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 June 30, 2018

Or

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

For the transition period from             to             

Commission File Number 001-32498

________________________

Xerium Technologies, Inc.

(Exact name of registrant as specified in its charter)

________________________

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

(919) 526-1400

(Registrant’s telephone number, including area code)

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

________________________

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

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

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

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

Act).    Yes  ¨    No  ý

The number of shares of the registrant’s common stock, $0.001 par value, outstanding as of July 26, 2018 was 16,427,603.

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	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	38
Part II. Other Information
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 6.	Exhibits	39

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Xerium Technologies, Inc.

Condensed Consolidated Balance Sheets

(Dollars in thousands, except per share data)

	(Unaudited)
	June 30, 2018			December 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	14,782		$	17,253
Accounts receivable, net	81,629			76,633
Inventories, net	72,630			74,725
Prepaid expenses	13,124			11,335
Other current assets	14,482			15,316
Total current assets	196,647			195,262
Property and equipment, net	261,989			282,378
Goodwill	64,159			64,783
Intangible assets	5,352			5,965
Non-current deferred tax asset	9,987			10,103
Other assets	9,054			9,358
Total assets	$	547,188		$	567,849
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Notes payable	$	8,112		$	8,398
Accounts payable	41,338			39,856
Accrued expenses	65,914			64,155
Current maturities of long-term debt	9,238			10,614
Total current liabilities	124,602			123,023
Long-term debt, net of current maturities	473,168			473,904
Liabilities under capital leases	13,757			15,952
Non-current deferred tax liability	12,113			12,897
Pension, other post-retirement and post-employment obligations	65,166			69,205
Other long-term liabilities	9,399			9,334
Commitments and contingencies
Stockholders’ deficit
Preferred stock, $0.001 par value, 1,000,000 shares authorized; no shares outstanding as of June 30, 2018 and December 31, 2017	—			—
Common stock, $0.001 par value, 20,000,000 shares authorized; 16,427,603 and 16,367,743 shares outstanding as of June 30, 2018 and December 31, 2017, respectively	16			16
Paid-in capital	433,048			432,489
Accumulated deficit	(460,158		)	(457,712		)
Accumulated other comprehensive loss	(123,923		)	(111,259		)
Total stockholders’ deficit	(151,017		)	(136,466		)
Total liabilities and stockholders’ deficit	$	547,188		$	567,849

See accompanying notes.

3

Xerium Technologies, Inc.

Consolidated Statements of Operations and Comprehensive (Loss) Income

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Net Sales	$	125,284		$	120,339		$	251,359		$	240,205
Costs and expenses:
Cost of products sold	76,310			71,344			155,152			143,584
Selling	15,249			15,936			30,926			31,610
General and administrative	17,216			15,263			30,313			27,686
Research and development	1,613			1,666			3,181			3,410
Restructuring	206			874			1,030			4,038
	110,594			105,083			220,602			210,328
Income from operations	14,690			15,256			30,757			29,877
Interest expense, net	(13,130		)	(13,281		)	(25,895		)	(26,544		)
Other components of net periodic pension cost	(262		)	(307		)	(528		)	(668		)
Loss on extinguishment of debt	—			(7		)	—			(32		)
Foreign exchange loss	(3,126		)	(1,246		)	(2,594		)	(2,371		)
(Loss) income before provision for income taxes	(1,828		)	415			1,740			262
Provision for income taxes	(2,516		)	(3,826		)	(3,853		)	(6,507		)
Net loss	$	(4,344	)	$	(3,411	)	$	(2,113	)	$	(6,245	)
Comprehensive (loss) income	$	(23,139	)	$	(146	)	$	(14,777	)	$	6,660
Net loss per share:
Basic	$	(0.26	)	$	(0.21	)	$	(0.13	)	$	(0.39	)
Diluted	$	(0.26	)	$	(0.21	)	$	(0.13	)	$	(0.39	)
Shares used in computing net loss per share:
Basic	16,427,603			16,262,867			16,412,921			16,208,293
Diluted	16,427,603			16,262,867			16,412,921			16,208,293

See accompanying notes.

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Xerium Technologies, Inc.

Consolidated Statements of Cash Flows

(Dollars in thousands and unaudited)

	Six Months Ended June 30,
	2018			2017
Operating activities
Net loss	$	(2,113	)	$	(6,245	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Stock-based compensation	618			2,046
Depreciation	15,601			15,662
Amortization of intangible assets	613			546
Deferred financing cost amortization	1,864			1,810
Foreign exchange loss on revaluation of debt	425			534
Deferred taxes	(742		)	312
Asset impairment	—			55
Gain on disposition of property and equipment	(73		)	(85		)
Loss on extinguishment of debt	—			32
Provision for doubtful accounts	257			142
Change in assets and liabilities which (used) provided cash:
Accounts receivable	(8,863		)	(5,400		)
Inventories	(957		)	(3,213		)
Prepaid expenses	(2,521		)	(441		)
Other current assets	69			(1,179		)
Accounts payable and accrued expenses	6,115			528
Deferred and other long-term liabilities	(1,646		)	(2,106		)
Net cash provided by operating activities	8,647			2,998
Investing activities
Capital expenditures	(4,928		)	(8,517		)
Proceeds from disposals of property and equipment	459			290
Net cash used in investing activities	(4,469		)	(8,227		)
Financing activities
Proceeds from borrowings	41,625			66,578
Principal payments on debt	(44,782		)	(59,282		)
Payment of financing fees	—			(393		)
Payment of obligations under capital leases	(2,670		)	(2,794		)
Employee taxes paid on equity awards	(59		)	(832		)
Net cash (used in) provided by financing activities	(5,886		)	3,277
Effect of exchange rate changes on cash flows	(763		)	203
Net decrease in cash	(2,471		)	(1,749		)
Cash and cash equivalents at beginning of period	17,253			12,808
Cash and cash equivalents at end of period	$	14,782		$	11,059

See accompanying notes.

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Xerium Technologies, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

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

1. Description of Business and Significant Accounting Policies

Description of Business

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

Basis of Presentation

The accompanying unaudited condensed consolidated interim financial statements at June 30, 2018 and for the three and six months ended June 30, 2018 and 2017 include the accounts of the Company and its wholly-owned subsidiaries. These financial statements have been prepared in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, such financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. The interim results presented herein are not necessarily indicative of the results to be expected for the entire year. In management’s opinion, these unaudited condensed consolidated interim financial statements contain all adjustments of a normal recurring nature necessary for a fair presentation of the financial statements for the interim periods presented. These unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2017 as reported on the Company's Annual Report on Form 10-K filed on February 28, 2018.

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:

	June 30, 2018			December 31, 2017
Raw materials	$	14,452		$	13,881
Work in process	28,263			27,819
Finished goods (includes consigned inventory of $6,208 at June 30, 2018 and $7,757 at December 31, 2017)	36,405			39,798
Inventory allowances	(6,490		)	(6,773		)
	$	72,630		$	74,725

Goodwill

The Company accounts for goodwill and other intangible assets in accordance with ASC Topic 350, Intangibles—Goodwill and Other Intangible Assets (“Topic 350”). Topic 350 requires that goodwill and intangible assets that have indefinite lives not be amortized, but instead, must be tested for impairment at least annually or whenever events or business conditions warrant. During the three and six months ended June 30, 2018, the Company evaluated events and business conditions to determine if a test for an impairment of goodwill was warranted. On June 24, 2018 the Company entered into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which Andritz AG ("Andritz") will acquire the Company for a price in excess of it's carrying amount through the merger of an indirect wholly owned subsidiary of Andritz with and into the Company (the "Merger"). Completion of the Merger is subject to approval by the Company's

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stockholders, regulatory approvals, and other customary closing conditions. No goodwill impairment test was necessary as of June 30, 2018 as a result of this pending Merger.

Warranties

The Company offers warranties on certain roll products that it sells. The specific terms and conditions of these warranties vary depending on the product sold, the country in which the product is sold and arrangements with the customer. The Company estimates the costs that may be incurred under its warranties and records a liability in Accrued Expenses on its Consolidated Balance Sheet for such costs. Factors that affect the Company’s warranty liability include the number of units sold, historical and anticipated rates of warranty claims, cost per claim and new product introduction. The Company periodically assesses the adequacy of its recorded warranty claims and adjusts the amounts as necessary. The table below represents the changes in the Company’s warranty liability for the six months ended June 30, 2018 and 2017:

	Beginning Balance		Charged to  Cost of Sales		Effect of Foreign Currency Translation			Deduction from Reserves			Ending Balance
Six Months Ended June 30, 2018:	$	2,470	$	414	$	(72	)	$	(556	)	$	2,256
Six Months Ended June 30, 2017:	$	2,203	$	271	$	29		$	(501	)	$	2,002

Net Loss Per Common Share

Net loss per common share has been computed and presented pursuant to the provisions of ASC Topic 260, Earnings per Share (“Topic 260”). Net loss per share is based on the weighted-average number of shares outstanding during the period. As of June 30, 2018 and 2017, the Company had outstanding restricted stock units (“RSUs”) and deferred stock units (“DSUs”).

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

	Three Months Ended June 30,		Six Months Ended June 30,
	2018	2017	2018	2017
Weighted-average common shares outstanding–basic	16,427,603	16,262,867	16,412,921	16,208,293
Dilutive effect of stock-based compensation awards outstanding	—	—	—	—
Weighted-average common shares outstanding–diluted	16,427,603	16,262,867	16,412,921	16,208,293

The following table sets forth the aggregate of the dilutive securities that were outstanding in the three and six months ended June 30, 2018 and 2017, but were not included in the computation of diluted loss per share because the impact would have been anti-dilutive:

	Three Months Ended June 30,		Six Months Ended June 30,
	2018	2017	2018	2017
Anti-dilutive securities	743,514	988,100	743,514	988,100

Impairment

The Company reviews its long-lived assets that have finite lives for impairment in accordance with ASC Topic 360, Property, Plant, and Equipment (“Topic 360”). This topic requires that companies evaluate the fair value of long-lived assets based on the anticipated undiscounted future cash flows to be generated by the assets when indicators of impairment exist to determine if there is impairment to the carrying value. Any change in the carrying amount of an asset as a result of the Company's evaluation has been recorded in either restructuring expense, if it was a result of the Company's restructuring activities, or general and administrative expense for all other impairments in the Consolidated Statements of Operations and Comprehensive (Loss) Income. For the three and six months ended June 30, 2018 and 2017, the Company had no impairment charges included in restructuring expense.

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Recently Adopted Accounting Pronouncements

In March 2018, the Financial Accounting Standard Board ("FASB") issued Accounting Standards Update No 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (SAB 118). The amendments in ASU 2018-05 codified the amendments from SAB 118 which related to the income tax accounting implications of the Tax Cuts and Jobs Act. The Company already adopted SAB 118 as of December 31, 2017. Refer to Note 5.

In May 2017, the FASB issued Accounting Standards Update No 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting ("ASU 2017-09"). The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The amendments in ASU 2017-09 are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for (1) public business entities for reporting periods for which financial statements have not yet been issued and (2) all other entities for reporting periods for which financial statements have not yet been made available for issuance. The amendments in this update should be applied prospectively to an award modified on or after the adoption date. The adoption of this guidance effective January 1, 2018 did not have a material impact on the Company's financial statements.

In March 2017, the FASB issued Accounting Standards Update No 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost ("ASU 2017-07"). ASU 2017-07 will change how employers that sponsor defined benefit pension and/or other post-retirement benefit plans present the net periodic benefit cost in the income statement. Employers will present the service cost component of net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. Only the service cost component will be eligible for capitalization in assets. Employers will present the other components of the net periodic benefit cost separately from the line item(s) that includes the service cost and outside of any subtotal of operating income, if one is presented. These components will not be eligible for capitalization in assets. The guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods therein. The Company elected the practical expedient that allowed it to estimate amounts for comparative periods using the information previously disclosed in its historical financial statements and notes thereto, which reasonably reflects the effect of the capitalized amount of net periodic benefit cost for the prior comparative periods. The Company adopted this guidance effective January 1, 2018 and, as a result, reclassified $0.3 million and $0.7 million of pension cost (interest cost, expected return on plan assets, and amortization of net loss) for the three and six months ended June 30, 2017, respectively, out of operating income into other components of net periodic pension cost, a component of non-operating expenses on the Consolidated Statements of Operations and Comprehensive (Loss) Income. The adoption of this standard did not have a material impact on the Company's net income or financial position. Also, no changes to cash flows resulted from adoption of this standard.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory ("ASU 2016-16"). ASU 2016-16 eliminates the exception to the principle in ASC 740, for all intra-entity sales of assets other than inventory, to be deferred, until the transferred asset is sold to a third party or otherwise recovered through use. This standard is effective for financial statements issued for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company adopted this guidance effective January 1, 2018 which resulted in an increase in 2018 opening accumulated deficit of $0.3 million representing the cumulative net impact from (1) the write-off of unamortized tax expense previously deferred in income tax receivable under the previous guidance and (2) recognition of the previously unrecognized deferred tax assets, net of any necessary valuation allowance. The adoption of this standard did not have a material impact on the Company's net income or financial position. Also, no changes to cash flows resulted from adoption of this standard.

In August 2016, the FASB issued Accounting Standards Update No 2016-15, Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"). ASU 2016-15 clarifies how entities should classify certain cash receipts and cash payments in the statement of cash flows and amends certain disclosure requirements of ASC 230. The guidance will generally be applied retrospectively and is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those years. The adoption of this guidance effective January 1, 2018 did not have a material impact on the Company's financial statements.

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In May of 2014, the FASB issued Accounting Standard Update No. 2014-09 Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Company identify the contract with the customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when it satisfies the performance obligations. The Company will also be required to disclose information regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 was required to be adopted in January of 2018. Retrospective application is required either to all periods presented or with the cumulative effect of initial adoption recognized in the period of adoption. The Company adopted this new standard effective January 1, 2018 using the modified retrospective transition method. The adoption of this standard did not result in adjustment to the Company's financial statements.

Recently Issued Accounting Pronouncements

In February 2018, the FASB issued Accounting Standards Update No 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02). The amendments in ASU 2018-02 allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendments in this update is permitted, including adoption in any interim period, for public business entities for reporting periods for which financial statements have not yet been issued and for all other entities for reporting periods for which financial statements have not yet been made available for issuance. The Company is in the process of evaluating this accounting standard update.

In August 2017, the FASB issued Accounting Standards Update No 2017-12, Derivative and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12). The amendments in ASU 2017-12 provide guidance to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. To meet that objective, the amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early application is permitted in any interim period after issuance of the update. The Company is in the process of evaluating this accounting standard update.

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

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

9

year. Early adoption is permitted for all entities. The Company has commenced a comprehensive project plan to direct the implementation of the new leases standard and an assessment of the impact to business processes.

2. Revenue from Contracts with Customers

The Company operates through two principal business segments, machine clothing and roll covers. The machine clothing segment performance obligations generally include the production of various types of industrial textiles used on paper-making machines and on other industrial applications. In the Company's roll covers segment, the performance obligations generally include the manufacturing of various types of roll covers, spreader rolls, refurbishment of previously installed roll covers, and providing mechanical services for the internal mechanisms of rolls used on paper-making machines. The contract and order economics and risks are determined to be at the segment level. Within each segment the contracts are similar. Total revenues by segment for the reporting periods on the Consolidated Statements of Operations and Comprehensive (Loss) Income are disclosed in Note 9.

Revenue from the Company's performance obligations to customers is recognized at the point in time when control is transferred to the customer. Control is generally transferred to the customer when persuasive evidence of an arrangement exists, the price is fixed and determinable, delivery including transfer of title has occurred and there is a reasonable assurance of collection of the sales proceeds. The Company generally obtains written purchase authorizations from customers for a specific product or service performance obligation at a specified price and considers delivery and transfer of title to have occurred in accordance with its shipping terms. Payment is generally due in accordance with customary payment terms once the transfer of control has occurred. Revenue is recorded net of applicable allowances, including estimated allowances for returns, rebates and other discounts. Allowances are generally estimated based upon customer trends. In the machine clothing segment, a small portion of the business has been conducted pursuant to consignment arrangements under which the Company does 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, the Company delivers the goods to a location designated by the customer. In many cases, the customer and the Company generally agree to a “sunset” date, which represents the date by which the customer must accept all risks and rewards of ownership of the product and payment terms begin. For consignment sales, revenue is generally recognized on the earlier of the actual product installation date or the “sunset” date.

The costs to fulfill the Company's performance obligations at a point in time are included in inventory. Refer to balances and further discussion in Note 1. Commissions are generally earned at the point in time the performance obligation is satisfied by the Company and are expensed as incurred. Commission expense for the three and six months ended June 30, 2018 and 2017 was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Commission expense (1)	$	2,574	$	3,564	$	5,832	$	7,098

⁽¹⁾ During the second quarter of 2018, the Company modified the commission structure for both the split between base pay and incentive compensation and the definition of commissionable sales in its North American operations. This resulted in a lower commission expense compared to the prior year.

The Company has net accounts receivable balances from customers of $81.6 million and $76.6 million as of June 30, 2018 and December 31, 2017, respectively. The Company does not have any contract receivable balance as of June 30, 2018 and December 31, 2017. The Company had minimal contract liability balances, which primarily relate to customer prepayments for certain products in its North American rolls business of $1.1 million and $0.5 million as of June 30, 2018 and December 31, 2017, respectively. The corresponding balances as of June 30, 2017 and December 31, 2016 were $0.4 million and $1.1 million, respectively. Minimal revenue was recognized on these contract liabilities during the three and six months ended June 30, 2018 and 2017.

3. Derivatives and Hedging

Risk Management Objective of Using Derivatives

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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 foreign exchange rates.

Non-designated Hedges of Foreign Exchange Risk

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

The Company, from time to time, may enter into foreign exchange forward contracts to fix currencies at specified rates based on expected future cash flows to protect against the fluctuations in cash flows 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 June 30, 2018 and December 31, 2017, the Company had outstanding derivatives that were not designated as hedges in qualifying hedging relationships. The value of these contracts is recognized at fair value based on market exchange forward rates and is recorded in other assets or other liabilities on the Consolidated Balance Sheets. The following represents the fair value of these derivatives at June 30, 2018 and December 31, 2017 and the change in fair value included in foreign exchange loss in the three and six months ended June 30, 2018 and 2017:

	June 30, 2018			December 31, 2017
Fair value of derivative liability	$	(1,757	)	$	(591	)
	Three Months Ended June 30, 2018			Three Months Ended June 30, 2017
Change in fair value of derivative included in foreign exchange loss	$	(2,211	)	$	(1,169	)
	Six Months Ended June 30, 2018			Six Months Ended June 30, 2017
Change in fair value of derivative included in foreign exchange loss	$	(1,784	)	$	(1,023	)

The following represents the notional amounts of foreign exchange forward contracts at June 30, 2018:

	Notional Sold		Notional Purchased
Non-designated hedges of foreign exchange risk	$	19,555	$	(23,033	)

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

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

4. Long term Debt

At June 30, 2018 and December 31, 2017, long term debt consisted of the following:

	June 30, 2018			December 31, 2017
9.5% Senior Notes due August 2021.	$	480,000		$	480,000
Capital leases	18,259			20,749
Notes payable, working capital loan, variable interest rate at 1.45%. Matures August 31, 2018, with one-year rollover option.	8,112			8,398
Fixed asset loan contract, variable interest rate of 5.23%. Matures June of 2020.	5,186			6,761
Other debt	3,954			6,062
Total debt	515,511			521,970
Less deferred financing costs and debt discount	(11,236		)	(13,102		)
Less current maturities of long term debt and notes payable	(17,350		)	(19,012		)
Total long term debt including capital leases	$	486,925		$	489,856
Balance sheet classification of total long-term debt including capital leases
Long-term debt, net of current maturities and deferred financing costs	473,168			473,904
Liabilities under capital lease, non-current	13,757			15,952
Total long term debt including capital leases	$	486,925		$	489,856

As of June 30, 2018, the carrying value of the Company’s debt was $504.3 million (including a credit for deferred financing costs and debt discount) and its fair value was approximately $540.7 million. The Company determined the fair value of its debt utilizing significant other observable inputs (Level 2 of the fair value hierarchy) based on the quoted market prices for the same issues or on the current rates offered for debt of similar remaining maturities and estimates.

9.5% Secured Notes due 2021

On August 9, 2016, the Company issued $480.0 million aggregate principal amount of 9.5% Senior Secured Notes due August 2021 (the "Notes") for a price equal to 98.54% of their face value. Interest payments are due semi-annually in arrears on February 15 and August 15 of each year beginning on February 15, 2017 and the Notes will mature on August 15, 2021, unless earlier redeemed or repurchased.

The Company used the net proceeds from the offering to repay all amounts outstanding under its then existing $230.0 million term loan credit facility, to redeem all of its $240.0 million aggregate principal amount 8.875% Senior Notes due 2018 at a redemption price equal to 102.219% of the principal amount thereof, together with accrued and unpaid interest, to the date of redemption, to pay fees and expenses relating to these transactions, and for working capital and other general corporate purposes.

ABL Revolving Credit Facility

On November 3, 2015, the Company refinanced its prior revolving credit facility by entering into a new Revolving Credit and Guaranty Agreement (the “ABL Facility”) with one of its existing lenders. The amount of the ABL Facility provides an aggregate facility limit of $55.0 million, subject to a borrowing base collateralized by eligible accounts receivable, inventory and equipment of Xerium Technologies, Inc., as a US borrower, Xerium Canada Inc., as Canadian borrower, and Huyck.Wagner Germany GmbH, Robec Walzen GmbH, and Stowe Woodward AG, as the European borrowers. On June 19, 2018, the Company amended the ABL Facility to, among other things, reduce the applicable margin used to determine the interest rate for the Alternative Base rate prime loans in certain jurisdictions. No changes were made to the interest rate margin on the LIBOR loans. The ABL Facility matures in November of 2020 and accrues interest at either an Alternative Base rate (Prime -100 bps or Prime) or Fixed LIBOR (LIBOR +175 bps). As of June 30, 2018, after the amendment discussed above, these rates were 4.00% to 5.00% for the Alternative Base rate and 3.92% for the Fixed LIBOR rate.

As of June 30, 2018, an aggregate of $31.4 million was available for additional borrowings under the ABL Facility. This availability represents $34.3 million under the ABL Facility currently collateralized by certain assets of the Company, less $2.9

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million committed for letters of credit or current borrowings. In addition, the Company had approximately $6.0 million available for borrowings under other small lines of credit.

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

• declare dividends or redeem or repurchase equity interests;

•prepay, redeem or purchase debt;

•incur liens and engage in sale-leaseback transactions;

•make loans and investments;

•incur additional indebtedness;

•amend or otherwise alter debt and other material agreements;

•engage in mergers, acquisitions and asset sales;

•transact with affiliates; and

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

Fixed Assets Loan Contract

On July 17, 2015, Xerium China, Co., Ltd. ("Xerium China"), a wholly-owned subsidiary of the Company entered into a Fixed Assets Loan Contract (the "Loan Agreement") with the Industrial and Commercial Bank of China Limited, Shanghai-Jingan Branch (the “Bank”) with respect to a RMB 58.5 million loan, which was approximately $9.4 million USD based on the exchange rate in effect on July 17, 2015. The loan is secured by pledged machinery and equipment of Xerium China and guaranteed by Xerium Asia Pacific (Shanghai) Limited and Stowe Woodward (Changzhou) Roll Technologies Co. Ltd., which are wholly-owned subsidiaries of the Company, pursuant to guarantee agreements. Interest on the outstanding principal balance of the loan accrues at a benchmark rate plus a margin. The current interest rate at June 30, 2018 is approximately 5.2%. The interest rate will be adjusted every 12 months during the term of the loan, based on the benchmark interest rate adjustment. Interest under the loan is payable quarterly in arrears. Principal on the loan is to be repaid in part every six months, in accordance with a predetermined schedule set forth in the Loan Agreement. Proceeds of the loan will be used by Xerium China to purchase production equipment. The Loan Agreement contains certain customary representations and warranties and provisions relating to events of default.

The Company was in compliance with all covenants under the Notes, the ABL Facility, and the Loan Agreement at June 30, 2018.

Long-term Capitalized Lease Liabilities

As of June 30, 2018 and December 31, 2017, the Company had capitalized lease liabilities totaling $18.3 million and $20.7 million, respectively. These amounts represent the lease on the corporate headquarters and the Kunshan, China facility, as well as other leases for machinery and equipment, software and vehicles that expire at various dates through 2027.

5. Income Taxes

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

For the three and six months ended June 30, 2018, the provision for income taxes was $2.5 million and $3.9 million, respectively, as compared to $3.8 million and $6.5 million for the three and six months ended June 30, 2017, respectively. The decrease in tax expense in the three and six months ended June 30, 2018 was primarily attributable to the geographic mix of earnings and a release of valuation allowance previously established against certain China deferred tax assets. Generally, the provision for income taxes is primarily impacted by income earned in tax-paying jurisdictions relative to income earned in non-tax-paying jurisdictions. The majority of income recognized for purposes of computing the effective tax rate is earned in countries where the statutory income tax rates range from 15.0% to 34.8%; however, permanent income adjustments recorded

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against pre-tax earnings may result in an effective tax rate that is higher or lower than the statutory tax rate in these jurisdictions. The Company generates losses in certain jurisdictions for which no tax benefit is realized, as the deferred tax assets in these jurisdictions (including the net operating losses) are fully reserved in the valuation allowance. For this reason, the Company recognizes minimal income tax expense or benefit in these jurisdictions, of which the most material jurisdictions are the United States, Germany, 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 June 30, 2018, the Company has not completed its accounting related to the enactment of the Tax Cuts and Jobs Act (the "Tax Act"), as follows:

1. Remeasurement of U.S. deferred tax assets - During the fourth quarter of 2017, the Company recorded a provisional estimate of $31.8 million discrete deferred tax expense related to the remeasurement of the U.S. deferred tax assets as a result of the reduction in the corporate income tax rate. A corresponding tax benefit was recorded related to the reduction in valuation allowance.

2. Transition tax - During the fourth quarter of 2017, the Company recorded a provisional estimate related to accounting for the transition tax and its impact on tax accounting for unrepatriated foreign earnings and other foreign income inclusions. The provisional estimate resulted in $0 current or deferred tax impact primarily as a result of the historic tax loss carry-forwards and the corresponding valuation allowance against related deferred tax assets. In order to complete the accounting, the Company will continue to analyze foreign earnings calculations as well as to await clarification of certain provisions of the Tax Act.

3. Deferred tax accounting on outside basis differences of controlled foreign corporations - Consistent with the provisional estimates made during the fourth quarter of 2017, the Company has recorded a provisional estimate related to the deferred tax accounting for basis differences associated with foreign subsidiaries. Historically, the Company has accrued U.S. deferred taxes in connection with certain foreign earnings which were not considered to be permanently reinvested as these earnings were expected to be distributed to the U.S. However, the transition tax has resulted in immediate U.S. taxation of previously untaxed foreign earnings. As a result, the Company has reversed the U.S. deferred taxes previously recognized on those foreign earnings that were not considered to be permanently reinvested. Additionally, future repatriation of foreign earnings (even those previously considered to be permanently reinvested) would not be expected to give rise to U.S. tax under the Tax Act’s territorial regime. Therefore, a provisional estimate has been recorded for deferred taxes on unrepatriated foreign earnings assuming none of the earnings are permanently reinvested. No additional U.S. income taxes have been provided in connection with any remaining untaxed foreign earnings or any additional outside basis difference with respect to investments in foreign subsidiaries as the Company assesses whether any investments should be considered as indefinitely reinvested in foreign operations.

