10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 29, 2013

Or

oTransition 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 44,806,626 shares of the registrant’s common stock outstanding as of July 31, 2013.

Polypore International, Inc.

Index to Quarterly Report on Form 10-Q

For the Three Months Ended June 29, 2013

		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	30
Item 4.	Controls and Procedures	31
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 6.	Exhibits	32
SIGNATURES		33

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 29, 2012, 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;

·lithium market demand does not materialize as anticipated;

·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

	June 29, 2013
(in thousands, except share data)	(unaudited)			December 29, 2012*
Assets
Current assets:
Cash and cash equivalents	$	32,262		$	44,873
Accounts receivable, net	119,242			122,056
Inventories	115,855			115,462
Deferred income taxes	21,673			21,671
Prepaid and other	22,060			22,769
Assets held for sale	89,511			92,261
Total current assets	400,603			419,092
Property, plant and equipment, net	592,882			607,466
Goodwill	444,512			444,512
Intangibles and loan acquisition costs, net	100,077			107,006
Other	7,945			7,996
Total assets	$	1,546,019		$	1,586,072
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	25,289		$	30,083
Accrued liabilities	45,699			44,039
Income taxes payable	4,432			1,603
Current portion of debt	69,200			50,000
Liabilities related to assets held for sale	20,403			19,576
Total current liabilities	165,023			145,301
Debt, less current portion	635,000			646,250
Pension obligations, less current portion	104,011			103,491
Deferred income taxes	83,572			84,719
Other	23,580			23,474
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; 46,812,226 issued and 44,822,126 outstanding at June 29, 2013 and 46,627,064 issued and outstanding at December 29, 2012	468			466
Paid-in capital	555,511			545,196
Retained earnings	80,229			55,768
Accumulated other comprehensive loss	(27,055		)	(22,353		)
Treasury stock, at cost — 1,990,100 shares at June 29, 2013 and no shares at December 29, 2012	(79,935		)	—
Total Polypore shareholders’ equity	529,218			579,077
Noncontrolling interest	5,615			3,760
Total shareholders’ equity	534,833			582,837
Total liabilities and shareholders’ equity	$	1,546,019		$	1,586,072

* 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						Six Months Ended
(in thousands, except per share data)	June 29, 2013			June 30, 2012			June 29, 2013		June 30, 2012
Net sales	$	168,897		$	167,607		$	314,838	$	325,210
Cost of goods sold	108,471			102,225			205,217		193,693
Gross profit	60,426			65,382			109,621		131,517
Selling, general and administrative expenses	32,394			31,390			63,130		64,618
Operating income	28,032			33,992			46,491		66,899
Other (income) expense:
Interest expense, net	9,921			8,169			19,712		16,960
Foreign currency and other	(116		)	(1,706		)	702		(1,243		)
Write-off of loan acquisition costs associated with refinancing of senior credit agreement	—			2,478			—		2,478
	9,805			8,941			20,414		18,195
Income from continuing operations before income taxes	18,227			25,051			26,077		48,704
Income taxes	5,731			7,396			7,924		15,218
Income from continuing operations	12,496			17,655			18,153		33,486
Income from discontinued operations, net of income taxes	2,944			2,826			6,308		5,768
Net income	$	15,440		$	20,481		$	24,461	$	39,254
Net income per share — basic:
Continuing operations	$	0.27		$	0.38		$	0.39	$	0.72
Discontinued operations	0.06			0.06			0.14		0.12
Net income per share	$	0.33		$	0.44		$	0.53	$	0.84
Net income per share — diluted:
Continuing operations	$	0.27		$	0.37		$	0.39	$	0.71
Discontinued operations	0.06			0.06			0.13		0.12
Net income per share	$	0.33		$	0.43		$	0.52	$	0.83
Weighted average shares outstanding — basic	46,269,885			46,533,322			46,441,603		46,515,512
Weighted average shares outstanding — diluted	46,917,077			47,207,680			47,106,282		47,211,282

See notes to condensed consolidated financial statements

5

Polypore International, Inc.

Condensed consolidated statements of comprehensive income

(unaudited)

	Three Months Ended						Six Months Ended
(in thousands)	June 29, 2013			June 30, 2012			June 29, 2013			June 30, 2012
Net income	$	15,440		$	20,481		$	24,461		$	39,254
Other comprehensive income (loss):
Foreign currency translation adjustment	(1,845		)	(16,274		)	(5,833		)	(6,851		)
Change in net actuarial loss and prior service credit	(264		)	625			639			305
Income taxes related to other comprehensive income (loss)	(130		)	1,144			492			610
Other comprehensive loss	(2,239		)	(14,505		)	(4,702		)	(5,936		)
Comprehensive income	$	13,201		$	5,976		$	19,759		$	33,318

See notes to condensed consolidated financial statements

6

Polypore International, Inc.

Condensed consolidated statements of cash flows

(unaudited)

	Six Months Ended
(in thousands)	June 29, 2013			June 30, 2012
Operating activities:
Net income	$	24,461		$	39,254
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	22,882			20,032
Amortization expense	5,927			7,430
Amortization of loan acquisition costs	1,237			1,234
Stock-based compensation	9,297			8,432
Loss on disposal of property, plant and equipment	864			900
Foreign currency (gain) loss	670			(535		)
Deferred income taxes	(713		)	8,678
Write-off of loan acquisition costs associated with refinancing of senior credit agreement	—			2,478
Changes in operating assets and liabilities:
Accounts receivable	2,498			(1,486		)
Inventories	(1,894		)	(24,015		)
Prepaid and other current assets	719			1,136
Accounts payable and accrued liabilities	(1,457		)	(11,955		)
Income taxes payable	2,838			(6,002		)
Other, net	2,002			1,224
Net cash provided by operating activities	69,331			46,805
Investing activities:
Purchases of property, plant and equipment, net	(13,574		)	(95,277		)
Net cash used in investing activities	(13,574		)	(95,277		)
Financing activities:
Principal payments on debt	(11,250		)	(924		)
Payments on revolving credit facility	(35,000		)	—
Proceeds from revolving credit facility	54,200			—
Proceeds from stock option exercises	1,020			490
Repurchases of common stock	(79,935		)	—
Noncontrolling interest	1,731			(104		)
Proceeds from new senior credit agreement	—			350,000
Principal payments in connection with refinancing of senior credit agreement	—			(342,291		)
Loan acquisition costs	—			(5,986		)
Net cash provided by (used in) financing activities	(69,234		)	1,185
Effect of exchange rate changes on cash and cash equivalents	866			(894		)
Net decrease in cash and cash equivalents	(12,611		)	(48,181		)
Cash and cash equivalents at beginning of period	44,873			92,574
Cash and cash equivalents at end of period	$	32,262		$	44,393

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. 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 29, 2012. Operating results for the three months ended June 29, 2013 are not necessarily indicative of the results that may be expected for the fiscal year ending December 28, 2013.

Effective June 24, 2013 (see Note 14), the accompanying condensed consolidated balance sheets as of June 29, 2013 and December 29, 2012 reflect the classification of certain assets and liabilities as held for sale.  The condensed consolidated statements of income for all periods presented reflect the presentation of discontinued operations. All disclosures and amounts in the notes to the condensed consolidated financial statements relate to the Company’s continuing operations, unless otherwise indicated.

2.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)	June 29, 2013		December 29, 2012
Raw materials	$	36,819	$	42,113
Work-in-process	27,667		27,608
Finished goods	51,369		45,741
	$	115,855	$	115,462

3.Debt

Debt, in order of priority, consists of:

(in thousands)	June 29, 2013		December 29, 2012
Senior credit agreement:
Revolving credit facility	$	54,200	$	35,000
Term loan facility	285,000		296,250
	339,200		331,250
7.5% senior notes	365,000		365,000
	704,200		696,250
Less current portion, including borrowings under the revolving credit facility	69,200		50,000
Long-term debt	$	635,000	$	646,250

On June 29, 2012, the Company refinanced its previous senior secured credit agreement with a new senior secured credit agreement.  The credit agreement provides for a $150,000,000 revolving credit facility ($50,000,000 of which was borrowed in connection with the refinancing) and a $300,000,000 term loan facility. The proceeds from the credit agreement were used to pay outstanding principal and interest under the previous credit agreement and loan acquisition costs of $6,228,000

8

Polypore International, Inc.

Notes to condensed consolidated financial statements

(unaudited)

($5,986,000 paid during the second quarter of 2012), which were capitalized and will be amortized over the life of the 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. 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.

At June 29, 2013, the Company had $54,200,000 outstanding under the revolving credit facility and $95,800,000 available for borrowing. The revolving credit facility matures in June 2017.  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.

4.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 $380,513,000 at June 29, 2013.

5.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.

6.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						Six Months Ended
(in thousands)	June 29, 2013			June 30, 2012			June 29, 2013			June 30, 2012
Service cost	$	555		$	414		$	1,118		$	836
Interest cost	1,114			1,184			2,241			2,391
Expected return on plan assets	(189		)	(211		)	(380		)	(426		)
Amortization of prior service credit	(13		)	(13		)	(26		)	(26		)
Recognized net actuarial loss	427			117			859			236
Net periodic benefit cost	$	1,894		$	1,491		$	3,812		$	3,011

7.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 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

9

Polypore International, Inc.

Notes to condensed consolidated financial statements

(unaudited)

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 $8,556,000 and $11,079,000 at June 29, 2013 and December 29, 2012, respectively. The Company anticipates the expenditures associated with the reserve will be made in the next twelve months. The reserve is 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 June 29, 2013 and December 29, 2012, the indemnification receivable, which is denominated in euros, was $11,383,000 and $11,542,000, respectively. The receivable is included in “Prepaid and other” in the accompanying condensed consolidated balance sheets.

8.Treasury Stock

On February 19, 2013, the Board of Directors authorized the repurchase of up to 4,000,000 shares of the Company’s common stock by December 31, 2013. As of June 29, 2013, the Company had repurchased 1,984,500 shares of common stock for $79,731,000.  Additionally, in connection with the restricted stock grant on February 25, 2013, the Company withheld and repurchased 5,600 shares of common stock for $204,000 to satisfy certain foreign employees’ statutory withholding tax liability.

9.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 $641,000 and $650,000 at June 29, 2013 and December 29, 2012, respectively. Charges from the affiliates for work performed were $393,000 and $659,000 for the three and six months ended June 29, 2013, respectively. Charges from the affiliates for work performed were $358,000 and $685,000 for the three and six months ended June 30, 2012, respectively. Amounts due to the affiliates were $69,000 and $239,000 at June 29, 2013 and December 29, 2012, respectively.

10.Noncontrolling Interest

In 2010, the Company formed a joint venture with 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 owned 65% by the Company and 35% by Camel. During the six months ended June 29, 2013, the Company and Camel made equity contributions of $2,470,000 and $1,330,000, respectively, to fund capital expenditures.

In exchange for notes payable, Daramic Xiangyang purchased from Camel a building and from the Company certain production equipment that 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 at June 29, 2013 and December 29, 2012 and is included in “Other” non-current liabilities in the accompanying condensed consolidated balance sheets, and the equipment note payable to the Company eliminates in consolidation.

11.Commitments and Contingencies

Collective Bargaining Agreement

The Company’s employees at the Corydon, Indiana facility are represented under a labor union collective bargaining agreement. The collective bargaining agreement at the Corydon facility, covering approximately 3% of the Company’s workers, expires on August 31, 2013.

10

Polypore International, Inc.

Notes to condensed consolidated financial statements

(unaudited)

12.Stock-Based Compensation Plans

The Company offers stock-based compensation plans to attract, retain, motivate and reward key officers, non-employee directors and employees. Stock-based compensation expense was $4,830,000 and $9,297,000 for the three and six months ended June 29, 2013, respectively, and $4,162,000 and $8,432,000 for the same three and six month periods in the prior year, respectively. The income tax benefit related to stock-based compensation expense was $1,717,000 and $3,304,000 for the three and six months ended June 29, 2013, respectively, and $1,477,000 and $2,992,000 for the same three and six month periods in the prior year, respectively. Stock-based compensation expense includes costs associated with stock options and restricted stock and is classified as “Selling, general and administrative expenses” in the accompanying condensed consolidated statements of income.

The 2007 Stock Incentive Plan (“2007 Plan”) allows for the grant of stock options, restricted stock and other instruments for up to a total of 4,751,963 shares of common stock. On February 25, 2013, the Company granted 328,467 stock options and 85,461 shares of restricted stock under the 2007 Plan with an aggregate grant-date fair value of $9,248,000, to be recognized over the vesting period for each award.  The stock options granted are time-vested options that vest annually in equal one-third installments and have 10-year terms and an exercise price of $36.42, the fair market value of the Company’s stock on the grant date.

The fair value of the options granted was estimated on the date of grant based on the Black-Scholes option pricing model with the following assumptions:

	February 25, 2013Grant Assumptions
Expected term (years)	5.6
Risk-free interest rate	0.92	%
Expected volatility	57.3	%
Dividend yield	—

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

On February 25, 2013, the Company modified the terms of stock options granted on August 23, 2011. For participants that meet certain criteria upon retirement, the modification extends the exercise period for vested options from 90 days after retirement to the earlier of the option expiration date or three years after retirement and also allows unvested options to continue to vest for up to three years after retirement as if the participant had remained in the service of the Company. The total incremental stock option expense associated with the modification, net of estimated forfeitures, was $2,500,000, of which $482,000 has been recognized as of June 29, 2013, and the remainder of which will be recognized over the remaining vesting period of 1.4 years.

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.

11

Polypore International, Inc.

Notes to condensed consolidated financial statements

(unaudited)

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 batteries that are used in portable electronic devices, cordless power tools, electric drive vehicles (“EDVs”) and energy storage systems (“ESS”).

·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 a reportable segment and produces and markets membranes and membrane modules 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 segments is presented below:

	Three Months Ended						Six Months Ended
(in thousands)	June 29, 2013			June 30, 2012			June 29, 2013			June 30, 2012
Net sales to external customers (by major product group):
Electronics and EDVs	$	42,214		$	47,396		$	66,589		$	89,784
Transportation and industrial	80,340			73,861			156,453			143,961
Energy storage	122,554			121,257			223,042			233,745
Healthcare	30,045			28,524			59,543			56,069
Filtration and specialty	16,298			17,826			32,253			35,396
Separations media	46,343			46,350			91,796			91,465
Total net sales to external customers	$	168,897		$	167,607		$	314,838		$	325,210
Operating income:
Electronics and EDVs	$	10,781		$	14,508		$	8,262		$	31,303
Transportation and industrial	16,800			17,105			33,041			32,703
Energy storage	27,581			31,613			41,303			64,006
Separations media	13,836			12,958			29,345			26,821
Corporate and other	(7,612		)	(5,827		)	(13,445		)	(14,338		)
Segment operating income	33,805			38,744			57,203			76,489
Stock-based compensation	4,830			4,162			9,297			8,432
Non-recurring and other costs	943			590			1,415			1,158
Total operating income	28,032			33,992			46,491			66,899
Reconciling items:
Interest expense, net	9,921			8,169			19,712			16,960
Foreign currency and other	(116		)	(1,706		)	702			(1,243		)
Write-off of loan acquisition costs associated with refinancing of senior credit agreement	—			2,478			—			2,478
Income from continuing operations before income taxes	$	18,227		$	25,051		$	26,077		$	48,704
Depreciation and amortization:
Electronics and EDVs	$	4,395		$	4,150		$	8,796		$	7,311
Transportation and industrial	2,901			2,295			5,670			4,478
Energy storage	7,296			6,445			14,466			11,789
Separations media	3,491			3,390			6,927			6,712
Corporate and other	2,814			3,197			5,636			7,160
Total depreciation and amortization from continuing operations	$	13,601		$	13,032		$	27,029		$	25,661

12

Polypore International, Inc.

Notes to condensed consolidated financial statements

(unaudited)

14.Assets Held for Sale and Discontinued Operations

In February 2008, the Company purchased 100% of the capital stock of Microporous Holding Corporation, the parent company of Microporous Products L.P. (“Microporous”).  On September 9, 2008, the Federal Trade Commission (the “FTC”) issued an administrative complaint against the Company. 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 the Microporous assets that were acquired in February 2008.  In January 2011, the Company filed a petition with the U.S. Court of Appeals for the 11th Circuit to review the FTC’s order and opinion. The 11th Circuit affirmed the FTC’s decision. In January 2013, the Company filed an appeal with the U.S. Supreme Court. On June 24, 2013, the U.S. Supreme Court declined to hear the Company’s appeal.  As a result, the divestiture provisions of the FTC’s order, which were stayed pending appeal, went into effect and the Company is required to divest the Microporous assets, which consist of the production facilities in Piney Flats, Tennessee, and Feistritz, Austria, by December 26, 2013. Microporous is a component of the transportation and industrial segment.

