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 September 30, 2012

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.)
8537 Six Forks Road Suite 300 Raleigh, North Carolina	27615
(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” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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

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 November 1, 2012 was 15,289,129.

TABLE OF CONTENTS

Part I. Financial Information
		Page
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33
Part II. Other Information
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 6.	Exhibits	34

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Xerium Technologies, Inc.

Condensed Consolidated Balance Sheets

(Dollars in thousands)

	September 30, 2012 (Unaudited)			December 31, 2011
ASSETS
Current assets:
Cash and cash equivalents	$	39,577		$	43,566
Accounts receivable, net	87,394			91,784
Inventories, net	80,036			83,317
Prepaid expenses	10,050			6,177
Other current assets	13,011			15,051
Total current assets	230,068			239,895
Property and equipment, net	312,326			335,256
Goodwill	59,096			59,120
Intangible assets	19,973			22,640
Other assets	9,314			8,810
Total assets	$	630,777		$	665,721
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	33,056		$	39,743
Accrued expenses	55,982			47,805
Notes payable	7,714			—
Current maturities of long-term debt	2,368			3,548
Total current liabilities	99,120			91,096
Long-term debt, net of current maturities	437,728			465,506
Deferred and long-term taxes	18,538			18,582
Pension, other post-retirement and post-employment obligations	80,041			81,188
Other long-term liabilities	11,894			11,654
Commitments and contingencies (Note 9)
Stockholders’ deficit
Preferred stock, $0.001 par value, 1,000,000 shares authorized; no shares outstanding as of September 30, 2012 and December 31, 2011	—			—
Common stock, $0.001 par value, 20,000,000 shares authorized; 15,289,129 and 15,145,451 shares outstanding as of September 30, 2012 and December 31, 2011, respectively	15			15
Stock warrants	13,532			13,532
Paid-in capital	412,749			411,498
Accumulated deficit	(404,756		)	(395,804		)
Accumulated other comprehensive loss	(38,084		)	(31,546		)
Total stockholders’ deficit	(16,544		)	(2,305		)
Total liabilities and stockholders’ deficit	$	630,777		$	665,721

See accompanying notes.

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Xerium Technologies, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

(Dollars in thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net sales	$	134,231		$	148,227		$	404,973		$	441,771
Costs and expenses:
Cost of products sold	85,079			94,010			258,396			275,768
Selling	18,546			19,817			57,104			59,848
General and administrative	15,650			14,002			47,509			47,560
Research and development	2,700			2,907			8,531			8,920
Restructuring and impairment	5,840			577			10,943			1,287
	127,815			131,313			382,483			393,383
Income from operations	6,416			16,914			22,490			48,388
Interest expense, net	(9,777		)	(9,873		)	(28,494		)	(29,709		)
Loss on extinguishment of debt	—			—			—			(2,926		)
Foreign exchange (loss) gain	(202		)	(289		)	157			(284		)
(Loss) income before provision for income taxes	(3,563		)	6,752			(5,847		)	15,469
Provision for income taxes	(94		)	(3,264		)	(3,105		)	(9,711		)
Net (loss) income	$	(3,657	)	$	3,488		$	(8,952	)	$	5,758
Comprehensive loss	$	(1,781	)	$	(18,375	)	$	(15,490	)	$	(4,453	)
Net (loss) income per share:
Basic	$	(0.24	)	$	0.23		$	(0.59	)	$	0.38
Diluted	$	(0.24	)	$	0.23		$	(0.59	)	$	0.38
Shares used in computing net (loss) income per share:
Basic	15,257,617			15,135,309			15,215,752			15,059,320
Diluted	15,257,617			15,144,668			15,215,752			15,068,679

See accompanying notes.

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Xerium Technologies, Inc.

Condensed Consolidated Statements of Cash Flows—(Unaudited)

(Dollars in thousands)

	Nine Months Ended September 30,
	2012			2011
Operating activities
Net (loss) income	$	(8,952	)	$	5,758
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Stock-based compensation	1,574			2,253
Depreciation	28,513			31,573
Amortization of intangibles	1,729			1,729
Curtailment/settlement loss	—			402
Deferred financing cost amortization	2,707			1,613
Unrealized foreign exchange loss on revaluation of debt	167			1,070
Deferred taxes	(383		)	2,246
Asset impairment	1,600			—
Gain on disposition of property and equipment	(656		)	(604		)
Loss on extinguishment of debt	—			2,926
Provision for doubtful accounts	463			733
Change in assets and liabilities which provided (used) cash:
Accounts receivable	2,954			(1,108		)
Inventories	2,338			(10,649		)
Prepaid expenses	(4,021		)	(1,118		)
Other current assets	1,385			(1,201		)
Accounts payable and accrued expenses	1,945			(1,679		)
Deferred and other long-term liabilities	(1,158		)	(3,108		)
Net cash provided by operating activities	30,205			30,836
Investing activities
Capital expenditures, gross	(13,222		)	(18,930		)
Proceeds from disposals of property and equipment	1,378			7,723
Restricted cash	—			13,701
Net cash (used in) provided by investing activities	(11,844		)	2,494
Financing activities
Net increase in notes payable	7,365			—
Proceeds from borrowings	—			489,629
Principal payments on debt	(27,965		)	(501,419		)
Payment of deferred financing fees	(1,782		)	(17,115		)
Net cash used in financing activities	(22,382		)	(28,905		)
Effect of exchange rate changes on cash flows	32			(169		)
Net (decrease) increase in cash	(3,989		)	4,256
Cash and cash equivalents at beginning of period	43,566			38,701
Cash and cash equivalents at end of period	$	39,577		$	42,957

See accompanying notes.

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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 manufacturer and supplier of two types of consumable products used primarily in the production of paper – clothing and roll covers. Its operations are strategically located in the major paper-making regions of the world, including North America, Europe, South America and Asia-Pacific.

Basis of Presentation

The accompanying unaudited condensed consolidated interim financial statements at September 30, 2012 and for the three and nine months ended September 30, 2012 and 2011 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. 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 consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2011 as reported on the Company's Annual Report on Form 10-K filed on March 14, 2012.

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:

	September 30, 2012		December 31, 2011
Raw materials	$	17,256	$	19,872
Work in process	23,514		26,326
Finished goods (includes consigned inventory of $9,943 in 2012 and $12,953 in 2011)	39,266		37,119
	$	80,036	$	83,317

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 nine months ended September 30, 2012, 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 September 30, 2012.

Warranties

The Company offers warranties on certain 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 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

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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 nine months ended September 30, 2012:

	Balance at December 31, 2011		Charged to Revenue or Cost of Sales		Effect of Foreign Currency Translation			Deduction from Reserves			Balance at September 30, 2012
For the nine months ended September 30, 2012	$	2,121	$	966	$	(20	)	$	(1,252	)	$	1,815

Notes Payable

In July of 2012, the Company's Austrian subsidiary entered into a $7,714 working capital loan with a local banking institution. This loan bears interest at a variable rate, which was 1.8% at September 30, 2012, and has a initial maturity date of June 30, 2013, with a twelve month roll-over option. Proceeds from this loan were used to pay down the Company's senior secured credit facility.

Net Income (Loss) Per Common Share

Net income (loss) per common share has been computed and presented pursuant to the provisions of ASC Topic 260, Earnings per Share (“Topic 260”). Net income (loss) per share is based on the weighted-average number of shares outstanding during the period. As of September 30, 2012 and 2011, the Company had outstanding restricted stock units (“RSUs”), deferred stock units (“DSUs”), warrants and options.

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

	Three Months Ended September 30,		Nine Months Ended September 30,
	2012	2011	2012	2011
Weighted-average common shares outstanding–basic	15,257,617	15,135,309	15,215,752	15,059,320
Dilutive effect of stock-based compensation awards outstanding	—	9,359	—	9,359
Weighted-average common shares outstanding–diluted	15,257,617	15,144,668	15,215,752	15,068,679

Dilutive securities aggregating approximately 1.8 million were outstanding for the three and nine months ended September 30, 2012, respectively, but were not included in the computation of diluted earnings per share because the impact of including such shares would be anti-dilutive to the earnings per share calculations.

2. Derivatives and Hedging

As required by ASC Topic 815, Derivatives and Hedging (“Topic 815”), the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability or firm commitment attributable to a particular risk are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge.

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.

7

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company uses interest rate caps as part of its interest rate risk management strategy. Interest rate caps designated as cash flow hedges protect the Company from increases in interest rates above the strike rate of the interest rate cap. However, the Company’s financial statements are exposed to the effects of interest rate fluctuations below the strike rate negotiated in the interest rate cap agreements, which could have a material impact on its results of operations.

On August 8, 2011, the Company entered into two interest rate cap agreements with certain financial institutions, with notional amounts totaling $114,400, whereby the Company limits its variable interest rate exposure to the strike rate of the interest rate cap agreements. At September 30, 2012, these agreements had notional amounts of $96,924. Under the terms of the interest rate cap agreements, the Company will receive payments based on the spread in rates if the three-month LIBOR rate

increases above the negotiated cap rates of 3.0%. The interest rate caps are considered designated hedging instruments, classified as Level 2 in the fair value hierarchy. Changes in fair value will be deferred in accumulated other comprehensive loss and the cap purchase price will be reclassified from accumulated comprehensive loss into earnings as interest expense over the life of the agreements. The fair value of the interest rate caps was $30 at September 30, 2012 and $175 at December 31, 2011. These amounts are included in other assets in the Condensed Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011. Unrecognized losses of ($637) and ($520) were recorded in accumulated other comprehensive loss at September 30, 2012 and December 31, 2011, respectively.

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 Topic 815. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly to 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 September 30, 2012 and December 31, 2011, 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 Condensed Consolidated Balance Sheets. The fair value of these derivatives at September 30, 2012 and December 31, 2011 was ($71) and $123, respectively. The change in fair value of these contracts is included in foreign exchange gain and was $155 and $1,021 for the three months ended September 30, 2012 and 2011, respectively and $438 and $457 for the nine months ended September 30, 2012 and 2011, respectively.

The following represents the notional amounts of foreign exchange forward contracts at September 30, 2012:

	Notional Sold		Notional Purchased
Non-designated hedges of foreign exchange risk	$	28,070	$	(8,128	)

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

8

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.

3. Long-term Debt

At September 30, 2012 and December 31, 2011, long-term debt consisted of the following:

	September 30, 2012		December 31, 2011
Senior Bank Debt (Secured):
First lien debt, payable quarterly, U.S. Dollar denominated–LIBOR (minimum 1.25%) plus 5.00% (6.25%) as of September 30, 2012	$	105,520	$	119,366
First lien debt, payable quarterly, Euro denominated–EURIBOR (minimum 1.25%) plus 5.00% (6.25%) as of September 30, 2012	94,445		107,771
	199,965		227,137
Senior Notes (Unsecured), payable semi-annually–U.S. Dollar denominated interest rate fixed at 8.875%, matures June of 2018	240,000		240,000
Other Long-Term Debt:
Unsecured, interest rate fixed at 2.00%, Euro denominated	131		228
Unsecured, interest rate fixed at 1.31% to 3.40%, Yen denominated	—		1,689
	440,096		469,054
Less current maturities	2,368		3,548
Total	$	437,728	$	465,506

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”) and a new approximately $278 million multi-currency senior secured credit facility (as subsequently amended, the “Credit Facility”), comprised of approximately $248 million of senior secured term loans and a $30 million senior secured revolving credit facility. The interest rates under the Credit Facility are calculated, at the Company’s option, at the Alternate Base Rate as defined in the Credit Facility, LIBOR or EURIBOR, subject to a minimum of 2.25%, 1.25% and 1.25%, respectively, plus, in each case, a margin. The Credit Facility and Notes contain customary covenants that, subject to certain exceptions, restrict the Company’s ability to enter into certain transactions and engage in certain activities. In addition, the Credit Facility includes specified financial covenants, requiring the Company to maintain certain consolidated leverage and interest coverage ratios and limiting its ability to make capital expenditures in excess of specified amounts. These covenants are included in Note 7 to the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2011. Management believes the Company is in compliance with all covenants under the Notes and Credit Facility at September 30, 2012.

To facilitate its restructuring initiatives, on June 28, 2012, the Company entered into an amendment to its senior secured credit facility. Among other revisions to the credit facility, the amendment allows for additional add backs to Adjusted EBITDA annually through 2015 up to the lesser of $15 million or the unused portion of the allowed annual capital expenditure limit; increases the maximum leverage ratios between September of 2012 and December of 2013; amends the definition of the leverage ratio to reduce debt by unrestricted surplus cash held by the Company and increases the interest rate on the term loans by 0.75% annually for eighteen months. The Company paid $1.5 million in deferred financing costs related to the amendment. This amount is classified as an intangible asset in the Condensed Consolidated Balance Sheets at September 30, 2012.

As of September 30, 2012, an aggregate of $17.4 million is available for additional borrowings under the Credit Facility. This availability represents the $30.0 million revolving facility less $12.6 million of that facility committed for letters of credit. Additionally, at September 30, 2012, the Company had $5.0 million available for borrowings under other small lines of credit.

As of September 30, 2012 and December 31, 2011, the carrying value of the Company’s long-term debt was $440.1 million and $469.1 million, respectively, and exceeded its fair value of approximately $408.2 million and $439.1 million, respectively. The Company determined the fair value of its debt utilizing significant other observable inputs (Level 2 of the fair

9

value hierarchy).

4. Income Taxes

The Company utilizes the asset and 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 and nine months ended September 30, 2012, the provision for income taxes was $94 and $3,105, respectively, as compared with $3,264 and $9,711 for the three and nine months ended September 30, 2011. The decrease in tax expense was primarily attributable to consolidated losses and the geographic mix of earnings in the nine months ended September 30, 2012 as compared with the nine months ended September 30, 2011. 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 25% to 41%; 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 received, 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, the United Kingdom 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 of September 30, 2012, the Company had a gross unrecognized tax benefit of $8,431. The unrecognized tax benefit decreased by approximately $188 during the nine months ended September 30, 2012, as a result of foreign currency effects, statute expirations and ongoing changes in currently reserved positions. The Company’s policy is to recognize interest and penalties related to income tax matters as income tax expense, which were immaterial for the nine months ended September 30, 2012 and 2011. The tax years 2000 through 2011 remain open to examination in a number of the major taxing jurisdictions to which the Company and its subsidiaries are subject.

In November of 2011, the Federal Revenue Department of the Ministry of Finance of Brazil (“FRD”) issued a tax assessment against the Company’s indirect subsidiary, Xerium Technologies Brasil Indústria e Comércio S.A. (“Xerium Brazil”), challenging the goodwill recorded in the 2005 acquisition of Wangner Itelpa and Huyck Indústria e Comércio S.A. by Robec Brasil Participações Ltda., a predecessor to Xerium Brazil. This assessment denies the amortization of that goodwill against net income for the years 2006 through 2010. As of September 30, 2012, the Company would be required to pay approximately $43.3 million (subject to currency exchange rates) in tax, penalties and interest in the event the Company was unable to overturn this assessment. The Company believes the transactions in question (i) complied with Brazilian tax and accounting rules, (ii) were effected for a legitimate business purpose, to consolidate the Company’s operating activities in Brazil into one legal entity, and (iii) were properly documented and declared to Brazilian tax and corporate authorities. Based on the foregoing, Xerium Brazil filed a response disputing the tax assessment at the first administrative level of appeal within the FRD in December 2011. The tax assessment is still pending review at this first administrative appeals level.

Although there can be no assurances, as of September 30, 2012, the Company believes it is more likely than not that it would prevail on every tax position under examination and therefore it did not accrue any amounts related to this assessment. Consistent with this position, Xerium Brazil continues to amortize the remaining goodwill against its net income. Because this dispute is at a preliminary stage for resolution with the FRD, the Company cannot assure a favorable outcome and cannot currently estimate the timing of the final resolution of this matter. The Company believes it has meritorious defenses and will vigorously contest this matter. However, if management's views of the Company's position and the probable outcome of the assessment changes or the FRD’s initial position is sustained by Brazilian judicial courts, the amount accrued would adversely impact the Company’s financial condition and results of operations in the period in which any such determination or decision is made.

The Company believes that it has made adequate provisions for all income tax uncertainties.

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

10

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.

The Company sponsors various unfunded defined contribution plans that provide for retirement benefits to employees, some in accordance with local government requirements. The Company also maintains a funded retirement savings plan for U.S. employees which is qualified under Section 401(k) of the U.S. Internal Revenue Code. The plan allows eligible employees to contribute up to 99% of their compensation (subject to certain Internal Revenue Service limitations), with the Company matching 200% of the first 1% of employee compensation and 100% of the next 4% of employee compensation. The following represents the approximate matching contribution expense for the three and nine months ended September 30, 2012 and 2011:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Matching contribution expense	$	420	$	430	$	1,298	$	1,310

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

Defined Benefit Plans

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Service cost	$	898		$	679		$	2,671		$	2,090
Interest cost	1,855			1,939			5,523			5,968
Expected return on plan assets	(1,392		)	(1,413		)	(4,142		)	(4,350		)
Amortization of prior service cost	4			4			11			12
Amortization of net loss	640			355			1,906			1,093
Net periodic benefit cost	$	2,005		$	1,564		$	5,969		$	4,813

6. Comprehensive Loss and Accumulated Other Comprehensive Loss

Comprehensive loss for the three and nine months ended September 30, 2012 and 2011 is as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net (loss) income	$	(3,657	)	$	3,488		$	(8,952	)	$	5,758
Foreign currency translation adjustments	2,571			(22,906		)	(5,828		)	(10,429		)
Pension liability changes under Topic 715	(683		)	1,481			(593		)	656
Change in value of derivative instruments	(12		)	(438		)	(117		)	(438		)
Comprehensive loss	$	(1,781	)	$	(18,375	)	$	(15,490	)	$	(4,453	)

The components of accumulated other comprehensive loss are as follows:

	Foreign Currency Translation     Adjustment			Pension Liability Changes Under  Topic 715			Change in Value of Derivative Instruments			Accumulated    Other Comprehensive Income (Loss)
Balance at December 31, 2011	$	10,157		$	(41,183	)	$	(520	)	$	(31,546	)
Current period change, net of tax	(5,828		)	(593		)	(117		)	(6,538		)
Balance at September 30, 2012	$	4,329		$	(41,776	)	$	(637	)	$	(38,084	)

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7. Restructuring and Impairment Expense

During the nine months ended September 30, 2012, the Company recorded restructuring expenses of approximately$10.9 million. The following table sets forth the significant components and activity under restructuring programs for the nine months ended September 30, 2012 and 2011:

	Balance at December 31,  2011		Charges (1)		Currency     Effects			Cash Payments			Balance at     September 30, 2012
Severance	$	800	$	4,888	$	9		$	(2,405	)	$	3,292
Facility costs and other	452		4,455		(117		)	(4,456		)	334
Total	$	1,252	$	9,343	$	(108	)	$	(6,861	)	$	3,626

	Balance at December 31,  2010		Charges (2)		Currency     Effects			Cash Payments			Balance at     September 30, 2011
Severance	$	2,255	$	445	$	(53	)	$	(1,590	)	$	1,057
Facility costs and other	471		440		60			(450		)	521
Total	$	2,726	$	885	$	7		$	(2,040	)	$	1,578

(1) Amount excludes $1,600 impairment charges. See below for further discussion.

(2) Amount excludes $402 related to a Canadian pension plan termination charge reclassified out of Accumulated Other Comprehensive Income, rather than recorded in the accrual above.

Restructuring and impairment expense by segment, which is not included in Segment Earnings (Loss) in Note 8, is as follows:

	Three Months Ended              September 30,				Nine Months Ended              September 30,
	2012		2011		2012		2011
Clothing	$	2,572	$	13	$	7,338	$	327
Roll Covers	3,223		564		3,402		960
Corporate	45		—		203		—
Total	$	5,840	$	577	$	10,943	$	1,287

In July of 2012, the Company announced a voluntary redundancy program at its press felt facility in Buenos Aires, Argentina in connection with the relocation of its Huyck Wangner press felt capacity. The production of press felts and fiber cement felts will be transferred to its facilities in Brazil. During the third quarter of 2012, the Company completed the voluntary redundancy program and severance payments totaling $0.9 million were made to the employees. In addition, during the third quarter of 2012, management did an extensive review of the assets at the Argentina clothing facility to determine which assets would be redeployed to other facilities, which assets would be sold and which assets would be scrapped, and consequently, recorded an impairment charge of $1.1 million. The Company plans to sell the majority of the land and building, and does not expect to impair either the land or building, under the requirements of ASC 360 "Impairment and Disposal of Long-Lived Assets".

Also in July of 2012, the Company initiated consultation proceedings with its works’ council at its rolls cover facility in Meyzieu, France regarding a proposal to cease operations there, transferring the roll cover production of this facility to its rolls facilities in Germany and Italy. In October of 2012, the Company completed negotiations with its works' council and signed an agreement which allowed the Company to formally give notice to employees. All employees were aware of the benefits they would receive in the upcoming months. Therefore, severance charges of $2.6 million were accrued at September 30, 2012. In addition, during the third quarter of 2012, management did an extensive review of the assets at the France rolls facility to determine which assets would be redeployed to other facilities, which assets would be sold and which assets would be

12

scrapped, and consequently, recorded an impairment charge of $0.5 million. The Company plans to sell the land and building, and does not expect to impair either the land or building, under the requirements of ASC 360 "Impairment and Disposal of Long-Lived Assets".

In addition to the above restructuring activities, during 2012, the Company terminated sales agency contracts in Europe, transferred certain machinery and equipment from downsized facilities and reduced headcount, which resulted in $5.8 million in related restructuring charges.

8. 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 along the length of papermaking machines. The Roll Covers segment primarily represents the manufacture and refurbishment of covers used on the steel rolls of papermaking machines. The Company manages each of these operating segments separately.

Management evaluates segment performance based on earnings before interest, taxes, depreciation and amortization and before 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 and nine months ended September 30, 2012 and 2011, respectively.

	Clothing		Roll Covers		Corporate			Total
Three Months Ended September 30, 2012:
Net Sales	$	88,873	$	45,358	$	—		$	134,231
Segment Earnings (Loss)	17,429		9,914		(2,942		)
Three Months Ended September 30, 2011:
Net Sales	$	97,515	$	50,712	$	—		$	148,227
Segment Earnings (Loss)	20,757		10,396		(2,548		)

	Clothing		Roll Covers		Corporate			Total
Nine Months Ended September 30, 2012:
Net Sales	$	265,671	$	139,302	$	—		$	404,973
Segment Earnings (Loss)	48,051		29,930		(9,364		)
Nine Months Ended September 30, 2011:
Net Sales	$	291,085	$	150,686	$	—		$	441,771
Segment Earnings (Loss)	63,026		31,216		(9,296		)

Provided below is a reconciliation of Segment earnings (loss) to (loss) income before provision for income taxes for the three and nine months ended September 30, 2012 and 2011, respectively.

13

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Segment Earnings (Loss):
Clothing	$	17,429		$	20,757		$	48,051		$	63,026
Roll Covers	9,914			10,396			29,930			31,216
Corporate	(2,942		)	(2,548		)	(9,364		)	(9,296		)
Stock compensation	(820		)	(172		)	(1,574		)	(2,253		)
Legal fees related to term debt amendment	(30		)	—			(115		)	—
Non-recurring expenses related to CEO retirement	(1,600		)	—			(3,096		)	—
Net interest expense	(9,777		)	(9,873		)	(28,494		)	(29,709		)
Depreciation and amortization	(9,897		)	(11,231		)	(30,242		)	(33,302		)
Loss on debt extinguishment	—			—			—			(2,926		)
Restructuring and impairment expense	(5,840		)	(577		)	(10,943		)	(1,287		)
(Loss) income before provision for income taxes	$	(3,563	)	$	6,752		$	(5,847	)	$	15,469

9. 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 September 30, 2012, 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. See Note 4 for a discussion of Xerium Brazil’s proceeding with the FRD.

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.

10. 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 time-based restricted stock units ("RSU's") and deferred stock units ("DSUs"). The Company recorded stock-based compensation expense during the three and nine ended September 30, 2012 and September 30, 2011 as follows:

	Three Months Ended     September 30,					Nine Months Ended     September 30,
	2012		2011			2012		2011
RSU and DSU Awards (1)	$	820	$	634		$	1,574	$	1,942
Management Incentive/Performance Award Programs (2)	—		(462		)	—		311
Total	$	820	$	172		$	1,574	$	2,253

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

(2) For 2011, the amount represents the value of stock awards granted under the 2011 Management Incentive Compensation Program, which was approved by the Company’s Board of Directors in March of 2011. No amount has been recorded for the 2012 Management Incentive Compensation Program (the “2012 MIC”), as the performance targets are not projected to be met as of September 30, 2012.

Summary of Activity under the Long-Term Incentive Plans

On September 22, 2010, the Board approved the Company’s 2010 Long-Term Incentive Plan (the “2010 LTIP”) under the 2010 Equity Incentive Plan (the “2010 Plan”). Awards under the 2010 LTIP are both time-based and performance-based. Awards will be paid in the form of RSUs or shares of common stock of the Company. Time-based awards under the 2010 LTIP were approved in the form of 131,010 time-based RSUs granted on October 29, 2010 under the Company’s 2010 Plan. As of September 30, 2012, 86,511 time-based RSUs had vested in accordance with the 2010 LTIP and were converted to common stock, with the remaining 44,499 time-based RSUs to vest on March 31, 2013. These will be converted into shares of common stock when they vest. Performance-based awards under the 2010 LTIP will vest upon meeting various criteria, as included in

14

the Company’s 2011 Annual Report on Form 10-K.

On May 8, 2012, the Board approved the 2012 Executive Long-Term Incentive Plan (the “2012 Executive LTIP”) under the 2010 Plan. Awards under the 2012 Executive LTIP are both time-based and performance-based. A specific target share award is set for each participant in the 2012 Executive LTIP. Awards will be paid in the form of RSUs or shares of common stock of the Company. Time-based awards, or 50% of the total target award, were granted in the form of 54,750 time-based RSUs under the Company’s 2012 Plan and will vest in equal installments on March 31, 2013, March 31, 2014, and March 31, 2015. These will be converted into shares of common stock as they vest. Performance-based awards, which constitute 50% of the total award, will be determined based on the Company’s performance against a three-year cumulative Adjusted EBITDA metric, adjusted for currency fluctuations during the term of the 2012 – 2014 Executive LTIP. The performance-based awards will convert into shares of the Company’s common stock and be paid after the close of the three-year performance period. The amount of the payment will be based on a sliding scale ranging from 50% if the metric is achieved at 85% of the target up to 200% if the metric is achieved at or above 115% of the target.

Summary of Activity under the MIC Plans

On March 13, 2012, the Board approved the 2012 MIC. Under the 2012 MIC, payouts will be determined by the Company’s performance against specified Adjusted EBITDA metrics for the 2012 fiscal year. The Adjusted EBITDA metrics will be adjusted for currency fluctuations. A specific target award is set for each participant in the 2012 MIC equal to a percentage of his or her current base cash compensation. Fifty percent (50%) of any 2012 MIC award earned will be paid in cash and fifty percent (50%) is expected to be paid in the form of shares of the Company’s common stock under the Company’s 2010 Equity Incentive Plan. The 2012 MIC awards will be paid out based on a sliding scale. A participant will receive an award equal to 20% of his or her target award if Adjusted EBITDA is achieved above a minimum target level, 90% of target award if Adjusted EBITDA is at budget performance, 100% of target award if the targeted metric is achieved and ranging up to 200% if Adjusted EBITDA is achieved at a maximum target level. As indicated above, management determined that Adjusted EBITDA is projected not to meet the minimum target level at September 30, 2012. Therefore, no compensation expense has been recorded for the nine months ended September 30, 2012.

Other Stock Compensation Plans

On August 15, 2012, in connection with the previously announced anticipated retirement of Stephen R. Light, the Board of Directors of the Company appointed Harold C. Bevis to the position of President and Chief Executive Officer, effective immediately, and Mr. Light notified the Company of his resignation, effective as of that date, as the Company's Chairman, President and Chief Executive Officer. The Company granted Mr. Bevis a sign-on award of 204,208 restricted stock units and options to acquire 781,701 shares of the Company's Common Stock, par value $0.001 per share. Both the restricted stock units and the options will vest over a three year period, beginning on the second anniversary of the August 15, 2012 grant date. The options will have a 10-year term and an exercise price of $4.00 per share, the August 15, 2012 closing price of the Company's common stock on the New York Stock Exchange. In addition, on August 15, 2012, the Company accelerated the vesting of Mr. Light's remaining 50,000 restricted stock units, issuing 27,900 shares of common stock, upon vesting, net of certain tax withholdings.

15

11. Supplemental Guarantor Financial Information

On May 26, 2011, the Company closed on the sale of its Notes. The Notes are unsecured obligations of the Company and are fully and unconditionally guaranteed on a senior unsecured 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, 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 September 30, 2012

(Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The Company
ASSETS
Current assets:
Cash and cash equivalents	$	10,535		$	8		$	29,034		$	—		$	39,577
Accounts receivable, net	—			20,508			66,886			—			87,394
Intercompany receivable	(97,747		)	103,042			(5,295		)	—			—
Inventories, net	—			16,652			64,367			(983		)	80,036
Prepaid expenses	149			2,216			7,685			—			10,050
Other current assets	—			2,917			10,094			—			13,011
Total current assets	(87,063		)	145,343			172,771			(983		)	230,068
Property and equipment, net	425			63,697			248,204			—			312,326
Investments	598,237			148,027			—			(746,264		)	—
Goodwill	—			17,737			41,359			—			59,096
Intangible assets	10,646			5,329			3,998			—			19,973
Other assets	49			—			9,265			—			9,314
Total assets	$	522,294		$	380,133		$	475,597		$	(747,247	)	$	630,777
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	464		$	7,635		$	24,957		$	—		$	33,056
Accrued expenses	11,888			6,236			37,858			—			55,982
Current notes payable	—			—			7,714						7,714
Current maturities of long-term debt	1,250			—			1,118			—			2,368
Total current liabilities	13,602			13,871			71,647			—			99,120
Long-term debt, net of current maturities	344,270			—			93,458			—			437,728
Deferred and long-term taxes	—			2,378			16,160			—			18,538
Pension, other post-retirement and post-employment obligations	23,087			1,198			55,756			—			80,041
Other long-term liabilities	13			—			11,881			—			11,894
Intercompany loans	217,965			(347,605		)	129,640			—			—
Total stockholders’ (deficit) equity	(76,643		)	710,291			97,055			(747,247		)	(16,544		)
Total liabilities and stockholders’ equity	$	522,294		$	380,133		$	475,597		$	(747,247	)	$	630,777

16

Xerium Technologies, Inc.

Consolidating Balance Sheet

At December 31, 2011

(Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The Company
ASSETS
Current assets:
Cash and cash equivalents	$	11,548		$	280		$	31,738		$	—		$	43,566
Accounts receivable, net	—			21,210			70,574			—			91,784
Intercompany receivable	(95,855		)	102,653			(6,798		)	—			—
Inventories, net	—			19,759			64,857			(1,299		)	83,317
Prepaid expenses	272			1,546			4,359			—			6,177
Other current assets	—			4,716			10,335			—			15,051
Total current assets	(84,035		)	150,164			175,065			(1,299		)	239,895
Property and equipment, net	881			67,727			266,648			—			335,256
Investments	579,018			162,438			—			(741,456		)	—
Goodwill	—			17,737			41,383			—			59,120
Intangible assets	11,484			6,986			4,170			—			22,640
Other assets	196			—			8,614			—			8,810
Total assets	$	507,544		$	405,052		$	495,880		$	(742,755	)	$	665,721
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Accounts payable	$	679		$	10,257		$	28,807		$	—		$	39,743
Accrued expenses	6,563			5,722			35,520			—			47,805
Current maturities of long-term debt	1,250			—			2,298			—			3,548
Total current liabilities	8,492			15,979			66,625			—			91,096
Long-term debt, net of current maturities	358,116			—			107,390			—			465,506
Deferred and long-term taxes	—			2,378			16,204			—			18,582
Pension, other post-retirement and post-employment obligations	22,906			1,820			56,462			—			81,188
Other long-term liabilities	—			—			11,654			—			11,654
Intercompany loans	187,661			(307,813		)	120,152			—			—
Total stockholders’ (deficit) equity	(69,631		)	692,688			117,393			(742,755		)	(2,305		)
Total liabilities and stockholders’ equity	$	507,544		$	405,052		$	495,880		$	(742,755	)	$	665,721

17

Xerium Technologies, Inc.

