10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________

FORM 10-Q

________________________

ý Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2017

Or

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from             to             

Commission File Number 001-32498

________________________

Xerium Technologies, Inc.

(Exact name of registrant as specified in its charter)

________________________

DELAWARE	42-1558674
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
14101 Capital Boulevard Youngsville, North Carolina	27596
(Address of principal executive offices)	(Zip Code)

(919) 526-1400

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

________________________

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.    Yes  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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).    Yes  ý    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 definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	£	Accelerated filer	x	Smaller reporting company	£
Non-accelerated filer	£	(Do not check if a smaller reporting company)		Emerging growth company	£

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. £

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange

Act).    Yes  ¨    No  ý

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    Yes  ý    No  ¨

The number of shares of the registrant’s common stock, $0.001 par value, outstanding as of May 2, 2017 was 16,167,949.

TABLE OF CONTENTS

Part I. Financial Information
		Page
Item 1.	Unaudited Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31
Part II. Other Information
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 5.	Other Information	32
Item 6.	Exhibits	32

2

PART I. FINANCIAL INFORMATION

ITEM 1. UNAUDITED FINANCIAL STATEMENTS

Xerium Technologies, Inc.

Condensed Consolidated Balance Sheets

(Dollars in thousands and unaudited)

	March 31, 2017			December 31, 2016
ASSETS
Current assets:
Cash and cash equivalents	$	10,138		$	12,808
Accounts receivable, net	74,666			68,667
Inventories, net	73,997			70,822
Prepaid expenses	5,658			6,325
Other current assets	17,733			15,784
Total current assets	182,192			174,406
Property and equipment, net	288,009			284,101
Goodwill	58,064			56,783
Intangible assets	7,694			7,330
Non-current deferred tax asset	12,810			10,737
Other assets	8,350			8,556
Total assets	$	557,119		$	541,913
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Notes payable	$	7,596		$	7,328
Accounts payable	42,261			36,158
Accrued expenses	52,549			64,532
Current maturities of long-term debt	9,403			8,600
Total current liabilities	111,809			116,618
Long-term debt, net of current maturities	483,981			472,923
Liabilities under capital leases	18,216			19,236
Non-current deferred tax liability	8,442			7,157
Pension, other post-retirement and post-employment obligations	65,183			65,026
Other long-term liabilities	9,056			7,858
Commitments and contingencies
Stockholders’ deficit
Preferred stock, $0.001 par value, 1,000,000 shares authorized; no shares outstanding as of March 31, 2017 and December 31, 2016	—			—
Common stock, $0.001 par value, 20,000,000 shares authorized; 16,167,949 and 16,152,946 shares outstanding as of March 31, 2017 and December 31, 2016, respectively	16			16
Paid-in capital	431,354			430,823
Accumulated deficit	(445,900		)	(443,066		)
Accumulated other comprehensive loss	(125,038		)	(134,678		)
Total stockholders’ deficit	(139,568		)	(146,905		)
Total liabilities and stockholders’ deficit	$	557,119		$	541,913

3

Xerium Technologies, Inc.

Consolidated Statements of Operations

(Dollars in thousands, except per share data and unaudited)

	Three Months Ended March 31,
	2017			2016
Net Sales	$	119,866		$	114,965
Costs and expenses:
Cost of products sold	72,370			71,428
Selling	15,674			15,721
General and administrative	12,654			11,507
Research and development	1,744			1,940
Restructuring	3,164			2,832
	105,606			103,428
Income from operations	14,260			11,537
Interest expense, net	(13,263		)	(10,341		)
Loss on extinguishment of debt	(25		)	—
Foreign exchange (loss) gain	(1,125		)	24
(Loss) income before provision for income taxes	(153		)	1,220
Provision for income taxes	(2,681		)	(2,665		)
Net loss	$	(2,834	)	$	(1,445	)
Comprehensive income	$	6,806		$	7,373
Net loss per share:
Basic	$	(0.18	)	$	(0.09	)
Diluted	$	(0.18	)	$	(0.09	)
Shares used in computing net loss per share:
Basic	16,153,113			15,789,991
Diluted	16,153,113			15,789,991

4

Xerium Technologies, Inc.

Consolidated Statements of Cash Flows

(Dollars in thousands and unaudited)

	Three Months Ended March 31,
	2017			2016
Operating activities
Net loss	$	(2,834	)	$	(1,445	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Stock-based compensation	531			592
Depreciation	7,819			7,900
Amortization of intangible assets	273			94
Deferred financing cost amortization	899			756
Foreign exchange loss on revaluation of debt	627			1,120
Deferred taxes	10			155
(Gain) loss on disposition of property and equipment	(49		)	17
Loss on extinguishment of debt	25			—
Provision (benefit) for doubtful accounts	41			(72		)
Change in assets and liabilities which (used) provided cash:
Accounts receivable	(4,153		)	(2,130		)
Inventories	(1,136		)	2,232
Prepaid expenses	783			(621		)
Other current assets	(1,785		)	1,024
Accounts payable and accrued expenses	(7,334		)	4,689
Deferred and other long-term liabilities	(940		)	792
Net cash (used in) provided by operating activities	(7,223		)	15,103
Investing activities
Capital expenditures	(5,285		)	(3,550		)
Proceeds from disposals of property and equipment	216			20
Net cash used in investing activities	(5,069		)	(3,530		)
Financing activities
Proceeds from borrowings	40,476			13,313
Principal payments on debt	(29,693		)	(16,439		)
Payment of financing fees	(170		)	(98		)
Payment of obligations under capital leases	(1,520		)	(673		)
Employee taxes paid on equity awards	—			(1,029		)
Net cash provided by (used in) financing activities	9,093			(4,926		)
Effect of exchange rate changes on cash flows	529			(1,036		)
Net (decrease) increase in cash	(2,670		)	5,611
Cash and cash equivalents at beginning of period	12,808			9,839
Cash and cash equivalents at end of period	$	10,138		$	15,450
Noncash capitalized lease asset and liability	$	—		$	1,259

5

Xerium Technologies, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands, except per share data)

1. Description of Business and Significant Accounting Policies

Description of Business

Xerium Technologies, Inc. (the "Company") is a leading, global provider of industrial consumable products and services including machine clothing, roll coverings, roll repair and mechanical services. These goods and services are used in the production of paper, paperboard, building products and nonwoven materials. Its operations are strategically located in the major paper-making regions of the world, including North America, Europe, Latin America and Asia-Pacific.

Basis of Presentation

The accompanying unaudited condensed consolidated interim financial statements at March 31, 2017 and for the three months ended March 31, 2017 and 2016 include the accounts of the Company and its wholly-owned subsidiaries and have been prepared in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, such financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. The interim results presented herein are not necessarily indicative of the results to be expected for the entire year. In management’s opinion, these unaudited condensed consolidated interim financial statements contain all adjustments of a normal recurring nature necessary for a fair presentation of the financial statements for the interim periods presented. These unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2016 as reported on the Company's Annual Report on Form 10-K filed on March 1, 2017.

Accounting Policies

Inventories, net

Inventories are generally valued at the lower of cost or market using the first-in, first-out (FIFO) method. Raw materials are valued principally on a weighted average cost basis. The Company’s work in process and finished goods are specifically identified and valued based on actual inputs to production. Provisions are recorded as appropriate to write-down obsolete and excess inventory to estimated net realizable value. The process for evaluating obsolete and excess inventory often requires management to make subjective judgments and estimates concerning future sales levels, quantities and prices at which such inventory will be able to be sold in the normal course of business, while considering the general aging of inventory and factoring in any new business conditions.

The components of inventories are as follows at:

	March 31, 2017			December 31, 2016
Raw materials	$	14,706		$	14,089
Work in process	27,205			25,879
Finished goods (includes consigned inventory of $6,985 at March 31, 2017 and $6,673 at December 31, 2016)	38,866			37,155
Inventory allowances	(6,780		)	(6,301		)
	$	73,997		$	70,822

Goodwill

The Company accounts for goodwill and other intangible assets in accordance with ASC Topic 350, Intangibles—Goodwill and Other Intangible Assets (“Topic 350”). Topic 350 requires that goodwill and intangible assets that have indefinite lives not be amortized, but instead, must be tested for impairment at least annually or whenever events or business conditions warrant. During the three months ended March 31, 2017, the Company evaluated events and business conditions to determine if a test for an impairment of goodwill was warranted. No such events or business conditions took place during this period, therefore no test was determined to be warranted at March 31, 2017.

Warranties

6

The Company offers warranties on certain roll products that it sells. The specific terms and conditions of these warranties vary depending on the product sold, the country in which the product is sold and arrangements with the customer. The Company estimates the costs that may be incurred under its warranties and records a liability in Accrued Expenses on its Consolidated Balance Sheet for such costs. Factors that affect the Company’s warranty liability include the number of units sold, historical and anticipated rates of warranty claims, cost per claim and new product introduction. The Company periodically assesses the adequacy of its recorded warranty claims and adjusts the amounts as necessary. The table below represents the changes in the Company’s warranty liability for the three months ended March 31, 2017 and 2016:

	Beginning Balance		Charged to  Cost of Sales		Effect of Foreign Currency Translation		Deduction from Reserves			Ending Balance
Three Months Ended March 31, 2017:	$	2,203	$	235	$	30	$	(179	)	$	2,289
Three Months Ended March 31, 2016:	$	2,175	$	477	$	34	$	(189	)	$	2,497

Net Loss Per Common Share

Net loss per common share has been computed and presented pursuant to the provisions of ASC Topic 260, Earnings per Share (“Topic 260”). Net loss per share is based on the weighted-average number of shares outstanding during the period. As of March 31, 2017 and 2016, the Company had outstanding restricted stock units (“RSUs”), deferred stock units (“DSUs”) and options.

The following table sets forth the computation of basic and diluted weighted-average shares:

	Three Months Ended March 31,
	2017	2016
Weighted-average common shares outstanding–basic	16,153,113	15,789,991
Dilutive effect of stock-based compensation awards outstanding	—	—
Weighted-average common shares outstanding–diluted	16,153,113	15,789,991

The following table sets forth the aggregate of the potentially dilutive securities that were outstanding in the three months ended March 31, 2017 and 2016, but were not included in the computation of diluted earnings per share because the impact would have been anti-dilutive:

	Three Months Ended March 31,
	2017	2016
Anti-dilutive securities	902,988	738,294

Impairment

The Company reviews its long-lived assets that have finite lives for impairment in accordance with ASC Topic 360, Property, Plant, and Equipment (“Topic 360”). This topic requires that companies evaluate the fair value of long-lived assets based on the anticipated undiscounted future cash flows to be generated by the assets when indicators of impairment exist to determine if there is impairment to the carrying value. Any change in the carrying amount of an asset as a result of the Company's evaluation has been recorded in either restructuring expense, if it was a result of the Company's restructuring activities, or general and administrative expense for all other impairments in the consolidated statements of operations. For the three months ended March 31, 2017 and 2016, the Company had no impairment charges included in restructuring expense.

New Accounting Pronouncements

In March 2017, the FASB issued Accounting Standards Update No 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost ("ASU 2017-07"). ASU 2017-07 will change how employers that sponsor defined benefit pension and/or other post-retirement benefit plans present the net periodic benefit cost in the income statement. Employers will present the service cost component of net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. Only the service cost component will be eligible for capitalization in

7

assets. Employers will present the other components of the net periodic benefit cost separately from the line item(s) that includes the service cost and outside of any subtotal of operating income, if one is presented. These components will not be eligible for capitalization in assets. The guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods therein. Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance. The guidance provides a practical expedient for disaggregating the service cost component and other components for comparative periods. The Company is in the process of evaluating this accounting standard update.

In January 2017, the FASB issued Accounting Standards Update No 2017-04, Intangibles—Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 simplifies the accounting for goodwill impairment for all entities by requiring impairment charges to be based on the first step in today’s two-step impairment test under Accounting Standards Codification (ASC) 350. The FASB issued new guidance that eliminates the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of today’s goodwill impairment test) to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (i.e., measure the charge based on today’s Step 1). The standard has tiered effective dates, starting in 2020 for calendar-year public business entities that meet the definition of an SEC filer. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The Company is in the process of evaluating this accounting standard update.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory ("ASU 2016-16"). ASU 2016-16 eliminates the exception to the principle in ASC 740, for all intra-entity sales of assets other than inventory, to be deferred, until the transferred asset is sold to a third party or otherwise recovered through use. This standard is effective for financial statements issued for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements.

In August 2016, the FASB issued Accounting Standards Update No 2016-15, Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"). ASU 2016-15 clarifies how entities should classify certain cash receipts and cash payments in the statement of cash flows and amends certain disclosure requirements of ASC 230. The guidance will generally be applied retrospectively and is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those years. For all other entities, it is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. The Company is in the process of evaluating this accounting standard update.

In March of 2016, the FASB issued Accounting Standards Update No 2016-09 Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 will change certain aspects of accounting for share-based payments to employees. The new guidance will require all income tax effects of awards to be recognized in the income statement when the awards vest or are settled. It also will allow an employer to repurchase more of an employee’s shares than it can today for tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur. ASU 2016-09 is required to be adopted in January of 2017. The Company early adopted this standard at June 30, 2016. As of March 31, 2017, the adoption of the standard has resulted in the re-classification of $1.0 million of employee taxes paid on equity awards as a financing activity in the statement of cash flows, for the three months ended March 31, 2016. The remaining provisions of ASU 2016-09 did not have a material impact on the accompanying condensed consolidated financial statements.

In February of 2016, the FASB issued Accounting Standards Update No 2016-02 Leases ("ASU 2016-02"). ASU 2016-02 includes final guidance that requires lessees to put most leases on their balance sheets but recognize expenses in the income statement in a manner similar to today’s accounting. The guidance also eliminates today’s real estate-specific provisions and changes the guidance on sale-leaseback transactions, initial direct costs and lease executory costs for all entities. For lessors, the standard modifies the classification criteria and the accounting for sales-type and direct financing leases. All entities will classify leases to determine how to recognize lease-related revenue and expense. Classification will continue to affect amounts that lessors record on the balance sheet. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. They have the option to use certain relief. Full retrospective application is prohibited. ASU 2016-02 is effective for public companies with annual periods beginning after 15 December 2018, and interim periods within those years. For all other entities, it is effective for annual periods beginning after 15 December 2019, and interim periods the following year. Early adoption is permitted for all entities. The Company is in the process of evaluating this accounting standard update.

8

In November of 2015, the FASB issued ASU 2015-17 Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes ("ASU 2015-17"). This guidance requires companies to classify all deferred tax assets and liabilities as non-current on the balance sheet instead of separating deferred taxes into current and non-current amounts. For public companies, the guidance is effective for financial statements issued for annual periods beginning after 15 December 2016 (i.e., 2017 for a calendar-year company) and interim periods within those annual periods. Early adoption of the guidance is permitted. Companies can adopt the guidance either prospectively or retrospectively. The Company early adopted this standard at December 31, 2016, using the prospective method; prior periods were not retrospectively adjusted. The provisions of ASU 2015-17 did not have a material impact on the consolidated financial statements.

In July of 2015, the FASB issued Accounting Standards Update Inventory ("ASU 2015-11"). ASU 2015-11 applies only to first-in, first-out (FIFO) and average cost inventory costing methods and will reduce costs and increase comparability for these methods. There will be no change for last-in, first-out, (LIFO) or retail inventory methods as the costs of transitioning to a new method would outweigh the benefits due to the complexity of these methods. Under this ASU, inventory should be measured at the lower of cost and net realizable value (selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation). When the net realizable value of inventory is less than its cost, the difference will be recognized as a loss in earnings in the period in which it occurs. This ASU more closely aligns the measurement of inventory under GAAP with International Financial Reporting Standards guidance. The amendments are effective for public companies for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, and for other entities, the amendments are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendments should be applied prospectively, and early application is permitted as of the beginning of an interim or annual reporting period. The Company implemented this standard during the first quarter of 2016. The provisions of ASU 2015-11 did not have an impact to the financial statements.

In May of 2014, the FASB issued Accounting Standard Update No. 2014-09 Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Company identify the contract with the customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when it satisfies the performance obligations. The Company will also be required to disclose information regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 is required to be adopted in January of 2018. Retrospective application is required either to all periods presented or with the cumulative effect of initial adoption recognized in the period of adoption. The Company has commenced a comprehensive project plan to direct the implementation of the new revenue recognition standards and an assessment of the impact to business processes. The Company intends to adopt the new standard using the modified retrospective transition method effective January 1, 2018.

2. Business Acquisitions

On May 4, 2016, the Company acquired certain assets and liabilities of JJ Plank Corporation/Spencer Johnston (“Spencer Johnston”), a spreader roll company headquartered in Neenah, Wisconsin for an adjusted purchase price of $17.6 million. This acquisition expands the Company's current rolls product offerings, service capabilities and markets served, strengthens its financial profile and grows its customer base. The Company acquired all of the assets and assumed certain liabilities of Spencer Johnston.

Because the transaction was completed on May 4, 2016, the final purchase price allocation at the acquisition date was subject to change with respect to closing date working capital balances and other post-closing adjustments. The measurement period remains open as of March 31, 2017.

The adjusted purchase price of $17.6 million resulted in net assets acquired other than goodwill of $15.7 million and goodwill of $1.9 million. All of the goodwill is allocated to the Rolls Covers business segment. Goodwill represents the excess purchase price over the fair values of assets acquired and liabilities assumed. The goodwill was generated by the synergies the transaction provides.

3. Derivatives and Hedging

Risk Management Objective of Using Derivatives

9

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. From time to time, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known cash amounts, the value of which are determined by interest rates or foreign exchange rates.

Cash Flow Hedges of Interest Rate Risk

From time to time, the Company uses interest rate derivatives to add stability to interest expense and to manage its exposure to interest rate movements. However, at March 31, 2017, the Company had no interest rate derivatives.

Non-designated Hedges of Foreign Exchange Risk

Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to foreign exchange rates, but do not meet the strict hedge accounting requirements of ASC Topic 815. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings.

The Company, from time to time, may enter into foreign exchange forward contracts to fix currencies at specified rates based on expected future cash flows to protect against the fluctuations in cash flows resulting from sales denominated in foreign currencies. Additionally, to manage its exposure to fluctuations in foreign currency on intercompany balances and certain purchase commitments, the Company from time to time may use foreign exchange forward contracts.

As of March 31, 2017 and December 31, 2016, the Company had outstanding derivatives that were not designated as hedges in qualifying hedging relationships. The value of these contracts is recognized at fair value based on market exchange forward rates and is recorded in other assets or other liabilities on the Consolidated Balance Sheets. The following represents the fair value of these derivatives at March 31, 2017 and December 31, 2016 and the change in fair value included in foreign exchange gain (loss) in the three months ended March 31, 2017 and 2016:

	March 31, 2017			December 31, 2016
Fair value of derivative (liability)	$	(79	)	$	(1,461	)
	Three Months Ended March 31, 2017			Three Months Ended March 31, 2016
Change in fair value of derivative included in foreign exchange (loss) gain	$	145		$	1,170

The following represents the notional amounts of foreign exchange forward contracts at March 31, 2017:

	Notional Sold		Notional Purchased
Non-designated hedges of foreign exchange risk	$	—	$	(987	)

Fair Value of Derivatives Under ASC Topic 820

ASC Topic 820, Fair Value Measurements and Disclosures (“Topic 820”), emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, Topic 820 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs including fair value of investments that do not have the ability to redeem at net asset value as of the measurement date, or during the first quarter following the measurement date. The derivative assets or liabilities are typically based on an entity’s own assumptions, as there is little, if any, market activity. In instances where the determination of the fair value measurement is

10

based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and the Company considers factors specific to the asset or liability. The Company determined that its derivative valuations, which are based on market exchange forward rates, fall within Level 2 of the fair value hierarchy.

4. Long term Debt

At March 31, 2017 and December 31, 2016, long term debt consisted of the following:

	March 31, 2017			December 31, 2016
Notes (Secured), payable semi-annually–U.S. Dollar denominated interest rate fixed at 9.50%. Sold at a price equal to 98.54% of their face value. Matures August of 2021.	$	480,000		$	480,000
Notes payable, working capital loan, variable interest rate at 2.05%. Matures June 30, 2017, with one-year rollover option.	7,596			7,328
Fixed asset loan contract, variable interest rate of 5.78%. Matures June of 2020.	7,590			7,511
Other debt	21,593			10,448
Total debt (excluding long-term capital leases and deferred finance fees)	516,779			505,287
Less deferred financing costs and debt discount	(15,799		)	(16,436		)
Less current maturities of long term debt and notes payable	(16,999		)	(15,928		)
Total long term debt	$	483,981		$	472,923

On August 9, 2016, the Company closed on $480 million aggregate principal amount of 9.5% Senior Secured Notes due August 2021 (the "Notes"), which were sold at a price equal to 98.54% of their face value. The Notes will pay interest semi-annually in arrears on February 15 and August 15 of each year beginning on February 15, 2017 and will mature on August 15, 2021, unless earlier redeemed or repurchased.

The Company used the net proceeds from the offering to repay all amounts outstanding under its then existing term loan credit facility, to redeem all of its 8.875% Senior Notes due 2018 at a redemption price equal to 102.219% of the principal amount thereof, together with accrued and unpaid interest, to the date of redemption, to pay fees and expenses relating to these transactions, and for working capital and other general corporate purposes.

As of March 31, 2017, an aggregate of $25.3 million is available for additional borrowings under the $55.0 million Revolving Credit and Guaranty Agreement ("ABL Facility"). This availability represents $39.4 million under the ABL revolver that is currently collateralized by certain assets of the Company, less $14.1 million of that facility committed for letters of credit or additional borrowings. In addition, the Company had approximately $3.2 million available for borrowings under other small lines of credit.

On May 17, 2013, the Company entered into a Credit and Guaranty Agreement for $200.0 million (increased to $230 million on August 18, 2016) term loan credit facility (the “Term Credit Facility”), net of a discount of $1.0 million, among the Company, certain direct and indirect U.S. subsidiaries of the Company as guarantors and certain financial institutions. This facility was repaid with proceeds from the 9.5% senior secured notes.

On May 17, 2013, the Company also entered into a Revolving Credit and Guaranty Agreement originally for a $40.0 million asset-based revolving credit facility subject to a borrowing base among Xerium Technologies, Inc., as a US borrower, Xerium Canada Inc., as Canadian borrower, certain direct and indirect U.S. subsidiaries of the Company as guarantors and certain financial institutions (the "Domestic Revolver"). On March 3, 2014, the Company entered into an amendment to the Revolving Credit and Guaranty Agreement (as amended, the “old ABL Facility,” and collectively with the Term Credit Facility, the “Credit Facility”), increasing the aggregate availability under the old ABL Facility to $55 million. On November 3, 2015, the Company refinanced the old ABL Facility and entered into the ABL Facility with one of its existing ABL lenders. The amount of the ABL Facility continues to provide aggregate availability of $55 million and the collateral pledged thereunder has remained the same. The ABL Facility matures in November of 2020 and accrues interest at either an Alternative Base rate (Prime plus 75 bps) or Fixed LIBOR (LIBOR +175 bps). As of March 31, 2017 these rates were 4.75% and 2.78%, respectively.

The Indenture and the ABL Facility contain certain customary covenants that, subject to exceptions, restrict our ability to, among other things:

• declare dividends or redeem or repurchase equity interests;

•prepay, redeem or purchase debt;

11

•incur liens and engage in sale-leaseback transactions;

•make loans and investments;

•incur additional indebtedness;

•amend or otherwise alter debt and other material agreements;

•engage in mergers, acquisitions and asset sales;

•transact with affiliates; and

•engage in businesses that are not related to the Company's existing business.

On July 17, 2015 (the "Closing Date"), Xerium China, Co., Ltd. ("Xerium China"), a wholly-owned subsidiary of the Company entered into and closed a Fixed Assets Loan Contract (the "Loan Agreement") with the Industrial and Commercial Bank of China Limited, Shanghai-Jingan Branch (the “Bank”) with respect to a RMB 58.5 million loan, which was approximately 9.4 million USD on July 17, 2015. The loan is secured by pledged machinery and equipment of Xerium China and guaranteed by Xerium Asia Pacific (Shanghai) Limited and Stowe Woodward (Changzhou) Roll Technologies Co. Ltd., which are wholly-owned subsidiaries of the Company, pursuant to guarantee agreements (the "Guarantee Agreements"). Interest on the outstanding principal balance of the loan accrues at a benchmark rate plus a margin. The current interest rate at March 31, 2017 is approximately 5.8%. The interest rate will be adjusted every 12 months during the term of the loan, based on the benchmark interest rate adjustment. Interest under the loan is payable quarterly in arrears. Principal on the loan is to be repaid in part every six months following the Closing Date, in accordance with a predetermined schedule set forth in the Loan Agreement. Proceeds of the Loan will be used by Xerium China to purchase production equipment. The Loan Agreement contains certain customary representations and warranties and provisions relating to events of default.

On May 26, 2011, the Company completed a refinancing transaction, which replaced certain of its then outstanding indebtedness with $240 million aggregate principal amount of 8.875% senior unsecured notes. The notes were repaid with proceeds from the 9.5% Senior Secured Notes.

As of March 31, 2017, the carrying value of the Company’s long term debt was $499.8 million (excluding deferred financing costs) and its fair value was approximately $510.0 million. The Company determined the fair value of its debt utilizing significant other observable inputs (Level 2 of the fair value hierarchy).

Long-term Capitalized Lease Liabilities

As of March 31, 2017, the Company had long-term capitalized lease liabilities totaling $18.2 million. These amounts represent the lease on the corporate headquarters and the Kunshan, China facility, as well as other leases for software, vehicles and machinery and equipment.

5. Income Taxes

The Company utilizes the liability method for accounting for income taxes in accordance with ASC Topic 740, Income Taxes (“Topic 740”). Under Topic 740, deferred tax assets and liabilities are determined based on the difference between their financial reporting and tax basis. The assets and liabilities are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company reduces its deferred tax assets by a valuation allowance if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In making this determination, the Company evaluates all available information including the Company’s financial position and results of operations for the current and preceding years, as well as any available projected information for future years.

For the three months ended March 31, 2017, the provision for income taxes was $2.7 million as compared to $2.7 million for the three months ended March 31, 2016. The slight increase in tax expense in the three months ended March 31, 2017 was primarily attributable to the geographic mix of earnings. Generally, the provision for income taxes is primarily impacted by income earned in tax paying jurisdictions relative to income earned in non-tax paying jurisdictions. The majority of income recognized for purposes of computing the effective tax rate is earned in countries where the statutory income tax rates range from 15.0% to 35.4%; however, permanent income adjustments recorded against pre-tax earnings may result in an effective tax rate that is higher or lower than the statutory tax rate in these jurisdictions. The Company generates losses in certain jurisdictions for which no tax benefit is realized, as the deferred tax assets in these jurisdictions (including the net operating losses) are fully reserved in the valuation allowance. For this reason, the Company recognizes minimal income tax expense or benefit in these jurisdictions, of which the most material jurisdictions are the United States and Australia. Due to these reserves,

12

the geographic mix of the Company’s pre-tax earnings has a direct correlation with how high or low its annual effective tax rate is relative to consolidated earnings.

As the Company continues to reorganize and restructure its operations, it is possible that deferred tax assets, for which no income tax benefit has previously been provided, may more likely than not become realized. The Company continues to evaluate future operations and will record an income tax benefit in the period where it believes it is more likely than not that the deferred tax asset will be able to be realized. The most material unrecognized deferred tax asset relates to the U.S. By 2029, future U.S. earnings ranging between $40 million and $130 million, generated by U.S. earnings from continuing operations or qualified tax planning strategies, would be required in order to fully recognize the U.S. deferred tax asset. Historic and future ownership changes could potentially reduce the amount of net operating loss carry-forwards available for use.

As of March 31, 2017, the Company had a gross amount of unrecognized tax benefit of $9.7 million, exclusive of interest and penalties. The unrecognized tax benefit increased by approximately $0.4 million during the three months ended March 31, 2017, as a result of new positions related to the current year and foreign currency effects.

The Company’s policy is to recognize interest and penalties related to income tax matters as income tax expense, which were $0.4 million related to the unrecognized tax benefits for the three months ended March 31, 2017. The tax years 2007 through 2016 remain open to examination in a number of the major tax jurisdictions to which the Company and its subsidiaries are subject. The Company believes that it has made adequate provisions for all income tax uncertainties.

6. Pensions, Other Post-retirement and Post-employment Benefits

The Company accounts for its pensions, other post-retirement and post-employment benefit plans in accordance with ASC Topic 715, Compensation—Retirement Benefits (“Topic 715”). The Company has defined benefit pension plans covering substantially all of its U.S. and Canadian employees and employees of certain subsidiaries in other countries. Benefits are generally based on the employee’s years of service and compensation. These plans are funded in conformity with the funding requirements of applicable government regulations. The Company does not fund certain plans, as funding is not required. The Company plans to continue to fund its U.S. defined benefit plans to comply with the Pension Protection Act of 2006. In addition, the Company also intends to fund its U.K. and Canadian defined benefit plans in accordance with local regulations.