Effective June 24, 2013, the assets and liabilities of Microporous to be sold meet the accounting criteria to be classified as held for sale and have been aggregated and reported separately in the accompanying condensed consolidated balance sheets as of June 29, 2013 and December 29, 2012.  The Company expects to divest the Microporous assets at a price in excess of book value. The carrying amounts of assets and liabilities held for sale are as follows:

(in thousands)	June 29, 2013		December 29, 2012
Assets
Accounts receivable, net	$	14,377	$	15,259
Inventories	4,860		4,447
Prepaid and other	327		759
Property, plant and equipment, net	30,019		31,335
Goodwill and intangibles, net	39,160		39,530
Other	768		931
Assets held for sale	$	89,511	$	92,261
Liabilities
Accounts payable and accrued liabilities	$	5,033	$	4,066
Deferred income taxes	13,935		13,948
Other	1,435		1,562
Liabilities related to assets held for sale	$	20,403	$	19,576

The results of operations of Microporous are classified as discontinued operations and are presented separately in the accompanying condensed consolidated statements of income for all periods presented.  Summarized results of operations reported as discontinued operations are as follows:

	Three Months Ended				Six Months Ended
(in thousands)	June 29, 2013		June 30, 2012		June 29, 2013		June 30, 2012
Net sales	$	18,373	$	18,207	$	35,945	$	34,309
Income from discontinued operations	4,676		4,377		9,795		8,620
Income from discontinued operations, net of income taxes	2,944		2,826		6,308		5,768

13

Polypore International, Inc.

Notes to condensed consolidated financial statements

(unaudited)

15.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
June 29, 2013

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Assets
Cash and cash equivalents	$	—	$	24,948	$	7,314		$	—		$	32,262
Accounts receivable, net	41,901		77,341		—			—			119,242
Inventories	34,863		80,992		—			—			115,855
Prepaid and other	25,420		17,344		969			—			43,733
Assets held for sale	27,778		22,573		39,160			—			89,511
Total current assets	129,962		223,198		47,443			—			400,603
Due from affiliates	625,525		388,773		483,038			(1,497,336		)	—
Investment in subsidiaries	120,655		385,518		679,052			(1,185,225		)	—
Property, plant and equipment, net	309,974		282,908		—			—			592,882
Goodwill	—		—		444,512			—			444,512
Intangibles and loan acquisition costs, net	—		—		100,077			—			100,077
Other	727		7,188		30			—			7,945
Total assets	$	1,186,843	$	1,287,585	$	1,754,152		$	(2,682,561	)	$	1,546,019
Liabilities and shareholders’ equity
Accounts payable and accrued liabilities	$	21,843	$	43,952	$	5,193		$	—		$	70,988
Income taxes payable	—		4,815		(383		)	—			4,432
Current portion of debt	—		—		69,200			—			69,200
Liabilities related to assets held for sale	16,077		4,326		—			—			20,403
Total current liabilities	37,920		53,093		74,010			—			165,023
Due to affiliates	623,493		363,708		510,135			(1,497,336		)	—
Debt, less current portion	—		—		635,000			—			635,000
Pension obligations, less current portion	—		104,011		—			—			104,011
Deferred income taxes and other	63,717		43,261		174			—			107,152
Shareholders’ equity	461,713		723,512		534,833			(1,185,225		)	534,833
Total liabilities and shareholders’ equity	$	1,186,843	$	1,287,585	$	1,754,152		$	(2,682,561	)	$	1,546,019

14

Polypore International, Inc.

Notes to condensed consolidated financial statements

(unaudited)

Condensed consolidating balance sheet
December 29, 2012

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries		The Company		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	—	$	28,098	$	16,775	$	—		$	44,873
Accounts receivable, net	36,980		85,076		—		—			122,056
Inventories	41,616		73,846		—		—			115,462
Prepaid and other	24,656		19,246		538		—			44,440
Assets held for sale	27,566		25,165		39,530		—			92,261
Total current assets	130,818		231,431		56,843		—			419,092
Due from affiliates	554,190		330,148		482,869		(1,367,207		)	—
Investment in subsidiaries	123,765		381,295		636,860		(1,141,920		)	—
Property, plant and equipment, net	316,128		291,338		—		—			607,466
Goodwill	—		—		444,512		—			444,512
Intangibles and loan acquisition costs, net	—		—		107,006		—			107,006
Other	727		7,269		—		—			7,996
Total assets	$	1,125,628	$	1,241,481	$	1,728,090	$	(2,509,127	)	$	1,586,072
Liabilities and shareholders’ equity
Accounts payable and accrued liabilities	$	24,279	$	45,286	$	4,557	$	—		$	74,122
Income taxes payable	—		723		880		—			1,603
Current portion of debt	—		—		50,000		—			50,000
Liabilities related to assets held for sale	15,222		4,354		—		—			19,576
Total current liabilities	39,501		50,363		55,437		—			145,301
Due to affiliates	579,388		344,398		443,421		(1,367,207		)	—
Debt, less current portion	—		—		646,250		—			646,250
Pension obligations, less current portion	—		103,491		—		—			103,491
Deferred income taxes and other	65,367		42,681		145		—			108,193
Shareholders’ equity	441,372		700,548		582,837		(1,141,920		)	582,837
Total liabilities and shareholders’ equity	$	1,125,628	$	1,241,481	$	1,728,090	$	(2,509,127	)	$	1,586,072

15

Polypore International, Inc.

Notes to condensed consolidated financial statements

(unaudited)

Condensed consolidating statement of income
For the three months ended June 29, 2013

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Net sales	$	54,763		$	114,134	$	—		$	—		$	168,897
Cost of goods sold	22,650			85,821		—			—			108,471
Gross profit	32,113			28,313		—			—			60,426
Selling, general and administrative expenses	15,237			10,799		6,358			—			32,394
Operating income (loss)	16,876			17,514		(6,358		)	—			28,032
Interest expense and other	(2,315		)	2,560		9,560			—			9,805
Equity in earnings of subsidiaries	—			—		(23,220		)	23,220			—
Income from continuing operations before income taxes	19,191			14,954		7,302			(23,220		)	18,227
Income taxes	9,517			4,537		(8,323		)	—			5,731
Income from continuing operations	9,674			10,417		15,625			(23,220		)	12,496
Income from discontinued operations, net of income taxes	1,690			1,439		(185		)	—			2,944
Net income	$	11,364		$	11,856	$	15,440		$	(23,220	)	$	15,440

Condensed consolidating statement of income
For the three months ended June 30, 2012

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Net sales	$	43,475		$	124,132	$	—		$	—		$	167,607
Cost of goods sold	10,906			91,319		—			—			102,225
Gross profit	32,569			32,813		—			—			65,382
Selling, general and administrative expenses	16,347			11,032		4,011			—			31,390
Operating income (loss)	16,222			21,781		(4,011		)	—			33,992
Interest expense and other	(3,714		)	1,063		9,114			—			6,463
Write-off of loan acquisition costs associated with refinancing of senior credit agreement	—			—		2,478			—			2,478
Equity in earnings of subsidiaries	—			—		(29,849		)	29,849			—
Income from continuing operations before income taxes	19,936			20,718		14,246			(29,849		)	25,051
Income taxes	9,666			4,150		(6,420		)	—			7,396
Income from continuing operations	10,270			16,568		20,666			(29,849		)	17,655
Income from discontinued operations, net of income taxes	1,411			1,600		(185		)	—			2,826
Net income	$	11,681		$	18,168	$	20,481		$	(29,849	)	$	20,481

16

Polypore International, Inc.

Notes to condensed consolidated financial statements

(unaudited)

Condensed consolidating statement of income
For the six months ended June 29, 2013

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Net sales	$	89,900		$	224,938	$	—		$	—		$	314,838
Cost of goods sold	39,297			165,920		—			—			205,217
Gross profit	50,603			59,018		—			—			109,621
Selling, general and administrative expenses	30,244			22,211		10,675			—			63,130
Operating income (loss)	20,359			36,807		(10,675		)	—			46,491
Interest expense and other	(3,715		)	4,701		19,428			—			20,414
Equity in earnings of subsidiaries	—			—		(39,307		)	39,307			—
Income from continuing operations before income taxes	24,074			32,106		9,204			(39,307		)	26,077
Income taxes	13,427			10,124		(15,627		)	—			7,924
Income from continuing operations	10,647			21,982		24,831			(39,307		)	18,153
Income from discontinued operations, net of income taxes	3,180			3,498		(370		)	—			6,308
Net income	$	13,827		$	25,480	$	24,461		$	(39,307	)	$	24,461

Condensed consolidating statement of income
For the six months ended June 30, 2012

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Net sales	$	86,363		$	238,847	$	—		$	—		$	325,210
Cost of goods sold	20,268			173,425		—			—			193,693
Gross profit	66,095			65,422		—			—			131,517
Selling, general and administrative expenses	33,312			23,177		8,129			—			64,618
Operating income (loss)	32,783			42,245		(8,129		)	—			66,899
Interest expense and other	(6,298		)	3,872		18,143			—			15,717
Write-off of loan acquisition costs associated with refinancing of senior credit agreement	—			—		2,478			—			2,478
Equity in earnings of subsidiaries	—			—		(58,512		)	58,512			—
Income from continuing operations before income taxes	39,081			38,373		29,762			(58,512		)	48,704
Income taxes	16,850			8,230		(9,862		)	—			15,218
Income from continuing operations	22,231			30,143		39,624			(58,512		)	33,486
Income from discontinued operations, net of income taxes	2,903			3,235		(370		)	—			5,768
Net income	$	25,134		$	33,378	$	39,254		$	(58,512	)	$	39,254

17

Polypore International, Inc.

Notes to condensed consolidated financial statements

(unaudited)

Condensed consolidating statement of comprehensive income
For the three months ended June 29, 2013

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net income	$	11,364	$	11,856		$	15,440		$	(23,220	)	$	15,440
Foreign currency translation adjustment, net of income tax expense of $268	—		(1,597		)	(346		)	(170		)	(2,113		)
Change in net actuarial loss and prior service credit, net of income tax benefit of $138	—		(126		)	—			—			(126		)
Equity in earnings of subsidiaries	—		—			(1,893		)	1,893			—
Comprehensive income	$	11,364	$	10,133		$	13,201		$	(21,497	)	$	13,201

Condensed consolidating statement of comprehensive income
For the three months ended June 30, 2012

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net income	$	11,681	$	18,168		$	20,481		$	(29,849	)	$	20,481
Foreign currency translation adjustment, net of income tax benefit of $1,144	—		(14,595		)	1,053			(1,588		)	(15,130		)
Change in net actuarial loss and prior service credit	—		625			—			—			625
Equity in earnings of subsidiaries	—		—			(15,558		)	15,558			—
Comprehensive income	$	11,681	$	4,198		$	5,976		$	(15,879	)	$	5,976

18

Polypore International, Inc.

Notes to condensed consolidated financial statements

(unaudited)

Condensed consolidating statement of comprehensive income
For the six months ended June 29, 2013

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net income	$	13,827	$	25,480		$	24,461		$	(39,307	)	$	24,461
Foreign currency translation adjustment, net of income tax benefit of $218	—		(5,874		)	354			(95		)	(5,615		)
Change in net actuarial loss and prior service credit, net of income tax benefit of $274	—		913			—			—			913
Equity in earnings of subsidiaries	—		—			(5,056		)	5,056			—
Comprehensive income	$	13,827	$	20,519		$	19,759		$	(34,346	)	$	19,759

Condensed consolidating statement of comprehensive income
For the six months ended June 30, 2012

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net income	$	25,134	$	33,378		$	39,254		$	(58,512	)	$	39,254
Foreign currency translation adjustment, net of income tax benefit of $610	—		(6,293		)	782			(730		)	(6,241		)
Change in net actuarial loss and prior service credit	—		305			—			—			305
Equity in earnings of subsidiaries	—		—			(6,718		)	6,718			—
Comprehensive income	$	25,134	$	27,390		$	33,318		$	(52,524	)	$	33,318

19

Polypore International, Inc.

Notes to condensed consolidated financial statements

(unaudited)

Condensed consolidating statement of cash flows
For the six months ended June 29, 2013

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	43,221		$	41,903		$	(20,075	)	$	4,282		$	69,331
Investing activities:
Purchases of property, plant and equipment, net	(2,240		)	(11,334		)	—			—			(13,574		)
Net cash used in investing activities	(2,240		)	(11,334		)	—			—			(13,574		)
Financing activities:
Principal payments on debt	—			—			(11,250		)	—			(11,250		)
Payments on revolving credit facility	—			—			(35,000		)	—			(35,000		)
Proceeds from revolving credit facility	—			—			54,200			—			54,200
Proceeds from stock option exercises	—			—			1,020			—			1,020
Repurchases of common stock	—			—			(79,935		)	—			(79,935		)
Noncontrolling interest	—			—			1,731			—			1,731
Intercompany transactions, net	(40,981		)	(34,585		)	79,848			(4,282		)	—
Net cash provided by (used in) financing activities	(40,981		)	(34,585		)	10,614			(4,282		)	(69,234		)
Effect of exchange rate changes on cash and cash equivalents	—			866			—			—			866
Net decrease in cash and cash equivalents	—			(3,150		)	(9,461		)	—			(12,611		)
Cash and cash equivalents at beginning of period	—			28,098			16,775			—			44,873
Cash and cash equivalents at end of period	$	—		$	24,948		$	7,314		$	—		$	32,262

Condensed consolidating statement of cash flows
For the six months ended June 30, 2012

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	51,499		$	14,239		$	(18,133	)	$	(800	)	$	46,805
Investing activities:
Purchases of property, plant and equipment, net	(83,072		)	(12,205		)	—			—			(95,277		)
Net cash used in investing activities	(83,072		)	(12,205		)	—			—			(95,277		)
Financing activities:
Principal payments on debt	—			(117		)	(807		)	—			(924		)
Proceeds from stock option exercises	—			—			490			—			490
Noncontrolling interest	—			—			(104		)	—			(104		)
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		)
Loan acquisition costs	—			—			(5,986		)	—			(5,986		)
Intercompany transactions, net	31,573			(814		)	(31,559		)	800			—
Net cash provided by (used in) financing activities	31,573			(42,796		)	11,608			800			1,185
Effect of exchange rate changes on cash and cash equivalents	—			(894		)	—			—			(894		)
Net decrease in cash and cash equivalents	—			(41,656		)	(6,525		)	—			(48,181		)
Cash and cash equivalents at beginning of period	—			65,495			27,079			—			92,574
Cash and cash equivalents at end of period	$	—		$	23,839		$	20,554		$	—		$	44,393

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 29, 2012.

In the second quarter of 2013, the order requiring us to divest the Microporous assets went into effect (as discussed in more detail in the discussion of discontinued operations below). The results of operations of Microporous are classified as discontinued operations and are excluded from continuing operations and segment results for all periods presented. All disclosures and amounts in Management’s Discussion and Analysis of Financial Condition and Results of Operations relate to our continuing operations, unless otherwise indicated.

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 2012, we generated total net sales of $648.7 million. We operate in two primary businesses: energy storage, which includes the transportation and industrial segment and the electronics and EDVs segment, and separations media. The transportation and industrial and separations media segments represent approximately 75% of our total net sales and operate in stable, growing markets, have high recurring revenue bases and generate strong cash flows. In the electronics and EDVs segment, we have a key presence in the more established consumer electronics market and participate in the potentially larger and developing electric drive vehicle (“EDV”) and energy storage systems (“ESS”) markets where lithium is the disruptive technology. As described in more detail below, the long-term growth drivers for lithium batteries are positive, but we have and may continue to experience variability in the short term as these markets emerge.

Since 2009, we have made significant investments in capacity expansion projects, all of which were funded by internally generated cash and a $49.3 million grant from the U.S. Department of Energy. Cash flows from operations, lower capital expenditures and expected proceeds from the divestiture of the Microporous assets position us to generate significant amounts of cash in 2013.

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 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, demand for consumer electronics and growing demand for EDVs — are positive. The energy storage business is comprised of two reportable segments.

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 ESS. Demand for lithium batteries in consumer electronics is driven by the need for increased mobility. In EDV applications, demand is driven by the need to increase fuel efficiency to meet mileage standards in many countries such as the U.S. and China, the need to reduce CO2 emissions around the world but especially in Europe due to regulations, conversion from nickel metal hydride to lithium battery technology in hybrid vehicles due to greater energy and power density, concern in developed countries and emerging markets over future access to petroleum at stable prices, smog and pollution control, and the need to address increasing transportation needs in developing economies. Since late 2009, we have expanded capacity at our existing Charlotte, North Carolina and Ochang, South Korea facilities and built a new facility in Concord, North Carolina. Equipment installation for the Concord facility is substantially complete and production has started for portions of the facility. The remaining capacity at Concord will ramp up over time as the nascent market for EDVs develops.