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

For the three months ended September 30, 2012

(Dollars in thousands)

	Parent			Total Guarantors			Total  Non Guarantors			Other Eliminations			The Company
Net sales	$	—		$	45,119		$	100,831		$	(11,719	)	$	134,231
Costs and expenses:
Cost of products sold	(342		)	31,821			65,442			(11,842		)	85,079
Selling	—			5,393			13,153			—			18,546
General and administrative	3,489			1,725			10,436			—			15,650
Research and development	—			2,105			595			—			2,700
Restructuring and impairment	45			19			5,776			—			5,840
	3,192			41,063			95,402			(11,842		)	127,815
(Loss) income from operations	(3,192		)	4,056			5,429			123			6,416
Interest (expense) income, net	(6,973		)	1,490			(4,294		)	—			(9,777		)
Foreign exchange (loss) gain	(193		)	(3		)	(6		)	—			(202		)
Equity in subsidiaries income	5,093			(13,056		)	—			7,963			—
Dividend income	1,656			18,904			—			(20,560		)	—
(Loss) income before provision for income taxes	(3,609		)	11,391			1,129			(12,474		)	(3,563		)
Provision for income taxes	(48		)	(35		)	(11		)	—			(94		)
Net (loss) income	$	(3,657	)	$	11,356		$	1,118		$	(12,474	)	$	(3,657	)
Comprehensive (loss) income	$	(3,598	)	$	11,464		$	2,827		$	(12,474	)	$	(1,781	)

Xerium Technologies, Inc.

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

For the three months ended September 30, 2011

(Dollars in thousands)

	Parent			Total Guarantors			Total  Non Guarantors			Other Eliminations			The Company
Net sales	$	—		$	45,203		$	115,433		$	(12,409	)	$	148,227
Costs and expenses:
Cost of products sold	(682		)	32,233			74,873			(12,414		)	94,010
Selling	—			5,861			13,956			—			19,817
General and administrative	148			2,016			11,838			—			14,002
Research and development	—			1,912			995			—			2,907
Restructuring and impairment	—			100			477			—			577
	(534		)	42,122			102,139			(12,414		)	131,313
Income (loss) from operations	534			3,081			13,294			5			16,914
Interest (expense) income, net	(7,239		)	1,961			(4,595		)	—			(9,873		)
Foreign exchange (loss) gain	(862		)	529			44			—			(289		)
Equity in subsidiaries income	11,222			5,336			—			(16,558		)	—
Income (loss) before provision for income taxes	3,655			10,907			8,743			(16,553		)	6,752
Provision for income taxes	(167		)	(45		)	(3,052		)	—			(3,264		)
Net income (loss)	$	3,488		$	10,862		$	5,691		$	(16,553	)	$	3,488
Comprehensive income (loss)	$	5,405		$	10,568		$	(17,795	)	$	(16,553	)	$	(18,375	)

18

Xerium Technologies, Inc.

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

For the nine months ended September 30, 2012

(Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The  Company
Net sales	$	—		$	134,970		$	305,628		$	(35,625	)	$	404,973
Costs and expenses:
Cost of products sold	(1,150		)	97,245			198,291			(35,990		)	258,396
Selling	—			16,725			40,379			—			57,104
General and administrative	8,753			5,492			33,264			—			47,509
Research and development	—			6,258			2,273			—			8,531
Restructuring and impairment	203			182			10,558			—			10,943
	7,806			125,902			284,765			(35,990		)	382,483
(Loss) income from operations	(7,806		)	9,068			20,863			365			22,490
Interest (expense) income, net	(21,419		)	5,035			(12,110		)	—			(28,494		)
Foreign exchange (loss) gain	(501		)	(7		)	665			—			157
Equity in subsidiaries income	19,221			(10,668		)	—			(8,553		)	—
Dividend income	1,656			18,904			—			(20,560		)	—
(Loss) income before provision for income taxes	(8,849		)	22,332			9,418			(28,748		)	(5,847		)
Provision for income taxes	(103		)	(108		)	(2,894		)	—			(3,105		)
Net (loss) income	$	(8,952	)	$	22,224		$	6,524		$	(28,748	)	$	(8,952	)
Comprehensive (loss) income	$	(8,261	)	$	22,860		$	(1,341	)	$	(28,748	)	$	(15,490	)

Xerium Technologies, Inc.

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

For the nine months ended September 30, 2011

(Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The  Company
Net sales	$	—		$	136,173		$	343,288		$	(37,690	)	$	441,771
Costs and expenses:
Cost of products sold	(1,835		)	97,105			218,104			(37,606		)	275,768
Selling	—			17,188			42,660			—			59,848
General and administrative	5,132			5,969			36,459			—			47,560
Research and development	(3		)	5,979			2,944			—			8,920
Restructuring and impairment	—			714			573			—			1,287
	3,294			126,955			300,740			(37,606		)	393,383
(Loss) income from operations	(3,294		)	9,218			42,548			(84		)	48,388
Interest (expense) income, net	(17,549		)	5,749			(17,909		)	—			(29,709		)
Loss on extinguishment of debt	(2,903		)	(6		)	(17		)	—			(2,926		)
Foreign exchange gain (loss)	551			(948		)	113			—			(284		)
Equity in subsidiaries income	29,408			11,450			—			(40,858		)	—
Income (loss) before provision for income taxes	6,213			25,463			24,735			(40,942		)	15,469
Provision for income taxes	(455		)	(154		)	(9,102		)	—			(9,711		)
Net income (loss)	$	5,758		$	25,309		$	15,633		$	(40,942	)	$	5,758
Comprehensive income (loss)	$	4,678		$	32,540		$	(729	)	$	(40,942	)	$	(4,453	)

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Xerium Technologies, Inc.

Consolidating Statement of Cash Flows-(Unaudited)

For the nine months ended September 30, 2012

(Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The  Company
Operating activities
Net (loss) income	$	(8,952	)	$	22,224		$	6,524		$	(28,748	)	$	(8,952	)
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Stock-based compensation	1,574			—			—			—			1,574
Depreciation	135			5,932			22,446			—			28,513
Amortization of intangibles	—			1,659			70			—			1,729
Deferred financing cost amortization	1,885			—			822			—			2,707
Unrealized foreign exchange loss on revaluation of debt	—			—			167			—			167
Deferred taxes	—			—			(383		)	—			(383		)
Asset impairment	—			—			1,600						1,600
Loss (gain) on disposition of property and equipment	—			24			(680		)	—			(656		)
Intercompany dividend	(1,656		)	(18,904		)				20,560			—
Provision for doubtful accounts	—			(150		)	613			—			463
Undistributed equity in (earnings) loss of subsidiaries	(19,221		)	10,668			—			8,553			—
Change in assets and liabilities which provided (used) cash:
Accounts receivable	8			852			2,094			—			2,954
Inventories	—			3,107			(404		)	(365		)	2,338
Prepaid expenses	122			(671		)	(3,472		)	—			(4,021		)
Other current assets	—			1,799			(414		)	—			1,385
Accounts payable and accrued expenses	4,781			(2,106		)	(730		)	—			1,945
Deferred and other long-term liabilities	244			(622		)	(780		)	—			(1,158		)
Intercompany loans	1,891			(394		)	(1,497		)	—			—
Net cash (used in) provided by operating activities	(19,189		)	23,418			25,976			—			30,205
Investing activities
Capital expenditures, gross	(22		)	(1,895		)	(11,305		)	—			(13,222		)
Intercompany property and equipment transfers, net	344			(317		)	(27		)	—			—
Proceeds from disposals of property and equipment	—			298			1,080			—			1,378
Net cash provided by (used in) investing activities	322			(1,914		)	(10,252		)	—			(11,844		)
Financing activities
Net increase in notes payable	—			—			7,365						7,365
Principal payments on debt	(13,846		)	—			(14,119		)	—			(27,965		)
Payment of deferred financing fees	(1,047		)	—			(735		)	—			(1,782		)
Dividends paid	1,656			—			(1,656		)	—			—
Intercompany loans	31,091			(21,778		)	(9,313		)	—			—
Net cash provided by (used in) financing activities	17,854			(21,778		)	(18,458		)	—			(22,382		)
Effect of exchange rate changes on cash flows	—			2			30			—			32
Net decrease in cash	(1,013		)	(272		)	(2,704		)	—			(3,989		)
Cash and cash equivalents at beginning of period	11,548			280			31,738			—			43,566
Cash and cash equivalents at end of period	$	10,535		$	8		$	29,034		$	—		$	39,577

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Xerium Technologies, Inc.

Consolidating Statement of Cash Flows-(Unaudited)

For the nine months ended September 30, 2011

(Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The Company
Operating activities
Net income	$	5,758		$	25,309		$	15,633		$	(40,942	)	$	5,758
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Stock-based compensation	2,253			—			—			—			2,253
Depreciation	176			6,044			25,353			—			31,573
Amortization of intangibles	—			1,659			70			—			1,729
Curtailment/settlement loss	—			—			402						402
Deferred financing cost amortization	(431		)	204			1,840			—			1,613
Unrealized foreign exchange loss on revaluation of debt	—			—			1,070			—			1,070
Deferred taxes	—			—			2,246			—			2,246
Gain on disposition of property and equipment	—			(128		)	(476		)	—			(604		)
Loss on extinguishment of debt	2,903			6			17			—			2,926
Provision for doubtful accounts	—			438			295			—			733
Undistributed equity in (earnings) loss of subsidiaries	(29,408		)	(11,450		)	—			40,858			—
Change in assets and liabilities which provided (used) cash:
Accounts receivable	11			280			(1,399		)	—			(1,108		)
Inventories	—			(1,470		)	(9,263		)	84			(10,649		)
Prepaid expenses	229			(187		)	(1,160		)	—			(1,118		)
Other current assets	645			(982		)	(864		)	—			(1,201		)
Accounts payable and accrued expenses	6,623			(2,677		)	(5,625		)	—			(1,679		)
Deferred and other long-term liabilities	(347		)	(1,064		)	(1,697		)	—			(3,108		)
Intercompany loans	6,932			2,559			(9,491		)	—			—
Net cash (used in)provided by operating activities	(4,656		)	18,541			16,951			—			30,836
Investing activities
Capital expenditures, gross	(364		)	(2,727		)	(15,839		)	—			(18,930		)
Intercompany property and equipment transfers, net	—			15			(15		)	—			—
Proceeds from disposals of property and equipment	—			149			7,574			—			7,723
Restricted cash	13,701			—			—			—			13,701
Net cash provided by (used in) investing activities	13,337			(2,563		)	(8,280		)	—			2,494
Financing activities
Proceeds from borrowings	365,000			—			124,629			—			489,629
Principal payments on debt	(262,920		)	(51,016		)	(187,483		)	—			(501,419		)
Payment of deferred financing fees	(72,185		)	—			55,070			—			(17,115		)
Intercompany loans	(37,570		)	35,055			2,515			—			—
Net cash used in financing activities	(7,675		)	(15,961		)	(5,269		)	—			(28,905		)
Effect of exchange rate changes on cash flows	—			2			(171		)	—			(169		)
Net increase in cash	1,006			19			3,231			—			4,256
Cash and cash equivalents at beginning of period	6,345			33			32,323			—			38,701
Cash and cash equivalents at end of period	$	7,351		$	52		$	35,554		$	—		$	42,957

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

Forward-Looking Statements

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:

• we are subject to the risk of weaker paper industry and general economic conditions in the locations around the world where we conduct business, including the impact of price pressures and cost reduction strategies by our customers in the paper industry;

• our strategies and plans, including, but not limited to, those relating to developing and successfully marketing new products, enhancing our operational efficiencies and reducing costs, may not result in the anticipated benefits;

• we may be required to incur significant costs to reorganize or restructure our operations in response to market changes in the paper industry;

• our financial results could be adversely affected by fluctuations in interest rates and currency exchange rates;

• our manufacturing facilities may be required to quickly increase or decrease production capacity, which could negatively affect our production, customer order lead time, product quality, labor relations or gross margin;

• we may not be successful in developing and marketing new technologies or in competing against new technologies developed by competitors;

• variations in demand for our products, including our new products, could negatively affect our net sales and profitability;

• we are subject to fluctuations in the price of our component supply costs;

• due to our high degree of leverage and significant debt service obligations, we need to generate substantial operating cash flow to fund growth and unexpected cash needs;

• our credit facility contains restrictive covenants, such as the covenants requiring compliance with minimum interest coverage and maximum leverage ratios, which become more restrictive over time, that may require us to increasingly improve our performance over time to remain compliant;

• we are subject to the risk of terrorist attacks or an outbreak or escalation of any insurrection or 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;

• we are subject to the impact of 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 could make it more difficult for a third-party to acquire us.

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, 2011 filed with the SEC on March 14, 2012, in our Quarterly Reports on Form 10-Q for the quarters ended March 30, 2012 and June 30, 2012 filed with the SEC on May 9, 2012 and August 7, 2012, respectively, and this Quarterly Report on Form 10-Q. 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 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.

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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 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 nine months ended September 30, 2012, our clothing segment represented 66% 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 the paper producer. Roll covers are tailored 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 nine months ended September 30, 2012, our roll cover segment represented 34% of our net sales.

Industry Trends and Outlook

Historically, demand for our products has been driven primarily by the volume (tonnage) of paper produced on a worldwide basis. Industry forecasters predict the growth of global paper production from 2012 to 2015 to be between 2% and 4% per annum. Generally, and over time, we expect growth in paper production to be greater in Asia-Pacific, South America and Eastern Europe than in the more mature North American and Western European regions where demand may decline. Between the second half of 2008 and 2009, the global paper industry experienced a sharp reduction in production levels, caused by the general slowdown in economic activity and related paper consumption during the same period. In 2010 and 2011, global paper and board production began to recover from the economic recession and show growth, particularly in developing countries, although growth slowed in the second half of 2011 and has continued to slow through 2012.

The profitability of paper producers has historically been highly cyclical due to wide swings in the price of paper, driven to a high degree by the oversupply of paper during periods when paper producers have more aggregate capacity than the market requires. A sustained downturn in the paper industry, either globally or in a particular region, can cause paper manufacturers to reduce production or cease operations, which could adversely affect our net sales and profitability. Since 2000, paper producers have taken actions that seek to structurally improve the balance between the supply of, and demand for, paper. As part of these efforts, they have permanently shut down many paper-making machines or entire manufacturing facilities. However, many paper producers continue to experience low levels of profitability. We believe that further consolidation among papermakers, reduction in the number of paper producers, and shutdowns of paper-making machines or facilities will continue in Europe and North America until there is a better balance between supply and demand for paper and the profit levels of paper producers improve. This rebalancing has been accelerated since the most recent global economic recession. Over a number of years, paper consumption growth, particularly in South America and Asia-Pacific, is expected to drive an increase in the global production rates required to maintain balance between supply and demand. It is highly likely, however, that the recession-led consumption slow-down and related effect on global paper production will continue in the near term. Also affecting machine curtailments are structural productivity gains from improved products that we and our competitors supply that enable paper producers to manufacture more paper with fewer machines.

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The impact of e-commerce and digitalization has resulted in a prolonged decline in specific paper grades, such as newsprint, printing and writing grades of paper. Fortunately, the decline has been partially offset by increases in the production of packaging grades, both as a consequence of globalization of manufacturing and as a result of the increase of tissue/personal care products which have increased as global GDP has risen, particularly in the developing world.

Global paper production growth would be moderated by the level of industry consolidation and paper-machine shutdown activity that is a continuing underlying trend in North America and Western Europe. We also believe that, in addition to industry consolidation and paper machine shutdown activity in North America and Western Europe, the trend towards new paper machine designs which have fewer rolls and market recognition of the extended life of our roll cover products has been and will continue to negatively impact demand for these products and their volume potential. Additionally, we are seeing a trend that paper producers are placing an increasing emphasis on maintenance cost reduction and, as a result, are extending the life of roll covers through additional maintenance cycles before replacing them. However, we believe volume declines would be at least partially offset by our introduction of new products with the extended life qualities that our customer’s desire and increasing market share of proprietary products such as our SmartRoll™.

We anticipate that pricing pressure for our products may continue with the consolidation among paper producers and as the shift of paper production growth in Asia-Pacific develops. In response to this pricing pressure, we expect to focus our research and development efforts on new products that deliver increased value to our customers and for which they will pay increased prices. In addition, we will continue to enhance and deploy our value added selling approach as part of our strategy to differentiate our products, while at the same time we remain focused on cost reduction and efficiency programs.

The negative paper industry trends described above are likely to continue. We believe that the paper industry will experience increased emphasis on cost reduction, continued paper-machine shutdown activity, and reduced availability of credit than would have been the case in the absence of the economic downturn. These industry dynamics could negatively impact our business, results of operations and financial condition.

Net Sales and Expenses

Net sales in both our clothing and roll covers segments are primarily driven by the following factors:

Ÿ The volume (tonnage) of worldwide paper production;

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

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

Ÿ Our ability to provide products and services which reduce paper-making machine downtime while at the same time allowing the manufacture of high quality paper products;

Ÿ The mix of paper grades being produced; and

Ÿ 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, a small portion of our business has been conducted pursuant to consignment arrangements under which 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 the product is shipped 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, revenue is recognized 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 cost reduction programs.

24

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 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 $8.5 million and $8.9 million for the nine months ended September 30, 2012 and September 30, 2011, respectively.

Foreign Exchange

We have a geographically diverse customer base. In the nine months ended September 30, 2012, we generated approximately 38% of our net sales in North America, 31% in Europe, 9% in South America, 19% in Asia-Pacific and 3% in the rest of the world.

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.

Currency fluctuations have a greater effect on the level of our net sales than on the level of our income (loss) from operations. For example, in the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011, the change in the value of the U.S. Dollar against most of the currencies we conduct our business in resulted in net currency decreases in net sales of $17.7 million, yet income from operations currency effects increased by $3.6 million. Although the nine months ended September 30, 2012 results reflect a period in which the value of the U.S. Dollar increased against the Euro as compared to the nine months ended September 30, 2011, we would expect an opposite effect in a period in which the value of the U.S. Dollar decreases.

During the nine months ended September 30, 2012, we conducted business in 9 foreign currencies. The following table provides the average exchange rate for the nine months ended September 30, 2012 and the nine months ended September 30, 2011 of the U.S. Dollar against each of the four foreign currencies in which we conduct the largest portion of our operations.

Currency	Average exchange rate of the U.S. Dollar in the nine months ended September 30, 2012	Average exchange rate of the U.S. Dollar in the nine months ended September 30, 2011
Euro	$1.28 = 1 Euro	$1.41 = 1 Euro
Brazilian Real	$0.52 = 1 Brazilian Real	$0.61 = 1 Brazilian Real
Canadian Dollar	$1.00 = 1 Canadian Dollar	$1.02 = 1 Canadian Dollar
Australian Dollar	$1.04 = 1 Australian Dollar	$1.04 = 1 Australian Dollar

In the nine months ended September 30, 2012, we conducted approximately 35% of our operations in Euros, approximately 9% in the Australian Dollar, approximately 8% in the Brazilian Real (although a significant portion of Brazil net sales are in U.S. Dollars) and approximately 6% in the Canadian Dollar.

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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 and nine months ended September 30, 2012 and September 30, 2011 and a discussion of the results of operations during those periods (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Domestic income from operations	$	864	$	3,615	$	1,262	$	5,924
Foreign income from operations	5,552		13,299		21,228		42,464
Total income from operations	$	6,416	$	16,914	$	22,490	$	48,388

During the three and nine months ended September 30, 2012, domestic income from operations was lower than foreign income from operations, primarily due to product mix and market differences. Cash flows from the above foreign income from operations typically remains reinvested in the foreign subsidiaries. However, there is no legal restriction or material adverse consequence for repatriating the cash flows to the domestic subsidiaries to assist in debt repayment, capital expenditures and other expenses of our 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 have rationalized production among our facilities to better enable us to meet customer demands. Cost savings have been 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 the cost savings are recognized at the time of the headcount reductions and plant closure, with the remaining cost savings recognized over subsequent periods. Cost savings from headcount reductions have not been offset by related increases in other expenses. Cost savings related to plant closures have been partially offset by the reduction of revenues associated with those closed facilities in subsequent periods and additional costs incurred in the facilities that assumed the operations of the closed facility.

In July of 2012, we announced a voluntary redundancy program at our press felt facility in Buenos Aires, Argentina in connection with the relocation of our Huyck Wangner press felt capacity. The production of press felts and fiber cement felts will be transferred to our facilities in Brazil. During the third quarter of 2012, we completed the voluntary redundancy program and severance payments totaling $0.9 million were made to the employees. In addition, during the third quarter of 2012, management did an extensive review of the assets at the Argentina clothing facility, including the land and building, to determine which assets would be redeployed to other facilities, which assets would be sold and which assets would be scrapped, and consequently, recorded an impairment charge of $1.1 million. We plan to sell the majority of the land and building, and do not expect to impair either the land or building, under the requirements of ASC 360 "Impairment and Disposal of Long-Lived Assets".

Also in July of 2012, we initiated consultation proceedings with our works’ council at our rolls cover facility in Meyzieu, France regarding a proposal to cease operations there, transferring the roll cover production of this facility to our rolls facilities in Germany and Italy. In October of 2012, we completed negotiations with our works' council and signed an agreement which allowed us to formally give notice to employees. All employees were fully aware of the benefits they would receive in the upcoming months. Therefore, severance charges of $2.6 million were accrued at September 30, 2012. In addition, during the third quarter of 2012, management did an extensive review of fixed assets at the France rolls facility to determine which assets would be redeployed to other facilities, which assets would be sold and which assets would be scrapped, and consequently,

26

recorded an impairment charge of $0.5 million. We plan to sell the land and building, and do not expect to impair either the land or building, under the requirements of ASC 360 "Impairment and Disposal of Long-Lived Assets".

In addition to the above restructuring and impairment activities, during 2012, we terminated sales agency contracts in Europe, transferred certain machinery and equipment from downsized facilities and reduced headcount, which resulted in $5.8 million in related restructuring charges.

Results of Operations

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

	Three Months Ended              September 30,						Nine Months Ended              September 30,
	2012			2011			2012			2011
	(in thousands)						(in thousands)
Net sales	$	134,231		$	148,227		$	404,973		$	441,771
Cost of products sold	85,079			94,010			258,396			275,768
Selling expenses	18,546			19,817			57,104			59,848
General and administrative expenses	15,650			14,002			47,509			47,560
Research and development expenses	2,700			2,907			8,531			8,920
Restructuring and impairment expenses	5,840			577			10,943			1,287
Income from operations	6,416			16,914			22,490			48,388
Interest expense, net	(9,777		)	(9,873		)	(28,494		)	(29,709		)
Loss on extinguishment of debt	—			—			—			(2,926		)
Foreign exchange (loss) gain	(202		)	(289		)	157			(284		)
(Loss) income before provision for income taxes	(3,563		)	6,752			(5,847		)	15,469
Provision for income taxes	(94		)	(3,264		)	(3,105		)	(9,711		)
Net (loss) income	$	(3,657	)	$	3,488		$	(8,952	)	$	5,758
Comprehensive loss	$	(1,781	)	$	(18,375	)	$	(15,490	)	$	(4,453	)

Three Months Ended September 30, 2012 Compared to the Three Months Ended September 30, 2011

Net Sales. Net sales for the three months ended September 30, 2012 decreased by $14.0 million, or 9.4%, to $134.2 million from $148.2 million for the three months ended September 30, 2011. For the three months ended September 30, 2012, approximately 66% of our net sales were in our clothing segment and approximately 34% were in our roll covers segment.

In our clothing segment, net sales for the three months ended September 30, 2012 decreased by $8.6 million, or 8.8%, to $88.9 million from $97.5 million for the three months ended September 30, 2011, primarily due to unfavorable currency effects of $4.8 million and decreased sales volume of $3.0 million in Europe and $1.4 million in South America and Asia Pacific. These decreases were partially offset by an increase in sales volume of $0.6 million in North America.

In our roll covers segment, net sales for the three months ended September 30, 2012 decreased by $5.4 million or 10.7%, to $45.3 million from $50.7 million for the three months ended September 30, 2011. The decrease was primarily due to unfavorable currency effects of $2.7 million and decreased sales volume of $1.8 million in Europe and $1.5 million in North America. These decreases were partially offset by an increase in sales volume of $0.6 million in Asia Pacific.

Cost of Products Sold. Cost of products sold for the three months ended September 30, 2012 decreased by $8.9 million, or 9.5%, to $85.1 million from $94.0 million for the three months ended September 30, 2011.

In our clothing segment, cost of products sold decreased $5.2 million in the current quarter compared to the third quarter of 2011 as a result of lower sales volume partially offset by higher cost of products sold as a percentage of sales. Cost of products sold, as a percentage of net sales increased slightly by 0.2% to 63.1% in the three months ended September 30, 2012 from 62.9% in the three months ended September 30, 2011. The increase was primarily due to unfavorable production absorption partially offset by favorable currency effects in the third quarter of 2012.

In our roll covers segment, cost of products sold decreased $4.1 million in the current quarter compared to the third quarter of 2011 as a result of lower cost of products sold as a percentage of sales. Cost of products sold, as a percentage of net

27

sales decreased by 1.2% to 64.7% in the three months ended September 30, 2012 from 65.9% in the three months ended September 30, 2011. The decrease was due to improved material efficiencies in the third quarter of 2012, partially offset by unfavorable production absorption.

Selling Expenses. For the three months ended September 30, 2012, selling expenses decreased by $1.3 million, or 6.6% to $18.5 million from $19.8 million for the three months ended September 30, 2011 primarily due to favorable currency effects.

General and Administrative Expenses. For the three months ended September 30, 2012, general and administrative expenses increased by $1.7 million, or 12.1% to $15.7 million from $14.0 million for the three months ended September 30, 2011. The increase was primarily due to an increase in salaries and other expenses of $1.6 million as a result of the transition of the CEO in the third quarter of 2012, an increase of $0.6 million related to the reversal of management incentive compensation in the third quarter of 2011 and the reversal of $0.6 million in environmental costs in the third quarter of 2011. Neither of these reversals occurred in 2012. These increases were partially offset by favorable currency effects of $1.1 million.

Restructuring and Impairment Expenses. For the three months ended September 30, 2012, we incurred restructuring and impairment expenses of $5.8 million primarily related to the voluntary redundancy program in Argentina and the closure of a rolls cover facility in France. In 2011, we incurred restructuring expenses of $0.6 million as a result of restructuring activity in our North America rolls facility. See Note 7 to the Consolidated Financial Statements for further discussion on these restructuring and impairment activities.

Interest Expense, Net. Net interest expense for the three months ended September 30, 2012 decreased by $0.1 million or 1.0%, to $9.8 million from $9.9 million for the three months ended September 30, 2011. This slight decline in interest expense reflects lower debt balances and favorable currency effects, offset by an increase in interest rates of approximately 75 basis points as a result of the amendment to the credit facility.

Provision for Income Taxes. For the three months ended September 30, 2012 and September 30, 2011, the provision for income taxes was $0.1 million and $3.3 million, respectively. The decrease in income tax expense was primarily attributable to consolidated net losses driven by reduced sales volume and increased restructuring expenses and the geographic mix of earnings in the third quarter of 2012 as compared to the third quarter of 2011. Our provision for income taxes is primarily impacted by income we earn in tax paying jurisdictions relative to 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 25% to 41%; 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 receive 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, the United Kingdom 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.

Nine Months Ended September 30, 2012 Compared to the Nine Months Ended September 30, 2011

Net Sales. Net sales for the nine months ended September 30, 2012 decreased by $36.8 million, or 8.3%, to $405.0 million from $441.8 million for the nine months ended September 30, 2011. For the nine months ended September 30, 2012, approximately 66% of our net sales were in our clothing segment and approximately 34% were in our roll covers segment.

In our clothing segment, net sales for the nine months ended September 30, 2012 decreased by $25.4 million, or 8.7%, to $265.7 million from $291.1 million for the nine months ended September 30, 2011, primarily due to decreased sales volume of $11.7 million in Europe, $2.4 million in North America and $2.0 million in South America and unfavorable currency effects of $11.5 million. These decreases were partially offset by an increase in sales volume of $2.2 million in Asia Pacific.

In our roll covers segment, net sales for the nine months ended September 30, 2012 decreased by $11.4 million or 7.6%, to $139.3 million from $150.7 million for the nine months ended September 30, 2011. The decrease was primarily due to decreased sales volume of $8.8 million in Europe and $0.6 million in South America and unfavorable currency effects of $6.2 million, partially offset by an increase in sales volume of $0.4 million in North America and $3.8 million in Asia Pacific.

Cost of Products Sold. Cost of products sold for the nine months ended September 30, 2012 decreased by $17.4 million, or 6.3%, to $258.4 million from $275.8 million for the nine months ended September 30, 2011.

In our clothing segment, cost of products sold decreased $11.6 million in the nine months ended September 30, 2012 compared to the nine months ended September 30, 2011 as a result of lower sales volume partially offset by higher cost of products sold as a percentage of sales. Cost of products sold, as a percentage of net sales increased by 1.5% to 63.2% in the

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nine months ended September 30, 2012 from 61.7% in the nine months ended September 30, 2011. The increase was primarily due to the reduction of inventory reserves in the prior year, unfavorable regional mix due to reduced volumes in Europe and unfavorable factory overhead absorption. These increases were partially offset by a decrease in freight and repairs and maintenance costs in the nine months ended September 30, 2012.

In our roll covers segment, cost of products sold decreased $6.5 million in the nine months ended September 30, 2012 compared to the nine months ended September 30, 2011 as a result of favorable currency effects and lower sales volume partially offset by higher cost of products sold as a percentage of sales. Cost of products sold, as a percentage of net sales, increased by 0.7% to 65.8% in the nine months ended September 30, 2012 from 65.1% in the nine months ended September 30, 2011. The increase was due to higher sales of products with lower margins, including mechanical services and new roll core sales and unfavorable absorption of production costs. These increases were partially offset by favorable material costs in the third quarter of 2012.

Selling Expenses. For the nine months ended September 30, 2012, selling expenses decreased by $2.7 million, or 4.5% to $57.1 million from $59.8 million for the nine months ended September 30, 2011, primarily due to favorable currency effects of $2.9 million and $1.1 million related to the termination of a sales agency arrangement and a reduction of headcount in Europe.These decreases were partially offset by an increase in salaries and selling commissions costs of $1.3 million, primarily in Asia.

General and Administrative Expenses. For the nine months ended September 30, 2012, general and administrative expenses decreased by $0.1 million, or 0.2% to $47.5 million for the nine months ended September 30, 2012 from $47.6 million for the nine months ended September 30, 2011. The decrease was primarily related to favorable currency effects of $2.4 million, the reversal of a $1.0 million contingent liability that was favorably resolved in 2012 and $1.3 decrease in management incentive compensation. Offsetting these decreases was $3.1 million due to the incremental CEO transition costs in 2012, an increase resulting from the reversal of $1.1 million in 2011 related to a value added tax (“VAT”) in Brazil and the reversal of $0.6 million in environmental costs in 2011.

Restructuring and Impairment Expenses. For the nine months ended September 30, 2012, we incurred restructuring and impairment expenses of $10.9 million, primarily related to the voluntary redundancy program in Argentina, the closure of a rolls cover facility in France and contract termination costs incurred to exit sales agency agreements in 2012. In 2011, we incurred restructuring expenses of $1.3 million as a result of restructuring activity in our North America rolls facility. See Note 7 to the Consolidated Financial Statements for further discussion on these restructuring and impairment activities.

Interest Expense, Net. Net interest expense for the nine months ended September 30, 2012 decreased by $1.2 million or 4.0%, to $28.5 million from $29.7 million for the nine months ended September 30, 2011. This decline in interest expense reflects lower debt balances and favorable currency effects, net of higher deferred financing cost amortization for the nine months ended September 30, 2012. The increase in deferred financing cost amortization are a result of the refinancing in May 2011.

Loss on Debt Extinguishment. The loss on debt extinguishment of $2.9 million in the nine months ended September 30, 2011 represents the write-off of deferred financing costs resulting from the refinancing of debt that closed on May 26, 2011. (See Note 3 of the Condensed Consolidated Financial Statements and “Liquidity and Capital Resources-Credit Facility and Notes” for further discussion on the refinancing).

Provision for Income Taxes. For the nine months ended September 30, 2012 and September 30, 2011, the provision for income taxes was $3.1 million and $9.7 million, respectively. The decrease in income tax expense was primarily attributable to consolidated net losses driven by reduced sales volume and increased restructuring expenses and the geographic mix of earnings in the nine months ended September 30, 2012 as compared to the same period in 2011. Our provision for income taxes is primarily impacted by income we earn in tax paying jurisdictions relative to 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 25% to 41%; 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 receive 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, the United Kingdom 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

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Our principal liquidity requirements are for debt service, working capital and capital expenditures. We plan to use cash on hand, cash generated by operations and, should it become necessary, access to 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, the impact of the most recent global economic recession and the continued lack of availability of credit may affect our customers’ ability to pay their debts.