As required by Topic 715, the following tables summarize the components of net periodic benefit cost:

Defined Benefit Plans

	Three Months Ended March 31,
	2017			2016
Service cost	$	376		$	405
Interest cost	1,267			1,485
Expected return on plan assets	(1,496		)	(1,548		)
Amortization of net loss	590			558
Net periodic benefit cost	$	737		$	900

7. Comprehensive Income and Accumulated Other Comprehensive Loss

Comprehensive income for the three months ended March 31, 2017 (net of tax expense of $109 thousand) and 2016 (net of a tax expense of $67 thousand) is as follows:

	Three Months Ended March 31,
	2017			2016
Net loss	$	(2,834	)	$	(1,445	)
Foreign currency translation adjustments	9,765			8,460
Pension liability changes under Topic 715	(125		)	358
Comprehensive income	$	6,806		$	7,373

The components of accumulated other comprehensive loss for the three months ended March 31, 2017 are as follows (net of tax benefits of $5.9 million):

13

	Foreign Currency Translation     Adjustment			Pension Liability Changes Under  Topic 715			Accumulated    Other Comprehensive (Loss) Income
Balance at December 31, 2016	$	(95,232	)	$	(39,446	)	$	(134,678	)
Other comprehensive income before reclassifications	9,765			(715		)	9,050
Amounts reclassified from other comprehensive loss:
Amortization of actuarial losses	—			590			590
Net current period other comprehensive income	9,765			(125		)	9,640
Balance at March 31, 2017	$	(85,467	)	$	(39,571	)	$	(125,038	)

For the three months ended March 31, 2017, the amortization of actuarial losses is included in cost of products sold and general and administrative expenses in the Consolidated Statements of Operations.

8. Restructuring Expense

For the three months ended March 31, 2017, the Company incurred restructuring expenses of $3.2 million relating to headcount reductions and other costs related to previous plant closures. For the three months ended March 31, 2016, the Company incurred restructuring expenses of $2.8 million. These included $0.7 million of charges related to the closure of the Middletown, Va. facility and $2.1 million of charges relating to headcount reductions and other costs related to previous plant closures.

The following table sets forth the significant components of the restructuring accrual (included in Accrued Expenses on our Consolidated Balance Sheet), including activity under restructuring programs for the three months ended March 31, 2017 and 2016:

	Balance at December 31, 2016		Charges		Currency     Effects		Cash Payments			Balance at March 31, 2017
Severance and other benefits	$	3,805	$	2,258	$	138	$	(1,061	)	$	5,140
Facility costs and other	392		906		14		(980		)	332
Total	$	4,197	$	3,164	$	152	$	(2,041	)	$	5,472

	Balance at December 31, 2015		Charges		Currency     Effects		Cash Payments			Balance at March 31, 2016
Severance and other benefits	$	5,308	$	1,390	$	62	$	(1,804	)	$	4,956
Facility costs and other	903		1,442		63		(1,871		)	537
Total	$	6,211	$	2,832	$	125	$	(3,675	)	$	5,493

Restructuring and impairment expense by segment, which is not included in Segment Earnings in Note 9, is as follows:

14

	Three Months Ended March 31,
	2017		2016
Clothing	$	2,476	$	1,452
Roll Covers	627		891
Corporate	61		489
Total	$	3,164	$	2,832

9. Business Segment Information

The Company is a global manufacturer and supplier of consumable products used primarily in the production of paper and is organized into two reportable segments: clothing and roll covers. The clothing segment represents the manufacture and sale of synthetic textile belts used to transport paper or other materials along the length of papermaking or other industrial machines. The roll covers segment primarily represents the manufacture and refurbishment of covers used on the steel rolls of papermaking or manufacturing machines and the servicing of those rolls. The Company manages each of these operating segments separately.

Management evaluates segment performance based on adjusted earnings before interest, taxes, depreciation and amortization, yet after allocation of corporate charges. Such measure is then adjusted to exclude items that are of an unusual nature and are not used in measuring segment performance or are not segment specific (“Segment Earnings (Loss)”). The accounting policies of these segments are the same as those for the Company as a whole. Inter-segment net sales and inter-segment eliminations are not material for any of the periods presented.

Summarized financial information for the Company’s reportable segments is presented in the tables that follow for the three months ended March 31, 2017 and 2016.

	Clothing		Roll Covers		Corporate			Total
Three months ended March 31, 2017
Net Sales	$	72,495	$	47,371	$	—		$	119,866
Segment Earnings (Loss)	$	20,807	$	9,795	$	(4,029	)	$	26,573
Three months ended March 31, 2016
Net Sales	$	71,337	$	43,628	$	—		$	114,965
Segment Earnings (Loss)	$	18,635	$	9,198	$	(3,898	)	$	23,935

Provided below is a reconciliation of Segment Earnings (Loss) to (Loss) Income before provision for income taxes for the three months ended March 31, 2017 and 2016, respectively.

	Three Months Ended March 31,
	2017			2016
Segment Earnings (Loss):
Clothing	$	20,807		$	18,635
Roll Covers	9,795			9,198
Corporate	(4,029		)	(3,898		)
Stock-based compensation	(531		)	(592		)
Interest expense, net	(13,263		)	(10,341		)
Depreciation and amortization	(8,093		)	(7,994		)
Loss on extinguishment of debt	(25		)	—
Restructuring expense	(3,164		)	(2,832		)
Other non-recurring expense	(45		)	(103		)
Plant startup costs	(480		)	(877		)
Foreign exchange (loss) gain	(1,125		)	24
(Loss) income before provision for income taxes	$	(153	)	$	1,220

10. Commitments and Contingencies

15

The Company is involved in various legal matters which have arisen in the ordinary course of business as a result of various immaterial labor claims, taxing authority reviews and other routine legal matters. As of March 31, 2017, the Company accrued an immaterial amount in its financial statements for these matters for which the Company believed the possibility of loss was probable and was able to estimate the damages. The Company does not believe that the ultimate resolution of these matters will have a material adverse effect on its financial position, results of operations or cash flow. The Company believes that any additional liability in excess of amounts provided which may result from the resolution of legal matters will not have a material adverse effect on the financial condition, liquidity or cash flow of the Company.

11. Stock-Based Compensation and Stockholders’ Deficit

The Company records stock-based compensation expense in accordance with ASC Topic 718, Accounting for Stock Compensation and has used the straight-line attribution method to recognize expense for RSUs, options and DSUs. The Company recorded stock-based compensation expense during the three months ended March 31, 2017 and March 31, 2016 as follows:

	Three Months Ended March 31,
	2017		2016
RSU, Options and DSU Awards (1)	$	531	$	592

(1) Related to RSUs, Options and DSUs awarded to certain employees and non-employee directors.

Summary of Activity Under Long-term Incentive Plans

Long-Term Incentive Program—2015 LTIP and 2014 LTIP

During the first quarter of 2016 the Company performed a valuation on the market-based stock units and estimated payout to be at 0% under both the 2015 and 2014 LTIP plans, reducing stock-based compensation by $0.2 million.

Directors’ Deferred Stock Unit Plan

Under the 2011 non-management directors stock plan ("2011 DSU Plan”), as amended in January of 2015, each director receives an annual retainer of $132 thousand, to be paid on a quarterly basis in arrears. Approximately 54% of the annual retainer is payable in DSUs, with the remaining 46% payable in cash or a mix of both cash and DSUs at the election of each director. The non-management directors were awarded an aggregate of 17,787 DSUs under the 2011 DSU Plan for service during the three months ended March 31, 2017. In addition, in accordance with the 2011 DSU Plan, as amended in January of 2015, 15,003 DSUs were settled in common stock during the three months ended March 31, 2017.

12. Supplemental Guarantor Financial Information

On August 9, 2016, the Company closed on the sale of its Notes. The Notes are secured obligations of the Company and are fully and unconditionally guaranteed on a senior secured basis by all of the domestic wholly owned subsidiaries of the Company (the “Guarantors”). In accordance with Rule 3-10 of Regulation S-X promulgated under the Securities Act of 1933, as amended, the following condensed consolidating financial statements present the financial position, results of operations and cash flows of Xerium Technologies, Inc. (referred to as “Parent” for the purpose of this note only) on a stand-alone parent-only basis, the Guarantors on a Guarantors-only basis, the combined non-Guarantor subsidiaries and elimination entries necessary to arrive at the information for the Parent, the Guarantors and non-Guarantor subsidiaries on a consolidated basis.

16

Xerium Technologies, Inc.

Consolidating Balance Sheet—(Unaudited)

At March 31, 2017

(Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors		Other Eliminations			The Company
ASSETS
Current assets:
Cash and cash equivalents	$	2,056		$	66		$	8,016	$	—		$	10,138
Accounts receivable, net	78			21,783			52,805		—			74,666
Intercompany receivables	(428,202		)	428,150			52		—			—
Inventories, net	—			17,295			57,813		(1,111		)	73,997
Prepaid expenses	771			105			4,782		—			5,658
Other current assets	—			3,896			13,837		—			17,733
Total current assets	(425,297		)	471,295			137,305		(1,111		)	182,192
Property and equipment, net	8,069			66,229			213,711		—			288,009
Investments	878,223			231,443			—		(1,109,666		)	—
Goodwill	—			19,614			38,450		—			58,064
Intangible assets	—			7,019			675		—			7,694
Non-current deferred tax asset	—			—			12,810		—			12,810
Other assets	—			(121		)	8,471		—			8,350
Total assets	$	460,995		$	795,479		$	411,422	$	(1,110,777	)	$	557,119
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Notes payable	$	—		$	—		$	7,596	$	—		$	7,596
Accounts payable	2,026			12,048			28,187		—			42,261
Accrued expenses	11,894			7,363			33,292		—			52,549
Current maturities of long-term debt	2,428			2,606			4,369		—			9,403
Total current liabilities	16,348			22,017			73,444		—			111,809
Long-term debt, net of current maturities	475,627			—			8,354		—			483,981
Liabilities under capital leases	5,281			4,093			8,842		—			18,216
Non-current deferred tax liability	1,301			—			7,141		—			8,442
Pension, other post-retirement and post-employment obligations	20,258			811			44,114		—			65,183
Other long-term liabilities	—			1,250			7,806		—			9,056
Intercompany loans	63,376			(99,159		)	35,783		—			—
Total stockholders’ (deficit) equity	(121,196		)	866,467			225,938		(1,110,777		)	(139,568		)
Total liabilities and stockholders’ equity (deficit)	$	460,995		$	795,479		$	411,422	$	(1,110,777	)	$	557,119

17

Xerium Technologies, Inc.

Consolidating Balance Sheet

At December 31, 2016

(Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The Company
ASSETS
Current assets:
Cash and cash equivalents	$	1,368		$	279		$	11,161		$	—		$	12,808
Accounts receivable, net	70			18,787			49,810			—			68,667
Intercompany receivables	(410,370		)	419,192			(8,822		)	—			—
Inventories, net	—			17,356			54,577			(1,111		)	70,822
Prepaid expenses	545			395			5,385			—			6,325
Other current assets	—			3,842			11,942			—			15,784
Total current assets	(408,387		)	459,851			124,053			(1,111		)	174,406
Property and equipment, net	8,393			67,794			207,914			—			284,101
Investments	869,508			211,897			—			(1,081,405		)	—
Goodwill	—			19,614			37,169			—			56,783
Intangible assets	—			7,265			65			—			7,330
Non-current deferred tax asset	—			—			10,737			—			10,737
Other assets	—			—			8,556			—			8,556
Total assets	$	469,514		$	766,421		$	388,494		$	(1,082,516	)	$	541,913
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Notes payable	$	—		$	—		$	7,328		$	—		$	7,328
Accounts payable	2,279			10,307			23,572			—			36,158
Accrued expenses	26,495			8,659			29,378			—			64,532
Current maturities of long-term debt	2,342			2,320			3,938			—			8,600
Total current liabilities	31,116			21,286			64,216			—			116,618
Long-term debt, net of current maturities	464,494			—			8,429			—			472,923
Liabilities under capital leases	5,830			4,627			8,779			—			19,236
Non-current deferred tax liability	1,270			—			5,887			—			7,157
Pension, other post-retirement and post-employment obligations	20,923			763			43,340			—			65,026
Other long-term liabilities	—			1,250			6,608			—			7,858
Intercompany loans	63,923			(97,953		)	34,030			—			—
Total stockholders’ (deficit) equity	(118,042		)	836,448			217,205			(1,082,516		)	(146,905		)
Total liabilities and stockholders’ equity (deficit)	$	469,514		$	766,421		$	388,494		$	(1,082,516	)	$	541,913

18

Xerium Technologies, Inc.

Consolidating Statement of Operations and Comprehensive (Loss) Income (Unaudited)

For the three months ended March 31, 2017

(Dollars in thousands)

	Parent			Total Guarantors			Total  Non Guarantors			Other Eliminations			The Company
Net sales	$	—		$	46,945		$	81,084		$	(8,163	)	$	119,866
Costs and expenses:
Cost of products sold	—			30,948			49,585			(8,163		)	72,370
Selling	233			5,044			10,397			—			15,674
General and administrative	2,702			974			8,978			—			12,654
Research and development	299			931			514			—			1,744
Restructuring	61			642			2,461			—			3,164
	3,295			38,539			71,935			(8,163		)	105,606
(Loss) income from operations	(3,295		)	8,406			9,149			—			14,260
Interest (expense) income, net	(12,338		)	(347		)	(578		)	—			(13,263		)
Foreign exchange gain (loss)	(472		)	65			(718		)	—			(1,125		)
Equity in subsidiaries income	8,714			4,381			—			(13,095		)	—
Loss on extinguishment of debt	(25		)	—			—			—			(25		)
Dividend income	4,263			3,858			—			(8,121		)	—
(Loss) income before provision for income taxes	(3,153		)	16,363			7,853			(21,216		)	(153		)
Provision for income taxes	319			(141		)	(2,859		)	—			(2,681		)
Net (loss) income	$	(2,834	)	$	16,222		$	4,994		$	(21,216	)	$	(2,834	)
Comprehensive (loss) income	$	(3,684	)	$	16,230		$	15,476		$	(21,216	)	$	6,806

Xerium Technologies, Inc.

Consolidating Statement of Operations and Comprehensive Income (Loss)-(Unaudited)

For the three months ended March 31, 2016

(Dollars in thousands)

	Parent			Total Guarantors			Total  Non Guarantors			Other Eliminations			The Company
Net sales	$	—		$	40,588		$	81,600		$	(7,223	)	$	114,965
Costs and expenses:
Cost of products sold	—			28,296			50,259			(7,127		)	71,428
Selling	305			5,011			10,405			—			15,721
General and administrative	2,691			923			7,893			—			11,507
Research and development	380			1,091			469			—			1,940
Restructuring	428			1,028			1,376			—			2,832
	3,804			36,349			70,402			(7,127		)	103,428
(Loss) income from operations	(3,804		)	4,239			11,198			(96		)	11,537
Interest (expense) income, net	(9,714		)	517			(1,144		)	—			(10,341		)
Foreign exchange gain (loss)	17			(54		)	61			—			24
Equity in subsidiaries income	9,102			7,804			—			(16,906		)	—
Dividend income	3,145			—			—			(3,145		)	—
(Loss) income before provision for income taxes	(1,254		)	12,506			10,115			(20,147		)	1,220
Provision for income taxes	(191		)	(2		)	(2,472		)	—			(2,665		)
Net (loss) income	$	(1,445	)	$	12,504		$	7,643		$	(20,147	)	$	(1,445	)
Comprehensive (loss) income	$	(606	)	$	12,494		$	15,632		$	(20,147	)	$	7,373

19

Xerium Technologies, Inc.

Consolidating Statement of Cash Flows-(Unaudited)

For the three months ended March 31, 2017 (Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The  Company
Operating activities
Net (loss) income	$	(2,834	)	$	16,222		$	4,994		$	(21,216	)	$	(2,834	)
Adjustments to reconcile net (loss) income to net cash(used in) provided by operating activities:
Stock-based compensation	531			—			—			—			531
Depreciation	579			2,069			5,171			—			7,819
Amortization of intangible assets	—			246			27			—			273
Deferred financing cost amortization	875			—			24			—			899
Foreign exchange gain on revaluation of debt	625			—			2			—			627
Deferred taxes	(321		)	—			331			—			10
Loss on disposition of property and equipment	—			(37		)	(12		)	—			(49		)
Loss on extinguishment of debt	25			—			—			—			25
Provision for doubtful accounts	—			(15		)	56			—			41
Undistributed equity in earnings of subsidiaries	(8,714		)	(4,381		)	—			13,095			—
Change in assets and liabilities which (used) provided cash:
Accounts receivable	(8		)	(2,981		)	(1,164		)	—			(4,153		)
Inventories	—			62			(1,198		)	—			(1,136		)
Prepaid expenses	(226		)	289			720			—			783
Other current assets	—			(117		)	(1,668		)	—			(1,785		)
Accounts payable and accrued expenses	(14,965		)	443			7,188			—			(7,334		)
Deferred and other long-term liabilities	(47		)	169			(1,062		)	—			(940		)
Intercompany loans	17,832			(9,010		)	(8,822		)	—			—
Net cash (used in) provided by operating activities	(6,648		)	2,959			4,587			(8,121		)	(7,223		)
Investing activities
Capital expenditures	(158		)	(167		)	(4,960		)	—			(5,285		)
Intercompany property and equipment transfers, net	—			29			(29		)	—			—
Proceeds from disposals of property and equipment	—			211			5			—			216
Net cash (used in) provided by investing activities	(158		)	73			(4,984		)	—			(5,069		)
Financing activities
Proceeds from borrowings	36,253			—			4,223			—			40,476
Principal payments on debt	(25,730		)	—			(3,963		)	—			(29,693		)
Dividends paid	—			(4,263		)	(3,858		)	8,121			—
Payment of obligations under capital leases	(656		)	(721		)	(143		)	—			(1,520		)
Payment of financing fees	(187		)	—			17			—			(170		)
Intercompany loans	(2,186		)	1,739			447			—			—
Net cash provided by (used in) financing activities	7,494			(3,245		)	(3,277		)	8,121			9,093
Effect of exchange rate changes on cash flows	—			—			529			—			529
Net increase (decrease) in cash	688			(213		)	(3,145		)	—			(2,670		)
Cash and cash equivalents at beginning of period	$	1,368		$	279		$	11,161		$	—		$	12,808
Cash and cash equivalents at end of period	$	2,056		$	66		$	8,016		$	—		$	10,138

20

Xerium Technologies, Inc.

Consolidating Statement of Cash Flows (Unaudited)

For the three months ended March 31, 2016

(Dollars in Thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The  Company
Operating activities
Net (loss) income	$	(1,445	)	$	12,504		$	7,643		$	(20,147	)	$	(1,445	)
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Stock-based compensation	603			—			(11		)	—			592
Depreciation	555			2,053			5,292			—			7,900
Amortization of intangible assets	—			69			25			—			94
Deferred financing cost amortization	732			—			24			—			756
Foreign exchange gain on revaluation of debt	1,120			—			—			—			1,120
Deferred taxes	173			—			(18		)	—			155
Asset impairment	—			—			—			—			—
Loss on disposition of property and equipment	—			—			17			—			17
Provision for doubtful accounts	—			—			(72		)	—			(72		)
Undistributed equity in earnings of subsidiaries	(9,102		)	(7,804		)	—			16,906			—
Change in assets and liabilities which (used) provided cash:
Accounts receivable	(555		)	842			(2,417		)	—			(2,130		)
Inventories	—			1,229			907			96			2,232
Prepaid expenses	(872		)	170			81			—			(621		)
Other current assets	—			167			857			—			1,024
Accounts payable and accrued expenses	6,459			(932		)	(838		)	—			4,689
Deferred and other long-term liabilities	3			379			410			—			792
Intercompany loans	1,925			(4,721		)	2,796			—			—
Net cash (used in) provided by operating activities	(404		)	3,956			14,696			(3,145		)	15,103
Investing activities
Capital expenditures	(117		)	(938		)	(2,495		)	—			(3,550		)
Intercompany property and equipment transfers, net	(2		)	2			—			—			—
Proceeds from disposals of property and equipment	—			5			15			—			20
Net cash (used in) investing activities	(119		)	(931		)	(2,480		)	—			(3,530		)
Financing activities
Proceeds from borrowings	10,992			—			2,321			—			13,313
Principal payments on debt	(11,547		)	—			(4,892		)	—			(16,439		)
Dividends paid	—			(3,145		)	—			3,145			—
Payments of obligations under capitalized leases	(67		)	(517		)	(89		)	—			(673		)
Payment of deferred financing fees	(116		)	—			18			—			(98		)
Intercompany loans	1,247			637			(1,884		)	—			—
Employee taxes paid on equity awards	(1,029		)	—			—			—			(1,029		)
Net cash (used in) provided by financing activities	(520		)	(3,025		)	(4,526		)	3,145			(4,926		)
Effect of exchange rate changes on cash flows	—			—			(1,036		)	—			(1,036		)
Net (decrease) increase in cash	(1,043		)	—			6,654			—			5,611
Cash and cash equivalents at beginning of period	3,105			(2		)	6,736			—			9,839
Cash and cash equivalents at end of period	$	2,062		$	(2	)	$	13,390		$	—		$	15,450

21

13. Subsequent Events

On April 28, 2017, the Company’s Board of Directors (the “Board”) appointed Mark Staton as President and Chief Executive Officer of the Company and also appointed him to the Board, in each case replacing Mr. Bevis.  Mr. Bevis will receive severance pay of approximately $1.3 million to be paid over the next 18 months and will receive stock based compensation with an estimated value of approximately $1.7 million.

22

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to the safe harbor created by that Act. These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. In some cases, forward-looking statements can be identified by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other comparable terminology. Undue reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors that are, in some cases, beyond our control and that could materially affect actual results, levels of activity, performance, or achievements. Factors that could materially affect our actual results, levels of activity, performance or achievements include the following items:

• rate and magnitude of decline in graphical grade paper production;

• fluctuations in interest rates and currency exchange rates;

• over-capacity of certain grades of paper, leading to distressed profit situations;            

• execution risk related to the startup of our new facilities;

• local economic conditions in the areas around the world where we conduct business;

• quality issues with new products that could lead to higher warranty and quality costs;

• structural shifts in the demand for paper;

• the effectiveness of our strategies and plans;

• sudden increase or decrease in production capacity;

• trend toward extended life in forming fabrics, leading to reduced market size;

• our development and marketing of new technologies and our ability to compete against new technologies developed by competitors;

• variations in demand for our products, including our new products;

• fluctuations in the price of our component supply costs and energy costs;

• our ability to generate substantial operating cash flow to service our debt and fund growth and unexpected cash needs;

• occurrences of terrorist attacks or an armed conflict involving the United States or any other country in which we conduct business, or any other domestic or international calamity, including natural disasters;

•  changes in the policies, laws, regulations and practices of the United States and any foreign country in which we operate or conduct business, including changes regarding taxes and the repatriation of earnings; and

•  anti-takeover provisions in our charter documents.

Other factors that could materially affect our actual results, levels of activity, performance or achievements can be found in our “Risk Factors” section in our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 1, 2017. If any of these risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary significantly from what we project. Any forward-looking statement in this Quarterly Report on Form 10-Q reflects our current views with respect to future events and is subject to these and other risks, uncertainties, and assumptions relating to our operations, results of operations, growth strategy, and liquidity. We assume no obligation to publicly update or

23

revise these forward-looking statements for any reason, whether as a result of new information, future events, or otherwise, except as required by law.

All references in this Quarterly Report to “Xerium”, “the Company”, “we”, “our” and “us” means Xerium Technologies, Inc. and its subsidiaries.

Company Overview

We are a leading global manufacturer and supplier of two types of consumable products used primarily in the production of paper—clothing and roll covers. Our operations are strategically located in the major paper-producing regions of North America, Europe, South America and Asia-Pacific.

Our products play key roles in the formation and processing of paper along the length of a paper-making machine. Paper producers rely on our products and services to help improve the quality of their paper, differentiate their paper products, operate their paper-making machines more efficiently and reduce production costs. Our products and services typically represent only a small percentage of a paper producer’s overall production costs, yet they can reduce costs by permitting the use of lower-cost raw materials and by reducing energy consumption. Paper producers must replace machine clothing and refurbish or replace roll covers periodically as these products wear down during the paper production process. Our products are designed to withstand high temperatures, chemicals and high pressure conditions and are the result of a substantial investment in research and development and highly sophisticated manufacturing processes.

We operate in two principal business segments: clothing and roll covers. In our clothing segment, we manufacture and sell highly engineered synthetic textile belts that transport paper as it is processed in a paper-making machine. Clothing plays a significant role in the forming, pressing and drying stages of paper production. Because paper-making processes and machine specifications vary widely, the clothing size, form, material and function is custom engineered to fit each individual paper-making machine and process. For the three months ended March 31, 2017, our clothing segment represented 60% of our net sales.

Our roll cover products provide a surface with the mechanical properties necessary to process the paper sheet in a cost-effective manner that delivers the sheet qualities desired by each paper producer. We tailor our roll covers to individual paper-making machines and processes, using different materials, treatments and finishings. In addition to manufacturing and selling new roll covers, we also provide refurbishment services for previously installed roll covers and we manufacture new and rebuilt spreader rolls. We also provide various related products and services to our customers, both directly and through third party providers, as a growing part of our overall product offering through our roll covers sales channels. For the three months ended March 31, 2017, our roll cover segment represented 40% of our net sales.

Industry Trends and Outlook

The Company's global markets are slightly favorable overall in the first quarter of 2017. The Company's markets have gone through a tough business cycle. Demand for the Company’s products are tied to our customer’s production rates and our product’s useful lives. While the majority of the Company’s end markets are growing, certain graphical grade paper production market segments have been in decline. Non-declining markets make up greater than 75% of the Company’s business model. Production of these grades of paper and board (tissue, paper towels, napkins, cardboard, consumer packaging, consumer durable packaging, e-commerce packaging) is steady and/or increasing globally. Declining grades of paper production are newsprint globally, and printing/writing papers in mature economies with full access to wireless/digital media. These market corrections have been very strong in the last few years and many paper machines dedicated to graphical paper production have been closed. At the same time, new machines have been installed to make the growing grades of paper and board. Both of these trends are continuing. In order to optimize outcomes in this changing environment, the Company has been implementing a repositioning program to re-map its people, products, equipment tooling, machine services offered, and plant locations to more naturally align with growing markets both geographically and by type of paper machine serviced.

Net Sales and Expenses

The following factors primarily drive net sales in both our clothing and roll covers segments:

•the volume (tonnage) of worldwide paper production;

•our ability to introduce new products that our customers value and will pay for;

• advances in technology of our products, which can provide value to our customers by improving the efficiency of paper-making machines and reduce their manufacturing costs;

24

•growth in developing markets, particularly in Asia;

•the mix of paper grades being produced;

•our ability to enter and expand our business in non-paper products; and

•the impact of currency fluctuations.

Net sales in our roll covers segment include our mechanical services business. We have expanded this business in response to demand from paper producers that we perform work on the internal mechanisms of their rolls while we refurbish or replace a roll cover. In our clothing segment, we conduct a small portion of our business pursuant to consignment arrangements; for these, we do not recognize a sale of a product to a customer until the customer places the product into use, which typically occurs some period after we ship the product to the customer or to a warehouse location near the customer’s facility. As part of the consignment agreement, we deliver the goods to a location designated by the customer. In addition, we agree to a “sunset” date with the customer, which represents the date by which the customer must accept all risks and responsibilities of ownership of the product and payment terms begin. For consignment sales, we recognize revenue on the earlier of the actual product installation date or the “sunset” date.

Our operating cost levels are impacted by total sales volume, raw material costs, the impact of inflation, foreign currency fluctuations and the success of our cost reduction programs.

The level of our cost of products sold is primarily attributable to labor costs, raw material costs, product shipping costs, plant utilization and depreciation, with labor costs constituting the largest component. We invest in facilities and equipment that enable innovative product development and improve production efficiency and costs. Recent examples of capital spending for such purposes include faster weaving and needling looms and seaming machines with accurate electronic controls, automated compound mixing equipment and computer-controlled lathes and mills.

The level of research and development spending is driven by market demand for technology enhancements, including both specific customer needs and general market requirements, as well as by our own analysis of applied technology opportunities. With the exception of purchases of equipment and similar capital items used in our research and development activities, all research and development is expensed as incurred. Research and development expenses were $1.7 million and $1.9 million for the three months ended March 31, 2017 and 2016, respectively.

Foreign Exchange

A substantial portion of our net sales is denominated in Euros or other currencies. As a result, changes in the relative values of U.S. Dollars, Euros and other currencies affect our reported levels of net sales and profitability as the results are translated into U.S. Dollars for reporting purposes. In particular, decreases in the value of the U.S. Dollar relative to the value of the Euro and these other currencies positively impact our levels of revenue and profitability because the translation of a certain number of Euros or units of such other currencies into U.S. Dollars for financial reporting purposes will represent more U.S. Dollars than it would have prior to the relative decrease in the value of the U.S. Dollar. Conversely, a decline in the value of the Euro will result in a lower number of U.S. Dollars for financial reporting purposes.

