682
Long-term debt	$	646,250	$	705,836

On June 29, 2012, the Company refinanced its previous senior secured credit agreement with a new senior secured credit agreement.  The proceeds from the new credit agreement were used to pay outstanding principal and interest under the previous credit agreement and loan acquisition costs of $6,223,000, which were capitalized and will be amortized over the life of the new credit agreement. In connection with the refinancing, the Company wrote-off unamortized loan acquisition costs of $2,478,000 associated with the previous credit agreement.

The new credit agreement provides for a $300,000,000 term loan facility and a $150,000,000 revolving credit facility.  Interest rates under the 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’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.  The Company is also subject to certain financial covenants, including a maximum senior leverage ratio and a minimum interest coverage ratio.  The Company was in compliance with all covenants as of September 29, 2012.

The revolving credit facility matures in June 2017.  At September 29, 2012, the Company had $50,000,000 outstanding under the revolving credit facility and $100,000,000 available for borrowing.  The Company intends to pay back outstanding borrowings under the revolving credit facility within the next twelve months and accordingly, has included these borrowings in “Current portion of debt” in the accompanying condensed consolidated balance sheets.

The term loan matures in June 2017.  Minimum scheduled principal repayments of the term loan are as follows:

(in thousands)
2012	$	3,750
2013	15,000
2014	18,750
2015	26,250
2016	37,500
2017	195,000
	$	296,250

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Debt (Details) (USD $)	9 Months Ended			1 Months Ended			1 Months Ended
	Sep. 29, 2012	Oct. 01, 2011	Dec. 31, 2011	Jun. 30, 2012 Senior credit agreement	Sep. 29, 2012 Senior credit agreement	Dec. 31, 2011 Senior credit agreement	Sep. 29, 2012 Revolving credit facility months	Sep. 29, 2012 Term loan facility	Dec. 31, 2011 Term loan facility	Sep. 29, 2012 7.5% senior notes	Dec. 31, 2011 7.5% senior notes
Debt
Revolving credit facility							$ 50,000,000
Long-term debt including current maturities	711,250,000		709,518,000		346,250,000	344,518,000		296,250,000	344,518,000	365,000,000	365,000,000
Less current maturities	65,000,000		3,682,000
Long-term debt	646,250,000		705,836,000
Debt instrument, interest rate (as a percent)										7.50%	7.50%
Loan acquisition costs	6,223,000	627,000		6,223,000
Write-off of unamortized loan acquisition costs	2,478,000			2,478,000
Maximum borrowing capacity							150,000,000
Percentage of voting capital stock of foreign subsidiaries pledged as collateral for borrowing under senior credit agreement (as a percent)					66.00%
Available borrowing capacity							100,000,000
Debt instrument, face amount								$ 300,000,000
Planned repayment period for revolving credit facility (in months)							12