Net cash provided by operating activities was $30.2 million for the nine months ended September 30, 2012 and $30.8 million for the nine months ended September 30, 2011. The $0.6 million decrease was due to a decrease in working capital, partially offset by reduced cash earnings.

Net cash used in investing activities was $11.8 million for the nine months ended September 30, 2012. Net cash provided by investing activities was $2.5 million for the nine months ended September 30, 2011. The decrease of $14.3 million was primarily due to the release of $13.7 million in restricted cash reserves and the reduction in proceeds from disposals of property and equipment of $6.3 million, offset by the reduction in capital expenditures of $5.7 million.

Net cash used in financing activities was $22.4 million and $28.9 million for the nine months ended September 30, 2012 and September 30, 2011, respectively. The decrease of $6.5 million was primarily the result of the decrease of $15.3 million in deferred financing costs paid from 2011 to 2012, offset by the increase of $8.8 million in principal payments made on debt in 2012.

As of September 30, 2012, there was a $440.1 million balance of term loans outstanding under our Credit Facility and Notes. In addition, as of September 30, 2012, we had no outstanding borrowings under our current revolving lines of credit, including the revolving credit facility under the Credit Facility and lines of credit in various foreign countries that are used to facilitate local short-term operating needs, except that $12.6 million of the revolving credit facility is committed for letters of credit, leaving an aggregate of $17.4 million available for additional borrowings under these revolving lines of credit. We had cash and cash equivalents of $39.6 million at September 30, 2012 compared to $43.6 million at December 31, 2011.

Capital Expenditures

For the nine months ended September 30, 2012, we had capital expenditures of $13.2 million consisting of growth capital expenditures of $4.1 million and maintenance capital expenditures of $9.1 million. For the nine months ended September 30, 2011, we had capital expenditures of $18.9 million consisting of growth capital expenditures of $7.8 million and maintenance capital expenditures of $11.1 million.

Growth capital expenditures consist of items that are intended to increase the manufacturing, production and/or distribution capacity or efficiencies of our operations in conjunction with the execution of our business strategies. Maintenance capital expenditures are designed to sustain the current capacity or efficiency of our operations and include items relating to the renovation of existing manufacturing or service facilities, the purchase of machinery and equipment for safety and environmental needs and information technology.

We target capital expenditures for 2012 to be $25.0 million. We analyze our planned capital expenditures based on investment opportunities available to us and our financial and operating performance, and accordingly, actual capital expenditures may be more or less than this amount.

See “Credit Facility and Notes” below for a description on limitations on capital expenditures imposed by our Credit Facility.

Credit Facility and Notes

On May 26, 2011, we completed a refinancing transaction, which replaced certain of our then outstanding indebtedness with $240 million aggregate principal amount of 8.875% senior unsecured notes (the “Notes”) and a new approximately $278 million multi-currency senior secured credit facility (as subsequently amended, the “Credit Facility”), comprised of approximately $248 million of senior secured term loans and a $30 million senior secured revolving credit facility. The interest rates under the Credit Facility are calculated, at our option, at the Alternate Base Rate as defined in the Credit Facility, LIBOR or EURIBOR, subject to a minimum of 2.25%, 1.25% and 1.25%, respectively, plus, in each case, a margin.

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Notes

Interest on the Notes is payable semiannually in cash in arrears on June 15 and December 15 of each year, and commenced on December 15, 2011. The Notes are our senior unsecured obligations and are guaranteed by each of our direct and indirect wholly-owned domestic subsidiaries (the “Notes Guarantors”). They rank equal in right of payment with our existing and future senior indebtedness and senior in right of payment to any of our existing and future subordinated indebtedness. The Notes are effectively subordinated to all of our secured debt, including the Credit Facility and related guarantees, to the extent of the value of the assets securing such debt and structurally subordinated to all of the existing and future liabilities of our subsidiaries that do not guarantee the Notes. Subject to the terms of the Credit Facility, the Notes may be redeemed by the Company at specified redemption prices which vary depending on the timing of the redemption.

The Notes contain customary covenants that, subject to certain exceptions, restrict the Company’s ability to enter into certain transactions. We believe we are in compliance with these covenants at September 30, 2012.

Credit Facility

The Credit Facility provides for (i) a six-year $125.0 million senior secured term loan facility, borrowed by us, the proceeds of which were used to refinance certain of our existing indebtedness; (ii) a six-year €87.0 million senior secured term loan facility, borrowed by Xerium Technologies Limited, a wholly-owned indirect subsidiary of ours organized under the laws of England and Wales, the proceeds of which were used to refinance certain of our existing indebtedness; (iii) a five-year $30.0 million senior secured revolving credit facility, available to us; and an uncommitted incremental amount of $10 million, the proceeds of which are used for working capital and general corporate purposes and include sub-limits available for letters of credit (the “Revolving Facility”); (iv) and an uncommitted incremental credit facility (the “Incremental Facility”) allowing for increases under the Revolving Facility and Term Loans with the same terms, and borrowing of new tranches of term loans, up to an aggregate principal amount not to exceed the greater of (i) $100.0 million and (ii) our Adjusted EBITDA over the prior 12-month period, provided that increases under the Revolving Facility shall not exceed $35.0 million.

The loans under the Credit Facility are required to be permanently repaid with 100% of the net proceeds of assets sales, dispositions, issuances of certain debt obligations and insurance, in each case, subject to certain exceptions and 50% of annual excess cash flow. The Credit Facility requires us to make annual principal payments (payable in quarterly installments) equal to 1% per annum with respect to the Term Loans with the remaining amount due at final maturity.

The obligations under the Credit Facility are guaranteed by all of our existing and future direct and indirect subsidiaries that are organized in the United States (subject to certain exceptions in the case of immaterial subsidiaries and joint ventures) and certain of our direct and indirect foreign subsidiaries, provided that non-U.S. guarantors are only liable for obligations of Xerium Technologies Limited and certain other non-U.S. guarantors. The loans are secured by a first-priority perfected security interest in substantially all of the assets.

Credit Facility Amendment

To facilitate our restructuring initiatives, on June 28, 2012, we entered into an amendment to our Credit Facility. Among other revisions to the Credit Facility, the amendment allows for additional add backs to Adjusted EBITDA annually though 2015 up to the lesser of $15.0 million or the unused portion of our annual capital expenditure limit; increases the maximum leverage ratios between the fiscal quarter ending September 30, 2012 and the fiscal quarter ending December 31, 2013; amends the definition of the leverage ratio to reduce debt by unrestricted surplus cash held by us and increases the interest rate on the term loans by 0.75% annually for eighteen months following the effective date of the amendment. We paid $1.5 million in deferred financing costs related to the amendment.

Covenants

The Credit Facility contains customary covenants that, subject to certain exceptions, restrict our ability to enter into certain transactions and engage in certain activities. In addition, the Credit Facility includes specified financial covenants requiring us to maintain certain consolidated leverage and interest coverage ratios. The consolidated leverage ratio is calculated by dividing the total of our total gross debt, at average currency exchange rates for the last twelve months, less surplus cash by Adjusted EBITDA and is 4.75 to 1.00 at September 30, 2012. In order to be in compliance with this covenant, as amended, we were required to have a ratio of no more than 5.50 to 1.00 at September 30, 2012. This ratio decreases after March 31, 2013 by 25-50 basis points in various periods to a minimum of 3.25 to 1.00 for the quarter ending March 31, 2017 and all subsequent periods. The interest coverage ratio is calculated by dividing Adjusted EBITDA by interest expense, net of mark to market movements on hedging instruments and amortization of deferred financing costs, and is 2.64 to 1.00 at September 30, 2012. In order to be in compliance with this covenant, we must have a ratio of at least 2.25 to 1.00 at September 30, 2012. In various periods subsequent to September 30, 2012, this ratio increases by increments of 25 basis points to 3.25 to 1.00 for the quarter

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ended December 31, 2016 and thereafter. Each of these covenants is calculated at the end of each quarter and is based on a rolling twelve month period. In addition, the terms of the Credit Facility limit our ability to make capital expenditures in excess of specified amounts. We believe we are in compliance with all of these covenants at September 30, 2012.

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 condensed consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2011. 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, 2011.

Non-GAAP Financial Measures

We use EBITDA and Adjusted EBITDA (as defined in the Credit Facility) 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. The Credit Facility includes covenants based on Adjusted EBITDA. If our Adjusted EBITDA declines below certain levels, we may violate the covenants resulting in a default condition under the credit facility or be required to prepay the credit facility. 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 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”, under the Credit Facility 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 or gains 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) and (xiii) 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) non-cash gains with respect to the items described in clauses (vi), (vii), (ix), (xi), (xii) and (xiii) (other than, in the case of clause (xiii), 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 (ii) provisions for tax benefits based on income or profits. Notwithstanding the foregoing, Adjusted EBITDA, as defined in the credit facility 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

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instrument, in each case, as permitted under the Credit Facility and (iv) any gains resulting from the returned surplus assets of any pension plan.

The following table provides reconciliation from net (loss) income and operating cash flows, which are the most directly comparable GAAP financial measures, to EBITDA and Adjusted EBITDA.

	Three Months Ended     September 30,						Nine Months Ended September  30,
	2012			2011			2012			2011
Net (loss) income	$	(3,657	)	$	3,488		$	(8,952	)	$	5,758
Stock-based compensation	820			172			1,574			2,253
Depreciation	9,321			10,655			28,513			31,573
Amortization of intangibles	576			577			1,729			1,729
Curtailment/settlement loss	—			402			—			402
Deferred financing cost amortization	971			1,011			2,707			1,613
Unrealized foreign exchange (gain) loss on revaluation of debt	(214		)	2,484			167			1,070
Deferred taxes	(22		)	1,037			(383		)	2,246
Asset impairment	1,600			—			1,600			—
Gain on disposition of property and equipment	(40		)	(40		)	(656		)	(604		)
Loss on extinguishment of debt	—			—			—			2,926
Net change in operating assets and liabilities	7,053			4,289			3,906			(18,130		)
Net cash provided by operating activities	16,408			24,075			30,205			30,836
Interest expense, excluding amortization	8,806			8,862			25,787			28,096
Net change in operating assets and liabilities	(7,053		)	(4,289		)	(3,906		)	18,130
Current portion of income tax expense	116			2,227			3,488			7,465
Stock-based compensation	(820		)	(172		)	(1,574		)	(2,253		)
Curtailment/settlement loss	—			(402		)	—			(402		)
Unrealized foreign exchange gain (loss) on revaluation of debt	214			(2,484		)	(167		)	(1,070		)
Asset impairment	(1,600		)	—			(1,600		)	—
Gain on disposition of property and equipment	40			40			656			604
Loss on extinguishment of debt	—			—			—			(2,926		)
EBITDA	16,111			27,857			52,889			78,480
Loss on extinguishment of debt	—			—			—			2,926
Stock-based compensation	820			172			1,574			2,253
Operational restructuring expenses	5,840			577			10,943			1,287
Legal fees related to term debt amendment	30			—			115			—
Non-recurring CEO retirement expenses	1,600			—			3,096			—
Adjusted EBITDA	$	24,401		$	28,606		$	68,617		$	84,946

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our foreign currency exposure and interest rate risks as of September 30, 2012 have not materially changed from December 31, 2011 (see Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2011). As of September 30, 2012, we had outstanding long-term debt with a carrying amount of $440.1 million with an approximate fair value of $408.2 million.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures. We have carried out an evaluation, as of September 30, 2012 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

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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 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 September 30, 2012 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, 2011. See Notes 4 and 9 to our Unaudited Condensed Consolidated Financial Statements for a discussion of our Brazilian operating subsidiary’s proceedings before the Federal Reserve Department of Brazil and 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, 2011 have not materially changed, except for the risk factor below.

If we cannot meet the New York Stock Exchange ("NYSE") continued listing requirements, the NYSE may delist our common stock, which could have an adverse impact on the liquidity and market price of our common stock.

Our common stock is currently listed on the NYSE. As previously disclosed in our press release dated August 3, 2012 filed with the Securities and Exchange Commission on August 3, 2012, the Company received a notice from the NYSE informing us that our average market capitalization over a 30 consecutive trading day period had been less than $50 million at the same time that our stockholders’ equity was less than $50 million as of the most recent balance sheet date. As of November 1, 2012 when our stock price closed at $3.22, our 30-day average market capitalization was $54.0 million and at September 30, 2012, our stockholders’ deficit was $16.5 million, as reflected on the balance sheet included in this September 30, 2012 quarterly report. Although our 30-day average market capitalization currently exceeds $50 million, there can be no assurance that it will remain above the required NYSE criteria. Additionally, we have submitted, and the NYSE has accepted, a plan to regain compliance with the market capitalization listing standards within 18 months. If we are unable to regain compliance with this NYSE continued listing standard in accordance with our plan in a timely manner, the NYSE could delist our stock which could negatively impact us and our stockholders by reducing the liquidity and market price of our common stock.

ITEM 6.    EXHIBITS

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

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.

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	XERIUM TECHNOLOGIES, INC.
	(Registrant)
November 5, 2012	By:	/s/Clifford Pietrafitta
		Clifford E. Pietrafitta
		Executive Vice President and CFO
		(Principal Financial Officer)

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EXHIBIT INDEX

Exhibit   Number	Description of Exhibits
10.1	Employment Agreement with Harold C. Bevis dated August 15, 2012
10.2	Time-Based Restricted Stock Unit Agreement with Harold C. Bevis dated August 15, 2012
10.3	Option Agreement with Harold C. Bevis dated August 15, 2012
10.4	Amendment No. 4 to Employment Agreement with Stephen R. Light dated August 15, 2012
10.5	Amendment No. 3 to Amended and Restated Employment Agreement with David J. Pretty dated August 15, 2012
10.6	Non-Management Director Compensation Policy
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(1)	XBRL Instance Document
101.SCH(1)	XBRL Taxonomy Extension Schema Document
101.CAL(1)	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB(1)	XBRL Taxonomy Extension Label Linkbase Document
101.PRE(1)	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF(1)	XBRL Taxonomy Extension Definition Linkbase Document

(1) Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files in Exhibits 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into in North Carolina by and between Xerium Technologies, Inc. (the “Company”), a Delaware corporation with its principal place of business in Raleigh, North Carolina and Harold C. Bevis (the “Executive”), effective as of the 15^th day of August, 2012 (the “Effective Date”).

WHEREAS, subject to the terms and conditions hereinafter set forth, the Company wishes to employ the Executive in the position of President and Chief Executive Officer and the Executive wishes to accept such employment;

NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises, terms, provisions and conditions set forth in this Agreement, the parties hereby agree:

1.    Employment. Subject to the terms and conditions set forth in this Agreement, the Company hereby offers and the Executive hereby accepts employment.

2.    Term. The employment of the Executive by the Company hereunder shall be for the period commencing on the Effective Date and expiring on the date of the termination of such employment in accordance with Section 5 hereof. For all purposes of this Agreement, references to (a) the “Termination Date” shall mean the date the Executive’s employment hereunder shall terminate pursuant to said Section 5, and (b) references to the “term” of the Executive’s employment hereunder shall mean the period commencing on the Effective Date and ending on the Termination Date. Following the Termination Date, unless specifically otherwise agreed between the Executive and any applicable party, the Executive shall cease to hold any position (whether as an officer, director, manager, employee, trustee, fiduciary or otherwise) with the Company or any of its Subsidiaries or Affiliates.

3.    Capacity and Performance.

(a)    During the term of the Executive’s employment hereunder, the Executive shall serve the Company as its President and Chief Executive Officer. In addition, and without further compensation, the Executive shall serve as a director of the Company and as a director and/or officer of one or more of the Company’s Subsidiaries, if so elected or appointed from time to time.

(b)    During the term of the Executive’s employment hereunder, the Executive shall be employed by the Company on a full-time basis and shall perform such duties and responsibilities on behalf of the Company and its Subsidiaries commensurate with his title and position as may be designated from time to time by the Board of Directors of the Company (the “Board”).

(c)     During the term of the Executive’s employment hereunder, the Executive shall devote his full business time to the advancement of the business and interests of the Company and its Subsidiaries and to the discharge of his duties and responsibilities hereunder; provided, however, that Executive may manage personal investments and affairs for Executive and his family, and participate in industry, trade, professional, non-profit, community or philanthropic activities, serve on civic or charitable boards or committees, in each case to the

extent that such activities do not materially interfere with the performance of Executive’s duties

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under this Agreement and are not in conflict with the business interests of the Company or its Subsidiaries or otherwise compete with the Company or its Subsidiaries and, subject to Executive’s providing advance notice to the Board and the Board’s written consent, which shall not be unreasonably withheld, may serve as a director of two (2) for-profit external boards of directors that do not compete with the Company or its Subsidiaries. The Executive shall not engage in any other business activity or serve in any governmental or academic position during the term of this Agreement, except as may be expressly approved in advance by the Board in writing. The Executive agrees to relocate his primary residence to a location within a reasonable distance of the Company’s offices in Raleigh, North Carolina, as promptly as possible after the Effective Date,but in no event, later than March 1, 2013.

4.    Compensation and Benefits. During the term of the Executive’s employment hereunder as compensation for all services performed by the Executive:

(a)    Base Salary. The Company shall pay the Executive a base salary at the rate of Six Hundred and Sixty-Five Thousand Dollars ($665,000) per year, payable in accordance with the payroll practices of the Company for its executives and subject to increase from time to time by the Board (but not decrease), in its sole discretion. Such base salary, as from time to time increased, is hereafter referred to as the “Base Salary.”

(b)    Annual Bonus Plan. The Executive shall be entitled to participate in any and all annual bonus plans (the “Annual Bonus Plans”) from time to time in effect for senior executives of the Company generally. The terms of each Annual Bonus Plan and Executive’s participation therein, including the form of payment, shall be determined by the compensation committee of the Board (or, if there is no such committee, by the Board); provided, however, that (i) the Executive shall be entitled to participate in such plans at a target opportunity of one hundred percent (100%) of his Base Salary (pro-rated in 2012 based on employment commencement date, and, for 2012, payable 50% in shares of the Company’s common stock and 50% in cash), (ii) each year the form of payment shall include at least fifty percent (50%) of such bonus amount in cash and, (iii) provided that the Executive is employed by the Company on the last day of the fiscal year for which such awards were earned with any awards thereunder payable only to the extent earned pursuant to the terms of the applicable Annual Bonus Plan and subject to adjustment in accordance with the terms of the applicable Annual Bonus Plan. Awards payable under the Annual Bonus Plans shall be payable not later than two and one-half (2½) months following the end of the fiscal year for which the awards were earned.The compensation committee of the Board (or, if there is no such committee, the Board) may alter, modify, add to or delete any Annual Bonus Plan at any time as it, in its sole judgment determines to be appropriate.

(c)    Long Term Incentive. Each fiscal year commencing with 2013, the Executive will receive a grant of long-term incentive awards having a fair market value that is not less than two hundred percent (200%) of the Executive's then current Base Salary subject to such time-based and performance-based vesting conditions as the Compensation Committee may impose, in its sole discretion, provided however, such grant shall not be less than $1,400,000. Such long-term incentive awards shall be issued under the Company’s then applicable Long Term Incentive Program and will

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be made to the Executive at the same time and on the same terms as awards are made to other participants in the Long Term Incentive Program.

(d)     Other Incentive Plans. The Executive shall be entitled to participate in any and all cash, equity, bonus and other incentive plans not otherwise described herein from time to time in effect for senior executives of the Company generally. The terms of each such plan and the Executive’s participation therein shall be determined by the compensation committee of the Board (or, if there is no such committee, by the Board). The compensation committee of the Board (or, if there is no such committee, the Board) may alter, modify, add to or delete any such plan at any time as it, in its sole judgment, determines to be appropriate.

(e)     Vacations. The Executive shall be entitled to an annual vacation of four (4) weeks, with reasonable advance notice and subject to the reasonable business needs of the Company. Vacation shall otherwise be governed by the policies of the Company, as in effect from time to time.

(f)    Other Benefits. Subject to any contribution therefor generally required of executives of the Company, the Executive shall be entitled to participate in any and all employee benefit plans from time to time in effect for executives of the Company generally, except to the extent such plans are in a category of benefit specifically otherwise provided to the Executive under this Agreement (e.g., severance pay). Such participation shall be subject to the terms of the applicable plan documents and generally applicable Company policies. Except to the extent such plans are in a category of benefit specifically otherwise provided to the Executive under this Agreement, the Board may alter, modify, add to or delete employee benefit plans at any time as it, in its sole judgment, determines to be appropriate.

(g)    Automobile Allowance. The Company shall provide the Executive while he continues to be employed by the Company with participation in the Company’s standard executive automobile program pursuant to which he would receive a current amount of eight hundred dollars ($800) per month as an automobile allowance.

(h)    Business Expenses. The Company shall pay or reimburse the Executive for all reasonable and necessary business expenses incurred or paid by the Executive in the performance of his duties and responsibilities hereunder, subject to any maximum annual limit or other restrictions on such expenses set by the Board and to such reasonable substantiation and documentation as may be specified by the Company from time to time. In the case of any reimbursement to which the Executive is entitled pursuant to this Section 4(h) that would constitute deferred compensation subject to Section 409A of the Code, the following additional rules shall apply: (i) the reimbursable expense must have been incurred, except as otherwise expressly provided in this Agreement, during the term of this Agreement; (ii) the amount of expenses eligible for reimbursement during any calendar year will not affect the amount of expenses eligible for reimbursement in any other calendar year; (iii) the reimbursement shall be made not later than December 31 of the calendar year following the calendar year in which the expense was incurred; and (iv) the Executive’s entitlement to reimbursement shall not be subject to liquidation or exchange for another benefit.

(i)    Relocation Expenses. The Company shall provide the Executive with the relocation benefits package set forth on Exhibit A attached hereto.

(j)    Sign-On Award.  The Executive shall be entitled to a Sign-On Award (the “Sign-On Award”) consisting of Restricted Stock Units (the “RSUs”) and options to acquire shares of the Company’s common stock (the “Options”) to be provided as follows:

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(i)     204,208 RSUs shall be granted to the Executive on the Effective Date.  Assuming the Executive’s continued employment with the Company, one third of the total number of RSUs granted shall vest on each of the second, third and fourth anniversaries of the Effective Date (unless otherwise fully vested immediately prior to any Change of Control or other events) and otherwise be subject to the terms and conditions of the attached RSU Agreement; and

(ii)Options to acquire 781,701 shares of the Company’s common stock shall be granted to the Executive on the Effective Date.  The exercise price of the Options will be the fair market value of a share of the Company’s common stock on the date of grant.  Assuming the Executive’s continued employment with the Company, one third of the total number of Options granted shall vest and become exercisable on each of the second, third and fourth anniversaries of the Effective Date (unless otherwise fully vested immediately prior to any Change of Control or other events) and otherwise be subject to the terms and conditions of the attached Option Agreement.

(k)    Country Club Use. During the term of the Executive’s employment hereunder, the Executive shall be eligible to use a Company-owned country club membership at the McConnell Golf Course in Wakefield Plantation, Raleigh, North Carolina.

(l)    Annual Physical Examination. During the term of the Executive’s employment hereunder, the Company shall reimburse the Executive for the cost and expense of an annual physical and related testing conducted at the Duke University Medical Center to the extent the cost and expense of such physical and testing are not covered by the Company’s group health plan in which the Executive is enrolled.

(m)    Payments/Actions by Company. Wherever it is provided in this Agreement that payment of any form of compensation or any other action shall be made by the Company, such payment or action may be made by any Subsidiary or Affiliate of the Company.

5.    Termination of Employment. The Executive’s employment hereunder shall terminate under the following circumstances:

(a)     Death. In the event of the Executive’s death during the term of Executive’s employment hereunder, the Executive’s employment shall immediately and automatically terminate.

(b)    Disability. The Company may terminate the Executive’s employment hereunder, upon notice to the Executive, in the event that the Executive becomes disabled during his employment hereunder. For this purpose, disability means that the Executive (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 twelve (12) 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 twelve (12) months, receiving income replacement benefits for a period of not less than six (6) months under an accident and health plan covering employees of the Company. If any question shall arise as to whether during any period the Executive is disabled within the meaning of this Section 5(b), the Executive, at the request of the Company, shall submit to a medical examination, at the Company’s sole cost and expense, by a physician mutually selected and agreed upon by the Company and Executive to determine whether the Executive is so disabled and such determination shall for the purposes of this Agreement be conclusive of the issue. If such

4

question shall arise and the Executive shall fail to submit to such medical examination, the Company’s determination of the issue shall be binding on the Executive.

(c)    By the Company for Cause. The Company may terminate the Executive’s employment hereunder for Cause at any time upon notice to the Executive setting forth the nature of such Cause. The following shall constitute Cause for termination: (i) the Executive’s conviction of or plea of nolo contendere to a felony or other crime involving moral turpitude (other than one involving a motor vehicle); (ii) the Executive’s fraud, theft or embezzlement committed with respect to the Company or its Subsidiaries; (iii) material breach by the Executive of any of the provisions of Sections 8, 9 or 10 hereof that causes demonstrable harm to the Company or any of its Subsidiaries; or (iv) the Executive’s willful and continued failure to perform his material duties to the Company and its Subsidiaries; provided, however, that the Company may terminate Executive’s employment hereunder for “Cause” within the meaning of this clause (iv) only after the Company has provided written notice to the Executive of the failure and the Executive shall not have remedied such failure within thirty (30) days following the effectiveness of such notice. “Cause” (including, without limitation, any “Cause” under clause (iv) above) shall not include any act or omission reasonably believed by the Executive in good faith to have been in and not opposed to the best interests of the Company and its Subsidiaries (without intent to gain, directly or indirectly, a profit to which the Executive was not legally entitled) and reasonably believed by the Executive not to have been improper or unlawful. In the event of any dispute between the Executive and the Company regarding whether “Cause” exists, any determination by the Board shall be subject to de novo review by any forum deciding the disputed issue, provided that such de novo review shall not otherwise change or shift the burden of proof in connection with any dispute resolution proceeding.

(d)    By the Company Other than for Cause. The Company may terminate the Executive’s employment, hereunder other than for Cause at any time upon not less than thirty (30) days notice to the Executive. In the event of termination of the Executive pursuant to this Section 5(d), the Board may elect to waive the period of notice or any portion thereof (it being understood that if the Board elects to waive the period of notice, or any portion thereof, the Company shall pay Executive’s Base Salary through the notice period or any portion thereof so waived).

(e)    By the Executive Other than for Good Reason. The Executive may terminate his employment hereunder other than for Good Reason (as defined in Section 5(f) below) at any time upon the provision of sixty (60) days written notice to the Company. In the event of termination of the Executive pursuant to this Section 5(e), the Board may elect to waive the period of notice or any portion thereof.

(f)    By the Executive for Good Reason. The Executive may terminate his employment hereunder for Good Reason upon written notice to the Company setting forth in reasonable detail the nature of such Good Reason; provided, that such written notice must be delivered to the Company within ninety (90) days of the initial existence of the condition or circumstance constituting or giving rise to the purported Good Reason. A termination by the Executive hereunder shall not be treated as a termination for Good Reason if the Company remedies the condition or circumstance constituting or giving rise to the purported Good Reason within thirty (30) days of the receipt of the Executive’s notice, or if actual termination occurs more than two (2) years following the initial existence of such condition or circumstance. The following shall constitute Good Reason for purposes of this Agreement: (i) relocation of the Executive’s primary office to a location that is more than fifty (50) miles from his then-current principal residence (following the Executive’s relocation of his principal residence to a location within reasonable

5

commuting distance of the Company’s offices in Raleigh, North Carolina), it being understood that the Executive may be required to travel frequently and that prolonged periods spent away from Executive’s office shall not constitute Good Reason; (ii) the assignment to Executive of duties materially inconsistent with Executive’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 3; (iii) the material breach by the Company of any material provision of this Agreement; (iv) any material reduction in the Base Salary or the applicable percentages of Base Salary used to determine bonuses under the Annual Bonus Plans; or (v) the Company’s failure to cause any successor to assume this Agreement as required by Section 19 below.

6.    Compensation upon Termination.

(a)    Death. In the event of a termination of the Executive’s employment hereunder by reason of death as contemplated by Section 5(a), the Company shall pay to the Executive’s designated beneficiary or, if no beneficiary has been designated by the Executive, to his estate, the accrued compensation and vested benefits required to be paid or provided pursuant to Section 6(g). In addition, the Company shall pay the Executive’s beneficiary or, if no beneficiary has been designated by the Executive, to his estate, the Annual Bonus for the fiscal year in which the Executive’s employment is terminated (pro-rated based on employment through the date of termination). The amount of such pro-rated Annual Bonus will be determined based on actual performance during such fiscal year and will be paid at the same time Annual Bonuses are paid to other members of senior management.

(b)    Disability. In the event of any termination of the Executive’s employment hereunder by reason of disability as contemplated by Section 5(b), the Company shall pay to the Executive the accrued compensation and vested benefits required to be paid or provided pursuant to Section 6(g). In addition, the Company shall pay the Executive the Annual Bonus for the fiscal year in which the Executive’s employment is terminated (pro-rated based on employment through the date of termination). The amount of such pro-rated Annual Bonus will be determined based on actual performance during such fiscal year and will be paid at the same time Annual Bonuses are paid to other members of senior management. The Company shall also continue to contribute to the premium cost of the Executive’s participation in the Company’s group medical and dental plans for eighteen (18) months (or such longer period as may be provided under the employee benefit plans of the Company) subject to any employee contribution applicable to the Executive on the Termination Date, but only if the Executive does not have access at reasonable cost to substantially equivalent benefits through another employer, and provided that the Executive is entitled to continue such participation under applicable law and plan terms. For the purpose of insuring that the Executive receives the full benefit of the Company’s short-term disability insurance plan, the Termination Date under Section 5(b) (Termination for Disability) shall be no earlier than the date that corresponds with the date the Executive exhausts his eligibility for short-term disability insurance benefits under the Company’s then-existing short-term disability plan. For the avoidance of doubt, nothing in this Agreement is intended to affect any rights the Executive may have under any long-term disability plan the Company may have and in which the Executive is entitled to participate.

(c)    By the Company for Cause. In the event of any termination of the Executive’s employment hereunder by the Company for Cause as contemplated by Section 5(c), the Company shall have no further obligations to the Executive under this Agreement other than payment of accrued compensation and vested benefits required to be paid or provided pursuant to Section 6(g).

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(d)    By the Company Other than for Cause or by the Executive for Good Reason. In the event of any termination of the Executive’s employment hereunder by the Company pursuant to Section 5(d) or by the Executive pursuant to Section 5(f), the Company shall pay to the Executive the accrued compensation and vested benefits required to be paid or provided pursuant to Section 6(g). In addition, the Company shall provide the Executive with the compensation and benefits described in (i) and (ii) below.

(i)    Not Close in Time to a Change of Control. In the event of any termination of the Executive’s employment hereunder by the Company pursuant to Section 5(d) or by the Executive pursuant to Section 5(f), which does not occur within three (3) months prior to or within two (2) years following a Change of Control, the Company (A) shall continue to pay the Executive the Base Salary at the rate in effect on the Termination Date for eighteen (18) months, (B) the Annual Bonus for the fiscal year in which the Executive’s employment is terminated (pro-rated based on employment through the date of termination) and (C) subject to any employee contribution applicable to the Executive on the Termination Date, shall continue to contribute to the premium cost of the Executive’s participation in the Company’s group medical and dental plans for eighteen (18) months, but only if the Executive does not have access at reasonable cost to substantially equivalent benefits through another employer, and provided that the Executive is entitled to continue such participation under applicable law and plan terms. In the event that the Executive is not permitted to continue under applicable law or the plan terms for the entire eighteen (18) month period for any reason, the Company shall reimburse the Executive for the portion of his monthly COBRA premium that is equal to the employer portion of the premium paid by the Company immediately prior to the Executive’s termination for the remainder of such eighteen month period. All such reimbursements shall be made no later than two (2) months following the end of the year in which the expense was incurred. The amount of the pro-rated Annual Bonus payable pursuant to clause (B) above will be determined based on actual performance during such fiscal year and will be paid at the same time Annual Bonuses are paid to other members of senior management.