4. Global Intangible Low-Taxed Income (“GILTI”) - In the second quarter of 2018, the Company has recorded a provisional estimate related to its GILTI inclusion, and the provisional estimate reduces U.S. tax loss carryforwards and the corresponding valuation allowance. In order to complete the accounting, the Company will await clarification of certain provisions. The deferred tax accounting for basis differences associated with foreign subsidiaries as it relates to GILTI remains incomplete and no provisional estimate has been provided. The election of an accounting policy with respect to deferred tax accounting for GILTI will depend, in part, on analyzing foreign income to estimate future GILTI inclusions, as well as clarification of certain provisions of the Tax Act. Until such analyses and clarifications are made, the Company has not made a policy decision regarding deferred tax accounting for the GILTI provision.

5. Interest Deduction Limitation - The Company has recorded a provisional estimate related to the limitation on U.S. interest expense as a result of the Tax Act. The estimate reduces the U.S. tax loss carryforwards but establishes indefinite-lived deferred tax assets for the interest that is limited. In order to complete the accounting, the Company will await clarification of certain provisions.

6. State and Local Income Taxes - The Company has recorded a provisional estimate related to the tax accounting for state and local income taxes upon enactment of the Tax Act. The Company continues to gather and analyze information available related to the impact of the Tax Act on state and local taxes and awaits clarification from the municipalities in order to complete the accounting.

To the extent a provisional estimate was made, the Company utilized previously issued guidance for the Tax Act in order to reach an estimate. However, these estimates are not capable of finalization given the lack of statutory and regulatory guidance in many areas, as well as the complexity in acquiring the data required to calculate the impact on the tax accounts.

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The Company will revise and conclude the accounting as and when additional information is obtained, which in many cases is contingent on the timing of issuance of guidance. For these reasons, the ultimate impact may differ from these provisional amounts due to, among other things, additional information, changes in interpretations and assumptions management has made, and changes based on additional statutory and regulatory guidance that may be issued. Acknowledging this uncertainty, accounting for the impacts of the Tax Act will be completed within the twelve months of the use of the estimates.

As of June 30, 2018, the Company had a gross amount of unrecognized tax benefit of $10.3 million, exclusive of interest and penalties. The unrecognized tax benefit increased by approximately $0.3 million during the six months ended June 30, 2018, as a result of new positions related to the current year primarily related to transfer pricing and foreign currency effects.

The Company’s policy is to recognize interest and penalties related to income tax matters as income tax expense or benefit, which was $0.1 million of tax benefit for both the three and six months ended June 30, 2018, and was primarily attributable to currency fluctuations. The tax years 2005 through 2017 remain open to examination in a number of the major tax jurisdictions to which the Company and its subsidiaries are subject. The Company believes that it has made adequate provisions for all income tax uncertainties.

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

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

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

Defined Benefit Plans

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Service cost	$	360		$	320		$	743		$	696
Interest cost	1,042			1,079			2,130			2,346
Expected return on plan assets	(1,345		)	(1,273		)	(2,750		)	(2,769		)
Amortization of net loss	565			501			1,148			1,091
Net periodic benefit cost	$	622		$	627		$	1,271		$	1,364

Service costs are included as a component of operating income while interest cost, expected return on plan assets and amortization of net loss are included as a component of non-operating expense in other components of net periodic pension cost on the Consolidated Statements of Operations and Comprehensive (Loss) Income.

7. Comprehensive (Loss) Income and Accumulated Other Comprehensive Loss

Comprehensive (loss) income for the three and six months ended June 30, 2018 (net of tax expense of $1.5 million and $1.4 million, respectively) and 2017 (net of a tax expense of $0.1 million and $0.2 million, respectively) is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Net loss	$	(4,344	)	$	(3,411	)	$	(2,113	)	$	(6,245	)
Foreign currency translation adjustments	(20,677		)	3,250			(14,600		)	13,015
Pension liability changes under Topic 715	1,882			15			1,936			(110		)
Comprehensive (loss) income	$	(23,139	)	$	(146	)	$	(14,777	)	$	6,660

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Included in foreign currency translation adjustments are foreign currency gains (losses) on intercompany transactions that are considered a long-term investment totaling $2.9 million and $1.8 million for the three and six months ended June 30, 2018 and $(1.3) million and $(2.1) million for the three and six months ended June 30, 2017, respectively.

The components of accumulated other comprehensive loss for the three months ended June 30, 2018 are as follows (net of tax benefits of $4.3 million):

	Foreign Currency Translation     Adjustment			Pension Liability Changes Under  Topic 715			Accumulated    Other Comprehensive Income (Loss)
Balance at March 31, 2018	$	(63,072	)	$	(42,056	)	$	(105,128	)
Other comprehensive (loss) income before reclassifications	(20,677		)	1,317			(19,360		)
Amounts reclassified from Other Comprehensive loss:
Amortization of actuarial losses	—			565			565
Net current period other comprehensive (loss) income	(20,677		)	1,882			(18,795		)
Balance at June 30, 2018	$	(83,749	)	$	(40,174	)	$	(123,923	)

The components of accumulated other comprehensive loss for the six months ended June 30, 2018 are as follows (net of tax benefits of $4.3 million):

	Foreign Currency Translation     Adjustment			Pension Liability Changes Under  Topic 715			Accumulated    Other Comprehensive (Loss) Income
Balance at December 31, 2017	$	(69,149	)	$	(42,110	)	$	(111,259	)
Other comprehensive (loss) income before reclassifications	(14,600		)	788			(13,812		)
Amounts reclassified from other comprehensive loss
Amortization of actuarial losses	—			1,148			1,148
Net current period other comprehensive (loss) income	(14,600		)	1,936			(12,664		)
Balance at June 30, 2018	$	(83,749	)	$	(40,174	)	$	(123,923	)

For the three and six months ended June 30, 2018, the amortization of actuarial losses is included in other components of net periodic pension cost in the Consolidated Statements of Operations and Comprehensive (Loss) Income.

8. Restructuring Expense

For the six months ended June 30, 2018 and 2017, the Company incurred restructuring expenses of $1.0 million and $4.0 million, respectively, relating to headcount reductions and other costs related to previous plant closures.

The Company expects to continue to review its business to determine if additional actions will be taken to further improve its cost structure. Restructuring expenses of approximately $1.0 million to $3.0 million are estimated during 2018, primarily related to the continuation of streamlining the operating structure and improving long-term competitiveness of the Company. Actual restructuring costs for 2018 may substantially differ from estimates at this time, depending on actual operating results in 2018 and the timing of the restructuring activities.

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The following table sets forth the significant components of the restructuring accrual (included in Accrued Expenses in the Company's Consolidated Balance Sheet), including activity under restructuring programs for the six months ended June 30, 2018 and 2017:

	Balance at December 31, 2017		Charges		Currency     Effects			Cash Payments			Balance at June 30, 2018
Severance and other benefits	$	2,686	$	320	$	(23	)	$	(1,622	)	$	1,361
Facility costs and other	733		710		(6		)	(967		)	470
Total	$	3,419	$	1,030	$	(29	)	$	(2,589	)	$	1,831

	Balance at December 31, 2016		Charges		Currency     Effects		Cash Payments			Balance at June 30, 2017
Severance and other benefits	$	3,805	$	2,626	$	311	$	(3,316	)	$	3,426
Facility costs and other	392		1,412		32		(1,581		)	255
Total	$	4,197	$	4,038	$	343	$	(4,897	)	$	3,681

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Clothing	$	141	$	162	$	327	$	2,638
Roll Covers	52		681		690		1,308
Corporate	13		31		13		92
Total	$	206	$	874	$	1,030	$	4,038

9. Business Segment Information

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

Management evaluates segment performance based on adjusted earnings before interest, taxes, depreciation and amortization. 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 six months ended June 30, 2018 and 2017.

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	Clothing		Roll Covers		Corporate			Total
Three months ended June 30, 2018
Net Sales	$	76,189	$	49,095	$	—		$	125,284
Segment Earnings (Loss)	$	21,744	$	10,117	$	(4,380	)	$	27,481
Three months ended June 30, 2017
Net Sales	$	72,425	$	47,914	$	—		$	120,339
Segment Earnings (Loss)	$	20,906	$	10,566	$	(4,292	)	$	27,180
Six months ended June 30, 2018
Net Sales	$	151,946	$	99,413	$	—		$	251,359
Segment Earnings (Loss)	$	40,656	$	20,873	$	(8,655	)	$	52,874
Six months ended June 30, 2017
Net Sales	$	144,920	$	95,285	$	—		$	240,205
Segment Earnings (Loss)	$	41,704	$	20,361	$	(8,329	)	$	53,736

Provided below is a reconciliation of Segment Earnings (Loss) to (Loss) income before provision for income taxes for the three and six months ended June 30, 2018 and 2017, respectively.

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Segment Earnings (Loss):
Clothing	$	21,744		$	20,906		$	40,656		$	41,704
Roll Covers	10,117			10,566			20,873			20,361
Corporate	(4,380		)	(4,292		)	(8,655		)	(8,329		)
Stock-based compensation	(263		)	(328		)	(618		)	(859		)
CEO transition expense	244			(3,039		)	87			(3,039		)
Interest expense, net	(13,130		)	(13,281		)	(25,895		)	(26,544		)
Depreciation and amortization	(7,953		)	(8,115		)	(16,214		)	(16,208		)
Loss on extinguishment of debt	—			(7		)	—			(32		)
Restructuring expense	(206		)	(874		)	(1,030		)	(4,038		)
Strategic alternative expenses (1)	(5,118		)	—			(5,238		)	—
Other non-recurring expense	(8		)	(69		)	(10		)	(114		)
Plant startup costs	(264		)	(166		)	(264		)	(646		)
Unrealized foreign exchange loss	(2,611		)	(886		)	(1,952		)	(1,994		)
(Loss) income before provision for income taxes	$	(1,828	)	$	415		$	1,740		$	262

⁽¹⁾ On March 19, 2018, the Company’s Board of Directors initiated a review of strategic alternatives for the Company. As a result of the strategic alternatives review, on June 24, 2018, the Company entered into the Merger Agreement, pursuant to which Andritz will acquire the Company for $13.50 per share in cash. Completion of the Merger is subject to approval by the Company's stockholders, regulatory approvals, and other customary closing conditions. The Company expects to close the Merger during the second half of 2018. Strategic alternatives expenses include legal, investment banking, incremental management LTIP compensation and other costs related to the strategic alternatives process. These expenses are recorded as a component of general and administrative expense on the statement of operations.

10. 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 June 30, 2018, the Company accrued an immaterial amount in its financial statements for these matters for which the Company believed the possibility of loss was probable and was able to estimate the damages. The Company does not believe that the ultimate resolution of these matters will have a material adverse effect on its financial position, results of operations or cash flow. The Company believes

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that any additional liability that may result from the resolution of legal matters will not have a material adverse effect on the financial condition, liquidity or cash flow of the Company.

11. Long-term Incentive and Stock-Based Compensation

The Company records stock-based compensation expense in accordance with ASC Topic 718, Accounting for Stock Compensation and has used the straight-line attribution method to recognize expense for RSUs, and DSUs. The Company recorded stock-based compensation expense during the three and six months ended June 30, 2018 and June 30, 2017 as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
RSU and DSU Awards (1)	$	263	$	1,515	$	618	$	2,046

(1) Related to RSUs and DSUs awarded to certain employees and non-employee directors. The second quarter of 2017 includes approximately $1.2 million of expense related to the accelerated vesting on RSU's upon the transition of the Company's former Chief Executive Officer ("CEO"). Upon transition 146,134 shares were issued to the former CEO.

Summary of Recent Activity for Company Stock and Long-term Incentive Plans

On June 24, 2018 the Company entered into the Merger Agreement, pursuant to which Andritz will acquire the Company for $13.50 per share in cash. Completion of the Merger is subject to approval by the Company's stockholders, regulatory approvals, and other customary closing conditions. The Company expects to close the Merger during the second half of 2018.

Long-Term Incentive Program - 2018 LTIP

On January 30, 2018, the Board of Directors approved the 2018 - 2020 Long-Term Incentive Plan (the "2018 LTIP") which provides for the grant of incentive award opportunities (each, an "Award") payable, if earned, in cash. Because any Award under the 2018 LTIP will be paid in cash, and not equity, the Awards granted under the 2018 LTIP are not made pursuant to the Xerium Technologies, Inc. 2010 Equity Incentive Plan. Awards will consist of Phantom Stock Units. Each Phantom Stock Unit represents the right to receive a cash amount equal to the Average Value of one share of common stock of the Company as described below:

•282,240 Time-based awards, or 50% of the total target award for each participant, have been granted in the form of time-based units. The time-based units vest on the third anniversary of the date of grant.

•282,240 Performance-based awards, or 50% of the total target award for each participant, have been granted in the form of performance-based units. Of these units, one half will vest based on the financial performance of the Company as measured by Adjusted EBITDA, and one half will vest based on the Return on Net Assets (as defined in the 2018 LTIP) of the Company.

Half of the performance-based units whose vesting is subject to the financial performance of the Company will vest based on the degree to which the Company achieves a targeted three-year cumulative Adjusted EBITDA metric, adjusted for currency fluctuations, over the performance period of January 1, 2018 through December 31, 2020. The amount of units that will vest between the target threshold and target ceiling will range from 50% to 200% of the employee's total units granted. Below the target threshold 0% of the units will vest.

Half of the performance-based units whose vesting is subject to the financial performance of the Company will vest based on the degree to which the Company achieves an average three-year Return on Net Assets metric over the performance period of January 1, 2018 through December 31, 2020. The amount of units that will vest between the target threshold and target ceiling will range from 50% to 200% of the employee's total units granted. Below the target threshold 0% of the units will vest.

19

Long-Term Incentive Program— 2015 LTIP

Awards under the 2015 LTIP vested on March 2, 2018, and were converted to 22,895 shares of common stock, after withholdings.

Directors’ Deferred Stock Unit Plan

Under the 2011 non-management directors stock plan ("2011 DSU Plan”), as amended in January of 2015, each director receives an annual retainer of $132 thousand, to be paid on a quarterly basis in arrears. Approximately 54% of the annual retainer is payable in DSUs, with the remaining 46% payable in cash or a mix of both cash and DSUs at the election of each director. The non-management directors were awarded an aggregate of 22,763 DSUs under the 2011 DSU Plan for service during the six months ended June 30, 2018. In addition, in accordance with the 2011 DSU Plan, as amended in January of 2015, 14,424 DSUs, and 28,357 DSUs were settled in common stock during the six months ended June 30, 2018 and June 30, 2017, respectively. Pursuant to terms of the Merger Agreement, the Company has ceased issuing DSU's to directors for director fees.

CEO Restricted Stock Unit Award

On June 2, 2017, the Company filed a Registration Statement on Form S-8 for the purpose of registering 600,000 shares of its common stock reserved for issuance in accordance with an Inducement Restricted Stock Unit Award Agreement between the Company and Mark Staton in connection with his appointment as the Company's President and Chief Executive Officer on April 28, 2017. The Inducement Restricted Stock Unit Award Agreement provides Mr. Staton with the opportunity to earn up to

600,000 shares of the Company’s common stock if its stock price attains certain levels within certain time periods, subject to his continued employment with the Company and other qualifying terms.  As a result of certain performance conditions being met on this award during the six months ended June 30, 2018, the Company recorded $0.2 million of related stock-based compensation expense.

12. Supplemental Guarantor Financial Information

On August 9, 2016, the Company closed on the sale of its Notes. The Notes are secured obligations of Xerium Technologies, Inc. (referred to as “Parent” for the purpose of this note only) and are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by all of the domestic 100% owned subsidiaries of the Parent (the “Guarantors”).  In accordance with Rule 3-10 of Regulation S-X promulgated under the Securities Act of 1933, as amended, the following condensed consolidating financial statements present the financial position, results of operations and cash flows of the Parent 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.

20

Xerium Technologies, Inc.

Consolidating Balance Sheet

At June 30, 2018

(Dollars in thousands, and unaudited)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The Company
ASSETS
Current assets:
Cash and cash equivalents	$	4,816		$	48		$	9,918		$	—		$	14,782
Accounts receivable, net	39			19,068			62,522			—			81,629
Intercompany receivables	(487,606		)	504,108			(16,502		)	—			—
Inventories, net	—			15,454			58,050			(874		)	72,630
Prepaid expenses	991			131			12,002			—			13,124
Other current assets	150			3,709			10,623			—			14,482
Total current assets	(481,610		)	542,518			136,613			(874		)	196,647
Property and equipment, net	5,748			58,047			198,194			—			261,989
Investments	929,139			262,229			—			(1,191,368		)	—
Goodwill	—			19,614			44,545			—			64,159
Intangible assets	—			5,349			3			—			5,352
Non-current deferred tax asset	—			—			9,987			—			9,987
Other assets	—			—			9,054			—			9,054
Total assets	$	453,277		$	887,757		$	398,396		$	(1,192,242	)	$	547,188
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Notes payable	$	—		$	—		$	8,112		$	—		$	8,112
Accounts payable	3,041			12,173			26,124			—			41,338
Accrued expenses	28,852			8,138			28,924			—			65,914
Current maturities of long-term debt	1,584			2,347			5,307			—			9,238
Total current liabilities	33,477			22,658			68,467			—			124,602
Long-term debt, net of current maturities	469,353			—			3,815			—			473,168
Liabilities under capital leases	3,344			1,829			8,584			—			13,757
Non-current deferred tax liability	3,654			—			8,459			—			12,113
Pension, other post-retirement and post-employment obligations	19,826			1,783			43,557			—			65,166
Other long-term liabilities	—			—			9,399			—			9,399
Intercompany loans	61,823			(107,195		)	45,372			—			—
Total stockholders’ (deficit) equity	(138,200		)	968,682			210,743			(1,192,242		)	(151,017		)
Total liabilities and stockholders’ (deficit) equity	$	453,277		$	887,757		$	398,396		$	(1,192,242	)	$	547,188

21

Xerium Technologies, Inc.

Consolidating Balance Sheet

At December 31, 2017

(Dollars in thousands, and unaudited)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The Company
ASSETS
Current assets:
Cash and cash equivalents	$	3,578		$	57		$	13,618		$	—		$	17,253
Accounts receivable, net	20			19,721			56,892			—			76,633
Intercompany receivables	(452,873		)	475,864			(22,991		)	—			—
Inventories, net	—			16,618			59,047			(940		)	74,725
Prepaid expenses	266			316			10,753			—			11,335
Other current assets	175			3,338			11,803			—			15,316
Total current assets	(448,834		)	515,914			129,122			(940		)	195,262
Property and equipment, net	7,044			60,382			214,952			—			282,378
Investments	901,275			271,278			—			(1,172,553		)	—
Goodwill	—			19,614			45,169			—			64,783
Intangible assets	—			5,961			4			—			5,965
Non-current deferred tax asset	—			—			10,103			—			10,103
Other assets	—			—			9,358			—			9,358
Total assets	$	459,485		$	873,149		$	408,708		$	(1,173,493	)	$	567,849
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Notes payable	$	—		$	—		$	8,398		$	—		$	8,398
Accounts payable	1,963			11,431			26,462			—			39,856
Accrued expenses	26,186			8,214			29,755			—			64,155
Current maturities of long-term debt	1,800			2,329			6,485			—			10,614
Total current liabilities	29,949			21,974			71,100			—			123,023
Long-term debt, net of current maturities	467,605			—			6,299			—			473,904
Liabilities under capital leases	4,159			2,831			8,962			—			15,952
Non-current deferred tax liability	3,439			—			9,458			—			12,897
Pension, other post-retirement and post-employment obligations	21,402			1,434			46,369			—			69,205
Other long-term liabilities	—			—			9,334			—			9,334
Intercompany loans	71,692			(108,319		)	36,627			—			—
Total stockholders’ (deficit) equity	(138,761		)	955,229			220,559			(1,173,493		)	(136,466		)
Total liabilities and stockholders’ (deficit) equity	$	459,485		$	873,149		$	408,708		$	(1,173,493	)	$	567,849

22

Xerium Technologies, Inc.

Consolidating Statement of Operations and Comprehensive (Loss) Income

For the three months ended June 30, 2018

(Dollars in thousands, and unaudited)

	Parent			Total Guarantors			Total  Non Guarantors			Other Eliminations			The Company
Net sales	$	—		$	42,262		$	88,285		$	(5,263	)	$	125,284
Costs and expenses:
Cost of products sold	—			27,470			54,169			(5,329		)	76,310
Selling	65			4,449			10,735			—			15,249
General and administrative	6,816			(3,353		)	13,753			—			17,216
Research and development	294			840			479			—			1,613
Restructuring	13			90			103			—			206
	7,188			29,496			79,239			(5,329		)	110,594
(Loss) income from operations	(7,188		)	12,766			9,046			66			14,690
Interest expense, net	(12,089		)	(457		)	(584		)	—			(13,130		)
Foreign exchange loss	(2,259		)	(197		)	(670		)	—			(3,126		)
Equity in subsidiaries income	15,891			4,847			—			(20,738		)	—
Other components of net periodic pension cost	(129		)	(191		)	58			—			(262		)
Dividend income	859			859			—			(1,718		)	—
(Loss) income before provision for income taxes	(4,915		)	17,627			7,850			(22,390		)	(1,828		)
Benefit from (provision for) income taxes	571			(222		)	(2,865		)	—			(2,516		)
Net (loss) income	$	(4,344	)	$	17,405		$	4,985		$	(22,390	)	$	(4,344	)
Comprehensive (loss) income	$	(1,808	)	$	17,568		$	(16,509	)	$	(22,390	)	$	(23,139	)

Xerium Technologies, Inc.

Consolidating Statement of Operations and Comprehensive (Loss) Income

For the three months ended June 30, 2017

(Dollars in thousands, and unaudited)

	Parent			Total Guarantors			Total  Non Guarantors			Other Eliminations			The Company
Net sales	$	—		$	45,920		$	80,736		$	(6,317	)	$	120,339
Costs and expenses:
Cost of products sold	58			29,544			48,016			(6,274		)	71,344
Selling	256			5,317			10,363			—			15,936
General and administrative	5,453			496			9,314			—			15,263
Research and development	200			1,017			449			—			1,666
Restructuring and impairment	31			207			636			—			874
	5,998			36,581			68,778			(6,274		)	105,083
(Loss) income from operations	(5,998		)	9,339			11,958			(43		)	15,256
Interest expense, net	(12,289		)	(436		)	(556		)	—			(13,281		)
Foreign exchange (loss) gain	(1,296		)	152			(102		)	—			(1,246		)
Equity in subsidiaries income	6,289			19,453			—			(25,742		)	—
Other components of net periodic pension cost	(133		)	(188		)	14			—			(307		)
Loss on extinguishment of debt	(7		)	—			—			—			(7		)
Dividend income	9,966			(1,275		)	12,384			(21,075		)	—
(Loss) income before provision for income taxes	(3,468		)	27,045			23,698			(46,860		)	415
Benefit from (provision for) income taxes	57			(322		)	(3,561		)	—			(3,826		)
Net (loss) income	$	(3,411	)	$	26,723		$	20,137		$	(46,860	)	$	(3,411	)
Comprehensive (loss) income	$	(4,346	)	$	26,808		$	24,252		$	(46,860	)	$	(146	)

23

Xerium Technologies, Inc.

Consolidating Statement of Operations and Comprehensive Income (Loss)

For the six months ended June 30, 2018

(Dollars in thousands, and unaudited)

	Parent			Total Guarantors			Total  Non Guarantors			Other Eliminations			The Company
Net sales	$	—		$	88,416		$	173,294		$	(10,351	)	$	251,359
Costs and expenses:
Cost of products sold	—			57,405			108,164			(10,417		)	155,152
Selling	116			9,165			21,645			—			30,926
General and administrative	6,871			(7,116		)	30,558			—			30,313
Research and development	630			1,656			895			—			3,181
Restructuring	13			533			484			—			1,030
	7,630			61,643			161,746			(10,417		)	220,602
(Loss) income from operations	(7,630		)	26,773			11,548			66			30,757
Interest expense, net	(23,996		)	(897		)	(1,002		)	—			(25,895		)
Foreign exchange (loss) gain	(1,659		)	110			(1,045		)	—			(2,594		)
Equity in subsidiaries income	27,864			7,129			—			(34,993		)	—
Other components of net periodic pension cost	(257		)	(383		)	112			—			(528		)
Dividend income	3,367			3,369			—			(6,736		)	—
(Loss) income before provision for income taxes	(2,311		)	36,101			9,613			(41,663		)	1,740
Benefit from (provision for) income taxes	198			(221		)	(3,830		)	—			(3,853		)
Net (loss) income	$	(2,113	)	$	35,880		$	5,783		$	(41,663	)	$	(2,113	)
Comprehensive income (loss)	$	3		$	36,013		$	(9,130	)	$	(41,663	)	$	(14,777	)

Xerium Technologies, Inc.

Consolidating Statement of Operations and Comprehensive (Loss) Income

For the six months ended June 30, 2017

(Dollars in thousands, and unaudited)

	Parent			Total Guarantors			Total  Non Guarantors			Other Eliminations			The Company
Net sales	$	—		$	92,990		$	161,830		$	(14,615	)	$	240,205
Costs and expenses:
Cost of products sold	57			60,525			97,574			(14,572		)	143,584
Selling	489			10,361			20,760			—			31,610
General and administrative	8,023			1,375			18,288			—			27,686
Research and development	499			1,948			963			—			3,410
Restructuring	92			848			3,098			—			4,038
	9,160			75,057			140,683			(14,572		)	210,328
(Loss) income from operations	(9,160		)	17,933			21,147			(43		)	29,877
Interest expense, net	(24,627		)	(784		)	(1,133		)	—			(26,544		)
Foreign exchange (loss) gain	(1,767		)	218			(822		)	—			(2,371		)
Equity in subsidiaries income	15,003			11,451			—			(26,454		)	—
Other components of net periodic pension cost	(265		)	(376		)	(27		)	—			(668		)
Loss on extinguishment of debt	(32		)	—			—			—			(32		)
Dividend income	14,229			6,846			—			(21,075		)	—
(Loss) income before provision for income taxes	(6,619		)	35,288			19,165			(47,572		)	262
Benefit from (provision for) income taxes	374			(463		)	(6,418		)	—			(6,507		)
Net (loss) income	$	(6,245	)	$	34,825		$	12,747		$	(47,572	)	$	(6,245	)
Comprehensive (loss) income	$	(8,031	)	$	34,918		$	27,345		$	(47,572	)	$	6,660

24

Xerium Technologies, Inc.