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Financial Statements of Guarantors (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 29, 2012	Oct. 01, 2011	Sep. 29, 2012	Oct. 01, 2011
Net sales	$ 177,618	$ 190,062	$ 537,137	$ 572,112
Cost of goods sold	118,376	113,158	336,631	328,228
Gross profit	59,242	76,904	200,506	243,884
Selling, general and administrative expenses	29,569	33,086	95,485	98,129
Operating income	29,673	43,818	105,021	145,755
Interest expense and other	10,133	8,147	25,679	26,213
Write-off of loan acquisition costs associated with refinancing of senior credit agreement			2,478
Income before income taxes	19,540	35,671	76,864	119,542
Income taxes	5,308	12,066	23,378	40,749
Net income	14,232	23,605	53,486	78,793
Combined Guarantor Subsidiaries
Net sales	54,322	71,842	163,766	206,760
Cost of goods sold	24,626	23,200	62,757	64,821
Gross profit	29,696	48,642	101,009	141,939
Selling, general and administrative expenses	14,914	18,315	48,906	54,447
Operating income	14,782	30,327	52,103	87,492
Interest expense and other	(2,219)	(3,007)	(8,517)	(5,921)
Income before income taxes	17,001	33,334	60,620	93,413
Income taxes	8,052	15,809	26,537	40,106
Net income	8,949	17,525	34,083	53,307
Combined Non-Guarantor Subsidiaries
Net sales	123,296	118,220	373,371	365,352
Cost of goods sold	93,750	89,958	273,874	263,407
Gross profit	29,546	28,262	99,497	101,945
Selling, general and administrative expenses	10,708	12,629	34,133	39,313
Operating income	18,838	15,633	65,364	62,632
Interest expense and other	2,894	1,949	6,595	5,524
Income before income taxes	15,944	13,684	58,769	57,108
Income taxes	3,807	4,770	13,254	17,563
Net income	12,137	8,914	45,515	39,545
The Company
Selling, general and administrative expenses	3,947	2,142	12,446	4,369
Operating income	(3,947)	(2,142)	(12,446)	(4,369)
Interest expense and other	9,458	9,205	27,601	26,610
Write-off of loan acquisition costs associated with refinancing of senior credit agreement			2,478
Equity in earnings of subsidiaries	(21,086)	(26,439)	(79,598)	(92,852)
Income before income taxes	7,681	15,092	37,073	61,873
Income taxes	(6,551)	(8,513)	(16,413)	(16,920)
Net income	14,232	23,605	53,486	78,793
Eliminations
Equity in earnings of subsidiaries	21,086	26,439	79,598	92,852
Income before income taxes	(21,086)	(26,439)	(79,598)	(92,852)
Net income	$ (21,086)	$ (26,439)	$ (79,598)	$ (92,852)

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Financial Statements of Guarantors

9 Months Ended

Sep. 29, 2012

Financial Statements of Guarantors

Financial Statements of Guarantors

14.          Financial Statements of Guarantors

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.

Condensed consolidating balance sheet
September 29, 2012

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries		The Company		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	—	$	42,662	$	9,927	$	—		$	52,589
Accounts receivable, net	42,221		85,907		—		—			128,128
Inventories	43,421		74,933		—		—			118,354
Prepaid and other	5,742		19,658		656		—			26,056
Total current assets	91,384		223,160		10,583		—			325,127
Due from affiliates	521,076		332,759		469,469		(1,323,304		)	—
Investment in subsidiaries	190,888		322,309		619,995		(1,133,192		)	—
Property, plant and equipment, net	329,754		300,401		—		—			630,155
Goodwill	—		—		469,319		—			469,319
Intangibles and loan acquisition costs, net	—		—		125,064		—			125,064
Other	157		8,238		—		—			8,395
Total assets	$	1,133,259	$	1,186,867	$	1,694,430	$	(2,456,496	)	$	1,558,060
Liabilities and shareholders’ equity
Accounts payable and accrued liabilities	$	30,595	$	46,072	$	10,254	$	—		$	86,921
Current portion of debt	—		—		65,000		—			65,000
Total current liabilities	30,595		46,072		75,254		—			151,921
Due to affiliates	601,127		317,301		404,876		(1,323,304		)	—
Debt, less current portion	—		—		646,250		—			646,250
Pension obligations, less current portion	—		80,587		—		—			80,587
Deferred income taxes and other	58,624		52,628		147		—			111,399
Shareholders’ equity	442,913		690,279		567,903		(1,133,192		)	567,903
Total liabilities and shareholders’ equity	$	1,133,259	$	1,186,867	$	1,694,430	$	(2,456,496	)	$	1,558,060

Condensed consolidating balance sheet
December 31, 2011

(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 obligations, less current portion	—		78,086		—		—			78,086
Deferred income taxes and other	47,140		45,476		146		—			92,762
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

Condensed consolidating statement of income
For the three months ended September 29, 2012