For certain transactions, our net sales are denominated in U.S. Dollars, but all or a substantial portion of the associated costs are denominated in a different currency. As a result, changes in the relative values of U.S. Dollars, Euros and other currencies can affect the level of the profitability of these transactions. The largest proportion of such transactions consists of transactions in which the net sales are denominated in or indexed to the U.S. Dollar and all or a substantial portion of the associated costs are denominated in Brazilian Reals or other currencies.

During the three months ended March 31, 2017, we conducted business in nine foreign currencies. The following table provides the average exchange rate for the three months ended March 31, 2017 and 2016 of the U.S. Dollar against each of the four foreign currencies in which we conduct the largest portion of our operations.

Currency	Three Months Ended March 31, 2017	Three Months Ended March 31, 2016
Euro	$1.07 = 1 Euro	$1.10 = 1 Euro
Canadian Dollar	$0.76 = 1 Canadian Dollar	$0.73 = 1 Canadian Dollar
Chinese Renminbi	$0.15 = 1 Chinese Renminbi	$0.15 = 1 Chinese Renminbi
Japanese Yen	$0.01 = 1 Japanese Yen	$0.01 = 1 Japanese Yen

In the three months ended March 31, 2017, we conducted approximately 31% of our sales in Euros, approximately 6% in the Canadian Dollar, approximately 4% in the Chinese Renminbi and approximately 3% in the Japanese Yen.

25

To mitigate the risk of transactions in which a sale is made in one currency and associated costs are denominated in a different currency, we may utilize forward currency contracts in certain circumstances to lock in exchange rates with the objective that the gain or loss on the forward contracts will approximate the loss or gain that results from the transaction or transactions being hedged. We determine whether to enter into hedging arrangements based upon the size of the underlying transaction or transactions, an assessment of the risk of adverse movements in the applicable currencies and the availability of a cost effective hedge strategy. To the extent we do not engage in hedging or such hedging is not effective, changes in the relative value of currencies can affect our profitability.

Domestic and Foreign Operating Results:

The following is an analysis of our domestic and foreign operations during the three months ended March 31, 2017 and March 31, 2016 and a discussion of the results of operations during those periods (in thousands):

	Three Months Ended March 31,
	2017		2016
Domestic income from operations	$	5,111	$	435
Foreign income from operations	9,149		11,102
Total income from operations	$	14,260	$	11,537

During the three months ended March 31, 2017, domestic income from operations was lower than foreign income from operations primarily due to product mix, corporate overhead costs and market differences.  We intend for all earnings generated by foreign subsidiaries after 2012 to be remitted to the parent company at some point in the future. U.S. income taxes and foreign withholding taxes have been provided related to those foreign earnings. All other foreign un-remitted earnings generated in years prior to 2013 likely will remain indefinitely reinvested, except for a portion of the earnings generated prior to 2013 related to our Brazilian and Chinese operations.

Cost Reduction Programs

An important part of our strategy is to seek to reduce our overall costs and improve our competitiveness. As a part of this effort, we engage in cost reduction programs, which are designed to improve the cost structure of our global operations in response to changing market conditions. These cost reduction programs include headcount reductions throughout the world as well as plant closures that are intended to rationalize production among our facilities to better enable us to match our cost structure with customer demand. Cost savings have been realized and are expected to be realized in labor costs and other production overhead, other components of costs of products sold, general and administrative expenses and facility costs. The majority of cost savings begin at the time of the headcount reductions and plant closure with remaining cost savings recognized over subsequent periods. Cost savings from headcount reductions have not been and are not expected to be offset by related increases in other expenses. Cost savings related to plant closures have been and are expected to be partially offset by additional costs incurred in the facilities that assumed the operations of the closed facility.

For the three months ended March 31, 2017, the Company incurred restructuring expenses of $3.2 million for charges relating to headcount reductions and other costs related to previous plant closures. For the three months ended March 31, 2016, the Company incurred restructuring expenses of $2.8 million. These included $0.7 million of charges related to the closure of the Middletown, Va. facility and $2.1 million of charges relating to headcount reductions and other costs related to previous plant closures.

26

Results of Operations

The table that follows sets forth for the periods presented certain consolidated operating results.

	Three Months Ended March 31,
	2017			2016
	(in thousands)
Net sales	$	119,866		$	114,965
Costs and expenses:
Cost of products sold	72,370			71,428
Selling	15,674			15,721
General and administrative	12,654			11,507
Research and development	1,744			1,940
Restructuring	3,164			2,832
	105,606			103,428
Income from operations	14,260			11,537
Interest expense, net	(13,263		)	(10,341		)
Loss on extinguishment of debt	(25		)	—
Foreign exchange (loss) gain	(1,125		)	24
(Loss) income before provision for income taxes	(153		)	1,220
Provision for income taxes	(2,681		)	(2,665		)
Net loss	$	(2,834	)	$	(1,445	)
Comprehensive income	$	6,806		$	7,373

Three Months Ended March 31, 2017 Compared to the Three Months Ended March 31, 2016

Net Sales. Net sales for the three months ended March 31, 2017 increased by $4.9 million, or 4.3%, to $119.9 million from $115.0 million for the three months ended March 31, 2016. Excluding currency effects, sales were up $6.3 million, or 5.5%. For the three months ended March 31, 2017, approximately 60% of our net sales were in our clothing segment and approximately 40% were in our roll covers segment.

In our clothing segment, net sales for the three months ended March 31, 2017 increased $1.2 million to $72.5 million from $71.3 million for the three months ended March 31, 2016. Excluding currency effects, the sales increase of $2.0 million, or 2.8% was driven largely by higher sales volumes in the North America and Latin America markets.

In our rolls segment, net sales for the three months ended March 31, 2017 increased $3.8 million to $47.4 million from $43.6 million for the three months ended March 31, 2016. Excluding currency effects, sales were up by $4.3 million or 9.8%, driven by the acquisition of Spencer Johnston.

Cost of Products Sold. Cost of products sold for the three months ended March 31, 2017 increased to $72.4 million from $71.4 million for the three months ended March 31, 2016.

In our clothing segment, cost of products sold decreased $(1.3) million in the current quarter compared to the first quarter of 2016, due to production efficiencies in certain regions around the world, partially offset by increased sales volumes in North America and Latin America. Cost of products sold as a percentage of net sales decreased by (2.7) percentage points to 57.2% in the three months ended March 31, 2017 from 59.9% in the three months ended March 31, 2016. This improvement was primarily due to production efficiencies in certain regions around the world, partially offset by negative currency impacts.

In our rolls segment, cost of products sold increased $2.3 million in the current quarter compared to the first quarter of 2016. The increase was primarily a result of increased sales volume. Cost of products sold as a percentage of net sales decreased by 0.4 percentage points to 65.4% for the three months ended March 31, 2017 from 65.8% for the three months ended March 31, 2016.

Selling Expenses. For the three months ended March 31, 2017, selling expenses were down slightly, to $15.7 million.

27

General and Administrative Expenses. For the three months ended March 31, 2017, general and administrative expenses increased by $1.2 million, or 10.4%, to $12.7 million from $11.5 million for the three months ended March 31, 2016, primarily as a result of the acquisition of Spencer Johnston in the second quarter of 2016.

Restructuring Expenses. For the three months ended March 31, 2017, we incurred restructuring expenses of $3.2 million of charges relating to headcount reductions and other costs related to previous plant closures.

Interest Expense, Net. Net interest expense for the three months ended March 31, 2017 was $13.3 million, up $3.0 million from $10.3 million for the three months ended March 31, 2016. The increase was driven by the increase in average debt balances in the first quarter of 2017 versus the first quarter of 2016 due to the refinancing completed during the third quarter of 2016 and additional debt assumed to finance the Spencer Johnston acquisition in the second quarter of 2016.

Provision for Income Taxes. For the three months ended March 31, 2017 and 2016, the provision for income taxes was $2.7 million and $2.7 million, respectively. The slight increase in tax expense in the three months ended March 31, 2017, was primarily attributable to the geographic earnings mix. Generally, our provision for income taxes is primarily impacted by the income we earn in tax paying jurisdictions relative to the income we earn in non-tax paying jurisdictions. The majority of income recognized for purposes of computing our effective tax rate is earned in countries where the statutory income tax rates range from 15.0% to 35.4%. However, permanent income adjustments recorded against pre-tax earnings may result in an effective tax rate that is higher or lower than the statutory tax rate in these jurisdictions. We generate losses in certain jurisdictions for which we realize no tax benefit as the deferred tax assets in these jurisdictions (including net operating losses) are fully reserved in our valuation allowance. For this reason, we recognize minimal income tax expense or benefit in these jurisdictions, of which the most material jurisdictions are the United States and Australia. Due to these reserves, the geographic mix of our pre-tax earnings has a direct correlation with how high or low our annual effective tax rate is relative to consolidated earnings.

Liquidity and Capital Resources

Our principal liquidity requirements are for debt service, restructuring payments, working capital and capital expenditures. We plan to use cash on hand, cash generated by operations and our revolving credit facility, as our primary sources of liquidity. Our operations are highly dependent upon the paper production industry and the degree to which the paper industry is affected by global economic conditions and the availability of credit. Demand for our products could decline if paper manufacturers are unable to obtain required financing or if economic conditions cause additional mill closures. In addition, an economic recession or unavailability of credit may affect our customers’ ability to pay their debts.

Net cash used in operating activities was $(7.2) million for the three months ended March 31, 2017 and cash provided by operating activities was $15.1 million for the three months ended March 31, 2016. The $(22.3) million decrease was primarily due to the timing of interest paid as a result of the refinancing.

Net cash used in investing activities was $(5.1) million for the three months ended March 31, 2017 and $(3.5) million for the three months ended March 31, 2016. The increase in cash used in investing activities of $(1.6) million was primarily due to the timing of capital expenditures.

Net cash provided by financing activities was $9.1 million for the three months ended March 31, 2017 and $(4.9) million for the three months ended March 31, 2016. The increase of $14.0 million was due largely to the timing of borrowings on the revolver used to finance the bond interest payment in February of 2017. The interest payments on the Notes are now due in the first and third quarters as opposed to the second and fourth quarters in the prior financing.

As of March 31, 2017, there was an additional $25.3 million available for additional borrowings under the ABL Facility. This availability represents $39.4 million under the ABL revolver that is currently collateralized by certain assets of the Company, less $14.1 million of that facility committed for letters of credit or additional borrowings. In addition, the Company had approximately $3.2 million available for borrowings under other small lines of credit. The Company also had cash and cash equivalents of $10.1 million at March 31, 2017 compared to $12.8 million at December 31, 2016.

We expect to spend cash of approximately $5.0 million related to our restructuring initiatives in 2017. We have spent $2.0 million in the three months ended March 31, 2017. Actual restructuring costs for 2017 may substantially differ from estimates at this time, depending on the timing of the restructuring activities and the required actions to complete them.

Capital Expenditures

For the three months ended March 31, 2017, we had capital expenditures of $5.3 million. We are currently targeting capital expenditures for 2017 to be approximately $16 million. We analyze our planned capital expenditures, based on investment opportunities available to us and our financial and operating performance, and accordingly, actual capital

28

expenditures may be more or less than this amount. We intend to use existing cash and cash from operations to fund our capital expenditures.

Credit Facility and Notes

On August 9, 2016, the Company closed on $480 million aggregate principal amount of 9.5% Senior Secured Notes due August 2021 (the "Notes"), which were sold at a price equal to 98.54% of their face value. The Notes will pay interest semi-annually in arrears on February 15 and August 15 of each year beginning on February 15, 2017 and will mature on August 15, 2021, unless earlier redeemed or repurchased.

The Company used the net proceeds from the offering to repay all amounts outstanding under its then existing term loan credit facility, to redeem all of its 8.875% Senior Notes due 2018 at a redemption price equal to 102.219% of the principal amount thereof, together with accrued and unpaid interest, to the date of redemption, to pay fees and expenses relating to these transactions, and for working capital and other general corporate purposes.

On May 17, 2013, the Company entered into a Credit and Guaranty Agreement for $200.0 million (increased to $230 million on August 18, 2016) term loan credit facility (the “Term Credit Facility”), net of a discount of $1.0 million, among the Company, certain direct and indirect U.S. subsidiaries of the Company as guarantors and certain financial institutions. This facility was repaid with proceeds from the 9.5% senior secured notes.

On May 17, 2013, the Company also entered into a Revolving Credit and Guaranty Agreement originally for a $40.0 million asset-based revolving credit facility subject to a borrowing base among Xerium Technologies, Inc., as a US borrower, Xerium Canada Inc., as Canadian borrower, certain direct and indirect U.S. subsidiaries of the Company as guarantors and certain financial institutions (the "Domestic Revolver"). On March 3, 2014, the Company entered into an amendment to the Revolving Credit and Guaranty Agreement (as amended, the “old ABL Facility,” and collectively with the Term Credit Facility, the “Credit Facility”), increasing the aggregate availability under the old ABL Facility to $55 million. On November 3, 2015, the Company refinanced the old ABL Facility and entered into the ABL Facility. The ABL Facility continues to provide a maximum credit limit of $55 million and the collateral pledged thereunder has remained the same. The ABL Facility matures in November of 2020 and accrues interest at either an Alternative Base rate (Prime plus 75 bps) or Fixed LIBOR (LIBOR +175 bps). As of March 31, 2017 these rates were 4.75% and 2.78%, respectively.

The Indenture and the ABL Facility contain certain customary covenants that, subject to exceptions, restrict our ability to, among other things:

• declare dividends or redeem or repurchase equity interests;

•prepay, redeem or purchase debt;

•incur liens and engage in sale-leaseback transactions;

•make loans and investments;

•incur additional indebtedness;

•amend or otherwise alter debt and other material agreements;

•engage in mergers, acquisitions and asset sales;

•transact with affiliates; and

•engage in businesses that are not related to the Company's existing business.

On July 17, 2015 (the "Closing Date"), Xerium China, Co., Ltd. ("Xerium China"), a wholly-owned subsidiary of the Company entered into and closed a Fixed Assets Loan Contract (the "Loan Agreement") with the Industrial and Commercial Bank of China Limited, Shanghai-Jingan Branch (the “Bank”) with respect to a RMB 58.5 million loan, which was approximately 9.4 million USD on July 17, 2015. The loan is secured by pledged machinery and equipment of Xerium China and guaranteed by Xerium Asia Pacific (Shanghai) Limited and Stowe Woodward (Changzhou) Roll Technologies Co. Ltd., which are wholly-owned subsidiaries of the Company, pursuant to guarantee agreements (the "Guarantee Agreements"). Interest on the outstanding principal balance of the loan accrues at a benchmark rate plus a margin. The current interest rate at March 31, 2017 is approximately 5.8%. The interest rate will be adjusted every 12 months during the term of the loan, based on the benchmark interest rate adjustment. Interest under the loan is payable quarterly in arrears. Principal on the loan is to be repaid in part every six months following the Closing Date, in accordance with a predetermined schedule set forth in the Loan Agreement. Proceeds of the Loan will be used by Xerium China to purchase production equipment. The Loan Agreement contains certain customary representations and warranties and provisions relating to events of default.

29

On May 26, 2011, the Company completed a refinancing transaction, which replaced certain of its then outstanding indebtedness with $240 million aggregate principal amount of 8.875% senior unsecured notes. The notes were repaid with proceeds from the 9.5% Senior Secured Notes on August 9, 2016.

We are in compliance with all covenants under the Notes and ABL Facility at March 31, 2017.

Critical Accounting Policies

The condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). The preparation of financial statements in conformity with GAAP requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses. Actual results could differ from those estimates.

Our significant policies are described in the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016. Judgments and estimates of uncertainties are required in applying our accounting policies in many areas. There have been no material changes to the critical accounting policies affecting the application of those accounting policies as noted in our Annual Report on Form 10-K for the year ended December 31, 2016.

Non-GAAP Financial Measures

We use EBITDA and Adjusted EBITDA as supplementary non-GAAP liquidity measures to assist us in evaluating our liquidity and financial performance, specifically our ability to service indebtedness and to fund ongoing capital expenditures. Neither EBITDA nor Adjusted EBITDA should be considered in isolation or as a substitute for income (loss) from operations or cash flows (as determined in accordance with U.S. GAAP).

EBITDA is defined as net income (loss) before interest expense, income tax provision (benefit) and depreciation (including non-cash impairment charges) and amortization.

"Adjusted EBITDA" means, with respect to any period, the total of (A) the consolidated net income for such period, plus (B) without duplication, to the extent that any of the following were deducted in computing such consolidated net income for such period: (i) provision for taxes based on income or profits, including, without limitation, federal, state, provincial, franchise and similar taxes, including any penalties and interest relating to any tax examinations, (ii) consolidated interest expense, (iii) consolidated depreciation and amortization expense, (iv) reserves for inventory in connection with plant closures, (v) consolidated operational restructuring costs, (vi) non-cash charges resulting from the application of purchase accounting, including push-down accounting, (vii) non-cash expenses resulting from the granting of common stock, stock options, restricted stock or restricted stock unit awards under equity compensation programs solely with respect to common stock, and cash expenses for compensation mandatorily applied to purchase common stock, (viii) non-cash items relating to a change in or adoption of accounting policies, (ix) non-cash expenses relating to pension or benefit arrangements, (x) expenses incurred as a result of the repurchase, redemption or retention of common stock earned under equity compensation programs solely in order to make withholding tax payments, (xi) amortization or write-offs of deferred financing costs, (xii) any non-cash losses resulting from mark to market hedging obligations (to the extent the cash impact resulting from such loss has not been realized in such period), (xiii) foreign currency losses and (xiv) other non-cash losses or charges (excluding, however, any non-cash loss or charge which represents an accrual of, or a reserve for, a cash disbursement in a future period), minus (C) without duplication, to the extent any of the following were included in computing consolidated net income for such period, (i) foreign currency gains, (ii) non-cash gains with respect to the items described in clauses (vi), (vii), (ix), (xi), (xii), (xiii) and xiv (other than, in the case of clause (xiv), any such gain to the extent that it represents a reversal of an accrual of, or reserve for, a cash disbursement in a future period) of clause (B) above and (iii) provisions for tax benefits based on income or profits. Notwithstanding the foregoing, Adjusted EBITDA, as defined and calculated below, may not be comparable to similarly titled measurements used by other companies.

Consolidated net income is defined as net income (loss) determined on a consolidated basis in accordance with GAAP; provided, however, that the following, without duplication, shall be excluded in determining consolidated net income: (i) any net after-tax extraordinary or non-recurring gains, losses or expenses (less all fees and expenses relating thereto), (ii) the cumulative effect of changes in accounting principles, (iii) any fees and expenses incurred during such period in connection with the issuance or repayment of indebtedness, any refinancing transaction or amendment or modification of any debt instrument, in each case and (iv) any cancellation of indebtedness income. The following table provides a reconciliation from net income and operating cash flows, which are the most directly comparable GAAP financial measures, to EBITDA and Adjusted EBITDA.

Adjusted EBITDA Definition Modification

30

During the fourth quarter of 2016, the Company modified its definition of Adjusted EBITDA to exclude foreign exchange gains and losses from this non-GAAP measure. This change enhances investor insight into the Company’s operational performance. In previous filings, first quarter 2016 Adjusted EBITDA was stated at $24.0 million.

	Three Months Ended March 31,
	2017			2016
Net loss	$	(2,834	)	$	(1,445	)
Stock-based compensation	531			592
Depreciation	7,819			7,900
Amortization of intangible assets	273			94
Deferred financing cost amortization	899			756
Foreign exchange loss (gain) on revaluation of debt	627			1,120
Deferred tax expense	10			155
(Gain) loss on disposition of property and equipment	(49		)	17
Loss on extinguishment of debt	25			—
Net change in operating assets and liabilities	(14,524		)	4,885
Net cash provided by operating activities	(7,223		)	14,074
Interest expense, excluding amortization	12,365			9,585
Net change in operating assets and liabilities	14,524			(4,885		)
Current portion of income tax expense	2,671			2,510
Stock-based compensation	(531		)	(592		)
Foreign exchange gain (loss) on revaluation of debt	(627		)	(1,120		)
Gain (loss) on disposition of property and equipment	49			(17		)
Loss on extinguishment of debt	(25		)	—
EBITDA	21,203			19,555
Loss on extinguishment of debt	25			—
Stock-based compensation	531			592
Operational restructuring expenses	3,164			2,832
Other non-recurring expenses	45			103
Plant startup costs	480			877
Foreign exchange loss (gain)	1,125			(24		)
Adjusted EBITDA	$	26,573		$	23,935

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our interest rate risks as of March 31, 2017 have not materially changed from December 31, 2016 (see Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2016). As of March 31, 2017, we had outstanding long term debt with a carrying amount of $499.8 million and an approximate fair value of $510.0 million.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures. We have carried out an evaluation, as of March 31, 2017 under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a–15(e) and 15d–15(e) under the Securities Exchange Act of 1934, as amended (the “Act”). Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Act is (i) recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms; and (ii) accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosures. No evaluation of disclosure controls and procedures can provide absolute assurance that these controls and procedures will operate effectively

31

under all circumstances. However, our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, and our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are effective at the reasonable assurance level as set forth above.

(b) Changes in Internal Control over Financial Reporting. No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Act) occurred during the quarter ended March 31, 2017 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

There have been no material developments to the legal proceedings described in our Annual Report on Form 10-K for the year ended December 31, 2016. See Note 10 to our Unaudited Condensed Consolidated Financial Statements for other routine litigation to which we are subject.

ITEM 1A. RISK FACTORS

The risks described in our Annual Report on Form 10-K for the year ended December 31, 2016 have not materially changed.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

See the exhibit index following the signature page to this Quarterly Report on Form 10-Q.

32

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.

	XERIUM TECHNOLOGIES, INC.
	(Registrant)
May 3, 2017	By:	/s/Clifford E. Pietrafitta
		Clifford E. Pietrafitta
		Executive Vice President and CFO
		(Principal Financial Officer)

33

EXHIBIT INDEX

Exhibit   Number	Description of Exhibits
10.1	Third Amendment to Revolving Credit and Guaranty Agreement by and among the Company, certain Guarantor subsidiaries, and JP Morgan, dated November 30, 2016.
10.2	Form of Xerium Technologies, Inc. 2017 Management Incentive Compensation Award Agreement
31.1	Certification Statement of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification Statement of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification Statement of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification Statement of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

34

EX-10.1

Exhibit 10.1

THIRD AMENDMENT TO REVOLVING CREDIT AND GUARANTY AGREEMENT

THIS THIRD AMENDMENT TO REVOLVING CREDIT AND GUARANTY AGREEMENT (this “Amendment”) is made and entered into this 30th day of November, 2016, by and among XERIUM TECHNOLOGIES, INC., a Delaware corporation (the “Lead Borrower”), XERIUM CANADA INC., a corporation organized under the laws of the Province of New Brunswick (“Xerium Canada”), HUYCK. WANGNER GERMANY GMBH, a limited liability company (Gesellschaft mit beschränkter Haftung) organized under the laws of Germany and registered with the commercial register (Handelsregister) of the local court (Amtsgericht) Stuttgart under registration number HRB 353855 (the “European Lead Borrower”), ROBEC WALZEN GMBH, a limited liability company (Gesellschaft mit beschränkter Haftung) organized under the laws of Germany and registered with the commercial register (Handelsregister) of the local court (Amtsgericht) Düren under registration number HRB 2867 (“Robec Germany”), STOWE WOODWARD AKTIENGESELLSCHAFT, a stock corporation (Aktiengesellschaft) organized under the laws of Germany and registered with the commercial register (Handelsregister) of the local court (Amtsgericht) Düren under registration number HRB 2635 (“Stowe Germany”), (European Lead Borrower, Robec Germany and Stowe Germany are each a “European Borrower” and collectively, the “European Borrowers”; and the European Borrowers, together with the Lead Borrower and Xerium Canada, collectively, the “Borrowers”), CERTAIN SUBSIDIARIES OF THE LEAD BORROWER, as Guarantors (together with Borrowers, collectively “Credit Parties”), the Lenders party hereto, JPMORGAN CHASE BANK, N.A., as Administrative Agent (together with its permitted successors, in such capacity, “Administrative Agent”) and as Collateral Agent (together with its permitted successors, in such capacity, “Collateral Agent”) and J.P. MORGAN EUROPE LIMITED, as European Administrative Agent (together with its permitted successors, in such capacity, “European Administrative Agent”) and as European Collateral Agent (together with its permitted successors, in such capacity, “European Collateral Agent”).

Recitals:

Agents, Lenders and Credit Parties are parties to a certain Revolving Credit and Guaranty Agreement dated as of November 3, 2015 (as at any time amended, restated, supplemented or otherwise modified, the “Credit Agreement”), pursuant to which Lenders have made loans and other financial accommodations to Borrowers, which have been guaranteed by Guarantors in accordance with the Credit Agreement.

The Credit Parties have requested that Agents and Lenders amend certain terms of the Credit Agreement in order to permit Borrowers to include in the US Borrowing Base certain Receivables that may be subject to Factoring Agreements prior to their sale pursuant to such Factoring Agreements.

Agents and Lenders are willing to amend the Credit Agreement to permit such Receivables to be included in the US Borrowing Base, on the terms and and subject to the conditions set forth in this Amendment.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby severally acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

1.Definitions

. Capitalized terms used in this Amendment, unless otherwise defined herein, shall have the meaning ascribed to such terms in the Credit Agreement.

2.Amendments to Credit Agreement

. Subject to the satisfaction of the conditions precedent set forth in Section 7 of this Amendment, the Credit Agreement is hereby amended by adding the following new paragraph to the end of the definition of "Eligible Receivables" contained in Section 1.1 of the Credit Agreement:

Notwithstanding clause (p) above, to the extent a Borrower is party to a Factoring Agreement relating to some or all of the Receivables from time to time owing by (i) International Paper Company,

(ii) WestRock Company, or (iii) up to one other Customer approved by Administrative Agent in its Permitted Discretion in writing, a Receivable owing by such Customer may nevertheless be deemed by Administrative Agent to be an Eligible Receivable hereunder so long as each of the following conditions is satisfied: (1) such Receivable otherwise constitutes an Eligible Receivable hereunder (other than pursuant to clause (p) above); (2) the applicable factor shall have entered into a Factoring Agreement and an intercreditor agreement or other documentation reasonably required by Administrative Agent and such Factoring Agreement and intercreditor agreement or other documentation shall each be in full force and effect and in form and substance satisfactory to Administrative Agent for purposes of including the applicable Receivables in the Borrowing Base; (3) such Receivable has not yet been sold or assigned pursuant to any Factoring Agreement; (4) no more than $10,000,000 in the aggregate of any such Receivables for all Customers subject to Factoring Agreements shall constitute Eligible Receivables at any one time; (5) Borrowers are in material compliance with all reasonable reporting requirements established by Administrative Agent from time to time regarding Borrowers' Factoring Agreements; and (6) no Event of Default then exists.

3.Ratification and Reaffirmation

. Each Borrower hereby ratifies and reaffirms the Obligations, each of the Credit Documents, and all of such Borrower's covenants, duties, indebtedness and liabilities under the Credit Documents. Each Guarantor hereby (i) consents to each Borrower's execution and delivery of this Amendment and of the other documents, instruments or agreements each Borrower agrees to execute and deliver pursuant thereto; (ii) agrees to be bound hereby; and (iii) affirms that nothing contained herein shall modify in any respect whatsoever its respective guaranty of the Obligations and reaffirms that such guaranty is and shall remain in full force and effect.

4.Representations and Warranties

. Each Credit Party represents and warrants to Agents and Lenders, to induce Agents and Lenders to enter into this Amendment, that no Default or Event of Default exists on the date hereof; the execution, delivery and performance of this Amendment have been duly authorized by all requisite action on the part of such Credit Party and this Amendment has been duly executed and delivered by such Credit Party; and all of the representations and warranties made by such Credit Party in the Credit Agreement are true and correct on and as of the date hereof (except to the extent that any such representation and warranty expressly relates to a particular date, in which case such representation and warranty is true and correct on and as of such date).

5.Reference to Credit Agreement

. Upon the effectiveness of this Amendment, each reference in the Credit Agreement to "this Agreement," "hereunder," or words of like import shall mean and be a reference to the Credit Agreement, as amended by this Amendment.

6.Breach of Amendment

. This Amendment shall be part of the Credit Agreement and a breach of any representation, warranty or covenant herein shall constitute an Event of Default.

7.Conditions Precedent

. The effectiveness of this Amendment is subject to the satisfaction of each of the following conditions precedent, in form and substance satisfactory to Administrative Agent, unless satisfaction thereof is specifically waived in writing by Administrative Agent:

(a)Administrative Agent shall have received from each Credit Party, Agent and Lender a duly executed original counterpart of this Amendment;

(b)Administrative Agent shall have received (i) copies of each Factoring Agreement for which Borrowers desire to include such Receivables in the US Borrowing Base, and all amendments and supplements thereto, and (ii) an intercreditor agreement with the applicable factor in connection with each such Factoring Agreement; and

(c)Administrative Agent shall have received such other certificates, documents and instruments as Administrative Agent may reasonably request, if any.