(ii)    Close in Time to a Change of Control. In the event of any termination of the Executive’s employment hereunder by the Company pursuant to Section 5(d) or by the Executive pursuant to Section 5(f), which occurs within three (e) months prior to or within two (2) years following a Change of Control, the Company (A) shall continue to pay the Executive the Base Salary at the rate in effect on the Termination Date for twenty-four (24) months, (B) the Annual Bonus for the fiscal year in which Executive’s employment is terminated (pro-rated based on employment through the date of termination) and (C) subject to any employee contribution applicable to the Executive on the Termination Date, shall continue to contribute to the premium cost of the Executive’s participation in the Company’s group medical and dental plans for twenty-four (24) months, but only if the Executive does not have access at reasonable cost to substantially equivalent benefits through another employer, and provided that the Executive is entitled to continue such participation under applicable law and plan terms. In the event that the Executive is not permitted to continue under applicable law or the plan terms prior to the end of the twenty-four (24) month period for any reason, the Company shall reimburse the Executive for the portion of his COBRA premium that is equal to the employer portion of the premium costs paid by the Company immediately prior to the Executive’s termination (“Employee’s Portion”) for eighteen months following the termination of employment and if, at the end of that eighteen (18) month period he is still participating in the Company’s group medical and dental plans, the Company shall pay him a lump sum amount equal to six (6) months of the Employer’s Portion. Said lump sum payment shall be made within thirty (30) days following the end of that eighteen (18) month period. All

7

such reimbursements shall be made no later than two (2) months following the end of the year in which the expense was incurred. The amount of the pro-rated Annual Bonus payable pursuant to clause (B) above will be determined based on actual performance during such fiscal year and will be paid at the same time annual bonuses are paid to other members of senior management.

(iii)    Conditions. Any obligation of the Company to the Executive under Sections 6(b) and 6(d) hereof (other than the accrued compensation and vested benefits required to be paid or provided pursuant to Section 6(g)) is conditioned upon (A) the Executive’s signing a release of claims in the form of Exhibit B attached hereto (the “Employee Release”) and (B) the Executive’s continued full performance of his continuing obligations hereunder, including those under Sections 8 and 9. The Company shall provide the Executive with an executable copy of the Employee Release within seven (7) days following the Termination Date. The Executive must execute the Employee Release within the time period specified in the Employee Release which shall not be longer than forty-five (45) days. The Employee Release shall not be effective until any applicable revocation period has expired. Base Salary to which the Executive is entitled under Sections 6(b) and 6(d) hereof shall be payable in accordance with the normal payroll practices of the Company in effect on the Termination Date and will begin at the Company’s next regular payroll period which is at least five (5) business days following the effective date of the Employee Release, but shall be retroactive to next business day following the Termination Date, provided, however, that in all cases, such payments shall commence within ninety (90) days following the Executive’s separation from service, and further provided that if the ninety (90) day period begins in one taxable year for the Executive and ends in the subsequent taxable year for the Executive, then the payments shall not commence until the subsequent taxable year pursuant to the guidance provided in IRS Notice 2010-80.

(iv)     No reduction. The payments and contributions by the Company that are described in Sections 6(d)(i) and 6(d)(ii) hereof shall not be reduced by any income or other compensation received by the Executive subsequent to the termination of his employment.

(e)    By the Executive Other than for Good Reason. If the Executive shall terminate his employment pursuant to Section 5(e), the Company shall have no further obligations to the Executive under this Agreement other than payment of accrued compensation and vested benefits required to be paid or provided pursuant to Section 6(g). Notwithstanding the foregoing, if the Board elects to waive the period of notice, or any portion thereof, the payment of Base Salary shall continue through the notice period or any portion thereof so waived.

(f)    Delay in Payment Commencement on Account of Internal Revenue Code Section 409A. If the Executive is, at the time of separation from service, a “specified employee” (as hereinafter defined), any and all amounts payable in connection with such separation from service that constitute deferred compensation subject to Section 409A of the Code, as determined by the Company in its sole discretion, and that would (but for this sentence) be payable within six (6) months following such separation from service, shall not be paid until the date which is six (6) months and one (1) day after the date of such separation from service or, if earlier, the Executive’s date of death. In this regard, any payments that otherwise would have been made during such six (6) month period shall be paid to the Executive in a lump sum on the first date on which they may be paid, together with interest credited at the short-term applicable federal rate, compounded daily. For purposes of this subsection (f), “specified employee” means an individual determined by the Company to be a specified employee as defined in subsection (a)(2)(B)(i) of Section 409A of the Code. The Company may, but need not, elect in writing, subject to the applicable limitations under

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Section 409 A of the Code, any of the special elective rules prescribed in Section 1.409A-l(i) of the Treasury Regulations for purposes of determining “specified employee” status. Any such written election shall be deemed part of this Agreement.

(g)    Payment of Post-Termination Accrued Obligations Generally. In addition to the compensation and benefits provided pursuant to other provisions in this Section 6, following the Executive’s termination of employment for any reason, the Company (or its Affiliated or Subsidiaries, as applicable) shall (i) pay the Executive (or his beneficiary or estate if the Executive has died) all accrued but unpaid Base Salary earned through his Termination Date in accordance with the Company’s regular payroll practices, (ii) any accrued but unpaid Annual Bonus earned for the fiscal year ended prior to the Termination Date (except in the case of a Termination by the Company for Cause in accordance with the Section 5(c)) at the same time that annual bonuses are payable to other members of senior management, (iii) provide any vested benefits under any employee benefit plan referred to in Section 4(f) which specifically is designed to provide benefits following termination of employment (such as any such plan providing benefits upon disability or retirement) (but subject to all of the terms, if any, of each such other benefit plan as to how such vested benefits will be treated following termination of employment) and (iv) reimburse the Executive within thirty (30) days of his Termination Date for any business expenses incurred by the Executive prior to the Termination Date to the extent not reimbursed prior to the Termination Date, and (v) pay or provide the Executive with any other compensation, benefits or rights expressly set forth in any other written agreement to which Executive and any of the Company or any of its Subsidiaries or Affiliates shall become parties from time to time after the date hereof.

7.    Limitation.

(a)    In the event that it is determined that any payment or benefit provided by the Company or any of its Subsidiaries to or for the benefit of the Executive, either under this Agreement or otherwise, and regardless of under what plan or arrangement it was made, would, absent the application of this Section 7, be subject to excise tax (the “Excise Tax”) imposed by Section 4999 of the Code, or any successor provision (“Section 4999”), the Company will automatically reduce such payments and/or benefits to the extent, but only to the extent, necessary so that no portion of the remaining payments and/or benefits will be subject to the Excise Tax, unless the amount of such payment and benefits that the Executive would retain after payment of the Excise Tax and all applicable Federal, state and local income taxes without such reduction would exceed the amount of such payments and benefits that the Executive would retain after payment of all applicable Federal, state and local taxes after applying such reduction. If any payments or benefits are reduced pursuant to the preceding sentence, the Company shall have discretion in determining which, if any, of several payments and/or benefits (if more than one) are to be reduced.

(b)     Determinations as to whether any cutback is required and the amount of any cutback that may be required under this Section 7 will be made by the Company’s tax accountant unless the Executive has reasonable objections to the use of that firm, in which case the determinations will be made by a comparable firm chosen jointly by the Company and the Executive (the firm making the determinations to be referred to as the “Firm”). The determinations of the Firm will be binding upon the Company and the Executive except as the determinations are established in resolution (including by settlement) of a controversy with the Internal Revenue Service to have been incorrect. All fees and expenses of the Firm will be paid by the Company.

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8.    Restricted Activities. The Executive 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:

(a)    While the Executive is employed by the Company and for eighteen (18) months after his employment terminates (the “Non-Competition Period”) the Executive shall not, whether as owner, partner, investor, consultant, agent, employee, co-venturer or otherwise, sell, distribute, manufacture, or market products that are substantially the same as the Products (“Competitive Activities”), it being understood that, as of the Effective Date, Competitive Activities are selling, distributing, manufacturing or marketing textile belts and rolls used in the manufacturing of paper and paperboard: (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, the Executive agrees that during the Non-Competition Period, he shall not: (A) undertake any planning for any business involved in Competitive Activities; or (B) engage in any manner in any Competitive Activity. For the purposes of this Section 8, the Executive’s undertaking shall encompass all items and products that are intended to be used as direct substitutes for Products.

(b)     The Executive 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.

(c)     The Executive further agrees that while he is employed by the Company and during the period of eighteen (18) months after his employment terminates, the Executive 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 in connection with any Competitive Activity, (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 Competitive Activity. For purposes of the Executive’s obligations hereunder during that portion of the Non-Competition Period that follows the Termination Date, 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 Termination Date.

(d)     In the event that the eighteen (18) months period stated above is held unenforceable by a court of competent jurisdiction due to its length, then the period shall be one (1) year.

(e)    The provisions of Section 8(a) shall not be deemed breached as a result of Executive’s passive ownership of less than an aggregate of 5% of any class of securities of a Person engaged, directly or indirectly, in Competitive Activities, so long as Executive does not actively participate in the business of such Person; provided, however, that the stock of such Person is listed on a national securities exchange.

9.    Confidential Information.

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(a)    The Executive acknowledges that the Company and its Subsidiaries continually develop Confidential Information, that the Executive may develop Confidential Information for the Company or its Subsidiaries during his employment with the Company, and that the Executive may learn of Confidential Information during the course of such employment. The Executive 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 the Executive incident to his employment or other association with the Company or any of its Subsidiaries. The Executive understands that this restriction shall continue to apply after his employment terminates, regardless of the reason for such termination.

(b)     All documents, records, tapes and other media of every kind and description relating to the business, present or otherwise, of the Company or its Subsidiaries and any copies, in whole or in part, thereof (the “Documents”), whether or not prepared by the Executive, shall be the sole and exclusive property of the Company and its Subsidiaries. The Executive 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 Executive’s possession or control.

10.    Assignment of Rights to Intellectual Property. The Executive shall promptly and fully disclose all Intellectual Property to the Company. The Executive hereby assigns and agrees to assign to the Company (or as otherwise directed by the Company) the Executive’s full right, title and interest in and to all Intellectual Property. The Executive 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. The Executive will not charge the Company for time spent in complying with these obligations. All copyrightable works that the Executive creates shall be considered “work made for hire” and shall, upon creation, be owned exclusively by the Company.

11.    Notification Requirement. Until the conclusion of the Non-Competition Period, the Executive hereby agrees that prior to accepting employment with, or agreeing to provide services to, any other Person during any period during which the Executive remains subject to any of the covenants set forth in Section 8, the Executive shall provide such prospective employer with written notice of such provisions of this Agreement (with a copy sent simultaneously to the Company), unless such prospective employer is clearly not engaged in Competitive Activities (for example, a university).

12.    Enforcement of Covenants. The Executive acknowledges that he has carefully read and considered all the terms and conditions of this Agreement, including the restraints imposed upon him pursuant to Sections 8, 9 and 10 hereof. The Executive agrees that said restraints are necessary for the reasonable and proper protection of the Company and its Subsidiaries and that each and every one of the restraints is reasonable in respect to subject matter, length of time and geographic area. The Executive further acknowledges that, were he to breach any of the covenants contained in Sections 8, 9 and 10 hereof, the damage to the Company may be irreparable. The Executive therefore agrees that the Company, in addition to any other remedies available to it, shall be entitled to seek preliminary and permanent injunctive relief against any breach or threatened

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breach by the Executive of any of said covenants, without having to post bond. The parties further agree that, in the event that any provision of Sections 8, 9 and 10 hereof shall be determined by any court of competent jurisdiction to be unenforceable by reason of its being extended over too great a time, too large a geographic area or too great a range of activities, such provision may be “blue penciled” or written by the court to the extent necessary to render it enforceable to the maximum extent permitted by law.

13.    Conflicting Agreements. The Executive hereby represents and warrants that the execution of this Agreement and the performance of his obligations hereunder will not breach or be in conflict with any other agreement to which the Executive is a party or is bound and that the Executive is not now subject to any covenants against competition or similar covenants or any court order or other legal obligation that would affect the performance of his obligations hereunder. The Executive will not disclose to or use on behalf of the Company any proprietary information of a third party without such party’s consent.

14.    Definitions. Words or phrases which are initially capitalized or are within quotation marks shall have the meanings provided in this Section 14 and as provided elsewhere herein. For purposes of this Agreement, the following definitions apply:

(a)    “Affiliate” means, with respect to the Company or any other specified Person, any other Person directly or indirectly controlling, controlled by or under common control with the Company or such other specified Person, where control may be by management authority, equity interest or other means.

(b)    “Change of Control” shall mean any of the following which takes place after the Effective Date: (i) 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 fifty percent (50%) or more of the total number of votes that may be cast for the election of directors of the Company; (ii) any merger or consolidation involving the Company or any sale or other disposition of all or substantially all of the assets of the Company, or any combination of the foregoing, 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 in the case of any merger or consolidation or of the acquiring Person or Persons in the case of any sale or other disposition; or (iii) within twelve (12) months after a tender offer or exchange offer for voting securities of the Company (other than by the Company or any of its Subsidiaries), individuals who are Continuing Directors shall cease to constitute a majority of the Board. For the purpose 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.

(c)     “Confidential Information” means any and all confidential and proprietary 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)

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the development, research, testing, manufacturing, marketing and financial activities of the Company and its Subsidiaries, (ii) the 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 the Executive’s employment with the Company or any of its Subsidiaries (including prior to the Effective Date if applicable), (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. Confidential Information will not include such information known to Executive prior to Executive’s involvement with the Company and its Subsidiaries or information obtained by Executive from a third party (other than pursuant to a breach by Executive of this Agreement).

(d)     “Continuing Director” means, with respect to any event referred to in the definition of “Change of Control,” each individual who was a director of the Company immediately prior to the event in question and each individual whose election as a director by the Board or whose nomination for election by the stockholders of the Company was approved by a vote of two-thirds of the directors then still in office who were directors immediately prior to such event or whose election or nomination was previously so approved.

(e)    “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 the Executive (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 the Executive’s employment with the Company or any of its Subsidiaries that relate to either the 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 the Executive’s employment with the Company or any of its Subsidiaries (including prior to the Effective Date if applicable) 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.

(f)    “Person” means an individual, a corporation, a limited liability company, an association, a partnership, an estate, a trust and any other entity or organization.

(g)    “Products” mean all products manufactured, sold, licensed, leased or otherwise distributed or put into use by the Company or any of its Subsidiaries, together with all services provided by the Company or any of its Subsidiaries, as of the date of Executive’s termination of employment.

(h)     “Subsidiary” shall mean any Person of which the Company (or other specified Person) shall, directly or indirectly, own beneficially or control the voting of at least a majority of the outstanding capital stock (or other shares of beneficial interest) entitled to vote generally or at least a majority of the partnership, membership, joint venture or similar interests, or in which the

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Company (or other specified Person) or a Subsidiary thereof shall be a general partner or joint venturer without limited liability.

15.    Section 409A. The compensation and benefits provided to the Executive hereunder are intended to be exempt from the requirements of Section 409A of the Code or to comply with the requirements of Section 409A of the Code so that the Executive will not be subject to tax penalties imposed under Section 409A of the Code and this Agreement shall be construed accordingly. All references in this Agreement to termination of employment, separation from service, retirement and similar or correlative terms, when used in a context that bears upon the vesting, payment or timing of payment of any amounts or benefits that constitute or could constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code, shall be construed to require a “separation from service” (as that term is defined in Section 1.409A-1(h) of the Treasury Regulations) from the Company and from all other corporations and trades or businesses, if any, that would be treated as a single “service recipient” with the Company under Section 1.409A-l(h)(3) of the Treasury Regulations. The Company may, but need not, elect in writing, subject to the applicable limitations under Section 409A of the Code, any of the special elective rules prescribed in Section 1.409A-1(h) of the Treasury Regulations for purposes of determining whether a “separation from service” has occurred. Any such written election shall be deemed part of this Agreement. Each installment payment required under this Agreement shall be considered a separate payment for purposes of Section 409A.

16.    Nondisparagement.

(i)     The Executive shall not, whether in writing or orally, publicly malign, denigrate or disparage the Company, its Subsidiaries or Affiliates or their respective predecessors and successors, or any of the current or former directors, officers, employees, shareholders, partners, members, agents or representatives of any of the foregoing, with respect to any of their respective past or present activities, or otherwise publish (whether in writing or orally) statements that tend to portray any of the aforementioned parties in an unfavorable light.

(ii)    The directors, officers and members of senior management of the Company, its Subsidiaries and Affiliates shall not, whether in writing or orally, publicly malign, denigrate or disparage the Executive with respect to any of his past or present activities, or otherwise publish (whether in writing or orally) statements that tend to portray the Executive in an unfavorable light.

(iii)     Nothing in Section 16(i) or 16(ii) shall or shall be deemed to prevent or impair the Executive or the directors, officers and members of senior management of the Company, its Subsidiaries and Affiliates from pleading or testifying, to the extent that he or she reasonably believes his or her pleadings or testimony to be true, in any legal or administrative proceeding if such testimony is compelled or requested, or from otherwise complying with legal requirements.

17.    Survival. The provisions of this Agreement shall survive following the Termination Date if so provided herein or desirable to accomplish the purposes of other surviving provisions, including without limitation the provisions of Sections 6, 7, 8, 9, 11, 15, and 16.

18.    Withholding. All payments made by the Company under this Agreement shall be reduced by any tax or other amounts required to be withheld by the Company under applicable law.

19.    Assignment. Neither the Company nor the Executive may make any assignment of this Agreement or any interest herein, by operation of law or otherwise, without the prior written

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consent of the other; provided, however, that the Company may assign its rights and obligations under this Agreement without the consent of the Executive in the event that the Company shall hereafter effect a reorganization, consolidation or merger or to whom the Company transfers all or substantially all of its properties or assets so long as the Company requires any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. This Agreement shall inure to the benefit of and be binding upon the Company and the Executive, their respective successors, executors, administrators, heirs and permitted assigns.

20.    Severability. If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

21.    Waiver. No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of either party to require the performance of any term or obligation of this Agreement, or the waiver by either party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.

22.     Notices. Any and all notices, requests, demands and other communications provided for by this Agreement shall be in writing and shall be effective when delivered in person, when delivered by courier at the Executive’s last known address on the books of the Company, or five (5) business days following deposit in the United States mail, postage prepaid, registered or certified, and addressed to the Executive at his last known address on the books of the Company or, in the case of the Company, at its principal place of business, attention of the Chairman of the Board or to such other address as either party may specify by notice to the other actually received.

23.    Entire Agreement. This Agreement and the other plans and documents specifically referred to herein constitute the entire agreement between the parties regarding the subject matter of this Agreement and such other plans and documents and supersede all prior communications, agreements and understandings, written or oral, with respect to such subject matter.

24.    Amendment. This Agreement may be amended or modified only by a written instrument signed by the Executive and by an expressly authorized representative of the Company.

25.    Headings. The headings and captions in this Agreement are for convenience only and in no way define or describe the scope or content of any provision of this Agreement.

26.    Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument.

27.    Governing Law. This is a North Carolina contract and shall be construed and enforced under and be governed in all respects by the laws of the State of North Carolina, without regard to the conflict of laws principles thereof.

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28.    Seal. The Executive warrants and represents that he hereby adopts the word/symbol (SEAL) as his seal with the intent that this Agreement be signed by the Executive under seal and treated as a sealed instrument.

29.    Consideration. The parties expressly waive any defense either may now or hereafter have as to the lack of inadequacy of consideration for this Agreement.

30.    Director’s and Officer’s Liability Insurance; Indemnification. The Company shall indemnify Executive to the fullest extent permitted by law (to the extent not prohibited by the Company’s Certificate of Incorporation or Bylaws in effect as of the date hereof, a copy of which has been provided to Executive) for any actions or inactions as an officer or director of the Company, its Subsidiaries or any related entity and as a fiduciary of any benefit plan of any of the foregoing.

31.    Reimbursement of Legal Expenses. The Company will reimburse the Executive for reasonable legal fees and expenses incurred by the Executive in connection with the negotiation and execution of this Agreement and the agreements ancillary hereto up to Twenty-Five Thousand and 00/100 Dollars ($25,000). Said reimbursement shall be made within thirty (30) days after the Executive submits to the Company the invoice for such legal fees and expenses.

THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK

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IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the Executive, and by the Company, through its duly authorized representative, as the date first above written.

THE EXECUTIVE:    XERIUM TECHNOLOGIES, INC.

Harold C. Bevis___________________ (SEAL)    By: /s/ James F. Wilson__________

Harold C. Bevis    Name:     James F. Wilson_________

Title: Chairman of the Board______

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EXHIBIT A

RELOCATION PACKAGE

The Company will provide the Executive with the Company’s normal relocation package and, in addition and notwithstanding anything to the contrary in that package, the Company shall:

1. Reimburse the Executive for temporary housing and relocation expenses he incurs for a maximum of four (4) months following the Effective Date. Reimbursement for such temporary housing and relocation expenses shall include rent, utilities, airfare, taxes, insurance, and such other expenses as are reasonably attributable to residence in temporary housing and relocation, up to a maximum total reimbursement of Five Thousand Dollars and 00/100 ($5,000.00) per month.

2. Reimburse the Executive for two househunting trips for the Executive and his family members associated with the relocation.

3. Pay for shipment of two of the Executive’s automobiles from Illinois to North Carolina.

4. Pay for the cost of storage of the Executive’s household goods for up to eight (8) months and pay for the cost of moving his household goods from storage and from his temporary housing to his permanent housing.

5. Assist the Executive with the sale of his personal residence as follows:

a. The Company shall select a relocation company which shall obtain broker market analyses (“BMA”) from three brokers providing an expected selling price for the residence.

b. The Executive shall list the residence with one of those three brokers.

c. The residence shall be listed at 105% of the average of the three BMA values.

d. If the residence has not been sold sixty (60) days after the initial listing, then on the sixty-first (61^st) day after the initial listing, the listing price shall be reduced to 102% of the BMA and an appraisal process shall begin. The Executive shall select two appraisers and an alternate appraiser from a list of appraisers provided to the Executive by the relocation company.

e. After the appraisers are selected, the two selected appraisers shall provide appraisals of the residence. If the two appraisal values are reasonably close in value, those two appraisals shall be averaged to determine the “Buyout Price.” If the two appraisals are not reasonably close in value, then an appraisal shall be obtained from the alternate appraiser and that third appraisal shall be averaged with the closer in value to it of the other two appraisals. The resulting average shall be the Buyout Price.

f. If the residence has not sold 120 days after the initial listing, then the Executive shall have seven (7) days in which to notify the Company in writing that he wants the Company to buy the residence at the Buyout Price. If he so notifies the

Company, the Company shall commence proceedings to buy the residence at the Buyout Price, otherwise the Executive shall continue to market the residence.

If there is any discrepancy between this Exhibit A and the Company’s normal relocation package, the provisions of this Exhibit A shall govern. The parties acknowledge that Crown Relocations is not the party handling the relocation.

EXHIBIT B

RELEASE OF CLAIMS

1.    Release of Claims

In consideration of the payments and benefits described in the Employment Agreement (the “Employment Agreement”) dated as of August [__], 2012, by and among Harold Bevis (hereinafter “you” or “Executive”) and Xerium Technologies, Inc. (hereinafter the “Company”), to which you agree that you are not entitled until and unless you execute this Release of Claims (“Release”) and it becomes effective in accordance with the terms hereof, you, for and on behalf of yourself and your heirs, successors and assigns, except as specifically otherwise provided in the last sentence of this Section 1 and Section 2 of this Release, hereby waive and release any common law, statutory or other complaints, claims, charges or causes of action of any kind whatsoever, both known and unknown, in law or in equity, which you ever had, now have or may have against the Company and each of its shareholders, subsidiaries, predecessors, successors, assigns, directors, officers, partners, members, managers, employees, trustees (in their official and individual capacities), employee benefit plans and their administrators and fiduciaries (in their official and individual capacities), representatives or agents, and each of their affiliates, successors and assigns, (collectively, the “Releasees”) by reason of acts or omissions which have occurred on or prior to the date that you sign this Release, on account of, arising out of or in connection with your employment and/or the termination thereof, or the provision of any services to the Releasees, or any term or condition of that employment or service, arising under federal, state or local laws pertaining to employment, including the Age Discrimination in Employment Act of 1967 (“ADEA,” a law which prohibits discrimination on the basis of age), the Older Workers Benefit Protection Act, the National Labor Relations Act, the Civil Rights Act of 1991, the Americans With Disabilities Act of 1990, Title VII of the Civil Rights Act of 1964, the Employee Retirement Income Security Act of 1974, the Family and Medical Leave Act, the Sarbanes-Oxley Act of 2002, all as amended, and any other Federal, state and local laws relating to discrimination on the basis of age, sex or other protected class, all claims under Federal, state or local laws for express or implied breach of contract, wrongful discharge, defamation, intentional infliction of emotional distress, and any related claims for attorneys’ fees and costs. You further agree that this Release may be pleaded as a full defense to any action, suit, arbitration or other proceeding covered by the terms hereof which is or may be initiated, prosecuted or maintained by you, your descendants, dependents, heirs, executors, administrators or permitted assigns. By signing this Release, you acknowledge that you intend to waive and release any rights known or unknown that you may have against the Releasees under these and any other laws by reason of acts or omissions which have occurred on or prior to the date that you sign this Release, on account of, arising out of or in connection with your employment and/or the termination thereof, or the provision of any services to the Releasees, or any term or condition of that employment or service; provided, that you do not waive or release claims with respect to (a) rights that cannot be so released as a matter of applicable law, (b) breach of the terms, provisions or covenants of this Release or the payments and benefits provided to you and your family members pursuant to Section 6 of the Employment Agreement, (c) accrued vested benefits under employee benefit plans of the Company and its subsidiaries subject to the terms and conditions of such plans and applicable law, (d) any rights you may have solely in connection with your capacity as a stockholder of the Company (without regard to your employment or termination of employment with the Company), (e) any claim arising under the terms of the Employment Agreement after the effective date of this release, and (f) any claims subject to (A) indemnification by the Company under any current article, section or provision of the Company’s Certificate of Incorporation or

Bylaws related to liability and/or indemnification of officers and directors of the Company or under any former article, section or provision of any of the foregoing which remain in force, or (B) coverage under any of the Company’s director and officer insurance policies (collectively, the “Unreleased Claims”).

2.    Proceedings

You acknowledge that you have not filed any complaint, charge, claim or proceeding, against any of the Releasees before any local, state or federal agency, court or other body (each individually a “Proceeding”). You represent that you are not aware of any basis on which such a Proceeding could reasonably be instituted. Except with respect to Unreleased Claims, you (i) acknowledge that you will not initiate or cause to be initiated any Proceeding and will not participate in any Proceeding related to any claims released by you under Section 1 of this Release, in each case, except as required by law; and (ii) waive any right you may have to benefit in any manner from any relief (whether monetary or otherwise) arising out of any Proceeding related to any claims released by you under Section 1 of this Release, including any Proceeding conducted by the Equal Employment Opportunity Commission (“EEOC”). Further, you understand that, by executing this Release, you will be limiting the availability of certain remedies that you may have against the Company and limiting also your ability to pursue certain claims against the Releasees. Notwithstanding the above, nothing in Section 1 of this Release shall prevent you from (i) initiating or causing to be initiated any complaint, charge, claim or proceeding against the Company before any local, state or federal agency, court or other body challenging the validity of the waiver of claims under the ADEA contained in Section 1 of this Release (but no other portion of such waiver); (ii) initiating or participating in an investigation or proceeding conducted by the EEOC or any other Federal, State or Local governmental or quasi-governmental entity; or (iii) filing any claim for unemployment benefits.

3.    Time to Consider

You acknowledge that you have been advised that you have twenty-one (21) days from the date of receipt of this Release to consider all the provisions of this Release. You acknowledge that you were provided with this Release in connection with the negotiation of your employment agreement with the Company in August of 2012. You further acknowledge that you may not execute this Release prior to the date your employment with the Company terminates. YOU FURTHER ACKNOWLEDGE THAT YOU HAVE READ THIS RELEASE CAREFULLY, YOU HAVE BEEN ADVISED BY THE COMPANY TO CONSULT AN ATTORNEY PRIOR TO EXECUTING THIS RELEASE, AND YOU FULLY UNDERSTAND THAT BY SIGNING BELOW YOU ARE GIVING UP CERTAIN RIGHTS WHICH YOU MAY HAVE TO SUE OR ASSERT A CLAIM AGAINST ANY OF THE RELEASEES. YOU ACKNOWLEDGE THAT YOU HAVE NOT BEEN FORCED OR PRESSURED IN ANY MANNER WHATSOEVER TO SIGN THIS AGREEMENT, AND YOU AGREE TO ALL OF ITS TERMS VOLUNTARILY.

4.    Revocation

You hereby acknowledge and understand that you shall have seven (7) days from the date of execution of this Release to revoke your execution of this Release and that neither the Company nor any other person is obligated to provide any benefits to you pursuant to this Release until eight (8) days have passed since your signing of this Release without your having revoked this Release.

If you revoke this Release, you will be deemed not to have accepted the terms of this Release, and no action will be required of the Company under any section of this Release.

5.    No Admission

This Release does not constitute an admission of liability or wrongdoing of any kind by the Executive or the Company.

6.    General Provisions

A failure of any of the Releasees to insist on strict compliance with any provision of this Release shall not be deemed a waiver of such provision or any other provision hereof. If any provision of this Release is determined to be so broad as to be unenforceable, such provision shall be interpreted to be only so broad as is enforceable, and in the event that any provision is determined to be entirely unenforceable, such provision shall be deemed severable, such that all other provisions of this Release shall remain valid and binding upon Executive and the Releasees.

7.    Governing Law

The validity, interpretations, construction and performance of this Release shall be governed by the laws of the State of North Carolina without giving effect to conflict of laws principles.

IN WITNESS WHEREOF, you have hereunto set your hand as of the day and year set forth opposite your signature below.

________________________        __________________________

Date:                        Harold C. Bevis

EX-10.2

Exhibit 10.2

XERIUM TECHNOLOGIES, INC.

TIME-BASED RESTRICTED STOCK UNITS AGREEMENT

(Employment Inducement Award)

Dated as of August 15, 2012

THIS RESTRICTED STOCK UNITS AGREEMENT is made by and between Xerium Technologies, Inc. (the “Company”) and Harold C. Bevis (the “Employee”).

WHEREAS, the Employee has entered into an employment agreement, executed and effective as of the date hereof, by and between the Employee and the Company (the “Employment Agreement”); and

WHEREAS, in accordance with the terms of the Employment Agreement, the Committee desires to make an award of restricted stock units to the Employee as an “employment inducement award” (within the meaning of Rule 303A.08 of the New York Stock Exchange Listed Company Manual).

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, and for other good and valuable consideration, the parties agree as follows:

1. The Restricted Stock Units Award. In accordance with the employment inducement award exception to the shareholder approval requirements of the New York Stock Exchange (the “NYSE”) set forth in Rule 303A.00 of the New York Stock Exchange Listed Company Manual, the Company hereby grants to the Employee 204,208 restricted stock units (the “Units”). It is understood that the grant of such Units is not made pursuant to the Company’s 2010 Equity Incentive Plan (the “Plan”) or any other equity-based incentive plan of the Company or its Affiliates; provided, however, that, unless inconsistent with the express terms of this Agreement, this Agreement shall be construed, and the Units shall be administered, consistent with the provisions of the Plan, the terms of which are herein incorporated by reference. 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 the Units are subject to the restrictions described in this Agreement and the Plan in addition to such other restrictions, if any, as may be imposed by law.

2. Definitions. The following definitions will apply for purposes of this Agreement. Capitalized terms not defined in the Agreement shall have the same meaning as in the Plan, including without limitation the following terms: “Affiliate”; “Committee”; and “Covered Transaction”.

(a) “Agreement” means this Restricted Stock Units Agreement by and between the Company and the Employee.

(b) “Award” means the grant of Units in accordance with this Agreement.

(c) “Cause” has the meaning ascribed to it in the Employment Agreement (as in effect on the date hereof).

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(d) “Change of Control” has the meaning ascribed to it in the Employment Agreement (as in effect on the date hereof).

(e) “Change of Control Termination” means a termination of the Employee’s employment with the Company or a member of the Company Group that occurs within three (3) months prior to or two (2) years following a Change of Control as a result of (x) termination by a member of the Company Group without Cause or (y) a Good Reason Termination.

(f) “Common Stock” means the common stock of the Company, $0.001 par value.

(g) “Company Group” means the Company together with its Affiliates.

(h) “Fair Market Value” means, on the applicable date, or if the applicable date is not a date on which the NYSE is open the next preceding date on which the NYSE was open, the last sale price with respect to such Common Stock reported on the NYSE or, if on any such date such Common Stock is not quoted by NYSE, the average of the closing bid and asked prices with respect to such Common Stock, as furnished by a professional market maker making a market in such Common Stock selected by the Committee in good faith; or, if no such market maker is available, the fair market value of such Common Stock as of such day as determined in good faith by the Committee.

(i) “Good Reason Termination” shall mean a termination of employment by the Employee with “Good Reason,” as such term is defined in the Employment Agreement (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.

(j) “Grant Date” means August 15, 2012.

(k) “Payment Date” means, as to Vested Units, within 30 days of the date on which the Units become Vested, provided that such Payment Date shall be immediately preceding the Change of Control transaction with respect to Units that become Vested in connection with a Change of Control.