Consolidating Statement of Cash Flows

For the six months ended June 30, 2018

(Dollars in thousands, and unaudited)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The  Company
Operating activities
Net (loss) income	$	(2,113	)	$	35,880		$	5,783		$	(41,663	)	$	(2,113	)
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Stock-based compensation	618			—			—			—			618
Depreciation	1,153			3,935			10,513			—			15,601
Amortization of intangible assets	—			611			2			—			613
Deferred financing cost amortization	1,776			—			88			—			1,864
Foreign exchange (gain) loss on revaluation of debt	(136		)	—			561			—			425
Deferred taxes	(531		)	—			(211		)	—			(742		)
Loss (gain) on disposition of property and equipment	—			101			(174		)	—			(73		)
Provision for doubtful accounts	—			30			227			—			257
Undistributed equity in earnings of subsidiaries	(27,864		)	(7,129		)	—			34,993			—
Change in assets and liabilities which (used) provided cash:
Accounts receivable	(19		)	623			(9,467		)	—			(8,863		)
Inventories	—			1,163			(2,054		)	(66		)	(957		)
Prepaid expenses	(725		)	185			(1,981		)	—			(2,521		)
Other current assets	25			(371		)	415			—			69
Accounts payable and accrued expenses	3,713			641			1,761			—			6,115
Deferred and other long-term liabilities	(545		)	349			(1,450		)	—			(1,646		)
Intercompany loans	34,733			(28,182		)	(6,551		)	—			—
Net cash provided by (used in) operating activities	10,085			7,836			(2,538		)	(6,736		)	8,647
Investing activities
Capital expenditures	(325		)	(1,072		)	(3,531		)	—			(4,928		)
Intercompany property and equipment transfers, net	438			(109		)	(329		)	—			—
Proceeds from disposals of property and equipment	—			22			437			—			459
Net cash provided by (used in) investing activities	113			(1,159		)	(3,423		)	—			(4,469		)
Financing activities
Proceeds from borrowings	29,311			—			12,314			—			41,625
Principal payments on debt	(29,343		)	—			(15,439		)	—			(44,782		)
Dividends paid	—			(3,367		)	(3,369		)	6,736			—
Payment of obligations under capital leases	(965		)	(1,399		)	(306		)	—			(2,670		)
Intercompany loans	(7,904		)	(1,918		)	9,822			—			—
Employee taxes paid on equity awards	(59		)	—			—			—			(59		)
Net cash (used in) provided by financing activities	(8,960		)	(6,684		)	3,022			6,736			(5,886		)
Effect of exchange rate changes on cash flows	—			(2		)	(761		)	—			(763		)
Net increase (decrease) in cash	1,238			(9		)	(3,700		)	—			(2,471		)
Cash and cash equivalents at beginning of period	3,578			57			13,618			—			17,253
Cash and cash equivalents at end of period	$	4,816		$	48		$	9,918		$	—		$	14,782

25

Xerium Technologies, Inc.

Consolidating Statement of Cash Flows

For the six months ended June 30, 2017

(Dollars in thousands, and unaudited)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The  Company
Operating activities
Net (loss) income	$	(6,245	)	$	34,825		$	12,747		$	(47,572	)	$	(6,245	)
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Stock-based compensation	2,046			—			—			—			2,046
Depreciation	1,157			4,136			10,369			—			15,662
Amortization of intangible assets	—			492			54			—			546
Deferred financing cost amortization	1,762			—			48			—			1,810
Foreign exchange loss on revaluation of debt	819			—			(285		)	—			534
Deferred taxes	(438		)	—			750			—			312
Asset impairment	—			49			6			—			55
Loss on disposition of property and equipment	—			(72		)	(13		)	—			(85		)
Loss on extinguishment of debt	32			—			—			—			32
Provision for doubtful accounts	—			(12		)	154			—			142
Undistributed equity in earnings of subsidiaries	(15,003		)	(11,451		)	—			26,454			—
Change in assets and liabilities which provided (used) cash:
Accounts receivable	40			(3,705		)	(1,735		)	—			(5,400		)
Inventories	—			(490		)	(2,766		)	43			(3,213		)
Prepaid expenses	(904		)	402			61			—			(441		)
Other current assets	—			(39		)	(1,140		)	—			(1,179		)
Accounts payable and accrued expenses	(1,800		)	1,229			1,099			—			528
Deferred and other long-term liabilities	(71		)	337			(2,372		)	—			(2,106		)
Intercompany loans	21,928			(20,713		)	(1,215		)	—			—
Net cash provided by (used in) operating activities	3,323			4,988			15,762			(21,075		)	2,998
Investing activities
Capital expenditures	(407		)	(568		)	(7,542		)	—			(8,517		)
Intercompany property and equipment transfers, net	(3		)	32			(29		)	—			—
Proceeds from disposals of property and equipment	—			258			32			—			290
Net cash used in investing activities	(410		)	(278		)	(7,539		)	—			(8,227		)
Financing activities
Proceeds from borrowings	55,213			—			11,365			—			66,578
Principal payments on debt	(49,556		)	—			(9,726		)	—			(59,282		)
Dividends paid	—			(7,238		)	(13,837		)	21,075			—
Payments of obligations under capitalized leases	(1,322		)	(1,296		)	(176		)	—			(2,794		)
Payment of deferred financing fees	(427		)	—			34			—			(393		)
Intercompany loans	(6,003		)	3,557			2,446			—			—
Employee taxes paid on equity awards	(832		)	—			—			—			(832		)
Net cash (used in) provided by financing activities	(2,927		)	(4,977		)	(9,894		)	21,075			3,277
Effect of exchange rate changes on cash flows	—			(1		)	204			—			203
Net decrease in cash	(14		)	(268		)	(1,467		)	—			(1,749		)
Cash and cash equivalents at beginning of period	1,368			279			11,161			—			12,808
Cash and cash equivalents at end of period	$	1,354		$	11		$	9,694		$	—		$	11,059

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

Unless the context requires otherwise, all references in this Quarterly Report on Form 10-Q to “Xerium”, “the Company”, “we”, “our” and “us” means Xerium Technologies, Inc. and its consolidated subsidiaries.

Strategic Alternatives Update

As communicated on March 19, 2018, our Board of Directors initiated a review of strategic alternatives for the Company. On June 24, 2018, we entered into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which Andritz AG ("Andritz") will acquire the Company for $13.50 per share in cash through the Merger of an indirect wholly owned subsidiary of Andritz with and into the Company (the "Merger"). Completion of the Merger is subject to approval by our stockholders, regulatory approvals, and other customary closing conditions. We expect to close the Merger during the second half of 2018.

Cautionary Statement Regarding 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:

• the inability to consummate the Merger within the anticipated time period, or at all, due to any reason, including the failure to obtain stockholder approval to adopt the Merger Agreement or failure to satisfy the other conditions to the consummation of the Merger;

• the risk that the Merger Agreement may be terminated in circumstances requiring us to pay Andritz a termination fee of $25 million and reimburse Andritz for certain expenses;

• the potential disruption of management’s attention from our ongoing business operations due to the Merger;

• the effect of the announcement of the Merger on our ability to retain and hire key personnel and maintain relationships with our customers, suppliers and others with whom we does business, or on our operating results and business generally;

• the amount of the costs, fees, expenses and charges related to the Merger Agreement or the Merger;

• the risk that our stock price may decline significantly if the Merger is not consummated;

• the nature, cost and outcome of any litigation and other legal proceedings, including any such proceedings related to the Merger and instituted against us and others;

• the fact that receipt of the all-cash Merger consideration would be taxable to our stockholders that are treated as U.S. Holders for United States federal income tax purposes;

• the fact that our stockholders would forego the opportunity to realize the potential long-term value of the successful execution of our current strategy as an independent public company;

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

• fluctuations in interest rates and currency exchange rates;

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

• execution risk related to the startup of new facilities;

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

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

• structural shifts in the demand for paper;

• the effectiveness of our strategies and plans;

• sudden increase or decrease in production capacity;

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

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

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

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

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

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

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

• anti-takeover provisions in our charter documents.

Other factors that could materially affect our actual results, levels of activity, performance or achievements can be found in the “Risk Factors” section in our Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 28, 2018 and the "Risk Factors" section of 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 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.

Company Overview

We are a leading, global provider of industrial consumable products and services including machine clothing, roll coverings and mechanical services. These goods and services are used in the production of paper, paperboard, building products and nonwoven materials. Our operations are strategically located in the major paper-making regions of the world, including North America, Europe, Latin America and Asia-Pacific.

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

We operate in two principal business segments: clothing and roll covers. In our clothing segment, we manufacture and sell highly engineered synthetic textile belts that transport paper as it is processed in a paper-making machine. Clothing plays a

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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 six months ended June 30, 2018, our clothing segment represented approximately 60% of our net sales.

Our roll cover products provide a surface with the mechanical properties necessary to process the paper sheet in a cost-effective manner that delivers the sheet qualities desired by each paper producer. We tailor our roll covers to individual paper-making machines and processes, using different materials, treatments and finishings. In addition to manufacturing and selling new roll covers, we also provide refurbishment services for previously installed roll covers and we manufacture new and rebuilt spreader rolls. We also provide various related products and services to our customers, both directly and through third party providers, as a growing part of our overall product offering through our roll covers sales channels. For the six months ended June 30, 2018, our roll cover segment represented approximately 40% of our net sales.

Industry Trends and Outlook

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

Net Sales and Expenses

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

•the volume (tonnage) of worldwide paper production;

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

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

•growth in developing markets, particularly in Asia-Pacific;

•the mix of paper grades being produced;

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

•the impact of currency fluctuations.

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

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

The level of our cost of products sold is primarily attributable to labor costs, raw material costs, product shipping costs, plant utilization and depreciation, with labor costs constituting the largest area of expense. We invest in facilities and equipment that enable innovative product development and improve production efficiency and costs. Recent examples of capital spending

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for such purposes include faster weaving and needling looms and seaming machines with accurate electronic controls, automated compound mixing equipment and computer-controlled lathes and mills.

The level of research and development spending is driven by market demand for technology enhancements, including both specific customer needs and general market requirements, as well as by our own analysis of applied technology opportunities. With the exception of purchases of equipment and similar capital items used in our research and development activities, all research and development is expensed as incurred. Research and development expenses were $3.2 million and $3.4 million for the six months ended June 30, 2018 and 2017, respectively.

Foreign Exchange

A substantial portion of our operations is denominated in currencies other than the U.S. Dollar, such as the Euro, for example. 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 or other currencies in which our operations are denominated will result in a lower number of U.S. Dollars for financial reporting purposes.

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

During the six months ended June 30, 2018, we conducted business primarily in nine foreign currencies. The following table provides the average exchange rate for the six months ended June 30, 2018 and 2017 of the U.S. Dollar against each of the four foreign currencies that have the largest net exposure on our operations.

Currency	Six Months Ended June 30, 2018	Six Months Ended June 30, 2017
Canadian Dollar	$0.78 = 1 Canadian Dollar	$0.75 = 1 Canadian Dollar
Brazilian Real	$0.29 = 1 Brazilian Real	$0.31 = 1 Brazilian Real
Australian Dollar	$0.77 = 1 Australian Dollar	$0.75 = 1 Australian Dollar
Japanese Yen	$0.01 = 1 Japanese Yen	$0.01 = 1 Japanese Yen

In the six months ended June 30, 2018, our largest foreign currency net revenue (long) exposures are against the Canadian Dollar and the Japanese Yen. Our largest foreign currency net cost (short) exposures are against the Brazilian Real and the Australian Dollar.

To mitigate the risk that changes in foreign currencies have on our cash flows, 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 successful, changes in the relative value of currencies can affect our cash flows.

Domestic and Foreign Operating Results:

The following is an analysis of our domestic and foreign operations during the three and six months ended June 30, 2018 and June 30, 2017 and a discussion of the results of operations during those periods (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Domestic income from operations	$	5,578	$	3,341	$	19,143	$	8,773
Foreign income from operations	9,112		11,915		11,614		21,104
Total income from operations	$	14,690	$	15,256	$	30,757	$	29,877

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During the three months ended June 30, 2018, domestic income from operations was lower than foreign income from operations primarily due to lower sales, product mix, corporate overhead costs and market differences, partially offset by higher intercompany charges to foreign entities. During the six months ended June 30, 2018, domestic income from operations was higher than foreign income from operations primarily due to higher intercompany charges to foreign entities, partially offset by lower sales, product mix, corporate overhead costs and market differences. In light of U.S. taxation upon repatriation of foreign earnings under the Tax Cuts and Jobs Act, we intend for all earnings generated by foreign subsidiaries to be remitted to the parent company at some point in the future. Foreign withholding taxes have been provided related to those foreign earnings.

Cost Reduction Programs

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

For the six months ended June 30, 2018 and 2017, we incurred restructuring expenses of $1.0 million and $4.0 million, respectively, relating to headcount reductions and other costs related to previous plant closures.

We expect to continue to review our business to determine if additional actions will be taken to further improve our cost structure. Restructuring expenses of approximately $1.0 million to $3.0 million are estimated during 2018, primarily related to the continuation of streamlining the operating structure and improving our long-term competitiveness. Actual restructuring costs for 2018 may substantially differ from estimates at this time, depending on actual operating results in 2018 and the timing of the restructuring activities.

During the fourth quarter of 2017, we implemented a cost-out initiative which reduced headcount in North America and Europe. The cost-out initiative is completed and implementation costs were approximately $2.4 million. Annual savings from the program are anticipated to be approximately $8.0 million per year, which is expected to largely offset inflation and keep our cost structure flat to 2017 levels in 2018. The anticipated savings would reduce our cost of products sold and selling, general and administrative expenses.

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Results of Operations

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
	(in thousands)						(in thousands)
Net sales	$	125,284		$	120,339		$	251,359		$	240,205
Costs and expenses:
Cost of products sold	76,310			71,344			155,152			143,584
Selling	15,249			15,936			30,926			31,610
General and administrative	17,216			15,263			30,313			27,686
Research and development	1,613			1,666			3,181			3,410
Restructuring	206			874			1,030			4,038
	110,594			105,083			220,602			210,328
Income from operations	14,690			15,256			30,757			29,877
Interest expense, net	(13,130		)	(13,281		)	(25,895		)	(26,544		)
Other components of net periodic pension cost	(262		)	(307		)	(528		)	(668		)
Loss on extinguishment of debt	—			(7		)	—			(32		)
Foreign exchange loss	(3,126		)	(1,246		)	(2,594		)	(2,371		)
(Loss) income before provision for income taxes	(1,828		)	415			1,740			262
Provision for income taxes	(2,516		)	(3,826		)	(3,853		)	(6,507		)
Net loss	$	(4,344	)	$	(3,411	)	$	(2,113	)	$	(6,245	)
Comprehensive (loss) income	$	(23,139	)	$	(146	)	$	(14,777	)	$	6,660

Three Months Ended June 30, 2018 Compared to the Three Months Ended June 30, 2017

Net Sales. Net sales for the three months ended June 30, 2018increased by $4.9 million, or 4.1%, to $125.3 million from $120.3 million for the three months ended June 30, 2017. Excluding currency effects, net sales increased $0.8 million, or 0.7%. For the three months ended June 30, 2018, approximately 61% of our net sales were in our clothing segment and approximately 39% were in our roll covers segment.

In our clothing segment, net sales for the three months ended June 30, 2018 increased $3.8 million to $76.2 million from $72.4 million for the three months ended June 30, 2017. Excluding currency effects, net sales increased by $1.0 million, or 1.4%, as a result of improved volume in Asia and Europe partially offset by a reduction in North America. In the prior year, sales in North America benefited from the catchup of sales related to 2016 machine clothing production shortfalls.

In our rolls segment, net sales for the three months ended June 30, 2018 increased $1.2 million to $49.1 million from $47.9 million for the three months ended June 30, 2017. Excluding currency effects, net sales decreased by $0.2 million, or 0.4%, driven primarily by lower sales volumes in North America, partially offset by higher sales volumes in Europe and Latin America.

Cost of Products Sold. Cost of products sold for the three months ended June 30, 2018increased$5.0 million to $76.3 million from $71.3 million for the three months ended June 30, 2017.

In our clothing segment, cost of products sold increased $3.5 million in the three months ended June 30, 2018 compared to the three months ended June 30, 2017, due to higher sales in the second quarter of 2018 coupled with favorable production variance amortization in the prior year. Cost of products sold as a percentage of net sales increased by 1.8 percentage points to 58.0% in the three months ended June 30, 2018 from 56.2% in the three months ended June 30, 2017. Gross margin was unfavorably impacted by favorable fixed cost absorption in the prior year due to changes in the timing of production and flow through of inventory which did not recur in 2018.

In our rolls segment, cost of products sold increased $1.5 million in the three months ended June 30, 2018 compared to the three months ended June 30, 2017. The increase was primarily a result of currency effects and timing of production costs.

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Cost of products sold as a percentage of net sales increased by 1.6 percentage points to 65.4% for the three months ended June 30, 2018 from 63.8% for the three months ended June 30, 2017 primarily due to timing of production costs.

Selling Expenses. For the three months ended June 30, 2018, selling expenses of $15.2 million were $0.7 million lower than the $15.9 million of selling expenses for the three months ended June 30, 2017. Selling expenses as a percent of sales decreased 1.0 percentage points to 12.2% for the three months ended June 30, 2018 from 13.2% for the three months ended June 30, 2017 primarily as a result of savings achieved through our cost-out initiatives.

General and Administrative Expenses. For the three months ended June 30, 2018, general and administrative expenses increased by $2.0 million, or 12.8%, to $17.2 million from $15.3 million for the three months ended June 30, 2017, primarily as a result of strategic initiative costs in the second quarter of 2018 partially offset by CEO transition costs in the second quarter of 2017.

Restructuring Expenses. For the three months ended June 30, 2018, we incurred restructuring expenses of $0.2 million relating to headcount reductions and other costs related to previous plant closures.

Interest Expense, Net. Net interest expense for the three months ended June 30, 2018 was $13.1 million, $0.2 millionlower than $13.3 million for the three months ended June 30, 2017. The decrease was primarily driven by lower average debt balances for the three months ended June 30, 2018 versus the three months ended June 30, 2017.

Provision for Income Taxes. For the three months ended June 30, 2018 and 2017, the provision for income taxes was $2.5 million and $3.8 million, respectively. The decrease in tax expense in the three months ended June 30, 2018, was primarily attributable to the geographic earnings mix and a release of valuation allowance previously established against certain China deferred tax assets. Generally, our provision for income taxes is primarily impacted by the income we earn in tax-paying jurisdictions relative to the income we earn in non-tax-paying jurisdictions. The majority of income recognized for purposes of computing our effective tax rate is earned in countries where the statutory income tax rates range from 15.0% to 34.8%. However, permanent income adjustments recorded against pre-tax earnings may result in an effective tax rate that is higher or lower than the statutory tax rate in these jurisdictions. We generate losses in certain jurisdictions for which we realize no tax benefit as the deferred tax assets in these jurisdictions (including net operating losses) are fully reserved in our valuation allowance. For this reason, we recognize minimal income tax expense or benefit in these jurisdictions, of which the most material jurisdictions are the United States, Germany, 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.

Six Months Ended June 30, 2018 Compared to the Six Months Ended June 30, 2017

Net Sales. Net sales for the six months ended June 30, 2018increased by $11.2 million, or 4.6%, to $251.4 million from $240.2 million for the six months ended June 30, 2017. Excluding currency effects, net sales were flat to the six months ended June 30, 2017. For the six months ended June 30, 2018, approximately 60% of our net sales were in our clothing segment and approximately 40% were in our roll covers segment.

In our clothing segment, net sales for the six months ended June 30, 2018 increased $7.0 million to $151.9 million from $144.9 million for the six months ended June 30, 2017. Excluding currency effects, net sales decreased by $0.3 million, or 0.2%, which was driven by lower sales in North America, as the first half of 2017 benefited from the catchup of sales related to 2016 machine clothing production shortfalls, partially offset by higher sales volumes in Asia Pacific and Europe.

In our rolls segment, net sales for the six months ended June 30, 2018 increased $4.1 million to $99.4 million from $95.3 million for the six months ended June 30, 2017. Excluding currency effects, net sales increased by $0.4 million, or 0.4%, driven primarily by higher sales volumes in Latin America and Europe, partially offset by lower North America sales volumes.

Cost of Products Sold. Cost of products sold for the six months ended June 30, 2018increased to $155.2 million from $143.6 million for the six months ended June 30, 2017.

In our clothing segment, cost of products sold increased $8.4 million in the six months ended June 30, 2018 compared to the six months ended June 30, 2017, primarily due to negative currency impacts and unfavorable production variance amortization activity. Cost of products sold as a percentage of net sales increased by 2.9 percentage points to 59.5% in the six months ended June 30, 2018 from 56.6% in the six months ended June 30, 2017. Gross margin was unfavorably impacted by approximately 170 basis points in the current year from (i) favorable fixed cost absorption in the prior year due to changes in the timing of production and flow through of inventory which did not recur in 2018, and (ii) planned inventory reductions in

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the fourth quarter of 2017 that drove unfavorable overhead absorption into the first quarter of 2018. Additionally, there was negative product mix in the current year in Asia Pacific, partially offset by positive product mix in Europe.

In our rolls segment, cost of products sold increased $3.2 million in the six months ended June 30, 2018 compared to the six months ended June 30, 2017. The increase was primarily a result of negative currency impacts and timing of production costs. Cost of products sold as a percentage of net sales increased by 0.5 percentage points to 65.1% for the six months ended June 30, 2018 from 64.6% for the six months ended June 30, 2017 primarily due to timing of production costs.

Selling Expenses. For the six months ended June 30, 2018, selling expenses of $30.9 million were $0.7 million lower than the six months ended June 30, 2017 at $31.6 million as lower costs were partially offset by negative foreign exchange impacts. Selling expenses as a percent of sales decreased 0.9 percentage points to 12.3% for the six months ended June 30, 2018 from 13.2% for the six months ended June 30, 2017 primarily as a result of savings achieved through our cost-out initiatives.

General and Administrative Expenses. For the six months ended June 30, 2018, general and administrative expenses increased by $2.6 million, or 9.5%, to $30.3 million from $27.7 million for the six months ended June 30, 2017, primarily as a result of strategic initiative costs in the second quarter of 2018 partially offset by CEO transition costs in the second quarter of 2017.

Restructuring Expenses. For the six months ended June 30, 2018, we incurred restructuring expenses of $1.0 million relating to headcount reductions and other costs related to previous plant closures.

Interest Expense, Net. Net interest expense for the six months ended June 30, 2018 was $25.9 million, $0.6 millionlower than $26.5 million for the six months ended June 30, 2017. The decrease was primarily driven by lower average debt balances for the six months ended June 30, 2018 versus the six months ended June 30, 2017.

Provision for Income Taxes. For the six months ended June 30, 2018 and 2017, the provision for income taxes was $3.9 million and $6.5 million, respectively. The decrease in tax expense in the six months ended June 30, 2018, was primarily attributable to the geographic earnings mix and a release of valuation allowance previously established against certain China deferred tax assets. Generally, our provision for income taxes is primarily impacted by the income we earn in tax-paying jurisdictions relative to the income we earn in non-tax-paying jurisdictions. The majority of income recognized for purposes of computing our effective tax rate is earned in countries where the statutory income tax rates range from 15.0% to 34.8%. However, permanent income adjustments recorded against pre-tax earnings may result in an effective tax rate that is higher or lower than the statutory tax rate in these jurisdictions. We generate losses in certain jurisdictions for which we realize no tax benefit as the deferred tax assets in these jurisdictions (including net operating losses) are fully reserved in our valuation allowance. For this reason, we recognize minimal income tax expense or benefit in these jurisdictions, of which the most material jurisdictions are the United States, Germany, and Australia. Due to these reserves, the geographic mix of our pre-tax earnings has a direct correlation with how high or low our annual effective tax rate is relative to consolidated earnings.

Liquidity and Capital Resources

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

Net cash provided by operating activities was $8.6 million for the six months ended June 30, 2018 compared to net cash provided by operating activities of $3.0 million for the six months ended June 30, 2017. The $5.6 million increase in cash provided was primarily due to favorable working capital and lower restructuring payments in the six months ended June 30, 2018.

Net cash used in investing activities was $4.5 million for the six months ended June 30, 2018 and $8.2 million for the six months ended June 30, 2017. The decrease in cash used in investing activities of $3.8 million was primarily due to lower capital expenditures in the six months ended June 30, 2018.

Net cash used in financing activities was $5.9 million for the six months ended June 30, 2018 compared to net cash provided by financing activities of $3.3 million for the six months ended June 30, 2017. The increased use of cash of $9.2 million was due to lower net borrowing on the ABL Facility for the six months ended June 30, 2018, the issuance of the Changzhou rolls facility loan in the second quarter of 2017 and timing of scheduled principal payments on non-ABL debt, partially offset by lower employee taxes paid on equity awards.

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As of June 30, 2018, an aggregate of $31.4 million is available for additional borrowings under our ABL Facility. This availability represents $34.3 million under the ABL Facility currently collateralized by certain of our assets, less $2.9 million of that facility committed for letters of credit or current borrowings. In addition, we had approximately $6.0 million available for borrowings under other small lines of credit. We also had cash and cash equivalents of $14.8 million at June 30, 2018 compared to $17.3 million at December 31, 2017.

We expect to spend cash of between $4.0 million and $6.0 million related to the continuation of our restructuring initiatives in 2018. We have spent $2.6 million in the six months ended June 30, 2018. Actual restructuring costs for 2018 may substantially differ from estimates at this time, depending on the timing of the restructuring activities and the required actions to complete them.

Capital Expenditures

For the six months ended June 30, 2018, we had capital expenditures of $4.9 million. We are currently targeting capital expenditures for 2018 to be approximately $15.0 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. We intend to use existing cash and cash from operations to fund our capital expenditures.

Credit Facilities

9.5% Secured Notes due 2021

On August 9, 2016, we issued $480.0 million aggregate principal amount of 9.5% Senior Secured Notes due August 2021 for a price equal to 98.54% of their face value. Interest on the Notes is due semi-annually in arrears on February 15 and August 15 of each year beginning on February 15, 2017 and the Notes will mature on August 15, 2021, unless earlier redeemed or repurchased.

We used the net proceeds from the offering to repay all amounts outstanding under our then existing $230.0 million term loan credit facility, to redeem all of our $240.0 million aggregate principal amount 8.875% Senior Notes due 2018 at a redemption price equal to 102.219% of the principal amount thereof, together with accrued and unpaid interest, to the date of redemption, to pay fees and expenses relating to these transactions, and for working capital and other general corporate purposes.

ABL Revolving Credit Facility

On November 3, 2015, we refinanced our prior revolving credit facility by entering into the ABL Facility with one of our existing lenders. The amount of the ABL Facility provides an aggregate facility limit of $55.0 million, subject to a borrowing base collateralized by eligible accounts receivable, inventory and equipment of the Company, as US borrower, Xerium Canada Inc., as Canadian borrower, and Huyck.Wagner Germany GmbH, Robec Walzen GmbH, and Stowe Woodward AG, as the European borrowers. On June 19, 2018, we amended our ABL Facility to, among other things, reduce the applicable margin used to determine the interest rate for the Alternative Base rate prime loans in certain jurisdictions. No changes were made to the interest rate margin on the LIBOR loans. The ABL Facility matures in November of 2020 and accrues interest at either an Alternative Base rate (Prime -100 bps or Prime) or Fixed LIBOR (LIBOR +175 bps). As of June 30, 2018, after the amendment discussed above, these rates were 4.00% to 5.00% for the Alternative Base rate and 3.92% for the Fixed LIBOR rate.

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

• declare dividends or redeem or repurchase equity interests;

•prepay, redeem or purchase debt;

•incur liens and engage in sale-leaseback transactions;

•make loans and investments;

•incur additional indebtedness;

•amend or otherwise alter debt and other material agreements;

•engage in mergers, acquisitions and asset sales;

•transact with affiliates; and

•engage in businesses that are not related to the our existing business.