We believe the long-term demand drivers for our products—consumer demand for mobility, regulations for fuel efficiency and CO2 emissions, conversion to lithium technology in hybrids, concerns about access to petroleum, efforts to reduce pollution, and increasing transportation needs in developing countries—remain fully intact. While consumer electronics applications have attractive long-term market growth trends, EDV and eventually ESS applications have the potential to be much larger markets. Based on industry forecasts and industry studies, unit sales of lithium batteries for EDV applications are expected to grow at a compound annual growth rate of greater than 40% over the next five years. We believe lithium battery separator growth will exceed battery unit sales growth because the trend towards larger batteries will require the use of more separator in each battery. Industry forecasts also predict EDV sales to be 5% or more of new car sales within the next five years. If 5% of new car sales were EDVs, we believe the entire lithium battery separator market would virtually double in total size. Based on our current customer base, if only a portion of these industry forecasts materialize, we believe we will completely utilize our current production capacity. We believe the electrification of the worldwide fleet of vehicles is just beginning, from hybrids to plug-ins to full battery electric vehicles, including automobiles, buses, taxis and commercial fleet vehicles. Hybrids are selling

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well and regulations around the world are driving development and introductions. New hybrids are coming to market and some high-separator content vehicles have just been introduced in Europe. We believe our dry process products continue to be the preferred product in large format lithium-ion batteries for EDVs and ESS. We are currently working with existing and new customers on next-generation batteries, which is important considering the long lead times required to become qualified for EDV applications. EDV and ESS are emerging market applications and are being adopted around the world in many forms. We believe the factors that influenced our decision to expand capacity remain valid, and we continue to expect significant sales growth as the EDV market develops and as ESS experiences more meaningful adoption. Although the long-term growth drivers are positive for these applications, short-term fluctuations in demand can be expected in the early stages of adoption while initial penetration rates are low. Given the high-separator content for these applications, and the potential size of these markets, small changes in end-market demand can have a significant impact on our business.

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 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.

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 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 the 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 29, 2012.

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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)	June 29, 2013			June 30, 2012		June 29, 2013		June 30, 2012
Net sales	$	168.9		$	167.6	100.0	%	100.0	%
Gross profit	60.4			65.4		35.8		39.0
Selling, general and administrative expenses	32.4			31.4		19.2		18.7
Operating income	28.0			34.0		16.6		20.3
Interest expense, net	9.9			8.2		5.9		4.9
Other	(0.1		)	0.7		(0.1	)	0.4
Income from continuing operations before income taxes	18.2			25.1		10.8		15.0
Income taxes	5.7			7.4		3.4		4.4
Income from continuing operations	$	12.5		$	17.7	7.4	%	10.6	%

					Percentage of Net Sales
	Six Months Ended				Six Months Ended
($’s in millions)	June 29, 2013		June 30, 2012		June 29, 2013		June 30, 2012
Net sales	$	314.8	$	325.2	100.0	%	100.0	%
Gross profit	109.6		131.5		34.8		40.4
Selling, general and administrative expenses	63.1		64.6		20.0		19.8
Operating income	46.5		66.9		14.8		20.6
Interest expense, net	19.7		17.0		6.3		5.2
Other	0.7		1.2		0.2		0.4
Income from continuing operations before income taxes	26.1		48.7		8.3		15.0
Income taxes	7.9		15.2		2.5		4.7
Income from continuing operations	$	18.2	$	33.5	5.8	%	10.3	%

Comparison of the three months ended June 29, 2013 with the three months ended June 30, 2012

Net sales.  Net sales for the three months ended June 29, 2013 were $168.9 million, an increase of $1.3 million, or 0.8%, from the same period in the prior year, as higher sales in the transportation and industrial segment were offset by lower sales in the electronics and EDVs segment.

Gross profit.  Gross profit was $60.4 million, a decrease of $5.0 million, or 7.6%, from the same period in the prior year.  Gross profit as a percent of net sales was 35.8% for the three months ended June 29, 2013 compared to 39.0% for the three months ended June 30, 2012.  The decrease in consolidated gross profit and gross profit margin was primarily due to lower sales in the electronics and EDVs segment, costs of exporting goods from our U.S. and European manufacturing facilities to meet growing demand in Asia in the transportation and industrial segment and the negative impact of foreign currency.

Selling, general and administrative expenses.  Selling, general and administrative expenses increased $1.0 million for the three months ended June 29, 2013 compared to the prior year primarily due to an increase in performance-based incentive compensation expense.  Selling, general and administrative expenses were 19.2% of consolidated net sales for the three months ended June 29, 2013 and 18.7% for the same period in the prior year.

Segment operating income.  Segment operating income, which excludes stock-based compensation and certain non-recurring and other costs, was $33.8 million, a decrease of $5.0 million, or 12.9%, from the same period in the prior year. Segment operating income as a percent of net sales was 20.0% for the three months ended June 29, 2013 compared to 23.2% for the three months ended June 30, 2012.  The decrease in segment operating income and segment operating income margin was the result of lower sales in the electronics and EDVs segment, costs of exporting goods from our U.S. and European manufacturing facilities to meet growing demand in Asia in the transportation and industrial segment, higher performance-based incentive compensation expense and the negative impact of foreign currency.

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Interest expense.  Interest expense for the three months ended June 29, 2013 increased by $1.7 million from the same period in the prior year, primarily resulting from a decrease in capitalized interest associated with capacity expansion projects 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 31.4% for the three months ended June 29, 2013 compared to 29.5% for the same period in the prior year. The mix of earnings between the tax jurisdictions has the most 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
	June 29, 2013		June 30, 2012
U.S. federal statutory rate	35.0	%	35.0	%
State income taxes	0.5		0.4
Mix of income in taxing jurisdictions	(2.6	)	(5.9	)
Other	(1.5	)	—
Total effective tax rate	31.4	%	29.5	%

Comparison of the six months ended June 29, 2013 with the six months ended June 30, 2012

Net sales.  Net sales for the six months ended June 29, 2013 were $314.8 million, a decrease of $10.4 million, or 3.2%, from the same period in the prior year, as lower sales in the electronics and EDVs segment were somewhat offset by higher sales in the transportation and industrial segment.

Gross profit.  Gross profit was $109.6 million, a decrease of $21.9 million, or 16.7%, from the same period in the prior year.  Gross profit as a percent of net sales was 34.8% for the six months ended June 29, 2013 compared to 40.4% for the six months ended June 30, 2012.  The decrease in consolidated gross profit and gross profit margin was primarily due to lower sales in the electronics and EDVs segment, costs of exporting goods from our U.S. and European manufacturing facilities to meet growing demand in Asia in the transportation and industrial segment and the negative impact of foreign currency.

Selling, general and administrative expenses.  Selling, general and administrative expenses decreased $1.5 million for the six months ended June 29, 2013 compared to the prior year primarily due to lower amortization expense.  Selling, general and administrative expenses were 20.0% of consolidated net sales for the six months ended June 29, 2013 and 19.8% for the same period in the prior year.

Segment operating income.  Segment operating income, which excludes stock-based compensation and certain non-recurring and other costs, was $57.2 million, a decrease of $19.3 million, or 25.2%, from the same period in the prior year. Segment operating income as a percent of net sales was 18.2% for the six months ended June 29, 2013 compared to 23.5% for the six months ended June 30, 2012.  The decrease in segment operating income and segment operating income margin was the result of lower sales in the electronics and EDVs segment, costs of exporting goods from our U.S. and European manufacturing facilities to meet growing demand in Asia in the transportation and industrial segment and the negative impact of foreign currency.

Interest expense.  Interest expense for the six months ended June 29, 2013 increased by $2.7 million from the same period in the prior year, primarily resulting from a decrease in capitalized interest associated with capacity expansion projects 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 six months ended June 29, 2013 compared to 31.2% for the same period in the prior year. The mix of earnings between the tax jurisdictions has the most 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%.

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The components of our effective tax rate are as follows:

	Six Months Ended
	June 29, 2013		June 30, 2012
U.S. federal statutory rate	35.0	%	35.0	%
State income taxes	(0.2	)	0.5
Mix of income in taxing jurisdictions	(2.9	)	(4.3	)
Other	(1.5	)	—
Total effective tax rate	30.4	%	31.2	%

Discontinued Operations

In February 2008, we acquired Microporous Products L.P. (“Microporous”).  In September 2008, the Federal Trade Commission (the “FTC”) issued an administrative complaint against us regarding the acquisition.  After challenging the complaint before an Administrative Law Judge of the FTC and subsequently before the Commissioners of the FTC, we were ordered to divest the Microporous assets that were acquired in February 2008.  In January 2011, we filed a petition with the U.S. Court of Appeals for the 11th Circuit to review the FTC’s order and opinion.  The 11th Circuit affirmed the FTC’s decision.  In January 2013, we filed an appeal with the U.S. Supreme Court.  On June 24, 2013, the U.S. Supreme Court declined to hear the appeal.  As a result, the divestiture provisions of the FTC’s order, which were stayed pending appeal, went into effect and we are required to divest the Microporous assets, which consist of the production facilities in Piney Flats, Tennessee, and Feistritz, Austria, by December 26, 2013.  Microporous is a component of the transportation and industrial segment of our energy storage business. The results of operations of Microporous are classified as discontinued operations for all periods presented.

Our energy storage business produces polymer-based membrane battery separators used in transportation, industrial and consumer electronics applications.  The acquisition of Microporous extended our product portfolio into the niche, mature deep cycle market for rubber-based battery separators.  We do not believe that the divestiture of the Microporous assets will significantly impact our energy storage business or its long-term growth drivers, including growth in Asia, demand for consumer electronics and growing demand for EDVs.

Financial reporting segments

Electronics and EDVs

Comparison of the three months ended June 29, 2013 with the three months ended June 30, 2012

Net sales.  Net sales for the three months ended June 29, 2013 were $42.2 million, a decrease of $5.2 million, or 11.0%, from the same period in the prior year.  The decrease was due to lower volumes resulting from weak demand in consumer electronics, partially offset by higher volumes in EDV applications.  The impact of price/product mix on sales was insignificant.

Segment operating income.  Segment operating income was $10.8 million, a decrease of $3.7 million, or 25.5%, from the same period in the prior year. Segment operating income as a percent of net sales was 25.6% for the three months ended June 29, 2013 compared to 30.6% for the three months ended June 30, 2012.  The decrease in segment operating income and segment operating income margin was primarily due to lower sales volume.

Since 2009, we have completed five separate capacity expansions and added the fixed costs required to operate the new capacity. Excluding the final phase of expansion at Concord, which will be qualified and ramped-up as demand develops, we have total production capacity sufficient to generate approximately $400.0 million in annual lithium battery separator sales, depending on the mix of products and grades produced. Based on annualized sales in the second quarter of 2013, our current production capacity in terms of sales was approximately 40%.

The key driver of profitability is sales and the resulting benefit of higher production volumes. Because this is a low variable production cost business, operating income and operating income margins fluctuate primarily based on production volumes and the application of fixed costs to those production volumes. When sales volumes increase, operating income margins increase as the production cost per unit is lower due to the allocation of fixed costs to more units of production. Conversely, when sales

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volumes decline, operating income margins decrease as the production cost per unit is higher due to the allocation of fixed costs to less units of production. Because of this, we expect segment operating income and segment operating income margins to improve as sales volumes increase and the costs associated with our capacity expansions are allocated to more units of production.

Comparison of the six months ended June 29, 2013 with the six months ended June 30, 2012

Net sales.  Net sales for the six months ended June 29, 2013 were $66.6 million, a decrease of $23.2 million, or 25.8%, from the same period in the prior year.  The decrease was due primarily to lower volumes, but was also impacted by price/product mix. Net sales were down approximately $21.0 million, or 23.4%, due to lower volumes resulting from weak demand in consumer electronics, partially offset by higher volumes in EDV applications. Net sales decreased by approximately $2.0 million, or 2.2%, due to price/product mix. Price/product mix includes the impact of volume-based price declines where expected volumes did not materialize but the lower price was honored. During the second quarter of 2013, we increased prices to address this issue.

Segment operating income.  Segment operating income was $8.3 million, a decrease of $23.0 million, or 73.5%, from the same period in the prior year.  Segment operating income as a percent of net sales was 12.5% for the six months ended June 29, 2013 compared to 34.9% for the six months ended June 30, 2012.  The decrease in segment operating income and segment operating income margin was primarily due to lower sales volume.

Transportation and Industrial

Comparison of the three months ended June 29, 2013 with the three months ended June 30, 2012

Net sales.  Net sales for the three months ended June 29, 2013 were $80.4 million, an increase of $6.5 million, or 8.8%, from the same period in the prior year primarily due to growth in Asia and the Americas.

Segment operating income.  Segment operating income was $16.8 million, a decrease of $0.3 million, or 1.8%, from the same period in the prior year.  Segment operating income as a percent of net sales was 20.9% for the three months ended June 29, 2013 compared to 23.1% for the three months ended June 30, 2012.  The decrease in segment operating income margin was primarily due to costs of exporting goods from our U.S. and European manufacturing facilities to meet growing demand in Asia and the negative impact of foreign currency.

Comparison of the six months ended June 29, 2013 with the six months ended June 30, 2012

Net sales.  Net sales for the six months ended June 29, 2013 were $156.4 million, an increase of $12.5 million, or 8.7%, from the same period in the prior year primarily due to growth in Asia and the Americas and a more typical battery build season associated with colder winter weather in North America and Europe.

Segment operating income.  Segment operating income was $33.0 million, an increase of $0.3 million, or 0.9%, from the same period in the prior year.  Segment operating income as a percent of net sales was 21.1% for the six months ended June 29, 2013 compared to 22.7% for the six months ended June 30, 2012.  The decrease in segment operating income margin was primarily due to costs of exporting goods from our U.S. and European manufacturing facilities to meet growing demand in Asia and the negative impact of foreign currency.

Separations Media

Comparison of the three months ended June 29, 2013 with the three months ended June 30, 2012

Net sales.  Net sales for the three months ended June 29, 2013 were $46.3 million, which is comparable to net sales for the same period in the prior year, as higher healthcare sales were offset by a decline in filtration and specialty product sales due to lower volumes in certain specialty applications.

Segment operating income.  Segment operating income was $13.8 million, an increase of $0.8 million, or 6.2%, from the same period in the prior year.  Segment operating income as a percent of net sales was 29.8% for the three months ended June 29, 2013 compared to 28.1% for the three months ended June 30, 2012.  Segment operating income margins can fluctuate between quarters due to production timing and mix, but are expected to be relatively consistent to the prior year on an annual basis.

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Comparison of the six months ended June 29, 2013 with the six months ended June 30, 2012

Net sales.  Net sales for the six months ended June 29, 2013 were $91.8 million, an increase of $0.3 million, or 0.3%, from the same period in the prior year.  The increase consisted of higher healthcare sales, offset by a decline in filtration and specialty product sales due to economic weakness in microelectronics.

Segment operating income.  Segment operating income was $29.3 million, an increase of $2.5 million, or 9.3%, from the same period in the prior year.  Segment operating income as a percent of net sales was 31.9% for the six months ended June 29, 2013 compared to 29.3% for the six months ended June 30, 2012.  Segment operating income margins can fluctuate between quarters due to production timing and mix, but are expected to be relatively consistent to the prior year on an annual basis.

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 June 29, 2013 with the three months ended June 30, 2012

Corporate and other costs for the three months ended June 29, 2013 were $7.6 million, compared to $5.8 million for the three months ended June 30, 2012. The increase was primarily due to higher performance-based incentive compensation expense.

Comparison of the six months ended June 29, 2013 with the six months ended June 30, 2012

Corporate and other costs for the six months ended June 29, 2013 were $13.4 million, compared to $14.3 million for the six months ended June 30, 2012. The decrease was primarily due to a decline in amortization expense as certain intangible assets became fully amortized in the second quarter of 2012.

Foreign Operations

As of June 29, 2013, we manufacture our products at 14 strategically located facilities in the United States, Europe and Asia. Net sales from foreign locations were $201.1 million (63.9% of consolidated sales) and $221.1 million (68.0% of consolidated sales) for the six months ended June 29, 2013 and June 30, 2012, respectively. The majority of sales from U.S. production facilities are attributable to the electronics and EDVs segment, where we primarily produce in the U.S. for customers located in Asia. The majority of sales from foreign production facilities are attributable to the transportation and industrial and separations media segments. In the transportation and industrial segment, we have production facilities in the U.S., Europe and Asia and generally produce in the same geographic region that we sell, though we do export some production from U.S. and European facilities to meet growing demand in Asia. In the separations media segment, the majority of production is at our manufacturing facility in Germany and sales are made to customers worldwide. Operating results generated by production facilities within business segments was not significantly impacted by differences in economic, regulatory, geographic or other competitive factors.

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.

Liquidity and capital resources

Cash and cash equivalents decreased by $12.6 million during the six months ended June 29, 2013, as cash generated from operations and borrowings under the revolving credit facility were used to repurchase shares of common stock and fund capital expenditures.