8.Expenses of Agents and Lenders

. In consideration of Agents' and Lenders' willingness to enter into this Amendment as set forth herein,Borrowers agree to pay, on demand, all reasonable costs and expenses incurred by Administrative Agent in connection with the preparation, negotiation and execution of this Amendment and any other Credit Documents executed pursuant hereto and any and all amendments, modifications, and supplements thereto, including, without limitation, the reasonable costs and fees of Administrative Agent's legal counsel and any taxes, filing fees and other reasonable expenses associated with or incurred in connection with the execution, delivery or filing of any instrument or agreement referred to herein or contemplated hereby.

9.Governing Law

. This Amendment shall be governed by and construed in accordance with the internal laws of the State of New York.

10.No Novation, etc

. Except as otherwise expressly provided in this Amendment, nothing herein shall be deemed to amend or modify any provision of the Credit Agreement or any of the other Credit Documents, each of which shall remain in full force and effect. This Amendment is not intended to be, nor shall it be construed to create, a novation or accord and satisfaction, and the Credit Agreement as herein modified shall continue in full force and effect.

11.Successors and Assigns

. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

12.Further Assurances

. Each Credit Party agrees to take such further actions as Administrative Agent shall reasonably request from time to time in connection herewith to evidence or give effect to the amendments set forth herein or any of the transactions contemplated hereby.

13.Miscellaneous

. This Amendment may be executed in any number of counterparts and by different parties to this Amendment on separate counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement. Any manually executed signature page to this Amendment delivered by a party by facsimile or other electronic transmission shall be deemed to be an original signature hereto. Section titles and references used in this Amendment shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreements among the parties hereto. This Amendment expresses the entire understanding of the parties with respect to the subject matter hereof and may not be amended except in a writing signed by the parties.

14.Waiver of Jury Trial

. To the fullest extent permitted by applicable law, each party hereby waives the right to trial by jury in any action, suit, counterclaim or proceeding arising out of or related to this Amendment.

[Remainder of page intentionally left blank; signatures begin on following page.]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective duly authorized officers on the date first written above.

XERIUM TECHNOLOGIES, INC.

XERIUM CANADA, INC.

HUYCK LICENSCO INC.

ROBEC BRAZIL LLC

STOWE WOODWARD LICENSCO LLC

STOWE WOODWARD LLC

WANGNER ITELPA I LLC

WANGNER ITELPA II LLC

WEAVEXX, LLC

XERIUM ASIA, LLC

XERIUM III (US) LIMITED

XERIUM IV (US) LIMITED

XERIUM V (US) LIMITED

XTI LLC

JJ PLANK COMPANY, LLC

By: _/s/ Cliff E. Pietrafitta____________

Name: Cliff E. Pietrafitta

Title: Vice President & Chief Financial

Officer

[Signatures continued on following page.]

HUYCK. WANGNER GERMANY GMBH

By: _/s/ Michael F. Bly_____________

Name: Michael F. Bly

Title: Managing Director

[Signatures continued on following page.]

Robec Walzen GmbH

By: _/s/ Michael F. Bly_____________

Name: Michael F. Bly

Title: Managing Director

[Signatures continued on following page.]

STOWE WOODWARD AKTIENGESELLSCHAFT

By: _/s/ David J. Pretty_____________

Name: David J. Pretty

Title: Member of the Managing Board

(Vorstand)

[Signatures continued on following page.]

XERIUM GERMANY HOLDING GMBH

By: _/s/ David J. Pretty_____________

Name: David J. Pretty

Title: Managing Director

[Signatures continued on following page.]

XERIUM TECHNOLOGIES LIMITED

By: _/s/ Michael F. Bly_____________

Name: Michael F. Bly

Title: Director

[Signatures continued on following page.]

JPMORGAN CHASE BANK, N.A., as

Administrative Agent and Collateral Agent and as a Lender

By: _/s/ Patrick Fravel_____________

Name: Patrick Fravel

Title: Authorized Officer

[Signatures continued on following page]

J.P. MORGAN EUROPE LIMITED, as European Administrative Agent and European Collateral Agent

By: _/s/ Matthew Sparkes_____________

Name: Matthew Sparkes

Title: Vice President

JPMORGAN CHASE BANK, N.A., LONDON BRANCH, as a Lender to the extent provided in the Credit Agreement

By: _/s/ Matthew Sparkes_____________

Name: Matthew Sparkes

Title: Vice President

[Signatures continued on following page.]

JPMORGAN CHASE BANK, N.A., TORONTO BRANCH, as a Lender to the extent provided in the Credit Agreement

By: _/s/Agostino Marchetti________________

Name: Agostino Marchetti

Title: Authorized Officer

EX-10.2

XERIUM TECHNOLOGIES, INC.

MANAGEMENT INCENTIVE COMPENSATION AWARD AGREEMENT

[NAME]

Pursuant to the terms of the Xerium Technologies, Inc. 2017 Management Incentive Compensation Program (the "MIC"), Xerium Technologies, Inc. (the "Company") hereby grants to the Employee the Management Incentive Compensation Award ("MIC Award") described below, effective as of _____, 2017 (the “Effective Date”).

1.The Incentive Compensation Award. The MIC Award is subject to the terms and conditions of this Management Incentive Compensation Award Agreement ("Agreement") and the MIC. The Incentive Compensation Award is a cash award payable as set forth in this Agreement. The target amount of the award for the Employee, as a percentage of Employee's year-end annual base compensation from the Company, is set forth on Schedule 1 of this Agreement. The amount payable will be adjusted upward or downward, or may be forfeited, based on performance as set forth on Schedule 1 of this Agreement. "Vested" portion of the Award is the portion of the Award to which the Employee has a nonforfeitable rights. An Award shall be paid hereunder only to the extent that such Award is Vested, as provided in this Agreement. The Employee's rights to payment under the Award are subject to the restrictions described in this Agreement and the MIC in addition to such other restrictions, if any, as may be imposed by law.

2.Payment of Award. The amount determined under Schedule 1 shall be paid to the Employee in cash not later than March 15, 2018, subject to applicable tax withholding.

3.Treatment of Awards Upon a Change of Control; Termination of Employment.

(a)In the event a Change of Control (defined below) occurs prior to the close of the performance year with respect to the Award, for the performance period from January 1, 2017 to the date of closing of the Change of Control (the "COC Performance Year") the applicable performance metrics specified in Schedule 1 of the Award Agreement shall be determined as follows: (i) the performance year shall be deemed to end on the effective date of such transaction; and (ii) the performance metrics shall be deemed achieved to the extent the applicable performance metrics specified in Schedule 1 of the Award Agreement for the shortened performance year described in clause (i) above are on target to be achieved based upon the financial information available to the Company. In the event such performance metrics have been achieved pursuant to the foregoing sentence for the COC Performance Year and the MIC (or an equivalent plan approved by the Board that is no less lucrative or generous than the MIC) is not continued for the period from the end of the COC Performance Year to the end of calendar year 2017, the full amount of the Award determined under Schedule 1 shall be paid to the Employee in cash promptly following the Change of Control, subject to applicable tax withholding. In the event such performance metrics have been achieved pursuant to the first sentence above for the COC Performance Year and the MIC (or an equivalent plan approved by the Board that is no less lucrative or generous than the MIC) is continued for the period from the end of the COC Performance Year to the end of the calendar year (subject to an adjustment for any payments made at the Change of Control effective date hereunder), the amount of the Award determined under Schedule 1 shall be prorated by multiplying the Award by a fraction, the numerator of which is the number of days in the COC Performance Year and the denominator of which is 365, and such Award shall be paid to the Employee in cash promptly following the Change of Control, subject to applicable tax withholding.

A - 1

(US - Standard MIC 2017)

(b)In the event of a termination of the Employee's employment for reasons other than (i) death or Disability, (ii) termination without Cause or (iii) termination by the Employee with Good Reason on or prior to December 31, 2017, no Award shall be payable to Employee.

(c)In the event of a termination of the Employee's employment as a result of (i) death or Disability, (ii) termination without Cause or (iii) termination by the Employee with Good Reason on or prior to December 31, 2017, the Formula Award for such Employee determined under Schedule 1 of the Award Agreement shall be prorated by multiplying such Formula Award amount by a fraction, the numerator of which is the number of days in the performance year in which Employee was employed by the Company and the denominator of which is 365. The resulting Award shall be paid to Employee in accordance with Section 2 above.

(d)For purposes of this Agreement, the following definitions will apply:

(i)"Cause" has the meaning ascribed to it in the written employment agreement between the Company and the Employee (as in effect on the date hereof). If the Employee has no written employment agreement with the Company, "Cause" shall mean (A) the Employee's conviction of or plea of nolo contendere to a felony or other crime involving moral turpitude; (B) the Employee's fraud, theft or embezzlement committed with respect to the Company or any of its subsidiaries; or (C) the Employee's willful and continued failure to perform his material duties to the Company and its Subsidiaries, where the Company has provided written notice to the Employee of the failure and the Employee shall not have remedied such failure within then (10) business days following the effectiveness of such notice.

(ii)"Change of Control" shall mean any of the following which takes place after the Effective Date: (A) any Person or "group," within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the "Act"), other than the Company or any of its subsidiaries or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or one of its subsidiaries, becomes a beneficial owner, directly or indirectly, in one or a series of transactions, of securities representing more than fifty percent (50%) of the total number of votes that may be cast for the election of directors of the Company; (B) any merger or consolidation involving the Company occurs and the beneficial owners of the Company's voting securities outstanding immediately prior to such consolidation, merger, sale or other disposition do not, immediately following the consummation of such consolidation, merger, sale or other disposition, hold beneficial ownership, directly or indirectly, of securities representing fifty percent (50%) or more of the total number of votes that may be cast for election of directors of the surviving or resulting corporation; (C) any sale or other disposition of all or a substantial portion of the assets of the Company occurs and the beneficial owners of the Company's voting securities outstanding immediately prior to such sale or other disposition do not, immediately following the consummation of such sale or other disposition, hold beneficial ownership, directly or indirectly, of securities representing fifty percent (50%) or more of the total number of votes that may be cast for election of directors of the acquiring Person or Persons in the case of any sale or other disposition; or (D) a change in the composition of the members of the Board such that the individuals who, as of the Effective Date, constitute the Board (such Board, the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that, for purposes of this Section 3(d)(ii)(D), any individual who becomes a member of the Board subsequent to the Effective Date, whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; provided, further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board. For the purpose

A - 2

(US - Standard MIC 2017)

of this definition, the term "beneficial owner" (and correlative terms, including "beneficial ownership") shall have the meaning set forth in Rule 13d-3 under the Act.

(iii)"Disability" has the meaning ascribed to it in the written employment agreement between the Company and the Employee (as in effect on the date hereof). If the Employee has no written employment agreement with the Company, "Disability" shall mean Employee (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than six (6) months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than six (6) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Company.

(iv)"Good Reason" has the meaning ascribed to it in the written employment agreement between the Company and the Employee (as in effect on the date hereof), where the Employee provides notice of the Good Reason event within 90 days of its occurrence and provides the Company at least 30 days to cure such matter. If the Employee has no written employment agreement with the Company, "Good Reason" shall mean a requirement that the Employee relocate more than fifty (50) miles from his then-current principal residence, it being understood that the Employee may be required to travel frequently and that prolonged periods spent away from Employee's principal residence shall not constitute Good Reason.

(v)"Person" means any individual, partnership, limited liability company, corporation, association, trust, joint venture, unincorporated organization, or other entity or group.

4.Clawback. If an Employee receives an Award payout under the MIC based on financial statements that are subsequently required to be restated in a way that would decrease the amount of the Award to which the Employee was entitled, the Employee will refund to the Company the difference between what the Employee received and what the Employee should have received; provided that (i) the value of any difference to be refunded will be determined net of withholding and (ii) no refund will be required for Awards paid more than three years prior to the date on which the Company is required to prepare the applicable restatement. The value of any difference to be refunded will be determined in a manner consistent with regulations the Securities and Exchange Commission may adopt pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

5.Confidentiality.

(a)Employee acknowledges that the Company and its subsidiaries continually develop Confidential Information (defined below), that the Employee may develop Confidential Information for the Company or its subsidiaries during Employee’s employment with the Company, and that Employee may learn of Confidential Information during the course of such employment. Employee will comply with the policies and procedures of the Company and its subsidiaries for protecting Confidential Information and shall never use or disclose to any Person (except as required by applicable law or for the proper performance of his duties and responsibilities to the Company and its subsidiaries), any Confidential Information obtained by Employee incident to his employment or other association with the Company or any of its subsidiaries. Employee agrees to only use the Company’s Confidential Information as necessary to perform his or her job during employment with the Company. Employee understands that this restriction shall continue to apply after his employment terminates, regardless of the reason for such termination. All documents, records, tapes and other media of every kind and description relating to the business, present or otherwise, of the

A - 3

(US - Standard MIC 2017)

Company or its subsidiaries and any copies, in whole or in part, thereof (the “Documents”), whether or not prepared by Employee, shall be the sole and exclusive property of the Company and its subsidiaries. Employee shall safeguard all Documents and shall surrender to the Company at the time his employment terminates, or at such earlier time or times as the Board or its designee may specify, all Documents then in the Employee’s possession or control.

(b)For purposes of this Agreement, “Confidential Information” means any and all information of the Company and its subsidiaries that is not generally known by others with whom they compete or do business, or with whom they plan to compete or do business and any and all information which, if disclosed by the Company or its subsidiaries, would assist in competition against them. Confidential Information includes without limitation such information relating to (i) the development, research, testing, manufacturing, marketing and financial activities of the Company and its subsidiaries, (ii) the Company and its subsidiaries Products (defined below), (iii) the costs, sources of supply, financial performance and strategic plans of the Company and its subsidiaries, (iv) the identity and special needs of the customers of the Company and its subsidiaries and (v) the people and organizations with whom the Company and its subsidiaries have business relationships and those relationships. Confidential Information also includes any information that the Company or any of its subsidiaries have received, or may receive hereafter, from others which was received by the Company or any of its subsidiaries with any understanding, express or implied, that the information would not be disclosed. For purposes of this Agreement, “Products” mean all products planned, researched, developed, tested, manufactured, sold, licensed, leased or otherwise distributed or put into use by the Company or any of its subsidiaries, together with all services provided or planned by the Company or any of its subsidiaries, during Employee’s employment with the Company or any of its subsidiaries.

6.Restricted Activities. Employee, as a condition to participation in the MIC and in consideration of Participant's continued employment by the Company and/or its subsidiaries, agrees that some restrictions on his activities during and after his employment are necessary to protect the goodwill, Confidential Information and other legitimate interests of the Company and its subsidiaries and agrees as follows:

(a)For a period of time beginning on the date Employee executes a copy of this Agreement and continuing for a period ending on the date which is one (1) year after Employee’s employment terminates (the “Non-Competition Period”) Employee shall not, whether as owner, partner, investor, consultant, agent, employee, co-venturer or otherwise, engage in, assist or have any active interest in a business that competes with the Company or any of its subsidiaries or otherwise compete with the Company or any of its subsidiaries: (i) anywhere throughout the world; (ii) in North America; (iii) in South America; (iv) in Europe; (v) in Asia; (vi) in Australia; (vii) in the United States; (viii) in those states of the United States in which the Company or any of its subsidiaries sells products or conducts business activities. Specifically, but without limiting the foregoing, Employee agrees that during the Non-Competition Period, Employee shall not: (A) undertake any planning for any business competitive with the Company or any of its subsidiaries; or (B) engage in any manner in any activity that is competitive with the business of the Company or any of its subsidiaries. For the purposes of this Section 6, Employee’s undertaking shall encompass all items, products and services that may be used in substitution for Products.

(b)Employee agrees that, during his employment with the Company, he will not undertake any outside activity, whether or not competitive with the business of the Company or its subsidiaries that could reasonably give rise to a conflict of interest or otherwise interfere with his duties and obligations to the Company or any of its subsidiaries.

A - 4

(US - Standard MIC 2017)

(c)Employee further agrees that while he is employed by the Company and during the Non-Competition Period, Employee will not, (i) hire or attempt to hire any employee of the Company or any of its subsidiaries, (ii) hire or attempt to hire any independent contractor providing services to the Company or any of its subsidiaries, (iii) assist in hiring or any attempt to hire anyone identified in clauses (i) or (ii) of this sentence by any other Person, (iv) encourage any employee or independent contractor of the Company or any of its subsidiaries to terminate his or her relationship with the Company or any of its subsidiaries, or (v) solicit or encourage any customer or vendor of the Company or any of its subsidiaries to terminate or diminish its relationship with any of them, or, in the case of a customer, to conduct with any Person any competing business or activity. For purposes of Employee’s obligations hereunder during that portion of the Non-Competition Period that follows termination of Employee’s employment, employee, independent contractor, customer or vendor of the Company or any of its subsidiaries shall mean any Person who was such at any time during the six (6) months immediately preceding the date of the termination of Employee’s employment.

(d)In the event that the one (1) year period stated above is held unenforceable by a court of competent jurisdiction due to its length, then the period shall be six (6) months or such other time as determined enforceable by such court.

7.Non-Inducement. Employee will not directly or indirectly assist or encourage any person or entity in carrying out or conducting any activity that would be prohibited by this Agreement if such activity were carried out or conducted by me.

8.Assignment of Rights to Intellectual Property. Employee shall promptly and fully disclose all Intellectual Property (defined below) to the Company. Employee hereby assigns and agrees to assign to the Company (or as otherwise directed by the Company) Employee’s full right, title and interest in and to all Intellectual Property. Employee agrees to execute any and all applications for domestic and foreign patents, copyrights or other proprietary rights and to do such other acts (including without limitation the execution and delivery of instruments of further assurance or confirmation) requested by the Company to assign the Intellectual Property to the Company and to permit the Company to enforce any patents, copyrights or other proprietary rights to the Intellectual Property. Employee will not charge the Company for time spent in complying with these obligations. All copyrightable works that Employee creates shall be considered “work made for hire” and shall, upon creation, be owned exclusively by the Company. For purposes of this Section 8, “Intellectual Property” means inventions, discoveries, developments, methods, processes, compositions, works, concepts and ideas (whether or not patentable or copyrightable or constituting trade secrets) conceived, made, created, developed or reduced to practice by Employee (whether alone or with others and whether or not during normal business hours or on or off the premises of the Company or any of its subsidiaries) during Employee’s employment with the Company or any of its subsidiaries (including prior to the Effective Date if applicable) that relate to either the Products or any prospective activity of the Company or any of its subsidiaries or that make use of Confidential Information or any of the equipment or facilities of the Company or any of its subsidiaries.

9.Consideration and Acknowledgments. Employee acknowledges and agrees that the covenants described in Sections 4 through 8 of this Agreement are essential terms, and the underlying Management Incentive Compensation Award would not be provided by the Company in the absence of these covenants. Employee further acknowledges that these covenants are supported by adequate consideration as set forth in this Agreement, that full compliance with these covenants will not prevent Employee from earning a livelihood following the termination of his or her employment, and that these covenants do not

A - 5

(US - Standard MIC 2017)

place undue restraint on Employee and are not in conflict with any public interest. Employee further acknowledges and agrees that Employee fully understands these covenants, has had full and complete opportunity to discuss and resolve any ambiguities or uncertainties regarding these covenants before signing this Agreement, that these covenants are reasonable and enforceable in every respect, and has voluntarily agreed to comply with these covenants for their stated term. Employee agrees that in the event he or she is offered employment with a competing business at any time in the future, Employee shall immediately notify the competing business of the existence of the covenants set forth above.

10.Enforceability; General Provisions.

(a)Employee agrees that the restrictions contained in this Agreement are reasonable and necessary to protect the Company’s legitimate business interests and that full compliance with the terms of this Agreement will not prevent Employee from earning a livelihood following the termination of employment, and that these covenants do not place undue restraint on Employee.

(b)Because the Company’s current base of operations is in North Carolina, Employee consents to the jurisdiction of the state and federal courts of North Carolina with respect to any claim arising out of this Agreement.

(c)Employee acknowledges that in the event of a breach or a threatened breach of this Agreement, the Company will face irreparable injury which may be difficult to calculate in dollar terms and that the Company shall be entitled, in addition to all remedies otherwise available in law or in equity, to temporary restraining orders and preliminary and final injunctions enjoining such breach or threatened breach in any court of competent jurisdiction without the necessity of posting a surety bond, as well as to obtain an equitable accounting of all profits or benefits arising out of any violation of this Agreement.

(d)Employee agrees that if a court determines that any of the provisions in this Agreement is unenforceable or unreasonable in duration, territory, or scope, then that court shall modify those provisions so they are reasonable and enforceable, and enforce those provisions as modified.

(e)If any phrase or provision of this Agreement is declared invalid or unenforceable by a court of competent jurisdiction, that phrase, clause or provision shall be deemed severed from this Agreement, and will not affect the enforceability of any other provisions of this Agreement, which shall otherwise remain in full force and effect.

(f)Waiver of any of the provisions of this Agreement by the Company in any particular instance shall not be deemed to be a waiver of any provision in any other instance and/or of the Company’s other rights at law or under this Agreement.

(g)Employee agrees that the Company may assign its rights under this Agreement to its successors and that any such successor may stand in the Company’s shoes for purposes of enforcing this Agreement.

(h)Employee agrees to reimburse Company for all attorneys’ fees, costs, and expenses that it reasonably incurs in connection with enforcing its rights and remedies under this Agreement, but only to the extent the Company is ultimately the prevailing party in the applicable legal proceedings.

A - 6

(US - Standard MIC 2017)

(i)If Employee violates this Agreement, then the restrictions set out in Sections 4 - 8 shall be extended by the same period of time as the period of time during which the violation(s) occurred.

(j)Employee fully understands Employee’s obligations in this Agreement, has had full and complete opportunity to discuss and resolve any ambiguities or uncertainties regarding these covenants before signing this Agreement, and has voluntarily agreed to comply with these covenants for their stated terms.

(k)Employee agrees that in the event Employee receives an offer of employment at any time in the future with any entity that may be considered a Competing Business Line, Employee shall immediately notify such Competing Business of the existence and terms of this Agreement. Employee also understands and agrees that the Company may notify anyone later employing Employee of the existence and provisions of this Agreement.

(l)Employee agrees that Employee’s obligations under Sections 4 through this Section 10 will survive the payment or forfeiture of the Award hereunder and continue for the duration of Employee’s employment with the Company, and thereafter to the extent stated in their terms.

11.Miscellaneous.

(a)No Assignment. No right or benefit or payment under the Plan shall be subject to assignment or other transfer nor shall it be liable or subject in any manner to attachment, garnishment or execution.

(b)Employment Rights. This Agreement shall not create any right of the Employee to continued employment with the Company or its Affiliates or limit the right of Company or its Affiliates to terminate the Employee’s employment at any time and shall not create any right of the Employee to employment with the Company or any of its Affiliates. Except to the extent required by applicable law that cannot be waived, the loss of the Award shall not constitute an element of damages in the event of termination of the Employee’s employment even if the termination is determined to be in violation of an obligation of the Company or its Affiliates to the Employee by contract or otherwise.

(c)Unfunded Status. The obligations of the Company hereunder shall be contractual only. The Employee shall rely solely on the unsecured promise of the Company and nothing herein shall be construed to give the Employee or any other person or persons any right, title, interest or claim in or to any specific asset, fund, reserve, account or property of any kind whatsoever owned by the Company or any Affiliate.

(d)Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction will not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. In the event that any provision hereof would, under applicable law, be invalid or unenforceable in any respect, such provision will be construed by modifying or limiting it so as to be valid and enforceable to the maximum extent compatible with, and possible under, applicable law.

(e)Employee Acknowledgements. Employee acknowledges that (i) Employee has had access to Company’s trade secrets and Confidential Information at the highest levels, including without limitation manufacturing and marketing strategy, customer strategy and lists, technical know-how, product

A - 7

(US - Standard MIC 2017)

and process research and development, and business plans, (ii) Employee has had access to Confidential Information regarding and has been privy to discussions and strategy sessions at the highest levels of the Company regarding all aspects, business lines and product segments of the Company, and (iii) that these trade secrets and Confidential Information would inevitably be disclosed were Employee to work for a competitor.

(f)Governing Law. This Agreement and all actions arising in whole or in part under or in connection herewith, will be governed by and construed in accordance with the domestic substantive laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction.

(g)Conflicts. To the extent there are any conflicts between provisions this Agreement and any applicable employment agreement entered into between Employee and the Company or its subsidiaries, the provisions of such employment agreement shall govern and nothing in this Agreement shall in any way amend, supersede or otherwise change any provisions or rights contained in such employment agreement.

(h)409A. The Award shall be construed and administered consistent with the intent that it be at all times in compliance with, or exempt from, the requirements of Section 409A of the Internal Revenue Code and the regulations thereunder.

(i)Section 162(m). The Award shall be construed and administered consistent with the intent that it qualify to the maximum extent possible as qualifying performance-based compensation within the meaning of Section 162(m) of the Internal Revenue Code and the regulations thereunder.

(j)Amendment. This Agreement may be amended only by mutual written agreement of the parties.

A - 8

(US - Standard MIC 2017)

IN WITNESS WHEREOF, Xerium Technologies, Inc. and Employee have executed this Management Incentive Compensation Agreement as of the date first written above.

Xerium Technologies, Inc.

By:    Name:    Michael Bly
Title:    EVP of Global Human Resources

Acknowledged and agreed:

Employee

Signature:    

Print Name:    

Date:    

A - 9

(US - Standard MIC 2017)

Schedule 1

(a)    Target Award: ___% of base compensation

(b)    Metrics. Three measures of performance will be used in determining the formula

adjustment under the Award:

(1)34% of the Target Award shall be based on Xerium 2017 Operating Income. As identified in the audited Consolidated Statement of Operations contained in the Company’s 2017 10-K, Operating Income is defined as “Income from operations.”

(2)33% of the Target Award shall be based on Xerium 2017 Free Cash Flow. As identified in the audited Consolidated Statement of Cash Flows contained in the Company’s 2017 10-K, Free Cash Flow is defined as “net cash provided by operating activities” less “capital expenditures” plus “proceeds from disposals of property and equipment.”

(3)33% of the Target Award shall be based on Xerium 2017 Revenue. As identified in the audited Consolidated Statement of Operations contained in the Company’s 2017 10-K, Revenue is defined as “Net sales.”

(c)    Currency Adjustments. The final Operating Income, Free Cash Flow and Revenue figures will be adjusted at the end of the year to reflect currency fluctuations relative to the US$ in all markets. Any adjustments made will be based on the following budgeted rates:

(US - MIC - 2017)

2017
Budget		YTD
		Dec
AvgRate	EUR	1.070000
AvgRate	USD	1.00
AvgRate	ARS	0.055556
AvgRate	AUD	0.700000
AvgRate	BRL	0.289855
AvgRate	CAD	0.699301
AvgRate	CHF	1.030928
AvgRate	CNY	0.137931
AvgRate	EUR	1.070000
AvgRate	GBP	1.310000
AvgRate	JPY	0.008333
AvgRate	MXN	0.045662
AvgRate	SEK	0.125628
AvgRate	TRY	0.312500

(US - MIC - 2017)

(d)    Target and Formula. The minimum, target and maximum thresholds of Operating Income, Free Cash Flow and Revenue for 2017 shall be set by the Committee and delivered to the Employee in a separate writing; provided, however, that the amounts may be adjusted by the Committee after the initial determination of the amounts to reflect any material change of circumstance, including without limitation, the acquisition or disposition of any business by the Company or any of its subsidiaries.

Operating Income (34% of Target Award)

Operating Income	Minimum	Target	Maximum
Percentage of Target Award Payable	25%	100%	150%

Free Cash Flow (33% of Target Award)

Free Cash Flow	Minimum	Target	Maximum
Percentage of Target Award Payable	25%	100%	150%

Revenue (33% of Target Award)

Revenue	Minimum	Target	Maximum
Percentage of Target Award Payable	25%	100%	150%

The formula amount payable with respect to an Award shall be determined as follows (where "X" below refers to the portion of the target award for a Participant under an Award):

•Operating Income Metric below minimum:    34% of Award = no payment

•Operating Income Metric equal to minimum:    34% of Award = 0.25X

•Operating Income Metric at target:    34% of Award = X

•Operating Income Metric at maximum or above:    34% of Award = 1.5X

•Free Cash Flow Metric below minimum:    33% of Award = no payment

•Free Cash Flow Metric equal to minimum:    33% of Award = 0.25X

•Free Cash Flow Metric at target:    33% of Award = X

•Free Cash Flow Metric at maximum or above:     33% of Award = 1.5X

•Revenue Metric below minimum:    33% of Award = no payment

•Revenue Metric equal to minimum:    33% of Award = 0.25X

(US - MIC - 2017)

•Revenue Metric at target:    33% of Award = X

•Revenue Metric at maximum or above:     33% of Award = 1.5X

The amount payable between the levels of Operating Income, Free Cash Flow and Revenue identified above shall be determined on the basis of straight line interpolation between points.

(e)    The Committee may in its sole discretion adjust Award amount determined under subsection (d) upwards or downwards by 20% based on a set of individual goals separate from the thresholds of Operating Income, Free Cash Flow and Revenue which shall be set by the Committee (or the President and Chief Executive Officer of the Company as its delegate, except with respect to his own Award) and delivered to the Employee in a separate writing.

