The global market for separation and filtration membranes is large and extremely fragmented, with most suppliers producing products for separate and distinct niches. Industry analysts estimate that the annual global market for lead-acid batteries is approximately $30 billion, or 770 million units, of which approximately $25 billion, or 600 million units, are lead-acid batteries for SLI applications for motor vehicles. Accordingly, the size of the separator market is much smaller than the overall lead-acid battery market. The SLI lead-acid battery market is characterized by stable demand because of the relatively short replacement cycle for batteries in automobiles. The primary demand driver of the replacement market is the size of the worldwide fleet of motor vehicles, which, according to Ward\'s Motor Vehicles Facts and Figures, has been growing approximately 3% per year. Secondary drivers of the replacement market include weather patterns (hot summers and cold winters tend to shorten battery life), the longer average life of vehicles and the larger average size of engines.

According to industry analysts, the market for rechargeable lithium batteries used in electronic devices is over $3 billion and the market for disposable lithium batteries is approximately $700 million. As with lead-acid batteries, the size of the market for separators is considerably smaller than the overall market for lithium batteries. According to industry analysts, sales in the rechargeable lithium battery market grew at a compound annual growth rate of approximately 22% from 1996 to 2001 and are expected to grow at a compound annual growth rate of approximately 16% through 2011. Growth in the rechargeable lithium battery business has historically been driven by growth in the underlying markets for portable electronic products (primarily mobile phones and laptop computers) and the displacement of nickel-based battery technologies. The continuing market growth is being driven by the increasing mobility of consumers demanding portable electronic devices, the increasing number of consumers purchasing back-up batteries, and the increasing functionality and complexity of these devices requiring more battery power and more batteries per electronic device. Lithium-based batteries exhibit superior energy density and weight characteristics relative to other battery technologies such as nickel-based materials and have become the standard in the majority of consumer end-markets.

The Company also develops, manufactures and markets a complete line of polypropylene and polyethylene monolayer and proprietary multilayer separators used for rechargeable (Li2) and disposable (Li1) lithium batteries. Approximately 80% of the lithium battery separators the Company sells are used in rechargeable lithium batteries and 20% are used for disposable lithium batteries.

The Company is a leading developer, manufacturer and marketer of membranes for use in blood oxygenators, with an estimated 85% global market share. A blood oxygenator is a device containing highly specialized separation media used to remove carbon dioxide from the blood while oxygen is diffused through the membrane and into the blood. Oxygenators are primarily sold to hospitals for use in heart-lung bypass surgical procedures.

The Company is a leading developer, manufacturer and marketer of extracorporeal therapeutic plasmapheresis membranes, with an estimated 57% market share. Plasmapheresis is the extracorporeal separation of blood cells and plasma from plasma proteins in different diseases. Therapeutic plasmapheresis is a new and growing field that is becoming accepted among the medical community

The Company develops, manufactures and markets a number of industrial and specialty filtration and filtration-related products. Liquid filtration is a diverse and high growth market. Almost every process stream has a filtration application. The Company has leveraged its established filtration technology and membrane expertise to supply a broad portfolio of membranes based on flat sheet, tubular and capillary technology.

The Company has also developed significant capability in the development of membrane applications for fuel cells. The Company has leveraged its technological expertise in electrochemistry and has established key technical alliances to develop membrane technology for fuel cell applications. The Company has already developed several functional membranes for controlling moisture in fuel cell systems.

Gross profit for the three months ended April 3, 2004 was $53.8 million, an increase of $19.6 million, or 57.3%, from the three months ended March 29, 2003.

Selling, general and administrative expenses for the three months ended April 3, 2004 were $19.0 million, an increase of $3.2 million, or 20.3%, from the three months ended March 29, 2003.

Interest expense, net was $4.5 million for the three months ended April 3, 2004 and March 29, 2003.

Income tax expense as a percentage of income before income taxes was 34.1% for the three months ended April 3, 2004, as compared to the 40.1% effective tax rate for the three months ended March 29, 2003.