Operating activities.  Net cash provided by operating activities was $69.3 million in the six months ended June 29, 2013, primarily consisting of cash generated from operations of $64.6 million and a net decrease in working capital of $2.7 million.  Accounts receivable and days sales outstanding were 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 levels and days sales in ending inventory are consistent with the prior year. We produce inventory to meet

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expected future customer demand, which is based on a number of factors, including discussions with customers, customer forecasts and industry and economic trends. 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, accrued liabilities and income taxes payable decreased primarily due to timing of payments.

Investing activities.  In the six months ended June 29, 2013, total capital expenditures were $13.6 million compared to $95.3 million for the same period in the prior year.  We currently estimate capital expenditures for fiscal 2013 to be approximately $40.0 million. As of June 29, 2013, we had $154.7 million of construction in progress, primarily related to the expansions in the electronics and EDVs segment, portions of which will be qualified and ramped up over time as market demand develops.

Financing activities.  During the six months ended June 29, 2013, financing activities consisted primarily of repurchases of common stock of $79.9 million, net borrowings under the revolving credit facility of $19.2 million and scheduled principal payments under our credit agreement of $11.3 million.

On February 19, 2013, the Board of Directors authorized the repurchase of up to 4.0 million shares of our common stock by December 31, 2013. As of June 29, 2013, we had repurchased approximately 2.0 million shares of common stock. The timing, price and volume of future repurchases will be based on market conditions, relevant securities laws and other factors. The stock repurchases may be made from time to time on the open market or in privately negotiated transactions. The stock repurchase program does not require us to repurchase any specific number of shares, and we may terminate the repurchase program at any time. The expected cash proceeds received from the divestiture of the Microporous assets in Piney Flats, Tennessee, and Feistritz, Austria, may be a factor in the amount of shares repurchased. Cash flows from operations, lower capital expenditures and expected proceeds from the divestiture of the Microporous assets position us to generate significant amounts of cash in 2013.

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 June 29, 2013, approximately 75% of our cash and cash equivalents were held by foreign subsidiaries. There were no significant restrictions on our ability to transfer funds with and among subsidiaries, or any material adverse tax consequences that would impact our ability to transfer funds held by foreign subsidiaries to the U.S.

Our senior secured credit agreement provides for a $300.0 million term loan facility ($285.0 million outstanding at June 29, 2013) and a $150.0 million revolving credit facility ($54.2 million outstanding at June 29, 2013). At June 29, 2013, the Company had $95.8 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.

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 June 29, 2013, the interest rate on borrowings under the senior secured credit agreement was 2.95%.

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 June 29, 2013
Net income	$	56.2
Add/Subtract:
Depreciation and amortization expense	57.0
Interest expense, net	38.8
Income taxes	23.9
Stock-based compensation	17.1
Foreign currency loss	2.0
Loss on disposal of property, plant and equipment	1.0
Costs related to the FTC litigation	0.2
Other non-cash or non-recurring charges	0.1
Adjusted EBITDA	$	196.3

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As of June 29, 2013, the calculation of the senior leverage ratio, as defined under the senior secured credit agreement, was as follows:

(in millions)
Indebtedness (1)	$	306.9
Adjusted EBITDA	$	196.3
Actual senior leverage ratio	1.56x
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 June 29, 2013, the calculation of the interest coverage ratio, as defined under the senior secured credit agreement, was as follows:

(in millions)
Adjusted EBITDA	$	196.3
Interest expense, net (1)	$	36.7
Actual interest coverage ratio	5.34x
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 June 29, 2013.

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.

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 $38.1 million.

We believe we have sufficient liquidity to meet our cash requirements over both the short (next twelve months) and long term (in relation to our debt service requirements). In evaluating the sufficiency of our liquidity, we considered cash on hand, expected cash flow to be generated from operations and available borrowings under our senior secured credit agreement compared to our anticipated cash requirements for debt service, working capital, cash taxes, capital expenditures and funding requirements for long-term liabilities. We anticipate that our cash on hand and operating cash flow, together with borrowings under the revolving credit facility, will be sufficient to meet our anticipated future operating expenses, capital expenditures and debt service obligations as they become due for at least the next twelve months. However, our ability to make scheduled payments of principal, to pay interest on or to refinance our indebtedness and to satisfy our other debt obligations will depend upon our future operating performance, which will be affected by general economic, financial, competitive, legislative, regulatory, business and other factors beyond our control. See “Item 1A. Risk Factors” in 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.

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

29

technology. Accruals for estimated losses from environmental obligations are adjusted as further information develops or circumstances change. Costs of future expenditures for environmental obligations are not discounted to their present value. We do not currently anticipate any material loss in excess of the amounts accrued. Future remediation expenses may be affected by a number of uncertainties including, but not limited to, the difficulty in estimating the extent and method of remediation, the evolving nature of environmental regulations and the availability and application of technology. We do not expect the resolution of such uncertainties to have a material adverse effect on our consolidated financial position or liquidity. Recoveries of environmental costs from other parties are recognized as assets when their receipt is deemed probable.

In connection with the acquisition of Membrana 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 $8.6 million at June 29, 2013.  We anticipate the expenditures associated with the reserve will be made in the next twelve months.

We have indemnification agreements for certain environmental matters from Acordis A.G. (“Acordis”) and Akzo Nobel N.V. (“Akzo”), the prior owners of Membrana. Akzo originally provided broad environmental protections to Acordis with the right to assign such indemnities to Acordis’s successors. Akzo’s indemnifications relate to conditions existing prior to December 1999, which is the date that Membrana was sold to Acordis. In addition to the Akzo indemnification, Acordis provides separate indemnification of claims incurred from December 1999 through February 2002, the acquisition date. We will receive indemnification payments under the indemnification agreements after expenditures are made against approved claims. At June 29, 2013, the indemnification receivable, which is denominated in euros, was $11.4 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.

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 June 29, 2013, we had fixed rate debt of $365.0 million and variable rate debt of $339.2 million. To reduce the interest rate risk inherent in our variable rate debt, we may utilize interest rate derivatives. As of June 29, 2013, there were no outstanding interest rate derivatives. The pre-tax earnings and cash flow impact resulting from a 100 basis point increase in interest rates on our variable rate debt, holding other variables constant, would be $3.4 million per year.

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.

30

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

	June 29, 2013	June 30, 2012
Period end rate	1.3043	1.2578
Period average rate for the three months ended	1.3060	1.2852
Period average rate for the six months ended	1.3133	1.2976

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 June 29, 2013, we did not have any foreign currency derivatives outstanding.

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 June 29, 2013 to ensure that information required to be disclosed in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

During the three months ended June 29, 2013, 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 regarding our February 29, 2008 acquisition of Microporous Holding Corporation, the parent company of Microporous Products L.P. (“Microporous”). After challenging the complaint before an Administrative Law Judge of the FTC and subsequently before the Commissioners of the FTC, we were ordered to divest 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. On January 15, 2013, we filed an appeal with the U.S. Supreme Court, and on June 24, 2013, the U.S. Supreme Court declined to hear our petition for review of the 11th Circuit’s opinion upholding the FTC’s order. With the U.S. Supreme Court’s decision not to hear the appeal, the divestiture provisions of the order, which were stayed pending appeal, went into effect on June 24, 2013.  In accordance with the FTC’s order, we are required to complete the divestiture of the Microporous assets, which consist of the production facilities in Piney Flats, Tennessee, and Feistritz, Austria, by December 26, 2013.

Our energy storage business produces polymer-based membrane battery separators used in transportation, industrial and consumer electronics applications.  The acquisition of Microporous 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 the required divestiture of the Microporous assets will significantly impact our energy storage business or its long-term growth drivers, including growth in Asia, demand for consumer electronics and growing demand for electric drive vehicles.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table provides detail about our share repurchase activity during the three months ended June 29, 2013:

Fiscal Month	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Maximum Number of Shares that May Yet Be Purchased Under the Program
March 31, 2013 — May 4, 2013	143,200	$	38.29	143,200	3,850,000
May 5, 2013 — June 1, 2013	—	—		—	3,850,000
June 2, 2013 — June 29, 2013	1,834,500		40.33	1,834,500	2,015,500
Total	1,977,700	$	40.18	1,977,700	2,015,500

On February 19, 2013, the Board of Directors authorized the repurchase of up to 4,000,000 million shares of our common stock by December 31, 2013. As of June 29, 2013, we had repurchased 1,984,500 shares of common stock under the February 2013 repurchase program.

Item 6.   Exhibits

Exhibit No.	Exhibit Description
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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: August 8, 2013		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-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: August 8, 2013	/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: August 8, 2013	/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 June 29, 2013 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: August 8, 2013	/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 June 29, 2013 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: August 8, 2013	/s/  Lynn Amos
	Lynn Amos
	Chief Financial Officer

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Commitments and Contingencies

6 Months Ended

Jun. 29, 2013

Commitments and Contingencies

Commitments and Contingencies

11. Commitments and Contingencies

Collective Bargaining Agreement

The Company’s employees at the Corydon, Indiana facility are represented under a labor union collective bargaining agreement. The collective bargaining agreement at the Corydon facility, covering approximately 3% of the Company’s workers, expires on August 31, 2013.

XML

Condensed consolidated statements of income (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2013	Jun. 30, 2012	Jun. 29, 2013	Jun. 30, 2012
Condensed consolidated statements of income
Net sales	$ 168,897	$ 167,607	$ 314,838	$ 325,210
Cost of goods sold	108,471	102,225	205,217	193,693
Gross profit	60,426	65,382	109,621	131,517
Selling, general and administrative expenses	32,394	31,390	63,130	64,618
Operating income	28,032	33,992	46,491	66,899
Other (income) expense:
Interest expense, net	9,921	8,169	19,712	16,960
Foreign currency and other	(116)	(1,706)	702	(1,243)
Write-off of loan acquisition costs associated with refinancing of senior credit agreement		2,478		2,478
Other (income) expense total	9,805	8,941	20,414	18,195
Income from continuing operations before income taxes	18,227	25,051	26,077	48,704
Income taxes	5,731	7,396	7,924	15,218
Income from continuing operations	12,496	17,655	18,153	33,486
Income from discontinued operations, net of income taxes	2,944	2,826	6,308	5,768
Net income	$ 15,440	$ 20,481	$ 24,461	$ 39,254
Net income per share - basic:
Continuing operations (in dollars per share)	$ 0.27	$ 0.38	$ 0.39	$ 0.72
Discontinued operations (in dollars per share)	$ 0.06	$ 0.06	$ 0.14	$ 0.12
Net income per share (in dollars per share)	$ 0.33	$ 0.44	$ 0.53	$ 0.84
Net income per share - diluted:
Continuing operations (in dollars per share)	$ 0.27	$ 0.37	$ 0.39	$ 0.71
Discontinued operations (in dollars per share)	$ 0.06	$ 0.06	$ 0.13	$ 0.12
Net income per share (in dollars per share)	$ 0.33	$ 0.43	$ 0.52	$ 0.83
Weighted average shares outstanding:
Weighted average shares outstanding - basic (in shares)	46,269,885	46,533,322	46,441,603	46,515,512
Weighted average shares outstanding - diluted (in shares)	46,917,077	47,207,680	47,106,282	47,211,282

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Fair Value of Financial Instruments

6 Months Ended

Jun. 29, 2013

Fair Value of Financial Instruments

Fair Value of Financial Instruments

4. 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 $380,513,000 at June 29, 2013.

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Pension Plans (Tables)

6 Months Ended

Jun. 29, 2013

Pension Plans

Schedule of components of net periodic benefit cost

	Three Months Ended						Six Months Ended
(in thousands)	June 29, 2013			June 30, 2012			June 29, 2013			June 30, 2012
Service cost	$	555		$	414		$	1,118		$	836
Interest cost	1,114			1,184			2,241			2,391
Expected return on plan assets	(189		)	(211		)	(380		)	(426		)
Amortization of prior service credit	(13		)	(13		)	(26		)	(26		)
Recognized net actuarial loss	427			117			859			236
Net periodic benefit cost	$	1,894		$	1,491		$	3,812		$	3,011

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Stock-Based Compensation Plans

6 Months Ended

Jun. 29, 2013

Stock-Based Compensation Plans

Stock-Based Compensation Plans

12. Stock-Based Compensation Plans

The Company offers stock-based compensation plans to attract, retain, motivate and reward key officers, non-employee directors and employees. Stock-based compensation expense was $4,830,000 and $9,297,000 for the three and six months ended June 29, 2013, respectively, and $4,162,000 and $8,432,000 for the same three and six month periods in the prior year, respectively. The income tax benefit related to stock-based compensation expense was $1,717,000 and $3,304,000 for the three and six months ended June 29, 2013, respectively, and $1,477,000 and $2,992,000 for the same three and six month periods in the prior year, respectively. Stock-based compensation expense includes costs associated with stock options and restricted stock and is classified as “Selling, general and administrative expenses” in the accompanying condensed consolidated statements of income.

The 2007 Stock Incentive Plan (“2007 Plan”) allows for the grant of stock options, restricted stock and other instruments for up to a total of 4,751,963 shares of common stock. On February 25, 2013, the Company granted 328,467 stock options and 85,461 shares of restricted stock under the 2007 Plan with an aggregate grant-date fair value of $9,248,000, to be recognized over the vesting period for each award.  The stock options granted are time-vested options that vest annually in equal one-third installments and have 10-year terms and an exercise price of $36.42, the fair market value of the Company’s stock on the grant date.

The fair value of the options granted was estimated on the date of grant based on the Black-Scholes option pricing model with the following assumptions:

	February 25, 2013Grant Assumptions
Expected term (years)	5.6
Risk-free interest rate	0.92	%
Expected volatility	57.3	%
Dividend yield	—

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

On February 25, 2013, the Company modified the terms of stock options granted on August 23, 2011. For participants that meet certain criteria upon retirement, the modification extends the exercise period for vested options from 90 days after retirement to the earlier of the option expiration date or three years after retirement and also allows unvested options to continue to vest for up to three years after retirement as if the participant had remained in the service of the Company. The total incremental stock option expense associated with the modification, net of estimated forfeitures, was $2,500,000, of which $482,000 has been recognized as of June 29, 2013, and the remainder of which will be recognized over the remaining vesting period of 1.4 years.

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Stock-Based Compensation Plans (Details) (2007 Stock Incentive Plan, USD $)	0 Months Ended	3 Months Ended		6 Months Ended
	Feb. 25, 2013	Jun. 29, 2013	Jun. 30, 2012	Jun. 29, 2013	Jun. 30, 2012
Stock Based Compensation Plans
Stock-based compensation		$ 4,830,000	$ 4,162,000	$ 9,297,000	$ 8,432,000
Income tax benefit related to stock-based compensation expense		1,717,000	1,477,000	3,304,000	2,992,000
Number of shares authorized for grant under 2007 plan		4,751,963		4,751,963
Aggregate grant-date fair value of awards granted	9,248,000
Stock option
Stock Based Compensation Plans
Granted (in shares)	328,467
Percentage of shares vesting in equal installments				33.00%
Term of Options granted under the plan				10 years
Exercise price (in dollars per share)	$ 36.42
Assumptions used in estimation of grant date fair value of options based on the Black Scholes option pricing model
Expected term	5 years 7 months 6 days
Risk-free interest rate (as a percent)	0.92%
Expected volatility (as a percent)	57.30%
Stock Based Compensation Plans
Vesting period				3 years
Exercise period after retirement for vested options before modification	90 days
Incremental stock option expense associated with the modification, net of estimated forfeitures	2,500,000
Recognized amount of incremental stock option expense associated with the modification, net of estimated forfeitures		$ 482,000		$ 482,000
Remaining vesting term for recognizing remaining incremental stock option expense associated with the modification				1 year 4 months 24 days
Stock option | Maximum
Stock Based Compensation Plans
Exercise period after retirement for vested options after modification	3 years
Vesting period after retirement for unvested options after modification	3 years
Restricted Stock
Stock Based Compensation Plans
Restricted stock grants (in shares)	85,461

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Assets Held for Sale and Discontinued Operations (Tables)

6 Months Ended

Jun. 29, 2013

Assets Held for Sale and Discontinued Operations

Schedule of carrying amounts of assets and liabilities held for sale

(in thousands)	June 29, 2013		December 29, 2012
Assets
Accounts receivable, net	$	14,377	$	15,259
Inventories	4,860		4,447
Prepaid and other	327		759
Property, plant and equipment, net	30,019		31,335
Goodwill and intangibles, net	39,160		39,530
Other	768		931
Assets held for sale	$	89,511	$	92,261
Liabilities
Accounts payable and accrued liabilities	$	5,033	$	4,066
Deferred income taxes	13,935		13,948
Other	1,435		1,562
Liabilities related to assets held for sale	$	20,403	$	19,576

Summary of results of operations reported as discontinued operations

	Three Months Ended				Six Months Ended
(in thousands)	June 29, 2013		June 30, 2012		June 29, 2013		June 30, 2012
Net sales	$	18,373	$	18,207	$	35,945	$	34,309
Income from discontinued operations	4,676		4,377		9,795		8,620
Income from discontinued operations, net of income taxes	2,944		2,826		6,308		5,768