The amount payable with respect to an Award shall in all cases be capped at one hundred eighty percent (180%) of a Participant's target Award (1.8X).

(US - MIC - 2017)

EX-31.1

Exhibit 31.1

CHIEF EXECUTIVE OFFICER CERTIFICATION

I, Mark Staton, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Xerium Technologies, Inc. (the “registrant”);

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(s) 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(s) 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: May 3, 2017

/s/ Mark Staton

Mark Staton

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CHIEF FINANCIAL OFFICER CERTIFICATION

I, Clifford E. Pietrafitta, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Xerium Technologies, Inc. (the “registrant”);

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(s) 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(s) 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: May 3, 2017

/s/ Clifford E. Pietrafitta

Clifford E. Pietrafitta

Executive Vice President and CFO

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as principal executive officer of Xerium Technologies, Inc. (the “Company”), does hereby certify that, to his knowledge:

1) the Company’s Form 10-Q for the period ended March 31, 2017, 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 Company’s Form 10-Q for the period ended March 31, 2017, fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Mark Staton

Mark Staton

President and Chief Executive Officer

(Principal Executive Officer)

May 3, 2017

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as principal financial officer of Xerium Technologies, Inc. (the “Company”), does hereby certify that, to his knowledge:

1) the Company’s Form 10-Q for the period ended March 31, 2017, 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 Company’s Form 10-Q for the period ended March 31, 2017, fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Clifford E. Pietrafitta

Clifford E. Pietrafitta

Executive Vice President and CFO

(Principal Financial Officer)

May 3, 2017

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	May 02, 2017
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Trading Symbol	XRM
Entity Registrant Name	XERIUM TECHNOLOGIES INC
Entity Central Index Key	0001287151
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding (in shares)		16,167,949

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 10,138	$ 12,808
Accounts receivable, net	74,666	68,667
Inventories, net	73,997	70,822
Prepaid expenses	5,658	6,325
Other current assets	17,733	15,784
Total current assets	182,192	174,406
Property and equipment, net	288,009	284,101
Goodwill	58,064	56,783
Intangible assets	7,694	7,330
Non-current deferred tax asset	12,810	10,737
Other assets	8,350	8,556
Total assets	557,119	541,913
Current liabilities:
Notes payable	7,596	7,328
Accounts payable	42,261	36,158
Accrued expenses	52,549	64,532
Current maturities of long-term debt	9,403	8,600
Total current liabilities	111,809	116,618
Long-term debt, net of current maturities	483,981	472,923
Liabilities under capital leases	18,216	19,236
Non-current deferred tax liability	8,442	7,157
Pension, other post-retirement and post-employment obligations	65,183	65,026
Other long-term liabilities	9,056	7,858
Commitments and contingencies
Stockholders’ deficit
Preferred stock, $0.001 par value, 1,000,000 shares authorized; no shares outstanding as of March 31, 2017 and December 31, 2016	0	0
Common stock, $0.001 par value, 20,000,000 shares authorized; 16,167,949 and 16,152,946 shares outstanding as of March 31, 2017 and December 31, 2016, respectively	16	16
Paid-in capital	431,354	430,823
Accumulated deficit	(445,900)	(443,066)
Accumulated other comprehensive loss	(125,038)	(134,678)
Total stockholders’ deficit	(139,568)	(146,905)
Total liabilities and stockholders’ deficit	$ 557,119	$ 541,913

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	1,000,000	1,000,000
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	20,000,000	20,000,000
Common stock, shares outstanding (in shares)	16,167,949	16,152,946

XML

Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Income Statement [Abstract]
Net Sales	$ 119,866	$ 114,965
Costs and expenses:
Cost of products sold	72,370	71,428
Selling	15,674	15,721
General and administrative	12,654	11,507
Research and development	1,744	1,940
Restructuring	3,164	2,832
Costs and expenses	105,606	103,428
Income from operations	14,260	11,537
Interest expense, net	(13,263)	(10,341)
Loss on extinguishment of debt	(25)	0
Foreign exchange (loss) gain	(1,125)	24
(Loss) income before provision for income taxes	(153)	1,220
Provision for income taxes	(2,681)	(2,665)
Net loss	(2,834)	(1,445)
Comprehensive income	$ 6,806	$ 7,373
Net loss per share:
Basic (in dollars per share)	$ (0.18)	$ (0.09)
Diluted (in dollars per share)	$ (0.18)	$ (0.09)
Shares used in computing net loss per share:
Basic (in shares)	16,153,113	15,789,991
Diluted (in shares)	16,153,113	15,789,991

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Operating activities
Net loss	$ (2,834)	$ (1,445)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Stock-based compensation	531	592
Depreciation	7,819	7,900
Amortization of intangible assets	273	94
Deferred financing cost amortization	899	756
Foreign exchange loss on revaluation of debt	627	1,120
Deferred taxes	10	155
(Gain) loss on disposition of property and equipment	(49)	17
Loss on extinguishment of debt	25	0
Provision (benefit) for doubtful accounts	41	(72)
Change in assets and liabilities which (used) provided cash:
Accounts receivable	(4,153)	(2,130)
Inventories	(1,136)	2,232
Prepaid expenses	783	(621)
Other current assets	(1,785)	1,024
Accounts payable and accrued expenses	(7,334)	4,689
Deferred and other long-term liabilities	(940)	792
Net cash (used in) provided by operating activities	(7,223)	15,103
Investing activities
Capital expenditures	(5,285)	(3,550)
Proceeds from disposals of property and equipment	216	20
Net cash used in investing activities	(5,069)	(3,530)
Financing activities
Proceeds from borrowings	40,476	13,313
Principal payments on debt	(29,693)	(16,439)
Payment of financing fees	(170)	(98)
Payment of obligations under capital leases	(1,520)	(673)
Employee taxes paid on equity awards	0	(1,029)
Net cash provided by (used in) financing activities	9,093	(4,926)
Effect of exchange rate changes on cash flows	529	(1,036)
Net (decrease) increase in cash	(2,670)	5,611
Cash and cash equivalents at beginning of period	12,808	9,839
Cash and cash equivalents at end of period	10,138	15,450
Noncash capitalized lease asset and liability	$ 0	$ 1,259

XML

Description of Business and Significant Accounting Policies

3 Months Ended

Mar. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business and Significant Accounting Policies

Description of Business and Significant Accounting Policies

Description of Business

Xerium Technologies, Inc. (the "Company") is a leading, global provider of industrial consumable products and services including machine clothing, roll coverings, roll repair and mechanical services. These goods and services are used in the production of paper, paperboard, building products and nonwoven materials. Its operations are strategically located in the major paper-making regions of the world, including North America, Europe, Latin America and Asia-Pacific.

Basis of Presentation

The accompanying unaudited condensed consolidated interim financial statements at March 31, 2017 and for the three months ended March 31, 2017 and 2016 include the accounts of the Company and its wholly-owned subsidiaries and have been prepared in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, such financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. The interim results presented herein are not necessarily indicative of the results to be expected for the entire year. In management’s opinion, these unaudited condensed consolidated interim financial statements contain all adjustments of a normal recurring nature necessary for a fair presentation of the financial statements for the interim periods presented. These unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2016 as reported on the Company's Annual Report on Form 10-K filed on March 1, 2017.

Accounting Policies

Inventories, net

Inventories are generally valued at the lower of cost or market using the first-in, first-out (FIFO) method. Raw materials are valued principally on a weighted average cost basis. The Company’s work in process and finished goods are specifically identified and valued based on actual inputs to production. Provisions are recorded as appropriate to write-down obsolete and excess inventory to estimated net realizable value. The process for evaluating obsolete and excess inventory often requires management to make subjective judgments and estimates concerning future sales levels, quantities and prices at which such inventory will be able to be sold in the normal course of business, while considering the general aging of inventory and factoring in any new business conditions.

The components of inventories are as follows at:

	March 31, 2017			December 31, 2016
Raw materials	$	14,706		$	14,089
Work in process	27,205			25,879
Finished goods (includes consigned inventory of $6,985 at March 31, 2017 and $6,673 at December 31, 2016)	38,866			37,155
Inventory allowances	(6,780		)	(6,301		)
	$	73,997		$	70,822

Goodwill

The Company accounts for goodwill and other intangible assets in accordance with ASC Topic 350, Intangibles—Goodwill and Other Intangible Assets (“Topic 350”). Topic 350 requires that goodwill and intangible assets that have indefinite lives not be amortized, but instead, must be tested for impairment at least annually or whenever events or business conditions warrant. During the three months ended March 31, 2017, the Company evaluated events and business conditions to determine if a test for an impairment of goodwill was warranted. No such events or business conditions took place during this period, therefore no test was determined to be warranted at March 31, 2017.

Warranties

The Company offers warranties on certain roll products that it sells. The specific terms and conditions of these warranties vary depending on the product sold, the country in which the product is sold and arrangements with the customer. The Company estimates the costs that may be incurred under its warranties and records a liability in Accrued Expenses on its Consolidated Balance Sheet for such costs. Factors that affect the Company’s warranty liability include the number of units sold, historical and anticipated rates of warranty claims, cost per claim and new product introduction. The Company periodically assesses the adequacy of its recorded warranty claims and adjusts the amounts as necessary. The table below represents the changes in the Company’s warranty liability for the three months ended March 31, 2017 and 2016:

	Beginning Balance		Charged to  Cost of Sales		Effect of Foreign Currency Translation		Deduction from Reserves			Ending Balance
Three Months Ended March 31, 2017:	$	2,203	$	235	$	30	$	(179	)	$	2,289
Three Months Ended March 31, 2016:	$	2,175	$	477	$	34	$	(189	)	$	2,497

Net Loss Per Common Share

Net loss per common share has been computed and presented pursuant to the provisions of ASC Topic 260, Earnings per Share (“Topic 260”). Net loss per share is based on the weighted-average number of shares outstanding during the period. As of March 31, 2017 and 2016, the Company had outstanding restricted stock units (“RSUs”), deferred stock units (“DSUs”) and options.

The following table sets forth the computation of basic and diluted weighted-average shares:

	Three Months Ended March 31,
	2017	2016
Weighted-average common shares outstanding–basic	16,153,113	15,789,991
Dilutive effect of stock-based compensation awards outstanding	—	—
Weighted-average common shares outstanding–diluted	16,153,113	15,789,991

The following table sets forth the aggregate of the potentially dilutive securities that were outstanding in the three months ended March 31, 2017 and 2016, but were not included in the computation of diluted earnings per share because the impact would have been anti-dilutive:

	Three Months Ended March 31,
	2017	2016
Anti-dilutive securities	902,988	738,294

Impairment

The Company reviews its long-lived assets that have finite lives for impairment in accordance with ASC Topic 360, Property, Plant, and Equipment (“Topic 360”). This topic requires that companies evaluate the fair value of long-lived assets based on the anticipated undiscounted future cash flows to be generated by the assets when indicators of impairment exist to determine if there is impairment to the carrying value. Any change in the carrying amount of an asset as a result of the Company's evaluation has been recorded in either restructuring expense, if it was a result of the Company's restructuring activities, or general and administrative expense for all other impairments in the consolidated statements of operations. For the three months ended March 31, 2017 and 2016, the Company had no impairment charges included in restructuring expense.

New Accounting Pronouncements

In March 2017, the FASB issued Accounting Standards Update No 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost ("ASU 2017-07"). ASU 2017-07 will change how employers that sponsor defined benefit pension and/or other post-retirement benefit plans present the net periodic benefit cost in the income statement. Employers will present the service cost component of net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. Only the service cost component will be eligible for capitalization in assets. Employers will present the other components of the net periodic benefit cost separately from the line item(s) that includes the service cost and outside of any subtotal of operating income, if one is presented. These components will not be eligible for capitalization in assets. The guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods therein. Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance. The guidance provides a practical expedient for disaggregating the service cost component and other components for comparative periods. The Company is in the process of evaluating this accounting standard update.

In January 2017, the FASB issued Accounting Standards Update No 2017-04, Intangibles—Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 simplifies the accounting for goodwill impairment for all entities by requiring impairment charges to be based on the first step in today’s two-step impairment test under Accounting Standards Codification (ASC) 350. The FASB issued new guidance that eliminates the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of today’s goodwill impairment test) to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (i.e., measure the charge based on today’s Step 1). The standard has tiered effective dates, starting in 2020 for calendar-year public business entities that meet the definition of an SEC filer. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The Company is in the process of evaluating this accounting standard update.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory ("ASU 2016-16"). ASU 2016-16 eliminates the exception to the principle in ASC 740, for all intra-entity sales of assets other than inventory, to be deferred, until the transferred asset is sold to a third party or otherwise recovered through use. This standard is effective for financial statements issued for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements.

In August 2016, the FASB issued Accounting Standards Update No 2016-15, Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"). ASU 2016-15 clarifies how entities should classify certain cash receipts and cash payments in the statement of cash flows and amends certain disclosure requirements of ASC 230. The guidance will generally be applied retrospectively and is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those years. For all other entities, it is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. The Company is in the process of evaluating this accounting standard update.

In March of 2016, the FASB issued Accounting Standards Update No 2016-09 Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 will change certain aspects of accounting for share-based payments to employees. The new guidance will require all income tax effects of awards to be recognized in the income statement when the awards vest or are settled. It also will allow an employer to repurchase more of an employee’s shares than it can today for tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur. ASU 2016-09 is required to be adopted in January of 2017. The Company early adopted this standard at June 30, 2016. As of March 31, 2017, the adoption of the standard has resulted in the re-classification of $1.0 million of employee taxes paid on equity awards as a financing activity in the statement of cash flows, for the three months ended March 31, 2016. The remaining provisions of ASU 2016-09 did not have a material impact on the accompanying condensed consolidated financial statements.

In February of 2016, the FASB issued Accounting Standards Update No 2016-02 Leases ("ASU 2016-02"). ASU 2016-02 includes final guidance that requires lessees to put most leases on their balance sheets but recognize expenses in the income statement in a manner similar to today’s accounting. The guidance also eliminates today’s real estate-specific provisions and changes the guidance on sale-leaseback transactions, initial direct costs and lease executory costs for all entities. For lessors, the standard modifies the classification criteria and the accounting for sales-type and direct financing leases. All entities will classify leases to determine how to recognize lease-related revenue and expense. Classification will continue to affect amounts that lessors record on the balance sheet. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. They have the option to use certain relief. Full retrospective application is prohibited. ASU 2016-02 is effective for public companies with annual periods beginning after 15 December 2018, and interim periods within those years. For all other entities, it is effective for annual periods beginning after 15 December 2019, and interim periods the following year. Early adoption is permitted for all entities. The Company is in the process of evaluating this accounting standard update.

In November of 2015, the FASB issued ASU 2015-17 Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes ("ASU 2015-17"). This guidance requires companies to classify all deferred tax assets and liabilities as non-current on the balance sheet instead of separating deferred taxes into current and non-current amounts. For public companies, the guidance is effective for financial statements issued for annual periods beginning after 15 December 2016 (i.e., 2017 for a calendar-year company) and interim periods within those annual periods. Early adoption of the guidance is permitted. Companies can adopt the guidance either prospectively or retrospectively. The Company early adopted this standard at December 31, 2016, using the prospective method; prior periods were not retrospectively adjusted. The provisions of ASU 2015-17 did not have a material impact on the consolidated financial statements.

In July of 2015, the FASB issued Accounting Standards Update Inventory ("ASU 2015-11"). ASU 2015-11 applies only to first-in, first-out (FIFO) and average cost inventory costing methods and will reduce costs and increase comparability for these methods. There will be no change for last-in, first-out, (LIFO) or retail inventory methods as the costs of transitioning to a new method would outweigh the benefits due to the complexity of these methods. Under this ASU, inventory should be measured at the lower of cost and net realizable value (selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation). When the net realizable value of inventory is less than its cost, the difference will be recognized as a loss in earnings in the period in which it occurs. This ASU more closely aligns the measurement of inventory under GAAP with International Financial Reporting Standards guidance. The amendments are effective for public companies for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, and for other entities, the amendments are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendments should be applied prospectively, and early application is permitted as of the beginning of an interim or annual reporting period. The Company implemented this standard during the first quarter of 2016. The provisions of ASU 2015-11 did not have an impact to the financial statements.

In May of 2014, the FASB issued Accounting Standard Update No. 2014-09 Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Company identify the contract with the customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when it satisfies the performance obligations. The Company will also be required to disclose information regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 is required to be adopted in January of 2018. Retrospective application is required either to all periods presented or with the cumulative effect of initial adoption recognized in the period of adoption. The Company has commenced a comprehensive project plan to direct the implementation of the new revenue recognition standards and an assessment of the impact to business processes. The Company intends to adopt the new standard using the modified retrospective transition method effective January 1, 2018.

XML

Business Acquisitions

3 Months Ended

Mar. 31, 2017

Business Combinations [Abstract]

Business Acquisitions

Business Acquisitions

On May 4, 2016, the Company acquired certain assets and liabilities of JJ Plank Corporation/Spencer Johnston (“Spencer Johnston”), a spreader roll company headquartered in Neenah, Wisconsin for an adjusted purchase price of $17.6 million. This acquisition expands the Company's current rolls product offerings, service capabilities and markets served, strengthens its financial profile and grows its customer base. The Company acquired all of the assets and assumed certain liabilities of Spencer Johnston.

Because the transaction was completed on May 4, 2016, the final purchase price allocation at the acquisition date was subject to change with respect to closing date working capital balances and other post-closing adjustments. The measurement period remains open as of March 31, 2017.

The adjusted purchase price of $17.6 million resulted in net assets acquired other than goodwill of $15.7 million and goodwill of $1.9 million. All of the goodwill is allocated to the Rolls Covers business segment. Goodwill represents the excess purchase price over the fair values of assets acquired and liabilities assumed. The goodwill was generated by the synergies the transaction provides.

XML

Derivatives and Hedging

3 Months Ended

Mar. 31, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging

Derivatives and Hedging

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. From time to time, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known cash amounts, the value of which are determined by interest rates or foreign exchange rates.

Cash Flow Hedges of Interest Rate Risk

From time to time, the Company uses interest rate derivatives to add stability to interest expense and to manage its exposure to interest rate movements. However, at March 31, 2017, the Company had no interest rate derivatives.

Non-designated Hedges of Foreign Exchange Risk

Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to foreign exchange rates, but do not meet the strict hedge accounting requirements of ASC Topic 815. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings.

The Company, from time to time, may enter into foreign exchange forward contracts to fix currencies at specified rates based on expected future cash flows to protect against the fluctuations in cash flows resulting from sales denominated in foreign currencies. Additionally, to manage its exposure to fluctuations in foreign currency on intercompany balances and certain purchase commitments, the Company from time to time may use foreign exchange forward contracts.

As of March 31, 2017 and December 31, 2016, the Company had outstanding derivatives that were not designated as hedges in qualifying hedging relationships. The value of these contracts is recognized at fair value based on market exchange forward rates and is recorded in other assets or other liabilities on the Consolidated Balance Sheets. The following represents the fair value of these derivatives at March 31, 2017 and December 31, 2016 and the change in fair value included in foreign exchange gain (loss) in the three months ended March 31, 2017 and 2016:

	March 31, 2017			December 31, 2016
Fair value of derivative (liability)	$	(79	)	$	(1,461	)
	Three Months Ended March 31, 2017			Three Months Ended March 31, 2016
Change in fair value of derivative included in foreign exchange (loss) gain	$	145		$	1,170

The following represents the notional amounts of foreign exchange forward contracts at March 31, 2017:

	Notional Sold		Notional Purchased
Non-designated hedges of foreign exchange risk	$	—	$	(987	)

Fair Value of Derivatives Under ASC Topic 820

ASC Topic 820, Fair Value Measurements and Disclosures (“Topic 820”), emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, Topic 820 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs including fair value of investments that do not have the ability to redeem at net asset value as of the measurement date, or during the first quarter following the measurement date. The derivative assets or liabilities are typically based on an entity’s own assumptions, as there is little, if any, market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and the Company considers factors specific to the asset or liability. The Company determined that its derivative valuations, which are based on market exchange forward rates, fall within Level 2 of the fair value hierarchy.

XML

Long term Debt

3 Months Ended

Mar. 31, 2017

Debt Disclosure [Abstract]

Long term Debt

Long term Debt

At March 31, 2017 and December 31, 2016, long term debt consisted of the following:

	March 31, 2017			December 31, 2016
Notes (Secured), payable semi-annually–U.S. Dollar denominated interest rate fixed at 9.50%. Sold at a price equal to 98.54% of their face value. Matures August of 2021.	$	480,000		$	480,000
Notes payable, working capital loan, variable interest rate at 2.05%. Matures June 30, 2017, with one-year rollover option.	7,596			7,328
Fixed asset loan contract, variable interest rate of 5.78%. Matures June of 2020.	7,590			7,511
Other debt	21,593			10,448
Total debt (excluding long-term capital leases and deferred finance fees)	516,779			505,287
Less deferred financing costs and debt discount	(15,799		)	(16,436		)
Less current maturities of long term debt and notes payable	(16,999		)	(15,928		)
Total long term debt	$	483,981		$	472,923

On August 9, 2016, the Company closed on $480 million aggregate principal amount of 9.5% Senior Secured Notes due August 2021 (the "Notes"), which were sold at a price equal to 98.54% of their face value. The Notes will pay interest semi-annually in arrears on February 15 and August 15 of each year beginning on February 15, 2017 and will mature on August 15, 2021, unless earlier redeemed or repurchased.

The Company used the net proceeds from the offering to repay all amounts outstanding under its then existing term loan credit facility, to redeem all of its 8.875% Senior Notes due 2018 at a redemption price equal to 102.219% of the principal amount thereof, together with accrued and unpaid interest, to the date of redemption, to pay fees and expenses relating to these transactions, and for working capital and other general corporate purposes.

As of March 31, 2017, an aggregate of $25.3 million is available for additional borrowings under the $55.0 million Revolving Credit and Guaranty Agreement ("ABL Facility"). This availability represents $39.4 million under the ABL revolver that is currently collateralized by certain assets of the Company, less $14.1 million of that facility committed for letters of credit or additional borrowings. In addition, the Company had approximately $3.2 million available for borrowings under other small lines of credit.

On May 17, 2013, the Company entered into a Credit and Guaranty Agreement for $200.0 million (increased to $230 million on August 18, 2016) term loan credit facility (the “Term Credit Facility”), net of a discount of $1.0 million, among the Company, certain direct and indirect U.S. subsidiaries of the Company as guarantors and certain financial institutions. This facility was repaid with proceeds from the 9.5% senior secured notes.

On May 17, 2013, the Company also entered into a Revolving Credit and Guaranty Agreement originally for a $40.0 million asset-based revolving credit facility subject to a borrowing base among Xerium Technologies, Inc., as a US borrower, Xerium Canada Inc., as Canadian borrower, certain direct and indirect U.S. subsidiaries of the Company as guarantors and certain financial institutions (the "Domestic Revolver"). On March 3, 2014, the Company entered into an amendment to the Revolving Credit and Guaranty Agreement (as amended, the “old ABL Facility,” and collectively with the Term Credit Facility, the “Credit Facility”), increasing the aggregate availability under the old ABL Facility to $55 million. On November 3, 2015, the Company refinanced the old ABL Facility and entered into the ABL Facility with one of its existing ABL lenders. The amount of the ABL Facility continues to provide aggregate availability of $55 million and the collateral pledged thereunder has remained the same. The ABL Facility matures in November of 2020 and accrues interest at either an Alternative Base rate (Prime plus 75 bps) or Fixed LIBOR (LIBOR +175 bps). As of March 31, 2017 these rates were 4.75% and 2.78%, respectively.

The Indenture and the ABL Facility contain certain customary covenants that, subject to exceptions, restrict our ability to, among other things:

• declare dividends or redeem or repurchase equity interests;

•prepay, redeem or purchase debt;

•incur liens and engage in sale-leaseback transactions;

•make loans and investments;

•incur additional indebtedness;

•amend or otherwise alter debt and other material agreements;

•engage in mergers, acquisitions and asset sales;

•transact with affiliates; and

•engage in businesses that are not related to the Company's existing business.

On July 17, 2015 (the "Closing Date"), Xerium China, Co., Ltd. ("Xerium China"), a wholly-owned subsidiary of the Company entered into and closed a Fixed Assets Loan Contract (the "Loan Agreement") with the Industrial and Commercial Bank of China Limited, Shanghai-Jingan Branch (the “Bank”) with respect to a RMB 58.5 million loan, which was approximately 9.4 million USD on July 17, 2015. The loan is secured by pledged machinery and equipment of Xerium China and guaranteed by Xerium Asia Pacific (Shanghai) Limited and Stowe Woodward (Changzhou) Roll Technologies Co. Ltd., which are wholly-owned subsidiaries of the Company, pursuant to guarantee agreements (the "Guarantee Agreements"). Interest on the outstanding principal balance of the loan accrues at a benchmark rate plus a margin. The current interest rate at March 31, 2017 is approximately 5.8%. The interest rate will be adjusted every 12 months during the term of the loan, based on the benchmark interest rate adjustment. Interest under the loan is payable quarterly in arrears. Principal on the loan is to be repaid in part every six months following the Closing Date, in accordance with a predetermined schedule set forth in the Loan Agreement. Proceeds of the Loan will be used by Xerium China to purchase production equipment. The Loan Agreement contains certain customary representations and warranties and provisions relating to events of default.

On May 26, 2011, the Company completed a refinancing transaction, which replaced certain of its then outstanding indebtedness with $240 million aggregate principal amount of 8.875% senior unsecured notes. The notes were repaid with proceeds from the 9.5% Senior Secured Notes.

As of March 31, 2017, the carrying value of the Company’s long term debt was $499.8 million (excluding deferred financing costs) and its fair value was approximately $510.0 million. The Company determined the fair value of its debt utilizing significant other observable inputs (Level 2 of the fair value hierarchy).

Long-term Capitalized Lease Liabilities

As of March 31, 2017, the Company had long-term capitalized lease liabilities totaling $18.2 million. These amounts represent the lease on the corporate headquarters and the Kunshan, China facility, as well as other leases for software, vehicles and machinery and equipment.

XML

Income Taxes

3 Months Ended

Mar. 31, 2017

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company utilizes the liability method for accounting for income taxes in accordance with ASC Topic 740, Income Taxes (“Topic 740”). Under Topic 740, deferred tax assets and liabilities are determined based on the difference between their financial reporting and tax basis. The assets and liabilities are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company reduces its deferred tax assets by a valuation allowance if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In making this determination, the Company evaluates all available information including the Company’s financial position and results of operations for the current and preceding years, as well as any available projected information for future years.

For the three months ended March 31, 2017, the provision for income taxes was $2.7 million as compared to $2.7 million for the three months ended March 31, 2016. The slight increase in tax expense in the three months ended March 31, 2017 was primarily attributable to the geographic mix of earnings. Generally, the provision for income taxes is primarily impacted by income earned in tax paying jurisdictions relative to income earned in non-tax paying jurisdictions. The majority of income recognized for purposes of computing the effective tax rate is earned in countries where the statutory income tax rates range from 15.0% to 35.4%; however, permanent income adjustments recorded against pre-tax earnings may result in an effective tax rate that is higher or lower than the statutory tax rate in these jurisdictions. The Company generates losses in certain jurisdictions for which no tax benefit is realized, as the deferred tax assets in these jurisdictions (including the net operating losses) are fully reserved in the valuation allowance. For this reason, the Company recognizes minimal income tax expense or benefit in these jurisdictions, of which the most material jurisdictions are the United States and Australia. Due to these reserves, the geographic mix of the Company’s pre-tax earnings has a direct correlation with how high or low its annual effective tax rate is relative to consolidated earnings.

As the Company continues to reorganize and restructure its operations, it is possible that deferred tax assets, for which no income tax benefit has previously been provided, may more likely than not become realized. The Company continues to evaluate future operations and will record an income tax benefit in the period where it believes it is more likely than not that the deferred tax asset will be able to be realized. The most material unrecognized deferred tax asset relates to the U.S. By 2029, future U.S. earnings ranging between $40 million and $130 million, generated by U.S. earnings from continuing operations or qualified tax planning strategies, would be required in order to fully recognize the U.S. deferred tax asset. Historic and future ownership changes could potentially reduce the amount of net operating loss carry-forwards available for use.

As of March 31, 2017, the Company had a gross amount of unrecognized tax benefit of $9.7 million, exclusive of interest and penalties. The unrecognized tax benefit increased by approximately $0.4 million during the three months ended March 31, 2017, as a result of new positions related to the current year and foreign currency effects.

The Company’s policy is to recognize interest and penalties related to income tax matters as income tax expense, which were $0.4 million related to the unrecognized tax benefits for the three months ended March 31, 2017. The tax years 2007 through 2016 remain open to examination in a number of the major tax jurisdictions to which the Company and its subsidiaries are subject. The Company believes that it has made adequate provisions for all income tax uncertainties.