(l) “Pro Rata Portion” shall mean the product of (x) a fraction, the numerator of which is, as of the time of measurement, the number of months (rounded down to the nearest whole number) occurring since the most recently occurring Vesting Date (or the Grant Date if a Vesting Date has not yet occurred) and the denominator of which is 12 and (y) (i) if the time of measurement is prior to the first Vesting Date, 33.33% of the Units not previously Vested; (ii) if the time of measurement is between the first and second Vesting Dates, 50% of the Units not previously Vested; or (iii) if the time of measurement is between the second and third Vesting Dates, 100% of the Units not previously Vested.

(m) “Unit” means a notional unit which is equivalent to a single share of Common Stock on the Grant Date, subject to Section 8(a).

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(n) “Vested” means that portion of the Award to which the Employee has a nonforfeitable right.

(o) “Vesting Dates” means the dates set forth in Section 3 of this Agreement.

3. Vesting. Subject to Sections 5 and 6 below, the Award shall become Vested based on the following schedule: 

Vesting Date	Percentage of Units (including any Units then credited to the Employee pursuant to Section 7) Vested on Vesting Date
August 15, 2014	33.33%
August 15, 2015	33.33%
August 15, 2016	33.34%

4. Payment of Award. Subject to Section 8(d) below, on the Payment Date, the Company shall issue to the Employee that number of shares of Common Stock as equals that number of Units which have become Vested.

5. Change of Control. In the event of a Change of Control, all outstanding Units shall become fully Vested immediately prior to the closing of the Change of Control.

6. Termination of Employment.

(a) Resignation or Termination by the Company. If the Employee ceases to be employed by the Company Group prior to a Vesting Date as a result of resignation, dismissal or any other reason, then the portion of the Award that has not previously Vested shall be forfeited automatically; provided that (i) in the event of a termination by a member of the Company Group without Cause or a Good Reason Termination, a portion of the Award equal to the Pro Rata Portion as of the time of termination shall Vest immediately prior to such termination and (ii) in the event that the Employee’s employment termination is a Change of Control Termination, then the entire portion of the Award (or any substitute award) that is then not Vested shall become Vested on the date of termination.

(b) Meaning of termination of employment. If the Company or a member of the Company Group provides Employee a written notice of termination of employment but the termination of employment is not effective for a period of more than thirty (30) days due to applicable law or contractual arrangements between a member of the Company Group and the Employee, for the purposes of this Award, including without limitation Section 6(a) hereof, the Employee’s employment shall be deemed terminated and the Employee shall be deemed ceased to be employed by the Company Group on the date that is thirty (30) days from the date of such notice instead of the actual date of termination.

7. Dividends. On each date on which dividends are paid by the Company, the Employee shall be credited with that number of additional Units (including fractional Units) as is

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equal to the amount of the dividend that would have been paid on the Units then credited to the Employee under this Agreement (which shall not include any Vested Units following the Payment Date in respect of such Vested Units) had they been held in Common Stock on such date divided by the Fair Market Value of a share of Common Stock on such date.

8. Miscellaneous.

(a) Adjustments Based on Certain Changes in the Common Stock. In the event of any stock split, reverse stock split, stock dividend, recapitalization or similar change affecting the Common Stock, the Award shall be equitably adjusted.

(b) No Voting Rights. The Award shall not be interpreted to bestow upon the Employee any equity interest or ownership in the Company or any Affiliate prior to the applicable Payment Date, and then only with respect to the shares of Common Stock issued on such Payment Date.

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

(d) Withholding. The Employee is responsible for payment of any taxes required by law to be withheld by the Company with respect to an Award. To facilitate that payment, the Company will, to the extent permitted by law, retain from the number of shares of Common Stock issued to the Employee on the Payment Date that number of shares necessary for payment of the minimum tax withholding amount, valued at their Fair Market Value on the business day most immediately preceding the date of retention. To the extent the Company’s withholding obligation cannot be satisfied by means of share withholding, the Company may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind due to the Employee.

(e) 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.

(f) 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.

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(g) 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.

(h) 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.

(i) 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.

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

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IN WITNESS WHEREOF, the undersigned have executed this Restricted Stock Units Agreement as of the date first written above.

XERIUM TECHNOLOGIES, INC.

By: /s/ James F. Wilson            

Name: James F. Wilson            

Title: Chairman of the Board            

EMPLOYEE

By: /s/ Harold C. Bevis            

Harold C. Bevis

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EX-10.3

Exhibit 10.3

XERIUM TECHNOLOGIES, INC.

OPTION AGREEMENT

(Employment Inducement Award)

Dated as of August 15, 2012

THIS OPTION AGREEMENT is made by and between Xerium Technologies, Inc. (the “Company”) and Harold C. Bevis (the “Employee”).

WHEREAS, the Employee has entered into an employment agreement, executed and effective as of the date hereof, by and between the Employee and the Company (the “Employment Agreement”); and

WHEREAS, in accordance with the terms of the Employment Agreement, the Committee desires to award a nonqualified stock option to the Employee as an “employment inducement award” (within the meaning of Rule 303A.08 of the New York Stock Exchange Listed Company Manual).

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, and for other good and valuable consideration, the parties agree as follows:

1. The Option Award. In accordance with the employment inducement award exception to the shareholder approval requirements of the New York Stock Exchange (the “NYSE”) set forth in Rule 303A.00 of the New York Stock Exchange Listed Company Manual, the Company hereby grants to the Employee a nonqualified stock option (the “Option”) to acquire 781,701shares of the Common Stock of the Company (the “Shares”) at the Option Price per Share of $4.00, the Fair Market Value on the date of the grant (the “Option Price”). It is understood that the grant of such Option is not made pursuant to the Company’s 2010 Equity Incentive Plan (the “Plan”) or any other equity-based incentive plan of the Company or its Affiliates; provided, however, that, unless inconsistent with the express terms of this Agreement, this Agreement shall be interpreted, and the Option shall be administered, consistent with the provisions of the Plan, the terms of which are herein incorporated by reference. The Option shall be exercisable, only to the extent that such Option is Vested, as provided in this Agreement. The Employee’s rights to the Option are subject to the restrictions described in this Agreement and the Plan in addition to such other restrictions, if any, as may be imposed by law. The future value of such Shares is unknown and cannot be predicted with certainty. If such Shares do not increase in value, the Option will have no value.

2. Definitions. The following definitions will apply for purposes of this Agreement. Capitalized terms not defined in this Agreement shall have the same meaning as in the Plan, including without limitation the following terms: “Affiliate”; “Committee”; and “Covered Transaction”.

(a) “Agreement” means this Option Agreement by and between the Company and the Employee.

(b) “Award” means the grant of the Option in accordance with this Agreement.

(c) “Cause” has the meaning ascribed to it in the Employment Agreement (as in effect on the date hereof).

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(d) “Change of Control” has the meaning ascribed to it in the Employment Agreement (as in effect on the date hereof).

(e) “Change of Control Termination” means a termination of the Employee’s employment with the Company or a member of the Company Group that occurs within three (3) months prior to or two (2) years following a Change of Control as a result of (x) termination by a member of the Company Group without Cause or (y) a Good Reason Termination.

(f) “Common Stock” means the common stock of the Company, $0.001 par value.

(g) “Company Group” means the Company together with its Affiliates.

(h) “Fair Market Value” means, on the applicable date, or if the applicable date is not a date on which the NYSE is open the next preceding date on which the NYSE was open, the last sale price with respect to such Common Stock reported on the NYSE or, if on any such date such Common Stock is not quoted by NYSE, the average of the closing bid and asked prices with respect to such Common Stock, as furnished by a professional market maker making a market in such Common Stock selected by the Committee in good faith; or, if no such market maker is available, the fair market value of such Common Stock as of such day as determined in good faith by the Committee.

(i) “Good Reason Termination” shall mean a termination of employment by the Employee with “Good Reason,” as such term is defined in the Employment Agreement (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.

(j) “Grant Date” means August 15, 2012.

(k) “Pro Rata Portion” shall mean the product of (x) a fraction, the numerator of which is, as of the time of measurement, the number of months (rounded down to the nearest whole number) occurring since the most recently occurring Vesting Date (or the Grant Date if a Vesting Date has not yet occurred) and the denominator of which is 12 and (y) (i) if the time of measurement is prior to the first Vesting Date, 33.33% of the portion of the Option not previously Vested; (ii) if the time of measurement is between the first and second Vesting Dates, 50% of the portion of the Option not previously Vested; or (iii) if the time of measurement is between the second and third Vesting Dates, 100% of the portion of the Option not previously Vested.

(l) “Vested” means that portion of the Award to which the Employee has a nonforfeitable right.

(m) “Vesting Dates” means the dates set forth in Section 3 of this Agreement.

3. Term of Option. Subject to earlier termination under Section 7 hereof, the term of the Option shall be ten (10) years (the “Term”).

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4. Vesting. Subject to Sections 5 and 6 below, the Employee shall not have the right to exercise the Option until the date the applicable portion of the Option becomes Vested based on the following schedule:

Vesting Date	Portion of Option Vested on Vesting Date
August 15, 2014	33.33%
August 15, 2015	33.33%
August 15, 2016	33.34%

5. Change of Control. In the event of a Change of Control, the Option shall become fully Vested immediately prior to the closing of the Change of Control.

6. Termination of Employment.

(a) Resignation or Termination by the Company. If the Employee ceases to be employed by the Company Group prior to a Vesting Date as a result of resignation, dismissal or any other reason, then the portion of the Option that has not previously Vested shall be forfeited automatically; provided that (i) in the event of a termination by a member of the Company Group without Cause or a Good Reason Termination, a portion of the Award equal to the Pro Rata Portion as of the time of termination shall Vest immediately prior to such termination and (ii) in the event that the Employee’s employment termination is a Change of Control Termination, then the entire portion of the Award (or any substitute award) that is then not Vested shall become Vested on the date of termination.

(b) Meaning of termination of employment. If the Company or a member of the Company Group provides Employee a written notice of termination of employment but the termination of employment is not effective for a period of more than thirty (30) days due to applicable law or contractual arrangements between a member of the Company Group and the Employee, for the purposes of this Award, including without limitation Section 6(a) hereof, the Employee’s employment shall be deemed terminated and the Employee shall be deemed ceased to be employed by the Company Group on the date that is thirty (30) days from the date of such notice instead of the actual date of termination.

7. Termination of Option. The Option may not be exercised to any extent by anyone after the first to occur of the following events:

(a) The expiration of the Term of the Option;

(b) In the event of a termination of the Employee’s employment by the Company Group without Cause or a Good Reason Termination, one hundred twenty (120) days following the date of such a termination of service;

(c) The date the Company Group terminates the Employee’s employment for Cause; or

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(d) Twelve (12) months following the Employee’s termination of employment with the Company Group by reason of theEmployee’s death or Disability.

8. Exercise of Option. The Option may be exercised in whole or in part by delivery of an exercise notice in the form attached hereto (the “Exercise Notice”) which shall state the election to exercise the Option and set forth the number of Shares with respect to which the Option is being exercised. The Exercise Notice shall be accompanied by payment of an amount equal to the aggregate Option Price as to all exercised Shares. Payment of such amount shall be made in one or any combination of the following forms: (i) in cash or its equivalent, (ii) through a “net exercise” such that, without the payment of any funds, the Employee may exercise the Option and receive the net number of Shares equal to (x) the number of Shares as to which the Option is being exercised, multiplied by (y) a fraction, the numerator of which is the Fair Market Value per Share on the date less the Option Price per Share, and the denominator of which is such Fair Market Value per Share, rounded down to the nearest whole number, or (iii) in any other method approved or accepted by the Committee in its sole discretion. The Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by the aggregate Option Price.

9. Non-Transferability of Option. This Option may not be transferred in any manner otherwise than by will or the laws of descent and distribution and, during the Employee’s lifetime, may only be exercised by the Employee, provided that the Committee may permit transfers to the Employee’s family members or to certain entities controlled by the Employee or his or her family members. Any such permitted transferee shall be subject to all the terms and conditions of the Plan and Agreement, including the provisions relating to the termination of the right to exercise the Option.

10. Miscellaneous.

(a) Adjustments Based on Certain Changes in the Common Stock. In the event of any stock split, reverse stock split, stock dividend, recapitalization or similar change affecting the Common Stock, the Award shall be equitably adjusted in a manner that would not constitute a modification within the meaning of Treasury Regulation Section 1.409A-1(a)(5)(v).

(b) No Rights as Stockholder. The Award shall not be interpreted to bestow upon the Employee any equity interest or ownership in the Company or any Affiliate or any rights as a stockholder.

(c) No Assignment. No right or benefit or payment under the Award shall be subject to assignment or other transfer nor shall it be liable or subject in any manner to attachment, garnishment or execution except as otherwise provided herein.

(d) Withholding. The Employee is responsible for payment of any taxes required by law to be withheld by the Company with respect to an Award. To facilitate that payment, the Company will, to the extent permitted by law, retain from the number of shares of Common Stock issued to the Employee on exercise that number of shares necessary for payment of the minimum tax withholding amount, valued at their Fair Market Value on the business day most immediately preceding the date of retention. To the extent the Company’s withholding obligation cannot

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be satisfied by means of share withholding, the Company may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind due to the Employee.

(e) 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.

(f) 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.

(g) 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.

(h) 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.

(i) 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.

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

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IN WITNESS WHEREOF, the undersigned have executed this Option Agreement as of the date first written above.

XERIUM TECHNOLOGIES, INC.

By: /s/ James F. Wilson            

Name: James F. Wilson            

Title: Chairman of the Board            

EMPLOYEE

By:     Harold C. Bevis        

Harold C. Bevis

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FORM OF EXERCISE NOTICE

(to be executed only upon exercise of Option)

Date: _____________

TO:    Xerium Technologies, Inc. (the “Company”)

RE:    Election to Purchase Common Stock

The undersigned irrevocably elects to exercise the number of Options set forth below and directs that the shares of Common Stock delivered upon exercise of such Options be registered or placed in the name and at the address specified below and delivered thereto.

Number of Options

Social Security Number or

Other Identifying Number:

Name

Street Address:

City, State and Zip Code:

Submitted by:                    Accepted by:

EMPLOYEEXERIUM TECHNOLOGIES, INC.

_____________________________        By:__________________________________

(Signature)                    Name: ______________________________

Name:________________________        Title: _______________________________

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EX-10.4

Exhibit 10.4

AMENDMENT NO. 4 TO EMPLOYMENT AGREEMENT

This Amendment No. 4 to Employment Agreement (the “Amendment No. 4”) is made and entered into as of the 15^th day of August, 2012, by and between Xerium Technologies, Inc. (the “Company”) and Stephen R. Light (the “Executive”).

WITNESSETH

WHEREAS, the Company and the Executive entered into an Employment Agreement effective as of February 11, 2008, and subsequently amended that Employment Agreement by Amendment No. 1, dated February 26, 2008, Amendment No. 2, dated December 31, 2009 and Amendment No. 3, dated December 9, 2011 (the Employment Agreement and its previous amendments are referred to herein as the “Employment Agreement”); and

WHEREAS, in consideration for the Executive’s past performance and continued service to the Company, the parties desire to amend the Employment Agreement as set forth herein.

NOW THEREFORE, in consideration of the mutual terms and conditions set forth below and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Executive agree that the Employment Agreement shall be amended as follows:

1.    Section 6(h)(vii) shall be deleted in its entirety and be replaced with the following:

(vii) Continued Employment. Immediately following his resignation, at which time this Agreement and his employment as an executive employee hereunder shall terminate, the Executive shall continue as a non-executive employee of the Company for six months. During such six month transition period, the Executive (A) must continue to comply with all Company policies; (B) shall receive a salary of Four Hundred Sixty and 00/100 Dollars ($460.00) per week; (C) shall continue to receive an allowance, at the rate of Forty-Five Thousand Dollars ($45,000.00) per year, paid in equal monthly installments to be applied as the Executive shall determine for the expenses associated with the automobile he uses, dues for club memberships, financial planning and other purposes; and (D) shall continue to have the cost of an annual executive physical examination at the medical services provider of the Executive’s choice, to the extent the cost of such examination is not covered by the Company group health plan in which the Executive is enrolled, paid for by the Company. In the discretion of the Board, the Executive may also be entitled to a discretionary bonus for extraordinary efforts during this six-month transition period. Such bonus shall be paid within forty-five (45) days following the end of the six-month transition period.

2.    Except as herein amended, the Employment Agreement shall remain in full force and effect and is hereby ratified and confirmed in all respects.

IN WITNESS WHEREOF, this Amendment No. 4 has been duly executed as of the day and year set forth above.

/s/ Stephen R. Light_______

Stephen R. Light

Xerium Technologies, Inc.

By: /s/ Clifford E. Pieatrafitta

                     Name: Clifford E. Pietrafitta

Title: Executive Vice President and Chief Financial Officer

EX-10.5

Exhibit 10.5

AMENDMENT NO. 3 TO

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

This Amendment No. 3 to the Amended and Restated Employment Agreement (the “Amendment No. 3”) is made and entered into as of the 15^th day of August, 2012, by and between Xerium Technologies, Inc. (the “Company”) and David J. Pretty (the “Executive”).

WITNESSETH

WHEREAS, the Company and the Executive entered into an Amended and Restated Employment Agreement effective as of February 11, 2008, and subsequently amended that Employment Agreement on March 14, 2011 and on December 16, 2011 (the Employment Agreement and its previous amendments are referred to herein as the “Employment Agreement”); and

WHEREAS, the parties desire to amend the Employment Agreement as set forth herein.

NOW THEREFORE, in consideration of the mutual terms and conditions set forth below and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Executive agree that the Employment Agreement shall be amended as follows:

1.Section 4, Compensation and Benefits, shall be amended by the addition of a new Section 4(h) which shall read:

“(h) Retention Bonus. If the Executive remains employed with the Company pursuant to the terms of this Agreement as of August 15, 2015, the Company shall pay the Executive a retention bonus equal to two hundred twenty-five thousand dollars ($225,000) (“Retention Bonus”), payable at the next then-occurring payroll payment date.”

2.     Section 6, Compensation Upon Termination, shall be amended (A) in Section 6(d)(ii), Close in Time to a Change in Control, by renumbering subclause (ii) to subclause (iii) and by adding a new subclause (ii) between subclause (i) and renumbered subclause (iii), which shall read as follows:

(ii) shall pay him an amount equal to his Retention Bonus, provided the Retention Bonus has not previously been paid (“Accelerated Retention Bonus”),

And (B) in Section 6(d)(iii), Conditions, by adding the following after the last sentence therein:     

“Payment of the Accelerated Retention Bonus under Section 6(d)(ii) shall be made as soon as possible following the effective date of the required Employee Release, but, in no event later than two and one-half months following the Executive’s separation from service.”

3.        Except as herein amended, the Employment Agreement shall remain in full force and effect and is hereby ratified and confirmed in all respects.

IN WITNESS WHEREOF, this Amendment No. 3 has been duly executed as of the day and year set forth above.

/s/ David J. Pretty________

David J. Pretty

Xerium Technologies, Inc.

By: /s/ Clifford E. Pietrafitta

Name: Clifford E. Pietrafitta

Title: Executive Vice President and Chief Financial Officer

EX-10.6

Exhibit 10.6

Xerium Technologies, Inc.

Non-Management Director Compensation Policy

Non-management directors receive an annual retainer of $112,000, which will be paid pursuant to the Xerium Technologies, Inc. Directors' Deferred Stock Unit Plan. Under the plan, 50% of the retainer will be paid in the form of a grant of deferred stock units. Non-management directors will be given the opportunity to elect to receive the remainder of such retainer in deferred stock units or in cash. Please see the Directors' Deferred Stock Unit Plan for additional information.

The chair of the Audit Committee also receive additional cash compensation at an annual rate of $10,000 per year, and the chair of the Compensation Committee, the chair on of the Nominating and Governance Committee, and the Lead Independent Director, if there is one, each receive additional cash compensation at an annual rate of $5,000 per year. If the Chairman of the Board is a non-management director, then he or she will receive additional cash compensation at an annual rate of $60,000 per year. Directors are also reimbursed for out-of-pocket expenses for attending board and committee meetings.

EX-31.1

Exhibit 31.1

CHIEF EXECUTIVE OFFICER CERTIFICATION

I, Harold C. Bevis, 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: November 5, 2012

/s/ Harold C. Bevis

Harold C. Bevis

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: November 5, 2012

/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 September 30, 2012, 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 September 30, 2012, fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Harold C. Bevis

Harold C. Bevis

President and Chief Executive Officer

(Principal Executive Officer)

November 5, 2012

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 September 30, 2012, 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 September 30, 2012, 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)

November 5, 2012

XML

Pensions, Other Post-retirement and Post-employment Benefits - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2012
Disclosure Pensions Other Postretirement And Postemployment Benefits Additional Information [Abstract]
Percentage contribution of compensation by eligible employees	99.00%
Percentage of employer contribution matching first 1% of employee compensation	200.00%
Percentage of employee compensation for which employer matches 200%	1.00%
Percentage of employer contribution matching next 4% of employee compensation	100.00%
Percentage of employee compensation for which employer matches 100%	4.00%

XML

Reconciliation Of Segment Earnings (Loss) To Income Before Provision For Income Taxes (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Segment Earnings (Loss):
Segment Earnings (Loss)	$ 6,416	$ 16,914	$ 22,490	$ 48,388
Non-cash compensation and related expenses	(820)	(172)	(1,574)	(2,253)
Legal fees related to term debt amendment	(30)	0	(115)	0
Interest expense, net	(9,777)	(9,873)	(28,494)	(29,709)
Depreciation and amortization	(9,897)	(11,231)	(30,242)	(33,302)
Loss on debt extinguishment	0	0	0	(2,926)
Restructuring expense	(5,840)	(577)	(10,943)	(1,287)
Income (loss) before provision for income taxes	(3,563)	6,752	(5,847)	15,469
Chief Executive Officer
Segment Earnings (Loss):
Non-recurring expenses related to CEO retirement	(1,600)	0	(3,096)	0
Clothing
Segment Earnings (Loss):
Segment Earnings (Loss)	17,429	20,757	48,051	63,026
Roll Covers
Segment Earnings (Loss):
Segment Earnings (Loss)	9,914	10,396	29,930	31,216
Corporate
Segment Earnings (Loss):
Segment Earnings (Loss)	$ (2,942)	$ (2,548)	$ (9,364)	$ (9,296)

XML

Restructuring And Impairments Expense By Segment (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Restructuring Cost and Reserve [Line Items]
Restructuring and impairments expense	$ 5,840	$ 577	$ 10,943	$ 1,287
Clothing
Restructuring Cost and Reserve [Line Items]
Restructuring and impairments expense	2,572	13	7,338	327
Roll Covers
Restructuring Cost and Reserve [Line Items]
Restructuring and impairments expense	3,223	564	3,402	960
Corporate
Restructuring Cost and Reserve [Line Items]
Restructuring and impairments expense	$ 45	$ 0	$ 203	$ 0

XML

Derivatives And Hedging - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011	Aug. 08, 2011 agreement
Derivative [Line Items]
Number of interest rate cap agreements						2
Interest rate cap agreements with notional amounts totaling	$ 96,924		$ 96,924			$ 114,400
Derivatives interest cap rate	3.00%		3.00%
Fair value of the interest rate caps	30		30		175
Unrecognized loss recorded in other comprehensive income			637		520
Fair value contracts included in foreign exchange gain (loss)	155	1,021	438	457
Not Designated as Hedging Instrument | Foreign Exchange Contract
Derivative [Line Items]
Derivatives fair value of other assets (liabilities)	$ 71		$ 71		$ 123

XML

Stock-Based Compensation and Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2012

Text Block [Abstract]

Stock-Based Compensation Expense

The Company recorded stock-based compensation expense during the three and nine ended September 30, 2012 and September 30, 2011 as follows:

	Three Months Ended     September 30,					Nine Months Ended     September 30,
	2012		2011			2012		2011
RSU and DSU Awards (1)	$	820	$	634		$	1,574	$	1,942
Management Incentive/Performance Award Programs (2)	—		(462		)	—		311
Total	$	820	$	172		$	1,574	$	2,253

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

(2) For 2011, the amount represents the value of stock awards granted under the 2011 Management Incentive Compensation Program, which was approved by the Company’s Board of Directors in March of 2011. No amount has been recorded for the 2012 Management Incentive Compensation Program (the “2012 MIC”), as the performance targets are not projected to be met as of September 30, 2012.

XML

Stock-Based Compensation And Stockholders' Deficit - Additional Information (Detail) (USD $)			9 Months Ended			6 Months Ended	12 Months Ended	9 Months Ended					3 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 2012 MIC	Sep. 30, 2012 2012 MIC Minimum	Sep. 30, 2012 2012 MIC Maximum	Jun. 30, 2012 2010-2012 Long-Term Incentive Plan Time Based Restricted Stock Units (RSU)	Dec. 31, 2010 2010-2012 Long-Term Incentive Plan Time Based Restricted Stock Units (RSU)	Sep. 30, 2012 2012-2014 Executive Long-Term Incentive Plan	Sep. 30, 2012 2012-2014 Executive Long-Term Incentive Plan Time Based Awards [Member]	Sep. 30, 2012 2012-2014 Executive Long-Term Incentive Plan Performance Based Awards	Sep. 30, 2012 2012-2014 Executive Long-Term Incentive Plan Performance Based Awards Minimum	Sep. 30, 2012 2012-2014 Executive Long-Term Incentive Plan Performance Based Awards Maximum	Sep. 30, 2012 Chief Executive Officer [Member] Chief Executive Officer Stock Plan [Member]	Sep. 30, 2012 Retiring Chief Executive Officer [Member] Chief Executive Officer Stock Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period													3 years
Stock units granted							131,010	54,750					204,208	50,000
Stock units vested						86,511
Stock units expected to vest						44,499
Incentive plan description									Time-based awards, or 50% of the total target award, were granted in the form of 54,750 time-based restricted stock units under the Company’s 2010 Plan and will vest in equal installments on March 31, 2013, March 31, 2014, and March 31, 2015.	Performance-based awards, which constitute 50% of the total award, will be determined based on the Company’s performance against a three-year cumulative Adjusted EBITDA metric, adjusted for currency fluctuations during the term of the 2012 – 2014 Executive LTIP.
Percentage of award on sliding scale					200.00%						50.00%	200.00%
Percentage of payout based on company performance				20.00%	90.00%						85.00%	115.00%
Percentage of award paid in cash			50.00%
Percentage of award paid in shares			50.00%
Percentage of fall in company result influencing vesting of performance-based awards				100.00%
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures													781,701	27,900
Common stock, par value	$ 0.001	$ 0.001											$ 0.001
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Contractual Term													10 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price													$ 4

XML

Components Of Comprehensive Income (Loss) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Comprehensive Income (Loss) And Accumulated Other Comprehensive Income (Loss) [Abstract]
Net (loss) income	$ (3,657)	$ 3,488	$ (8,952)	$ 5,758
Foreign currency translation adjustments	2,571	(22,906)	(5,828)	(10,429)
Pension liability changes under Topic 715	(683)	1,481	(593)	656
Change in value of derivative instruments	(12)	(438)	(117)	(438)
Comprehensive loss	$ (1,781)	$ (18,375)	$ (15,490)	$ (4,453)

XML

Long-term Debt - Additional Information (Detail) (USD $)	1 Months Ended	9 Months Ended
	Jun. 28, 2012	Sep. 30, 2012	Dec. 31, 2011
Debt Disclosure [Line Items]
Credit facility amendment description	Among other revisions to the credit facility, the amendment allows for additional add backs to Adjusted EBITDA annually through 2015 up to the lesser of $15 million or the unused portion of the allowed annual capital expenditure limit; increases the maximum leverage ratios between September of 2012 and December of 2013; amends the definition of the leverage ratio to reduce debt by unrestricted surplus cash held by the Company and increases the interest rate on the term loans by 0.75% annually for eighteen months. The Company paid $1.5 million in deferred financing costs related to the amendment.
Adjusted EBITDA	$ 15,000,000
Deferred financing costs related to the amendment		1,500,000
Additional borrowings under small lines of credit		5,000,000
Carrying value of long-term debt		440,096,000	469,054,000
Fair value of long-term debt		408,200,000	439,100,000
Letter of Credit
Debt Disclosure [Line Items]
Credit facility		12,600,000
Eight Point Eight Seven Five Percentage Of Senior Unsecured Notes Due On Two Thousand Eighteen
Debt Disclosure [Line Items]
Refinancing transaction, outstanding indebtedness		240,000,000
Debt instrument percentage		8.875%
Multi Currency Senior Secured Credit Facility
Debt Disclosure [Line Items]
Credit facility		278,000,000
Senior Secured Term Loans
Debt Disclosure [Line Items]
Senior secured term loans		248,000,000
Senior Secured Revolving Credit Facility
Debt Disclosure [Line Items]
Credit facility		30,000,000
Alternate Base Rate New Credit Facility
Debt Disclosure [Line Items]
Minimum interest rate under New Credit Facility		2.25%
Alternate Base Rate London Interbank Offer Rate
Debt Disclosure [Line Items]
Minimum interest rate under New Credit Facility		1.25%
Alternate Base Rate Euro Interbank Offered Rate
Debt Disclosure [Line Items]
Minimum interest rate under New Credit Facility		1.25%
New Credit Facility
Debt Disclosure [Line Items]
Additional borrowings under the Credit Facility		$ 17,400,000

XML

Consolidating Statement Of Operation and Comprehensive (Loss) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Schedule of Condensed Consolidating Statement of Operations [Line Items]
Net sales	$ 134,231	$ 148,227	$ 404,973	$ 441,771
Costs and expenses:
Cost of products sold	85,079	94,010	258,396	275,768
Selling	18,546	19,817	57,104	59,848
General and administrative	15,650	14,002	47,509	47,560
Research and development	2,700	2,907	8,531	8,920
Restructuring and impairment	5,840	577	10,943	1,287
Operating Costs and Expenses, Total	127,815	131,313	382,483	393,383
(Loss) income from operations	6,416	16,914	22,490	48,388
Interest (expense) income, net	(9,777)	(9,873)	(28,494)	(29,709)
Foreign exchange (loss) gain	(202)	(289)	157	(284)
(Loss) income before provision for income taxes	(3,563)	6,752	(5,847)	15,469
Provision for income taxes	(94)	(3,264)	(3,105)	(9,711)
Net (loss) income	(3,657)	3,488	(8,952)	5,758
Comprehensive (loss) income	(1,781)	(18,375)	(15,490)	(4,453)
Parent
Costs and expenses:
Cost of products sold	(342)	(682)	(1,150)	(1,835)
General and administrative	3,489	148	8,753	5,132
Research and development	0	0	0	(3)
Restructuring and impairment	45	0	203	0
Operating Costs and Expenses, Total	3,192	(534)	7,806	3,294
(Loss) income from operations	(3,192)	534	(7,806)	(3,294)
Interest (expense) income, net	(6,973)	(7,239)	(21,419)	(17,549)
Loss on extinguishment of debt				(2,903)
Foreign exchange (loss) gain	(193)	(862)	(501)	551
Equity in subsidiaries income	5,093	11,222	19,221	29,408
Dividend income	1,656		1,656
(Loss) income before provision for income taxes	(3,609)	3,655	(8,849)	6,213
Provision for income taxes	(48)	167	103	455
Net (loss) income	(3,657)	3,488	(8,952)	5,758
Comprehensive (loss) income	(3,598)	5,405	(8,261)	4,678
Total Guarantors
Schedule of Condensed Consolidating Statement of Operations [Line Items]
Net sales	45,119	45,203	134,970	136,173
Costs and expenses:
Cost of products sold	31,821	32,233	97,245	97,105
Selling	5,393	5,861	16,725	17,188
General and administrative	1,725	2,016	5,492	5,969
Research and development	2,105	1,912	6,258	5,979
Restructuring and impairment	19	100	182	714
Operating Costs and Expenses, Total	41,063	42,122	125,902	126,955
(Loss) income from operations	4,056	3,081	9,068	9,218
Interest (expense) income, net	1,490	1,961	5,035	5,749
Loss on extinguishment of debt				(6)
Foreign exchange (loss) gain	(3)	529	(7)	(948)
Equity in subsidiaries income	(13,056)	5,336	(10,668)	11,450
Dividend income	18,904		18,904
(Loss) income before provision for income taxes	11,391	10,907	22,332	25,463
Provision for income taxes	(35)	45	108	154
Net (loss) income	11,356	10,862	22,224	25,309
Comprehensive (loss) income	11,464	10,568	22,860	32,540
Total Non-Guarantors
Schedule of Condensed Consolidating Statement of Operations [Line Items]
Net sales	100,831	115,433	305,628	343,288
Costs and expenses:
Cost of products sold	65,442	74,873	198,291	218,104
Selling	13,153	13,956	40,379	42,660
General and administrative	10,436	11,838	33,264	36,459
Research and development	595	995	2,273	2,944
Restructuring and impairment	5,776	477	10,558	573
Operating Costs and Expenses, Total	95,402	102,139	284,765	300,740
(Loss) income from operations	5,429	13,294	20,863	42,548
Interest (expense) income, net	(4,294)	(4,595)	(12,110)	(17,909)
Loss on extinguishment of debt				(17)
Foreign exchange (loss) gain	(6)	44	665	113
Dividend income	0		0
(Loss) income before provision for income taxes	1,129	8,743	9,418	24,735
Provision for income taxes	(11)	3,052	2,894	9,102
Net (loss) income	1,118	5,691	6,524	15,633
Comprehensive (loss) income	2,827	(17,795)	(1,341)	(729)
Other Eliminations
Schedule of Condensed Consolidating Statement of Operations [Line Items]
Net sales	(11,719)	(12,409)	(35,625)	(37,690)
Costs and expenses:
Cost of products sold	(11,842)	(12,414)	(35,990)	(37,606)
Operating Costs and Expenses, Total	(11,842)	(12,414)	(35,990)	(37,606)
(Loss) income from operations	123	5	365	(84)
Loss on extinguishment of debt				0
Equity in subsidiaries income	7,963	(16,558)	(8,553)	(40,858)
Dividend income	(20,560)		(20,560)
(Loss) income before provision for income taxes	(12,474)	(16,553)	(28,748)	(40,942)
Provision for income taxes	0
Net (loss) income	(12,474)	(16,553)	(28,748)	(40,942)
Comprehensive (loss) income	(12,474)	(16,553)	(28,748)	(40,942)
The Company
Schedule of Condensed Consolidating Statement of Operations [Line Items]
Net sales	134,231	148,227	404,973	441,771
Costs and expenses:
Cost of products sold	85,079	94,010	258,396	275,768
Selling	18,546	19,817	57,104	59,848
General and administrative	15,650	14,002	47,509	47,560
Research and development	2,700	2,907	8,531	8,920
Restructuring and impairment	5,840	577	10,943	1,287
Operating Costs and Expenses, Total	127,815	131,313	382,483	393,383
(Loss) income from operations	6,416	16,914	22,490	48,388
Interest (expense) income, net	(9,777)	(9,873)	(28,494)	(29,709)
Loss on extinguishment of debt				(2,926)
Foreign exchange (loss) gain	(202)	(289)	157	(284)
Dividend income	0		0
(Loss) income before provision for income taxes	(3,563)	6,752	(5,847)	15,469
Provision for income taxes	(94)	3,264	3,105	9,711
Net (loss) income	(3,657)	3,488	(8,952)	5,758
Comprehensive (loss) income	$ (1,781)	$ (18,375)	$ (15,490)	$ (4,453)

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Summarized Financial Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Segment Reporting Information [Line Items]
Net sales	$ 134,231	$ 148,227	$ 404,973	$ 441,771
Segment Earnings (Loss)	6,416	16,914	22,490	48,388
Clothing
Segment Reporting Information [Line Items]
Net sales	88,873	97,515	265,671	291,085
Segment Earnings (Loss)	17,429	20,757	48,051	63,026
Roll Covers
Segment Reporting Information [Line Items]
Net sales	45,358	50,712	139,302	150,686
Segment Earnings (Loss)	9,914	10,396	29,930	31,216
Corporate
Segment Reporting Information [Line Items]
Segment Earnings (Loss)	$ (2,942)	$ (2,548)	$ (9,364)	$ (9,296)

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Income Taxes

9 Months Ended

Sep. 30, 2012

Text Block [Abstract]

Income Taxes

Income Taxes

The Company utilizes the asset and 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 and nine months ended September 30, 2012, the provision for income taxes was $94 and $3,105, respectively, as compared with $3,264 and $9,711 for the three and nine months ended September 30, 2011. The decrease in tax expense was primarily attributable to consolidated losses and the geographic mix of earnings in the nine months ended September 30, 2012 as compared with the nine months ended September 30, 2011. 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 25% to 41%; 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 received, 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, the United Kingdom 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 of September 30, 2012, the Company had a gross unrecognized tax benefit of $8,431. The unrecognized tax benefit decreased by approximately $188 during the nine months ended September 30, 2012, as a result of foreign currency effects, statute expirations and ongoing changes in currently reserved positions. The Company’s policy is to recognize interest and penalties related to income tax matters as income tax expense, which were immaterial for the nine months ended September 30, 2012 and 2011. The tax years 2000 through 2011 remain open to examination in a number of the major taxing jurisdictions to which the Company and its subsidiaries are subject.