35

Fixed Assets Loan Contract

On July 17, 2015, Xerium China, Co., Ltd. ("Xerium China"), a wholly-owned subsidiary of ours, entered into a Fixed Assets Loan Contract (the "Loan Agreement") with the Industrial and Commercial Bank of China Limited, Shanghai-Jingan Branch (the “Bank”) with respect to a RMB 58.5 million loan, which was approximately $9.4 million USD based on the exchange rate in effect on July 17, 2015. The loan is secured by pledged machinery and equipment of Xerium China and guaranteed by Xerium Asia Pacific (Shanghai) Limited and Stowe Woodward (Changzhou) Roll Technologies Co. Ltd., which are wholly-owned subsidiaries of ours, pursuant to guarantee agreements. Interest on the outstanding principal balance of the loan accrues at a benchmark rate plus a margin. The current interest rate at June 30, 2018 is approximately 5.2%. The interest rate will be adjusted every 12 months during the term of the loan, based on the benchmark interest rate adjustment. Interest under the loan is payable quarterly in arrears. Principal on the loan is to be repaid in part every six months, in accordance with a predetermined schedule set forth in the Loan Agreement. Proceeds of the loan will be used by Xerium China to purchase production equipment. The Loan Agreement contains certain customary representations and warranties and provisions relating to events of default.

We were in compliance with all covenants under the Notes, the ABL Facility, and the Loan Agreement at June 30, 2018.

Critical Accounting Policies

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

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

Our significant policies are described in the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017. 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, 2017.

Non-GAAP Financial Measures

We use EBITDA as supplementary non-GAAP liquidity measure and Adjusted EBITDA as a supplementary non-GAAP financial performance measure. EBITDA is specifically used in evaluating the ability to service indebtedness and to fund ongoing capital expenditures. Adjusted EBITDA excludes certain items the Company does not believe to be indicative of on-going business trends in order to better analyze historical and future business trends on a consistent basis.

Neither EBITDA nor Adjusted EBITDA should be considered in isolation or as a substitute for income (loss) from operations or cash flows (as determined in accordance with U.S. GAAP).

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

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

36

reserve for, a cash disbursement in a future period) of clause (B) above and (iii) provisions for tax benefits based on income or profits. Notwithstanding the foregoing, Adjusted EBITDA, as defined and calculated below, may not be comparable to similarly titled measurements used by other companies.

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Net loss	$	(4,344	)	$	(3,411	)	$	(2,113	)	$	(6,245	)
Stock-based compensation	263			328			618			859
CEO transition stock-based compensation	—			1,187			—			1,187
Depreciation	7,647			7,843			15,601			15,662
Amortization of intangible assets	306			272			613			546
Deferred financing cost amortization	932			911			1,864			1,810
Foreign exchange loss (gain) on revaluation of debt	509			(93		)	425			534
Deferred tax expense	(538		)	302			(742		)	312
Asset impairment	—			55			—			55
Gain on disposition of property and equipment	(16		)	(36		)	(73		)	(85		)
Loss on extinguishment of debt	—			7			—			32
Net change in operating assets and liabilities	16,047			2,855			(7,546		)	(11,669		)
Net cash provided by operating activities	20,806			10,220			8,647			2,998
Interest expense, excluding amortization	12,198			12,370			24,031			24,734
Net change in operating assets and liabilities	(16,047		)	(2,855		)	7,546			11,669
Current portion of income tax expense	3,054			3,524			4,595			6,195
Stock-based compensation	(263		)	(328		)	(618		)	(859		)
CEO transition stock-based compensation	—			(1,187		)	—			(1,187		)
Asset impairment	—			(55		)	—			(55		)
Foreign exchange (loss) gain on revaluation of debt	(509		)	93			(425		)	(534		)
Gain on disposition of property and equipment	16			36			73			85
Loss on extinguishment of debt	—			(7		)	—			(32		)
EBITDA	19,255			21,811			43,849			43,014
Loss on extinguishment of debt	—			7			—			32
Stock-based compensation	263			328			618			859
CEO transition expense	(244		)	3,039			(87		)	3,039
Operational restructuring expenses	206			874			1,030			4,038
Strategic alternative expenses	5,118			—			5,238			—
Other non-recurring expenses	8			69			10			114
Plant startup costs	264			166			264			646
Unrealized foreign exchange loss	2,611			886			1,952			1,994
Adjusted EBITDA	$	27,481		$	27,180		$	52,874		$	53,736

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

37

Our interest rate risks as of June 30, 2018 have not materially changed from December 31, 2017 (see Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2017). As of June 30, 2018, we had outstanding debt with a carrying amount of $504.3 million (including a credit for deferred financing costs and debt discount) and an approximate fair value of $540.7 million.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures. We have carried out an evaluation under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a–15(e) and 15d–15(e) under the Securities Exchange Act of 1934, as amended (the “Act”). Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of June 30, 2018 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 June 30, 2018 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, 2017. See Note 10 to our Unaudited Condensed Consolidated Financial Statements for other routine litigation to which we are subject.

ITEM 1A. RISK FACTORS

The risk factors presented below supplement the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2017.

Our inability to complete the Merger, or to complete the Merger in a timely manner, including as a result of the failure to obtain stockholder approval to adopt the Merger Agreement or failure to satisfy the other conditions to the consummation of the Merger, could negatively affect our business and the market price of our common stock.

The Merger is subject to various closing conditions such as the approval of our stockholders, as well as certain regulatory approvals in the United States and other jurisdictions, among other customary closing conditions. It is possible that our stockholders will not approve the Merger or that a government entity may prohibit, enjoin or refuse to grant approval for the consummation of the Merger. If any condition to the closing of the Merger is not satisfied or, if permissible, waived, the Merger will not be completed. In addition, satisfying the conditions to the closing of the Merger may take longer than we expect. There can be no assurance that any of the conditions to closing will be satisfied or waived or that other events will not intervene to delay or result in the failure to consummate the Merger.

If the Merger is not completed for any reason, our stockholders would not receive any payment for their shares in connection with the Merger, and we would remain an independent public company, with our shares continuing to be traded on the New York Stock Exchange. Depending on the circumstances that would have caused the Merger not to be completed, the price of our common stock may decline materially. If that were to occur, it is uncertain when, if ever, our common stock would return to the price levels at which the shares currently trade.

38

Failure to complete the Merger could trigger the payment of a termination fee, and, whether or not the Merger is consummated, we have incurred and will continue to incur significant costs, fees and expenses relating to professional services and transaction fees.

Under the Merger Agreement, we may be required to pay to Andritz a termination fee of $25.0 million, plus the actual and documented out-of-pocket expenses incurred by Andritz in connection with the Merger Agreement and the transactions contemplated thereby (up to a cap of $5.0 million), if the Merger Agreement is terminated under specified circumstances, including if our Board of Directors changes its recommendation in favor of the Merger Agreement or fails to reaffirm its recommendation after announcement of an exchange or tender offer, if we terminate the Merger Agreement to enter into a superior acquisition agreement, or if the Merger Agreement is terminated because the Merger is not consummated by the deadline provided in the Merger Agreement and we accept an acquisition proposal, subject to certain conditions, within nine months of such termination. There can be no assurance that the Merger Agreement will not be terminated under the circumstances triggering these termination fee obligations. Furthermore, whether or not the Merger is consummated, we have incurred, and will continue to incur, significant costs, fees and expenses relating to professional services and transaction fees in connection with the proposed Merger. Payment of these fees and costs could materially adversely affect our business, financial condition and results of operations.

Uncertainties associated with the Merger may cause us to lose key customers or suppliers and make it more difficult to retain and hire key personnel, and management’s attention may be disrupted from our ongoing business operations during the pendency of the Merger.

As a result of the uncertainty surrounding the conduct of our business during the pendency of the Merger, we may lose key customers and suppliers, and our relationships with other parties with whom we maintain business relationships may be materially adversely affected. Parties with whom we maintain business relationships may experience uncertainty about our future and seek alternative relationships with third parties, seek to alter their business relationships with us or fail to extend an existing relationship with us.

In addition, our employees, including key personnel, may be uncertain about their future roles and relationships with us following the completion of the Merger, which may adversely affect our ability to retain them or to hire new employees, and, during the pendency of the Merger, the potential disruption of management’s attention from our ongoing business operations could materially adversely affect our business, financial condition and results of operations.

Restrictions imposed on us pursuant to the Merger Agreement may prevent us from pursuing business opportunities, which could have a material adverse effect on our business, financial condition and results of operations.

The Merger Agreement restricts us from taking certain actions without Andritz’s consent while the Merger is pending. These restrictions may, among other matters, prevent us from pursuing otherwise attractive business opportunities, making certain investments or acquisitions, selling assets, engaging in capital expenditures, incurring certain indebtedness or making certain other changes to our business. These restrictions could have a material adverse effect on our business, financial condition and results of operations.

ITEM 6. EXHIBITS

39

Exhibit   Number	Description of Exhibits
2.1	Agreement and Plan of Merger, dated as of June 24, 2018, by and among Xerium Technologies, Inc., Andritz AG and XYZ Merger Sub, Inc.* (incorporated by reference to Ex. 2.1 to the Company’s Current Report on Form 8-K filed on June 25, 2018)
10.1	Fourth Amendment to Revolving Credit and Guaranty Agreement, dated June 19, 2018 (incorporated by reference to Ex. 10.1 to the Company’s Current Report on Form 8-K filed on June 22, 2018)
31.1	Certification Statement of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification Statement of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification Statement of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification Statement of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

* Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish copies of any of the omitted schedules and exhibits upon request by the SEC.

40

SIGNATURES

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

	XERIUM TECHNOLOGIES, INC.
	(Registrant)
July 26, 2018	By:	/s/Clifford E. Pietrafitta
		Clifford E. Pietrafitta
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

41

EX-31.1

Exhibit 31.1

CHIEF EXECUTIVE OFFICER CERTIFICATION

I, Mark Staton, certify that:

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

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

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

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

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

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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

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

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

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

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

Date: July 26, 2018

/s/ Mark Staton

Mark Staton

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CHIEF FINANCIAL OFFICER CERTIFICATION

I, Clifford E. Pietrafitta, certify that:

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

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

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

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

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

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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

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

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

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

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

Date: July 26, 2018

/s/ Clifford E. Pietrafitta

Clifford E. Pietrafitta

Executive Vice President and Chief Financial Officer

(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 June 30, 2018, 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 June 30, 2018, fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Mark Staton

Mark Staton

President and Chief Executive Officer

(Principal Executive Officer)

July 26, 2018

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 June 30, 2018, 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 June 30, 2018, 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 Chief Financial Officer

(Principal Financial Officer)

July 26, 2018

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Jul. 26, 2018
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
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		16,427,603

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 14,782	$ 17,253
Accounts receivable, net	81,629	76,633
Inventories, net	72,630	74,725
Prepaid expenses	13,124	11,335
Other current assets	14,482	15,316
Total current assets	196,647	195,262
Property and equipment, net	261,989	282,378
Goodwill	64,159	64,783
Intangible assets	5,352	5,965
Non-current deferred tax asset	9,987	10,103
Other assets	9,054	9,358
Total assets	547,188	567,849
Current liabilities:
Notes payable	8,112	8,398
Accounts payable	41,338	39,856
Accrued expenses	65,914	64,155
Current maturities of long-term debt	9,238	10,614
Total current liabilities	124,602	123,023
Long-term debt, net of current maturities	473,168	473,904
Liabilities under capital leases	13,757	15,952
Non-current deferred tax liability	12,113	12,897
Pension, other post-retirement and post-employment obligations	65,166	69,205
Other long-term liabilities	9,399	9,334
Commitments and contingencies
Stockholders’ deficit
Preferred stock, $0.001 par value, 1,000,000 shares authorized; no shares outstanding as of June 30, 2018 and December 31, 2017	0	0
Common stock, $0.001 par value, 20,000,000 shares authorized; 16,427,603 and 16,367,743 shares outstanding as of June 30, 2018 and December 31, 2017, respectively	16	16
Paid-in capital	433,048	432,489
Accumulated deficit	(460,158)	(457,712)
Accumulated other comprehensive loss	(123,923)	(111,259)
Total stockholders’ deficit	(151,017)	(136,466)
Total liabilities and stockholders’ deficit	$ 547,188	$ 567,849

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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	1,000,000	1,000,000
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	20,000,000	20,000,000
Common stock, shares outstanding (in shares)	16,427,603	16,367,743

XML

Consolidated Statements of Operations and Comprehensive (Loss) Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Income Statement [Abstract]
Net Sales	$ 125,284	$ 120,339	$ 251,359	$ 240,205
Costs and expenses:
Cost of products sold	76,310	71,344	155,152	143,584
Selling	15,249	15,936	30,926	31,610
General and administrative	17,216	15,263	30,313	27,686
Research and development	1,613	1,666	3,181	3,410
Restructuring	206	874	1,030	4,038
Costs and expenses	110,594	105,083	220,602	210,328
Income from operations	14,690	15,256	30,757	29,877
Interest expense, net	(13,130)	(13,281)	(25,895)	(26,544)
Other components of net periodic pension cost	(262)	(307)	(528)	(668)
Loss on extinguishment of debt	0	(7)	0	(32)
Foreign exchange loss	(3,126)	(1,246)	(2,594)	(2,371)
(Loss) income before provision for income taxes	(1,828)	415	1,740	262
Provision for income taxes	(2,516)	(3,826)	(3,853)	(6,507)
Net loss	(4,344)	(3,411)	(2,113)	(6,245)
Comprehensive (loss) income	$ (23,139)	$ (146)	$ (14,777)	$ 6,660
Net loss per share:
Basic (in dollars per share)	$ (0.26)	$ (0.21)	$ (0.13)	$ (0.39)
Diluted (in dollars per share)	$ (0.26)	$ (0.21)	$ (0.13)	$ (0.39)
Shares used in computing net loss per share:
Basic (in shares)	16,427,603	16,262,867	16,412,921	16,208,293
Diluted (in shares)	16,427,603	16,262,867	16,412,921	16,208,293

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Operating activities
Net loss	$ (2,113)	$ (6,245)
Adjustments to reconcile net loss to net cash provided by operating activities:
Stock-based compensation	618	2,046
Depreciation	15,601	15,662
Amortization of intangible assets	613	546
Deferred financing cost amortization	1,864	1,810
Foreign exchange loss on revaluation of debt	425	534
Deferred taxes	(742)	312
Asset impairment	0	55
Gain on disposition of property and equipment	(73)	(85)
Loss on extinguishment of debt	0	32
Provision for doubtful accounts	257	142
Change in assets and liabilities which (used) provided cash:
Accounts receivable	(8,863)	(5,400)
Inventories	(957)	(3,213)
Prepaid expenses	(2,521)	(441)
Other current assets	69	(1,179)
Accounts payable and accrued expenses	6,115	528
Deferred and other long-term liabilities	(1,646)	(2,106)
Net cash provided by operating activities	8,647	2,998
Investing activities
Capital expenditures	(4,928)	(8,517)
Proceeds from disposals of property and equipment	459	290
Net cash used in investing activities	(4,469)	(8,227)
Financing activities
Proceeds from borrowings	41,625	66,578
Principal payments on debt	(44,782)	(59,282)
Payment of financing fees	0	(393)
Payment of obligations under capital leases	(2,670)	(2,794)
Employee taxes paid on equity awards	(59)	(832)
Net cash (used in) provided by financing activities	(5,886)	3,277
Effect of exchange rate changes on cash flows	(763)	203
Net decrease in cash	(2,471)	(1,749)
Cash and cash equivalents at beginning of period	17,253	12,808
Cash and cash equivalents at end of period	$ 14,782	$ 11,059

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Description of Business and Significant Accounting Policies

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business and Significant Accounting Policies

Description of Business and Significant Accounting Policies

Description of Business

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

Basis of Presentation

The accompanying unaudited condensed consolidated interim financial statements at June 30, 2018 and for the three and six months ended June 30, 2018 and 2017 include the accounts of the Company and its wholly-owned subsidiaries. These financial statements have been prepared in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, such financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. The interim results presented herein are not necessarily indicative of the results to be expected for the entire year. In management’s opinion, these unaudited condensed consolidated interim financial statements contain all adjustments of a normal recurring nature necessary for a fair presentation of the financial statements for the interim periods presented. These unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2017 as reported on the Company's Annual Report on Form 10-K filed on February 28, 2018.

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:

	June 30, 2018			December 31, 2017
Raw materials	$	14,452		$	13,881
Work in process	28,263			27,819
Finished goods (includes consigned inventory of $6,208 at June 30, 2018 and $7,757 at December 31, 2017)	36,405			39,798
Inventory allowances	(6,490		)	(6,773		)
	$	72,630		$	74,725

Goodwill

The Company accounts for goodwill and other intangible assets in accordance with ASC Topic 350, Intangibles—Goodwill and Other Intangible Assets (“Topic 350”). Topic 350 requires that goodwill and intangible assets that have indefinite lives not be amortized, but instead, must be tested for impairment at least annually or whenever events or business conditions warrant. During the three and six months ended June 30, 2018, the Company evaluated events and business conditions to determine if a test for an impairment of goodwill was warranted. On June 24, 2018 the Company entered into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which Andritz AG ("Andritz") will acquire the Company for a price in excess of it's carrying amount through the merger of an indirect wholly owned subsidiary of Andritz with and into the Company (the "Merger"). Completion of the Merger is subject to approval by the Company's stockholders, regulatory approvals, and other customary closing conditions. No goodwill impairment test was necessary as of June 30, 2018 as a result of this pending Merger.

Warranties

The Company offers warranties on certain roll products that it sells. The specific terms and conditions of these warranties vary depending on the product sold, the country in which the product is sold and arrangements with the customer. The Company estimates the costs that may be incurred under its warranties and records a liability in Accrued Expenses on its Consolidated Balance Sheet for such costs. Factors that affect the Company’s warranty liability include the number of units sold, historical and anticipated rates of warranty claims, cost per claim and new product introduction. The Company periodically assesses the adequacy of its recorded warranty claims and adjusts the amounts as necessary. The table below represents the changes in the Company’s warranty liability for the six months ended June 30, 2018 and 2017:

	Beginning Balance		Charged to  Cost of Sales		Effect of Foreign Currency Translation			Deduction from Reserves			Ending Balance
Six Months Ended June 30, 2018:	$	2,470	$	414	$	(72	)	$	(556	)	$	2,256
Six Months Ended June 30, 2017:	$	2,203	$	271	$	29		$	(501	)	$	2,002

Net Loss Per Common Share

Net loss per common share has been computed and presented pursuant to the provisions of ASC Topic 260, Earnings per Share (“Topic 260”). Net loss per share is based on the weighted-average number of shares outstanding during the period. As of June 30, 2018 and 2017, the Company had outstanding restricted stock units (“RSUs”) and deferred stock units (“DSUs”).

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

	Three Months Ended June 30,		Six Months Ended June 30,
	2018	2017	2018	2017
Weighted-average common shares outstanding–basic	16,427,603	16,262,867	16,412,921	16,208,293
Dilutive effect of stock-based compensation awards outstanding	—	—	—	—
Weighted-average common shares outstanding–diluted	16,427,603	16,262,867	16,412,921	16,208,293

The following table sets forth the aggregate of the dilutive securities that were outstanding in the three and six months ended June 30, 2018 and 2017, but were not included in the computation of diluted loss per share because the impact would have been anti-dilutive:

	Three Months Ended June 30,		Six Months Ended June 30,
	2018	2017	2018	2017
Anti-dilutive securities	743,514	988,100	743,514	988,100

Impairment

The Company reviews its long-lived assets that have finite lives for impairment in accordance with ASC Topic 360, Property, Plant, and Equipment (“Topic 360”). This topic requires that companies evaluate the fair value of long-lived assets based on the anticipated undiscounted future cash flows to be generated by the assets when indicators of impairment exist to determine if there is impairment to the carrying value. Any change in the carrying amount of an asset as a result of the Company's evaluation has been recorded in either restructuring expense, if it was a result of the Company's restructuring activities, or general and administrative expense for all other impairments in the Consolidated Statements of Operations and Comprehensive (Loss) Income. For the three and six months ended June 30, 2018 and 2017, the Company had no impairment charges included in restructuring expense.

Recently Adopted Accounting Pronouncements

In March 2018, the Financial Accounting Standard Board ("FASB") issued Accounting Standards Update No 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (SAB 118). The amendments in ASU 2018-05 codified the amendments from SAB 118 which related to the income tax accounting implications of the Tax Cuts and Jobs Act. The Company already adopted SAB 118 as of December 31, 2017. Refer to Note 5.

In May 2017, the FASB issued Accounting Standards Update No 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting ("ASU 2017-09"). The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The amendments in ASU 2017-09 are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for (1) public business entities for reporting periods for which financial statements have not yet been issued and (2) all other entities for reporting periods for which financial statements have not yet been made available for issuance. The amendments in this update should be applied prospectively to an award modified on or after the adoption date. The adoption of this guidance effective January 1, 2018 did not have a material impact on the Company's financial statements.

In March 2017, the FASB issued Accounting Standards Update No 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost ("ASU 2017-07"). ASU 2017-07 will change how employers that sponsor defined benefit pension and/or other post-retirement benefit plans present the net periodic benefit cost in the income statement. Employers will present the service cost component of net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. Only the service cost component will be eligible for capitalization in assets. Employers will present the other components of the net periodic benefit cost separately from the line item(s) that includes the service cost and outside of any subtotal of operating income, if one is presented. These components will not be eligible for capitalization in assets. The guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods therein. The Company elected the practical expedient that allowed it to estimate amounts for comparative periods using the information previously disclosed in its historical financial statements and notes thereto, which reasonably reflects the effect of the capitalized amount of net periodic benefit cost for the prior comparative periods. The Company adopted this guidance effective January 1, 2018 and, as a result, reclassified $0.3 million and $0.7 million of pension cost (interest cost, expected return on plan assets, and amortization of net loss) for the three and six months ended June 30, 2017, respectively, out of operating income into other components of net periodic pension cost, a component of non-operating expenses on the Consolidated Statements of Operations and Comprehensive (Loss) Income. The adoption of this standard did not have a material impact on the Company's net income or financial position. Also, no changes to cash flows resulted from adoption of this standard.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory ("ASU 2016-16"). ASU 2016-16 eliminates the exception to the principle in ASC 740, for all intra-entity sales of assets other than inventory, to be deferred, until the transferred asset is sold to a third party or otherwise recovered through use. This standard is effective for financial statements issued for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company adopted this guidance effective January 1, 2018 which resulted in an increase in 2018 opening accumulated deficit of $0.3 million representing the cumulative net impact from (1) the write-off of unamortized tax expense previously deferred in income tax receivable under the previous guidance and (2) recognition of the previously unrecognized deferred tax assets, net of any necessary valuation allowance. The adoption of this standard did not have a material impact on the Company's net income or financial position. Also, no changes to cash flows resulted from adoption of this standard.

In August 2016, the FASB issued Accounting Standards Update No 2016-15, Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"). ASU 2016-15 clarifies how entities should classify certain cash receipts and cash payments in the statement of cash flows and amends certain disclosure requirements of ASC 230. The guidance will generally be applied retrospectively and is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those years. The adoption of this guidance effective January 1, 2018 did not have a material impact on the Company's financial statements.

In May of 2014, the FASB issued Accounting Standard Update No. 2014-09 Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Company identify the contract with the customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when it satisfies the performance obligations. The Company will also be required to disclose information regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 was required to be adopted in January of 2018. Retrospective application is required either to all periods presented or with the cumulative effect of initial adoption recognized in the period of adoption. The Company adopted this new standard effective January 1, 2018 using the modified retrospective transition method. The adoption of this standard did not result in adjustment to the Company's financial statements.

Recently Issued Accounting Pronouncements

In February 2018, the FASB issued Accounting Standards Update No 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02). The amendments in ASU 2018-02 allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendments in this update is permitted, including adoption in any interim period, for public business entities for reporting periods for which financial statements have not yet been issued and for all other entities for reporting periods for which financial statements have not yet been made available for issuance. The Company is in the process of evaluating this accounting standard update.

In August 2017, the FASB issued Accounting Standards Update No 2017-12, Derivative and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12). The amendments in ASU 2017-12 provide guidance to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. To meet that objective, the amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early application is permitted in any interim period after issuance of the update. The Company is in the process of evaluating this accounting standard update.

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

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

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Revenue from Contracts with Customers

6 Months Ended

Jun. 30, 2018

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customers

Revenue from Contracts with Customers

The Company operates through two principal business segments, machine clothing and roll covers. The machine clothing segment performance obligations generally include the production of various types of industrial textiles used on paper-making machines and on other industrial applications. In the Company's roll covers segment, the performance obligations generally include the manufacturing of various types of roll covers, spreader rolls, refurbishment of previously installed roll covers, and providing mechanical services for the internal mechanisms of rolls used on paper-making machines. The contract and order economics and risks are determined to be at the segment level. Within each segment the contracts are similar. Total revenues by segment for the reporting periods on the Consolidated Statements of Operations and Comprehensive (Loss) Income are disclosed in Note 9.

Revenue from the Company's performance obligations to customers is recognized at the point in time when control is transferred to the customer. Control is generally transferred to the customer when persuasive evidence of an arrangement exists, the price is fixed and determinable, delivery including transfer of title has occurred and there is a reasonable assurance of collection of the sales proceeds. The Company generally obtains written purchase authorizations from customers for a specific product or service performance obligation at a specified price and considers delivery and transfer of title to have occurred in accordance with its shipping terms. Payment is generally due in accordance with customary payment terms once the transfer of control has occurred. Revenue is recorded net of applicable allowances, including estimated allowances for returns, rebates and other discounts. Allowances are generally estimated based upon customer trends. In the machine clothing segment, a small portion of the business has been conducted pursuant to consignment arrangements under which the Company does 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, the Company delivers the goods to a location designated by the customer. In many cases, the customer and the Company generally agree to a “sunset” date, which represents the date by which the customer must accept all risks and rewards of ownership of the product and payment terms begin. For consignment sales, revenue is generally recognized on the earlier of the actual product installation date or the “sunset” date.

The costs to fulfill the Company's performance obligations at a point in time are included in inventory. Refer to balances and further discussion in Note 1. Commissions are generally earned at the point in time the performance obligation is satisfied by the Company and are expensed as incurred. Commission expense for the three and six months ended June 30, 2018 and 2017 was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Commission expense (1)	$	2,574	$	3,564	$	5,832	$	7,098

⁽¹⁾ During the second quarter of 2018, the Company modified the commission structure for both the split between base pay and incentive compensation and the definition of commissionable sales in its North American operations. This resulted in a lower commission expense compared to the prior year.

The Company has net accounts receivable balances from customers of $81.6 million and $76.6 million as of June 30, 2018 and December 31, 2017, respectively. The Company does not have any contract receivable balance as of June 30, 2018 and December 31, 2017. The Company had minimal contract liability balances, which primarily relate to customer prepayments for certain products in its North American rolls business of $1.1 million and $0.5 million as of June 30, 2018 and December 31, 2017, respectively. The corresponding balances as of June 30, 2017 and December 31, 2016 were $0.4 million and $1.1 million, respectively. Minimal revenue was recognized on these contract liabilities during the three and six months ended June 30, 2018 and 2017.