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Segment Information (Tables)

6 Months Ended

Jun. 29, 2013

Segment Information

Schedule of financial information relating to the reportable segments

	Three Months Ended						Six Months Ended
(in thousands)	June 29, 2013			June 30, 2012			June 29, 2013			June 30, 2012
Net sales to external customers (by major product group):
Electronics and EDVs	$	42,214		$	47,396		$	66,589		$	89,784
Transportation and industrial	80,340			73,861			156,453			143,961
Energy storage	122,554			121,257			223,042			233,745
Healthcare	30,045			28,524			59,543			56,069
Filtration and specialty	16,298			17,826			32,253			35,396
Separations media	46,343			46,350			91,796			91,465
Total net sales to external customers	$	168,897		$	167,607		$	314,838		$	325,210
Operating income:
Electronics and EDVs	$	10,781		$	14,508		$	8,262		$	31,303
Transportation and industrial	16,800			17,105			33,041			32,703
Energy storage	27,581			31,613			41,303			64,006
Separations media	13,836			12,958			29,345			26,821
Corporate and other	(7,612		)	(5,827		)	(13,445		)	(14,338		)
Segment operating income	33,805			38,744			57,203			76,489
Stock-based compensation	4,830			4,162			9,297			8,432
Non-recurring and other costs	943			590			1,415			1,158
Total operating income	28,032			33,992			46,491			66,899
Reconciling items:
Interest expense, net	9,921			8,169			19,712			16,960
Foreign currency and other	(116		)	(1,706		)	702			(1,243		)
Write-off of loan acquisition costs associated with refinancing of senior credit agreement	—			2,478			—			2,478
Income from continuing operations before income taxes	$	18,227		$	25,051		$	26,077		$	48,704
Depreciation and amortization:
Electronics and EDVs	$	4,395		$	4,150		$	8,796		$	7,311
Transportation and industrial	2,901			2,295			5,670			4,478
Energy storage	7,296			6,445			14,466			11,789
Separations media	3,491			3,390			6,927			6,712
Corporate and other	2,814			3,197			5,636			7,160
Total depreciation and amortization from continuing operations	$	13,601		$	13,032		$	27,029		$	25,661

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Treasury Stock (Details) (USD $)	6 Months Ended
	Jun. 29, 2013	Feb. 19, 2013
Treasury Stock
Maximum number of shares authorized to be repurchased		4,000,000
Shares of common stock repurchased	1,984,500
Amount at which shares of common stock were repurchased	$ 79,731,000
Shares of common stock withheld and repurchased to satisfy the statutory withholding tax liability for certain foreign employees	5,600
Amount at which shares of common stock were withheld and repurchased to satisfy the statutory withholding tax liability for certain foreign employees	$ 204,000

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Segment Information (Details 2) (Continuing operations, USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2013	Jun. 30, 2012	Jun. 29, 2013	Jun. 30, 2012
Financial information relating to the reportable segments
Depreciation and amortization from continuing operations	$ 13,601	$ 13,032	$ 27,029	$ 25,661
Energy Storage
Financial information relating to the reportable segments
Depreciation and amortization from continuing operations	7,296	6,445	14,466	11,789
Electronics and EDVs
Financial information relating to the reportable segments
Depreciation and amortization from continuing operations	4,395	4,150	8,796	7,311
Transportation and industrial
Financial information relating to the reportable segments
Depreciation and amortization from continuing operations	2,901	2,295	5,670	4,478
Separations Media
Financial information relating to the reportable segments
Depreciation and amortization from continuing operations	3,491	3,390	6,927	6,712
Corporate and other
Financial information relating to the reportable segments
Depreciation and amortization from continuing operations	$ 2,814	$ 3,197	$ 5,636	$ 7,160

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Fair Value of Financial Instruments (Details) (7.5% senior notes, USD $)	Jun. 29, 2013	Dec. 29, 2012
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	$ 380,513,000

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Financial Statements of Guarantors (Details 2) (USD $)	3 Months Ended		6 Months Ended
	Jun. 29, 2013	Jun. 30, 2012	Jun. 29, 2013	Jun. 30, 2012
Net sales	$ 168,897,000	$ 167,607,000	$ 314,838,000	$ 325,210,000
Cost of goods sold	108,471,000	102,225,000	205,217,000	193,693,000
Gross profit	60,426,000	65,382,000	109,621,000	131,517,000
Selling, general and administrative expenses	32,394,000	31,390,000	63,130,000	64,618,000
Operating income	28,032,000	33,992,000	46,491,000	66,899,000
Interest expense and other	9,805,000	6,463,000	20,414,000	15,717,000
Write-off of loan acquisition costs associated with refinancing of senior credit agreement		2,478,000		2,478,000
Income from continuing operations before income taxes	18,227,000	25,051,000	26,077,000	48,704,000
Income taxes	5,731,000	7,396,000	7,924,000	15,218,000
Income from continuing operations	12,496,000	17,655,000	18,153,000	33,486,000
Income from discontinued operations, net of income taxes	2,944,000	2,826,000	6,308,000	5,768,000
Net income	15,440,000	20,481,000	24,461,000	39,254,000
Combined Guarantor Subsidiaries
Net sales	54,763,000	43,475,000	89,900,000	86,363,000
Cost of goods sold	22,650,000	10,906,000	39,297,000	20,268,000
Gross profit	32,113,000	32,569,000	50,603,000	66,095,000
Selling, general and administrative expenses	15,237,000	16,347,000	30,244,000	33,312,000
Operating income	16,876,000	16,222,000	20,359,000	32,783,000
Interest expense and other	(2,315,000)	(3,714,000)	(3,715,000)	(6,298,000)
Income from continuing operations before income taxes	19,191,000	19,936,000	24,074,000	39,081,000
Income taxes	9,517,000	9,666,000	13,427,000	16,850,000
Income from continuing operations	9,674,000	10,270,000	10,647,000	22,231,000
Income from discontinued operations, net of income taxes	1,690,000	1,411,000	3,180,000	2,903,000
Net income	11,364,000	11,681,000	13,827,000	25,134,000
Combined Non-Guarantor Subsidiaries
Net sales	114,134,000	124,132,000	224,938,000	238,847,000
Cost of goods sold	85,821,000	91,319,000	165,920,000	173,425,000
Gross profit	28,313,000	32,813,000	59,018,000	65,422,000
Selling, general and administrative expenses	10,799,000	11,032,000	22,211,000	23,177,000
Operating income	17,514,000	21,781,000	36,807,000	42,245,000
Interest expense and other	2,560,000	1,063,000	4,701,000	3,872,000
Income from continuing operations before income taxes	14,954,000	20,718,000	32,106,000	38,373,000
Income taxes	4,537,000	4,150,000	10,124,000	8,230,000
Income from continuing operations	10,417,000	16,568,000	21,982,000	30,143,000
Income from discontinued operations, net of income taxes	1,439,000	1,600,000	3,498,000	3,235,000
Net income	11,856,000	18,168,000	25,480,000	33,378,000
The Company
Selling, general and administrative expenses	6,358,000	4,011,000	10,675,000	8,129,000
Operating income	(6,358,000)	(4,011,000)	(10,675,000)	(8,129,000)
Interest expense and other	9,560,000	9,114,000	19,428,000	18,143,000
Write-off of loan acquisition costs associated with refinancing of senior credit agreement		2,478,000		2,478,000
Equity in earnings of subsidiaries	(23,220,000)	(29,849,000)	(39,307,000)	(58,512,000)
Income from continuing operations before income taxes	7,302,000	14,246,000	9,204,000	29,762,000
Income taxes	(8,323,000)	(6,420,000)	(15,627,000)	(9,862,000)
Income from continuing operations	15,625,000	20,666,000	24,831,000	39,624,000
Income from discontinued operations, net of income taxes	(185,000)	(185,000)	(370,000)	(370,000)
Net income	15,440,000	20,481,000	24,461,000	39,254,000
Eliminations
Equity in earnings of subsidiaries	23,220,000	29,849,000	39,307,000	58,512,000
Income from continuing operations before income taxes	(23,220,000)	(29,849,000)	(39,307,000)	(58,512,000)
Income from continuing operations	(23,220,000)	(29,849,000)	(39,307,000)	(58,512,000)
Net income	$ (23,220,000)	$ (29,849,000)	$ (39,307,000)	$ (58,512,000)

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Stock-Based Compensation Plans (Tables)

6 Months Ended

Jun. 29, 2013

Stock-Based Compensation Plans

Schedule of assumptions for stock option grants

	February 25, 2013Grant Assumptions
Expected term (years)	5.6
Risk-free interest rate	0.92	%
Expected volatility	57.3	%
Dividend yield	—

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Condensed consolidated statements of cash flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 29, 2013	Jun. 30, 2012
Operating activities:
Net income	$ 24,461	$ 39,254
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	22,882	20,032
Amortization expense	5,927	7,430
Amortization of loan acquisition costs	1,237	1,234
Stock-based compensation	9,297	8,432
Loss on disposal of property, plant and equipment	864	900
Foreign currency (gain) loss	670	(535)
Deferred income taxes	(713)	8,678
Write-off of loan acquisition costs associated with refinancing of senior credit agreement		2,478
Changes in operating assets and liabilities:
Accounts receivable	2,498	(1,486)
Inventories	(1,894)	(24,015)
Prepaid and other current assets	719	1,136
Accounts payable and accrued liabilities	(1,457)	(11,955)
Income taxes payable	2,838	(6,002)
Other, net	2,002	1,224
Net cash provided by operating activities	69,331	46,805
Investing activities:
Purchases of property, plant and equipment, net	(13,574)	(95,277)
Net cash used in investing activities	(13,574)	(95,277)
Financing activities:
Principal payments on debt	(11,250)	(924)
Payments on revolving credit facility	(35,000)
Proceeds from revolving credit facility	54,200
Proceeds from stock option exercises	1,020	490
Repurchases of common stock	(79,935)
Noncontrolling interest	1,731	(104)
Proceeds from new senior credit agreement		350,000
Principal payments in connection with refinancing of senior credit agreement		(342,291)
Loan acquisition costs		(5,986)
Net cash provided by (used in) financing activities	(69,234)	1,185
Effect of exchange rate changes on cash and cash equivalents	866	(894)
Net decrease in cash and cash equivalents	(12,611)	(48,181)
Cash and cash equivalents at beginning of period	44,873	92,574
Cash and cash equivalents at end of period	$ 32,262	$ 44,393

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Inventories

6 Months Ended

Jun. 29, 2013

Inventories

Inventories

2. 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)	June 29, 2013		December 29, 2012
Raw materials	$	36,819	$	42,113
Work-in-process	27,667		27,608
Finished goods	51,369		45,741
	$	115,855	$	115,462

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Income Taxes

6 Months Ended

Jun. 29, 2013

Income Taxes

Income Taxes

5. 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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Debt

6 Months Ended

Jun. 29, 2013

Debt

Debt

3. Debt

Debt, in order of priority, consists of:

(in thousands)	June 29, 2013		December 29, 2012
Senior credit agreement:
Revolving credit facility	$	54,200	$	35,000
Term loan facility	285,000		296,250
	339,200		331,250
7.5% senior notes	365,000		365,000
	704,200		696,250
Less current portion, including borrowings under the revolving credit facility	69,200		50,000
Long-term debt	$	635,000	$	646,250

On June 29, 2012, the Company refinanced its previous senior secured credit agreement with a new senior secured credit agreement.  The credit agreement provides for a $150,000,000 revolving credit facility ($50,000,000 of which was borrowed in connection with the refinancing) and a $300,000,000 term loan facility. The proceeds from the credit agreement were used to pay outstanding principal and interest under the previous credit agreement and loan acquisition costs of $6,228,000 ($5,986,000 paid during the second quarter of 2012), which were capitalized and will be amortized over the life of the 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. 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.

At June 29, 2013, the Company had $54,200,000 outstanding under the revolving credit facility and $95,800,000 available for borrowing. The revolving credit facility matures in June 2017.  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.

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Assets Held for Sale and Discontinued Operations (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2013	Jun. 30, 2012	Jun. 29, 2013	Jun. 30, 2012	Dec. 29, 2012	Feb. 29, 2008
Assets Held for Sale and Discontinued Operations
Percentage of capital stock of Microporous purchased	100.00%		100.00%
Assets
Assets held for sale	$ 89,511		$ 89,511		$ 92,261
Liabilities
Liabilities related to assets held for sale	20,403		20,403		19,576
Results of operations
Income from discontinued operations, net of income taxes	2,944	2,826	6,308	5,768
Microporous
Assets Held for Sale and Discontinued Operations
Percentage of capital stock of Microporous purchased						100.00%
Assets
Accounts receivable, net	14,377		14,377		15,259
Inventories	4,860		4,860		4,447
Prepaid and other	327		327		759
Property, plant and equipment, net	30,019		30,019		31,335
Goodwill and intangibles, net	39,160		39,160		39,530
Other	768		768		931
Assets held for sale	89,511		89,511		92,261
Liabilities
Accounts payable and accrued liabilities	5,033		5,033		4,066
Deferred income taxes	13,935		13,935		13,948
Other	1,435		1,435		1,562
Liabilities related to assets held for sale	20,403		20,403		19,576
Results of operations
Net sales	18,373	18,207	35,945	34,309
Income from discontinued operations	4,676	4,377	9,795	8,620
Income from discontinued operations, net of income taxes	$ 2,944	$ 2,826	$ 6,308	$ 5,768

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Financial Statements of Guarantors (Tables)

6 Months Ended

Jun. 29, 2013

Financial Statements of Guarantors

Condensed consolidating balance sheet

Condensed consolidating balance sheet
June 29, 2013

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Assets
Cash and cash equivalents	$	—	$	24,948	$	7,314		$	—		$	32,262
Accounts receivable, net	41,901		77,341		—			—			119,242
Inventories	34,863		80,992		—			—			115,855
Prepaid and other	25,420		17,344		969			—			43,733
Assets held for sale	27,778		22,573		39,160			—			89,511
Total current assets	129,962		223,198		47,443			—			400,603
Due from affiliates	625,525		388,773		483,038			(1,497,336		)	—
Investment in subsidiaries	120,655		385,518		679,052			(1,185,225		)	—
Property, plant and equipment, net	309,974		282,908		—			—			592,882
Goodwill	—		—		444,512			—			444,512
Intangibles and loan acquisition costs, net	—		—		100,077			—			100,077
Other	727		7,188		30			—			7,945
Total assets	$	1,186,843	$	1,287,585	$	1,754,152		$	(2,682,561	)	$	1,546,019
Liabilities and shareholders’ equity
Accounts payable and accrued liabilities	$	21,843	$	43,952	$	5,193		$	—		$	70,988
Income taxes payable	—		4,815		(383		)	—			4,432
Current portion of debt	—		—		69,200			—			69,200
Liabilities related to assets held for sale	16,077		4,326		—			—			20,403
Total current liabilities	37,920		53,093		74,010			—			165,023
Due to affiliates	623,493		363,708		510,135			(1,497,336		)	—
Debt, less current portion	—		—		635,000			—			635,000
Pension obligations, less current portion	—		104,011		—			—			104,011
Deferred income taxes and other	63,717		43,261		174			—			107,152
Shareholders’ equity	461,713		723,512		534,833			(1,185,225		)	534,833
Total liabilities and shareholders’ equity	$	1,186,843	$	1,287,585	$	1,754,152		$	(2,682,561	)	$	1,546,019

Condensed consolidating balance sheet
December 29, 2012

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries		The Company		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	—	$	28,098	$	16,775	$	—		$	44,873
Accounts receivable, net	36,980		85,076		—		—			122,056
Inventories	41,616		73,846		—		—			115,462
Prepaid and other	24,656		19,246		538		—			44,440
Assets held for sale	27,566		25,165		39,530		—			92,261
Total current assets	130,818		231,431		56,843		—			419,092
Due from affiliates	554,190		330,148		482,869		(1,367,207		)	—
Investment in subsidiaries	123,765		381,295		636,860		(1,141,920		)	—
Property, plant and equipment, net	316,128		291,338		—		—			607,466
Goodwill	—		—		444,512		—			444,512
Intangibles and loan acquisition costs, net	—		—		107,006		—			107,006
Other	727		7,269		—		—			7,996
Total assets	$	1,125,628	$	1,241,481	$	1,728,090	$	(2,509,127	)	$	1,586,072
Liabilities and shareholders’ equity
Accounts payable and accrued liabilities	$	24,279	$	45,286	$	4,557	$	—		$	74,122
Income taxes payable	—		723		880		—			1,603
Current portion of debt	—		—		50,000		—			50,000
Liabilities related to assets held for sale	15,222		4,354		—		—			19,576
Total current liabilities	39,501		50,363		55,437		—			145,301
Due to affiliates	579,388		344,398		443,421		(1,367,207		)	—
Debt, less current portion	—		—		646,250		—			646,250
Pension obligations, less current portion	—		103,491		—		—			103,491
Deferred income taxes and other	65,367		42,681		145		—			108,193
Shareholders’ equity	441,372		700,548		582,837		(1,141,920		)	582,837
Total liabilities and shareholders’ equity	$	1,125,628	$	1,241,481	$	1,728,090	$	(2,509,127	)	$	1,586,072