In November of 2011, the Federal Revenue Department of the Ministry of Finance of Brazil (“FRD”) issued a tax assessment against the Company’s indirect subsidiary, Xerium Technologies Brasil Indústria e Comércio S.A. (“Xerium Brazil”), challenging the goodwill recorded in the 2005 acquisition of Wangner Itelpa and Huyck Indústria e Comércio S.A. by Robec Brasil Participações Ltda., a predecessor to Xerium Brazil. This assessment denies the amortization of that goodwill against net income for the years 2006 through 2010. As of September 30, 2012, the Company would be required to pay approximately $43.3 million (subject to currency exchange rates) in tax, penalties and interest in the event the Company was unable to overturn this assessment. The Company believes the transactions in question (i) complied with Brazilian tax and accounting rules, (ii) were effected for a legitimate business purpose, to consolidate the Company’s operating activities in Brazil into one legal entity, and (iii) were properly documented and declared to Brazilian tax and corporate authorities. Based on the foregoing, Xerium Brazil filed a response disputing the tax assessment at the first administrative level of appeal within the FRD in December 2011. The tax assessment is still pending review at this first administrative appeals level.

Although there can be no assurances, as of September 30, 2012, the Company believes it is more likely than not that it would prevail on every tax position under examination and therefore it did not accrue any amounts related to this assessment. Consistent with this position, Xerium Brazil continues to amortize the remaining goodwill against its net income. Because this dispute is at a preliminary stage for resolution with the FRD, the Company cannot assure a favorable outcome and cannot currently estimate the timing of the final resolution of this matter. The Company believes it has meritorious defenses and will vigorously contest this matter. However, if management's views of the Company's position and the probable outcome of the assessment changes or the FRD’s initial position is sustained by Brazilian judicial courts, the amount accrued would adversely impact the Company’s financial condition and results of operations in the period in which any such determination or decision is made.

The Company believes that it has made adequate provisions for all income tax uncertainties.

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Components Of Accumulated Other Comprehensive Income (Loss) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Comprehensive Income (Loss) And Accumulated Other Comprehensive Income (Loss) [Abstract]
Foreign Currency Translation Adjustment, Beginning Balance			$ 10,157
Foreign Currency Translation Adjustment, Current period change, net of tax	2,571	(22,906)	(5,828)	(10,429)
Foreign Currency Translation Adjustment, Ending Balance	4,329		4,329
Pension Liability Changes Under Topic 715, Beginning Balance			(41,183)
Pension Liability Changes Under Topic 715, Current period change, net of tax	(683)	1,481	(593)	656
Pension Liability Changes Under Topic 715, Ending Balance	(41,776)		(41,776)
Change in Value of Derivative Instruments, Beginning Balance			(520)
Change in Value of Derivative Instruments, Current period change, net of tax	(12)	(438)	(117)	(438)
Change in Value of Derivative Instruments, Ending Balance	(637)		(637)
Accumulated Other Comprehensive Income Gain (Loss), Beginning Balance			(31,546)
Accumulated Other Comprehensive Income Gain (Loss), Current period change, net of tax			(6,538)
Accumulated Other Comprehensive Income Gain (Loss), Ending Balance	$ (38,084)		$ (38,084)

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Changes In Warranty Liability (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Warranties, Increase (Decrease)
Beginning balance	$ 2,121
Charged to Cost of Sales	966
Effect of Foreign Currency Translation	(20)
Settlements	(1,252)
Ending balance	$ 1,815

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Components of Inventories (Parenthetical) (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Disclosure Components Of Inventories [Abstract]
Consigned inventory	$ 9,943	$ 12,953

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Restructuring Expense - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Restructuring Cost and Reserve [Line Items]
Curtailment/settlement gain			$ 0	$ (402)
Restructuring expense	5,840	577	10,943	1,287
Restructuring Charges			9,343	885
Asset impairment			1,600	0
Brazil Facility [Member]
Restructuring Cost and Reserve [Line Items]
Asset impairment	1,100
France Facility [Member]
Restructuring Cost and Reserve [Line Items]
Asset impairment	500
Severance [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges			4,888	445
Severance [Member] | Brazil Facility [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	1,000
Severance [Member] | France Facility [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	3,000
Facility Costs And Other [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges			4,455	440
Facility Costs And Other [Member] | Termination of Sales Agencies [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring Charges	$ 6,000

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Net Income (Loss) Per Common Share (Detail)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Disclosure Net Income Loss Per Common Share [Abstract]
Weighted-average common shares outstanding-basic	15,257,617	15,135,309	15,215,752	15,059,320
Dilutive effect of stock-based compensation awards outstanding	0	9,359	0	9,359
Weighted-average common shares outstanding-diluted	15,257,617	15,144,668	15,215,752	15,068,679

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Description of Business and Significant Accounting Policies - Additional Information (Detail) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2012
Disclosure Description Of Business And Significant Accounting Policies Additional Information [Abstract]
Dilutive securities outstanding, not included in the computation	1,800	1,800

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Long-term Debt

9 Months Ended

Sep. 30, 2012

Text Block [Abstract]

Long-term Debt

Long-term Debt

At September 30, 2012 and December 31, 2011, long-term debt consisted of the following:

	September 30, 2012		December 31, 2011
Senior Bank Debt (Secured):
First lien debt, payable quarterly, U.S. Dollar denominated–LIBOR (minimum 1.25%) plus 5.00% (6.25%) as of September 30, 2012	$	105,520	$	119,366
First lien debt, payable quarterly, Euro denominated–EURIBOR (minimum 1.25%) plus 5.00% (6.25%) as of September 30, 2012	94,445		107,771
	199,965		227,137
Senior Notes (Unsecured), payable semi-annually–U.S. Dollar denominated interest rate fixed at 8.875%, matures June of 2018	240,000		240,000
Other Long-Term Debt:
Unsecured, interest rate fixed at 2.00%, Euro denominated	131		228
Unsecured, interest rate fixed at 1.31% to 3.40%, Yen denominated	—		1,689
	440,096		469,054
Less current maturities	2,368		3,548
Total	$	437,728	$	465,506

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”) and a new approximately $278 million multi-currency senior secured credit facility (as subsequently amended, the “Credit Facility”), comprised of approximately $248 million of senior secured term loans and a $30 million senior secured revolving credit facility. The interest rates under the Credit Facility are calculated, at the Company’s option, at the Alternate Base Rate as defined in the Credit Facility, LIBOR or EURIBOR, subject to a minimum of 2.25%, 1.25% and 1.25%, respectively, plus, in each case, a margin. The Credit Facility and Notes contain customary covenants that, subject to certain exceptions, restrict the Company’s ability to enter into certain transactions and engage in certain activities. In addition, the Credit Facility includes specified financial covenants, requiring the Company to maintain certain consolidated leverage and interest coverage ratios and limiting its ability to make capital expenditures in excess of specified amounts. These covenants are included in Note 7 to the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2011. Management believes the Company is in compliance with all covenants under the Notes and Credit Facility at September 30, 2012.

To facilitate its restructuring initiatives, on June 28, 2012, the Company entered into an amendment to its senior secured credit facility. Among other revisions to the credit facility, the amendment allows for additional add backs to Adjusted EBITDA annually through 2015 up to the lesser of $15 million or the unused portion of the allowed annual capital expenditure limit; increases the maximum leverage ratios between September of 2012 and December of 2013; amends the definition of the leverage ratio to reduce debt by unrestricted surplus cash held by the Company and increases the interest rate on the term loans by 0.75% annually for eighteen months. The Company paid $1.5 million in deferred financing costs related to the amendment. This amount is classified as an intangible asset in the Condensed Consolidated Balance Sheets at September 30, 2012.

As of September 30, 2012, an aggregate of $17.4 million is available for additional borrowings under the Credit Facility. This availability represents the $30.0 million revolving facility less $12.6 million of that facility committed for letters of credit. Additionally, at September 30, 2012, the Company had $5.0 million available for borrowings under other small lines of credit.

As of September 30, 2012 and December 31, 2011, the carrying value of the Company’s long-term debt was $440.1 million and $469.1 million, respectively, and exceeded its fair value of approximately $408.2 million and $439.1 million, respectively. The Company determined the fair value of its debt utilizing significant other observable inputs (Level 2 of the fair value hierarchy).

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Description of Business and Significant Accounting Policies - Notes Payable (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Jul. 31, 2012	Dec. 31, 2011
Short-term Debt [Line Items]
Working capital loan	$ 7,714	$ 7,714	$ 0
Loan interest rate	1.80%

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Approximate Matching Contribution Expense (Detail) (Matching Contributions To Plan, USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Matching Contributions To Plan
Defined Contribution Plan Disclosure [Line Items]
Matching contribution expense	$ 420	$ 430	$ 1,298	$ 1,310

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Consolidating Statement Of Cash Flows (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Operating activities
Net (loss) income	$ (8,952)	$ 5,758
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Stock-based compensation	1,574	2,253
Depreciation	28,513	31,573
Amortization of intangibles	1,729	1,729
Curtailment/settlement gain	0	402
Deferred financing cost amortization	2,707	1,613
Unrealized foreign exchange loss on revaluation of debt	167	1,070
Deferred taxes	(383)	2,246
Asset impairment	1,600	0
Gain on disposition of property and equipment	(656)	(604)
Provision for doubtful accounts	463	733
Change in assets and liabilities which provided (used) cash:
Accounts receivable	2,954	(1,108)
Inventories	2,338	(10,649)
Prepaid expenses	(4,021)	(1,118)
Other current assets	1,385	(1,201)
Accounts payable and accrued expenses	1,945	(1,679)
Deferred and other long-term liabilities	(1,158)	(3,108)
Net cash provided by operating activities	30,205	30,836
Investing activities
Capital expenditures, gross	(13,222)	(18,930)
Proceeds from disposals of property and equipment	1,378	7,723
Restricted cash	0	13,701
Net cash (used in) provided by investing activities	(11,844)	2,494
Financing activities
Net increase in notes payable	0	489,629
Net decrease in borrowings (maturities of 90 days or less)	7,365	0
Principal payments on debt	(27,965)	(501,419)
Payment of deferred financing fees	(1,782)	(17,115)
Net cash (used in) provided by financing activities	(22,382)	(28,905)
Effect of exchange rate changes on cash flows	32	(169)
Net decrease in cash	(3,989)	4,256
Cash and cash equivalents at beginning of period	43,566	38,701
Cash and cash equivalents at end of period	39,577	42,957
Parent
Operating activities
Net (loss) income	(8,952)	5,758
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Stock-based compensation	1,574	2,253
Depreciation	135	176
Amortization of intangibles	0	0
Curtailment/settlement gain		0
Deferred financing cost amortization	1,885	(431)
Unrealized foreign exchange loss on revaluation of debt	0	0
Deferred taxes	0	0
Asset impairment	0
Gain on disposition of property and equipment	0	0
Intercompany dividend	(1,656)
Loss on extinguishment of debt		2,903
Provision for doubtful accounts	0	0
Undistributed equity in (earnings) loss of subsidiaries	(19,221)	(29,408)
Change in assets and liabilities which provided (used) cash:
Accounts receivable	8	11
Inventories	0	0
Prepaid expenses	122	229
Other current assets	0	645
Accounts payable and accrued expenses	4,781	6,623
Deferred and other long-term liabilities	244	(347)
Intercompany loans	1,891	6,932
Net cash provided by operating activities	(19,189)	(4,656)
Investing activities
Capital expenditures, gross	(22)	(364)
Intercompany property and equipment transfers, net	344	0
Proceeds from disposals of property and equipment	0	0
Restricted cash		13,701
Net cash (used in) provided by investing activities	322	13,337
Financing activities
Net increase in notes payable	0
Proceeds from borrowings (maturities longer than 90 days)		365,000
Principal payments on debt	(13,846)	(262,920)
Payment of deferred financing fees	(1,047)	(72,185)
Dividends paid	1,656
Intercompany loans	31,091	(37,570)
Net cash (used in) provided by financing activities	17,854	(7,675)
Effect of exchange rate changes on cash flows	0	0
Net decrease in cash	(1,013)	1,006
Cash and cash equivalents at beginning of period	11,548	6,345
Cash and cash equivalents at end of period	10,535	7,351
Total Guarantors
Operating activities
Net (loss) income	22,224	25,309
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Stock-based compensation	0	0
Depreciation	5,932	6,044
Amortization of intangibles	1,659	1,659
Curtailment/settlement gain		0
Deferred financing cost amortization	0	204
Unrealized foreign exchange loss on revaluation of debt	0	0
Deferred taxes	0	0
Asset impairment	0
Gain on disposition of property and equipment	24	(128)
Intercompany dividend	(18,904)
Loss on extinguishment of debt		6
Provision for doubtful accounts	(150)	438
Undistributed equity in (earnings) loss of subsidiaries	10,668	(11,450)
Change in assets and liabilities which provided (used) cash:
Accounts receivable	852	280
Inventories	3,107	(1,470)
Prepaid expenses	(671)	(187)
Other current assets	1,799	(982)
Accounts payable and accrued expenses	(2,106)	(2,677)
Deferred and other long-term liabilities	(622)	(1,064)
Intercompany loans	(394)	2,559
Net cash provided by operating activities	23,418	18,541
Investing activities
Capital expenditures, gross	(1,895)	(2,727)
Intercompany property and equipment transfers, net	(317)	15
Proceeds from disposals of property and equipment	298	149
Restricted cash		0
Net cash (used in) provided by investing activities	(1,914)	(2,563)
Financing activities
Net increase in notes payable	0
Proceeds from borrowings (maturities longer than 90 days)		0
Principal payments on debt	0	(51,016)
Payment of deferred financing fees	0	0
Dividends paid	0
Intercompany loans	(21,778)	35,055
Net cash (used in) provided by financing activities	(21,778)	(15,961)
Effect of exchange rate changes on cash flows	2	2
Net decrease in cash	(272)	19
Cash and cash equivalents at beginning of period	280	33
Cash and cash equivalents at end of period	8	52
Total Non-Guarantors
Operating activities
Net (loss) income	6,524	15,633
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Stock-based compensation	0	0
Depreciation	22,446	25,353
Amortization of intangibles	70	70
Curtailment/settlement gain		402
Deferred financing cost amortization	822	1,840
Unrealized foreign exchange loss on revaluation of debt	167	1,070
Deferred taxes	(383)	2,246
Asset impairment	1,600
Gain on disposition of property and equipment	(680)	(476)
Loss on extinguishment of debt		17
Provision for doubtful accounts	613	295
Undistributed equity in (earnings) loss of subsidiaries	0	0
Change in assets and liabilities which provided (used) cash:
Accounts receivable	2,094	(1,399)
Inventories	(404)	(9,263)
Prepaid expenses	(3,472)	(1,160)
Other current assets	(414)	(864)
Accounts payable and accrued expenses	(730)	(5,625)
Deferred and other long-term liabilities	(780)	(1,697)
Intercompany loans	(1,497)	(9,491)
Net cash provided by operating activities	25,976	16,951
Investing activities
Capital expenditures, gross	(11,305)	(15,839)
Intercompany property and equipment transfers, net	(27)	(15)
Proceeds from disposals of property and equipment	1,080	7,574
Restricted cash		0
Net cash (used in) provided by investing activities	(10,252)	(8,280)
Financing activities
Net increase in notes payable	7,365
Proceeds from borrowings (maturities longer than 90 days)		124,629
Principal payments on debt	(14,119)	(187,483)
Payment of deferred financing fees	(735)	55,070
Dividends paid	(1,656)
Intercompany loans	(9,313)	2,515
Net cash (used in) provided by financing activities	(18,458)	(5,269)
Effect of exchange rate changes on cash flows	30	(171)
Net decrease in cash	(2,704)	3,231
Cash and cash equivalents at beginning of period	31,738	32,323
Cash and cash equivalents at end of period	29,034	35,554
Other Eliminations
Operating activities
Net (loss) income	(28,748)	(40,942)
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Stock-based compensation	0	0
Depreciation	0	0
Amortization of intangibles	0	0
Deferred financing cost amortization	0	0
Unrealized foreign exchange loss on revaluation of debt	0	0
Deferred taxes	0	0
Gain on disposition of property and equipment	0	0
Intercompany dividend	20,560
Loss on extinguishment of debt		0
Provision for doubtful accounts	0	0
Undistributed equity in (earnings) loss of subsidiaries	8,553	40,858
Change in assets and liabilities which provided (used) cash:
Accounts receivable	0	0
Inventories	(365)	84
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 provided by operating activities	0	0
Investing activities
Capital expenditures, gross	0	0
Intercompany property and equipment transfers, net	0	0
Proceeds from disposals of property and equipment	0	0
Restricted cash		0
Net cash (used in) provided by investing activities	0	0
Financing activities
Proceeds from borrowings (maturities longer than 90 days)		0
Principal payments on debt	0	0
Payment of deferred financing fees	0	0
Dividends paid	0
Intercompany loans	0	0
Net cash (used in) provided by financing activities	0	0
Effect of exchange rate changes on cash flows	0	0
Net 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
The Company
Operating activities
Net (loss) income	(8,952)	5,758
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Stock-based compensation	1,574	2,253
Depreciation	28,513	31,573
Amortization of intangibles	1,729	1,729
Curtailment/settlement gain		402
Deferred financing cost amortization	2,707	1,613
Unrealized foreign exchange loss on revaluation of debt	167	1,070
Deferred taxes	(383)	2,246
Asset impairment	1,600
Gain on disposition of property and equipment	(656)	(604)
Intercompany dividend	0
Loss on extinguishment of debt		2,926
Provision for doubtful accounts	463	733
Undistributed equity in (earnings) loss of subsidiaries	0	0
Change in assets and liabilities which provided (used) cash:
Accounts receivable	2,954	(1,108)
Inventories	2,338	(10,649)
Prepaid expenses	(4,021)	(1,118)
Other current assets	1,385	(1,201)
Accounts payable and accrued expenses	1,945	(1,679)
Deferred and other long-term liabilities	(1,158)	(3,108)
Intercompany loans	0	0
Net cash provided by operating activities	30,205	30,836
Investing activities
Capital expenditures, gross	(13,222)	(18,930)
Intercompany property and equipment transfers, net	0	0
Proceeds from disposals of property and equipment	1,378	7,723
Restricted cash		13,701
Net cash (used in) provided by investing activities	(11,844)	2,494
Financing activities
Net increase in notes payable	7,365
Proceeds from borrowings (maturities longer than 90 days)		489,629
Principal payments on debt	(27,965)	(501,419)
Payment of deferred financing fees	(1,782)	(17,115)
Dividends paid	0
Intercompany loans	0	0
Net cash (used in) provided by financing activities	(22,382)	(28,905)
Effect of exchange rate changes on cash flows	32	(169)
Net decrease in cash	(3,989)	4,256
Cash and cash equivalents at beginning of period	43,566	38,701
Cash and cash equivalents at end of period	$ 39,577	$ 42,957

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 39,577	$ 43,566
Accounts receivable, net	87,394	91,784
Inventories, net	80,036	83,317
Prepaid expenses	10,050	6,177
Other current assets	13,011	15,051
Total current assets	230,068	239,895
Property and equipment, net	312,326	335,256
Goodwill	59,096	59,120
Intangible assets	19,973	22,640
Other assets	9,314	8,810
Total assets	630,777	665,721
Current liabilities:
Accounts payable	33,056	39,743
Accrued expenses	55,982	47,805
Notes payable	7,714	0
Current maturities of long-term debt	2,368	3,548
Total current liabilities	99,120	91,096
Long-term debt, net of current maturities	437,728	465,506
Deferred and long-term taxes	18,538	18,582
Pension, other post-retirement and post-employment obligations	80,041	81,188
Other long-term liabilities	11,894	11,654
Commitments and contingencies (Note 9)
Stockholders' deficit
Preferred stock, $0.001 par value, 1,000,000 shares authorized; no shares outstanding as of September 30, 2012 and December 31, 2011	0	0
Common stock, $0.001 par value, 20,000,000 shares authorized; 15,289,129 and 15,145,451 shares outstanding as of September 30, 2012 and December 31, 2011, respectively	15	15
Stock warrants	13,532	13,532
Paid-in capital	412,749	411,498
Accumulated deficit	(404,756)	(395,804)
Accumulated other comprehensive loss	(38,084)	(31,546)
Total stockholders' deficit	(16,544)	(2,305)
Total liabilities and stockholders' deficit	$ 630,777	$ 665,721

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Restructuring Programs (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Restructuring Reserve
Beginning Balance	$ 1,252	$ 2,726
Charges	9,343	885
Currency Effects	(108)	7
Cash Payments	(6,861)	(2,040)
Ending Balance	3,626	1,578
Severance [Member]
Restructuring Reserve
Beginning Balance	800	2,255
Charges	4,888	445
Currency Effects	9	(53)
Cash Payments	(2,405)	(1,590)
Ending Balance	3,292	1,057
Facility Costs And Other [Member]
Restructuring Reserve
Beginning Balance	452	471
Charges	4,455	440
Currency Effects	(117)	60
Cash Payments	(4,456)	(450)
Ending Balance	$ 334	$ 521

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Description of Business and Significant Accounting Policies

9 Months Ended

Sep. 30, 2012

Text Block [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 manufacturer and supplier of two types of consumable products used primarily in the production of paper – clothing and roll covers. Its operations are strategically located in the major paper-making regions of the world, including North America, Europe, South America and Asia-Pacific.

Basis of Presentation

The accompanying unaudited condensed consolidated interim financial statements at September 30, 2012 and for the three and nine months ended September 30, 2012 and 2011 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. 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 consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2011 as reported on the Company's Annual Report on Form 10-K filed on March 14, 2012.

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:

	September 30, 2012		December 31, 2011
Raw materials	$	17,256	$	19,872
Work in process	23,514		26,326
Finished goods (includes consigned inventory of $9,943 in 2012 and $12,953 in 2011)	39,266		37,119
	$	80,036	$	83,317

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 nine months ended September 30, 2012, 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 September 30, 2012.

Warranties

The Company offers warranties on certain 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 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 nine months ended September 30, 2012:

	Balance at December 31, 2011		Charged to Revenue or Cost of Sales		Effect of Foreign Currency Translation			Deduction from Reserves			Balance at September 30, 2012
For the nine months ended September 30, 2012	$	2,121	$	966	$	(20	)	$	(1,252	)	$	1,815

Notes Payable

In July of 2012, the Company's Austrian subsidiary entered into a $7,714 working capital loan with a local banking institution. This loan bears interest at a variable rate, which was 1.8% at September 30, 2012, and has a initial maturity date of June 30, 2013, with a twelve month roll-over option. Proceeds from this loan were used to pay down the Company's senior secured credit facility.

Net Income (Loss) Per Common Share

Net income (loss) per common share has been computed and presented pursuant to the provisions of ASC Topic 260, Earnings per Share (“Topic 260”). Net income (loss) per share is based on the weighted-average number of shares outstanding during the period. As of September 30, 2012 and 2011, the Company had outstanding restricted stock units (“RSUs”), deferred stock units (“DSUs”), warrants and options.

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

	Three Months Ended September 30,		Nine Months Ended September 30,
	2012	2011	2012	2011
Weighted-average common shares outstanding–basic	15,257,617	15,135,309	15,215,752	15,059,320
Dilutive effect of stock-based compensation awards outstanding	—	9,359	—	9,359
Weighted-average common shares outstanding–diluted	15,257,617	15,144,668	15,215,752	15,068,679

Dilutive securities aggregating approximately 1.8 million were outstanding for the three and nine months ended September 30, 2012, respectively, but were not included in the computation of diluted earnings per share because the impact of including such shares would be anti-dilutive to the earnings per share calculations.

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Schedule Of Long-Term Debt (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Senior Bank Debt (Secured):
Senior Bank Debt (Secured)	$ 199,965	$ 227,137
Other Long-Term Debt:
Carrying value of long-term debt	440,096	469,054
Less current maturities	2,368	3,548
Total	437,728	465,506
First Lien Debt Payable Quarterly Us Dollar Denominated London Interbank Offer Rate Six Point Two Five Percentage As Of June Thirty Two Thousand Twelve
Senior Bank Debt (Secured):
Senior Bank Debt (Secured)	105,520	119,366
First Lien Debt Payable Quarterly Euro Denominated Euribor Six Point Two Five Percentage As Of June Thirty Two Thousand Twelve
Senior Bank Debt (Secured):
Senior Bank Debt (Secured)	94,445	107,771
Senior Notes Unsecured Payable Semi Annually Us Dollar Denominated Interest Rate Fixed At Eight Point Eight Seven Five Percentage Matures June Of Two Thousand Eighteen
Senior Bank Debt (Secured):
Senior Notes (Unsecured), payable semi-annually-U.S. Dollar denominated interest rate fixed at 8.875%, matures June of 2018	240,000	240,000
Unsecured Interest Rate Fixed At Two Percentage To Two Point Five Percentage Euro Denominated Primarily Short Term
Other Long-Term Debt:
Unsecured, interest rate fixed at 1.31% to 3.40%, Yen denominated	131	228
Unsecured Interest Rate Fixed At One Point Three One Percentage To Three Point Four Zero Percentage Yen Denominated Primarily Short Term
Other Long-Term Debt:
Unsecured, interest rate fixed at 1.31% to 3.40%, Yen denominated		$ 1,689

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Comprehensive (Loss) Income and Accumulated Other Comprehensive Loss (Tables)

9 Months Ended

Sep. 30, 2012

Text Block [Abstract]

Components Of Comprehensive Income (Loss)

Comprehensive loss for the three and nine months ended September 30, 2012 and 2011 is as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net (loss) income	$	(3,657	)	$	3,488		$	(8,952	)	$	5,758
Foreign currency translation adjustments	2,571			(22,906		)	(5,828		)	(10,429		)
Pension liability changes under Topic 715	(683		)	1,481			(593		)	656
Change in value of derivative instruments	(12		)	(438		)	(117		)	(438		)
Comprehensive loss	$	(1,781	)	$	(18,375	)	$	(15,490	)	$	(4,453	)

Components Of Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive loss are as follows:

	Foreign Currency Translation     Adjustment			Pension Liability Changes Under  Topic 715			Change in Value of Derivative Instruments			Accumulated    Other Comprehensive Income (Loss)
Balance at December 31, 2011	$	10,157		$	(41,183	)	$	(520	)	$	(31,546	)
Current period change, net of tax	(5,828		)	(593		)	(117		)	(6,538		)
Balance at September 30, 2012	$	4,329		$	(41,776	)	$	(637	)	$	(38,084	)

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Schedule Of Long-Term Debt (Parenthetical) (Detail)	9 Months Ended
	Sep. 30, 2012 First Lien Debt Payable Quarterly Us Dollar Denominated London Interbank Offer Rate Six Point Two Five Percentage As Of June Thirty Two Thousand Twelve	Sep. 30, 2012 First Lien Debt Payable Quarterly Euro Denominated Euribor Six Point Two Five Percentage As Of June Thirty Two Thousand Twelve	Sep. 30, 2012 Senior Notes Unsecured Payable Semi Annually Us Dollar Denominated Interest Rate Fixed At Eight Point Eight Seven Five Percentage Matures June Of Two Thousand Eighteen	Sep. 30, 2012 Unsecured Interest Rate Fixed At Two Percentage To Two Point Five Percentage Euro Denominated Primarily Short Term	Dec. 31, 2011 Unsecured Interest Rate Fixed At Two Percentage To Two Point Five Percentage Euro Denominated Primarily Short Term	Sep. 30, 2012 Unsecured Interest Rate Fixed At One Point Three One Percentage To Three Point Four Zero Percentage Yen Denominated Primarily Short Term Minimum	Dec. 31, 2011 Unsecured Interest Rate Fixed At One Point Three One Percentage To Three Point Four Zero Percentage Yen Denominated Primarily Short Term Minimum	Sep. 30, 2012 Unsecured Interest Rate Fixed At One Point Three One Percentage To Three Point Four Zero Percentage Yen Denominated Primarily Short Term Maximum	Dec. 31, 2011 Unsecured Interest Rate Fixed At One Point Three One Percentage To Three Point Four Zero Percentage Yen Denominated Primarily Short Term Maximum
Debt Disclosure [Line Items]
LIBOR rate, minimum	1.25%	1.25%
Interest rate Percentage above LIBOR rate	5.00%	5.00%
Debt instrument interest rate	6.25%	6.25%
Debt instrument fixed interest rate			8.875%	2.00%	2.00%	1.31%	1.31%	3.40%	3.40%
Debt instrument maturity			Jun. 01, 2018

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Business Segment Information (Tables)

9 Months Ended

Sep. 30, 2012

Text Block [Abstract]

Summarized Financial Information

Summarized financial information for the Company’s reportable segments is presented in the tables that follow for the three and nine months ended September 30, 2012 and 2011, respectively.