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Derivatives and Hedging

6 Months Ended

Jun. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging

Derivatives and Hedging

Risk Management Objective of Using Derivatives

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

Non-designated Hedges of Foreign Exchange Risk

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

The Company, from time to time, may enter into foreign exchange forward contracts to fix currencies at specified rates based on expected future cash flows to protect against the fluctuations in cash flows 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 June 30, 2018 and December 31, 2017, the Company had outstanding derivatives that were not designated as hedges in qualifying hedging relationships. The value of these contracts is recognized at fair value based on market exchange forward rates and is recorded in other assets or other liabilities on the Consolidated Balance Sheets. The following represents the fair value of these derivatives at June 30, 2018 and December 31, 2017 and the change in fair value included in foreign exchange loss in the three and six months ended June 30, 2018 and 2017:

	June 30, 2018			December 31, 2017
Fair value of derivative liability	$	(1,757	)	$	(591	)
	Three Months Ended June 30, 2018			Three Months Ended June 30, 2017
Change in fair value of derivative included in foreign exchange loss	$	(2,211	)	$	(1,169	)
	Six Months Ended June 30, 2018			Six Months Ended June 30, 2017
Change in fair value of derivative included in foreign exchange loss	$	(1,784	)	$	(1,023	)

The following represents the notional amounts of foreign exchange forward contracts at June 30, 2018:

	Notional Sold		Notional Purchased
Non-designated hedges of foreign exchange risk	$	19,555	$	(23,033	)

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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Long term Debt

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Long term Debt

Long term Debt

At June 30, 2018 and December 31, 2017, long term debt consisted of the following:

	June 30, 2018			December 31, 2017
9.5% Senior Notes due August 2021.	$	480,000		$	480,000
Capital leases	18,259			20,749
Notes payable, working capital loan, variable interest rate at 1.45%. Matures August 31, 2018, with one-year rollover option.	8,112			8,398
Fixed asset loan contract, variable interest rate of 5.23%. Matures June of 2020.	5,186			6,761
Other debt	3,954			6,062
Total debt	515,511			521,970
Less deferred financing costs and debt discount	(11,236		)	(13,102		)
Less current maturities of long term debt and notes payable	(17,350		)	(19,012		)
Total long term debt including capital leases	$	486,925		$	489,856
Balance sheet classification of total long-term debt including capital leases
Long-term debt, net of current maturities and deferred financing costs	473,168			473,904
Liabilities under capital lease, non-current	13,757			15,952
Total long term debt including capital leases	$	486,925		$	489,856

As of June 30, 2018, the carrying value of the Company’s debt was $504.3 million (including a credit for deferred financing costs and debt discount) and its fair value was approximately $540.7 million. The Company determined the fair value of its debt utilizing significant other observable inputs (Level 2 of the fair value hierarchy) based on the quoted market prices for the same issues or on the current rates offered for debt of similar remaining maturities and estimates.

9.5% Secured Notes due 2021

On August 9, 2016, the Company issued $480.0 million aggregate principal amount of 9.5% Senior Secured Notes due August 2021 (the "Notes") for a price equal to 98.54% of their face value. Interest payments are due semi-annually in arrears on February 15 and August 15 of each year beginning on February 15, 2017 and the Notes will mature on August 15, 2021, unless earlier redeemed or repurchased.

The Company used the net proceeds from the offering to repay all amounts outstanding under its then existing $230.0 million term loan credit facility, to redeem all of its $240.0 million aggregate principal amount 8.875% Senior Notes due 2018 at a redemption price equal to 102.219% of the principal amount thereof, together with accrued and unpaid interest, to the date of redemption, to pay fees and expenses relating to these transactions, and for working capital and other general corporate purposes.

ABL Revolving Credit Facility

On November 3, 2015, the Company refinanced its prior revolving credit facility by entering into a new Revolving Credit and Guaranty Agreement (the “ABL Facility”) with one of its existing lenders. The amount of the ABL Facility provides an aggregate facility limit of $55.0 million, subject to a borrowing base collateralized by eligible accounts receivable, inventory and equipment of Xerium Technologies, Inc., as a US borrower, Xerium Canada Inc., as Canadian borrower, and Huyck.Wagner Germany GmbH, Robec Walzen GmbH, and Stowe Woodward AG, as the European borrowers. On June 19, 2018, the Company amended the ABL Facility to, among other things, reduce the applicable margin used to determine the interest rate for the Alternative Base rate prime loans in certain jurisdictions. No changes were made to the interest rate margin on the LIBOR loans. The ABL Facility matures in November of 2020 and accrues interest at either an Alternative Base rate (Prime -100 bps or Prime) or Fixed LIBOR (LIBOR +175 bps). As of June 30, 2018, after the amendment discussed above, these rates were 4.00% to 5.00% for the Alternative Base rate and 3.92% for the Fixed LIBOR rate.

As of June 30, 2018, an aggregate of $31.4 million was available for additional borrowings under the ABL Facility. This availability represents $34.3 million under the ABL Facility currently collateralized by certain assets of the Company, less $2.9 million committed for letters of credit or current borrowings. In addition, the Company had approximately $6.0 million available for borrowings under other small lines of credit.

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

• declare dividends or redeem or repurchase equity interests;

•prepay, redeem or purchase debt;

•incur liens and engage in sale-leaseback transactions;

•make loans and investments;

•incur additional indebtedness;

•amend or otherwise alter debt and other material agreements;

•engage in mergers, acquisitions and asset sales;

•transact with affiliates; and

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

Fixed Assets Loan Contract

On July 17, 2015, Xerium China, Co., Ltd. ("Xerium China"), a wholly-owned subsidiary of the Company entered into a Fixed Assets Loan Contract (the "Loan Agreement") with the Industrial and Commercial Bank of China Limited, Shanghai-Jingan Branch (the “Bank”) with respect to a RMB 58.5 million loan, which was approximately $9.4 million USD based on the exchange rate in effect on July 17, 2015. The loan is secured by pledged machinery and equipment of Xerium China and guaranteed by Xerium Asia Pacific (Shanghai) Limited and Stowe Woodward (Changzhou) Roll Technologies Co. Ltd., which are wholly-owned subsidiaries of the Company, pursuant to guarantee agreements. Interest on the outstanding principal balance of the loan accrues at a benchmark rate plus a margin. The current interest rate at June 30, 2018 is approximately 5.2%. The interest rate will be adjusted every 12 months during the term of the loan, based on the benchmark interest rate adjustment. Interest under the loan is payable quarterly in arrears. Principal on the loan is to be repaid in part every six months, in accordance with a predetermined schedule set forth in the Loan Agreement. Proceeds of the loan will be used by Xerium China to purchase production equipment. The Loan Agreement contains certain customary representations and warranties and provisions relating to events of default.

The Company was in compliance with all covenants under the Notes, the ABL Facility, and the Loan Agreement at June 30, 2018.

Long-term Capitalized Lease Liabilities

As of June 30, 2018 and December 31, 2017, the Company had capitalized lease liabilities totaling $18.3 million and $20.7 million, respectively. These amounts represent the lease on the corporate headquarters and the Kunshan, China facility, as well as other leases for machinery and equipment, software and vehicles that expire at various dates through 2027.

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Income Taxes

6 Months Ended

Jun. 30, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

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

For the three and six months ended June 30, 2018, the provision for income taxes was $2.5 million and $3.9 million, respectively, as compared to $3.8 million and $6.5 million for the three and six months ended June 30, 2017, respectively. The decrease in tax expense in the three and six months ended June 30, 2018 was primarily attributable to the geographic mix of earnings and a release of valuation allowance previously established against certain China deferred tax assets. Generally, the provision for income taxes is primarily impacted by income earned in tax-paying jurisdictions relative to income earned in non-tax-paying jurisdictions. The majority of income recognized for purposes of computing the effective tax rate is earned in countries where the statutory income tax rates range from 15.0% to 34.8%; however, permanent income adjustments recorded against pre-tax earnings may result in an effective tax rate that is higher or lower than the statutory tax rate in these jurisdictions. The Company generates losses in certain jurisdictions for which no tax benefit is realized, as the deferred tax assets in these jurisdictions (including the net operating losses) are fully reserved in the valuation allowance. For this reason, the Company recognizes minimal income tax expense or benefit in these jurisdictions, of which the most material jurisdictions are the United States, Germany, 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 June 30, 2018, the Company has not completed its accounting related to the enactment of the Tax Cuts and Jobs Act (the "Tax Act"), as follows:

1. Remeasurement of U.S. deferred tax assets - During the fourth quarter of 2017, the Company recorded a provisional estimate of $31.8 million discrete deferred tax expense related to the remeasurement of the U.S. deferred tax assets as a result of the reduction in the corporate income tax rate. A corresponding tax benefit was recorded related to the reduction in valuation allowance.

2. Transition tax - During the fourth quarter of 2017, the Company recorded a provisional estimate related to accounting for the transition tax and its impact on tax accounting for unrepatriated foreign earnings and other foreign income inclusions. The provisional estimate resulted in $0 current or deferred tax impact primarily as a result of the historic tax loss carry-forwards and the corresponding valuation allowance against related deferred tax assets. In order to complete the accounting, the Company will continue to analyze foreign earnings calculations as well as to await clarification of certain provisions of the Tax Act.

3. Deferred tax accounting on outside basis differences of controlled foreign corporations - Consistent with the provisional estimates made during the fourth quarter of 2017, the Company has recorded a provisional estimate related to the deferred tax accounting for basis differences associated with foreign subsidiaries. Historically, the Company has accrued U.S. deferred taxes in connection with certain foreign earnings which were not considered to be permanently reinvested as these earnings were expected to be distributed to the U.S. However, the transition tax has resulted in immediate U.S. taxation of previously untaxed foreign earnings. As a result, the Company has reversed the U.S. deferred taxes previously recognized on those foreign earnings that were not considered to be permanently reinvested. Additionally, future repatriation of foreign earnings (even those previously considered to be permanently reinvested) would not be expected to give rise to U.S. tax under the Tax Act’s territorial regime. Therefore, a provisional estimate has been recorded for deferred taxes on unrepatriated foreign earnings assuming none of the earnings are permanently reinvested. No additional U.S. income taxes have been provided in connection with any remaining untaxed foreign earnings or any additional outside basis difference with respect to investments in foreign subsidiaries as the Company assesses whether any investments should be considered as indefinitely reinvested in foreign operations.

4. Global Intangible Low-Taxed Income (“GILTI”) - In the second quarter of 2018, the Company has recorded a provisional estimate related to its GILTI inclusion, and the provisional estimate reduces U.S. tax loss carryforwards and the corresponding valuation allowance. In order to complete the accounting, the Company will await clarification of certain provisions. The deferred tax accounting for basis differences associated with foreign subsidiaries as it relates to GILTI remains incomplete and no provisional estimate has been provided. The election of an accounting policy with respect to deferred tax accounting for GILTI will depend, in part, on analyzing foreign income to estimate future GILTI inclusions, as well as clarification of certain provisions of the Tax Act. Until such analyses and clarifications are made, the Company has not made a policy decision regarding deferred tax accounting for the GILTI provision.

5. Interest Deduction Limitation - The Company has recorded a provisional estimate related to the limitation on U.S. interest expense as a result of the Tax Act. The estimate reduces the U.S. tax loss carryforwards but establishes indefinite-lived deferred tax assets for the interest that is limited. In order to complete the accounting, the Company will await clarification of certain provisions.

6. State and Local Income Taxes - The Company has recorded a provisional estimate related to the tax accounting for state and local income taxes upon enactment of the Tax Act. The Company continues to gather and analyze information available related to the impact of the Tax Act on state and local taxes and awaits clarification from the municipalities in order to complete the accounting.

To the extent a provisional estimate was made, the Company utilized previously issued guidance for the Tax Act in order to reach an estimate. However, these estimates are not capable of finalization given the lack of statutory and regulatory guidance in many areas, as well as the complexity in acquiring the data required to calculate the impact on the tax accounts. The Company will revise and conclude the accounting as and when additional information is obtained, which in many cases is contingent on the timing of issuance of guidance. For these reasons, the ultimate impact may differ from these provisional amounts due to, among other things, additional information, changes in interpretations and assumptions management has made, and changes based on additional statutory and regulatory guidance that may be issued. Acknowledging this uncertainty, accounting for the impacts of the Tax Act will be completed within the twelve months of the use of the estimates.

As of June 30, 2018, the Company had a gross amount of unrecognized tax benefit of $10.3 million, exclusive of interest and penalties. The unrecognized tax benefit increased by approximately $0.3 million during the six months ended June 30, 2018, as a result of new positions related to the current year primarily related to transfer pricing and foreign currency effects.

The Company’s policy is to recognize interest and penalties related to income tax matters as income tax expense or benefit, which was $0.1 million of tax benefit for both the three and six months ended June 30, 2018, and was primarily attributable to currency fluctuations. The tax years 2005 through 2017 remain open to examination in a number of the major tax jurisdictions to which the Company and its subsidiaries are subject. The Company believes that it has made adequate provisions for all income tax uncertainties.

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Pensions, Other Post-retirement and Post-employment Benefits

6 Months Ended

Jun. 30, 2018

Retirement Benefits [Abstract]

Pensions, Other Post-retirement and Post-employment Benefits

Pensions, Other Post-retirement and Post-employment Benefits

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

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

Defined Benefit Plans

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Service cost	$	360		$	320		$	743		$	696
Interest cost	1,042			1,079			2,130			2,346
Expected return on plan assets	(1,345		)	(1,273		)	(2,750		)	(2,769		)
Amortization of net loss	565			501			1,148			1,091
Net periodic benefit cost	$	622		$	627		$	1,271		$	1,364

Service costs are included as a component of operating income while interest cost, expected return on plan assets and amortization of net loss are included as a component of non-operating expense in other components of net periodic pension cost on the Consolidated Statements of Operations and Comprehensive (Loss) Income.

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Comprehensive (Loss) Income and Accumulated Other Comprehensive Loss

6 Months Ended

Jun. 30, 2018

Equity [Abstract]

Comprehensive (Loss) Income and Accumulated Other Comprehensive Loss

Comprehensive (Loss) Income and Accumulated Other Comprehensive Loss

Comprehensive (loss) income for the three and six months ended June 30, 2018 (net of tax expense of $1.5 million and $1.4 million, respectively) and 2017 (net of a tax expense of $0.1 million and $0.2 million, respectively) is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Net loss	$	(4,344	)	$	(3,411	)	$	(2,113	)	$	(6,245	)
Foreign currency translation adjustments	(20,677		)	3,250			(14,600		)	13,015
Pension liability changes under Topic 715	1,882			15			1,936			(110		)
Comprehensive (loss) income	$	(23,139	)	$	(146	)	$	(14,777	)	$	6,660

Included in foreign currency translation adjustments are foreign currency gains (losses) on intercompany transactions that are considered a long-term investment totaling $2.9 million and $1.8 million for the three and six months ended June 30, 2018 and $(1.3) million and $(2.1) million for the three and six months ended June 30, 2017, respectively.

The components of accumulated other comprehensive loss for the three months ended June 30, 2018 are as follows (net of tax benefits of $4.3 million):

	Foreign Currency Translation     Adjustment			Pension Liability Changes Under  Topic 715			Accumulated    Other Comprehensive Income (Loss)
Balance at March 31, 2018	$	(63,072	)	$	(42,056	)	$	(105,128	)
Other comprehensive (loss) income before reclassifications	(20,677		)	1,317			(19,360		)
Amounts reclassified from Other Comprehensive loss:
Amortization of actuarial losses	—			565			565
Net current period other comprehensive (loss) income	(20,677		)	1,882			(18,795		)
Balance at June 30, 2018	$	(83,749	)	$	(40,174	)	$	(123,923	)

The components of accumulated other comprehensive loss for the six months ended June 30, 2018 are as follows (net of tax benefits of $4.3 million):

	Foreign Currency Translation     Adjustment			Pension Liability Changes Under  Topic 715			Accumulated    Other Comprehensive (Loss) Income
Balance at December 31, 2017	$	(69,149	)	$	(42,110	)	$	(111,259	)
Other comprehensive (loss) income before reclassifications	(14,600		)	788			(13,812		)
Amounts reclassified from other comprehensive loss
Amortization of actuarial losses	—			1,148			1,148
Net current period other comprehensive (loss) income	(14,600		)	1,936			(12,664		)
Balance at June 30, 2018	$	(83,749	)	$	(40,174	)	$	(123,923	)

For the three and six months ended June 30, 2018, the amortization of actuarial losses is included in other components of net periodic pension cost in the Consolidated Statements of Operations and Comprehensive (Loss) Income.

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Restructuring Expense

6 Months Ended

Jun. 30, 2018

Restructuring and Related Activities [Abstract]

Restructuring Expense

Restructuring Expense

For the six months ended June 30, 2018 and 2017, the Company incurred restructuring expenses of $1.0 million and $4.0 million, respectively, relating to headcount reductions and other costs related to previous plant closures.

The Company expects to continue to review its business to determine if additional actions will be taken to further improve its cost structure. Restructuring expenses of approximately $1.0 million to $3.0 million are estimated during 2018, primarily related to the continuation of streamlining the operating structure and improving long-term competitiveness of the Company. Actual restructuring costs for 2018 may substantially differ from estimates at this time, depending on actual operating results in 2018 and the timing of the restructuring activities.

The following table sets forth the significant components of the restructuring accrual (included in Accrued Expenses in the Company's Consolidated Balance Sheet), including activity under restructuring programs for the six months ended June 30, 2018 and 2017:

	Balance at December 31, 2017		Charges		Currency     Effects			Cash Payments			Balance at June 30, 2018
Severance and other benefits	$	2,686	$	320	$	(23	)	$	(1,622	)	$	1,361
Facility costs and other	733		710		(6		)	(967		)	470
Total	$	3,419	$	1,030	$	(29	)	$	(2,589	)	$	1,831

	Balance at December 31, 2016		Charges		Currency     Effects		Cash Payments			Balance at June 30, 2017
Severance and other benefits	$	3,805	$	2,626	$	311	$	(3,316	)	$	3,426
Facility costs and other	392		1,412		32		(1,581		)	255
Total	$	4,197	$	4,038	$	343	$	(4,897	)	$	3,681

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Clothing	$	141	$	162	$	327	$	2,638
Roll Covers	52		681		690		1,308
Corporate	13		31		13		92
Total	$	206	$	874	$	1,030	$	4,038

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Business Segment Information

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Business Segment Information

Business Segment Information

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

Management evaluates segment performance based on adjusted earnings before interest, taxes, depreciation and amortization. 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 six months ended June 30, 2018 and 2017.

	Clothing		Roll Covers		Corporate			Total
Three months ended June 30, 2018
Net Sales	$	76,189	$	49,095	$	—		$	125,284
Segment Earnings (Loss)	$	21,744	$	10,117	$	(4,380	)	$	27,481
Three months ended June 30, 2017
Net Sales	$	72,425	$	47,914	$	—		$	120,339
Segment Earnings (Loss)	$	20,906	$	10,566	$	(4,292	)	$	27,180
Six months ended June 30, 2018
Net Sales	$	151,946	$	99,413	$	—		$	251,359
Segment Earnings (Loss)	$	40,656	$	20,873	$	(8,655	)	$	52,874
Six months ended June 30, 2017
Net Sales	$	144,920	$	95,285	$	—		$	240,205
Segment Earnings (Loss)	$	41,704	$	20,361	$	(8,329	)	$	53,736

Provided below is a reconciliation of Segment Earnings (Loss) to (Loss) income before provision for income taxes for the three and six months ended June 30, 2018 and 2017, respectively.

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Segment Earnings (Loss):
Clothing	$	21,744		$	20,906		$	40,656		$	41,704
Roll Covers	10,117			10,566			20,873			20,361
Corporate	(4,380		)	(4,292		)	(8,655		)	(8,329		)
Stock-based compensation	(263		)	(328		)	(618		)	(859		)
CEO transition expense	244			(3,039		)	87			(3,039		)
Interest expense, net	(13,130		)	(13,281		)	(25,895		)	(26,544		)
Depreciation and amortization	(7,953		)	(8,115		)	(16,214		)	(16,208		)
Loss on extinguishment of debt	—			(7		)	—			(32		)
Restructuring expense	(206		)	(874		)	(1,030		)	(4,038		)
Strategic alternative expenses (1)	(5,118		)	—			(5,238		)	—
Other non-recurring expense	(8		)	(69		)	(10		)	(114		)
Plant startup costs	(264		)	(166		)	(264		)	(646		)
Unrealized foreign exchange loss	(2,611		)	(886		)	(1,952		)	(1,994		)
(Loss) income before provision for income taxes	$	(1,828	)	$	415		$	1,740		$	262

⁽¹⁾ On March 19, 2018, the Company’s Board of Directors initiated a review of strategic alternatives for the Company. As a result of the strategic alternatives review, on June 24, 2018, the Company entered into the Merger Agreement, pursuant to which Andritz will acquire the Company for $13.50 per share in cash. Completion of the Merger is subject to approval by the Company's stockholders, regulatory approvals, and other customary closing conditions. The Company expects to close the Merger during the second half of 2018. Strategic alternatives expenses include legal, investment banking, incremental management LTIP compensation and other costs related to the strategic alternatives process. These expenses are recorded as a component of general and administrative expense on the statement of operations.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

The Company is involved in various legal matters which have arisen in the ordinary course of business as a result of various immaterial labor claims, taxing authority reviews and other routine legal matters. As of June 30, 2018, the Company accrued an immaterial amount in its financial statements for these matters for which the Company believed the possibility of loss was probable and was able to estimate the damages. The Company does not believe that the ultimate resolution of these matters will have a material adverse effect on its financial position, results of operations or cash flow. The Company believes that any additional liability that 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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Long-term Incentive and Stock-Based Compensation

6 Months Ended

Jun. 30, 2018

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

Long-term Incentive and Stock-Based Compensation

Long-term Incentive and Stock-Based Compensation

The Company records stock-based compensation expense in accordance with ASC Topic 718, Accounting for Stock Compensation and has used the straight-line attribution method to recognize expense for RSUs, and DSUs. The Company recorded stock-based compensation expense during the three and six months ended June 30, 2018 and June 30, 2017 as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
RSU and DSU Awards (1)	$	263	$	1,515	$	618	$	2,046

(1) Related to RSUs and DSUs awarded to certain employees and non-employee directors. The second quarter of 2017 includes approximately $1.2 million of expense related to the accelerated vesting on RSU's upon the transition of the Company's former Chief Executive Officer ("CEO"). Upon transition 146,134 shares were issued to the former CEO.

Summary of Recent Activity for Company Stock and Long-term Incentive Plans

On June 24, 2018 the Company entered into the Merger Agreement, pursuant to which Andritz will acquire the Company for $13.50 per share in cash. Completion of the Merger is subject to approval by the Company's stockholders, regulatory approvals, and other customary closing conditions. The Company expects to close the Merger during the second half of 2018.

Long-Term Incentive Program - 2018 LTIP

On January 30, 2018, the Board of Directors approved the 2018 - 2020 Long-Term Incentive Plan (the "2018 LTIP") which provides for the grant of incentive award opportunities (each, an "Award") payable, if earned, in cash. Because any Award under the 2018 LTIP will be paid in cash, and not equity, the Awards granted under the 2018 LTIP are not made pursuant to the Xerium Technologies, Inc. 2010 Equity Incentive Plan. Awards will consist of Phantom Stock Units. Each Phantom Stock Unit represents the right to receive a cash amount equal to the Average Value of one share of common stock of the Company as described below:

•282,240 Time-based awards, or 50% of the total target award for each participant, have been granted in the form of time-based units. The time-based units vest on the third anniversary of the date of grant.

•282,240 Performance-based awards, or 50% of the total target award for each participant, have been granted in the form of performance-based units. Of these units, one half will vest based on the financial performance of the Company as measured by Adjusted EBITDA, and one half will vest based on the Return on Net Assets (as defined in the 2018 LTIP) of the Company.

Half of the performance-based units whose vesting is subject to the financial performance of the Company will vest based on the degree to which the Company achieves a targeted three-year cumulative Adjusted EBITDA metric, adjusted for currency fluctuations, over the performance period of January 1, 2018 through December 31, 2020. The amount of units that will vest between the target threshold and target ceiling will range from 50% to 200% of the employee's total units granted. Below the target threshold 0% of the units will vest.

Half of the performance-based units whose vesting is subject to the financial performance of the Company will vest based on the degree to which the Company achieves an average three-year Return on Net Assets metric over the performance period of January 1, 2018 through December 31, 2020. The amount of units that will vest between the target threshold and target ceiling will range from 50% to 200% of the employee's total units granted. Below the target threshold 0% of the units will vest.

Long-Term Incentive Program— 2015 LTIP

Awards under the 2015 LTIP vested on March 2, 2018, and were converted to 22,895 shares of common stock, after withholdings.

Directors’ Deferred Stock Unit Plan

Under the 2011 non-management directors stock plan ("2011 DSU Plan”), as amended in January of 2015, each director receives an annual retainer of $132 thousand, to be paid on a quarterly basis in arrears. Approximately 54% of the annual retainer is payable in DSUs, with the remaining 46% payable in cash or a mix of both cash and DSUs at the election of each director. The non-management directors were awarded an aggregate of 22,763 DSUs under the 2011 DSU Plan for service during the six months ended June 30, 2018. In addition, in accordance with the 2011 DSU Plan, as amended in January of 2015, 14,424 DSUs, and 28,357 DSUs were settled in common stock during the six months ended June 30, 2018 and June 30, 2017, respectively. Pursuant to terms of the Merger Agreement, the Company has ceased issuing DSU's to directors for director fees.

CEO Restricted Stock Unit Award

On June 2, 2017, the Company filed a Registration Statement on Form S-8 for the purpose of registering 600,000 shares of its common stock reserved for issuance in accordance with an Inducement Restricted Stock Unit Award Agreement between the Company and Mark Staton in connection with his appointment as the Company's President and Chief Executive Officer on April 28, 2017. The Inducement Restricted Stock Unit Award Agreement provides Mr. Staton with the opportunity to earn up to

600,000 shares of the Company’s common stock if its stock price attains certain levels within certain time periods, subject to his continued employment with the Company and other qualifying terms.  As a result of certain performance conditions being met on this award during the six months ended June 30, 2018, the Company recorded $0.2 million of related stock-based compensation expense.

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Supplemental Guarantor Financial Information

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Supplemental Guarantor Financial Information

Supplemental Guarantor Financial Information

On August 9, 2016, the Company closed on the sale of its Notes. The Notes are secured obligations of Xerium Technologies, Inc. (referred to as “Parent” for the purpose of this note only) and are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by all of the domestic 100% owned subsidiaries of the Parent (the “Guarantors”).  In accordance with Rule 3-10 of Regulation S-X promulgated under the Securities Act of 1933, as amended, the following condensed consolidating financial statements present the financial position, results of operations and cash flows of the Parent 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

At June 30, 2018

(Dollars in thousands, and unaudited)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The Company
ASSETS
Current assets:
Cash and cash equivalents	$	4,816		$	48		$	9,918		$	—		$	14,782
Accounts receivable, net	39			19,068			62,522			—			81,629
Intercompany receivables	(487,606		)	504,108			(16,502		)	—			—
Inventories, net	—			15,454			58,050			(874		)	72,630
Prepaid expenses	991			131			12,002			—			13,124
Other current assets	150			3,709			10,623			—			14,482
Total current assets	(481,610		)	542,518			136,613			(874		)	196,647
Property and equipment, net	5,748			58,047			198,194			—			261,989
Investments	929,139			262,229			—			(1,191,368		)	—
Goodwill	—			19,614			44,545			—			64,159
Intangible assets	—			5,349			3			—			5,352
Non-current deferred tax asset	—			—			9,987			—			9,987
Other assets	—			—			9,054			—			9,054
Total assets	$	453,277		$	887,757		$	398,396		$	(1,192,242	)	$	547,188
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Notes payable	$	—		$	—		$	8,112		$	—		$	8,112
Accounts payable	3,041			12,173			26,124			—			41,338
Accrued expenses	28,852			8,138			28,924			—			65,914
Current maturities of long-term debt	1,584			2,347			5,307			—			9,238
Total current liabilities	33,477			22,658			68,467			—			124,602
Long-term debt, net of current maturities	469,353			—			3,815			—			473,168
Liabilities under capital leases	3,344			1,829			8,584			—			13,757
Non-current deferred tax liability	3,654			—			8,459			—			12,113
Pension, other post-retirement and post-employment obligations	19,826			1,783			43,557			—			65,166
Other long-term liabilities	—			—			9,399			—			9,399
Intercompany loans	61,823			(107,195		)	45,372			—			—
Total stockholders’ (deficit) equity	(138,200		)	968,682			210,743			(1,192,242		)	(151,017		)
Total liabilities and stockholders’ (deficit) equity	$	453,277		$	887,757		$	398,396		$	(1,192,242	)	$	547,188

Xerium Technologies, Inc.