XML

Pensions, Other Post-retirement and Post-employment Benefits

3 Months Ended

Mar. 31, 2017

Compensation and Retirement Disclosure [Abstract]

Pensions, Other Post-retirement and Post-employment Benefits

Pensions, Other Post-retirement and Post-employment Benefits

The Company accounts for its pensions, other post-retirement and post-employment benefit plans in accordance with ASC Topic 715, Compensation—Retirement Benefits (“Topic 715”). The Company has defined benefit pension plans covering substantially all of its U.S. and Canadian employees and employees of certain subsidiaries in other countries. Benefits are generally based on the employee’s years of service and compensation. These plans are funded in conformity with the funding requirements of applicable government regulations. The Company does not fund certain plans, as funding is not required. The Company plans to continue to fund its U.S. defined benefit plans to comply with the Pension Protection Act of 2006. In addition, the Company also intends to fund its U.K. and Canadian defined benefit plans in accordance with local regulations.

As required by Topic 715, the following tables summarize the components of net periodic benefit cost:

Defined Benefit Plans

	Three Months Ended March 31,
	2017			2016
Service cost	$	376		$	405
Interest cost	1,267			1,485
Expected return on plan assets	(1,496		)	(1,548		)
Amortization of net loss	590			558
Net periodic benefit cost	$	737		$	900

XML

Comprehensive Income and Accumulated Other Comprehensive Loss

3 Months Ended

Mar. 31, 2017

Equity [Abstract]

Comprehensive Income and Accumulated Other Comprehensive Loss

Comprehensive Income and Accumulated Other Comprehensive Loss

Comprehensive income for the three months ended March 31, 2017 (net of tax expense of $109 thousand) and 2016 (net of a tax expense of $67 thousand) is as follows:

	Three Months Ended March 31,
	2017			2016
Net loss	$	(2,834	)	$	(1,445	)
Foreign currency translation adjustments	9,765			8,460
Pension liability changes under Topic 715	(125		)	358
Comprehensive income	$	6,806		$	7,373

The components of accumulated other comprehensive loss for the three months ended March 31, 2017 are as follows (net of tax benefits of $5.9 million):

	Foreign Currency Translation     Adjustment			Pension Liability Changes Under  Topic 715			Accumulated    Other Comprehensive (Loss) Income
Balance at December 31, 2016	$	(95,232	)	$	(39,446	)	$	(134,678	)
Other comprehensive income before reclassifications	9,765			(715		)	9,050
Amounts reclassified from other comprehensive loss:
Amortization of actuarial losses	—			590			590
Net current period other comprehensive income	9,765			(125		)	9,640
Balance at March 31, 2017	$	(85,467	)	$	(39,571	)	$	(125,038	)

For the three months ended March 31, 2017, the amortization of actuarial losses is included in cost of products sold and general and administrative expenses in the Consolidated Statements of Operations.

XML

Restructuring Expense

3 Months Ended

Mar. 31, 2017

Restructuring and Related Activities [Abstract]

Restructuring Expense

Restructuring Expense

For the three months ended March 31, 2017, the Company incurred restructuring expenses of $3.2 million relating to headcount reductions and other costs related to previous plant closures. For the three months ended March 31, 2016, the Company incurred restructuring expenses of $2.8 million. These included $0.7 million of charges related to the closure of the Middletown, Va. facility and $2.1 million of charges relating to headcount reductions and other costs related to previous plant closures.

The following table sets forth the significant components of the restructuring accrual (included in Accrued Expenses on our Consolidated Balance Sheet), including activity under restructuring programs for the three months ended March 31, 2017 and 2016:

	Balance at December 31, 2016		Charges		Currency     Effects		Cash Payments			Balance at March 31, 2017
Severance and other benefits	$	3,805	$	2,258	$	138	$	(1,061	)	$	5,140
Facility costs and other	392		906		14		(980		)	332
Total	$	4,197	$	3,164	$	152	$	(2,041	)	$	5,472

	Balance at December 31, 2015		Charges		Currency     Effects		Cash Payments			Balance at March 31, 2016
Severance and other benefits	$	5,308	$	1,390	$	62	$	(1,804	)	$	4,956
Facility costs and other	903		1,442		63		(1,871		)	537
Total	$	6,211	$	2,832	$	125	$	(3,675	)	$	5,493

Restructuring and impairment expense by segment, which is not included in Segment Earnings in Note 9, is as follows:

	Three Months Ended March 31,
	2017		2016
Clothing	$	2,476	$	1,452
Roll Covers	627		891
Corporate	61		489
Total	$	3,164	$	2,832

XML

Business Segment Information

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Business Segment Information

Business Segment Information

The Company is a global manufacturer and supplier of consumable products used primarily in the production of paper and is organized into two reportable segments: clothing and roll covers. The clothing segment represents the manufacture and sale of synthetic textile belts used to transport paper or other materials along the length of papermaking or other industrial machines. The roll covers segment primarily represents the manufacture and refurbishment of covers used on the steel rolls of papermaking or manufacturing machines and the servicing of those rolls. The Company manages each of these operating segments separately.

Management evaluates segment performance based on adjusted earnings before interest, taxes, depreciation and amortization, yet after allocation of corporate charges. Such measure is then adjusted to exclude items that are of an unusual nature and are not used in measuring segment performance or are not segment specific (“Segment Earnings (Loss)”). The accounting policies of these segments are the same as those for the Company as a whole. Inter-segment net sales and inter-segment eliminations are not material for any of the periods presented.

Summarized financial information for the Company’s reportable segments is presented in the tables that follow for the three months ended March 31, 2017 and 2016.

	Clothing		Roll Covers		Corporate			Total
Three months ended March 31, 2017
Net Sales	$	72,495	$	47,371	$	—		$	119,866
Segment Earnings (Loss)	$	20,807	$	9,795	$	(4,029	)	$	26,573
Three months ended March 31, 2016
Net Sales	$	71,337	$	43,628	$	—		$	114,965
Segment Earnings (Loss)	$	18,635	$	9,198	$	(3,898	)	$	23,935

Provided below is a reconciliation of Segment Earnings (Loss) to (Loss) Income before provision for income taxes for the three months ended March 31, 2017 and 2016, respectively.

	Three Months Ended March 31,
	2017			2016
Segment Earnings (Loss):
Clothing	$	20,807		$	18,635
Roll Covers	9,795			9,198
Corporate	(4,029		)	(3,898		)
Stock-based compensation	(531		)	(592		)
Interest expense, net	(13,263		)	(10,341		)
Depreciation and amortization	(8,093		)	(7,994		)
Loss on extinguishment of debt	(25		)	—
Restructuring expense	(3,164		)	(2,832		)
Other non-recurring expense	(45		)	(103		)
Plant startup costs	(480		)	(877		)
Foreign exchange (loss) gain	(1,125		)	24
(Loss) income before provision for income taxes	$	(153	)	$	1,220

XML

Commitments and Contingencies

3 Months Ended

Mar. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

The Company is involved in various legal matters which have arisen in the ordinary course of business as a result of various immaterial labor claims, taxing authority reviews and other routine legal matters. As of March 31, 2017, the Company accrued an immaterial amount in its financial statements for these matters for which the Company believed the possibility of loss was probable and was able to estimate the damages. The Company does not believe that the ultimate resolution of these matters will have a material adverse effect on its financial position, results of operations or cash flow. The Company believes that any additional liability in excess of amounts provided which may result from the resolution of legal matters will not have a material adverse effect on the financial condition, liquidity or cash flow of the Company.

XML

Stock-Based Compensation and Stockholders' Deficit

3 Months Ended

Mar. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation and Stockholders' Deficit

Stock-Based Compensation and Stockholders’ Deficit

The Company records stock-based compensation expense in accordance with ASC Topic 718, Accounting for Stock Compensation and has used the straight-line attribution method to recognize expense for RSUs, options and DSUs. The Company recorded stock-based compensation expense during the three months ended March 31, 2017 and March 31, 2016 as follows:

	Three Months Ended March 31,
	2017		2016
RSU, Options and DSU Awards (1)	$	531	$	592

(1) Related to RSUs, Options and DSUs awarded to certain employees and non-employee directors.

Summary of Activity Under Long-term Incentive Plans

Long-Term Incentive Program—2015 LTIP and 2014 LTIP

During the first quarter of 2016 the Company performed a valuation on the market-based stock units and estimated payout to be at 0% under both the 2015 and 2014 LTIP plans, reducing stock-based compensation by $0.2 million.

Directors’ Deferred Stock Unit Plan

Under the 2011 non-management directors stock plan ("2011 DSU Plan”), as amended in January of 2015, each director receives an annual retainer of $132 thousand, to be paid on a quarterly basis in arrears. Approximately 54% of the annual retainer is payable in DSUs, with the remaining 46% payable in cash or a mix of both cash and DSUs at the election of each director. The non-management directors were awarded an aggregate of 17,787 DSUs under the 2011 DSU Plan for service during the three months ended March 31, 2017. In addition, in accordance with the 2011 DSU Plan, as amended in January of 2015, 15,003 DSUs were settled in common stock during the three months ended March 31, 2017.

XML

Supplemental Guarantor Financial Information

3 Months Ended

Mar. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Supplemental Guarantor Financial Information

Supplemental Guarantor Financial Information

On August 9, 2016, the Company closed on the sale of its Notes. The Notes are secured obligations of the Company and are fully and unconditionally guaranteed on a senior secured basis by all of the domestic wholly owned subsidiaries of the Company (the “Guarantors”). In accordance with Rule 3-10 of Regulation S-X promulgated under the Securities Act of 1933, as amended, the following condensed consolidating financial statements present the financial position, results of operations and cash flows of Xerium Technologies, Inc. (referred to as “Parent” for the purpose of this note only) on a stand-alone parent-only basis, the Guarantors on a Guarantors-only basis, the combined non-Guarantor subsidiaries and elimination entries necessary to arrive at the information for the Parent, the Guarantors and non-Guarantor subsidiaries on a consolidated basis.

Xerium Technologies, Inc.

Consolidating Balance Sheet—(Unaudited)

At March 31, 2017

(Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors		Other Eliminations			The Company
ASSETS
Current assets:
Cash and cash equivalents	$	2,056		$	66		$	8,016	$	—		$	10,138
Accounts receivable, net	78			21,783			52,805		—			74,666
Intercompany receivables	(428,202		)	428,150			52		—			—
Inventories, net	—			17,295			57,813		(1,111		)	73,997
Prepaid expenses	771			105			4,782		—			5,658
Other current assets	—			3,896			13,837		—			17,733
Total current assets	(425,297		)	471,295			137,305		(1,111		)	182,192
Property and equipment, net	8,069			66,229			213,711		—			288,009
Investments	878,223			231,443			—		(1,109,666		)	—
Goodwill	—			19,614			38,450		—			58,064
Intangible assets	—			7,019			675		—			7,694
Non-current deferred tax asset	—			—			12,810		—			12,810
Other assets	—			(121		)	8,471		—			8,350
Total assets	$	460,995		$	795,479		$	411,422	$	(1,110,777	)	$	557,119
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Notes payable	$	—		$	—		$	7,596	$	—		$	7,596
Accounts payable	2,026			12,048			28,187		—			42,261
Accrued expenses	11,894			7,363			33,292		—			52,549
Current maturities of long-term debt	2,428			2,606			4,369		—			9,403
Total current liabilities	16,348			22,017			73,444		—			111,809
Long-term debt, net of current maturities	475,627			—			8,354		—			483,981
Liabilities under capital leases	5,281			4,093			8,842		—			18,216
Non-current deferred tax liability	1,301			—			7,141		—			8,442
Pension, other post-retirement and post-employment obligations	20,258			811			44,114		—			65,183
Other long-term liabilities	—			1,250			7,806		—			9,056
Intercompany loans	63,376			(99,159		)	35,783		—			—
Total stockholders’ (deficit) equity	(121,196		)	866,467			225,938		(1,110,777		)	(139,568		)
Total liabilities and stockholders’ equity (deficit)	$	460,995		$	795,479		$	411,422	$	(1,110,777	)	$	557,119

Xerium Technologies, Inc.

Consolidating Balance Sheet

At December 31, 2016

(Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The Company
ASSETS
Current assets:
Cash and cash equivalents	$	1,368		$	279		$	11,161		$	—		$	12,808
Accounts receivable, net	70			18,787			49,810			—			68,667
Intercompany receivables	(410,370		)	419,192			(8,822		)	—			—
Inventories, net	—			17,356			54,577			(1,111		)	70,822
Prepaid expenses	545			395			5,385			—			6,325
Other current assets	—			3,842			11,942			—			15,784
Total current assets	(408,387		)	459,851			124,053			(1,111		)	174,406
Property and equipment, net	8,393			67,794			207,914			—			284,101
Investments	869,508			211,897			—			(1,081,405		)	—
Goodwill	—			19,614			37,169			—			56,783
Intangible assets	—			7,265			65			—			7,330
Non-current deferred tax asset	—			—			10,737			—			10,737
Other assets	—			—			8,556			—			8,556
Total assets	$	469,514		$	766,421		$	388,494		$	(1,082,516	)	$	541,913
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Notes payable	$	—		$	—		$	7,328		$	—		$	7,328
Accounts payable	2,279			10,307			23,572			—			36,158
Accrued expenses	26,495			8,659			29,378			—			64,532
Current maturities of long-term debt	2,342			2,320			3,938			—			8,600
Total current liabilities	31,116			21,286			64,216			—			116,618
Long-term debt, net of current maturities	464,494			—			8,429			—			472,923
Liabilities under capital leases	5,830			4,627			8,779			—			19,236
Non-current deferred tax liability	1,270			—			5,887			—			7,157
Pension, other post-retirement and post-employment obligations	20,923			763			43,340			—			65,026
Other long-term liabilities	—			1,250			6,608			—			7,858
Intercompany loans	63,923			(97,953		)	34,030			—			—
Total stockholders’ (deficit) equity	(118,042		)	836,448			217,205			(1,082,516		)	(146,905		)
Total liabilities and stockholders’ equity (deficit)	$	469,514		$	766,421		$	388,494		$	(1,082,516	)	$	541,913

Xerium Technologies, Inc.

Consolidating Statement of Operations and Comprehensive (Loss) Income (Unaudited)

For the three months ended March 31, 2017

(Dollars in thousands)

	Parent			Total Guarantors			Total  Non Guarantors			Other Eliminations			The Company
Net sales	$	—		$	46,945		$	81,084		$	(8,163	)	$	119,866
Costs and expenses:
Cost of products sold	—			30,948			49,585			(8,163		)	72,370
Selling	233			5,044			10,397			—			15,674
General and administrative	2,702			974			8,978			—			12,654
Research and development	299			931			514			—			1,744
Restructuring	61			642			2,461			—			3,164
	3,295			38,539			71,935			(8,163		)	105,606
(Loss) income from operations	(3,295		)	8,406			9,149			—			14,260
Interest (expense) income, net	(12,338		)	(347		)	(578		)	—			(13,263		)
Foreign exchange gain (loss)	(472		)	65			(718		)	—			(1,125		)
Equity in subsidiaries income	8,714			4,381			—			(13,095		)	—
Loss on extinguishment of debt	(25		)	—			—			—			(25		)
Dividend income	4,263			3,858			—			(8,121		)	—
(Loss) income before provision for income taxes	(3,153		)	16,363			7,853			(21,216		)	(153		)
Provision for income taxes	319			(141		)	(2,859		)	—			(2,681		)
Net (loss) income	$	(2,834	)	$	16,222		$	4,994		$	(21,216	)	$	(2,834	)
Comprehensive (loss) income	$	(3,684	)	$	16,230		$	15,476		$	(21,216	)	$	6,806

Xerium Technologies, Inc.

Consolidating Statement of Operations and Comprehensive Income (Loss)-(Unaudited)

For the three months ended March 31, 2016

(Dollars in thousands)

	Parent			Total Guarantors			Total  Non Guarantors			Other Eliminations			The Company
Net sales	$	—		$	40,588		$	81,600		$	(7,223	)	$	114,965
Costs and expenses:
Cost of products sold	—			28,296			50,259			(7,127		)	71,428
Selling	305			5,011			10,405			—			15,721
General and administrative	2,691			923			7,893			—			11,507
Research and development	380			1,091			469			—			1,940
Restructuring	428			1,028			1,376			—			2,832
	3,804			36,349			70,402			(7,127		)	103,428
(Loss) income from operations	(3,804		)	4,239			11,198			(96		)	11,537
Interest (expense) income, net	(9,714		)	517			(1,144		)	—			(10,341		)
Foreign exchange gain (loss)	17			(54		)	61			—			24
Equity in subsidiaries income	9,102			7,804			—			(16,906		)	—
Dividend income	3,145			—			—			(3,145		)	—
(Loss) income before provision for income taxes	(1,254		)	12,506			10,115			(20,147		)	1,220
Provision for income taxes	(191		)	(2		)	(2,472		)	—			(2,665		)
Net (loss) income	$	(1,445	)	$	12,504		$	7,643		$	(20,147	)	$	(1,445	)
Comprehensive (loss) income	$	(606	)	$	12,494		$	15,632		$	(20,147	)	$	7,373

Xerium Technologies, Inc.

Consolidating Statement of Cash Flows-(Unaudited)

For the three months ended March 31, 2017 (Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The  Company
Operating activities
Net (loss) income	$	(2,834	)	$	16,222		$	4,994		$	(21,216	)	$	(2,834	)
Adjustments to reconcile net (loss) income to net cash(used in) provided by operating activities:
Stock-based compensation	531			—			—			—			531
Depreciation	579			2,069			5,171			—			7,819
Amortization of intangible assets	—			246			27			—			273
Deferred financing cost amortization	875			—			24			—			899
Foreign exchange gain on revaluation of debt	625			—			2			—			627
Deferred taxes	(321		)	—			331			—			10
Loss on disposition of property and equipment	—			(37		)	(12		)	—			(49		)
Loss on extinguishment of debt	25			—			—			—			25
Provision for doubtful accounts	—			(15		)	56			—			41
Undistributed equity in earnings of subsidiaries	(8,714		)	(4,381		)	—			13,095			—
Change in assets and liabilities which (used) provided cash:
Accounts receivable	(8		)	(2,981		)	(1,164		)	—			(4,153		)
Inventories	—			62			(1,198		)	—			(1,136		)
Prepaid expenses	(226		)	289			720			—			783
Other current assets	—			(117		)	(1,668		)	—			(1,785		)
Accounts payable and accrued expenses	(14,965		)	443			7,188			—			(7,334		)
Deferred and other long-term liabilities	(47		)	169			(1,062		)	—			(940		)
Intercompany loans	17,832			(9,010		)	(8,822		)	—			—
Net cash (used in) provided by operating activities	(6,648		)	2,959			4,587			(8,121		)	(7,223		)
Investing activities
Capital expenditures	(158		)	(167		)	(4,960		)	—			(5,285		)
Intercompany property and equipment transfers, net	—			29			(29		)	—			—
Proceeds from disposals of property and equipment	—			211			5			—			216
Net cash (used in) provided by investing activities	(158		)	73			(4,984		)	—			(5,069		)
Financing activities
Proceeds from borrowings	36,253			—			4,223			—			40,476
Principal payments on debt	(25,730		)	—			(3,963		)	—			(29,693		)
Dividends paid	—			(4,263		)	(3,858		)	8,121			—
Payment of obligations under capital leases	(656		)	(721		)	(143		)	—			(1,520		)
Payment of financing fees	(187		)	—			17			—			(170		)
Intercompany loans	(2,186		)	1,739			447			—			—
Net cash provided by (used in) financing activities	7,494			(3,245		)	(3,277		)	8,121			9,093
Effect of exchange rate changes on cash flows	—			—			529			—			529
Net increase (decrease) in cash	688			(213		)	(3,145		)	—			(2,670		)
Cash and cash equivalents at beginning of period	$	1,368		$	279		$	11,161		$	—		$	12,808
Cash and cash equivalents at end of period	$	2,056		$	66		$	8,016		$	—		$	10,138

Xerium Technologies, Inc.

Consolidating Statement of Cash Flows (Unaudited)

For the three months ended March 31, 2016

(Dollars in Thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The  Company
Operating activities
Net (loss) income	$	(1,445	)	$	12,504		$	7,643		$	(20,147	)	$	(1,445	)
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Stock-based compensation	603			—			(11		)	—			592
Depreciation	555			2,053			5,292			—			7,900
Amortization of intangible assets	—			69			25			—			94
Deferred financing cost amortization	732			—			24			—			756
Foreign exchange gain on revaluation of debt	1,120			—			—			—			1,120
Deferred taxes	173			—			(18		)	—			155
Asset impairment	—			—			—			—			—
Loss on disposition of property and equipment	—			—			17			—			17
Provision for doubtful accounts	—			—			(72		)	—			(72		)
Undistributed equity in earnings of subsidiaries	(9,102		)	(7,804		)	—			16,906			—
Change in assets and liabilities which (used) provided cash:
Accounts receivable	(555		)	842			(2,417		)	—			(2,130		)
Inventories	—			1,229			907			96			2,232
Prepaid expenses	(872		)	170			81			—			(621		)
Other current assets	—			167			857			—			1,024
Accounts payable and accrued expenses	6,459			(932		)	(838		)	—			4,689
Deferred and other long-term liabilities	3			379			410			—			792
Intercompany loans	1,925			(4,721		)	2,796			—			—
Net cash (used in) provided by operating activities	(404		)	3,956			14,696			(3,145		)	15,103
Investing activities
Capital expenditures	(117		)	(938		)	(2,495		)	—			(3,550		)
Intercompany property and equipment transfers, net	(2		)	2			—			—			—
Proceeds from disposals of property and equipment	—			5			15			—			20
Net cash (used in) investing activities	(119		)	(931		)	(2,480		)	—			(3,530		)
Financing activities
Proceeds from borrowings	10,992			—			2,321			—			13,313
Principal payments on debt	(11,547		)	—			(4,892		)	—			(16,439		)
Dividends paid	—			(3,145		)	—			3,145			—
Payments of obligations under capitalized leases	(67		)	(517		)	(89		)	—			(673		)
Payment of deferred financing fees	(116		)	—			18			—			(98		)
Intercompany loans	1,247			637			(1,884		)	—			—
Employee taxes paid on equity awards	(1,029		)	—			—			—			(1,029		)
Net cash (used in) provided by financing activities	(520		)	(3,025		)	(4,526		)	3,145			(4,926		)
Effect of exchange rate changes on cash flows	—			—			(1,036		)	—			(1,036		)
Net (decrease) increase in cash	(1,043		)	—			6,654			—			5,611
Cash and cash equivalents at beginning of period	3,105			(2		)	6,736			—			9,839
Cash and cash equivalents at end of period	$	2,062		$	(2	)	$	13,390		$	—		$	15,450

XML

Subsequent Events

3 Months Ended

Mar. 31, 2017

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On April 28, 2017, the Company’s Board of Directors (the “Board”) appointed Mark Staton as President and Chief Executive Officer of the Company and also appointed him to the Board, in each case replacing Mr. Bevis.  Mr. Bevis will receive severance pay of approximately $1.3 million to be paid over the next 18 months and will receive stock based compensation with an estimated value of approximately $1.7 million.

XML

Description of Business and Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated interim financial statements at March 31, 2017 and for the three months ended March 31, 2017 and 2016 include the accounts of the Company and its wholly-owned subsidiaries and have been prepared in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, such financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. The interim results presented herein are not necessarily indicative of the results to be expected for the entire year. In management’s opinion, these unaudited condensed consolidated interim financial statements contain all adjustments of a normal recurring nature necessary for a fair presentation of the financial statements for the interim periods presented. These unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2016 as reported on the Company's Annual Report on Form 10-K filed on March 1, 2017.

Inventories, net

Inventories, net

Inventories are generally valued at the lower of cost or market using the first-in, first-out (FIFO) method. Raw materials are valued principally on a weighted average cost basis. The Company’s work in process and finished goods are specifically identified and valued based on actual inputs to production. Provisions are recorded as appropriate to write-down obsolete and excess inventory to estimated net realizable value. The process for evaluating obsolete and excess inventory often requires management to make subjective judgments and estimates concerning future sales levels, quantities and prices at which such inventory will be able to be sold in the normal course of business, while considering the general aging of inventory and factoring in any new business conditions.

Goodwill

Goodwill

The Company accounts for goodwill and other intangible assets in accordance with ASC Topic 350, Intangibles—Goodwill and Other Intangible Assets (“Topic 350”). Topic 350 requires that goodwill and intangible assets that have indefinite lives not be amortized, but instead, must be tested for impairment at least annually or whenever events or business conditions warrant. During the three months ended March 31, 2017, the Company evaluated events and business conditions to determine if a test for an impairment of goodwill was warranted. No such events or business conditions took place during this period, therefore no test was determined to be warranted at March 31, 2017.

Warranties

Warranties

The Company offers warranties on certain roll products that it sells. The specific terms and conditions of these warranties vary depending on the product sold, the country in which the product is sold and arrangements with the customer. The Company estimates the costs that may be incurred under its warranties and records a liability in Accrued Expenses on its Consolidated Balance Sheet for such costs. Factors that affect the Company’s warranty liability include the number of units sold, historical and anticipated rates of warranty claims, cost per claim and new product introduction. The Company periodically assesses the adequacy of its recorded warranty claims and adjusts the amounts as necessary.

Net (Loss) Income Per Common Share

Net Loss Per Common Share

Net loss per common share has been computed and presented pursuant to the provisions of ASC Topic 260, Earnings per Share (“Topic 260”). Net loss per share is based on the weighted-average number of shares outstanding during the period.

Impairment

Impairment

The Company reviews its long-lived assets that have finite lives for impairment in accordance with ASC Topic 360, Property, Plant, and Equipment (“Topic 360”). This topic requires that companies evaluate the fair value of long-lived assets based on the anticipated undiscounted future cash flows to be generated by the assets when indicators of impairment exist to determine if there is impairment to the carrying value. Any change in the carrying amount of an asset as a result of the Company's evaluation has been recorded in either restructuring expense, if it was a result of the Company's restructuring activities, or general and administrative expense for all other impairments in the consolidated statements of operations.

New Accounting Pronouncements

New Accounting Pronouncements

In March 2017, the FASB issued Accounting Standards Update No 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost ("ASU 2017-07"). ASU 2017-07 will change how employers that sponsor defined benefit pension and/or other post-retirement benefit plans present the net periodic benefit cost in the income statement. Employers will present the service cost component of net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. Only the service cost component will be eligible for capitalization in assets. Employers will present the other components of the net periodic benefit cost separately from the line item(s) that includes the service cost and outside of any subtotal of operating income, if one is presented. These components will not be eligible for capitalization in assets. The guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods therein. Early adoption is permitted as of the beginning of an annual period for which financial statements (interim or annual) have not been issued or made available for issuance. The guidance provides a practical expedient for disaggregating the service cost component and other components for comparative periods. The Company is in the process of evaluating this accounting standard update.

In January 2017, the FASB issued Accounting Standards Update No 2017-04, Intangibles—Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 simplifies the accounting for goodwill impairment for all entities by requiring impairment charges to be based on the first step in today’s two-step impairment test under Accounting Standards Codification (ASC) 350. The FASB issued new guidance that eliminates the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of today’s goodwill impairment test) to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (i.e., measure the charge based on today’s Step 1). The standard has tiered effective dates, starting in 2020 for calendar-year public business entities that meet the definition of an SEC filer. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The Company is in the process of evaluating this accounting standard update.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory ("ASU 2016-16"). ASU 2016-16 eliminates the exception to the principle in ASC 740, for all intra-entity sales of assets other than inventory, to be deferred, until the transferred asset is sold to a third party or otherwise recovered through use. This standard is effective for financial statements issued for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements.

In August 2016, the FASB issued Accounting Standards Update No 2016-15, Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"). ASU 2016-15 clarifies how entities should classify certain cash receipts and cash payments in the statement of cash flows and amends certain disclosure requirements of ASC 230. The guidance will generally be applied retrospectively and is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those years. For all other entities, it is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. The Company is in the process of evaluating this accounting standard update.

In March of 2016, the FASB issued Accounting Standards Update No 2016-09 Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 will change certain aspects of accounting for share-based payments to employees. The new guidance will require all income tax effects of awards to be recognized in the income statement when the awards vest or are settled. It also will allow an employer to repurchase more of an employee’s shares than it can today for tax withholding purposes without triggering liability accounting and to make a policy election to account for forfeitures as they occur. ASU 2016-09 is required to be adopted in January of 2017. The Company early adopted this standard at June 30, 2016. As of March 31, 2017, the adoption of the standard has resulted in the re-classification of $1.0 million of employee taxes paid on equity awards as a financing activity in the statement of cash flows, for the three months ended March 31, 2016. The remaining provisions of ASU 2016-09 did not have a material impact on the accompanying condensed consolidated financial statements.

In February of 2016, the FASB issued Accounting Standards Update No 2016-02 Leases ("ASU 2016-02"). ASU 2016-02 includes final guidance that requires lessees to put most leases on their balance sheets but recognize expenses in the income statement in a manner similar to today’s accounting. The guidance also eliminates today’s real estate-specific provisions and changes the guidance on sale-leaseback transactions, initial direct costs and lease executory costs for all entities. For lessors, the standard modifies the classification criteria and the accounting for sales-type and direct financing leases. All entities will classify leases to determine how to recognize lease-related revenue and expense. Classification will continue to affect amounts that lessors record on the balance sheet. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. They have the option to use certain relief. Full retrospective application is prohibited. ASU 2016-02 is effective for public companies with annual periods beginning after 15 December 2018, and interim periods within those years. For all other entities, it is effective for annual periods beginning after 15 December 2019, and interim periods the following year. Early adoption is permitted for all entities. The Company is in the process of evaluating this accounting standard update.