Condensed consolidating statement of income

Condensed consolidating statement of income
For the three months ended June 29, 2013

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Net sales	$	54,763		$	114,134	$	—		$	—		$	168,897
Cost of goods sold	22,650			85,821		—			—			108,471
Gross profit	32,113			28,313		—			—			60,426
Selling, general and administrative expenses	15,237			10,799		6,358			—			32,394
Operating income (loss)	16,876			17,514		(6,358		)	—			28,032
Interest expense and other	(2,315		)	2,560		9,560			—			9,805
Equity in earnings of subsidiaries	—			—		(23,220		)	23,220			—
Income from continuing operations before income taxes	19,191			14,954		7,302			(23,220		)	18,227
Income taxes	9,517			4,537		(8,323		)	—			5,731
Income from continuing operations	9,674			10,417		15,625			(23,220		)	12,496
Income from discontinued operations, net of income taxes	1,690			1,439		(185		)	—			2,944
Net income	$	11,364		$	11,856	$	15,440		$	(23,220	)	$	15,440

Condensed consolidating statement of income
For the three months ended June 30, 2012

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Net sales	$	43,475		$	124,132	$	—		$	—		$	167,607
Cost of goods sold	10,906			91,319		—			—			102,225
Gross profit	32,569			32,813		—			—			65,382
Selling, general and administrative expenses	16,347			11,032		4,011			—			31,390
Operating income (loss)	16,222			21,781		(4,011		)	—			33,992
Interest expense and other	(3,714		)	1,063		9,114			—			6,463
Write-off of loan acquisition costs associated with refinancing of senior credit agreement	—			—		2,478			—			2,478
Equity in earnings of subsidiaries	—			—		(29,849		)	29,849			—
Income from continuing operations before income taxes	19,936			20,718		14,246			(29,849		)	25,051
Income taxes	9,666			4,150		(6,420		)	—			7,396
Income from continuing operations	10,270			16,568		20,666			(29,849		)	17,655
Income from discontinued operations, net of income taxes	1,411			1,600		(185		)	—			2,826
Net income	$	11,681		$	18,168	$	20,481		$	(29,849	)	$	20,481

Condensed consolidating statement of income
For the six months ended June 29, 2013

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Net sales	$	89,900		$	224,938	$	—		$	—		$	314,838
Cost of goods sold	39,297			165,920		—			—			205,217
Gross profit	50,603			59,018		—			—			109,621
Selling, general and administrative expenses	30,244			22,211		10,675			—			63,130
Operating income (loss)	20,359			36,807		(10,675		)	—			46,491
Interest expense and other	(3,715		)	4,701		19,428			—			20,414
Equity in earnings of subsidiaries	—			—		(39,307		)	39,307			—
Income from continuing operations before income taxes	24,074			32,106		9,204			(39,307		)	26,077
Income taxes	13,427			10,124		(15,627		)	—			7,924
Income from continuing operations	10,647			21,982		24,831			(39,307		)	18,153
Income from discontinued operations, net of income taxes	3,180			3,498		(370		)	—			6,308
Net income	$	13,827		$	25,480	$	24,461		$	(39,307	)	$	24,461

Condensed consolidating statement of income
For the six months ended June 30, 2012

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Net sales	$	86,363		$	238,847	$	—		$	—		$	325,210
Cost of goods sold	20,268			173,425		—			—			193,693
Gross profit	66,095			65,422		—			—			131,517
Selling, general and administrative expenses	33,312			23,177		8,129			—			64,618
Operating income (loss)	32,783			42,245		(8,129		)	—			66,899
Interest expense and other	(6,298		)	3,872		18,143			—			15,717
Write-off of loan acquisition costs associated with refinancing of senior credit agreement	—			—		2,478			—			2,478
Equity in earnings of subsidiaries	—			—		(58,512		)	58,512			—
Income from continuing operations before income taxes	39,081			38,373		29,762			(58,512		)	48,704
Income taxes	16,850			8,230		(9,862		)	—			15,218
Income from continuing operations	22,231			30,143		39,624			(58,512		)	33,486
Income from discontinued operations, net of income taxes	2,903			3,235		(370		)	—			5,768
Net income	$	25,134		$	33,378	$	39,254		$	(58,512	)	$	39,254

Condensed consolidating statement of comprehensive income

Condensed consolidating statement of comprehensive income
For the three months ended June 29, 2013

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net income	$	11,364	$	11,856		$	15,440		$	(23,220	)	$	15,440
Foreign currency translation adjustment, net of income tax expense of $268	—		(1,597		)	(346		)	(170		)	(2,113		)
Change in net actuarial loss and prior service credit, net of income tax benefit of $138	—		(126		)	—			—			(126		)
Equity in earnings of subsidiaries	—		—			(1,893		)	1,893			—
Comprehensive income	$	11,364	$	10,133		$	13,201		$	(21,497	)	$	13,201

Condensed consolidating statement of comprehensive income
For the three months ended June 30, 2012

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net income	$	11,681	$	18,168		$	20,481		$	(29,849	)	$	20,481
Foreign currency translation adjustment, net of income tax benefit of $1,144	—		(14,595		)	1,053			(1,588		)	(15,130		)
Change in net actuarial loss and prior service credit	—		625			—			—			625
Equity in earnings of subsidiaries	—		—			(15,558		)	15,558			—
Comprehensive income	$	11,681	$	4,198		$	5,976		$	(15,879	)	$	5,976

Condensed consolidating statement of comprehensive income
For the six months ended June 29, 2013

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net income	$	13,827	$	25,480		$	24,461		$	(39,307	)	$	24,461
Foreign currency translation adjustment, net of income tax benefit of $218	—		(5,874		)	354			(95		)	(5,615		)
Change in net actuarial loss and prior service credit, net of income tax benefit of $274	—		913			—			—			913
Equity in earnings of subsidiaries	—		—			(5,056		)	5,056			—
Comprehensive income	$	13,827	$	20,519		$	19,759		$	(34,346	)	$	19,759

Condensed consolidating statement of comprehensive income
For the six months ended June 30, 2012

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net income	$	25,134	$	33,378		$	39,254		$	(58,512	)	$	39,254
Foreign currency translation adjustment, net of income tax benefit of $610	—		(6,293		)	782			(730		)	(6,241		)
Change in net actuarial loss and prior service credit	—		305			—			—			305
Equity in earnings of subsidiaries	—		—			(6,718		)	6,718			—
Comprehensive income	$	25,134	$	27,390		$	33,318		$	(52,524	)	$	33,318

Condensed consolidating statement of cash flows

Condensed consolidating statement of cash flows
For the six months ended June 29, 2013

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	43,221		$	41,903		$	(20,075	)	$	4,282		$	69,331
Investing activities:
Purchases of property, plant and equipment, net	(2,240		)	(11,334		)	—			—			(13,574		)
Net cash used in investing activities	(2,240		)	(11,334		)	—			—			(13,574		)
Financing activities:
Principal payments on debt	—			—			(11,250		)	—			(11,250		)
Payments on revolving credit facility	—			—			(35,000		)	—			(35,000		)
Proceeds from revolving credit facility	—			—			54,200			—			54,200
Proceeds from stock option exercises	—			—			1,020			—			1,020
Repurchases of common stock	—			—			(79,935		)	—			(79,935		)
Noncontrolling interest	—			—			1,731			—			1,731
Intercompany transactions, net	(40,981		)	(34,585		)	79,848			(4,282		)	—
Net cash provided by (used in) financing activities	(40,981		)	(34,585		)	10,614			(4,282		)	(69,234		)
Effect of exchange rate changes on cash and cash equivalents	—			866			—			—			866
Net decrease in cash and cash equivalents	—			(3,150		)	(9,461		)	—			(12,611		)
Cash and cash equivalents at beginning of period	—			28,098			16,775			—			44,873
Cash and cash equivalents at end of period	$	—		$	24,948		$	7,314		$	—		$	32,262

Condensed consolidating statement of cash flows
For the six months ended June 30, 2012

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	51,499		$	14,239		$	(18,133	)	$	(800	)	$	46,805
Investing activities:
Purchases of property, plant and equipment, net	(83,072		)	(12,205		)	—			—			(95,277		)
Net cash used in investing activities	(83,072		)	(12,205		)	—			—			(95,277		)
Financing activities:
Principal payments on debt	—			(117		)	(807		)	—			(924		)
Proceeds from stock option exercises	—			—			490			—			490
Noncontrolling interest	—			—			(104		)	—			(104		)
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		)
Loan acquisition costs	—			—			(5,986		)	—			(5,986		)
Intercompany transactions, net	31,573			(814		)	(31,559		)	800			—
Net cash provided by (used in) financing activities	31,573			(42,796		)	11,608			800			1,185
Effect of exchange rate changes on cash and cash equivalents	—			(894		)	—			—			(894		)
Net decrease in cash and cash equivalents	—			(41,656		)	(6,525		)	—			(48,181		)
Cash and cash equivalents at beginning of period	—			65,495			27,079			—			92,574
Cash and cash equivalents at end of period	$	—		$	23,839		$	20,554		$	—		$	44,393

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Pension Plans (Details) (Pension Plans, USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2013	Jun. 30, 2012	Jun. 29, 2013	Jun. 30, 2012
Pension Plans
Components of net periodic benefit cost:
Service cost	$ 555	$ 414	$ 1,118	$ 836
Interest cost	1,114	1,184	2,241	2,391
Expected return on plan assets	(189)	(211)	(380)	(426)
Amortization of prior service credit	(13)	(13)	(26)	(26)
Recognized net actuarial loss	427	117	859	236
Net periodic benefit cost	$ 1,894	$ 1,491	$ 3,812	$ 3,011

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Commitments and Contingencies (Details) (Total Number of Employees, Employees represented under collective bargaining agreements, Corydon, Indiana)	6 Months Ended
	Jun. 29, 2013
Total Number of Employees | Employees represented under collective bargaining agreements | Corydon, Indiana
Collective Bargaining Agreements
Concentration risk (as a percent)	3.00%

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Financial Statements of Guarantors (Details 4) (USD $)	6 Months Ended
	Jun. 29, 2013	Jun. 30, 2012
Operating activities:
Net cash provided by (used in) operating activities	$ 69,331,000	$ 46,805,000
Investing activities:
Purchases of property, plant and equipment, net	(13,574,000)	(95,277,000)
Net cash used in investing activities	(13,574,000)	(95,277,000)
Financing activities:
Principal payments on debt	(11,250,000)	(924,000)
Payments on revolving credit facility	(35,000,000)
Proceeds from revolving credit facility	54,200,000
Proceeds from stock option exercises	1,020,000	490,000
Repurchases of common stock	(79,935,000)
Noncontrolling interest	1,731,000	(104,000)
Proceeds from new senior credit agreement		350,000,000
Principal payments in connection with refinancing of senior credit agreement		(342,291,000)
Loan acquisition costs		(5,986,000)
Net cash provided by (used in) financing activities	(69,234,000)	1,185,000
Effect of exchange rate changes on cash and cash equivalents	866,000	(894,000)
Net decrease in cash and cash equivalents	(12,611,000)	(48,181,000)
Cash and cash equivalents at beginning of period	44,873,000	92,574,000
Cash and cash equivalents at end of period	32,262,000	44,393,000
Combined Guarantor Subsidiaries
Operating activities:
Net cash provided by (used in) operating activities	43,221,000	51,499,000
Investing activities:
Purchases of property, plant and equipment, net	(2,240,000)	(83,072,000)
Net cash used in investing activities	(2,240,000)	(83,072,000)
Financing activities:
Intercompany transactions, net	(40,981,000)	31,573,000
Net cash provided by (used in) financing activities	(40,981,000)	31,573,000
Combined Non-Guarantor Subsidiaries
Operating activities:
Net cash provided by (used in) operating activities	41,903,000	14,239,000
Investing activities:
Purchases of property, plant and equipment, net	(11,334,000)	(12,205,000)
Net cash used in investing activities	(11,334,000)	(12,205,000)
Financing activities:
Principal payments on debt		(117,000)
Principal payments in connection with refinancing of senior credit agreement		(41,865,000)
Intercompany transactions, net	(34,585,000)	(814,000)
Net cash provided by (used in) financing activities	(34,585,000)	(42,796,000)
Effect of exchange rate changes on cash and cash equivalents	866,000	(894,000)
Net decrease in cash and cash equivalents	(3,150,000)	(41,656,000)
Cash and cash equivalents at beginning of period	28,098,000	65,495,000
Cash and cash equivalents at end of period	24,948,000	23,839,000
The Company
Operating activities:
Net cash provided by (used in) operating activities	(20,075,000)	(18,133,000)
Financing activities:
Principal payments on debt	(11,250,000)	(807,000)
Payments on revolving credit facility	(35,000,000)
Proceeds from revolving credit facility	54,200,000
Proceeds from stock option exercises	1,020,000	490,000
Repurchases of common stock	(79,935,000)
Noncontrolling interest	1,731,000	(104,000)
Proceeds from new senior credit agreement		350,000,000
Principal payments in connection with refinancing of senior credit agreement		(300,426,000)
Loan acquisition costs		(5,986,000)
Intercompany transactions, net	79,848,000	(31,559,000)
Net cash provided by (used in) financing activities	10,614,000	11,608,000
Net decrease in cash and cash equivalents	(9,461,000)	(6,525,000)
Cash and cash equivalents at beginning of period	16,775,000	27,079,000
Cash and cash equivalents at end of period	7,314,000	20,554,000
Eliminations
Operating activities:
Net cash provided by (used in) operating activities	4,282,000	(800,000)
Financing activities:
Intercompany transactions, net	(4,282,000)	800,000
Net cash provided by (used in) financing activities	$ (4,282,000)	$ 800,000

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Condensed consolidated balance sheets (Parenthetical) (USD $)	Jun. 29, 2013	Dec. 29, 2012
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	46,812,226	46,627,064
Common stock, shares outstanding	44,822,126	46,627,064
Treasury stock, shares	1,990,100	0

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Treasury Stock

6 Months Ended

Jun. 29, 2013

Treasury Stock

Treasury Stock

8. Treasury Stock

On February 19, 2013, the Board of Directors authorized the repurchase of up to 4,000,000 shares of the Company’s common stock by December 31, 2013. As of June 29, 2013, the Company had repurchased 1,984,500 shares of common stock for $79,731,000.  Additionally, in connection with the restricted stock grant on February 25, 2013, the Company withheld and repurchased 5,600 shares of common stock for $204,000 to satisfy certain foreign employees’ statutory withholding tax liability.