Consolidating Balance Sheet

At December 31, 2017

(Dollars in thousands, and unaudited)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The Company
ASSETS
Current assets:
Cash and cash equivalents	$	3,578		$	57		$	13,618		$	—		$	17,253
Accounts receivable, net	20			19,721			56,892			—			76,633
Intercompany receivables	(452,873		)	475,864			(22,991		)	—			—
Inventories, net	—			16,618			59,047			(940		)	74,725
Prepaid expenses	266			316			10,753			—			11,335
Other current assets	175			3,338			11,803			—			15,316
Total current assets	(448,834		)	515,914			129,122			(940		)	195,262
Property and equipment, net	7,044			60,382			214,952			—			282,378
Investments	901,275			271,278			—			(1,172,553		)	—
Goodwill	—			19,614			45,169			—			64,783
Intangible assets	—			5,961			4			—			5,965
Non-current deferred tax asset	—			—			10,103			—			10,103
Other assets	—			—			9,358			—			9,358
Total assets	$	459,485		$	873,149		$	408,708		$	(1,173,493	)	$	567,849
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Notes payable	$	—		$	—		$	8,398		$	—		$	8,398
Accounts payable	1,963			11,431			26,462			—			39,856
Accrued expenses	26,186			8,214			29,755			—			64,155
Current maturities of long-term debt	1,800			2,329			6,485			—			10,614
Total current liabilities	29,949			21,974			71,100			—			123,023
Long-term debt, net of current maturities	467,605			—			6,299			—			473,904
Liabilities under capital leases	4,159			2,831			8,962			—			15,952
Non-current deferred tax liability	3,439			—			9,458			—			12,897
Pension, other post-retirement and post-employment obligations	21,402			1,434			46,369			—			69,205
Other long-term liabilities	—			—			9,334			—			9,334
Intercompany loans	71,692			(108,319		)	36,627			—			—
Total stockholders’ (deficit) equity	(138,761		)	955,229			220,559			(1,173,493		)	(136,466		)
Total liabilities and stockholders’ (deficit) equity	$	459,485		$	873,149		$	408,708		$	(1,173,493	)	$	567,849

Xerium Technologies, Inc.

Consolidating Statement of Operations and Comprehensive (Loss) Income

For the three months ended June 30, 2018

(Dollars in thousands, and unaudited)

	Parent			Total Guarantors			Total  Non Guarantors			Other Eliminations			The Company
Net sales	$	—		$	42,262		$	88,285		$	(5,263	)	$	125,284
Costs and expenses:
Cost of products sold	—			27,470			54,169			(5,329		)	76,310
Selling	65			4,449			10,735			—			15,249
General and administrative	6,816			(3,353		)	13,753			—			17,216
Research and development	294			840			479			—			1,613
Restructuring	13			90			103			—			206
	7,188			29,496			79,239			(5,329		)	110,594
(Loss) income from operations	(7,188		)	12,766			9,046			66			14,690
Interest expense, net	(12,089		)	(457		)	(584		)	—			(13,130		)
Foreign exchange loss	(2,259		)	(197		)	(670		)	—			(3,126		)
Equity in subsidiaries income	15,891			4,847			—			(20,738		)	—
Other components of net periodic pension cost	(129		)	(191		)	58			—			(262		)
Dividend income	859			859			—			(1,718		)	—
(Loss) income before provision for income taxes	(4,915		)	17,627			7,850			(22,390		)	(1,828		)
Benefit from (provision for) income taxes	571			(222		)	(2,865		)	—			(2,516		)
Net (loss) income	$	(4,344	)	$	17,405		$	4,985		$	(22,390	)	$	(4,344	)
Comprehensive (loss) income	$	(1,808	)	$	17,568		$	(16,509	)	$	(22,390	)	$	(23,139	)

Xerium Technologies, Inc.

Consolidating Statement of Operations and Comprehensive (Loss) Income

For the three months ended June 30, 2017

(Dollars in thousands, and unaudited)

	Parent			Total Guarantors			Total  Non Guarantors			Other Eliminations			The Company
Net sales	$	—		$	45,920		$	80,736		$	(6,317	)	$	120,339
Costs and expenses:
Cost of products sold	58			29,544			48,016			(6,274		)	71,344
Selling	256			5,317			10,363			—			15,936
General and administrative	5,453			496			9,314			—			15,263
Research and development	200			1,017			449			—			1,666
Restructuring and impairment	31			207			636			—			874
	5,998			36,581			68,778			(6,274		)	105,083
(Loss) income from operations	(5,998		)	9,339			11,958			(43		)	15,256
Interest expense, net	(12,289		)	(436		)	(556		)	—			(13,281		)
Foreign exchange (loss) gain	(1,296		)	152			(102		)	—			(1,246		)
Equity in subsidiaries income	6,289			19,453			—			(25,742		)	—
Other components of net periodic pension cost	(133		)	(188		)	14			—			(307		)
Loss on extinguishment of debt	(7		)	—			—			—			(7		)
Dividend income	9,966			(1,275		)	12,384			(21,075		)	—
(Loss) income before provision for income taxes	(3,468		)	27,045			23,698			(46,860		)	415
Benefit from (provision for) income taxes	57			(322		)	(3,561		)	—			(3,826		)
Net (loss) income	$	(3,411	)	$	26,723		$	20,137		$	(46,860	)	$	(3,411	)
Comprehensive (loss) income	$	(4,346	)	$	26,808		$	24,252		$	(46,860	)	$	(146	)

Xerium Technologies, Inc.

Consolidating Statement of Operations and Comprehensive Income (Loss)

For the six months ended June 30, 2018

(Dollars in thousands, and unaudited)

	Parent			Total Guarantors			Total  Non Guarantors			Other Eliminations			The Company
Net sales	$	—		$	88,416		$	173,294		$	(10,351	)	$	251,359
Costs and expenses:
Cost of products sold	—			57,405			108,164			(10,417		)	155,152
Selling	116			9,165			21,645			—			30,926
General and administrative	6,871			(7,116		)	30,558			—			30,313
Research and development	630			1,656			895			—			3,181
Restructuring	13			533			484			—			1,030
	7,630			61,643			161,746			(10,417		)	220,602
(Loss) income from operations	(7,630		)	26,773			11,548			66			30,757
Interest expense, net	(23,996		)	(897		)	(1,002		)	—			(25,895		)
Foreign exchange (loss) gain	(1,659		)	110			(1,045		)	—			(2,594		)
Equity in subsidiaries income	27,864			7,129			—			(34,993		)	—
Other components of net periodic pension cost	(257		)	(383		)	112			—			(528		)
Dividend income	3,367			3,369			—			(6,736		)	—
(Loss) income before provision for income taxes	(2,311		)	36,101			9,613			(41,663		)	1,740
Benefit from (provision for) income taxes	198			(221		)	(3,830		)	—			(3,853		)
Net (loss) income	$	(2,113	)	$	35,880		$	5,783		$	(41,663	)	$	(2,113	)
Comprehensive income (loss)	$	3		$	36,013		$	(9,130	)	$	(41,663	)	$	(14,777	)

Xerium Technologies, Inc.

Consolidating Statement of Operations and Comprehensive (Loss) Income

For the six months ended June 30, 2017

(Dollars in thousands, and unaudited)

	Parent			Total Guarantors			Total  Non Guarantors			Other Eliminations			The Company
Net sales	$	—		$	92,990		$	161,830		$	(14,615	)	$	240,205
Costs and expenses:
Cost of products sold	57			60,525			97,574			(14,572		)	143,584
Selling	489			10,361			20,760			—			31,610
General and administrative	8,023			1,375			18,288			—			27,686
Research and development	499			1,948			963			—			3,410
Restructuring	92			848			3,098			—			4,038
	9,160			75,057			140,683			(14,572		)	210,328
(Loss) income from operations	(9,160		)	17,933			21,147			(43		)	29,877
Interest expense, net	(24,627		)	(784		)	(1,133		)	—			(26,544		)
Foreign exchange (loss) gain	(1,767		)	218			(822		)	—			(2,371		)
Equity in subsidiaries income	15,003			11,451			—			(26,454		)	—
Other components of net periodic pension cost	(265		)	(376		)	(27		)	—			(668		)
Loss on extinguishment of debt	(32		)	—			—			—			(32		)
Dividend income	14,229			6,846			—			(21,075		)	—
(Loss) income before provision for income taxes	(6,619		)	35,288			19,165			(47,572		)	262
Benefit from (provision for) income taxes	374			(463		)	(6,418		)	—			(6,507		)
Net (loss) income	$	(6,245	)	$	34,825		$	12,747		$	(47,572	)	$	(6,245	)
Comprehensive (loss) income	$	(8,031	)	$	34,918		$	27,345		$	(47,572	)	$	6,660

Xerium Technologies, Inc.

Consolidating Statement of Cash Flows

For the six months ended June 30, 2018

(Dollars in thousands, and unaudited)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The  Company
Operating activities
Net (loss) income	$	(2,113	)	$	35,880		$	5,783		$	(41,663	)	$	(2,113	)
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Stock-based compensation	618			—			—			—			618
Depreciation	1,153			3,935			10,513			—			15,601
Amortization of intangible assets	—			611			2			—			613
Deferred financing cost amortization	1,776			—			88			—			1,864
Foreign exchange (gain) loss on revaluation of debt	(136		)	—			561			—			425
Deferred taxes	(531		)	—			(211		)	—			(742		)
Loss (gain) on disposition of property and equipment	—			101			(174		)	—			(73		)
Provision for doubtful accounts	—			30			227			—			257
Undistributed equity in earnings of subsidiaries	(27,864		)	(7,129		)	—			34,993			—
Change in assets and liabilities which (used) provided cash:
Accounts receivable	(19		)	623			(9,467		)	—			(8,863		)
Inventories	—			1,163			(2,054		)	(66		)	(957		)
Prepaid expenses	(725		)	185			(1,981		)	—			(2,521		)
Other current assets	25			(371		)	415			—			69
Accounts payable and accrued expenses	3,713			641			1,761			—			6,115
Deferred and other long-term liabilities	(545		)	349			(1,450		)	—			(1,646		)
Intercompany loans	34,733			(28,182		)	(6,551		)	—			—
Net cash provided by (used in) operating activities	10,085			7,836			(2,538		)	(6,736		)	8,647
Investing activities
Capital expenditures	(325		)	(1,072		)	(3,531		)	—			(4,928		)
Intercompany property and equipment transfers, net	438			(109		)	(329		)	—			—
Proceeds from disposals of property and equipment	—			22			437			—			459
Net cash provided by (used in) investing activities	113			(1,159		)	(3,423		)	—			(4,469		)
Financing activities
Proceeds from borrowings	29,311			—			12,314			—			41,625
Principal payments on debt	(29,343		)	—			(15,439		)	—			(44,782		)
Dividends paid	—			(3,367		)	(3,369		)	6,736			—
Payment of obligations under capital leases	(965		)	(1,399		)	(306		)	—			(2,670		)
Intercompany loans	(7,904		)	(1,918		)	9,822			—			—
Employee taxes paid on equity awards	(59		)	—			—			—			(59		)
Net cash (used in) provided by financing activities	(8,960		)	(6,684		)	3,022			6,736			(5,886		)
Effect of exchange rate changes on cash flows	—			(2		)	(761		)	—			(763		)
Net increase (decrease) in cash	1,238			(9		)	(3,700		)	—			(2,471		)
Cash and cash equivalents at beginning of period	3,578			57			13,618			—			17,253
Cash and cash equivalents at end of period	$	4,816		$	48		$	9,918		$	—		$	14,782

Xerium Technologies, Inc.

Consolidating Statement of Cash Flows

For the six months ended June 30, 2017

(Dollars in thousands, and unaudited)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The  Company
Operating activities
Net (loss) income	$	(6,245	)	$	34,825		$	12,747		$	(47,572	)	$	(6,245	)
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Stock-based compensation	2,046			—			—			—			2,046
Depreciation	1,157			4,136			10,369			—			15,662
Amortization of intangible assets	—			492			54			—			546
Deferred financing cost amortization	1,762			—			48			—			1,810
Foreign exchange loss on revaluation of debt	819			—			(285		)	—			534
Deferred taxes	(438		)	—			750			—			312
Asset impairment	—			49			6			—			55
Loss on disposition of property and equipment	—			(72		)	(13		)	—			(85		)
Loss on extinguishment of debt	32			—			—			—			32
Provision for doubtful accounts	—			(12		)	154			—			142
Undistributed equity in earnings of subsidiaries	(15,003		)	(11,451		)	—			26,454			—
Change in assets and liabilities which provided (used) cash:
Accounts receivable	40			(3,705		)	(1,735		)	—			(5,400		)
Inventories	—			(490		)	(2,766		)	43			(3,213		)
Prepaid expenses	(904		)	402			61			—			(441		)
Other current assets	—			(39		)	(1,140		)	—			(1,179		)
Accounts payable and accrued expenses	(1,800		)	1,229			1,099			—			528
Deferred and other long-term liabilities	(71		)	337			(2,372		)	—			(2,106		)
Intercompany loans	21,928			(20,713		)	(1,215		)	—			—
Net cash provided by (used in) operating activities	3,323			4,988			15,762			(21,075		)	2,998
Investing activities
Capital expenditures	(407		)	(568		)	(7,542		)	—			(8,517		)
Intercompany property and equipment transfers, net	(3		)	32			(29		)	—			—
Proceeds from disposals of property and equipment	—			258			32			—			290
Net cash used in investing activities	(410		)	(278		)	(7,539		)	—			(8,227		)
Financing activities
Proceeds from borrowings	55,213			—			11,365			—			66,578
Principal payments on debt	(49,556		)	—			(9,726		)	—			(59,282		)
Dividends paid	—			(7,238		)	(13,837		)	21,075			—
Payments of obligations under capitalized leases	(1,322		)	(1,296		)	(176		)	—			(2,794		)
Payment of deferred financing fees	(427		)	—			34			—			(393		)
Intercompany loans	(6,003		)	3,557			2,446			—			—
Employee taxes paid on equity awards	(832		)	—			—			—			(832		)
Net cash (used in) provided by financing activities	(2,927		)	(4,977		)	(9,894		)	21,075			3,277
Effect of exchange rate changes on cash flows	—			(1		)	204			—			203
Net decrease in cash	(14		)	(268		)	(1,467		)	—			(1,749		)
Cash and cash equivalents at beginning of period	1,368			279			11,161			—			12,808
Cash and cash equivalents at end of period	$	1,354		$	11		$	9,694		$	—		$	11,059

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Description of Business and Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated interim financial statements at June 30, 2018 and for the three and six months ended June 30, 2018 and 2017 include the accounts of the Company and its wholly-owned subsidiaries. These financial statements have been prepared in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, such financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. The interim results presented herein are not necessarily indicative of the results to be expected for the entire year. In management’s opinion, these unaudited condensed consolidated interim financial statements contain all adjustments of a normal recurring nature necessary for a fair presentation of the financial statements for the interim periods presented. These unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2017 as reported on the Company's Annual Report on Form 10-K filed on February 28, 2018.

Inventories, net

Inventories, net

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

Goodwill

Goodwill

The Company accounts for goodwill and other intangible assets in accordance with ASC Topic 350, Intangibles—Goodwill and Other Intangible Assets (“Topic 350”). Topic 350 requires that goodwill and intangible assets that have indefinite lives not be amortized, but instead, must be tested for impairment at least annually or whenever events or business conditions warrant.

Warranties

Warranties

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

Net Loss Per Common Share

Net Loss Per Common Share

Net loss per common share has been computed and presented pursuant to the provisions of ASC Topic 260, Earnings per Share (“Topic 260”). Net loss per share is based on the weighted-average number of shares outstanding during the period. As of June 30, 2018 and 2017, the Company had outstanding restricted stock units (“RSUs”) and deferred stock units (“DSUs”).

Impairment

Impairment

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

Recently Adopted and Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In March 2018, the Financial Accounting Standard Board ("FASB") issued Accounting Standards Update No 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (SAB 118). The amendments in ASU 2018-05 codified the amendments from SAB 118 which related to the income tax accounting implications of the Tax Cuts and Jobs Act. The Company already adopted SAB 118 as of December 31, 2017. Refer to Note 5.

In May 2017, the FASB issued Accounting Standards Update No 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting ("ASU 2017-09"). The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The amendments in ASU 2017-09 are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for (1) public business entities for reporting periods for which financial statements have not yet been issued and (2) all other entities for reporting periods for which financial statements have not yet been made available for issuance. The amendments in this update should be applied prospectively to an award modified on or after the adoption date. The adoption of this guidance effective January 1, 2018 did not have a material impact on the Company's financial statements.

In March 2017, the FASB issued Accounting Standards Update No 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost ("ASU 2017-07"). ASU 2017-07 will change how employers that sponsor defined benefit pension and/or other post-retirement benefit plans present the net periodic benefit cost in the income statement. Employers will present the service cost component of net periodic benefit cost in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. Only the service cost component will be eligible for capitalization in assets. Employers will present the other components of the net periodic benefit cost separately from the line item(s) that includes the service cost and outside of any subtotal of operating income, if one is presented. These components will not be eligible for capitalization in assets. The guidance is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods therein. The Company elected the practical expedient that allowed it to estimate amounts for comparative periods using the information previously disclosed in its historical financial statements and notes thereto, which reasonably reflects the effect of the capitalized amount of net periodic benefit cost for the prior comparative periods. The Company adopted this guidance effective January 1, 2018 and, as a result, reclassified $0.3 million and $0.7 million of pension cost (interest cost, expected return on plan assets, and amortization of net loss) for the three and six months ended June 30, 2017, respectively, out of operating income into other components of net periodic pension cost, a component of non-operating expenses on the Consolidated Statements of Operations and Comprehensive (Loss) Income. The adoption of this standard did not have a material impact on the Company's net income or financial position. Also, no changes to cash flows resulted from adoption of this standard.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory ("ASU 2016-16"). ASU 2016-16 eliminates the exception to the principle in ASC 740, for all intra-entity sales of assets other than inventory, to be deferred, until the transferred asset is sold to a third party or otherwise recovered through use. This standard is effective for financial statements issued for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company adopted this guidance effective January 1, 2018 which resulted in an increase in 2018 opening accumulated deficit of $0.3 million representing the cumulative net impact from (1) the write-off of unamortized tax expense previously deferred in income tax receivable under the previous guidance and (2) recognition of the previously unrecognized deferred tax assets, net of any necessary valuation allowance. The adoption of this standard did not have a material impact on the Company's net income or financial position. Also, no changes to cash flows resulted from adoption of this standard.

In August 2016, the FASB issued Accounting Standards Update No 2016-15, Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"). ASU 2016-15 clarifies how entities should classify certain cash receipts and cash payments in the statement of cash flows and amends certain disclosure requirements of ASC 230. The guidance will generally be applied retrospectively and is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those years. The adoption of this guidance effective January 1, 2018 did not have a material impact on the Company's financial statements.

In May of 2014, the FASB issued Accounting Standard Update No. 2014-09 Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Company identify the contract with the customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when it satisfies the performance obligations. The Company will also be required to disclose information regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 was required to be adopted in January of 2018. Retrospective application is required either to all periods presented or with the cumulative effect of initial adoption recognized in the period of adoption. The Company adopted this new standard effective January 1, 2018 using the modified retrospective transition method. The adoption of this standard did not result in adjustment to the Company's financial statements.

Recently Issued Accounting Pronouncements

In February 2018, the FASB issued Accounting Standards Update No 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02). The amendments in ASU 2018-02 allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendments in this update is permitted, including adoption in any interim period, for public business entities for reporting periods for which financial statements have not yet been issued and for all other entities for reporting periods for which financial statements have not yet been made available for issuance. The Company is in the process of evaluating this accounting standard update.

In August 2017, the FASB issued Accounting Standards Update No 2017-12, Derivative and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12). The amendments in ASU 2017-12 provide guidance to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. To meet that objective, the amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early application is permitted in any interim period after issuance of the update. The Company is in the process of evaluating this accounting standard update.

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

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

Revenue from Contract with Customers

The Company operates through two principal business segments, machine clothing and roll covers. The machine clothing segment performance obligations generally include the production of various types of industrial textiles used on paper-making machines and on other industrial applications. In the Company's roll covers segment, the performance obligations generally include the manufacturing of various types of roll covers, spreader rolls, refurbishment of previously installed roll covers, and providing mechanical services for the internal mechanisms of rolls used on paper-making machines. The contract and order economics and risks are determined to be at the segment level. Within each segment the contracts are similar. Total revenues by segment for the reporting periods on the Consolidated Statements of Operations and Comprehensive (Loss) Income are disclosed in Note 9.

Revenue from the Company's performance obligations to customers is recognized at the point in time when control is transferred to the customer. Control is generally transferred to the customer when persuasive evidence of an arrangement exists, the price is fixed and determinable, delivery including transfer of title has occurred and there is a reasonable assurance of collection of the sales proceeds. The Company generally obtains written purchase authorizations from customers for a specific product or service performance obligation at a specified price and considers delivery and transfer of title to have occurred in accordance with its shipping terms. Payment is generally due in accordance with customary payment terms once the transfer of control has occurred. Revenue is recorded net of applicable allowances, including estimated allowances for returns, rebates and other discounts. Allowances are generally estimated based upon customer trends. In the machine clothing segment, a small portion of the business has been conducted pursuant to consignment arrangements under which the Company does 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, the Company delivers the goods to a location designated by the customer. In many cases, the customer and the Company generally agree to a “sunset” date, which represents the date by which the customer must accept all risks and rewards of ownership of the product and payment terms begin. For consignment sales, revenue is generally recognized on the earlier of the actual product installation date or the “sunset” date.

The costs to fulfill the Company's performance obligations at a point in time are included in inventory. Refer to balances and further discussion in Note 1. Commissions are generally earned at the point in time the performance obligation is satisfied by the Company and are expensed as incurred.

Fair Value of Derivatives Under ASC Topic 820

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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Description of Business and Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Components of Inventories

The components of inventories are as follows at:

	June 30, 2018			December 31, 2017
Raw materials	$	14,452		$	13,881
Work in process	28,263			27,819
Finished goods (includes consigned inventory of $6,208 at June 30, 2018 and $7,757 at December 31, 2017)	36,405			39,798
Inventory allowances	(6,490		)	(6,773		)
	$	72,630		$	74,725

Changes in Warranty Liability

The table below represents the changes in the Company’s warranty liability for the six months ended June 30, 2018 and 2017:

	Beginning Balance		Charged to  Cost of Sales		Effect of Foreign Currency Translation			Deduction from Reserves			Ending Balance
Six Months Ended June 30, 2018:	$	2,470	$	414	$	(72	)	$	(556	)	$	2,256
Six Months Ended June 30, 2017:	$	2,203	$	271	$	29		$	(501	)	$	2,002

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 June 30,		Six Months Ended June 30,
	2018	2017	2018	2017
Weighted-average common shares outstanding–basic	16,427,603	16,262,867	16,412,921	16,208,293
Dilutive effect of stock-based compensation awards outstanding	—	—	—	—
Weighted-average common shares outstanding–diluted	16,427,603	16,262,867	16,412,921	16,208,293

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

The following table sets forth the aggregate of the dilutive securities that were outstanding in the three and six months ended June 30, 2018 and 2017, but were not included in the computation of diluted loss per share because the impact would have been anti-dilutive:

	Three Months Ended June 30,		Six Months Ended June 30,
	2018	2017	2018	2017
Anti-dilutive securities	743,514	988,100	743,514	988,100

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Revenue from Contracts with Customers (Tables)

6 Months Ended

Jun. 30, 2018

Revenue from Contract with Customer [Abstract]

Schedule of Commission Expense

Commission expense for the three and six months ended June 30, 2018 and 2017 was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Commission expense (1)	$	2,574	$	3,564	$	5,832	$	7,098

⁽¹⁾ During the second quarter of 2018, the Company modified the commission structure for both the split between base pay and incentive compensation and the definition of commissionable sales in its North American operations. This resulted in a lower commission expense compared to the prior year.