	Clothing		Roll Covers		Corporate			Total
Three Months Ended September 30, 2012:
Net Sales	$	88,873	$	45,358	$	—		$	134,231
Segment Earnings (Loss)	17,429		9,914		(2,942		)
Three Months Ended September 30, 2011:
Net Sales	$	97,515	$	50,712	$	—		$	148,227
Segment Earnings (Loss)	20,757		10,396		(2,548		)

	Clothing		Roll Covers		Corporate			Total
Nine Months Ended September 30, 2012:
Net Sales	$	265,671	$	139,302	$	—		$	404,973
Segment Earnings (Loss)	48,051		29,930		(9,364		)
Nine Months Ended September 30, 2011:
Net Sales	$	291,085	$	150,686	$	—		$	441,771
Segment Earnings (Loss)	63,026		31,216		(9,296		)

Reconciliation of Segment Earnings (Loss) to Income Before Provision for Income Taxes

Provided below is a reconciliation of Segment earnings (loss) to (loss) income before provision for income taxes for the three and nine months ended September 30, 2012 and 2011, respectively.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Segment Earnings (Loss):
Clothing	$	17,429		$	20,757		$	48,051		$	63,026
Roll Covers	9,914			10,396			29,930			31,216
Corporate	(2,942		)	(2,548		)	(9,364		)	(9,296		)
Stock compensation	(820		)	(172		)	(1,574		)	(2,253		)
Legal fees related to term debt amendment	(30		)	—			(115		)	—
Non-recurring expenses related to CEO retirement	(1,600		)	—			(3,096		)	—
Net interest expense	(9,777		)	(9,873		)	(28,494		)	(29,709		)
Depreciation and amortization	(9,897		)	(11,231		)	(30,242		)	(33,302		)
Loss on debt extinguishment	—			—			—			(2,926		)
Restructuring and impairment expense	(5,840		)	(577		)	(10,943		)	(1,287		)
(Loss) income before provision for income taxes	$	(3,563	)	$	6,752		$	(5,847	)	$	15,469

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Derivatives and Hedging

9 Months Ended

Sep. 30, 2012

Text Block [Abstract]

Derivatives and Hedging

Derivatives and Hedging

As required by ASC Topic 815, Derivatives and Hedging (“Topic 815”), the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability or firm commitment attributable to a particular risk are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge.

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

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company uses interest rate caps as part of its interest rate risk management strategy. Interest rate caps designated as cash flow hedges protect the Company from increases in interest rates above the strike rate of the interest rate cap. However, the Company’s financial statements are exposed to the effects of interest rate fluctuations below the strike rate negotiated in the interest rate cap agreements, which could have a material impact on its results of operations.

On August 8, 2011, the Company entered into two interest rate cap agreements with certain financial institutions, with notional amounts totaling $114,400, whereby the Company limits its variable interest rate exposure to the strike rate of the interest rate cap agreements. At September 30, 2012, these agreements had notional amounts of $96,924. Under the terms of the interest rate cap agreements, the Company will receive payments based on the spread in rates if the three-month LIBOR rate

increases above the negotiated cap rates of 3.0%. The interest rate caps are considered designated hedging instruments, classified as Level 2 in the fair value hierarchy. Changes in fair value will be deferred in accumulated other comprehensive loss and the cap purchase price will be reclassified from accumulated comprehensive loss into earnings as interest expense over the life of the agreements. The fair value of the interest rate caps was $30 at September 30, 2012 and $175 at December 31, 2011. These amounts are included in other assets in the Condensed Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011. Unrecognized losses of ($637) and ($520) were recorded in accumulated other comprehensive loss at September 30, 2012 and December 31, 2011, respectively.

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 Topic 815. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly to 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 September 30, 2012 and December 31, 2011, 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 Condensed Consolidated Balance Sheets. The fair value of these derivatives at September 30, 2012 and December 31, 2011 was ($71) and $123, respectively. The change in fair value of these contracts is included in foreign exchange gain and was $155 and $1,021 for the three months ended September 30, 2012 and 2011, respectively and $438 and $457 for the nine months ended September 30, 2012 and 2011, respectively.

The following represents the notional amounts of foreign exchange forward contracts at September 30, 2012:

	Notional Sold		Notional Purchased
Non-designated hedges of foreign exchange risk	$	28,070	$	(8,128	)

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.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	20,000,000	20,000,000
Common stock, shares outstanding	15,289,129	15,145,451

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Description of Business and Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2012

Text Block [Abstract]

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. The components of inventories are as follows at:

	September 30, 2012		December 31, 2011
Raw materials	$	17,256	$	19,872
Work in process	23,514		26,326
Finished goods (includes consigned inventory of $9,943 in 2012 and $12,953 in 2011)	39,266		37,119
	$	80,036	$	83,317

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 nine months ended September 30, 2012, 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 September 30, 2012.

Warranties

Warranties

The Company offers warranties on certain 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 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 nine months ended September 30, 2012:

	Balance at December 31, 2011		Charged to Revenue or Cost of Sales		Effect of Foreign Currency Translation			Deduction from Reserves			Balance at September 30, 2012
For the nine months ended September 30, 2012	$	2,121	$	966	$	(20	)	$	(1,252	)	$	1,815

Net (Loss) Income Per Common Share

Net Income (Loss) Per Common Share

Net income (loss) per common share has been computed and presented pursuant to the provisions of ASC Topic 260, Earnings per Share (“Topic 260”). Net income (loss) per share is based on the weighted-average number of shares outstanding during the period. As of September 30, 2012 and 2011, the Company had outstanding restricted stock units (“RSUs”), deferred stock units (“DSUs”), warrants and options.

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

	Three Months Ended September 30,		Nine Months Ended September 30,
	2012	2011	2012	2011
Weighted-average common shares outstanding–basic	15,257,617	15,135,309	15,215,752	15,059,320
Dilutive effect of stock-based compensation awards outstanding	—	9,359	—	9,359
Weighted-average common shares outstanding–diluted	15,257,617	15,144,668	15,215,752	15,068,679

Dilutive securities aggregating approximately 1.8 million were outstanding for the three and nine months ended September 30, 2012, respectively, but were not included in the computation of diluted earnings per share because the impact of including such shares would be anti-dilutive to the earnings per share calculations.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 01, 2012
Document Documentand Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
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		15,289,129

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Description of Business and Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2012

Text Block [Abstract]

Components of Inventories

The components of inventories are as follows at:

	September 30, 2012		December 31, 2011
Raw materials	$	17,256	$	19,872
Work in process	23,514		26,326
Finished goods (includes consigned inventory of $9,943 in 2012 and $12,953 in 2011)	39,266		37,119
	$	80,036	$	83,317

Changes In Warranty Liability

The table below represents the changes in the Company’s warranty liability for the nine months ended September 30, 2012:

	Balance at December 31, 2011		Charged to Revenue or Cost of Sales		Effect of Foreign Currency Translation			Deduction from Reserves			Balance at September 30, 2012
For the nine months ended September 30, 2012	$	2,121	$	966	$	(20	)	$	(1,252	)	$	1,815

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 September 30,		Nine Months Ended September 30,
	2012	2011	2012	2011
Weighted-average common shares outstanding–basic	15,257,617	15,135,309	15,215,752	15,059,320
Dilutive effect of stock-based compensation awards outstanding	—	9,359	—	9,359
Weighted-average common shares outstanding–diluted	15,257,617	15,144,668	15,215,752	15,068,679

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Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Income Statement [Abstract]
Net sales	$ 134,231	$ 148,227	$ 404,973	$ 441,771
Costs and expenses:
Cost of products sold	85,079	94,010	258,396	275,768
Selling	18,546	19,817	57,104	59,848
General and administrative	15,650	14,002	47,509	47,560
Research and development	2,700	2,907	8,531	8,920
Restructuring and impairment	5,840	577	10,943	1,287
Operating Costs and Expenses, Total	127,815	131,313	382,483	393,383
Income from operations	6,416	16,914	22,490	48,388
Interest expense, net	(9,777)	(9,873)	(28,494)	(29,709)
Loss on extinguishment of debt	0	0	0	(2,926)
Foreign exchange (loss) gain	(202)	(289)	157	(284)
(Loss) income before provision for income taxes	(3,563)	6,752	(5,847)	15,469
Provision for income taxes	(94)	(3,264)	(3,105)	(9,711)
Net income (loss)	(3,657)	3,488	(8,952)	5,758
Comprehensive (loss) income	$ (1,781)	$ (18,375)	$ (15,490)	$ (4,453)
Net income (loss) per share:
Basic	$ (0.24)	$ 0.23	$ (0.59)	$ 0.38
Diluted	$ (0.24)	$ 0.23	$ (0.59)	$ 0.38
Shares used in computing net income (loss) per share:
Basic	15,257,617	15,135,309	15,215,752	15,059,320
Diluted	15,257,617	15,144,668	15,215,752	15,068,679

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Restructuring Expense

9 Months Ended

Sep. 30, 2012

Text Block [Abstract]

Restructuring Expense

Restructuring and Impairment Expense

During the nine months ended September 30, 2012, the Company recorded restructuring expenses of approximately$10.9 million. The following table sets forth the significant components and activity under restructuring programs for the nine months ended September 30, 2012 and 2011:

	Balance at December 31,  2011		Charges (1)		Currency     Effects			Cash Payments			Balance at     September 30, 2012
Severance	$	800	$	4,888	$	9		$	(2,405	)	$	3,292
Facility costs and other	452		4,455		(117		)	(4,456		)	334
Total	$	1,252	$	9,343	$	(108	)	$	(6,861	)	$	3,626

	Balance at December 31,  2010		Charges (2)		Currency     Effects			Cash Payments			Balance at     September 30, 2011
Severance	$	2,255	$	445	$	(53	)	$	(1,590	)	$	1,057
Facility costs and other	471		440		60			(450		)	521
Total	$	2,726	$	885	$	7		$	(2,040	)	$	1,578

(1) Amount excludes $1,600 impairment charges. See below for further discussion.

(2) Amount excludes $402 related to a Canadian pension plan termination charge reclassified out of Accumulated Other Comprehensive Income, rather than recorded in the accrual above.

Restructuring and impairment expense by segment, which is not included in Segment Earnings (Loss) in Note 8, is as follows:

	Three Months Ended              September 30,				Nine Months Ended              September 30,
	2012		2011		2012		2011
Clothing	$	2,572	$	13	$	7,338	$	327
Roll Covers	3,223		564		3,402		960
Corporate	45		—		203		—
Total	$	5,840	$	577	$	10,943	$	1,287

In July of 2012, the Company announced a voluntary redundancy program at its press felt facility in Buenos Aires, Argentina in connection with the relocation of its Huyck Wangner press felt capacity. The production of press felts and fiber cement felts will be transferred to its facilities in Brazil. During the third quarter of 2012, the Company completed the voluntary redundancy program and severance payments totaling $0.9 million were made to the employees. In addition, during the third quarter of 2012, management did an extensive review of the assets at the Argentina clothing facility to determine which assets would be redeployed to other facilities, which assets would be sold and which assets would be scrapped, and consequently, recorded an impairment charge of $1.1 million. The Company plans to sell the majority of the land and building, and does not expect to impair either the land or building, under the requirements of ASC 360 "Impairment and Disposal of Long-Lived Assets".

Also in July of 2012, the Company initiated consultation proceedings with its works’ council at its rolls cover facility in Meyzieu, France regarding a proposal to cease operations there, transferring the roll cover production of this facility to its rolls facilities in Germany and Italy. In October of 2012, the Company completed negotiations with its works' council and signed an agreement which allowed the Company to formally give notice to employees. All employees were aware of the benefits they would receive in the upcoming months. Therefore, severance charges of $2.6 million were accrued at September 30, 2012. In addition, during the third quarter of 2012, management did an extensive review of the assets at the France rolls facility to determine which assets would be redeployed to other facilities, which assets would be sold and which assets would be scrapped, and consequently, recorded an impairment charge of $0.5 million. The Company plans to sell the land and building, and does not expect to impair either the land or building, under the requirements of ASC 360 "Impairment and Disposal of Long-Lived Assets".

In addition to the above restructuring activities, during 2012, the Company terminated sales agency contracts in Europe, transferred certain machinery and equipment from downsized facilities and reduced headcount, which resulted in $5.8 million in related restructuring charges.

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Comprehensive (Loss) Income and Accumulated Other Comprehensive Loss

9 Months Ended

Sep. 30, 2012

Text Block [Abstract]

Comprehensive (Loss) Income and Accumulated Other Comprehensive Loss

Comprehensive Loss and Accumulated Other Comprehensive Loss

Comprehensive loss for the three and nine months ended September 30, 2012 and 2011 is as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Net (loss) income	$	(3,657	)	$	3,488		$	(8,952	)	$	5,758
Foreign currency translation adjustments	2,571			(22,906		)	(5,828		)	(10,429		)
Pension liability changes under Topic 715	(683		)	1,481			(593		)	656
Change in value of derivative instruments	(12		)	(438		)	(117		)	(438		)
Comprehensive loss	$	(1,781	)	$	(18,375	)	$	(15,490	)	$	(4,453	)

The components of accumulated other comprehensive loss are as follows:

	Foreign Currency Translation     Adjustment			Pension Liability Changes Under  Topic 715			Change in Value of Derivative Instruments			Accumulated    Other Comprehensive Income (Loss)
Balance at December 31, 2011	$	10,157		$	(41,183	)	$	(520	)	$	(31,546	)
Current period change, net of tax	(5,828		)	(593		)	(117		)	(6,538		)
Balance at September 30, 2012	$	4,329		$	(41,776	)	$	(637	)	$	(38,084	)

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Restructuring Expense (Tables)

9 Months Ended

Sep. 30, 2012

Text Block [Abstract]

Restructuring Programs

The following table sets forth the significant components and activity under restructuring programs for the nine months ended September 30, 2012 and 2011:

	Balance at December 31,  2011		Charges (1)		Currency     Effects			Cash Payments			Balance at     September 30, 2012
Severance	$	800	$	4,888	$	9		$	(2,405	)	$	3,292
Facility costs and other	452		4,455		(117		)	(4,456		)	334
Total	$	1,252	$	9,343	$	(108	)	$	(6,861	)	$	3,626

	Balance at December 31,  2010		Charges (2)		Currency     Effects			Cash Payments			Balance at     September 30, 2011
Severance	$	2,255	$	445	$	(53	)	$	(1,590	)	$	1,057
Facility costs and other	471		440		60			(450		)	521
Total	$	2,726	$	885	$	7		$	(2,040	)	$	1,578

Restructuring And Impairments Expense By Segment

expense by segment, which is not included in Segment Earnings (Loss) in Note 8, is as follows:

	Three Months Ended              September 30,				Nine Months Ended              September 30,
	2012		2011		2012		2011
Clothing	$	2,572	$	13	$	7,338	$	327
Roll Covers	3,223		564		3,402		960
Corporate	45		—		203		—
Total	$	5,840	$	577	$	10,943	$	1,287

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Derivatives and Hedging (Tables)

9 Months Ended

Sep. 30, 2012

Text Block [Abstract]

Notional Amounts Sold and Purchased

The following represents the notional amounts of foreign exchange forward contracts at September 30, 2012:

	Notional Sold		Notional Purchased
Non-designated hedges of foreign exchange risk	$	28,070	$	(8,128	)

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Stock-Based Compensation and Stockholders' Equity

9 Months Ended

Sep. 30, 2012

Text Block [Abstract]

Stock-Based Compensation and Stockholders' Equity

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 time-based restricted stock units ("RSU's") and deferred stock units ("DSUs"). The Company recorded stock-based compensation expense during the three and nine ended September 30, 2012 and September 30, 2011 as follows:

	Three Months Ended     September 30,					Nine Months Ended     September 30,
	2012		2011			2012		2011
RSU and DSU Awards (1)	$	820	$	634		$	1,574	$	1,942
Management Incentive/Performance Award Programs (2)	—		(462		)	—		311
Total	$	820	$	172		$	1,574	$	2,253

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

(2) For 2011, the amount represents the value of stock awards granted under the 2011 Management Incentive Compensation Program, which was approved by the Company’s Board of Directors in March of 2011. No amount has been recorded for the 2012 Management Incentive Compensation Program (the “2012 MIC”), as the performance targets are not projected to be met as of September 30, 2012.

Summary of Activity under the Long-Term Incentive Plans

On September 22, 2010, the Board approved the Company’s 2010 Long-Term Incentive Plan (the “2010 LTIP”) under the 2010 Equity Incentive Plan (the “2010 Plan”). Awards under the 2010 LTIP are both time-based and performance-based. Awards will be paid in the form of RSUs or shares of common stock of the Company. Time-based awards under the 2010 LTIP were approved in the form of 131,010 time-based RSUs granted on October 29, 2010 under the Company’s 2010 Plan. As of September 30, 2012, 86,511 time-based RSUs had vested in accordance with the 2010 LTIP and were converted to common stock, with the remaining 44,499 time-based RSUs to vest on March 31, 2013. These will be converted into shares of common stock when they vest. Performance-based awards under the 2010 LTIP will vest upon meeting various criteria, as included in the Company’s 2011 Annual Report on Form 10-K.

On May 8, 2012, the Board approved the 2012 Executive Long-Term Incentive Plan (the “2012 Executive LTIP”) under the 2010 Plan. Awards under the 2012 Executive LTIP are both time-based and performance-based. A specific target share award is set for each participant in the 2012 Executive LTIP. Awards will be paid in the form of RSUs or shares of common stock of the Company. Time-based awards, or 50% of the total target award, were granted in the form of 54,750 time-based RSUs under the Company’s 2012 Plan and will vest in equal installments on March 31, 2013, March 31, 2014, and March 31, 2015. These will be converted into shares of common stock as they vest. Performance-based awards, which constitute 50% of the total award, will be determined based on the Company’s performance against a three-year cumulative Adjusted EBITDA metric, adjusted for currency fluctuations during the term of the 2012 – 2014 Executive LTIP. The performance-based awards will convert into shares of the Company’s common stock and be paid after the close of the three-year performance period. The amount of the payment will be based on a sliding scale ranging from 50% if the metric is achieved at 85% of the target up to 200% if the metric is achieved at or above 115% of the target.

Summary of Activity under the MIC Plans

On March 13, 2012, the Board approved the 2012 MIC. Under the 2012 MIC, payouts will be determined by the Company’s performance against specified Adjusted EBITDA metrics for the 2012 fiscal year. The Adjusted EBITDA metrics will be adjusted for currency fluctuations. A specific target award is set for each participant in the 2012 MIC equal to a percentage of his or her current base cash compensation. Fifty percent (50%) of any 2012 MIC award earned will be paid in cash and fifty percent (50%) is expected to be paid in the form of shares of the Company’s common stock under the Company’s 2010 Equity Incentive Plan. The 2012 MIC awards will be paid out based on a sliding scale. A participant will receive an award equal to 20% of his or her target award if Adjusted EBITDA is achieved above a minimum target level, 90% of target award if Adjusted EBITDA is at budget performance, 100% of target award if the targeted metric is achieved and ranging up to 200% if Adjusted EBITDA is achieved at a maximum target level. As indicated above, management determined that Adjusted EBITDA is projected not to meet the minimum target level at September 30, 2012. Therefore, no compensation expense has been recorded for the nine months ended September 30, 2012.

Other Stock Compensation Plans

On August 15, 2012, in connection with the previously announced anticipated retirement of Stephen R. Light, the Board of Directors of the Company appointed Harold C. Bevis to the position of President and Chief Executive Officer, effective immediately, and Mr. Light notified the Company of his resignation, effective as of that date, as the Company's Chairman, President and Chief Executive Officer. The Company granted Mr. Bevis a sign-on award of 204,208 restricted stock units and options to acquire 781,701 shares of the Company's Common Stock, par value $0.001 per share. Both the restricted stock units and the options will vest over a three year period, beginning on the second anniversary of the August 15, 2012 grant date. The options will have a 10-year term and an exercise price of $4.00 per share, the August 15, 2012 closing price of the Company's common stock on the New York Stock Exchange. In addition, on August 15, 2012, the Company accelerated the vesting of Mr. Light's remaining 50,000 restricted stock units, issuing 27,900 shares of common stock, upon vesting, net of certain tax withholdings.

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Business Segment Information

9 Months Ended

Sep. 30, 2012

Text Block [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 along the length of papermaking machines. The Roll Covers segment primarily represents the manufacture and refurbishment of covers used on the steel rolls of papermaking machines. The Company manages each of these operating segments separately.

Management evaluates segment performance based on earnings before interest, taxes, depreciation and amortization and before 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 and nine months ended September 30, 2012 and 2011, respectively.

	Clothing		Roll Covers		Corporate			Total
Three Months Ended September 30, 2012:
Net Sales	$	88,873	$	45,358	$	—		$	134,231
Segment Earnings (Loss)	17,429		9,914		(2,942		)
Three Months Ended September 30, 2011:
Net Sales	$	97,515	$	50,712	$	—		$	148,227
Segment Earnings (Loss)	20,757		10,396		(2,548		)

	Clothing		Roll Covers		Corporate			Total
Nine Months Ended September 30, 2012:
Net Sales	$	265,671	$	139,302	$	—		$	404,973
Segment Earnings (Loss)	48,051		29,930		(9,364		)
Nine Months Ended September 30, 2011:
Net Sales	$	291,085	$	150,686	$	—		$	441,771
Segment Earnings (Loss)	63,026		31,216		(9,296		)

Provided below is a reconciliation of Segment earnings (loss) to (loss) income before provision for income taxes for the three and nine months ended September 30, 2012 and 2011, respectively.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Segment Earnings (Loss):
Clothing	$	17,429		$	20,757		$	48,051		$	63,026
Roll Covers	9,914			10,396			29,930			31,216
Corporate	(2,942		)	(2,548		)	(9,364		)	(9,296		)
Stock compensation	(820		)	(172		)	(1,574		)	(2,253		)
Legal fees related to term debt amendment	(30		)	—			(115		)	—
Non-recurring expenses related to CEO retirement	(1,600		)	—			(3,096		)	—
Net interest expense	(9,777		)	(9,873		)	(28,494		)	(29,709		)
Depreciation and amortization	(9,897		)	(11,231		)	(30,242		)	(33,302		)
Loss on debt extinguishment	—			—			—			(2,926		)
Restructuring and impairment expense	(5,840		)	(577		)	(10,943		)	(1,287		)
(Loss) income before provision for income taxes	$	(3,563	)	$	6,752		$	(5,847	)	$	15,469

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2012

Text Block [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 September 30, 2012, 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. See Note 4 for a discussion of Xerium Brazil’s proceeding with the FRD.

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.

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Supplemental Guarantor Financial Information

9 Months Ended

Sep. 30, 2012

Text Block [Abstract]

Supplemental Guarantor Financial Information

Supplemental Guarantor Financial Information

On May 26, 2011, the Company closed on the sale of its Notes. The Notes are unsecured obligations of the Company and are fully and unconditionally guaranteed on a senior unsecured 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, 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 September 30, 2012

(Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The Company
ASSETS
Current assets:
Cash and cash equivalents	$	10,535		$	8		$	29,034		$	—		$	39,577
Accounts receivable, net	—			20,508			66,886			—			87,394
Intercompany receivable	(97,747		)	103,042			(5,295		)	—			—
Inventories, net	—			16,652			64,367			(983		)	80,036
Prepaid expenses	149			2,216			7,685			—			10,050
Other current assets	—			2,917			10,094			—			13,011
Total current assets	(87,063		)	145,343			172,771			(983		)	230,068
Property and equipment, net	425			63,697			248,204			—			312,326
Investments	598,237			148,027			—			(746,264		)	—
Goodwill	—			17,737			41,359			—			59,096
Intangible assets	10,646			5,329			3,998			—			19,973
Other assets	49			—			9,265			—			9,314
Total assets	$	522,294		$	380,133		$	475,597		$	(747,247	)	$	630,777
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	464		$	7,635		$	24,957		$	—		$	33,056
Accrued expenses	11,888			6,236			37,858			—			55,982
Current notes payable	—			—			7,714						7,714
Current maturities of long-term debt	1,250			—			1,118			—			2,368
Total current liabilities	13,602			13,871			71,647			—			99,120
Long-term debt, net of current maturities	344,270			—			93,458			—			437,728
Deferred and long-term taxes	—			2,378			16,160			—			18,538
Pension, other post-retirement and post-employment obligations	23,087			1,198			55,756			—			80,041
Other long-term liabilities	13			—			11,881			—			11,894
Intercompany loans	217,965			(347,605		)	129,640			—			—
Total stockholders’ (deficit) equity	(76,643		)	710,291			97,055			(747,247		)	(16,544		)
Total liabilities and stockholders’ equity	$	522,294		$	380,133		$	475,597		$	(747,247	)	$	630,777

Xerium Technologies, Inc.

Consolidating Balance Sheet

At December 31, 2011

(Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The Company
ASSETS
Current assets:
Cash and cash equivalents	$	11,548		$	280		$	31,738		$	—		$	43,566
Accounts receivable, net	—			21,210			70,574			—			91,784
Intercompany receivable	(95,855		)	102,653			(6,798		)	—			—
Inventories, net	—			19,759			64,857			(1,299		)	83,317
Prepaid expenses	272			1,546			4,359			—			6,177
Other current assets	—			4,716			10,335			—			15,051
Total current assets	(84,035		)	150,164			175,065			(1,299		)	239,895
Property and equipment, net	881			67,727			266,648			—			335,256
Investments	579,018			162,438			—			(741,456		)	—
Goodwill	—			17,737			41,383			—			59,120
Intangible assets	11,484			6,986			4,170			—			22,640
Other assets	196			—			8,614			—			8,810
Total assets	$	507,544		$	405,052		$	495,880		$	(742,755	)	$	665,721
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Accounts payable	$	679		$	10,257		$	28,807		$	—		$	39,743
Accrued expenses	6,563			5,722			35,520			—			47,805
Current maturities of long-term debt	1,250			—			2,298			—			3,548
Total current liabilities	8,492			15,979			66,625			—			91,096
Long-term debt, net of current maturities	358,116			—			107,390			—			465,506
Deferred and long-term taxes	—			2,378			16,204			—			18,582
Pension, other post-retirement and post-employment obligations	22,906			1,820			56,462			—			81,188
Other long-term liabilities	—			—			11,654			—			11,654
Intercompany loans	187,661			(307,813		)	120,152			—			—
Total stockholders’ (deficit) equity	(69,631		)	692,688			117,393			(742,755		)	(2,305		)
Total liabilities and stockholders’ equity	$	507,544		$	405,052		$	495,880		$	(742,755	)	$	665,721

Xerium Technologies, Inc.

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

For the three months ended September 30, 2012

(Dollars in thousands)

	Parent			Total Guarantors			Total  Non Guarantors			Other Eliminations			The Company
Net sales	$	—		$	45,119		$	100,831		$	(11,719	)	$	134,231
Costs and expenses:
Cost of products sold	(342		)	31,821			65,442			(11,842		)	85,079
Selling	—			5,393			13,153			—			18,546
General and administrative	3,489			1,725			10,436			—			15,650
Research and development	—			2,105			595			—			2,700
Restructuring and impairment	45			19			5,776			—			5,840
	3,192			41,063			95,402			(11,842		)	127,815
(Loss) income from operations	(3,192		)	4,056			5,429			123			6,416
Interest (expense) income, net	(6,973		)	1,490			(4,294		)	—			(9,777		)
Foreign exchange (loss) gain	(193		)	(3		)	(6		)	—			(202		)
Equity in subsidiaries income	5,093			(13,056		)	—			7,963			—
Dividend income	1,656			18,904			—			(20,560		)	—
(Loss) income before provision for income taxes	(3,609		)	11,391			1,129			(12,474		)	(3,563		)
Provision for income taxes	(48		)	(35		)	(11		)	—			(94		)
Net (loss) income	$	(3,657	)	$	11,356		$	1,118		$	(12,474	)	$	(3,657	)
Comprehensive (loss) income	$	(3,598	)	$	11,464		$	2,827		$	(12,474	)	$	(1,781	)

Xerium Technologies, Inc.

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

For the three months ended September 30, 2011

(Dollars in thousands)

	Parent			Total Guarantors			Total  Non Guarantors			Other Eliminations			The Company
Net sales	$	—		$	45,203		$	115,433		$	(12,409	)	$	148,227
Costs and expenses:
Cost of products sold	(682		)	32,233			74,873			(12,414		)	94,010
Selling	—			5,861			13,956			—			19,817
General and administrative	148			2,016			11,838			—			14,002
Research and development	—			1,912			995			—			2,907
Restructuring and impairment	—			100			477			—			577
	(534		)	42,122			102,139			(12,414		)	131,313
Income (loss) from operations	534			3,081			13,294			5			16,914
Interest (expense) income, net	(7,239		)	1,961			(4,595		)	—			(9,873		)
Foreign exchange (loss) gain	(862		)	529			44			—			(289		)
Equity in subsidiaries income	11,222			5,336			—			(16,558		)	—
Income (loss) before provision for income taxes	3,655			10,907			8,743			(16,553		)	6,752
Provision for income taxes	(167		)	(45		)	(3,052		)	—			(3,264		)
Net income (loss)	$	3,488		$	10,862		$	5,691		$	(16,553	)	$	3,488
Comprehensive income (loss)	$	5,405		$	10,568		$	(17,795	)	$	(16,553	)	$	(18,375	)

Xerium Technologies, Inc.

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

For the nine months ended September 30, 2012

(Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The  Company
Net sales	$	—		$	134,970		$	305,628		$	(35,625	)	$	404,973
Costs and expenses:
Cost of products sold	(1,150		)	97,245			198,291			(35,990		)	258,396
Selling	—			16,725			40,379			—			57,104
General and administrative	8,753			5,492			33,264			—			47,509
Research and development	—			6,258			2,273			—			8,531
Restructuring and impairment	203			182			10,558			—			10,943
	7,806			125,902			284,765			(35,990		)	382,483
(Loss) income from operations	(7,806		)	9,068			20,863			365			22,490
Interest (expense) income, net	(21,419		)	5,035			(12,110		)	—			(28,494		)
Foreign exchange (loss) gain	(501		)	(7		)	665			—			157
Equity in subsidiaries income	19,221			(10,668		)	—			(8,553		)	—
Dividend income	1,656			18,904			—			(20,560		)	—
(Loss) income before provision for income taxes	(8,849		)	22,332			9,418			(28,748		)	(5,847		)
Provision for income taxes	(103		)	(108		)	(2,894		)	—			(3,105		)
Net (loss) income	$	(8,952	)	$	22,224		$	6,524		$	(28,748	)	$	(8,952	)
Comprehensive (loss) income	$	(8,261	)	$	22,860		$	(1,341	)	$	(28,748	)	$	(15,490	)

Xerium Technologies, Inc.

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

For the nine months ended September 30, 2011

(Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The  Company
Net sales	$	—		$	136,173		$	343,288		$	(37,690	)	$	441,771
Costs and expenses:
Cost of products sold	(1,835		)	97,105			218,104			(37,606		)	275,768
Selling	—			17,188			42,660			—			59,848
General and administrative	5,132			5,969			36,459			—			47,560
Research and development	(3		)	5,979			2,944			—			8,920
Restructuring and impairment	—			714			573			—			1,287
	3,294			126,955			300,740			(37,606		)	393,383
(Loss) income from operations	(3,294		)	9,218			42,548			(84		)	48,388
Interest (expense) income, net	(17,549		)	5,749			(17,909		)	—			(29,709		)
Loss on extinguishment of debt	(2,903		)	(6		)	(17		)	—			(2,926		)
Foreign exchange gain (loss)	551			(948		)	113			—			(284		)
Equity in subsidiaries income	29,408			11,450			—			(40,858		)	—
Income (loss) before provision for income taxes	6,213			25,463			24,735			(40,942		)	15,469
Provision for income taxes	(455		)	(154		)	(9,102		)	—			(9,711		)
Net income (loss)	$	5,758		$	25,309		$	15,633		$	(40,942	)	$	5,758
Comprehensive income (loss)	$	4,678		$	32,540		$	(729	)	$	(40,942	)	$	(4,453	)

Xerium Technologies, Inc.