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Net sales	$	54,322		$	123,296	$	—		$	—		$	177,618
Cost of goods sold	24,626			93,750		—			—			118,376
Gross profit	29,696			29,546		—			—			59,242
Selling, general and administrative expenses	14,914			10,708		3,947			—			29,569
Operating income (loss)	14,782			18,838		(3,947		)	—			29,673
Interest expense and other	(2,219		)	2,894		9,458			—			10,133
Equity in earnings of subsidiaries	—			—		(21,086		)	21,086			—
Income before income taxes	17,001			15,944		7,681			(21,086		)	19,540
Income taxes	8,052			3,807		(6,551		)	—			5,308
Net income	$	8,949		$	12,137	$	14,232		$	(21,086	)	$	14,232

Condensed consolidating statement of income
For the three months ended October 1, 2011

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Net sales	$	71,842		$	118,220	$	—		$	—		$	190,062
Cost of goods sold	23,200			89,958		—			—			113,158
Gross profit	48,642			28,262		—			—			76,904
Selling, general and administrative expenses	18,315			12,629		2,142			—			33,086
Operating income (loss)	30,327			15,633		(2,142		)	—			43,818
Interest expense and other	(3,007		)	1,949		9,205			—			8,147
Equity in earnings of subsidiaries	—			—		(26,439		)	26,439			—
Income before income taxes	33,334			13,684		15,092			(26,439		)	35,671
Income taxes	15,809			4,770		(8,513		)	—			12,066
Net income	$	17,525		$	8,914	$	23,605		$	(26,439	)	$	23,605

Condensed consolidating statement of income
For the nine months ended September 29, 2012

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Net sales	$	163,766		$	373,371	$	—		$	—		$	537,137
Cost of goods sold	62,757			273,874		—			—			336,631
Gross profit	101,009			99,497		—			—			200,506
Selling, general and administrative expenses	48,906			34,133		12,446			—			95,485
Operating income (loss)	52,103			65,364		(12,446		)	—			105,021
Interest expense and other	(8,517		)	6,595		27,601			—			25,679
Write-off of loan acquisition costs associated with refinancing of senior credit agreement	—			—		2,478			—			2,478
Equity in earnings of subsidiaries	—			—		(79,598		)	79,598			—
Income before income taxes	60,620			58,769		37,073			(79,598		)	76,864
Income taxes	26,537			13,254		(16,413		)	—			23,378
Net income	$	34,083		$	45,515	$	53,486		$	(79,598	)	$	53,486

Condensed consolidating statement of income
For the nine months ended October 1, 2011

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Net sales	$	206,760		$	365,352	$	—		$	—		$	572,112
Cost of goods sold	64,821			263,407		—			—			328,228
Gross profit	141,939			101,945		—			—			243,884
Selling, general and administrative expenses	54,447			39,313		4,369			—			98,129
Operating income (loss)	87,492			62,632		(4,369		)	—			145,755
Interest expense and other	(5,921		)	5,524		26,610			—			26,213
Equity in earnings of subsidiaries	—			—		(92,852		)	92,852			—
Income before income taxes	93,413			57,108		61,873			(92,852		)	119,542
Income taxes	40,106			17,563		(16,920		)	—			40,749
Net income	$	53,307		$	39,545	$	78,793		$	(92,852	)	$	78,793

Condensed consolidating statement of comprehensive income
For the three months ended September 29, 2012

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net income	$	8,949	$	12,137		$	14,232		$	(21,086	)	$	14,232
Foreign currency translation adjustment, net of income tax expense of $438	—		9,365			(644		)	(189		)	8,532
Change in net actuarial loss and prior service credit	—		(272		)	—			—			(272		)
Equity in earnings of subsidiaries	—		—			8,904			(8,904		)	—
Comprehensive income	$	8,949	$	21,230		$	22,492		$	(30,179	)	$	22,492

Condensed consolidating statement of comprehensive income
For the three months ended October 1, 2011