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Derivatives and Hedging (Tables)

6 Months Ended

Jun. 30, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments

The following represents the fair value of these derivatives at June 30, 2018 and December 31, 2017 and the change in fair value included in foreign exchange loss in the three and six months ended June 30, 2018 and 2017:

	June 30, 2018			December 31, 2017
Fair value of derivative liability	$	(1,757	)	$	(591	)
	Three Months Ended June 30, 2018			Three Months Ended June 30, 2017
Change in fair value of derivative included in foreign exchange loss	$	(2,211	)	$	(1,169	)
	Six Months Ended June 30, 2018			Six Months Ended June 30, 2017
Change in fair value of derivative included in foreign exchange loss	$	(1,784	)	$	(1,023	)

Notional Amounts of Foreign Exchange Forward Contracts

The following represents the notional amounts of foreign exchange forward contracts at June 30, 2018:

	Notional Sold		Notional Purchased
Non-designated hedges of foreign exchange risk	$	19,555	$	(23,033	)

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Long term Debt (Tables)

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Summary of Long Term Debt

At June 30, 2018 and December 31, 2017, long term debt consisted of the following:

	June 30, 2018			December 31, 2017
9.5% Senior Notes due August 2021.	$	480,000		$	480,000
Capital leases	18,259			20,749
Notes payable, working capital loan, variable interest rate at 1.45%. Matures August 31, 2018, with one-year rollover option.	8,112			8,398
Fixed asset loan contract, variable interest rate of 5.23%. Matures June of 2020.	5,186			6,761
Other debt	3,954			6,062
Total debt	515,511			521,970
Less deferred financing costs and debt discount	(11,236		)	(13,102		)
Less current maturities of long term debt and notes payable	(17,350		)	(19,012		)
Total long term debt including capital leases	$	486,925		$	489,856
Balance sheet classification of total long-term debt including capital leases
Long-term debt, net of current maturities and deferred financing costs	473,168			473,904
Liabilities under capital lease, non-current	13,757			15,952
Total long term debt including capital leases	$	486,925		$	489,856

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

6 Months Ended

Jun. 30, 2018

Retirement Benefits [Abstract]

Components of Net Periodic Benefit Cost

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

Defined Benefit Plans

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Service cost	$	360		$	320		$	743		$	696
Interest cost	1,042			1,079			2,130			2,346
Expected return on plan assets	(1,345		)	(1,273		)	(2,750		)	(2,769		)
Amortization of net loss	565			501			1,148			1,091
Net periodic benefit cost	$	622		$	627		$	1,271		$	1,364

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

6 Months Ended

Jun. 30, 2018

Equity [Abstract]

Components of Comprehensive Income, Net of Tax

Comprehensive (loss) income for the three and six months ended June 30, 2018 (net of tax expense of $1.5 million and $1.4 million, respectively) and 2017 (net of a tax expense of $0.1 million and $0.2 million, respectively) is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Net loss	$	(4,344	)	$	(3,411	)	$	(2,113	)	$	(6,245	)
Foreign currency translation adjustments	(20,677		)	3,250			(14,600		)	13,015
Pension liability changes under Topic 715	1,882			15			1,936			(110		)
Comprehensive (loss) income	$	(23,139	)	$	(146	)	$	(14,777	)	$	6,660

Components of Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss for the three months ended June 30, 2018 are as follows (net of tax benefits of $4.3 million):

	Foreign Currency Translation     Adjustment			Pension Liability Changes Under  Topic 715			Accumulated    Other Comprehensive Income (Loss)
Balance at March 31, 2018	$	(63,072	)	$	(42,056	)	$	(105,128	)
Other comprehensive (loss) income before reclassifications	(20,677		)	1,317			(19,360		)
Amounts reclassified from Other Comprehensive loss:
Amortization of actuarial losses	—			565			565
Net current period other comprehensive (loss) income	(20,677		)	1,882			(18,795		)
Balance at June 30, 2018	$	(83,749	)	$	(40,174	)	$	(123,923	)

The components of accumulated other comprehensive loss for the six months ended June 30, 2018 are as follows (net of tax benefits of $4.3 million):

	Foreign Currency Translation     Adjustment			Pension Liability Changes Under  Topic 715			Accumulated    Other Comprehensive (Loss) Income
Balance at December 31, 2017	$	(69,149	)	$	(42,110	)	$	(111,259	)
Other comprehensive (loss) income before reclassifications	(14,600		)	788			(13,812		)
Amounts reclassified from other comprehensive loss
Amortization of actuarial losses	—			1,148			1,148
Net current period other comprehensive (loss) income	(14,600		)	1,936			(12,664		)
Balance at June 30, 2018	$	(83,749	)	$	(40,174	)	$	(123,923	)

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Restructuring Expense (Tables)

6 Months Ended

Jun. 30, 2018

Restructuring and Related Activities [Abstract]

Summary of Significant Components of Restructuring Accrual

The following table sets forth the significant components of the restructuring accrual (included in Accrued Expenses in the Company's Consolidated Balance Sheet), including activity under restructuring programs for the six months ended June 30, 2018 and 2017:

	Balance at December 31, 2017		Charges		Currency     Effects			Cash Payments			Balance at June 30, 2018
Severance and other benefits	$	2,686	$	320	$	(23	)	$	(1,622	)	$	1,361
Facility costs and other	733		710		(6		)	(967		)	470
Total	$	3,419	$	1,030	$	(29	)	$	(2,589	)	$	1,831

	Balance at December 31, 2016		Charges		Currency     Effects		Cash Payments			Balance at June 30, 2017
Severance and other benefits	$	3,805	$	2,626	$	311	$	(3,316	)	$	3,426
Facility costs and other	392		1,412		32		(1,581		)	255
Total	$	4,197	$	4,038	$	343	$	(4,897	)	$	3,681

Summary of Restructuring Expense by Segment

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Clothing	$	141	$	162	$	327	$	2,638
Roll Covers	52		681		690		1,308
Corporate	13		31		13		92
Total	$	206	$	874	$	1,030	$	4,038

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Business Segment Information (Tables)

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Summarized Financial Information by Segment

Summarized financial information for the Company’s reportable segments is presented in the tables that follow for the three and six months ended June 30, 2018 and 2017.

	Clothing		Roll Covers		Corporate			Total
Three months ended June 30, 2018
Net Sales	$	76,189	$	49,095	$	—		$	125,284
Segment Earnings (Loss)	$	21,744	$	10,117	$	(4,380	)	$	27,481
Three months ended June 30, 2017
Net Sales	$	72,425	$	47,914	$	—		$	120,339
Segment Earnings (Loss)	$	20,906	$	10,566	$	(4,292	)	$	27,180
Six months ended June 30, 2018
Net Sales	$	151,946	$	99,413	$	—		$	251,359
Segment Earnings (Loss)	$	40,656	$	20,873	$	(8,655	)	$	52,874
Six months ended June 30, 2017
Net Sales	$	144,920	$	95,285	$	—		$	240,205
Segment Earnings (Loss)	$	41,704	$	20,361	$	(8,329	)	$	53,736

Reconciliation of Segment Earnings (Loss) to (Loss) 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 six months ended June 30, 2018 and 2017, respectively.

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Segment Earnings (Loss):
Clothing	$	21,744		$	20,906		$	40,656		$	41,704
Roll Covers	10,117			10,566			20,873			20,361
Corporate	(4,380		)	(4,292		)	(8,655		)	(8,329		)
Stock-based compensation	(263		)	(328		)	(618		)	(859		)
CEO transition expense	244			(3,039		)	87			(3,039		)
Interest expense, net	(13,130		)	(13,281		)	(25,895		)	(26,544		)
Depreciation and amortization	(7,953		)	(8,115		)	(16,214		)	(16,208		)
Loss on extinguishment of debt	—			(7		)	—			(32		)
Restructuring expense	(206		)	(874		)	(1,030		)	(4,038		)
Strategic alternative expenses (1)	(5,118		)	—			(5,238		)	—
Other non-recurring expense	(8		)	(69		)	(10		)	(114		)
Plant startup costs	(264		)	(166		)	(264		)	(646		)
Unrealized foreign exchange loss	(2,611		)	(886		)	(1,952		)	(1,994		)
(Loss) income before provision for income taxes	$	(1,828	)	$	415		$	1,740		$	262

⁽¹⁾ On March 19, 2018, the Company’s Board of Directors initiated a review of strategic alternatives for the Company. As a result of the strategic alternatives review, on June 24, 2018, the Company entered into the Merger Agreement, pursuant to which Andritz will acquire the Company for $13.50 per share in cash. Completion of the Merger is subject to approval by the Company's stockholders, regulatory approvals, and other customary closing conditions. The Company expects to close the Merger during the second half of 2018. Strategic alternatives expenses include legal, investment banking, incremental management LTIP compensation and other costs related to the strategic alternatives process. These expenses are recorded as a component of general and administrative expense on the statement of operations.

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Long-term Incentive and Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2018

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

Schedule of Stock-Based Compensation Expense

The Company recorded stock-based compensation expense during the three and six months ended June 30, 2018 and June 30, 2017 as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
RSU and DSU Awards (1)	$	263	$	1,515	$	618	$	2,046

(1) Related to RSUs and DSUs awarded to certain employees and non-employee directors. The second quarter of 2017 includes approximately $1.2 million of expense related to the accelerated vesting on RSU's upon the transition of the Company's former Chief Executive Officer ("CEO"). Upon transition 146,134 shares were issued to the former CEO.

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Supplemental Guarantor Financial Information (Tables)

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Consolidating Balance Sheet

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The Company
ASSETS
Current assets:
Cash and cash equivalents	$	4,816		$	48		$	9,918		$	—		$	14,782
Accounts receivable, net	39			19,068			62,522			—			81,629
Intercompany receivables	(487,606		)	504,108			(16,502		)	—			—
Inventories, net	—			15,454			58,050			(874		)	72,630
Prepaid expenses	991			131			12,002			—			13,124
Other current assets	150			3,709			10,623			—			14,482
Total current assets	(481,610		)	542,518			136,613			(874		)	196,647
Property and equipment, net	5,748			58,047			198,194			—			261,989
Investments	929,139			262,229			—			(1,191,368		)	—
Goodwill	—			19,614			44,545			—			64,159
Intangible assets	—			5,349			3			—			5,352
Non-current deferred tax asset	—			—			9,987			—			9,987
Other assets	—			—			9,054			—			9,054
Total assets	$	453,277		$	887,757		$	398,396		$	(1,192,242	)	$	547,188
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Notes payable	$	—		$	—		$	8,112		$	—		$	8,112
Accounts payable	3,041			12,173			26,124			—			41,338
Accrued expenses	28,852			8,138			28,924			—			65,914
Current maturities of long-term debt	1,584			2,347			5,307			—			9,238
Total current liabilities	33,477			22,658			68,467			—			124,602
Long-term debt, net of current maturities	469,353			—			3,815			—			473,168
Liabilities under capital leases	3,344			1,829			8,584			—			13,757
Non-current deferred tax liability	3,654			—			8,459			—			12,113
Pension, other post-retirement and post-employment obligations	19,826			1,783			43,557			—			65,166
Other long-term liabilities	—			—			9,399			—			9,399
Intercompany loans	61,823			(107,195		)	45,372			—			—
Total stockholders’ (deficit) equity	(138,200		)	968,682			210,743			(1,192,242		)	(151,017		)
Total liabilities and stockholders’ (deficit) equity	$	453,277		$	887,757		$	398,396		$	(1,192,242	)	$	547,188

Xerium Technologies, Inc.

Consolidating Balance Sheet

At December 31, 2017

(Dollars in thousands, and unaudited)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The Company
ASSETS
Current assets:
Cash and cash equivalents	$	3,578		$	57		$	13,618		$	—		$	17,253
Accounts receivable, net	20			19,721			56,892			—			76,633
Intercompany receivables	(452,873		)	475,864			(22,991		)	—			—
Inventories, net	—			16,618			59,047			(940		)	74,725
Prepaid expenses	266			316			10,753			—			11,335
Other current assets	175			3,338			11,803			—			15,316
Total current assets	(448,834		)	515,914			129,122			(940		)	195,262
Property and equipment, net	7,044			60,382			214,952			—			282,378
Investments	901,275			271,278			—			(1,172,553		)	—
Goodwill	—			19,614			45,169			—			64,783
Intangible assets	—			5,961			4			—			5,965
Non-current deferred tax asset	—			—			10,103			—			10,103
Other assets	—			—			9,358			—			9,358
Total assets	$	459,485		$	873,149		$	408,708		$	(1,173,493	)	$	567,849
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Notes payable	$	—		$	—		$	8,398		$	—		$	8,398
Accounts payable	1,963			11,431			26,462			—			39,856
Accrued expenses	26,186			8,214			29,755			—			64,155
Current maturities of long-term debt	1,800			2,329			6,485			—			10,614
Total current liabilities	29,949			21,974			71,100			—			123,023
Long-term debt, net of current maturities	467,605			—			6,299			—			473,904
Liabilities under capital leases	4,159			2,831			8,962			—			15,952
Non-current deferred tax liability	3,439			—			9,458			—			12,897
Pension, other post-retirement and post-employment obligations	21,402			1,434			46,369			—			69,205
Other long-term liabilities	—			—			9,334			—			9,334
Intercompany loans	71,692			(108,319		)	36,627			—			—
Total stockholders’ (deficit) equity	(138,761		)	955,229			220,559			(1,173,493		)	(136,466		)
Total liabilities and stockholders’ (deficit) equity	$	459,485		$	873,149		$	408,708		$	(1,173,493	)	$	567,849

Consolidating Statement of Operations and Comprehensive Income (Loss)

	Parent			Total Guarantors			Total  Non Guarantors			Other Eliminations			The Company
Net sales	$	—		$	42,262		$	88,285		$	(5,263	)	$	125,284
Costs and expenses:
Cost of products sold	—			27,470			54,169			(5,329		)	76,310
Selling	65			4,449			10,735			—			15,249
General and administrative	6,816			(3,353		)	13,753			—			17,216
Research and development	294			840			479			—			1,613
Restructuring	13			90			103			—			206
	7,188			29,496			79,239			(5,329		)	110,594
(Loss) income from operations	(7,188		)	12,766			9,046			66			14,690
Interest expense, net	(12,089		)	(457		)	(584		)	—			(13,130		)
Foreign exchange loss	(2,259		)	(197		)	(670		)	—			(3,126		)
Equity in subsidiaries income	15,891			4,847			—			(20,738		)	—
Other components of net periodic pension cost	(129		)	(191		)	58			—			(262		)
Dividend income	859			859			—			(1,718		)	—
(Loss) income before provision for income taxes	(4,915		)	17,627			7,850			(22,390		)	(1,828		)
Benefit from (provision for) income taxes	571			(222		)	(2,865		)	—			(2,516		)
Net (loss) income	$	(4,344	)	$	17,405		$	4,985		$	(22,390	)	$	(4,344	)
Comprehensive (loss) income	$	(1,808	)	$	17,568		$	(16,509	)	$	(22,390	)	$	(23,139	)

Xerium Technologies, Inc.

Consolidating Statement of Operations and Comprehensive (Loss) Income

For the three months ended June 30, 2017

(Dollars in thousands, and unaudited)

	Parent			Total Guarantors			Total  Non Guarantors			Other Eliminations			The Company
Net sales	$	—		$	45,920		$	80,736		$	(6,317	)	$	120,339
Costs and expenses:
Cost of products sold	58			29,544			48,016			(6,274		)	71,344
Selling	256			5,317			10,363			—			15,936
General and administrative	5,453			496			9,314			—			15,263
Research and development	200			1,017			449			—			1,666
Restructuring and impairment	31			207			636			—			874
	5,998			36,581			68,778			(6,274		)	105,083
(Loss) income from operations	(5,998		)	9,339			11,958			(43		)	15,256
Interest expense, net	(12,289		)	(436		)	(556		)	—			(13,281		)
Foreign exchange (loss) gain	(1,296		)	152			(102		)	—			(1,246		)
Equity in subsidiaries income	6,289			19,453			—			(25,742		)	—
Other components of net periodic pension cost	(133		)	(188		)	14			—			(307		)
Loss on extinguishment of debt	(7		)	—			—			—			(7		)
Dividend income	9,966			(1,275		)	12,384			(21,075		)	—
(Loss) income before provision for income taxes	(3,468		)	27,045			23,698			(46,860		)	415
Benefit from (provision for) income taxes	57			(322		)	(3,561		)	—			(3,826		)
Net (loss) income	$	(3,411	)	$	26,723		$	20,137		$	(46,860	)	$	(3,411	)
Comprehensive (loss) income	$	(4,346	)	$	26,808		$	24,252		$	(46,860	)	$	(146	)

Xerium Technologies, Inc.

Consolidating Statement of Operations and Comprehensive Income (Loss)

For the six months ended June 30, 2018

(Dollars in thousands, and unaudited)

	Parent			Total Guarantors			Total  Non Guarantors			Other Eliminations			The Company
Net sales	$	—		$	88,416		$	173,294		$	(10,351	)	$	251,359
Costs and expenses:
Cost of products sold	—			57,405			108,164			(10,417		)	155,152
Selling	116			9,165			21,645			—			30,926
General and administrative	6,871			(7,116		)	30,558			—			30,313
Research and development	630			1,656			895			—			3,181
Restructuring	13			533			484			—			1,030
	7,630			61,643			161,746			(10,417		)	220,602
(Loss) income from operations	(7,630		)	26,773			11,548			66			30,757
Interest expense, net	(23,996		)	(897		)	(1,002		)	—			(25,895		)
Foreign exchange (loss) gain	(1,659		)	110			(1,045		)	—			(2,594		)
Equity in subsidiaries income	27,864			7,129			—			(34,993		)	—
Other components of net periodic pension cost	(257		)	(383		)	112			—			(528		)
Dividend income	3,367			3,369			—			(6,736		)	—
(Loss) income before provision for income taxes	(2,311		)	36,101			9,613			(41,663		)	1,740
Benefit from (provision for) income taxes	198			(221		)	(3,830		)	—			(3,853		)
Net (loss) income	$	(2,113	)	$	35,880		$	5,783		$	(41,663	)	$	(2,113	)
Comprehensive income (loss)	$	3		$	36,013		$	(9,130	)	$	(41,663	)	$	(14,777	)

Xerium Technologies, Inc.

Consolidating Statement of Operations and Comprehensive (Loss) Income

For the six months ended June 30, 2017

(Dollars in thousands, and unaudited)

	Parent			Total Guarantors			Total  Non Guarantors			Other Eliminations			The Company
Net sales	$	—		$	92,990		$	161,830		$	(14,615	)	$	240,205
Costs and expenses:
Cost of products sold	57			60,525			97,574			(14,572		)	143,584
Selling	489			10,361			20,760			—			31,610
General and administrative	8,023			1,375			18,288			—			27,686
Research and development	499			1,948			963			—			3,410
Restructuring	92			848			3,098			—			4,038
	9,160			75,057			140,683			(14,572		)	210,328
(Loss) income from operations	(9,160		)	17,933			21,147			(43		)	29,877
Interest expense, net	(24,627		)	(784		)	(1,133		)	—			(26,544		)
Foreign exchange (loss) gain	(1,767		)	218			(822		)	—			(2,371		)
Equity in subsidiaries income	15,003			11,451			—			(26,454		)	—
Other components of net periodic pension cost	(265		)	(376		)	(27		)	—			(668		)
Loss on extinguishment of debt	(32		)	—			—			—			(32		)
Dividend income	14,229			6,846			—			(21,075		)	—
(Loss) income before provision for income taxes	(6,619		)	35,288			19,165			(47,572		)	262
Benefit from (provision for) income taxes	374			(463		)	(6,418		)	—			(6,507		)
Net (loss) income	$	(6,245	)	$	34,825		$	12,747		$	(47,572	)	$	(6,245	)
Comprehensive (loss) income	$	(8,031	)	$	34,918		$	27,345		$	(47,572	)	$	6,660

Consolidating Statement of Cash Flows

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The  Company
Operating activities
Net (loss) income	$	(2,113	)	$	35,880		$	5,783		$	(41,663	)	$	(2,113	)
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Stock-based compensation	618			—			—			—			618
Depreciation	1,153			3,935			10,513			—			15,601
Amortization of intangible assets	—			611			2			—			613
Deferred financing cost amortization	1,776			—			88			—			1,864
Foreign exchange (gain) loss on revaluation of debt	(136		)	—			561			—			425
Deferred taxes	(531		)	—			(211		)	—			(742		)
Loss (gain) on disposition of property and equipment	—			101			(174		)	—			(73		)
Provision for doubtful accounts	—			30			227			—			257
Undistributed equity in earnings of subsidiaries	(27,864		)	(7,129		)	—			34,993			—
Change in assets and liabilities which (used) provided cash:
Accounts receivable	(19		)	623			(9,467		)	—			(8,863		)
Inventories	—			1,163			(2,054		)	(66		)	(957		)
Prepaid expenses	(725		)	185			(1,981		)	—			(2,521		)
Other current assets	25			(371		)	415			—			69
Accounts payable and accrued expenses	3,713			641			1,761			—			6,115
Deferred and other long-term liabilities	(545		)	349			(1,450		)	—			(1,646		)
Intercompany loans	34,733			(28,182		)	(6,551		)	—			—
Net cash provided by (used in) operating activities	10,085			7,836			(2,538		)	(6,736		)	8,647
Investing activities
Capital expenditures	(325		)	(1,072		)	(3,531		)	—			(4,928		)
Intercompany property and equipment transfers, net	438			(109		)	(329		)	—			—
Proceeds from disposals of property and equipment	—			22			437			—			459
Net cash provided by (used in) investing activities	113			(1,159		)	(3,423		)	—			(4,469		)
Financing activities
Proceeds from borrowings	29,311			—			12,314			—			41,625
Principal payments on debt	(29,343		)	—			(15,439		)	—			(44,782		)
Dividends paid	—			(3,367		)	(3,369		)	6,736			—
Payment of obligations under capital leases	(965		)	(1,399		)	(306		)	—			(2,670		)
Intercompany loans	(7,904		)	(1,918		)	9,822			—			—
Employee taxes paid on equity awards	(59		)	—			—			—			(59		)
Net cash (used in) provided by financing activities	(8,960		)	(6,684		)	3,022			6,736			(5,886		)
Effect of exchange rate changes on cash flows	—			(2		)	(761		)	—			(763		)
Net increase (decrease) in cash	1,238			(9		)	(3,700		)	—			(2,471		)
Cash and cash equivalents at beginning of period	3,578			57			13,618			—			17,253
Cash and cash equivalents at end of period	$	4,816		$	48		$	9,918		$	—		$	14,782

Xerium Technologies, Inc.

Consolidating Statement of Cash Flows

For the six months ended June 30, 2017

(Dollars in thousands, and unaudited)

	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The  Company
Operating activities
Net (loss) income	$	(6,245	)	$	34,825		$	12,747		$	(47,572	)	$	(6,245	)
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Stock-based compensation	2,046			—			—			—			2,046
Depreciation	1,157			4,136			10,369			—			15,662
Amortization of intangible assets	—			492			54			—			546
Deferred financing cost amortization	1,762			—			48			—			1,810
Foreign exchange loss on revaluation of debt	819			—			(285		)	—			534
Deferred taxes	(438		)	—			750			—			312
Asset impairment	—			49			6			—			55
Loss on disposition of property and equipment	—			(72		)	(13		)	—			(85		)
Loss on extinguishment of debt	32			—			—			—			32
Provision for doubtful accounts	—			(12		)	154			—			142
Undistributed equity in earnings of subsidiaries	(15,003		)	(11,451		)	—			26,454			—
Change in assets and liabilities which provided (used) cash:
Accounts receivable	40			(3,705		)	(1,735		)	—			(5,400		)
Inventories	—			(490		)	(2,766		)	43			(3,213		)
Prepaid expenses	(904		)	402			61			—			(441		)
Other current assets	—			(39		)	(1,140		)	—			(1,179		)
Accounts payable and accrued expenses	(1,800		)	1,229			1,099			—			528
Deferred and other long-term liabilities	(71		)	337			(2,372		)	—			(2,106		)
Intercompany loans	21,928			(20,713		)	(1,215		)	—			—
Net cash provided by (used in) operating activities	3,323			4,988			15,762			(21,075		)	2,998
Investing activities
Capital expenditures	(407		)	(568		)	(7,542		)	—			(8,517		)
Intercompany property and equipment transfers, net	(3		)	32			(29		)	—			—
Proceeds from disposals of property and equipment	—			258			32			—			290
Net cash used in investing activities	(410		)	(278		)	(7,539		)	—			(8,227		)
Financing activities
Proceeds from borrowings	55,213			—			11,365			—			66,578
Principal payments on debt	(49,556		)	—			(9,726		)	—			(59,282		)
Dividends paid	—			(7,238		)	(13,837		)	21,075			—
Payments of obligations under capitalized leases	(1,322		)	(1,296		)	(176		)	—			(2,794		)
Payment of deferred financing fees	(427		)	—			34			—			(393		)
Intercompany loans	(6,003		)	3,557			2,446			—			—
Employee taxes paid on equity awards	(832		)	—			—			—			(832		)
Net cash (used in) provided by financing activities	(2,927		)	(4,977		)	(9,894		)	21,075			3,277
Effect of exchange rate changes on cash flows	—			(1		)	204			—			203
Net decrease in cash	(14		)	(268		)	(1,467		)	—			(1,749		)
Cash and cash equivalents at beginning of period	1,368			279			11,161			—			12,808
Cash and cash equivalents at end of period	$	1,354		$	11		$	9,694		$	—		$	11,059

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Description of Business and Significant Accounting Policies - Components of Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Raw materials	$ 14,452	$ 13,881
Work in process	28,263	27,819
Finished goods (includes consigned inventory of $6,208 at June 30, 2018 and $7,757 at December 31, 2017)	36,405	39,798
Inventory allowances	(6,490)	(6,773)
Inventories, net	72,630	74,725
Consigned inventory	$ 6,208	$ 7,757

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Description of Business and Significant Accounting Policies - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Jan. 01, 2018	Dec. 31, 2017
Restructuring Cost and Reserve [Line Items]
Asset impairment			$ 0	$ 55,000
Increase to other components of net periodic pension cost, as a result of adoption of new accounting guidance	$ 262,000	$ 307,000	528,000	668,000
Increase in operating income as a result of adoption of new accounting guidance	14,690,000	15,256,000	30,757,000	29,877,000
Increase in accumulated deficit due to adoption of new accounting guidance	460,158,000		460,158,000			$ 457,712,000
Restructuring Expense
Restructuring Cost and Reserve [Line Items]
Asset impairment	$ 0	0	$ 0	0
Accounting Standards Update 2017-07
Restructuring Cost and Reserve [Line Items]
Increase to other components of net periodic pension cost, as a result of adoption of new accounting guidance		300,000		700,000
Increase in operating income as a result of adoption of new accounting guidance		$ 300,000		$ 700,000
Accounting Standards Update 2016-06
Restructuring Cost and Reserve [Line Items]
Increase in accumulated deficit due to adoption of new accounting guidance					$ 300,000

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Description of Business and Significant Accounting Policies - Changes in Warranty Liability (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Warranties, Increase (Decrease)
Beginning Balance	$ 2,470	$ 2,203
Charged to Cost of Sales	414	271
Effect of Foreign Currency Translation	(72)	29
Deduction from Reserves	(556)	(501)
Ending Balance	$ 2,256	$ 2,002

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Description of Business and Significant Accounting Policies - Net Loss Per Common Share (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Weighted-average common shares outstanding–basic (in shares)	16,427,603	16,262,867	16,412,921	16,208,293
Dilutive effect of stock-based compensation awards outstanding (in shares)	0	0	0	0
Weighted-average common shares outstanding–diluted (in shares)	16,427,603	16,262,867	16,412,921	16,208,293
Anti-dilutive securities (in shares)	743,514	988,100	743,514	988,100

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Revenue from Contracts with Customers (Details)	6 Months Ended
	Jun. 30, 2018 USD ($) segment	Dec. 31, 2017 USD ($)	Jun. 30, 2017 USD ($)	Dec. 31, 2016 USD ($)
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Number of reportable segments | segment	2
Net account receivable balances from customers	$ 81,629,000	$ 76,633,000
Roll Covers
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Contract liability	1,100,000	500,000	$ 400,000	$ 1,100,000
Trade Accounts Receivable, Contracts
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Net account receivable balances from customers	$ 0	$ 0

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Revenue from Contracts with Customers - Schedule of Commission Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Capitalized Commissions
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Commission expense	$ 2,574	$ 3,564	$ 5,832	$ 7,098

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Derivatives and Hedging - Schedule of Derivative Instruments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Derivative [Line Items]
Change in fair value of derivative included in foreign exchange loss	$ (2,211)	$ (1,169)	$ (1,784)	$ (1,023)
Not Designated as Hedging Instrument | Fair value of derivative liability
Derivative [Line Items]
Fair value of derivative liability	$ (1,757)		$ (1,757)		$ (591)

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Derivatives and Hedging - Notional Amounts of Foreign Exchange Forward Contracts (Details) - Not Designated as Hedging Instrument - Fair value of derivative liability $ in Thousands	Jun. 30, 2018 USD ($)
Notional Sold
Derivative [Line Items]
Non-designated hedges of foreign exchange risk	$ (19,555)
Notional Purchased
Derivative [Line Items]
Non-designated hedges of foreign exchange risk	$ (23,033)