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Condensed consolidated statements of comprehensive income (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2013	Jun. 30, 2012	Jun. 29, 2013	Jun. 30, 2012
Condensed consolidated statements of comprehensive income
Net income	$ 15,440	$ 20,481	$ 24,461	$ 39,254
Other comprehensive income (loss):
Foreign currency translation adjustment	(1,845)	(16,274)	(5,833)	(6,851)
Change in net actuarial loss and prior service credit	(264)	625	639	305
Income taxes related to other comprehensive income (loss)	(130)	1,144	492	610
Other comprehensive loss	(2,239)	(14,505)	(4,702)	(5,936)
Comprehensive income	$ 13,201	$ 5,976	$ 19,759	$ 33,318

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Condensed consolidated balance sheets (USD $) In Thousands, unless otherwise specified	Jun. 29, 2013	Dec. 29, 2012
Current assets:
Cash and cash equivalents	$ 32,262	$ 44,873
Accounts receivable, net	119,242	122,056
Inventories	115,855	115,462
Deferred income taxes	21,673	21,671
Prepaid and other	22,060	22,769
Assets held for sale	89,511	92,261
Total current assets	400,603	419,092
Property, plant and equipment, net	592,882	607,466
Goodwill	444,512	444,512
Intangibles and loan acquisition costs, net	100,077	107,006
Other	7,945	7,996
Total assets	1,546,019	1,586,072
Current liabilities:
Accounts payable	25,289	30,083
Accrued liabilities	45,699	44,039
Income taxes payable	4,432	1,603
Current portion of debt	69,200	50,000
Liabilities related to assets held for sale	20,403	19,576
Total current liabilities	165,023	145,301
Debt, less current portion	635,000	646,250
Pension obligations, less current portion	104,011	103,491
Deferred income taxes	83,572	84,719
Other	23,580	23,474
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; 46,812,226 issued and 44,822,126 outstanding at June 29, 2013 and 46,627,064 issued and outstanding at December 29, 2012	468	466
Paid-in capital	555,511	545,196
Retained earnings	80,229	55,768
Accumulated other comprehensive loss	(27,055)	(22,353)
Treasury stock, at cost - 1,990,100 shares at June 29, 2013 and no shares at December 29, 2012	(79,935)
Total Polypore shareholders' equity	529,218	579,077
Noncontrolling interest	5,615	3,760
Total shareholders' equity	534,833	582,837
Total liabilities and shareholders' equity	$ 1,546,019	$ 1,586,072

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Inventories (Details) (USD $) In Thousands, unless otherwise specified	Jun. 29, 2013	Dec. 29, 2012
Inventories
Raw materials	$ 36,819	$ 42,113
Work-in-process	27,667	27,608
Finished goods	51,369	45,741
Inventories	$ 115,855	$ 115,462

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Debt (Tables)

6 Months Ended

Jun. 29, 2013

Debt

Schedule of debt

(in thousands)	June 29, 2013		December 29, 2012
Senior credit agreement:
Revolving credit facility	$	54,200	$	35,000
Term loan facility	285,000		296,250
	339,200		331,250
7.5% senior notes	365,000		365,000
	704,200		696,250
Less current portion, including borrowings under the revolving credit facility	69,200		50,000
Long-term debt	$	635,000	$	646,250

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Financial Statements of Guarantors (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2013	Jun. 30, 2012	Jun. 29, 2013	Jun. 30, 2012
Net income	$ 15,440	$ 20,481	$ 24,461	$ 39,254
Foreign currency translation adjustment	(2,113)	(15,130)	(5,615)	(6,241)
Foreign currency translation adjustment, income tax benefit (expense)	(268)	1,144	218	610
Change in net actuarial loss and prior service credit	(126)	625	913	305
Change in net actuarial loss and prior service credit, income tax benefit (expense)	138		274
Comprehensive income	13,201	5,976	19,759	33,318
Combined Guarantor Subsidiaries
Net income	11,364	11,681	13,827	25,134
Comprehensive income	11,364	11,681	13,827	25,134
Combined Non-Guarantor Subsidiaries
Net income	11,856	18,168	25,480	33,378
Foreign currency translation adjustment	(1,597)	(14,595)	(5,874)	(6,293)
Change in net actuarial loss and prior service credit	(126)	625	913	305
Comprehensive income	10,133	4,198	20,519	27,390
The Company
Net income	15,440	20,481	24,461	39,254
Foreign currency translation adjustment	(346)	1,053	354	782
Equity in earnings of subsidiaries	(1,893)	(15,558)	(5,056)	(6,718)
Comprehensive income	13,201	5,976	19,759	33,318
Eliminations
Net income	(23,220)	(29,849)	(39,307)	(58,512)
Foreign currency translation adjustment	(170)	(1,588)	(95)	(730)
Equity in earnings of subsidiaries	1,893	15,558	5,056	6,718
Comprehensive income	$ (21,497)	$ (15,879)	$ (34,346)	$ (52,524)

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Segment Information (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 29, 2013	Jun. 30, 2012	Jun. 29, 2013 business segment	Jun. 30, 2012
Segment Information
Number of primary businesses			2
Financial information relating to the reportable segments
Number of reportable segments			3
Total net sales to external customers	$ 168,897,000	$ 167,607,000	$ 314,838,000	$ 325,210,000
Operating income	28,032,000	33,992,000	46,491,000	66,899,000
Interest expense, net	9,921,000	8,169,000	19,712,000	16,960,000
Foreign currency and other	(116,000)	(1,706,000)	702,000	(1,243,000)
Write-off of loan acquisition costs associated with refinancing of senior credit agreement		2,478,000		2,478,000
Income from continuing operations before income taxes	18,227,000	25,051,000	26,077,000	48,704,000
Reportable segments
Financial information relating to the reportable segments
Total net sales to external customers	168,897,000	167,607,000	314,838,000	325,210,000
Operating income	33,805,000	38,744,000	57,203,000	76,489,000
Energy Storage
Financial information relating to the reportable segments
Total net sales to external customers	122,554,000	121,257,000	223,042,000	233,745,000
Operating income	27,581,000	31,613,000	41,303,000	64,006,000
Electronics and EDVs
Financial information relating to the reportable segments
Total net sales to external customers	42,214,000	47,396,000	66,589,000	89,784,000
Operating income	10,781,000	14,508,000	8,262,000	31,303,000
Transportation and industrial
Financial information relating to the reportable segments
Total net sales to external customers	80,340,000	73,861,000	156,453,000	143,961,000
Operating income	16,800,000	17,105,000	33,041,000	32,703,000
Separations Media
Financial information relating to the reportable segments
Total net sales to external customers	46,343,000	46,350,000	91,796,000	91,465,000
Operating income	13,836,000	12,958,000	29,345,000	26,821,000
Healthcare
Financial information relating to the reportable segments
Total net sales to external customers	30,045,000	28,524,000	59,543,000	56,069,000
Filtration and specialty
Financial information relating to the reportable segments
Total net sales to external customers	16,298,000	17,826,000	32,253,000	35,396,000
Corporate and other
Financial information relating to the reportable segments
Operating income	(7,612,000)	(5,827,000)	(13,445,000)	(14,338,000)
Unallocated amount to segment
Financial information relating to the reportable segments
Stock-based compensation	4,830,000	4,162,000	9,297,000	8,432,000
Non-recurring and other costs	$ 943,000	$ 590,000	$ 1,415,000	$ 1,158,000

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Related Party Transactions (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 29, 2013	Jun. 30, 2012	Jun. 29, 2013	Jun. 30, 2012	Dec. 29, 2012
Related party transactions
Ownership percentage in related party	100.00%		100.00%
German Subsidiary | All related parties
Related party transactions
Equity method investment	$ 641,000		$ 641,000		$ 650,000
Charges from the affiliates for work performed	393,000	358,000	659,000	685,000
Amounts due to the affiliates	$ 69,000		$ 69,000		$ 239,000
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%

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Noncontrolling Interest (Details) (Daramic Xiangyang, USD $)	6 Months Ended
	Jun. 29, 2013	Dec. 29, 2012
Noncontrolling Interest
Ownership percentage of joint venture	65.00%
Contributions to joint venture	$ 2,470,000
Principal balance of building note payable	5,910,000	5,910,000
Camel Group Co., Ltd, Co-Venturer
Noncontrolling Interest
Ownership percentage of joint venture	35.00%
Contributions to joint venture	$ 1,330,000

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Environmental Matters

6 Months Ended

Jun. 29, 2013

Environmental Matters

Environmental Matters

7. 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 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 $8,556,000 and $11,079,000 at June 29, 2013 and December 29, 2012, respectively. The Company anticipates the expenditures associated with the reserve will be made in the next twelve months. The reserve is 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 June 29, 2013 and December 29, 2012, the indemnification receivable, which is denominated in euros, was $11,383,000 and $11,542,000, respectively. The receivable is included in “Prepaid and other” in the accompanying condensed consolidated balance sheets.

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Debt (Details) (USD $)	3 Months Ended	6 Months Ended			3 Months Ended	12 Months Ended		0 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012	Jun. 29, 2013	Dec. 29, 2012	Jun. 30, 2012 Senior credit agreement	Dec. 29, 2012 Senior credit agreement	Jun. 29, 2013 Senior credit agreement	Jun. 29, 2012 Revolving credit facility	Jun. 29, 2013 Revolving credit facility	Dec. 29, 2012 Revolving credit facility	Jun. 29, 2013 Term loan facility	Dec. 29, 2012 Term loan facility	Jun. 29, 2013 7.5% senior notes	Dec. 29, 2012 7.5% senior notes
Debt
Revolving credit facility									$ 54,200,000	$ 35,000,000
Long-term debt including current maturities			704,200,000	696,250,000		331,250,000	339,200,000				285,000,000	296,250,000	365,000,000	365,000,000
Less current maturities			69,200,000	50,000,000
Long-term debt			635,000,000	646,250,000
Debt instrument, interest rate (as a percent)													7.50%	7.50%
Maximum borrowing capacity									150,000,000
Amount borrowed during the period								50,000,000
Debt instrument, face amount											300,000,000
Loan acquisition costs		5,986,000			5,986,000	6,228,000
Write-off of unamortized loan acquisition costs	2,478,000	2,478,000				2,478,000
Available borrowing capacity									$ 95,800,000
Planned repayment period for revolving credit facility									12 months

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Financial Statements of Guarantors (Details) (USD $) In Thousands, unless otherwise specified	Jun. 29, 2013	Dec. 29, 2012	Jun. 30, 2012	Dec. 31, 2011
Financial Statements of Guarantors
Ownership percentage in domestic subsidiaries	100.00%
Assets
Cash and cash equivalents	$ 32,262	$ 44,873	$ 44,393	$ 92,574
Accounts receivable, net	119,242	122,056
Inventories	115,855	115,462
Prepaid and other	43,733	44,440
Assets held for sale	89,511	92,261
Total current assets	400,603	419,092
Property, plant and equipment, net	592,882	607,466
Goodwill	444,512	444,512
Intangibles and loan acquisition costs, net	100,077	107,006
Other	7,945	7,996
Total assets	1,546,019	1,586,072
Liabilities and shareholders' equity
Accounts payable and accrued liabilities	70,988	74,122
Income taxes payable	4,432	1,603
Current portion of debt	69,200	50,000
Liabilities related to assets held for sale	20,403	19,576
Total current liabilities	165,023	145,301
Debt, less current portion	635,000	646,250
Pension obligations, less current portion	104,011	103,491
Deferred income taxes and other	107,152	108,193
Shareholders' equity	534,833	582,837
Total liabilities and shareholders' equity	1,546,019	1,586,072
Combined Guarantor Subsidiaries
Assets
Accounts receivable, net	41,901	36,980
Inventories	34,863	41,616
Prepaid and other	25,420	24,656
Assets held for sale	27,778	27,566
Total current assets	129,962	130,818
Due from affiliates	625,525	554,190
Investment in subsidiaries	120,655	123,765
Property, plant and equipment, net	309,974	316,128
Other	727	727
Total assets	1,186,843	1,125,628
Liabilities and shareholders' equity
Accounts payable and accrued liabilities	21,843	24,279
Liabilities related to assets held for sale	16,077	15,222
Total current liabilities	37,920	39,501
Due to affiliates	623,493	579,388
Deferred income taxes and other	63,717	65,367
Shareholders' equity	461,713	441,372
Total liabilities and shareholders' equity	1,186,843	1,125,628
Combined Non-Guarantor Subsidiaries
Assets
Cash and cash equivalents	24,948	28,098	23,839	65,495
Accounts receivable, net	77,341	85,076
Inventories	80,992	73,846
Prepaid and other	17,344	19,246
Assets held for sale	22,573	25,165
Total current assets	223,198	231,431
Due from affiliates	388,773	330,148
Investment in subsidiaries	385,518	381,295
Property, plant and equipment, net	282,908	291,338
Other	7,188	7,269
Total assets	1,287,585	1,241,481
Liabilities and shareholders' equity
Accounts payable and accrued liabilities	43,952	45,286
Income taxes payable	4,815	723
Liabilities related to assets held for sale	4,326	4,354
Total current liabilities	53,093	50,363
Due to affiliates	363,708	344,398
Pension obligations, less current portion	104,011	103,491
Deferred income taxes and other	43,261	42,681
Shareholders' equity	723,512	700,548
Total liabilities and shareholders' equity	1,287,585	1,241,481
The Company
Assets
Cash and cash equivalents	7,314	16,775	20,554	27,079
Prepaid and other	969	538
Assets held for sale	39,160	39,530
Total current assets	47,443	56,843
Due from affiliates	483,038	482,869
Investment in subsidiaries	679,052	636,860
Goodwill	444,512	444,512
Intangibles and loan acquisition costs, net	100,077	107,006
Other	30
Total assets	1,754,152	1,728,090
Liabilities and shareholders' equity
Accounts payable and accrued liabilities	5,193	4,557
Income taxes payable	(383)	880
Current portion of debt	69,200	50,000
Total current liabilities	74,010	55,437
Due to affiliates	510,135	443,421
Debt, less current portion	635,000	646,250
Deferred income taxes and other	174	145
Shareholders' equity	534,833	582,837
Total liabilities and shareholders' equity	1,754,152	1,728,090
Eliminations
Assets
Due from affiliates	(1,497,336)	(1,367,207)
Investment in subsidiaries	(1,185,225)	(1,141,920)
Total assets	(2,682,561)	(2,509,127)
Liabilities and shareholders' equity
Due to affiliates	(1,497,336)	(1,367,207)
Shareholders' equity	(1,185,225)	(1,141,920)
Total liabilities and shareholders' equity	$ (2,682,561)	$ (2,509,127)

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Noncontrolling Interest

6 Months Ended

Jun. 29, 2013

Noncontrolling Interest

Noncontrolling Interest

10. Noncontrolling Interest

In 2010, the Company formed a joint venture with 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 owned 65% by the Company and 35% by Camel. During the six months ended June 29, 2013, the Company and Camel made equity contributions of $2,470,000 and $1,330,000, respectively, to fund capital expenditures.

In exchange for notes payable, Daramic Xiangyang purchased from Camel a building and from the Company certain production equipment that 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 at June 29, 2013 and December 29, 2012 and is included in “Other” non-current liabilities in the accompanying condensed consolidated balance sheets, and the equipment note payable to the Company eliminates in consolidation.

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Pension Plans

6 Months Ended

Jun. 29, 2013

Pension Plans

Pension Plans

6. 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						Six Months Ended
(in thousands)	June 29, 2013			June 30, 2012			June 29, 2013			June 30, 2012
Service cost	$	555		$	414		$	1,118		$	836
Interest cost	1,114			1,184			2,241			2,391
Expected return on plan assets	(189		)	(211		)	(380		)	(426		)
Amortization of prior service credit	(13		)	(13		)	(26		)	(26		)
Recognized net actuarial loss	427			117			859			236
Net periodic benefit cost	$	1,894		$	1,491		$	3,812		$	3,011

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Description of Business and Basis of Presentation

6 Months Ended

Jun. 29, 2013

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. 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 29, 2012. Operating results for the three months ended June 29, 2013 are not necessarily indicative of the results that may be expected for the fiscal year ending December 28, 2013.

Effective June 24, 2013 (see Note 14), the accompanying condensed consolidated balance sheets as of June 29, 2013 and December 29, 2012 reflect the classification of certain assets and liabilities as held for sale.  The condensed consolidated statements of income for all periods presented reflect the presentation of discontinued operations. All disclosures and amounts in the notes to the condensed consolidated financial statements relate to the Company’s continuing operations, unless otherwise indicated.

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Environmental Matters (Details) (Membrana GmbH, USD $)	6 Months Ended
	Jun. 29, 2013	Dec. 29, 2012
Membrana GmbH
Environmental Matters
Environmental reserve	$ 8,556,000	$ 11,079,000
Period over which expenditures will be made	12 months
Indemnification receivable	$ 11,383,000	$ 11,542,000

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Segment Information

6 Months Ended

Jun. 29, 2013

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 batteries that are used in portable electronic devices, cordless power tools, electric drive vehicles (“EDVs”) and energy storage systems (“ESS”).

· 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 a reportable segment and produces and markets membranes and membrane modules 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 segments is presented below:

	Three Months Ended						Six Months Ended
(in thousands)	June 29, 2013			June 30, 2012			June 29, 2013			June 30, 2012
Net sales to external customers (by major product group):
Electronics and EDVs	$	42,214		$	47,396		$	66,589		$	89,784
Transportation and industrial	80,340			73,861			156,453			143,961
Energy storage	122,554			121,257			223,042			233,745
Healthcare	30,045			28,524			59,543			56,069
Filtration and specialty	16,298			17,826			32,253			35,396
Separations media	46,343			46,350			91,796			91,465
Total net sales to external customers	$	168,897		$	167,607		$	314,838		$	325,210
Operating income:
Electronics and EDVs	$	10,781		$	14,508		$	8,262		$	31,303
Transportation and industrial	16,800			17,105			33,041			32,703
Energy storage	27,581			31,613			41,303			64,006
Separations media	13,836			12,958			29,345			26,821
Corporate and other	(7,612		)	(5,827		)	(13,445		)	(14,338		)
Segment operating income	33,805			38,744			57,203			76,489
Stock-based compensation	4,830			4,162			9,297			8,432
Non-recurring and other costs	943			590			1,415			1,158
Total operating income	28,032			33,992			46,491			66,899
Reconciling items:
Interest expense, net	9,921			8,169			19,712			16,960
Foreign currency and other	(116		)	(1,706		)	702			(1,243		)
Write-off of loan acquisition costs associated with refinancing of senior credit agreement	—			2,478			—			2,478
Income from continuing operations before income taxes	$	18,227		$	25,051		$	26,077		$	48,704
Depreciation and amortization:
Electronics and EDVs	$	4,395		$	4,150		$	8,796		$	7,311
Transportation and industrial	2,901			2,295			5,670			4,478
Energy storage	7,296			6,445			14,466			11,789
Separations media	3,491			3,390			6,927			6,712
Corporate and other	2,814			3,197			5,636			7,160
Total depreciation and amortization from continuing operations	$	13,601		$	13,032		$	27,029		$	25,661

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Related Party Transactions

6 Months Ended

Jun. 29, 2013

Related Party Transactions

Related Party Transactions

9. 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 $641,000 and $650,000 at June 29, 2013 and December 29, 2012, respectively. Charges from the affiliates for work performed were $393,000 and $659,000 for the three and six months ended June 29, 2013, respectively. Charges from the affiliates for work performed were $358,000 and $685,000 for the three and six months ended June 30, 2012, respectively. Amounts due to the affiliates were $69,000 and $239,000 at June 29, 2013 and December 29, 2012, respectively.