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net income	$	17,525	$	8,914		$	23,605		$	(26,439	)	$	23,605
Foreign currency translation adjustment, net of income tax benefit of $2,299	—		(19,197		)	1,387			1,363			(16,447		)
Change in net actuarial loss and prior service credit	—		443			—			—			443
Equity in earnings of subsidiaries	—		—			(17,391		)	17,391			—
Comprehensive income (loss)	$	17,525	$	(9,840	)	$	7,601		$	(7,685	)	$	7,601

Condensed consolidating statement of comprehensive income
For the nine months ended September 29, 2012

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries		The Company		Eliminations			Consolidated
Net income	$	34,083	$	45,515	$	53,486	$	(79,598	)	$	53,486
Foreign currency translation adjustment, net of income tax benefit of $172	—		3,072		138		(919		)	2,291
Change in net actuarial loss and prior service credit	—		33		—		—			33
Equity in earnings of subsidiaries	—		—		2,186		(2,186		)	—
Comprehensive income	$	34,083	$	48,620	$	55,810	$	(82,703	)	$	55,810

Condensed consolidating statement of comprehensive income
For the nine months ended October 1, 2011

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net income	$	53,307	$	39,545		$	78,793		$	(92,852	)	$	78,793
Foreign currency translation adjustment, net of income tax expense of $22	—		(2,687		)	(747		)	(149		)	(3,583		)
Change in net actuarial loss and prior service credit	—		(73		)	—			—			(73		)
Equity in earnings of subsidiaries	—		—			(2,909		)	2,909			—
Comprehensive income	$	53,307	$	36,785		$	75,137		$	(90,092	)	$	75,137

Condensed consolidating statement of cash flows
For the nine months ended September 29, 2012

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	72,194		$	35,600		$	(20,398	)	$	(799	)	$	86,597
Investing activities:
Purchases of property, plant and equipment, net	(107,691		)	(15,991		)	—			—			(123,682		)
Net cash used in investing activities	(107,691		)	(15,991		)	—			—			(123,682		)
Financing activities:
Proceeds from new senior credit agreement	—			—			350,000			—			350,000
Principal payments in connection with refinancing of senior credit agreement	—			(41,865		)	(300,426		)	—			(342,291		)
Principal payments on debt	—			(117		)	(4,557		)	—			(4,674		)
Proceeds from stock option exercises	—			—			635			—			635
Intercompany transactions, net	35,497			(413		)	(35,883		)	799			—
Other	—			—			(6,523		)	—			(6,523		)
Net cash provided by (used in) financing activities	35,497			(42,395		)	3,246			799			(2,853		)
Effect of exchange rate changes on cash and cash equivalents	—			(47		)	—			—			(47		)
Net decrease in cash and cash equivalents	—			(22,833		)	(17,152		)	—			(39,985		)
Cash and cash equivalents at beginning of period	—			65,495			27,079			—			92,574
Cash and cash equivalents at end of period	$	—		$	42,662		$	9,927		$	—		$	52,589

Condensed consolidating statement of cash flows
For the nine months ended October 1, 2011

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	97,315		$	46,692		$	(23,627	)	$	1,796		$	122,176
Investing activities:
Purchases of property, plant and equipment, net	(74,901		)	(36,418		)	—			—			(111,319		)
Net cash used in investing activities	(74,901		)	(36,418		)	—			—			(111,319		)
Financing activities:
Principal payments on debt	—			(369		)	(3,229		)	—			(3,598		)
Proceeds from stock option exercises	—			—			6,639			—			6,639
Intercompany transactions, net	(22,414		)	3,996			20,214			(1,796		)	—
Other	—			—			(87		)	—			(87		)
Net cash provided by (used in) financing activities	(22,414		)	3,627			23,537			(1,796		)	2,954
Effect of exchange rate changes on cash and cash equivalents	—			426			—			—			426
Net increase (decrease) in cash and cash equivalents	—			14,327			(90		)	—			14,237
Cash and cash equivalents at beginning of period	—			58,172			31,783			—			89,955
Cash and cash equivalents at end of period	$	—		$	72,499		$	31,693		$	—		$	104,192