Consolidating Statement of Cash Flows-(Unaudited)

For the nine months ended September 30, 2012

(Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The  Company
Operating activities
Net (loss) income	$	(8,952	)	$	22,224		$	6,524		$	(28,748	)	$	(8,952	)
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Stock-based compensation	1,574			—			—			—			1,574
Depreciation	135			5,932			22,446			—			28,513
Amortization of intangibles	—			1,659			70			—			1,729
Deferred financing cost amortization	1,885			—			822			—			2,707
Unrealized foreign exchange loss on revaluation of debt	—			—			167			—			167
Deferred taxes	—			—			(383		)	—			(383		)
Asset impairment	—			—			1,600						1,600
Loss (gain) on disposition of property and equipment	—			24			(680		)	—			(656		)
Intercompany dividend	(1,656		)	(18,904		)				20,560			—
Provision for doubtful accounts	—			(150		)	613			—			463
Undistributed equity in (earnings) loss of subsidiaries	(19,221		)	10,668			—			8,553			—
Change in assets and liabilities which provided (used) cash:
Accounts receivable	8			852			2,094			—			2,954
Inventories	—			3,107			(404		)	(365		)	2,338
Prepaid expenses	122			(671		)	(3,472		)	—			(4,021		)
Other current assets	—			1,799			(414		)	—			1,385
Accounts payable and accrued expenses	4,781			(2,106		)	(730		)	—			1,945
Deferred and other long-term liabilities	244			(622		)	(780		)	—			(1,158		)
Intercompany loans	1,891			(394		)	(1,497		)	—			—
Net cash (used in) provided by operating activities	(19,189		)	23,418			25,976			—			30,205
Investing activities
Capital expenditures, gross	(22		)	(1,895		)	(11,305		)	—			(13,222		)
Intercompany property and equipment transfers, net	344			(317		)	(27		)	—			—
Proceeds from disposals of property and equipment	—			298			1,080			—			1,378
Net cash provided by (used in) investing activities	322			(1,914		)	(10,252		)	—			(11,844		)
Financing activities
Net increase in notes payable	—			—			7,365						7,365
Principal payments on debt	(13,846		)	—			(14,119		)	—			(27,965		)
Payment of deferred financing fees	(1,047		)	—			(735		)	—			(1,782		)
Dividends paid	1,656			—			(1,656		)	—			—
Intercompany loans	31,091			(21,778		)	(9,313		)	—			—
Net cash provided by (used in) financing activities	17,854			(21,778		)	(18,458		)	—			(22,382		)
Effect of exchange rate changes on cash flows	—			2			30			—			32
Net decrease in cash	(1,013		)	(272		)	(2,704		)	—			(3,989		)
Cash and cash equivalents at beginning of period	11,548			280			31,738			—			43,566
Cash and cash equivalents at end of period	$	10,535		$	8		$	29,034		$	—		$	39,577

Xerium Technologies, Inc.

Consolidating Statement of Cash Flows-(Unaudited)

For the nine months ended September 30, 2011

(Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The Company
Operating activities
Net income	$	5,758		$	25,309		$	15,633		$	(40,942	)	$	5,758
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Stock-based compensation	2,253			—			—			—			2,253
Depreciation	176			6,044			25,353			—			31,573
Amortization of intangibles	—			1,659			70			—			1,729
Curtailment/settlement loss	—			—			402						402
Deferred financing cost amortization	(431		)	204			1,840			—			1,613
Unrealized foreign exchange loss on revaluation of debt	—			—			1,070			—			1,070
Deferred taxes	—			—			2,246			—			2,246
Gain on disposition of property and equipment	—			(128		)	(476		)	—			(604		)
Loss on extinguishment of debt	2,903			6			17			—			2,926
Provision for doubtful accounts	—			438			295			—			733
Undistributed equity in (earnings) loss of subsidiaries	(29,408		)	(11,450		)	—			40,858			—
Change in assets and liabilities which provided (used) cash:
Accounts receivable	11			280			(1,399		)	—			(1,108		)
Inventories	—			(1,470		)	(9,263		)	84			(10,649		)
Prepaid expenses	229			(187		)	(1,160		)	—			(1,118		)
Other current assets	645			(982		)	(864		)	—			(1,201		)
Accounts payable and accrued expenses	6,623			(2,677		)	(5,625		)	—			(1,679		)
Deferred and other long-term liabilities	(347		)	(1,064		)	(1,697		)	—			(3,108		)
Intercompany loans	6,932			2,559			(9,491		)	—			—
Net cash (used in)provided by operating activities	(4,656		)	18,541			16,951			—			30,836
Investing activities
Capital expenditures, gross	(364		)	(2,727		)	(15,839		)	—			(18,930		)
Intercompany property and equipment transfers, net	—			15			(15		)	—			—
Proceeds from disposals of property and equipment	—			149			7,574			—			7,723
Restricted cash	13,701			—			—			—			13,701
Net cash provided by (used in) investing activities	13,337			(2,563		)	(8,280		)	—			2,494
Financing activities
Proceeds from borrowings	365,000			—			124,629			—			489,629
Principal payments on debt	(262,920		)	(51,016		)	(187,483		)	—			(501,419		)
Payment of deferred financing fees	(72,185		)	—			55,070			—			(17,115		)
Intercompany loans	(37,570		)	35,055			2,515			—			—
Net cash used in financing activities	(7,675		)	(15,961		)	(5,269		)	—			(28,905		)
Effect of exchange rate changes on cash flows	—			2			(171		)	—			(169		)
Net increase in cash	1,006			19			3,231			—			4,256
Cash and cash equivalents at beginning of period	6,345			33			32,323			—			38,701
Cash and cash equivalents at end of period	$	7,351		$	52		$	35,554		$	—		$	42,957

XML

Notional Amounts of Outstanding Foreign Exchange Forward Contracts (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012
Derivatives Sold
Derivative [Line Items]
Non-designated hedges of foreign exchange risk	$ 28,070
Derivatives Purchased
Derivative [Line Items]
Non-designated hedges of foreign exchange risk	$ (8,128)

XML

Condensed Consolidated Balance Sheet (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Jul. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Dec. 31, 2010
Current assets:
Cash and cash equivalents	$ 39,577		$ 43,566	$ 42,957	$ 38,701
Accounts receivable, net	87,394		91,784
Inventories, net	80,036		83,317
Prepaid expenses	10,050		6,177
Other current assets	13,011		15,051
Total current assets	230,068		239,895
Property and equipment, net	312,326		335,256
Goodwill	59,096		59,120
Intangible assets	19,973		22,640
Other assets	9,314		8,810
Total assets	630,777		665,721
Current liabilities:
Accounts payable	33,056		39,743
Accrued expenses	55,982		47,805
Notes payable	7,714	7,714	0
Current maturities of long-term debt	2,368		3,548
Total current liabilities	99,120		91,096
Long-term debt, net of current maturities	437,728		465,506
Deferred and long-term taxes	18,538		18,582
Pension, other post-retirement and post-employment obligations	80,041		81,188
Other long-term liabilities	11,894		11,654
Total stockholders' (deficit) equity	(16,544)		(2,305)
Total liabilities and stockholders' deficit	630,777		665,721
Parent
Current assets:
Cash and cash equivalents	10,535		11,548	7,351	6,345
Intercompany receivable	(97,747)		(95,855)
Prepaid expenses	149		272
Total current assets	(87,063)		(84,035)
Property and equipment, net	425		881
Investments	598,237		579,018
Intangible assets	10,646		11,484
Other assets	49		196
Total assets	522,294		507,544
Current liabilities:
Accounts payable	464		679
Accrued expenses	11,888		6,563
Current maturities of long-term debt	1,250		1,250
Total current liabilities	13,602		8,492
Long-term debt, net of current maturities	344,270		358,116
Pension, other post-retirement and post-employment obligations	23,087		22,906
Other long-term liabilities	13
Intercompany loans	217,965		187,661
Total stockholders' (deficit) equity	(76,643)		(69,631)
Total liabilities and stockholders' deficit	522,294		507,544
Total Guarantors
Current assets:
Cash and cash equivalents	8		280	52	33
Accounts receivable, net	20,508		21,210
Intercompany receivable	103,042		102,653
Inventories, net	16,652		19,759
Prepaid expenses	2,216		1,546
Other current assets	2,917		4,716
Total current assets	145,343		150,164
Property and equipment, net	63,697		67,727
Investments	148,027		162,438
Goodwill	17,737		17,737
Intangible assets	5,329		6,986
Total assets	380,133		405,052
Current liabilities:
Accounts payable	7,635		10,257
Accrued expenses	6,236		5,722
Total current liabilities	13,871		15,979
Deferred and long-term taxes	2,378		2,378
Pension, other post-retirement and post-employment obligations	1,198		1,820
Intercompany loans	(347,605)		(307,813)
Total stockholders' (deficit) equity	710,291		692,688
Total liabilities and stockholders' deficit	380,133		405,052
Total Non-Guarantors
Current assets:
Cash and cash equivalents	29,034		31,738	35,554	32,323
Accounts receivable, net	66,886		70,574
Intercompany receivable	(5,295)		(6,798)
Inventories, net	64,367		64,857
Prepaid expenses	7,685		4,359
Other current assets	10,094		10,335
Total current assets	172,771		175,065
Property and equipment, net	248,204		266,648
Goodwill	41,359		41,383
Intangible assets	3,998		4,170
Other assets	9,265		8,614
Total assets	475,597		495,880
Current liabilities:
Accounts payable	24,957		28,807
Accrued expenses	37,858		35,520
Notes payable	7,714
Current maturities of long-term debt	1,118		2,298
Total current liabilities	71,647		66,625
Long-term debt, net of current maturities	93,458		107,390
Deferred and long-term taxes	16,160		16,204
Pension, other post-retirement and post-employment obligations	55,756		56,462
Other long-term liabilities	11,881		11,654
Intercompany loans	129,640		120,152
Total stockholders' (deficit) equity	97,055		117,393
Total liabilities and stockholders' deficit	475,597		495,880
Other Eliminations
Current assets:
Cash and cash equivalents	0		0	0	0
Inventories, net	(983)		(1,299)
Total current assets	(983)		(1,299)
Investments	(746,264)		(741,456)
Total assets	(747,247)		(742,755)
Current liabilities:
Accrued expenses	0		0
Total current liabilities	0
Total stockholders' (deficit) equity	(747,247)		(742,755)
Total liabilities and stockholders' deficit	(747,247)		(742,755)
The Company
Current assets:
Cash and cash equivalents	39,577		43,566	42,957	38,701
Accounts receivable, net	87,394		91,784
Inventories, net	80,036		83,317
Prepaid expenses	10,050		6,177
Other current assets	13,011		15,051
Total current assets	230,068		239,895
Property and equipment, net	312,326		335,256
Goodwill	59,096		59,120
Intangible assets	19,973		22,640
Other assets	9,314		8,810
Total assets	630,777		665,721
Current liabilities:
Accounts payable	33,056		39,743
Accrued expenses	55,982		47,805
Notes payable	7,714
Current maturities of long-term debt	2,368		3,548
Total current liabilities	99,120		91,096
Long-term debt, net of current maturities	437,728		465,506
Deferred and long-term taxes	18,538		18,582
Pension, other post-retirement and post-employment obligations	80,041		81,188
Other long-term liabilities	11,894		11,654
Total stockholders' (deficit) equity	(16,544)		(2,305)
Total liabilities and stockholders' deficit	$ 630,777		$ 665,721

XML

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

9 Months Ended

Sep. 30, 2012

Text Block [Abstract]

Approximate Matching Contribution Expense

The following represents the approximate matching contribution expense for the three and nine months ended September 30, 2012 and 2011:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Matching contribution expense	$	420	$	430	$	1,298	$	1,310

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 September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Service cost	$	898		$	679		$	2,671		$	2,090
Interest cost	1,855			1,939			5,523			5,968
Expected return on plan assets	(1,392		)	(1,413		)	(4,142		)	(4,350		)
Amortization of prior service cost	4			4			11			12
Amortization of net loss	640			355			1,906			1,093
Net periodic benefit cost	$	2,005		$	1,564		$	5,969		$	4,813

XML

Supplemental Guarantor Financial Information (Tables)

9 Months Ended

Sep. 30, 2012

Text Block [Abstract]

Consolidating Balance Sheet

Xerium Technologies, Inc.

Consolidating Balance Sheet—(Unaudited)

At September 30, 2012

(Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The Company
ASSETS
Current assets:
Cash and cash equivalents	$	10,535		$	8		$	29,034		$	—		$	39,577
Accounts receivable, net	—			20,508			66,886			—			87,394
Intercompany receivable	(97,747		)	103,042			(5,295		)	—			—
Inventories, net	—			16,652			64,367			(983		)	80,036
Prepaid expenses	149			2,216			7,685			—			10,050
Other current assets	—			2,917			10,094			—			13,011
Total current assets	(87,063		)	145,343			172,771			(983		)	230,068
Property and equipment, net	425			63,697			248,204			—			312,326
Investments	598,237			148,027			—			(746,264		)	—
Goodwill	—			17,737			41,359			—			59,096
Intangible assets	10,646			5,329			3,998			—			19,973
Other assets	49			—			9,265			—			9,314
Total assets	$	522,294		$	380,133		$	475,597		$	(747,247	)	$	630,777
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	464		$	7,635		$	24,957		$	—		$	33,056
Accrued expenses	11,888			6,236			37,858			—			55,982
Current notes payable	—			—			7,714						7,714
Current maturities of long-term debt	1,250			—			1,118			—			2,368
Total current liabilities	13,602			13,871			71,647			—			99,120
Long-term debt, net of current maturities	344,270			—			93,458			—			437,728
Deferred and long-term taxes	—			2,378			16,160			—			18,538
Pension, other post-retirement and post-employment obligations	23,087			1,198			55,756			—			80,041
Other long-term liabilities	13			—			11,881			—			11,894
Intercompany loans	217,965			(347,605		)	129,640			—			—
Total stockholders’ (deficit) equity	(76,643		)	710,291			97,055			(747,247		)	(16,544		)
Total liabilities and stockholders’ equity	$	522,294		$	380,133		$	475,597		$	(747,247	)	$	630,777

Xerium Technologies, Inc.

Consolidating Balance Sheet

At December 31, 2011

(Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The Company
ASSETS
Current assets:
Cash and cash equivalents	$	11,548		$	280		$	31,738		$	—		$	43,566
Accounts receivable, net	—			21,210			70,574			—			91,784
Intercompany receivable	(95,855		)	102,653			(6,798		)	—			—
Inventories, net	—			19,759			64,857			(1,299		)	83,317
Prepaid expenses	272			1,546			4,359			—			6,177
Other current assets	—			4,716			10,335			—			15,051
Total current assets	(84,035		)	150,164			175,065			(1,299		)	239,895
Property and equipment, net	881			67,727			266,648			—			335,256
Investments	579,018			162,438			—			(741,456		)	—
Goodwill	—			17,737			41,383			—			59,120
Intangible assets	11,484			6,986			4,170			—			22,640
Other assets	196			—			8,614			—			8,810
Total assets	$	507,544		$	405,052		$	495,880		$	(742,755	)	$	665,721
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Accounts payable	$	679		$	10,257		$	28,807		$	—		$	39,743
Accrued expenses	6,563			5,722			35,520			—			47,805
Current maturities of long-term debt	1,250			—			2,298			—			3,548
Total current liabilities	8,492			15,979			66,625			—			91,096
Long-term debt, net of current maturities	358,116			—			107,390			—			465,506
Deferred and long-term taxes	—			2,378			16,204			—			18,582
Pension, other post-retirement and post-employment obligations	22,906			1,820			56,462			—			81,188
Other long-term liabilities	—			—			11,654			—			11,654
Intercompany loans	187,661			(307,813		)	120,152			—			—
Total stockholders’ (deficit) equity	(69,631		)	692,688			117,393			(742,755		)	(2,305		)
Total liabilities and stockholders’ equity	$	507,544		$	405,052		$	495,880		$	(742,755	)	$	665,721

Condensed Consolidating Statement of Operations and Comprehensive (Loss) Income

Xerium Technologies, Inc.

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

For the three months ended September 30, 2012

(Dollars in thousands)

	Parent			Total Guarantors			Total  Non Guarantors			Other Eliminations			The Company
Net sales	$	—		$	45,119		$	100,831		$	(11,719	)	$	134,231
Costs and expenses:
Cost of products sold	(342		)	31,821			65,442			(11,842		)	85,079
Selling	—			5,393			13,153			—			18,546
General and administrative	3,489			1,725			10,436			—			15,650
Research and development	—			2,105			595			—			2,700
Restructuring and impairment	45			19			5,776			—			5,840
	3,192			41,063			95,402			(11,842		)	127,815
(Loss) income from operations	(3,192		)	4,056			5,429			123			6,416
Interest (expense) income, net	(6,973		)	1,490			(4,294		)	—			(9,777		)
Foreign exchange (loss) gain	(193		)	(3		)	(6		)	—			(202		)
Equity in subsidiaries income	5,093			(13,056		)	—			7,963			—
Dividend income	1,656			18,904			—			(20,560		)	—
(Loss) income before provision for income taxes	(3,609		)	11,391			1,129			(12,474		)	(3,563		)
Provision for income taxes	(48		)	(35		)	(11		)	—			(94		)
Net (loss) income	$	(3,657	)	$	11,356		$	1,118		$	(12,474	)	$	(3,657	)
Comprehensive (loss) income	$	(3,598	)	$	11,464		$	2,827		$	(12,474	)	$	(1,781	)

Xerium Technologies, Inc.

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

For the three months ended September 30, 2011

(Dollars in thousands)

	Parent			Total Guarantors			Total  Non Guarantors			Other Eliminations			The Company
Net sales	$	—		$	45,203		$	115,433		$	(12,409	)	$	148,227
Costs and expenses:
Cost of products sold	(682		)	32,233			74,873			(12,414		)	94,010
Selling	—			5,861			13,956			—			19,817
General and administrative	148			2,016			11,838			—			14,002
Research and development	—			1,912			995			—			2,907
Restructuring and impairment	—			100			477			—			577
	(534		)	42,122			102,139			(12,414		)	131,313
Income (loss) from operations	534			3,081			13,294			5			16,914
Interest (expense) income, net	(7,239		)	1,961			(4,595		)	—			(9,873		)
Foreign exchange (loss) gain	(862		)	529			44			—			(289		)
Equity in subsidiaries income	11,222			5,336			—			(16,558		)	—
Income (loss) before provision for income taxes	3,655			10,907			8,743			(16,553		)	6,752
Provision for income taxes	(167		)	(45		)	(3,052		)	—			(3,264		)
Net income (loss)	$	3,488		$	10,862		$	5,691		$	(16,553	)	$	3,488
Comprehensive income (loss)	$	5,405		$	10,568		$	(17,795	)	$	(16,553	)	$	(18,375	)

Xerium Technologies, Inc.

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

For the nine months ended September 30, 2012

(Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The  Company
Net sales	$	—		$	134,970		$	305,628		$	(35,625	)	$	404,973
Costs and expenses:
Cost of products sold	(1,150		)	97,245			198,291			(35,990		)	258,396
Selling	—			16,725			40,379			—			57,104
General and administrative	8,753			5,492			33,264			—			47,509
Research and development	—			6,258			2,273			—			8,531
Restructuring and impairment	203			182			10,558			—			10,943
	7,806			125,902			284,765			(35,990		)	382,483
(Loss) income from operations	(7,806		)	9,068			20,863			365			22,490
Interest (expense) income, net	(21,419		)	5,035			(12,110		)	—			(28,494		)
Foreign exchange (loss) gain	(501		)	(7		)	665			—			157
Equity in subsidiaries income	19,221			(10,668		)	—			(8,553		)	—
Dividend income	1,656			18,904			—			(20,560		)	—
(Loss) income before provision for income taxes	(8,849		)	22,332			9,418			(28,748		)	(5,847		)
Provision for income taxes	(103		)	(108		)	(2,894		)	—			(3,105		)
Net (loss) income	$	(8,952	)	$	22,224		$	6,524		$	(28,748	)	$	(8,952	)
Comprehensive (loss) income	$	(8,261	)	$	22,860		$	(1,341	)	$	(28,748	)	$	(15,490	)

Xerium Technologies, Inc.

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

For the nine months ended September 30, 2011

(Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The  Company
Net sales	$	—		$	136,173		$	343,288		$	(37,690	)	$	441,771
Costs and expenses:
Cost of products sold	(1,835		)	97,105			218,104			(37,606		)	275,768
Selling	—			17,188			42,660			—			59,848
General and administrative	5,132			5,969			36,459			—			47,560
Research and development	(3		)	5,979			2,944			—			8,920
Restructuring and impairment	—			714			573			—			1,287
	3,294			126,955			300,740			(37,606		)	393,383
(Loss) income from operations	(3,294		)	9,218			42,548			(84		)	48,388
Interest (expense) income, net	(17,549		)	5,749			(17,909		)	—			(29,709		)
Loss on extinguishment of debt	(2,903		)	(6		)	(17		)	—			(2,926		)
Foreign exchange gain (loss)	551			(948		)	113			—			(284		)
Equity in subsidiaries income	29,408			11,450			—			(40,858		)	—
Income (loss) before provision for income taxes	6,213			25,463			24,735			(40,942		)	15,469
Provision for income taxes	(455		)	(154		)	(9,102		)	—			(9,711		)
Net income (loss)	$	5,758		$	25,309		$	15,633		$	(40,942	)	$	5,758
Comprehensive income (loss)	$	4,678		$	32,540		$	(729	)	$	(40,942	)	$	(4,453	)

Consolidating Statement of Cash Flows

erium Technologies, Inc.

Consolidating Statement of Cash Flows-(Unaudited)

For the nine months ended September 30, 2012

(Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The  Company
Operating activities
Net (loss) income	$	(8,952	)	$	22,224		$	6,524		$	(28,748	)	$	(8,952	)
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Stock-based compensation	1,574			—			—			—			1,574
Depreciation	135			5,932			22,446			—			28,513
Amortization of intangibles	—			1,659			70			—			1,729
Deferred financing cost amortization	1,885			—			822			—			2,707
Unrealized foreign exchange loss on revaluation of debt	—			—			167			—			167
Deferred taxes	—			—			(383		)	—			(383		)
Asset impairment	—			—			1,600						1,600
Loss (gain) on disposition of property and equipment	—			24			(680		)	—			(656		)
Intercompany dividend	(1,656		)	(18,904		)				20,560			—
Provision for doubtful accounts	—			(150		)	613			—			463
Undistributed equity in (earnings) loss of subsidiaries	(19,221		)	10,668			—			8,553			—
Change in assets and liabilities which provided (used) cash:
Accounts receivable	8			852			2,094			—			2,954
Inventories	—			3,107			(404		)	(365		)	2,338
Prepaid expenses	122			(671		)	(3,472		)	—			(4,021		)
Other current assets	—			1,799			(414		)	—			1,385
Accounts payable and accrued expenses	4,781			(2,106		)	(730		)	—			1,945
Deferred and other long-term liabilities	244			(622		)	(780		)	—			(1,158		)
Intercompany loans	1,891			(394		)	(1,497		)	—			—
Net cash (used in) provided by operating activities	(19,189		)	23,418			25,976			—			30,205
Investing activities
Capital expenditures, gross	(22		)	(1,895		)	(11,305		)	—			(13,222		)
Intercompany property and equipment transfers, net	344			(317		)	(27		)	—			—
Proceeds from disposals of property and equipment	—			298			1,080			—			1,378
Net cash provided by (used in) investing activities	322			(1,914		)	(10,252		)	—			(11,844		)
Financing activities
Net increase in notes payable	—			—			7,365						7,365
Principal payments on debt	(13,846		)	—			(14,119		)	—			(27,965		)
Payment of deferred financing fees	(1,047		)	—			(735		)	—			(1,782		)
Dividends paid	1,656			—			(1,656		)	—			—
Intercompany loans	31,091			(21,778		)	(9,313		)	—			—
Net cash provided by (used in) financing activities	17,854			(21,778		)	(18,458		)	—			(22,382		)
Effect of exchange rate changes on cash flows	—			2			30			—			32
Net decrease in cash	(1,013		)	(272		)	(2,704		)	—			(3,989		)
Cash and cash equivalents at beginning of period	11,548			280			31,738			—			43,566
Cash and cash equivalents at end of period	$	10,535		$	8		$	29,034		$	—		$	39,577

Xerium Technologies, Inc.

Consolidating Statement of Cash Flows-(Unaudited)

For the nine months ended September 30, 2011

(Dollars in thousands)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The Company
Operating activities
Net income	$	5,758		$	25,309		$	15,633		$	(40,942	)	$	5,758
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Stock-based compensation	2,253			—			—			—			2,253
Depreciation	176			6,044			25,353			—			31,573
Amortization of intangibles	—			1,659			70			—			1,729
Curtailment/settlement loss	—			—			402						402
Deferred financing cost amortization	(431		)	204			1,840			—			1,613
Unrealized foreign exchange loss on revaluation of debt	—			—			1,070			—			1,070
Deferred taxes	—			—			2,246			—			2,246
Gain on disposition of property and equipment	—			(128		)	(476		)	—			(604		)
Loss on extinguishment of debt	2,903			6			17			—			2,926
Provision for doubtful accounts	—			438			295			—			733
Undistributed equity in (earnings) loss of subsidiaries	(29,408		)	(11,450		)	—			40,858			—
Change in assets and liabilities which provided (used) cash:
Accounts receivable	11			280			(1,399		)	—			(1,108		)
Inventories	—			(1,470		)	(9,263		)	84			(10,649		)
Prepaid expenses	229			(187		)	(1,160		)	—			(1,118		)
Other current assets	645			(982		)	(864		)	—			(1,201		)
Accounts payable and accrued expenses	6,623			(2,677		)	(5,625		)	—			(1,679		)
Deferred and other long-term liabilities	(347		)	(1,064		)	(1,697		)	—			(3,108		)
Intercompany loans	6,932			2,559			(9,491		)	—			—
Net cash (used in)provided by operating activities	(4,656		)	18,541			16,951			—			30,836
Investing activities
Capital expenditures, gross	(364		)	(2,727		)	(15,839		)	—			(18,930		)
Intercompany property and equipment transfers, net	—			15			(15		)	—			—
Proceeds from disposals of property and equipment	—			149			7,574			—			7,723
Restricted cash	13,701			—			—			—			13,701
Net cash provided by (used in) investing activities	13,337			(2,563		)	(8,280		)	—			2,494
Financing activities
Proceeds from borrowings	365,000			—			124,629			—			489,629
Principal payments on debt	(262,920		)	(51,016		)	(187,483		)	—			(501,419		)
Payment of deferred financing fees	(72,185		)	—			55,070			—			(17,115		)
Intercompany loans	(37,570		)	35,055			2,515			—			—
Net cash used in financing activities	(7,675		)	(15,961		)	(5,269		)	—			(28,905		)
Effect of exchange rate changes on cash flows	—			2			(171		)	—			(169		)
Net increase in cash	1,006			19			3,231			—			4,256
Cash and cash equivalents at beginning of period	6,345			33			32,323			—			38,701
Cash and cash equivalents at end of period	$	7,351		$	52		$	35,554		$	—		$	42,957

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Stock-Based Compensation Expense (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2012		Sep. 30, 2011		Sep. 30, 2012		Sep. 30, 2011
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 820		$ 172		$ 1,574		$ 2,253
RSU And DSU Awards
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	820	[1]	634	[1]	1,574	[1]	1,942	[1]
Management Incentive/Performance Award Programs
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 0	[2]	$ (462)	[2]	$ 0	[2]	$ 311	[2]

[1] Related to RSUs and DSUs awarded to certain employees and non-employee directors.

[2] For 2011, the amount represents the value of stock awards granted under the 2011 Management Incentive Compensation Program, which was approved by the Company’s Board of Directors in March of 2011. No amount has been recorded for the 2012 Management Incentive Compensation Program (the “2012 MIC”), as the performance targets are not projected to be met as of September 30, 2012.

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Components Of Net Periodic Benefit Cost (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Pensions, Other Post-Retirement And Post-Employment Benefits [Abstract]
Service cost	$ 898	$ 679	$ 2,671	$ 2,090
Interest cost	1,855	1,939	5,523	5,968
Expected return on plan assets	(1,392)	(1,413)	(4,142)	(4,350)
Amortization of prior service cost	4	4	11	12
Amortization of net loss	640	355	1,906	1,093
Net periodic benefit cost	$ 2,005	$ 1,564	$ 5,969	$ 4,813

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Operating activities
Net (loss) income	$ (8,952)	$ 5,758
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Stock-based compensation	1,574	2,253
Depreciation	28,513	31,573
Amortization of intangibles	1,729	1,729
Curtailment/settlement gain	0	402
Deferred financing cost amortization	2,707	1,613
Unrealized foreign exchange loss (gain) on revaluation of debt	167	1,070
Deferred taxes	(383)	2,246
Asset impairment	1,600	0
Gain on disposition of property and equipment	(656)	(604)
Loss on extinguishment of debt	0	2,926
Provision for doubtful accounts	463	733
Change in assets and liabilities which provided (used) cash:
Accounts receivable	2,954	(1,108)
Inventories	2,338	(10,649)
Prepaid expenses	(4,021)	(1,118)
Other current assets	1,385	(1,201)
Accounts payable and accrued expenses	1,945	(1,679)
Deferred and other long-term liabilities	(1,158)	(3,108)
Net cash provided by operating activities	30,205	30,836
Investing activities
Capital expenditures, gross	(13,222)	(18,930)
Proceeds from disposals of property and equipment	1,378	7,723
Restricted cash	0	13,701
Net cash (used in) provided by investing activities	(11,844)	2,494
Financing activities
Net decrease in borrowings (maturities of 90 days or less)	7,365	0
Proceeds from borrowings (maturities longer than 90 days)	0	489,629
Principal payments on debt	(27,965)	(501,419)
Payment of deferred financing fees	(1,782)	(17,115)
Net cash (used in) provided by financing activities	(22,382)	(28,905)
Effect of exchange rate changes on cash flows	32	(169)
Net decrease in cash	(3,989)	4,256
Cash and cash equivalents at beginning of period	43,566	38,701
Cash and cash equivalents at end of period	$ 39,577	$ 42,957

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Pensions, Other Post-retirement and Post-employment Benefits

9 Months Ended

Sep. 30, 2012

Text Block [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.

The Company sponsors various unfunded defined contribution plans that provide for retirement benefits to employees, some in accordance with local government requirements. The Company also maintains a funded retirement savings plan for U.S. employees which is qualified under Section 401(k) of the U.S. Internal Revenue Code. The plan allows eligible employees to contribute up to 99% of their compensation (subject to certain Internal Revenue Service limitations), with the Company matching 200% of the first 1% of employee compensation and 100% of the next 4% of employee compensation. The following represents the approximate matching contribution expense for the three and nine months ended September 30, 2012 and 2011:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Matching contribution expense	$	420	$	430	$	1,298	$	1,310

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

Defined Benefit Plans

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Service cost	$	898		$	679		$	2,671		$	2,090
Interest cost	1,855			1,939			5,523			5,968
Expected return on plan assets	(1,392		)	(1,413		)	(4,142		)	(4,350		)
Amortization of prior service cost	4			4			11			12
Amortization of net loss	640			355			1,906			1,093
Net periodic benefit cost	$	2,005		$	1,564		$	5,969		$	4,813

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Components of Inventories (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Inventories, Net [Abstract]
Raw materials	$ 17,256	$ 19,872
Work in process	23,514	26,326
Finished goods (includes consigned inventory of $11,686 in 2012 and $12,953 in 2011)	39,266	37,119
Inventories, net	$ 80,036	$ 83,317

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Income Taxes - Additional Information (Detail) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Income Taxes [Line Items]
Provision for income taxes	$ 94,000	$ 3,264,000	$ 3,105,000	$ 9,711,000
Gross unrecognized tax benefit	8,431,000		8,431,000
Unrecognized tax benefit decreased			188,000
Tax, penalties and interest			$ 43,300,000
Minimum
Income Taxes [Line Items]
Statutory income tax rate in foreign countries			25.00%
Tax years open to examination			2000
Maximum
Income Taxes [Line Items]
Statutory income tax rate in foreign countries			41.00%
Tax years open to examination			2011

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Long-term Debt (Tables)

9 Months Ended

Sep. 30, 2012

Text Block [Abstract]

Schedule Of Long-Term Debt

At September 30, 2012 and December 31, 2011, long-term debt consisted of the following:

	September 30, 2012		December 31, 2011
Senior Bank Debt (Secured):
First lien debt, payable quarterly, U.S. Dollar denominated–LIBOR (minimum 1.25%) plus 5.00% (6.25%) as of September 30, 2012	$	105,520	$	119,366
First lien debt, payable quarterly, Euro denominated–EURIBOR (minimum 1.25%) plus 5.00% (6.25%) as of September 30, 2012	94,445		107,771
	199,965		227,137
Senior Notes (Unsecured), payable semi-annually–U.S. Dollar denominated interest rate fixed at 8.875%, matures June of 2018	240,000		240,000
Other Long-Term Debt:
Unsecured, interest rate fixed at 2.00%, Euro denominated	131		228
Unsecured, interest rate fixed at 1.31% to 3.40%, Yen denominated	—		1,689
	440,096		469,054
Less current maturities	2,368		3,548
Total	$	437,728	$	465,506