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Inventories (Tables)

6 Months Ended

Jun. 29, 2013

Inventories

Schedule of inventories

(in thousands)	June 29, 2013		December 29, 2012
Raw materials	$	36,819	$	42,113
Work-in-process	27,667		27,608
Finished goods	51,369		45,741
	$	115,855	$	115,462

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Assets Held for Sale and Discontinued Operations

6 Months Ended

Jun. 29, 2013

Assets Held for Sale and Discontinued Operations

Assets Held for Sale and Discontinued Operations

14. Assets Held for Sale and Discontinued Operations

In February 2008, the Company purchased 100% of the capital stock of Microporous Holding Corporation, the parent company of Microporous Products L.P. (“Microporous”).  On September 9, 2008, the Federal Trade Commission (the “FTC”) issued an administrative complaint against the Company. 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 the Microporous assets that were acquired in February 2008.  In January 2011, the Company filed a petition with the U.S. Court of Appeals for the 11th Circuit to review the FTC’s order and opinion. The 11th Circuit affirmed the FTC’s decision. In January 2013, the Company filed an appeal with the U.S. Supreme Court. On June 24, 2013, the U.S. Supreme Court declined to hear the Company’s appeal.  As a result, the divestiture provisions of the FTC’s order, which were stayed pending appeal, went into effect and the Company is required to divest the Microporous assets, which consist of the production facilities in Piney Flats, Tennessee, and Feistritz, Austria, by December 26, 2013. Microporous is a component of the transportation and industrial segment.

Effective June 24, 2013, the assets and liabilities of Microporous to be sold meet the accounting criteria to be classified as held for sale and have been aggregated and reported separately in the accompanying condensed consolidated balance sheets as of June 29, 2013 and December 29, 2012.  The Company expects to divest the Microporous assets at a price in excess of book value. The carrying amounts of assets and liabilities held for sale are as follows:

(in thousands)	June 29, 2013		December 29, 2012
Assets
Accounts receivable, net	$	14,377	$	15,259
Inventories	4,860		4,447
Prepaid and other	327		759
Property, plant and equipment, net	30,019		31,335
Goodwill and intangibles, net	39,160		39,530
Other	768		931
Assets held for sale	$	89,511	$	92,261
Liabilities
Accounts payable and accrued liabilities	$	5,033	$	4,066
Deferred income taxes	13,935		13,948
Other	1,435		1,562
Liabilities related to assets held for sale	$	20,403	$	19,576

The results of operations of Microporous are classified as discontinued operations and are presented separately in the accompanying condensed consolidated statements of income for all periods presented.  Summarized results of operations reported as discontinued operations are as follows:

	Three Months Ended				Six Months Ended
(in thousands)	June 29, 2013		June 30, 2012		June 29, 2013		June 30, 2012
Net sales	$	18,373	$	18,207	$	35,945	$	34,309
Income from discontinued operations	4,676		4,377		9,795		8,620
Income from discontinued operations, net of income taxes	2,944		2,826		6,308		5,768

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Document and Entity Information	6 Months Ended
	Jun. 29, 2013	Jul. 31, 2013
Document and Entity Information
Entity Registrant Name	Polypore International, Inc.
Entity Central Index Key	0001292556
Document Type	10-Q
Document Period End Date	Jun. 29, 2013
Amendment Flag	false
Current Fiscal Year End Date	--12-28
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		44,806,626
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2

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Financial Statements of Guarantors

6 Months Ended

Jun. 29, 2013

Financial Statements of Guarantors

Financial Statements of Guarantors

15. 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
June 29, 2013

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Assets
Cash and cash equivalents	$	—	$	24,948	$	7,314		$	—		$	32,262
Accounts receivable, net	41,901		77,341		—			—			119,242
Inventories	34,863		80,992		—			—			115,855
Prepaid and other	25,420		17,344		969			—			43,733
Assets held for sale	27,778		22,573		39,160			—			89,511
Total current assets	129,962		223,198		47,443			—			400,603
Due from affiliates	625,525		388,773		483,038			(1,497,336		)	—
Investment in subsidiaries	120,655		385,518		679,052			(1,185,225		)	—
Property, plant and equipment, net	309,974		282,908		—			—			592,882
Goodwill	—		—		444,512			—			444,512
Intangibles and loan acquisition costs, net	—		—		100,077			—			100,077
Other	727		7,188		30			—			7,945
Total assets	$	1,186,843	$	1,287,585	$	1,754,152		$	(2,682,561	)	$	1,546,019
Liabilities and shareholders’ equity
Accounts payable and accrued liabilities	$	21,843	$	43,952	$	5,193		$	—		$	70,988
Income taxes payable	—		4,815		(383		)	—			4,432
Current portion of debt	—		—		69,200			—			69,200
Liabilities related to assets held for sale	16,077		4,326		—			—			20,403
Total current liabilities	37,920		53,093		74,010			—			165,023
Due to affiliates	623,493		363,708		510,135			(1,497,336		)	—
Debt, less current portion	—		—		635,000			—			635,000
Pension obligations, less current portion	—		104,011		—			—			104,011
Deferred income taxes and other	63,717		43,261		174			—			107,152
Shareholders’ equity	461,713		723,512		534,833			(1,185,225		)	534,833
Total liabilities and shareholders’ equity	$	1,186,843	$	1,287,585	$	1,754,152		$	(2,682,561	)	$	1,546,019

Condensed consolidating balance sheet
December 29, 2012

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries		The Company		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	—	$	28,098	$	16,775	$	—		$	44,873
Accounts receivable, net	36,980		85,076		—		—			122,056
Inventories	41,616		73,846		—		—			115,462
Prepaid and other	24,656		19,246		538		—			44,440
Assets held for sale	27,566		25,165		39,530		—			92,261
Total current assets	130,818		231,431		56,843		—			419,092
Due from affiliates	554,190		330,148		482,869		(1,367,207		)	—
Investment in subsidiaries	123,765		381,295		636,860		(1,141,920		)	—
Property, plant and equipment, net	316,128		291,338		—		—			607,466
Goodwill	—		—		444,512		—			444,512
Intangibles and loan acquisition costs, net	—		—		107,006		—			107,006
Other	727		7,269		—		—			7,996
Total assets	$	1,125,628	$	1,241,481	$	1,728,090	$	(2,509,127	)	$	1,586,072
Liabilities and shareholders’ equity
Accounts payable and accrued liabilities	$	24,279	$	45,286	$	4,557	$	—		$	74,122
Income taxes payable	—		723		880		—			1,603
Current portion of debt	—		—		50,000		—			50,000
Liabilities related to assets held for sale	15,222		4,354		—		—			19,576
Total current liabilities	39,501		50,363		55,437		—			145,301
Due to affiliates	579,388		344,398		443,421		(1,367,207		)	—
Debt, less current portion	—		—		646,250		—			646,250
Pension obligations, less current portion	—		103,491		—		—			103,491
Deferred income taxes and other	65,367		42,681		145		—			108,193
Shareholders’ equity	441,372		700,548		582,837		(1,141,920		)	582,837
Total liabilities and shareholders’ equity	$	1,125,628	$	1,241,481	$	1,728,090	$	(2,509,127	)	$	1,586,072

Condensed consolidating statement of income
For the three months ended June 29, 2013

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Net sales	$	54,763		$	114,134	$	—		$	—		$	168,897
Cost of goods sold	22,650			85,821		—			—			108,471
Gross profit	32,113			28,313		—			—			60,426
Selling, general and administrative expenses	15,237			10,799		6,358			—			32,394
Operating income (loss)	16,876			17,514		(6,358		)	—			28,032
Interest expense and other	(2,315		)	2,560		9,560			—			9,805
Equity in earnings of subsidiaries	—			—		(23,220		)	23,220			—
Income from continuing operations before income taxes	19,191			14,954		7,302			(23,220		)	18,227
Income taxes	9,517			4,537		(8,323		)	—			5,731
Income from continuing operations	9,674			10,417		15,625			(23,220		)	12,496
Income from discontinued operations, net of income taxes	1,690			1,439		(185		)	—			2,944
Net income	$	11,364		$	11,856	$	15,440		$	(23,220	)	$	15,440

Condensed consolidating statement of income
For the three months ended June 30, 2012

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Net sales	$	43,475		$	124,132	$	—		$	—		$	167,607
Cost of goods sold	10,906			91,319		—			—			102,225
Gross profit	32,569			32,813		—			—			65,382
Selling, general and administrative expenses	16,347			11,032		4,011			—			31,390
Operating income (loss)	16,222			21,781		(4,011		)	—			33,992
Interest expense and other	(3,714		)	1,063		9,114			—			6,463
Write-off of loan acquisition costs associated with refinancing of senior credit agreement	—			—		2,478			—			2,478
Equity in earnings of subsidiaries	—			—		(29,849		)	29,849			—
Income from continuing operations before income taxes	19,936			20,718		14,246			(29,849		)	25,051
Income taxes	9,666			4,150		(6,420		)	—			7,396
Income from continuing operations	10,270			16,568		20,666			(29,849		)	17,655
Income from discontinued operations, net of income taxes	1,411			1,600		(185		)	—			2,826
Net income	$	11,681		$	18,168	$	20,481		$	(29,849	)	$	20,481

Condensed consolidating statement of income
For the six months ended June 29, 2013

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Net sales	$	89,900		$	224,938	$	—		$	—		$	314,838
Cost of goods sold	39,297			165,920		—			—			205,217
Gross profit	50,603			59,018		—			—			109,621
Selling, general and administrative expenses	30,244			22,211		10,675			—			63,130
Operating income (loss)	20,359			36,807		(10,675		)	—			46,491
Interest expense and other	(3,715		)	4,701		19,428			—			20,414
Equity in earnings of subsidiaries	—			—		(39,307		)	39,307			—
Income from continuing operations before income taxes	24,074			32,106		9,204			(39,307		)	26,077
Income taxes	13,427			10,124		(15,627		)	—			7,924
Income from continuing operations	10,647			21,982		24,831			(39,307		)	18,153
Income from discontinued operations, net of income taxes	3,180			3,498		(370		)	—			6,308
Net income	$	13,827		$	25,480	$	24,461		$	(39,307	)	$	24,461

Condensed consolidating statement of income
For the six months ended June 30, 2012

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries		The Company			Eliminations			Consolidated
Net sales	$	86,363		$	238,847	$	—		$	—		$	325,210
Cost of goods sold	20,268			173,425		—			—			193,693
Gross profit	66,095			65,422		—			—			131,517
Selling, general and administrative expenses	33,312			23,177		8,129			—			64,618
Operating income (loss)	32,783			42,245		(8,129		)	—			66,899
Interest expense and other	(6,298		)	3,872		18,143			—			15,717
Write-off of loan acquisition costs associated with refinancing of senior credit agreement	—			—		2,478			—			2,478
Equity in earnings of subsidiaries	—			—		(58,512		)	58,512			—
Income from continuing operations before income taxes	39,081			38,373		29,762			(58,512		)	48,704
Income taxes	16,850			8,230		(9,862		)	—			15,218
Income from continuing operations	22,231			30,143		39,624			(58,512		)	33,486
Income from discontinued operations, net of income taxes	2,903			3,235		(370		)	—			5,768
Net income	$	25,134		$	33,378	$	39,254		$	(58,512	)	$	39,254

Condensed consolidating statement of comprehensive income
For the three months ended June 29, 2013

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net income	$	11,364	$	11,856		$	15,440		$	(23,220	)	$	15,440
Foreign currency translation adjustment, net of income tax expense of $268	—		(1,597		)	(346		)	(170		)	(2,113		)
Change in net actuarial loss and prior service credit, net of income tax benefit of $138	—		(126		)	—			—			(126		)
Equity in earnings of subsidiaries	—		—			(1,893		)	1,893			—
Comprehensive income	$	11,364	$	10,133		$	13,201		$	(21,497	)	$	13,201

Condensed consolidating statement of comprehensive income
For the three months ended June 30, 2012

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net income	$	11,681	$	18,168		$	20,481		$	(29,849	)	$	20,481
Foreign currency translation adjustment, net of income tax benefit of $1,144	—		(14,595		)	1,053			(1,588		)	(15,130		)
Change in net actuarial loss and prior service credit	—		625			—			—			625
Equity in earnings of subsidiaries	—		—			(15,558		)	15,558			—
Comprehensive income	$	11,681	$	4,198		$	5,976		$	(15,879	)	$	5,976

Condensed consolidating statement of comprehensive income
For the six months ended June 29, 2013

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net income	$	13,827	$	25,480		$	24,461		$	(39,307	)	$	24,461
Foreign currency translation adjustment, net of income tax benefit of $218	—		(5,874		)	354			(95		)	(5,615		)
Change in net actuarial loss and prior service credit, net of income tax benefit of $274	—		913			—			—			913
Equity in earnings of subsidiaries	—		—			(5,056		)	5,056			—
Comprehensive income	$	13,827	$	20,519		$	19,759		$	(34,346	)	$	19,759

Condensed consolidating statement of comprehensive income
For the six months ended June 30, 2012

(in thousands)	Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net income	$	25,134	$	33,378		$	39,254		$	(58,512	)	$	39,254
Foreign currency translation adjustment, net of income tax benefit of $610	—		(6,293		)	782			(730		)	(6,241		)
Change in net actuarial loss and prior service credit	—		305			—			—			305
Equity in earnings of subsidiaries	—		—			(6,718		)	6,718			—
Comprehensive income	$	25,134	$	27,390		$	33,318		$	(52,524	)	$	33,318

Condensed consolidating statement of cash flows
For the six months ended June 29, 2013

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	43,221		$	41,903		$	(20,075	)	$	4,282		$	69,331
Investing activities:
Purchases of property, plant and equipment, net	(2,240		)	(11,334		)	—			—			(13,574		)
Net cash used in investing activities	(2,240		)	(11,334		)	—			—			(13,574		)
Financing activities:
Principal payments on debt	—			—			(11,250		)	—			(11,250		)
Payments on revolving credit facility	—			—			(35,000		)	—			(35,000		)
Proceeds from revolving credit facility	—			—			54,200			—			54,200
Proceeds from stock option exercises	—			—			1,020			—			1,020
Repurchases of common stock	—			—			(79,935		)	—			(79,935		)
Noncontrolling interest	—			—			1,731			—			1,731
Intercompany transactions, net	(40,981		)	(34,585		)	79,848			(4,282		)	—
Net cash provided by (used in) financing activities	(40,981		)	(34,585		)	10,614			(4,282		)	(69,234		)
Effect of exchange rate changes on cash and cash equivalents	—			866			—			—			866
Net decrease in cash and cash equivalents	—			(3,150		)	(9,461		)	—			(12,611		)
Cash and cash equivalents at beginning of period	—			28,098			16,775			—			44,873
Cash and cash equivalents at end of period	$	—		$	24,948		$	7,314		$	—		$	32,262

Condensed consolidating statement of cash flows
For the six months ended June 30, 2012

(in thousands)	Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			The Company			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	51,499		$	14,239		$	(18,133	)	$	(800	)	$	46,805
Investing activities:
Purchases of property, plant and equipment, net	(83,072		)	(12,205		)	—			—			(95,277		)
Net cash used in investing activities	(83,072		)	(12,205		)	—			—			(95,277		)
Financing activities:
Principal payments on debt	—			(117		)	(807		)	—			(924		)
Proceeds from stock option exercises	—			—			490			—			490
Noncontrolling interest	—			—			(104		)	—			(104		)
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		)
Loan acquisition costs	—			—			(5,986		)	—			(5,986		)
Intercompany transactions, net	31,573			(814		)	(31,559		)	800			—
Net cash provided by (used in) financing activities	31,573			(42,796		)	11,608			800			1,185
Effect of exchange rate changes on cash and cash equivalents	—			(894		)	—			—			(894		)
Net decrease in cash and cash equivalents	—			(41,656		)	(6,525		)	—			(48,181		)
Cash and cash equivalents at beginning of period	—			65,495			27,079			—			92,574
Cash and cash equivalents at end of period	$	—		$	23,839		$	20,554		$	—		$	44,393