In November of 2015, the FASB issued ASU 2015-17 Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes ("ASU 2015-17"). This guidance requires companies to classify all deferred tax assets and liabilities as non-current on the balance sheet instead of separating deferred taxes into current and non-current amounts. For public companies, the guidance is effective for financial statements issued for annual periods beginning after 15 December 2016 (i.e., 2017 for a calendar-year company) and interim periods within those annual periods. Early adoption of the guidance is permitted. Companies can adopt the guidance either prospectively or retrospectively. The Company early adopted this standard at December 31, 2016, using the prospective method; prior periods were not retrospectively adjusted. The provisions of ASU 2015-17 did not have a material impact on the consolidated financial statements.

In July of 2015, the FASB issued Accounting Standards Update Inventory ("ASU 2015-11"). ASU 2015-11 applies only to first-in, first-out (FIFO) and average cost inventory costing methods and will reduce costs and increase comparability for these methods. There will be no change for last-in, first-out, (LIFO) or retail inventory methods as the costs of transitioning to a new method would outweigh the benefits due to the complexity of these methods. Under this ASU, inventory should be measured at the lower of cost and net realizable value (selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation). When the net realizable value of inventory is less than its cost, the difference will be recognized as a loss in earnings in the period in which it occurs. This ASU more closely aligns the measurement of inventory under GAAP with International Financial Reporting Standards guidance. The amendments are effective for public companies for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, and for other entities, the amendments are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendments should be applied prospectively, and early application is permitted as of the beginning of an interim or annual reporting period. The Company implemented this standard during the first quarter of 2016. The provisions of ASU 2015-11 did not have an impact to the financial statements.

In May of 2014, the FASB issued Accounting Standard Update No. 2014-09 Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Company identify the contract with the customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when it satisfies the performance obligations. The Company will also be required to disclose information regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 is required to be adopted in January of 2018. Retrospective application is required either to all periods presented or with the cumulative effect of initial adoption recognized in the period of adoption. The Company has commenced a comprehensive project plan to direct the implementation of the new revenue recognition standards and an assessment of the impact to business processes. The Company intends to adopt the new standard using the modified retrospective transition method effective January 1, 2018.

XML

Description of Business and Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Components of Inventories

The components of inventories are as follows at:

	March 31, 2017			December 31, 2016
Raw materials	$	14,706		$	14,089
Work in process	27,205			25,879
Finished goods (includes consigned inventory of $6,985 at March 31, 2017 and $6,673 at December 31, 2016)	38,866			37,155
Inventory allowances	(6,780		)	(6,301		)
	$	73,997		$	70,822

Changes in Warranty Liability

The table below represents the changes in the Company’s warranty liability for the three months ended March 31, 2017 and 2016:

	Beginning Balance		Charged to  Cost of Sales		Effect of Foreign Currency Translation		Deduction from Reserves			Ending Balance
Three Months Ended March 31, 2017:	$	2,203	$	235	$	30	$	(179	)	$	2,289
Three Months Ended March 31, 2016:	$	2,175	$	477	$	34	$	(189	)	$	2,497

Computation of Basic and Diluted Weighted-Average Shares

The following table sets forth the computation of basic and diluted weighted-average shares:

	Three Months Ended March 31,
	2017	2016
Weighted-average common shares outstanding–basic	16,153,113	15,789,991
Dilutive effect of stock-based compensation awards outstanding	—	—
Weighted-average common shares outstanding–diluted	16,153,113	15,789,991

Schedule of Antidilutive Securities Excluded from Computation of Diluted Earnings Per Share

The following table sets forth the aggregate of the potentially dilutive securities that were outstanding in the three months ended March 31, 2017 and 2016, but were not included in the computation of diluted earnings per share because the impact would have been anti-dilutive:

	Three Months Ended March 31,
	2017	2016
Anti-dilutive securities	902,988	738,294

XML

Derivatives and Hedging (Tables)

3 Months Ended

Mar. 31, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments

The following represents the fair value of these derivatives at March 31, 2017 and December 31, 2016 and the change in fair value included in foreign exchange gain (loss) in the three months ended March 31, 2017 and 2016:

	March 31, 2017			December 31, 2016
Fair value of derivative (liability)	$	(79	)	$	(1,461	)
	Three Months Ended March 31, 2017			Three Months Ended March 31, 2016
Change in fair value of derivative included in foreign exchange (loss) gain	$	145		$	1,170

Notional Amounts of Foreign Exchange Forward Contracts

The following represents the notional amounts of foreign exchange forward contracts at March 31, 2017:

	Notional Sold		Notional Purchased
Non-designated hedges of foreign exchange risk	$	—	$	(987	)

XML

Long term Debt (Tables)

3 Months Ended

Mar. 31, 2017

Debt Disclosure [Abstract]

Schedule of Long Term Debt

At March 31, 2017 and December 31, 2016, long term debt consisted of the following:

	March 31, 2017			December 31, 2016
Notes (Secured), payable semi-annually–U.S. Dollar denominated interest rate fixed at 9.50%. Sold at a price equal to 98.54% of their face value. Matures August of 2021.	$	480,000		$	480,000
Notes payable, working capital loan, variable interest rate at 2.05%. Matures June 30, 2017, with one-year rollover option.	7,596			7,328
Fixed asset loan contract, variable interest rate of 5.78%. Matures June of 2020.	7,590			7,511
Other debt	21,593			10,448
Total debt (excluding long-term capital leases and deferred finance fees)	516,779			505,287
Less deferred financing costs and debt discount	(15,799		)	(16,436		)
Less current maturities of long term debt and notes payable	(16,999		)	(15,928		)
Total long term debt	$	483,981		$	472,923

XML

Pensions, Other Post-retirement and Post-employment Benefits (Tables)

3 Months Ended

Mar. 31, 2017

Compensation and Retirement Disclosure [Abstract]

Components of Net Periodic Benefit Cost

As required by Topic 715, the following tables summarize the components of net periodic benefit cost:

Defined Benefit Plans

	Three Months Ended March 31,
	2017			2016
Service cost	$	376		$	405
Interest cost	1,267			1,485
Expected return on plan assets	(1,496		)	(1,548		)
Amortization of net loss	590			558
Net periodic benefit cost	$	737		$	900

XML

Comprehensive Income and Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Mar. 31, 2017

Equity [Abstract]

Components of Comprehensive Loss, Net of Tax

Comprehensive income for the three months ended March 31, 2017 (net of tax expense of $109 thousand) and 2016 (net of a tax expense of $67 thousand) is as follows:

	Three Months Ended March 31,
	2017			2016
Net loss	$	(2,834	)	$	(1,445	)
Foreign currency translation adjustments	9,765			8,460
Pension liability changes under Topic 715	(125		)	358
Comprehensive income	$	6,806		$	7,373

Components of Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss for the three months ended March 31, 2017 are as follows (net of tax benefits of $5.9 million):

	Foreign Currency Translation     Adjustment			Pension Liability Changes Under  Topic 715			Accumulated    Other Comprehensive (Loss) Income
Balance at December 31, 2016	$	(95,232	)	$	(39,446	)	$	(134,678	)
Other comprehensive income before reclassifications	9,765			(715		)	9,050
Amounts reclassified from other comprehensive loss:
Amortization of actuarial losses	—			590			590
Net current period other comprehensive income	9,765			(125		)	9,640
Balance at March 31, 2017	$	(85,467	)	$	(39,571	)	$	(125,038	)

XML

Restructuring Expense (Tables)

3 Months Ended

Mar. 31, 2017

Restructuring and Related Activities [Abstract]

Restructuring Programs

The following table sets forth the significant components of the restructuring accrual (included in Accrued Expenses on our Consolidated Balance Sheet), including activity under restructuring programs for the three months ended March 31, 2017 and 2016:

	Balance at December 31, 2016		Charges		Currency     Effects		Cash Payments			Balance at March 31, 2017
Severance and other benefits	$	3,805	$	2,258	$	138	$	(1,061	)	$	5,140
Facility costs and other	392		906		14		(980		)	332
Total	$	4,197	$	3,164	$	152	$	(2,041	)	$	5,472

	Balance at December 31, 2015		Charges		Currency     Effects		Cash Payments			Balance at March 31, 2016
Severance and other benefits	$	5,308	$	1,390	$	62	$	(1,804	)	$	4,956
Facility costs and other	903		1,442		63		(1,871		)	537
Total	$	6,211	$	2,832	$	125	$	(3,675	)	$	5,493

Restructuring and Impairment Expense by Segment

Restructuring and impairment expense by segment, which is not included in Segment Earnings in Note 9, is as follows:

	Three Months Ended March 31,
	2017		2016
Clothing	$	2,476	$	1,452
Roll Covers	627		891
Corporate	61		489
Total	$	3,164	$	2,832

XML

Business Segment Information (Tables)

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Summarized Financial Information and Segment Earnings (Loss)

Summarized financial information for the Company’s reportable segments is presented in the tables that follow for the three months ended March 31, 2017 and 2016.

	Clothing		Roll Covers		Corporate			Total
Three months ended March 31, 2017
Net Sales	$	72,495	$	47,371	$	—		$	119,866
Segment Earnings (Loss)	$	20,807	$	9,795	$	(4,029	)	$	26,573
Three months ended March 31, 2016
Net Sales	$	71,337	$	43,628	$	—		$	114,965
Segment Earnings (Loss)	$	18,635	$	9,198	$	(3,898	)	$	23,935

Provided below is a reconciliation of Segment Earnings (Loss) to (Loss) Income before provision for income taxes for the three months ended March 31, 2017 and 2016, respectively.

	Three Months Ended March 31,
	2017			2016
Segment Earnings (Loss):
Clothing	$	20,807		$	18,635
Roll Covers	9,795			9,198
Corporate	(4,029		)	(3,898		)
Stock-based compensation	(531		)	(592		)
Interest expense, net	(13,263		)	(10,341		)
Depreciation and amortization	(8,093		)	(7,994		)
Loss on extinguishment of debt	(25		)	—
Restructuring expense	(3,164		)	(2,832		)
Other non-recurring expense	(45		)	(103		)
Plant startup costs	(480		)	(877		)
Foreign exchange (loss) gain	(1,125		)	24
(Loss) income before provision for income taxes	$	(153	)	$	1,220

XML

Stock-Based Compensation and Stockholders' Deficit (Tables)

3 Months Ended

Mar. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation Expense

The Company recorded stock-based compensation expense during the three months ended March 31, 2017 and March 31, 2016 as follows:

	Three Months Ended March 31,
	2017		2016
RSU, Options and DSU Awards (1)	$	531	$	592

(1) Related to RSUs, Options and DSUs awarded to certain employees and non-employee directors.

XML

Supplemental Guarantor Financial Information (Tables)

3 Months Ended

Mar. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Consolidating Balance Sheet-(Unaudited)

Xerium Technologies, Inc.

Consolidating Balance Sheet—(Unaudited)

At March 31, 2017

(Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors		Other Eliminations			The Company
ASSETS
Current assets:
Cash and cash equivalents	$	2,056		$	66		$	8,016	$	—		$	10,138
Accounts receivable, net	78			21,783			52,805		—			74,666
Intercompany receivables	(428,202		)	428,150			52		—			—
Inventories, net	—			17,295			57,813		(1,111		)	73,997
Prepaid expenses	771			105			4,782		—			5,658
Other current assets	—			3,896			13,837		—			17,733
Total current assets	(425,297		)	471,295			137,305		(1,111		)	182,192
Property and equipment, net	8,069			66,229			213,711		—			288,009
Investments	878,223			231,443			—		(1,109,666		)	—
Goodwill	—			19,614			38,450		—			58,064
Intangible assets	—			7,019			675		—			7,694
Non-current deferred tax asset	—			—			12,810		—			12,810
Other assets	—			(121		)	8,471		—			8,350
Total assets	$	460,995		$	795,479		$	411,422	$	(1,110,777	)	$	557,119
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Notes payable	$	—		$	—		$	7,596	$	—		$	7,596
Accounts payable	2,026			12,048			28,187		—			42,261
Accrued expenses	11,894			7,363			33,292		—			52,549
Current maturities of long-term debt	2,428			2,606			4,369		—			9,403
Total current liabilities	16,348			22,017			73,444		—			111,809
Long-term debt, net of current maturities	475,627			—			8,354		—			483,981
Liabilities under capital leases	5,281			4,093			8,842		—			18,216
Non-current deferred tax liability	1,301			—			7,141		—			8,442
Pension, other post-retirement and post-employment obligations	20,258			811			44,114		—			65,183
Other long-term liabilities	—			1,250			7,806		—			9,056
Intercompany loans	63,376			(99,159		)	35,783		—			—
Total stockholders’ (deficit) equity	(121,196		)	866,467			225,938		(1,110,777		)	(139,568		)
Total liabilities and stockholders’ equity (deficit)	$	460,995		$	795,479		$	411,422	$	(1,110,777	)	$	557,119

Xerium Technologies, Inc.

Consolidating Balance Sheet

At December 31, 2016

(Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The Company
ASSETS
Current assets:
Cash and cash equivalents	$	1,368		$	279		$	11,161		$	—		$	12,808
Accounts receivable, net	70			18,787			49,810			—			68,667
Intercompany receivables	(410,370		)	419,192			(8,822		)	—			—
Inventories, net	—			17,356			54,577			(1,111		)	70,822
Prepaid expenses	545			395			5,385			—			6,325
Other current assets	—			3,842			11,942			—			15,784
Total current assets	(408,387		)	459,851			124,053			(1,111		)	174,406
Property and equipment, net	8,393			67,794			207,914			—			284,101
Investments	869,508			211,897			—			(1,081,405		)	—
Goodwill	—			19,614			37,169			—			56,783
Intangible assets	—			7,265			65			—			7,330
Non-current deferred tax asset	—			—			10,737			—			10,737
Other assets	—			—			8,556			—			8,556
Total assets	$	469,514		$	766,421		$	388,494		$	(1,082,516	)	$	541,913
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Notes payable	$	—		$	—		$	7,328		$	—		$	7,328
Accounts payable	2,279			10,307			23,572			—			36,158
Accrued expenses	26,495			8,659			29,378			—			64,532
Current maturities of long-term debt	2,342			2,320			3,938			—			8,600
Total current liabilities	31,116			21,286			64,216			—			116,618
Long-term debt, net of current maturities	464,494			—			8,429			—			472,923
Liabilities under capital leases	5,830			4,627			8,779			—			19,236
Non-current deferred tax liability	1,270			—			5,887			—			7,157
Pension, other post-retirement and post-employment obligations	20,923			763			43,340			—			65,026
Other long-term liabilities	—			1,250			6,608			—			7,858
Intercompany loans	63,923			(97,953		)	34,030			—			—
Total stockholders’ (deficit) equity	(118,042		)	836,448			217,205			(1,082,516		)	(146,905		)
Total liabilities and stockholders’ equity (deficit)	$	469,514		$	766,421		$	388,494		$	(1,082,516	)	$	541,913

Consolidating Statement of Operations and Comprehensive Income (Loss)-(Unaudited)

Xerium Technologies, Inc.

Consolidating Statement of Operations and Comprehensive (Loss) Income (Unaudited)

For the three months ended March 31, 2017

(Dollars in thousands)

	Parent			Total Guarantors			Total  Non Guarantors			Other Eliminations			The Company
Net sales	$	—		$	46,945		$	81,084		$	(8,163	)	$	119,866
Costs and expenses:
Cost of products sold	—			30,948			49,585			(8,163		)	72,370
Selling	233			5,044			10,397			—			15,674
General and administrative	2,702			974			8,978			—			12,654
Research and development	299			931			514			—			1,744
Restructuring	61			642			2,461			—			3,164
	3,295			38,539			71,935			(8,163		)	105,606
(Loss) income from operations	(3,295		)	8,406			9,149			—			14,260
Interest (expense) income, net	(12,338		)	(347		)	(578		)	—			(13,263		)
Foreign exchange gain (loss)	(472		)	65			(718		)	—			(1,125		)
Equity in subsidiaries income	8,714			4,381			—			(13,095		)	—
Loss on extinguishment of debt	(25		)	—			—			—			(25		)
Dividend income	4,263			3,858			—			(8,121		)	—
(Loss) income before provision for income taxes	(3,153		)	16,363			7,853			(21,216		)	(153		)
Provision for income taxes	319			(141		)	(2,859		)	—			(2,681		)
Net (loss) income	$	(2,834	)	$	16,222		$	4,994		$	(21,216	)	$	(2,834	)
Comprehensive (loss) income	$	(3,684	)	$	16,230		$	15,476		$	(21,216	)	$	6,806

Xerium Technologies, Inc.

Consolidating Statement of Operations and Comprehensive Income (Loss)-(Unaudited)

For the three months ended March 31, 2016

(Dollars in thousands)

	Parent			Total Guarantors			Total  Non Guarantors			Other Eliminations			The Company
Net sales	$	—		$	40,588		$	81,600		$	(7,223	)	$	114,965
Costs and expenses:
Cost of products sold	—			28,296			50,259			(7,127		)	71,428
Selling	305			5,011			10,405			—			15,721
General and administrative	2,691			923			7,893			—			11,507
Research and development	380			1,091			469			—			1,940
Restructuring	428			1,028			1,376			—			2,832
	3,804			36,349			70,402			(7,127		)	103,428
(Loss) income from operations	(3,804		)	4,239			11,198			(96		)	11,537
Interest (expense) income, net	(9,714		)	517			(1,144		)	—			(10,341		)
Foreign exchange gain (loss)	17			(54		)	61			—			24
Equity in subsidiaries income	9,102			7,804			—			(16,906		)	—
Dividend income	3,145			—			—			(3,145		)	—
(Loss) income before provision for income taxes	(1,254		)	12,506			10,115			(20,147		)	1,220
Provision for income taxes	(191		)	(2		)	(2,472		)	—			(2,665		)
Net (loss) income	$	(1,445	)	$	12,504		$	7,643		$	(20,147	)	$	(1,445	)
Comprehensive (loss) income	$	(606	)	$	12,494		$	15,632		$	(20,147	)	$	7,373

Consolidating Statement of Cash Flows (Unaudited)

Xerium Technologies, Inc.

Consolidating Statement of Cash Flows-(Unaudited)

For the three months ended March 31, 2017 (Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The  Company
Operating activities
Net (loss) income	$	(2,834	)	$	16,222		$	4,994		$	(21,216	)	$	(2,834	)
Adjustments to reconcile net (loss) income to net cash(used in) provided by operating activities:
Stock-based compensation	531			—			—			—			531
Depreciation	579			2,069			5,171			—			7,819
Amortization of intangible assets	—			246			27			—			273
Deferred financing cost amortization	875			—			24			—			899
Foreign exchange gain on revaluation of debt	625			—			2			—			627
Deferred taxes	(321		)	—			331			—			10
Loss on disposition of property and equipment	—			(37		)	(12		)	—			(49		)
Loss on extinguishment of debt	25			—			—			—			25
Provision for doubtful accounts	—			(15		)	56			—			41
Undistributed equity in earnings of subsidiaries	(8,714		)	(4,381		)	—			13,095			—
Change in assets and liabilities which (used) provided cash:
Accounts receivable	(8		)	(2,981		)	(1,164		)	—			(4,153		)
Inventories	—			62			(1,198		)	—			(1,136		)
Prepaid expenses	(226		)	289			720			—			783
Other current assets	—			(117		)	(1,668		)	—			(1,785		)
Accounts payable and accrued expenses	(14,965		)	443			7,188			—			(7,334		)
Deferred and other long-term liabilities	(47		)	169			(1,062		)	—			(940		)
Intercompany loans	17,832			(9,010		)	(8,822		)	—			—
Net cash (used in) provided by operating activities	(6,648		)	2,959			4,587			(8,121		)	(7,223		)
Investing activities
Capital expenditures	(158		)	(167		)	(4,960		)	—			(5,285		)
Intercompany property and equipment transfers, net	—			29			(29		)	—			—
Proceeds from disposals of property and equipment	—			211			5			—			216
Net cash (used in) provided by investing activities	(158		)	73			(4,984		)	—			(5,069		)
Financing activities
Proceeds from borrowings	36,253			—			4,223			—			40,476
Principal payments on debt	(25,730		)	—			(3,963		)	—			(29,693		)
Dividends paid	—			(4,263		)	(3,858		)	8,121			—
Payment of obligations under capital leases	(656		)	(721		)	(143		)	—			(1,520		)
Payment of financing fees	(187		)	—			17			—			(170		)
Intercompany loans	(2,186		)	1,739			447			—			—
Net cash provided by (used in) financing activities	7,494			(3,245		)	(3,277		)	8,121			9,093
Effect of exchange rate changes on cash flows	—			—			529			—			529
Net increase (decrease) in cash	688			(213		)	(3,145		)	—			(2,670		)
Cash and cash equivalents at beginning of period	$	1,368		$	279		$	11,161		$	—		$	12,808
Cash and cash equivalents at end of period	$	2,056		$	66		$	8,016		$	—		$	10,138

Xerium Technologies, Inc.

Consolidating Statement of Cash Flows (Unaudited)

For the three months ended March 31, 2016

(Dollars in Thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The  Company
Operating activities
Net (loss) income	$	(1,445	)	$	12,504		$	7,643		$	(20,147	)	$	(1,445	)
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Stock-based compensation	603			—			(11		)	—			592
Depreciation	555			2,053			5,292			—			7,900
Amortization of intangible assets	—			69			25			—			94
Deferred financing cost amortization	732			—			24			—			756
Foreign exchange gain on revaluation of debt	1,120			—			—			—			1,120
Deferred taxes	173			—			(18		)	—			155
Asset impairment	—			—			—			—			—
Loss on disposition of property and equipment	—			—			17			—			17
Provision for doubtful accounts	—			—			(72		)	—			(72		)
Undistributed equity in earnings of subsidiaries	(9,102		)	(7,804		)	—			16,906			—
Change in assets and liabilities which (used) provided cash:
Accounts receivable	(555		)	842			(2,417		)	—			(2,130		)
Inventories	—			1,229			907			96			2,232
Prepaid expenses	(872		)	170			81			—			(621		)
Other current assets	—			167			857			—			1,024
Accounts payable and accrued expenses	6,459			(932		)	(838		)	—			4,689
Deferred and other long-term liabilities	3			379			410			—			792
Intercompany loans	1,925			(4,721		)	2,796			—			—
Net cash (used in) provided by operating activities	(404		)	3,956			14,696			(3,145		)	15,103
Investing activities
Capital expenditures	(117		)	(938		)	(2,495		)	—			(3,550		)
Intercompany property and equipment transfers, net	(2		)	2			—			—			—
Proceeds from disposals of property and equipment	—			5			15			—			20
Net cash (used in) investing activities	(119		)	(931		)	(2,480		)	—			(3,530		)
Financing activities
Proceeds from borrowings	10,992			—			2,321			—			13,313
Principal payments on debt	(11,547		)	—			(4,892		)	—			(16,439		)
Dividends paid	—			(3,145		)	—			3,145			—
Payments of obligations under capitalized leases	(67		)	(517		)	(89		)	—			(673		)
Payment of deferred financing fees	(116		)	—			18			—			(98		)
Intercompany loans	1,247			637			(1,884		)	—			—
Employee taxes paid on equity awards	(1,029		)	—			—			—			(1,029		)
Net cash (used in) provided by financing activities	(520		)	(3,025		)	(4,526		)	3,145			(4,926		)
Effect of exchange rate changes on cash flows	—			—			(1,036		)	—			(1,036		)
Net (decrease) increase in cash	(1,043		)	—			6,654			—			5,611
Cash and cash equivalents at beginning of period	3,105			(2		)	6,736			—			9,839
Cash and cash equivalents at end of period	$	2,062		$	(2	)	$	13,390		$	—		$	15,450

XML

Description of Business and Significant Accounting Policies - Components of Inventories (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Raw materials	$ 14,706	$ 14,089
Work in process	27,205	25,879
Finished goods (includes consigned inventory of $6,985 at March 31, 2017 and $6,673 at December 31, 2016)	38,866	37,155
Inventory allowances	(6,780)	(6,301)
Inventories, net	73,997	70,822
Consigned inventory	$ 6,985	$ 6,673

XML

Description of Business and Significant Accounting Policies - Changes In Warranty Liability (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Warranties, Increase (Decrease)
Beginning Balance	$ 2,203	$ 2,175
Charged to Cost of Sales	235	477
Effect of Foreign Currency Translation	30	34
Deduction from Reserves	(179)	(189)
Ending Balance	$ 2,289	$ 2,497

XML

Description of Business and Significant Accounting Policies - Net (Loss) Income (Loss) Per Common Share (Detail) - shares	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Weighted-average common shares outstanding–basic (in shares)	16,153,113	15,789,991
Dilutive effect of stock-based compensation awards outstanding (in shares)	0	0
Weighted-average common shares outstanding–diluted (in shares)	16,153,113	15,789,991
Anti-dilutive securities (in shares)	902,988	738,294

XML

Description of Business and Significant Accounting Policies - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Restructuring Cost and Reserve [Line Items]
Employee taxes paid on equity awards	$ 0	$ 1,029,000
Restructuring Expense
Restructuring Cost and Reserve [Line Items]
Asset impairment	$ 0	0
Accounting Standards Update 2016-09 | New Accounting Pronouncement, Early Adoption, Effect
Restructuring Cost and Reserve [Line Items]
Employee taxes paid on equity awards		$ 1,000,000

XML

Business Acquisitions (Details) - USD ($) $ in Thousands	May 04, 2016	Mar. 31, 2017	Dec. 31, 2016
Business Acquisition [Line Items]
Goodwill		$ 58,064	$ 56,783
J.J. Plank Corporation
Business Acquisition [Line Items]
Purchase price	$ 17,600
Net assets acquired excluding goodwill	15,700
Goodwill	$ 1,900

XML

Derivatives and Hedging - Narrative (Details)	Mar. 31, 2017 derivative_instrument
Designated as Hedging Instrument | Interest Rate Swap
Derivative [Line Items]
Number of derivative instruments	0

XML

Derivatives and Hedging - Schedule of Derivative Instruments (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Derivative [Line Items]
Change in fair value of derivative included in foreign exchange (loss) gain	$ 145	$ 1,170
Not Designated as Hedging Instrument | Foreign Exchange Forward Contracts
Derivative [Line Items]
Fair value of derivative (liability)	$ (79)		$ (1,461)

XML

Derivatives and Hedging - Notional Amounts of Foreign Exchange Forward Contracts (Detail) - Not Designated as Hedging Instrument - Foreign Exchange Forward Contracts $ in Thousands	Mar. 31, 2017 USD ($)
Notional Sold
Derivative [Line Items]
Non-designated hedges of foreign exchange risk	$ 0
Notional Purchased
Derivative [Line Items]
Non-designated hedges of foreign exchange risk	$ (987)

XML

Long term Debt - Schedule of Long Term Debt (Detail) - USD ($) $ in Thousands		3 Months Ended	12 Months Ended
	Aug. 09, 2016	Mar. 31, 2017	Dec. 31, 2016	May 17, 2013
Debt Instrument [Line Items]
Long-term debt		$ 499,800
Notes payable		7,596	$ 7,328
Total debt (excluding long-term capital leases and deferred finance fees)		516,779	505,287
Less deferred financing costs and debt discount		(15,799)	(16,436)
Less current maturities of long term debt and notes payable		(16,999)	(15,928)
Total long term debt		483,981	472,923
Other debt
Debt Instrument [Line Items]
Long-term debt		$ 21,593	$ 10,448
Notes Payable
Debt Instrument [Line Items]
Debt instrument variable interest rate (percent)		2.05%	2.05%
Rollover option period (years)		1 year	1 year
Notes Payable | Notes payable, working capital loan, variable interest rate at 2.05%. Matures June 30, 2017, with one-year rollover option.
Debt Instrument [Line Items]
Notes payable		$ 7,596	$ 7,328
Senior Secured Term Loan Facility | Notes (Secured), payable semi-annually–U.S. Dollar denominated interest rate fixed at 9.50%. Sold at a price equal to 98.54% of their face value. Matures August of 2021.
Debt Instrument [Line Items]
Long-term debt		$ 480,000	$ 480,000
Debt instrument interest rate (percent)	9.50%	9.50%	9.50%
Redemption price (percent)	98.54%	98.54%	98.54%
Senior Secured Term Loan Facility | Senior secured term loan facility, payable quarterly, U.S. Dollar denominated–LIBOR (minimum 1.25%) plus 5.0% (6.25%) net of $0.6 million discount. Matures May of 2019.
Debt Instrument [Line Items]
Debt discount				$ 1,000
Senior Notes (Unsecured) | Senior Notes (Unsecured), payable semi-annually–U.S. Dollar denominated interest rate fixed at 8.875%. Matures June of 2018.
Debt Instrument [Line Items]
Redemption price (percent)		102.219%
Debt instrument fixed interest rate (percent)		8.875%
Capital Lease Obligations | Fixed asset loan contract, variable interest rate of 5.78%. Matures June of 2020.
Debt Instrument [Line Items]
Fixed asset loan		$ 7,590	$ 7,511
Debt instrument interest rate (percent)		5.78%	5.78%

XML

Long term Debt - Additional Information (Detail)			3 Months Ended	12 Months Ended
	Aug. 09, 2016 USD ($)	Jul. 17, 2015 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Aug. 18, 2016 USD ($)	Jul. 17, 2015 CNY (¥)	Mar. 03, 2014 USD ($)	May 17, 2013 USD ($)	May 26, 2011 USD ($)
Debt Instrument [Line Items]
Carrying value of long-term debt			$ 499,800,000
Fair value of long-term debt			510,000,000
Liabilities under capital leases			$ 18,216,000	$ 19,236,000
Senior secured term loan facility, payable quarterly, U.S. Dollar denominated–LIBOR (minimum 1.25%) plus 5.0% (6.25%) net of $0.6 million discount. Matures May of 2019. | Secured Debt
Debt Instrument [Line Items]
Debt instrument, face amount					$ 230,000,000			$ 200,000,000.0
Debt discount								1,000,000
Senior Notes (Unsecured), payable semi-annually–U.S. Dollar denominated interest rate fixed at 8.875%. Matures June of 2018. | Senior Notes (Unsecured)
Debt Instrument [Line Items]
Debt instrument, face amount									$ 240,000,000
Redemption price (percent)			102.219%
Debt instrument fixed interest rate (percent)			8.875%
ABL Secured Facility | Revolving Credit Facility
Debt Instrument [Line Items]
Remaining borrowing capacity			$ 25,300,000
Line of credit capacity			55,000,000.0
Amount outstanding			39,400,000
Current borrowing capacity							$ 55,000,000	$ 40,000,000
ABL Secured Facility | Letter of Credit
Debt Instrument [Line Items]
Amount outstanding			14,100,000
Other Small Lines of Credit | Line of Credit
Debt Instrument [Line Items]
Remaining borrowing capacity			$ 3,200,000
Xerium China Loan Agreement | Secured Debt
Debt Instrument [Line Items]
Debt instrument, face amount		$ 9,400,000.0				¥ 58,500,000.0
Interest rate adjustment period (months)		12 months
Frequency of principal payment (months)		6 months
Notes (Secured), payable semi-annually–U.S. Dollar denominated interest rate fixed at 9.50%. Sold at a price equal to 98.54% of their face value. Matures August of 2021. | Secured Debt
Debt Instrument [Line Items]
Debt instrument, face amount	$ 480,000,000
Debt instrument interest rate (percent)	9.50%		9.50%	9.50%
Redemption price (percent)	98.54%		98.54%	98.54%
Carrying value of long-term debt			$ 480,000,000	$ 480,000,000
Prime Rate | ABL Secured Facility | Revolving Credit Facility
Debt Instrument [Line Items]
Debt instrument interest rate (percent)			4.75%
Debt instrument, basis spread on variable rate (percent)			0.75%
London Interbank Offered Rate (LIBOR) | ABL Secured Facility | Revolving Credit Facility
Debt Instrument [Line Items]
Debt instrument interest rate (percent)			2.78%
Debt instrument, basis spread on variable rate (percent)			1.75%
Benchmark Rate | Xerium China Loan Agreement | Secured Debt
Debt Instrument [Line Items]
Interest rate during period (percent)			5.80%

XML

Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Income Taxes [Line Items]
Provision for income taxes	$ 2,681	$ 2,665
Net earnings required to recognize deferred tax asset, minimum	40,000
Net earnings required to recognize deferred tax asset, maximum	130,000
Gross unrecognized tax benefit	9,700
Increase in unrecognized tax benefits	400
Unrecognized tax benefits related to income tax matters and income tax expense	$ 400
Minimum
Income Taxes [Line Items]
Statutory income tax rate in foreign countries (percent)	15.00%
Maximum
Income Taxes [Line Items]
Statutory income tax rate in foreign countries (percent)	35.36%

XML

Pensions, Other Post-retirement and Post-employment Benefits - Components of Net Periodic Benefit Cost (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Pensions, Other Post-Retirement And Post-Employment Benefits [Abstract]
Service cost	$ 376	$ 405
Interest cost	1,267	1,485
Expected return on plan assets	(1,496)	(1,548)
Amortization of net loss	590	558
Net periodic benefit cost	$ 737	$ 900

XML

Comprehensive Income and Accumulated Other Comprehensive Loss - Components of Comprehensive Loss, Net of Tax (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Comprehensive Income Loss and Accumulated Other Comprehensive Income (Loss) [Abstract]
Other comprehensive loss, tax (benefit) expense	$ 109	$ 67
Net loss	(2,834)	(1,445)
Foreign currency translation adjustments	9,765	8,460
Pension liability changes under Topic 715	(125)	358
Comprehensive income	$ 6,806	$ 7,373

XML

Comprehensive Income and Accumulated Other Comprehensive Loss - Components of Accumulated Other Comprehensive Loss (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2017 USD ($)
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive loss, tax benefit	$ 5,900
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning	(146,905)
Amounts reclassified from other comprehensive loss:
Balance at end	(139,568)
Foreign Currency Translation Adjustment
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning	(95,232)
Other comprehensive income before reclassifications	9,765
Amounts reclassified from other comprehensive loss:
Amortization of actuarial losses	0
Net current period other comprehensive (loss) income	9,765
Balance at end	(85,467)
Pension Liability Changes Under Topic 715
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning	(39,446)
Other comprehensive income before reclassifications	(715)
Amounts reclassified from other comprehensive loss:
Amortization of actuarial losses	590
Net current period other comprehensive (loss) income	(125)
Balance at end	(39,571)
Accumulated Other Comprehensive (Loss) Income
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning	(134,678)
Other comprehensive income before reclassifications	9,050
Amounts reclassified from other comprehensive loss:
Amortization of actuarial losses	590
Net current period other comprehensive (loss) income	9,640
Balance at end	$ (125,038)

XML

Restructuring Expense - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Restructuring Cost and Reserve [Line Items]
Restructuring	$ 3,164	$ 2,832
Headcount Reductions
Restructuring Cost and Reserve [Line Items]
Restructuring	2,100
Clothing Facility | Middletown VA Facility | Facility Closing
Restructuring Cost and Reserve [Line Items]
Restructuring	$ 700

XML

Restructuring Expense - Restructuring Programs (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Restructuring Reserve
Beginning Balance	$ 4,197	$ 6,211
Charges	3,164	2,832
Currency Effects	152	125
Cash Payments	(2,041)	(3,675)
Ending Balance	5,472	5,493
Severance and other benefits
Restructuring Reserve
Beginning Balance	3,805	5,308
Charges	2,258	1,390
Currency Effects	138	62
Cash Payments	(1,061)	(1,804)
Ending Balance	5,140	4,956
Facility costs and other
Restructuring Reserve
Beginning Balance	392	903
Charges	906	1,442
Currency Effects	14	63
Cash Payments	(980)	(1,871)
Ending Balance	$ 332	$ 537

XML

Restructuring Expense - Restructuring and Impairment Expense by Segment (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Restructuring Cost and Reserve [Line Items]
Restructuring	$ 3,164	$ 2,832
Operating Segments | Clothing
Restructuring Cost and Reserve [Line Items]
Restructuring	2,476	1,452
Operating Segments | Roll Covers
Restructuring Cost and Reserve [Line Items]
Restructuring	627	891
Corporate
Restructuring Cost and Reserve [Line Items]
Restructuring	$ 61	$ 489

XML

Business Segment Information - Additional Information (Details)	3 Months Ended
	Mar. 31, 2017 segment
Segment Reporting [Abstract]
Number of reportable segments	2

XML

Business Segment Information - Summarized Financial Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Segment Reporting Information [Line Items]
Net Sales	$ 119,866	$ 114,965
Segment Earnings (Loss)	26,573	23,935
Operating Segments | Clothing
Segment Reporting Information [Line Items]
Net Sales	72,495	71,337
Segment Earnings (Loss)	20,807	18,635
Operating Segments | Roll Covers
Segment Reporting Information [Line Items]
Net Sales	47,371	43,628
Segment Earnings (Loss)	9,795	9,198
Corporate
Segment Reporting Information [Line Items]
Net Sales	0	0
Segment Earnings (Loss)	$ (4,029)	$ (3,898)

XML

Business Segment Information - Reconciliation of Segment Earnings (Loss) To Income Before Provision For Income Taxes (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Segment Earnings (Loss):
Segment Earnings (Loss)	$ 26,573	$ 23,935
Stock-based compensation	(531)	(592)
Interest expense, net	(13,263)	(10,341)
Depreciation and amortization	(8,093)	(7,994)
Loss on extinguishment of debt	(25)	0
Restructuring expense	(3,164)	(2,832)
Other non-recurring expense	(45)	(103)
Plant startup costs	(480)	(877)
Foreign exchange (loss) gain	(1,125)	24
(Loss) income before provision for income taxes	(153)	1,220
Operating Segments | Clothing
Segment Earnings (Loss):
Segment Earnings (Loss)	20,807	18,635
Restructuring expense	(2,476)	(1,452)
Operating Segments | Roll Covers
Segment Earnings (Loss):
Segment Earnings (Loss)	9,795	9,198
Restructuring expense	(627)	(891)
Corporate
Segment Earnings (Loss):
Segment Earnings (Loss)	(4,029)	(3,898)
Restructuring expense	$ (61)	$ (489)

XML

Stock-Based Compensation and Stockholders' Deficit - Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock compensation expense	$ 531	$ 592
RSU, Options and DSU Awards
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock compensation expense	$ 531	$ 592

XML

Stock-Based Compensation and Stockholders' Deficit - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
2015 - 2014 LTIP | Market-Based Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of award payout (as a percent)		0.00%
Reduction of stock based compensation		$ 200
2011 DSU Plan | Deferred Stock Unit (DSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual retainer per director	$ 132
Annual retainer payable in shares (as a percent)	54.00%
Annual retainer payable in shares or cash (as a percent)	46.00%
Shares issued (in shares)	17,787
2011 DSU Plan | Deferred Stock Unit (DSUs) | Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares issued (in shares)	15,003

XML

Supplemental Guarantor Financial Information - Consolidating Balance Sheet-(Unaudited) (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016	Mar. 31, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 10,138	$ 12,808	$ 15,450	$ 9,839
Accounts receivable, net	74,666	68,667
Intercompany receivables	0	0
Inventories, net	73,997	70,822
Prepaid expenses	5,658	6,325
Other current assets	17,733	15,784
Total current assets	182,192	174,406
Property and equipment, net	288,009	284,101
Investments	0	0
Goodwill	58,064	56,783
Intangible assets	7,694	7,330
Non-current deferred tax asset	12,810	10,737
Other assets	8,350	8,556
Total assets	557,119	541,913
Current liabilities:
Notes payable	7,596	7,328
Accounts payable	42,261	36,158
Accrued expenses	52,549	64,532
Current maturities of long-term debt	9,403	8,600
Total current liabilities	111,809	116,618
Long-term debt, net of current maturities	483,981	472,923
Liabilities under capital leases	18,216	19,236
Non-current deferred tax liability	8,442	7,157
Pension, other post-retirement and post-employment obligations	65,183	65,026
Other long-term liabilities	9,056	7,858
Intercompany loans	0	0
Total stockholders’ (deficit) equity	(139,568)	(146,905)
Total liabilities and stockholders’ deficit	557,119	541,913
Other Eliminations
Current assets:
Cash and cash equivalents	0	0	0	0
Accounts receivable, net	0	0
Intercompany receivables	0	0
Inventories, net	(1,111)	(1,111)
Prepaid expenses	0	0
Other current assets	0	0
Total current assets	(1,111)	(1,111)
Property and equipment, net	0	0
Investments	(1,109,666)	(1,081,405)
Goodwill	0	0
Intangible assets	0	0
Non-current deferred tax asset	0	0
Other assets	0	0
Total assets	(1,110,777)	(1,082,516)
Current liabilities:
Notes payable	0	0
Accounts payable	0	0
Accrued expenses	0	0
Current maturities of long-term debt	0	0
Total current liabilities	0	0
Long-term debt, net of current maturities	0	0
Liabilities under capital leases	0	0
Non-current deferred tax liability	0	0
Pension, other post-retirement and post-employment obligations	0	0
Other long-term liabilities	0	0
Intercompany loans	0	0
Total stockholders’ (deficit) equity	(1,110,777)	(1,082,516)
Total liabilities and stockholders’ deficit	(1,110,777)	(1,082,516)
Parent
Current assets:
Cash and cash equivalents	2,056	1,368	2,062	3,105
Accounts receivable, net	78	70
Intercompany receivables	(428,202)	(410,370)
Inventories, net	0	0
Prepaid expenses	771	545
Other current assets	0	0
Total current assets	(425,297)	(408,387)
Property and equipment, net	8,069	8,393
Investments	878,223	869,508
Goodwill	0	0
Intangible assets	0	0
Non-current deferred tax asset	0	0
Other assets	0	0
Total assets	460,995	469,514
Current liabilities:
Notes payable	0	0
Accounts payable	2,026	2,279
Accrued expenses	11,894	26,495
Current maturities of long-term debt	2,428	2,342
Total current liabilities	16,348	31,116
Long-term debt, net of current maturities	475,627	464,494
Liabilities under capital leases	5,281	5,830
Non-current deferred tax liability	1,301	1,270
Pension, other post-retirement and post-employment obligations	20,258	20,923
Other long-term liabilities	0	0
Intercompany loans	63,376	63,923
Total stockholders’ (deficit) equity	(121,196)	(118,042)
Total liabilities and stockholders’ deficit	460,995	469,514
Total Guarantors
Current assets:
Cash and cash equivalents	66	279	(2)	(2)
Accounts receivable, net	21,783	18,787
Intercompany receivables	428,150	419,192
Inventories, net	17,295	17,356
Prepaid expenses	105	395
Other current assets	3,896	3,842
Total current assets	471,295	459,851
Property and equipment, net	66,229	67,794
Investments	231,443	211,897
Goodwill	19,614	19,614
Intangible assets	7,019	7,265
Non-current deferred tax asset	0	0
Other assets	(121)	0
Total assets	795,479	766,421
Current liabilities:
Notes payable	0	0
Accounts payable	12,048	10,307
Accrued expenses	7,363	8,659
Current maturities of long-term debt	2,606	2,320
Total current liabilities	22,017	21,286
Long-term debt, net of current maturities	0	0
Liabilities under capital leases	4,093	4,627
Non-current deferred tax liability	0	0
Pension, other post-retirement and post-employment obligations	811	763
Other long-term liabilities	1,250	1,250
Intercompany loans	(99,159)	(97,953)
Total stockholders’ (deficit) equity	866,467	836,448
Total liabilities and stockholders’ deficit	795,479	766,421
Total Non Guarantors
Current assets:
Cash and cash equivalents	8,016	11,161	$ 13,390	$ 6,736
Accounts receivable, net	52,805	49,810
Intercompany receivables	52	(8,822)
Inventories, net	57,813	54,577
Prepaid expenses	4,782	5,385
Other current assets	13,837	11,942
Total current assets	137,305	124,053
Property and equipment, net	213,711	207,914
Investments	0	0
Goodwill	38,450	37,169
Intangible assets	675	65
Non-current deferred tax asset	12,810	10,737
Other assets	8,471	8,556
Total assets	411,422	388,494
Current liabilities:
Notes payable	7,596	7,328
Accounts payable	28,187	23,572
Accrued expenses	33,292	29,378
Current maturities of long-term debt	4,369	3,938
Total current liabilities	73,444	64,216
Long-term debt, net of current maturities	8,354	8,429
Liabilities under capital leases	8,842	8,779
Non-current deferred tax liability	7,141	5,887
Pension, other post-retirement and post-employment obligations	44,114	43,340
Other long-term liabilities	7,806	6,608
Intercompany loans	35,783	34,030
Total stockholders’ (deficit) equity	225,938	217,205
Total liabilities and stockholders’ deficit	$ 411,422	$ 388,494

XML

Supplemental Guarantor Financial Information - Consolidating Statement of Operations and Comprehensive (Loss) Income (Unaudited) (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Condensed Income Statements, Captions [Line Items]
Net Sales	$ 119,866	$ 114,965
Costs and expenses:
Cost of products sold	72,370	71,428
Selling	15,674	15,721
General and administrative	12,654	11,507
Research and development	1,744	1,940
Restructuring	3,164	2,832
Costs and expenses	105,606	103,428
(Loss) income from operations	14,260	11,537
Interest (expense) income, net	(13,263)	(10,341)
Foreign exchange gain (loss)	(1,125)	24
Equity in subsidiaries income	0	0
Loss on extinguishment of debt	25	0
Dividend income	0	0
(Loss) income before provision for income taxes	(153)	1,220
Provision for income taxes	(2,681)	(2,665)
Net loss	(2,834)	(1,445)
Comprehensive income	6,806	7,373
Other Eliminations
Condensed Income Statements, Captions [Line Items]
Net Sales	(8,163)	(7,223)
Costs and expenses:
Cost of products sold	(8,163)	(7,127)
Selling	0	0
General and administrative	0	0
Research and development	0	0
Restructuring	0	0
Costs and expenses	(8,163)	(7,127)
(Loss) income from operations	0	(96)
Interest (expense) income, net	0	0
Foreign exchange gain (loss)	0	0
Equity in subsidiaries income	(13,095)	(16,906)
Loss on extinguishment of debt	0
Dividend income	(8,121)	(3,145)
(Loss) income before provision for income taxes	(21,216)	(20,147)
Provision for income taxes	0	0
Net loss	(21,216)	(20,147)
Comprehensive income	(21,216)	(20,147)
Parent
Condensed Income Statements, Captions [Line Items]
Net Sales	0	0
Costs and expenses:
Cost of products sold	0	0
Selling	233	305
General and administrative	2,702	2,691
Research and development	299	380
Restructuring	61	428
Costs and expenses	3,295	3,804
(Loss) income from operations	(3,295)	(3,804)
Interest (expense) income, net	(12,338)	(9,714)
Foreign exchange gain (loss)	(472)	17
Equity in subsidiaries income	8,714	9,102
Loss on extinguishment of debt	25
Dividend income	4,263	3,145
(Loss) income before provision for income taxes	(3,153)	(1,254)
Provision for income taxes	319	(191)
Net loss	(2,834)	(1,445)
Comprehensive income	(3,684)	(606)
Total Guarantors
Condensed Income Statements, Captions [Line Items]
Net Sales	46,945	40,588
Costs and expenses:
Cost of products sold	30,948	28,296
Selling	5,044	5,011
General and administrative	974	923
Research and development	931	1,091
Restructuring	642	1,028
Costs and expenses	38,539	36,349
(Loss) income from operations	8,406	4,239
Interest (expense) income, net	(347)	517
Foreign exchange gain (loss)	65	(54)
Equity in subsidiaries income	4,381	7,804
Loss on extinguishment of debt	0
Dividend income	3,858	0
(Loss) income before provision for income taxes	16,363	12,506
Provision for income taxes	(141)	(2)
Net loss	16,222	12,504
Comprehensive income	16,230	12,494
Total Non Guarantors
Condensed Income Statements, Captions [Line Items]
Net Sales	81,084	81,600
Costs and expenses:
Cost of products sold	49,585	50,259
Selling	10,397	10,405
General and administrative	8,978	7,893
Research and development	514	469
Restructuring	2,461	1,376
Costs and expenses	71,935	70,402
(Loss) income from operations	9,149	11,198
Interest (expense) income, net	(578)	(1,144)
Foreign exchange gain (loss)	(718)	61
Equity in subsidiaries income	0	0
Loss on extinguishment of debt	0
Dividend income	0	0
(Loss) income before provision for income taxes	7,853	10,115
Provision for income taxes	(2,859)	(2,472)
Net loss	4,994	7,643
Comprehensive income	$ 15,476	$ 15,632

XML

Supplemental Guarantor Financial Information - Consolidating Statement of Cash Flows (Unaudited) (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Operating activities
Net loss	$ (2,834)	$ (1,445)
Adjustments to reconcile net (loss) income to net cash(used in) provided by operating activities:
Stock-based compensation	531	592
Depreciation	7,819	7,900
Amortization of intangible assets	273	94
Deferred financing cost amortization	899	756
Foreign exchange gain on revaluation of debt	627	1,120
Deferred taxes	10	155
Asset impairment		0
(Gain) loss on disposition of property and equipment	(49)	17
Loss on extinguishment of debt	25	0
Provision (benefit) for doubtful accounts	41	(72)
Undistributed equity in earnings of subsidiaries	0	0
Change in assets and liabilities which (used) provided cash:
Accounts receivable	(4,153)	(2,130)
Inventories	(1,136)	2,232
Prepaid expenses	783	(621)
Other current assets	(1,785)	1,024
Accounts payable and accrued expenses	(7,334)	4,689
Deferred and other long-term liabilities	(940)	792
Intercompany loans	0	0
Net cash (used in) provided by operating activities	(7,223)	15,103
Investing activities
Capital expenditures	(5,285)	(3,550)
Intercompany property and equipment transfers, net	0	0
Proceeds from disposals of property and equipment	216	20
Net cash used in investing activities	(5,069)	(3,530)
Financing activities
Proceeds from borrowings	40,476	13,313
Principal payments on debt	(29,693)	(16,439)
Dividends paid	0	0
Payment of obligations under capital leases	(1,520)	(673)
Payment of financing fees	(170)	(98)
Intercompany loans	0	0
Employee taxes paid on equity awards	0	(1,029)
Net cash provided by (used in) financing activities	9,093	(4,926)
Effect of exchange rate changes on cash flows	529	(1,036)
Net increase (decrease) in cash	(2,670)	5,611
Cash and cash equivalents at beginning of period	12,808	9,839
Cash and cash equivalents at end of period	10,138	15,450
Other Eliminations
Operating activities
Net loss	(21,216)	(20,147)
Adjustments to reconcile net (loss) income to net cash(used in) provided by operating activities:
Stock-based compensation	0	0
Depreciation	0	0
Amortization of intangible assets	0	0
Deferred financing cost amortization	0	0
Foreign exchange gain on revaluation of debt	0	0
Deferred taxes	0	0
Asset impairment		0
(Gain) loss on disposition of property and equipment	0	0
Loss on extinguishment of debt	0
Provision (benefit) for doubtful accounts	0	0
Undistributed equity in earnings of subsidiaries	13,095	16,906
Change in assets and liabilities which (used) provided cash:
Accounts receivable	0	0
Inventories	0	96
Prepaid expenses	0	0
Other current assets	0	0
Accounts payable and accrued expenses	0	0
Deferred and other long-term liabilities	0	0
Intercompany loans	0	0
Net cash (used in) provided by operating activities	(8,121)	(3,145)
Investing activities
Capital expenditures	0	0
Intercompany property and equipment transfers, net	0	0
Proceeds from disposals of property and equipment	0	0
Net cash used in investing activities	0	0
Financing activities
Proceeds from borrowings	0	0
Principal payments on debt	0	0
Dividends paid	8,121	3,145
Payment of obligations under capital leases	0	0
Payment of financing fees	0	0
Intercompany loans	0	0
Employee taxes paid on equity awards		0
Net cash provided by (used in) financing activities	8,121	3,145
Effect of exchange rate changes on cash flows	0	0
Net increase (decrease) in cash	0	0
Cash and cash equivalents at beginning of period	0	0
Cash and cash equivalents at end of period	0	0
Parent
Operating activities
Net loss	(2,834)	(1,445)
Adjustments to reconcile net (loss) income to net cash(used in) provided by operating activities:
Stock-based compensation	531	603
Depreciation	579	555
Amortization of intangible assets	0	0
Deferred financing cost amortization	875	732
Foreign exchange gain on revaluation of debt	625	1,120
Deferred taxes	(321)	173
Asset impairment		0
(Gain) loss on disposition of property and equipment	0	0
Loss on extinguishment of debt	25
Provision (benefit) for doubtful accounts	0	0
Undistributed equity in earnings of subsidiaries	(8,714)	(9,102)
Change in assets and liabilities which (used) provided cash:
Accounts receivable	(8)	(555)
Inventories	0	0
Prepaid expenses	(226)	(872)
Other current assets	0	0
Accounts payable and accrued expenses	(14,965)	6,459
Deferred and other long-term liabilities	(47)	3
Intercompany loans	17,832	1,925
Net cash (used in) provided by operating activities	(6,648)	(404)
Investing activities
Capital expenditures	(158)	(117)
Intercompany property and equipment transfers, net	0	(2)
Proceeds from disposals of property and equipment	0	0
Net cash used in investing activities	(158)	(119)
Financing activities
Proceeds from borrowings	36,253	10,992
Principal payments on debt	(25,730)	(11,547)
Dividends paid	0	0
Payment of obligations under capital leases	(656)	(67)
Payment of financing fees	(187)	(116)
Intercompany loans	(2,186)	1,247
Employee taxes paid on equity awards		(1,029)
Net cash provided by (used in) financing activities	7,494	(520)
Effect of exchange rate changes on cash flows	0	0
Net increase (decrease) in cash	688	(1,043)
Cash and cash equivalents at beginning of period	1,368	3,105
Cash and cash equivalents at end of period	2,056	2,062
Total Guarantors
Operating activities
Net loss	16,222	12,504
Adjustments to reconcile net (loss) income to net cash(used in) provided by operating activities:
Stock-based compensation	0	0
Depreciation	2,069	2,053
Amortization of intangible assets	246	69
Deferred financing cost amortization	0	0
Foreign exchange gain on revaluation of debt	0	0
Deferred taxes	0	0
Asset impairment		0
(Gain) loss on disposition of property and equipment	(37)	0
Loss on extinguishment of debt	0
Provision (benefit) for doubtful accounts	(15)	0
Undistributed equity in earnings of subsidiaries	(4,381)	(7,804)
Change in assets and liabilities which (used) provided cash:
Accounts receivable	(2,981)	842
Inventories	62	1,229
Prepaid expenses	289	170
Other current assets	(117)	167
Accounts payable and accrued expenses	443	(932)
Deferred and other long-term liabilities	169	379
Intercompany loans	(9,010)	(4,721)
Net cash (used in) provided by operating activities	2,959	3,956
Investing activities
Capital expenditures	(167)	(938)
Intercompany property and equipment transfers, net	29	2
Proceeds from disposals of property and equipment	211	5
Net cash used in investing activities	73	(931)
Financing activities
Proceeds from borrowings	0	0
Principal payments on debt	0	0
Dividends paid	(4,263)	(3,145)
Payment of obligations under capital leases	(721)	(517)
Payment of financing fees	0	0
Intercompany loans	1,739	637
Employee taxes paid on equity awards		0
Net cash provided by (used in) financing activities	(3,245)	(3,025)
Effect of exchange rate changes on cash flows	0	0
Net increase (decrease) in cash	(213)	0
Cash and cash equivalents at beginning of period	279	(2)
Cash and cash equivalents at end of period	66	(2)
Total Non Guarantors
Operating activities
Net loss	4,994	7,643
Adjustments to reconcile net (loss) income to net cash(used in) provided by operating activities:
Stock-based compensation	0	(11)
Depreciation	5,171	5,292
Amortization of intangible assets	27	25
Deferred financing cost amortization	24	24
Foreign exchange gain on revaluation of debt	2	0
Deferred taxes	331	(18)
Asset impairment		0
(Gain) loss on disposition of property and equipment	(12)	17
Loss on extinguishment of debt	0
Provision (benefit) for doubtful accounts	56	(72)
Undistributed equity in earnings of subsidiaries	0	0
Change in assets and liabilities which (used) provided cash:
Accounts receivable	(1,164)	(2,417)
Inventories	(1,198)	907
Prepaid expenses	720	81
Other current assets	(1,668)	857
Accounts payable and accrued expenses	7,188	(838)
Deferred and other long-term liabilities	(1,062)	410
Intercompany loans	(8,822)	2,796
Net cash (used in) provided by operating activities	4,587	14,696
Investing activities
Capital expenditures	(4,960)	(2,495)
Intercompany property and equipment transfers, net	(29)	0
Proceeds from disposals of property and equipment	5	15
Net cash used in investing activities	(4,984)	(2,480)
Financing activities
Proceeds from borrowings	4,223	2,321
Principal payments on debt	(3,963)	(4,892)
Dividends paid	(3,858)	0
Payment of obligations under capital leases	(143)	(89)
Payment of financing fees	17	18
Intercompany loans	447	(1,884)
Employee taxes paid on equity awards		0
Net cash provided by (used in) financing activities	(3,277)	(4,526)
Effect of exchange rate changes on cash flows	529	(1,036)
Net increase (decrease) in cash	(3,145)	6,654
Cash and cash equivalents at beginning of period	11,161	6,736
Cash and cash equivalents at end of period	$ 8,016	$ 13,390

XML

Subsequent Events (Details) - USD ($) $ in Thousands		3 Months Ended
	Apr. 28, 2017	Mar. 31, 2017	Mar. 31, 2016
Subsequent Event [Line Items]
Stock compensation expense		$ 531	$ 592
Director | Subsequent Event
Subsequent Event [Line Items]
Severance costs	$ 1,300
Severance payment period	18 months
Stock compensation expense	$ 1,700