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Long term Debt - Schedule of Long Term Debt (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017	Aug. 09, 2016
Other Long-term Debt [Abstract]
Total debt	$ 515,511	$ 521,970
Less deferred financing costs and debt discount	(11,236)	(13,102)
Less current maturities of long term debt and notes payable	(17,350)	(19,012)
Total long term debt including capital leases	486,925	489,856
Balance Sheet Classification Of Long-Term Debt And Capital Lease Obligations [Abstract]
Long-term debt, net of current maturities	473,168	473,904
Liabilities under capital leases	13,757	15,952
Total long term debt including capital leases	486,925	489,856
Other debt
Other Long-term Debt [Abstract]
Total debt	3,954	6,062
Notes payable | Notes payable, working capital loan, variable interest rate at 1.45%. Matures August 31, 2018, with one-year rollover option.
Other Long-term Debt [Abstract]
Total debt	$ 8,112	8,398
Balance Sheet Classification Of Long-Term Debt And Capital Lease Obligations [Abstract]
Short-term debt, percentage bearing variable interest rate	1.45%
Rollover option period	1 year
Secured Debt | 9.5% Senior Notes due August 2021.
Other Long-term Debt [Abstract]
Total debt	$ 480,000	480,000
Balance Sheet Classification Of Long-Term Debt And Capital Lease Obligations [Abstract]
Debt instrument interest rate	9.50%		9.50%
Secured Debt | Fixed asset loan contract, variable interest rate of 5.23%. Matures June of 2020.
Balance Sheet Classification Of Long-Term Debt And Capital Lease Obligations [Abstract]
Debt instrument interest rate	5.23%
Capital Lease Obligations
Other Long-term Debt [Abstract]
Total debt	$ 18,259	20,749
Capital Lease Obligations | Fixed asset loan contract, variable interest rate of 5.23%. Matures June of 2020.
Other Long-term Debt [Abstract]
Total debt	$ 5,186	$ 6,761

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Long term Debt - Additional Information (Details)				6 Months Ended
	Aug. 09, 2016 USD ($)	Jul. 17, 2015 USD ($)	May 26, 2011 USD ($)	Jun. 30, 2018 USD ($)	Dec. 31, 2017 USD ($)	Aug. 18, 2016 USD ($)	Nov. 03, 2015 USD ($)	Jul. 17, 2015 CNY (¥)
Debt Instrument [Line Items]
Carrying value of long-term debt				$ 504,300,000
Fair value of long-term debt				540,700,000
Total debt				515,511,000	$ 521,970,000
Capital Lease Obligations
Debt Instrument [Line Items]
Total debt				$ 18,259,000	20,749,000
9.5% Senior Notes due August 2021. | Secured Debt
Debt Instrument [Line Items]
Debt instrument, face amount	$ 480,000,000
Debt instrument interest rate	9.50%			9.50%
Redemption price percentage of debt	98.54%
Total debt				$ 480,000,000	$ 480,000,000
Senior Secured Term Loan Facility | Secured Debt
Debt Instrument [Line Items]
Debt instrument, face amount						$ 230,000,000.0
Senior Notes Unsecured | Senior Notes (Unsecured)
Debt Instrument [Line Items]
Debt instrument, face amount			$ 240,000,000.0
Redemption price percentage of debt			102.219%
Debt instrument fixed interest rate			8.875%
ABL Secured Facility | Revolving Credit Facility
Debt Instrument [Line Items]
Line of credit capacity							$ 55,000,000.0
Remaining borrowing capacity				31,400,000
Amount outstanding				34,300,000
ABL Secured Facility | Letter of Credit
Debt Instrument [Line Items]
Amount outstanding				2,900,000
Other Small Lines of Credit | Line of Credit
Debt Instrument [Line Items]
Remaining borrowing capacity				$ 6,000,000
Xerium China Loan Agreement | Secured Debt
Debt Instrument [Line Items]
Debt instrument, face amount		$ 9,400,000						¥ 58,500,000.0
Interest rate adjustment period (months)		12 months
Frequency of principal payment (months)		6 months
Prime Rate | ABL Secured Facility | Revolving Credit Facility
Debt Instrument [Line Items]
Basis spreads on variable rate debt				(1.00%)
London Interbank Offered Rate (LIBOR) | ABL Secured Facility | Revolving Credit Facility
Debt Instrument [Line Items]
Debt instrument interest rate				3.92%
Basis spreads on variable rate debt				1.75%
Benchmark Rate | Xerium China Loan Agreement | Secured Debt
Debt Instrument [Line Items]
Interest rate during period (percent)				5.20%
Minimum | Prime Rate | ABL Secured Facility | Revolving Credit Facility
Debt Instrument [Line Items]
Debt instrument interest rate				4.00%
Maximum | Prime Rate | ABL Secured Facility | Revolving Credit Facility
Debt Instrument [Line Items]
Debt instrument interest rate				5.00%

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Income Taxes - Additional Information (Details) - USD ($)	3 Months Ended			6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Income Tax Disclosure [Abstract]
Provision for income taxes	$ 2,516,000		$ 3,826,000	$ 3,853,000	$ 6,507,000
Discrete deferred tax expense		$ 31,800,000
Deferred tax impact		0
Additional income taxes related to remaining untaxed foreign earnings		0
Provisional estimate for GILTI		$ 0
Gross unrecognized tax benefit	10,300,000			10,300,000
Increase in unrecognized tax benefits	300,000
Unrecognized tax benefits related to income tax matters and income tax expense	$ 100,000			$ 100,000

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Pensions, Other Post-retirement and Post-employment Benefits - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Retirement Benefits [Abstract]
Service cost	$ 360	$ 320	$ 743	$ 696
Interest cost	1,042	1,079	2,130	2,346
Expected return on plan assets	(1,345)	(1,273)	(2,750)	(2,769)
Amortization of net loss	565	501	1,148	1,091
Net periodic benefit cost	$ 622	$ 627	$ 1,271	$ 1,364

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Comprehensive (Loss) Income and Accumulated Other Comprehensive Loss - Components of Comprehensive (Loss), Income, Net of Tax (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Equity [Abstract]
Other comprehensive (loss) income, tax expense (benefit)	$ 1,400	$ 100	$ 1,500	$ 200
Comprehensive Income Loss and Accumulated Other Comprehensive Income (Loss) [Abstract]
Net loss	(4,344)	(3,411)	(2,113)	(6,245)
Foreign currency translation adjustments	(20,677)	3,250	(14,600)	13,015
Pension liability changes under Topic 715	1,882	15	1,936	(110)
Comprehensive (loss) income	(23,139)	(146)	(14,777)	6,660
Foreign currency gains (losses) on intercompany transactions	$ 2,900	$ (1,300)	$ 1,800	$ (2,100)

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Comprehensive (Loss) Income and Accumulated Other Comprehensive Loss - Components of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2018
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive loss, tax benefits	$ (4,300)	$ (4,300)
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning		(136,466)
Amounts reclassified from Other Comprehensive loss:
Balance at end	(151,017)	(151,017)
Foreign Currency Translation Adjustment
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning	(63,072)	(69,149)
Other comprehensive income (loss) before reclassifications	(20,677)	(14,600)
Amounts reclassified from Other Comprehensive loss:
Amounts reclassified from Other Comprehensive income (loss)	0	0
Net current period other comprehensive (loss) income	(20,677)	(14,600)
Balance at end	(83,749)	(83,749)
Pension Liability Changes Under Topic 715
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning	(42,056)	(42,110)
Other comprehensive income (loss) before reclassifications	1,317	788
Amounts reclassified from Other Comprehensive loss:
Amounts reclassified from Other Comprehensive income (loss)	565	1,148
Net current period other comprehensive (loss) income	1,882	1,936
Balance at end	(40,174)	(40,174)
Accumulated Other Comprehensive (Loss) Income
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balance at beginning	(105,128)	(111,259)
Other comprehensive income (loss) before reclassifications	(19,360)	(13,812)
Amounts reclassified from Other Comprehensive loss:
Amounts reclassified from Other Comprehensive income (loss)	565	1,148
Net current period other comprehensive (loss) income	(18,795)	(12,664)
Balance at end	$ (123,923)	$ (123,923)

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Restructuring Expense - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Restructuring Cost and Reserve [Line Items]
Restructuring	$ 206	$ 874	$ 1,030	$ 4,038
Minimum
Restructuring Cost and Reserve [Line Items]
Estimated remaining restructuring expenses	1,000		1,000
Maximum
Restructuring Cost and Reserve [Line Items]
Estimated remaining restructuring expenses	$ 3,000		$ 3,000

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Restructuring Expense - Restructuring Programs (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Restructuring Reserve
Beginning Balance	$ 3,419	$ 4,197
Charges	1,030	4,038
Currency Effects	(29)	343
Cash Payments	(2,589)	(4,897)
Ending Balance	1,831	3,681
Severance and other benefits
Restructuring Reserve
Beginning Balance	2,686	3,805
Charges	320	2,626
Currency Effects	(23)	311
Cash Payments	(1,622)	(3,316)
Ending Balance	1,361	3,426
Facility costs and other
Restructuring Reserve
Beginning Balance	733	392
Charges	710	1,412
Currency Effects	(6)	32
Cash Payments	(967)	(1,581)
Ending Balance	$ 470	$ 255

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Restructuring Expense - Restructuring Expense by Segment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Restructuring Cost and Reserve [Line Items]
Restructuring	$ 206	$ 874	$ 1,030	$ 4,038
Operating Segments | Clothing
Restructuring Cost and Reserve [Line Items]
Restructuring	141	162	327	2,638
Operating Segments | Roll Covers
Restructuring Cost and Reserve [Line Items]
Restructuring	52	681	690	1,308
Corporate
Restructuring Cost and Reserve [Line Items]
Restructuring	$ 13	$ 31	$ 13	$ 92

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Business Segment Information - Additional Information (Details)	6 Months Ended
	Jun. 30, 2018 segment	Jun. 24, 2018 $ / shares
Segment Reporting [Abstract]
Number of reportable segments | segment	2
Andritz | Xerium Technologies, Inc.
Business Acquisition [Line Items]
Acquisition price (in usd per share) | $ / shares		$ 13.50

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Business Segment Information - Summarized Financial Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Segment Reporting Information [Line Items]
Net Sales	$ 125,284	$ 120,339	$ 251,359	$ 240,205
Segment Earnings (Loss)	27,481	27,180	52,874	53,736
Operating Segments | Clothing
Segment Reporting Information [Line Items]
Net Sales	76,189	72,425	151,946	144,920
Segment Earnings (Loss)	21,744	20,906	40,656	41,704
Operating Segments | Roll Covers
Segment Reporting Information [Line Items]
Net Sales	49,095	47,914	99,413	95,285
Segment Earnings (Loss)	10,117	10,566	20,873	20,361
Corporate
Segment Reporting Information [Line Items]
Net Sales	0	0	0	0
Segment Earnings (Loss)	$ (4,380)	$ (4,292)	$ (8,655)	$ (8,329)

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Business Segment Information - Reconciliation of Segment Earnings (Loss) To (Loss) Income Before Provision For Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Segment Earnings (Loss):
Segment Earnings (Loss)	$ 27,481	$ 27,180	$ 52,874	$ 53,736
Stock-based compensation	(263)	(328)	(618)	(859)
CEO transition expense	244	(3,039)	87	(3,039)
Interest expense, net	(13,130)	(13,281)	(25,895)	(26,544)
Depreciation and amortization	(7,953)	(8,115)	(16,214)	(16,208)
Loss on extinguishment of debt	0	(7)	0	(32)
Restructuring expense	(206)	(874)	(1,030)	(4,038)
Strategic alternative expenses	(5,118)	0	(5,238)	0
Other non-recurring expense	(8)	(69)	(10)	(114)
Plant startup costs	(264)	(166)	(264)	(646)
Unrealized foreign exchange loss	(2,611)	(886)	(1,952)	(1,994)
(Loss) income before provision for income taxes	(1,828)	415	1,740	262
Operating Segments | Clothing
Segment Earnings (Loss):
Segment Earnings (Loss)	21,744	20,906	40,656	41,704
Restructuring expense	(141)	(162)	(327)	(2,638)
Operating Segments | Roll Covers
Segment Earnings (Loss):
Segment Earnings (Loss)	10,117	10,566	20,873	20,361
Restructuring expense	(52)	(681)	(690)	(1,308)
Corporate
Segment Earnings (Loss):
Segment Earnings (Loss)	(4,380)	(4,292)	(8,655)	(8,329)
Restructuring expense	$ (13)	$ (31)	$ (13)	$ (92)

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Long-term Incentive and Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock compensation expense	$ 263	$ 328	$ 618	$ 859
Shares issued to former CEO (in shares)		146,134
RSU, Options and DSU Awards
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock compensation expense	$ 263	$ 1,515	$ 618	$ 2,046
Accelerated vesting of restricted stock units		$ 1,200

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Long-term Incentive and Stock-Based Compensation - Additional Information (Details) - USD ($)				1 Months Ended	3 Months Ended		6 Months Ended
	Mar. 02, 2018	Jan. 30, 2018	May 30, 2017	Jan. 31, 2015	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Jun. 24, 2018	Jun. 02, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock compensation expense					$ 263,000	$ 328,000	$ 618,000	$ 859,000
Performance Based Awards, EBITDA
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of vesting units (as a percent)			50.00%
Performance Based Awards, Return on Net Assets
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of vesting units (as a percent)			50.00%
Long Term Incentive Plan Twenty Eighteen | Time Based Phantom Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based awards (in shares)		282,240
Percentage of total target award (as a percent)		50.00%
Vesting period							3 years
Long Term Incentive Plan Twenty Eighteen | Performance Based Phantom Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based awards (in shares)		282,240
Percentage of total target award (as a percent)		50.00%
Long Term Incentive Plan Twenty Eighteen | Performance Based Awards, EBITDA
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period							3 years
Range of vesting units (as a percent)		0.00%	50.00%
Long Term Incentive Plan Twenty Eighteen | Performance Based Awards, Return on Net Assets
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period							3 years
Range of vesting units (as a percent)		0.00%	50.00%
Long Term Incentive Plan Twenty Fifteen
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards converted to common stock (in shares)	22,895
2011 DSU Plan | Deferred Stock Unit (DSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual retainer per director				$ 132,000
Annual retainer payable in shares (as a percent)				54.00%
Annual retainer payable in shares or cash (as a percent)				46.00%
Shares issued (in shares)							22,763
2011 DSU Plan | Deferred Stock Unit (DSUs) | Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares issued (in shares)							14,424	28,357
Minimum | Long Term Incentive Plan Twenty Eighteen | Performance Based Awards, EBITDA
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of vesting units (as a percent)		50.00%
Minimum | Long Term Incentive Plan Twenty Eighteen | Performance Based Awards, Return on Net Assets
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of vesting units (as a percent)		50.00%
Maximum | Long Term Incentive Plan Twenty Eighteen | Performance Based Awards, EBITDA
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of vesting units (as a percent)		200.00%
Maximum | Long Term Incentive Plan Twenty Eighteen | Performance Based Awards, Return on Net Assets
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Range of vesting units (as a percent)		200.00%
Xerium Technologies, Inc. | Andritz
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Acquisition price (in usd per share)									$ 13.50
Chief Executive Officer | Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares registered (in shares)										600,000
Stock compensation expense							$ 200,000

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Supplemental Guarantor Financial Information - Consolidating Balance Sheet (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 14,782	$ 17,253	$ 11,059	$ 12,808
Accounts receivable, net	81,629	76,633
Intercompany receivables	0	0
Inventories, net	72,630	74,725
Prepaid expenses	13,124	11,335
Other current assets	14,482	15,316
Total current assets	196,647	195,262
Property and equipment, net	261,989	282,378
Investments	0	0
Goodwill	64,159	64,783
Intangible assets	5,352	5,965
Non-current deferred tax asset	9,987	10,103
Other assets	9,054	9,358
Total assets	547,188	567,849
Current liabilities:
Notes payable	8,112	8,398
Accounts payable	41,338	39,856
Accrued expenses	65,914	64,155
Current maturities of long-term debt	9,238	10,614
Total current liabilities	124,602	123,023
Long-term debt, net of current maturities	473,168	473,904
Liabilities under capital leases	13,757	15,952
Non-current deferred tax liability	12,113	12,897
Pension, other post-retirement and post-employment obligations	65,166	69,205
Other long-term liabilities	9,399	9,334
Intercompany loans	0	0
Total stockholders’ deficit	(151,017)	(136,466)
Total liabilities and stockholders’ deficit	547,188	567,849
Consolidation, Eliminations
Current assets:
Cash and cash equivalents	0	0	0	0
Accounts receivable, net	0	0
Intercompany receivables	0	0
Inventories, net	(874)	(940)
Prepaid expenses	0	0
Other current assets	0	0
Total current assets	(874)	(940)
Property and equipment, net	0	0
Investments	(1,191,368)	(1,172,553)
Goodwill	0	0
Intangible assets	0	0
Non-current deferred tax asset	0	0
Other assets	0	0
Total assets	(1,192,242)	(1,173,493)
Current liabilities:
Notes payable	0	0
Accounts payable	0	0
Accrued expenses	0	0
Current maturities of long-term debt	0	0
Total current liabilities	0	0
Long-term debt, net of current maturities	0	0
Liabilities under capital leases	0	0
Non-current deferred tax liability	0	0
Pension, other post-retirement and post-employment obligations	0	0
Other long-term liabilities	0	0
Intercompany loans	0	0
Total stockholders’ deficit	(1,192,242)	(1,173,493)
Total liabilities and stockholders’ deficit	(1,192,242)	(1,173,493)
Parent | Consolidation, Eliminations
Current assets:
Cash and cash equivalents	4,816	3,578	1,354	1,368
Accounts receivable, net	39	20
Intercompany receivables	(487,606)	(452,873)
Inventories, net	0	0
Prepaid expenses	991	266
Other current assets	150	175
Total current assets	(481,610)	(448,834)
Property and equipment, net	5,748	7,044
Investments	929,139	901,275
Goodwill	0	0
Intangible assets	0	0
Non-current deferred tax asset	0	0
Other assets	0	0
Total assets	453,277	459,485
Current liabilities:
Notes payable	0	0
Accounts payable	3,041	1,963
Accrued expenses	28,852	26,186
Current maturities of long-term debt	1,584	1,800
Total current liabilities	33,477	29,949
Long-term debt, net of current maturities	469,353	467,605
Liabilities under capital leases	3,344	4,159
Non-current deferred tax liability	3,654	3,439
Pension, other post-retirement and post-employment obligations	19,826	21,402
Other long-term liabilities	0	0
Intercompany loans	61,823	71,692
Total stockholders’ deficit	(138,200)	(138,761)
Total liabilities and stockholders’ deficit	453,277	459,485
Total Guarantors | Consolidation, Eliminations
Current assets:
Cash and cash equivalents	48	57	11	279
Accounts receivable, net	19,068	19,721
Intercompany receivables	504,108	475,864
Inventories, net	15,454	16,618
Prepaid expenses	131	316
Other current assets	3,709	3,338
Total current assets	542,518	515,914
Property and equipment, net	58,047	60,382
Investments	262,229	271,278
Goodwill	19,614	19,614
Intangible assets	5,349	5,961
Non-current deferred tax asset	0	0
Other assets	0	0
Total assets	887,757	873,149
Current liabilities:
Notes payable	0	0
Accounts payable	12,173	11,431
Accrued expenses	8,138	8,214
Current maturities of long-term debt	2,347	2,329
Total current liabilities	22,658	21,974
Long-term debt, net of current maturities	0	0
Liabilities under capital leases	1,829	2,831
Non-current deferred tax liability	0	0
Pension, other post-retirement and post-employment obligations	1,783	1,434
Other long-term liabilities	0	0
Intercompany loans	(107,195)	(108,319)
Total stockholders’ deficit	968,682	955,229
Total liabilities and stockholders’ deficit	887,757	873,149
Total Non Guarantors | Consolidation, Eliminations
Current assets:
Cash and cash equivalents	9,918	13,618	$ 9,694	$ 11,161
Accounts receivable, net	62,522	56,892
Intercompany receivables	(16,502)	(22,991)
Inventories, net	58,050	59,047
Prepaid expenses	12,002	10,753
Other current assets	10,623	11,803
Total current assets	136,613	129,122
Property and equipment, net	198,194	214,952
Investments	0	0
Goodwill	44,545	45,169
Intangible assets	3	4
Non-current deferred tax asset	9,987	10,103
Other assets	9,054	9,358
Total assets	398,396	408,708
Current liabilities:
Notes payable	8,112	8,398
Accounts payable	26,124	26,462
Accrued expenses	28,924	29,755
Current maturities of long-term debt	5,307	6,485
Total current liabilities	68,467	71,100
Long-term debt, net of current maturities	3,815	6,299
Liabilities under capital leases	8,584	8,962
Non-current deferred tax liability	8,459	9,458
Pension, other post-retirement and post-employment obligations	43,557	46,369
Other long-term liabilities	9,399	9,334
Intercompany loans	45,372	36,627
Total stockholders’ deficit	210,743	220,559
Total liabilities and stockholders’ deficit	$ 398,396	$ 408,708

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Supplemental Guarantor Financial Information - Consolidating Statement of Operations and Comprehensive (Loss) Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Condensed Income Statements, Captions [Line Items]
Net Sales	$ 125,284	$ 120,339	$ 251,359	$ 240,205
Costs and expenses:
Cost of products sold	76,310	71,344	155,152	143,584
Selling	15,249	15,936	30,926	31,610
General and administrative	17,216	15,263	30,313	27,686
Research and development	1,613	1,666	3,181	3,410
Restructuring	206	874	1,030	4,038
Costs and expenses	110,594	105,083	220,602	210,328
Income from operations	14,690	15,256	30,757	29,877
Interest expense, net	(13,130)	(13,281)	(25,895)	(26,544)
Foreign exchange loss	(3,126)	(1,246)	(2,594)	(2,371)
Equity in subsidiaries income	0	0	0	0
Other components of net periodic pension cost	(262)	(307)	(528)	(668)
Loss on extinguishment of debt	0	(7)	0	(32)
Dividend income	0	0	0	0
(Loss) income before provision for income taxes	(1,828)	415	1,740	262
Benefit from (provision for) income taxes	(2,516)	(3,826)	(3,853)	(6,507)
Net loss	(4,344)	(3,411)	(2,113)	(6,245)
Comprehensive (loss) income	(23,139)	(146)	(14,777)	6,660
Consolidation, Eliminations
Condensed Income Statements, Captions [Line Items]
Net Sales	(5,263)	(6,317)	(10,351)	(14,615)
Costs and expenses:
Cost of products sold	(5,329)	(6,274)	(10,417)	(14,572)
Selling	0	0	0	0
General and administrative	0	0	0	0
Research and development	0	0	0	0
Restructuring	0	0	0	0
Costs and expenses	(5,329)	(6,274)	(10,417)	(14,572)
Income from operations	66	(43)	66	(43)
Interest expense, net	0	0	0	0
Foreign exchange loss	0	0	0	0
Equity in subsidiaries income	(20,738)	(25,742)	(34,993)	(26,454)
Other components of net periodic pension cost	0	0	0	0
Loss on extinguishment of debt		0		0
Dividend income	(1,718)	(21,075)	(6,736)	(21,075)
(Loss) income before provision for income taxes	(22,390)	(46,860)	(41,663)	(47,572)
Benefit from (provision for) income taxes	0	0	0	0
Net loss	(22,390)	(46,860)	(41,663)	(47,572)
Comprehensive (loss) income	(22,390)	(46,860)	(41,663)	(47,572)
Parent | Consolidation, Eliminations
Condensed Income Statements, Captions [Line Items]
Net Sales	0	0	0	0
Costs and expenses:
Cost of products sold	0	58	0	57
Selling	65	256	116	489
General and administrative	6,816	5,453	6,871	8,023
Research and development	294	200	630	499
Restructuring	13	31	13	92
Costs and expenses	7,188	5,998	7,630	9,160
Income from operations	(7,188)	(5,998)	(7,630)	(9,160)
Interest expense, net	(12,089)	(12,289)	(23,996)	(24,627)
Foreign exchange loss	(2,259)	(1,296)	(1,659)	(1,767)
Equity in subsidiaries income	15,891	6,289	27,864	15,003
Other components of net periodic pension cost	(129)	(133)	(257)	(265)
Loss on extinguishment of debt		(7)		(32)
Dividend income	859	9,966	3,367	14,229
(Loss) income before provision for income taxes	(4,915)	(3,468)	(2,311)	(6,619)
Benefit from (provision for) income taxes	571	57	198	374
Net loss	(4,344)	(3,411)	(2,113)	(6,245)
Comprehensive (loss) income	(1,808)	(4,346)	3	(8,031)
Total Guarantors | Consolidation, Eliminations
Condensed Income Statements, Captions [Line Items]
Net Sales	42,262	45,920	88,416	92,990
Costs and expenses:
Cost of products sold	27,470	29,544	57,405	60,525
Selling	4,449	5,317	9,165	10,361
General and administrative	(3,353)	496	(7,116)	1,375
Research and development	840	1,017	1,656	1,948
Restructuring	90	207	533	848
Costs and expenses	29,496	36,581	61,643	75,057
Income from operations	12,766	9,339	26,773	17,933
Interest expense, net	(457)	(436)	(897)	(784)
Foreign exchange loss	(197)	152	110	218
Equity in subsidiaries income	4,847	19,453	7,129	11,451
Other components of net periodic pension cost	(191)	(188)	(383)	(376)
Loss on extinguishment of debt		0		0
Dividend income	859	(1,275)	3,369	6,846
(Loss) income before provision for income taxes	17,627	27,045	36,101	35,288
Benefit from (provision for) income taxes	(222)	(322)	(221)	(463)
Net loss	17,405	26,723	35,880	34,825
Comprehensive (loss) income	17,568	26,808	36,013	34,918
Total Non Guarantors | Consolidation, Eliminations
Condensed Income Statements, Captions [Line Items]
Net Sales	88,285	80,736	173,294	161,830
Costs and expenses:
Cost of products sold	54,169	48,016	108,164	97,574
Selling	10,735	10,363	21,645	20,760
General and administrative	13,753	9,314	30,558	18,288
Research and development	479	449	895	963
Restructuring	103	636	484	3,098
Costs and expenses	79,239	68,778	161,746	140,683
Income from operations	9,046	11,958	11,548	21,147
Interest expense, net	(584)	(556)	(1,002)	(1,133)
Foreign exchange loss	(670)	(102)	(1,045)	(822)
Equity in subsidiaries income	0	0	0	0
Other components of net periodic pension cost	58	14	112	(27)
Loss on extinguishment of debt		0		0
Dividend income	0	12,384	0	0
(Loss) income before provision for income taxes	7,850	23,698	9,613	19,165
Benefit from (provision for) income taxes	(2,865)	(3,561)	(3,830)	(6,418)
Net loss	4,985	20,137	5,783	12,747
Comprehensive (loss) income	$ (16,509)	$ 24,252	$ (9,130)	$ 27,345

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Supplemental Guarantor Financial Information - Consolidating Statement of Cash Flows (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Operating activities
Net loss	$ (4,344)	$ (3,411)	$ (2,113)	$ (6,245)
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Stock-based compensation			618	2,046
Depreciation			15,601	15,662
Amortization of intangible assets			613	546
Deferred financing cost amortization			1,864	1,810
Foreign exchange loss on revaluation of debt			425	534
Deferred taxes			(742)	312
Asset impairment				55
Loss (gain) on disposition of property and equipment			(73)	(85)
Loss on extinguishment of debt	0	7	0	32
Provision for doubtful accounts			257	142
Undistributed equity in earnings of subsidiaries			0	0
Change in assets and liabilities which (used) provided cash:
Accounts receivable			(8,863)	(5,400)
Inventories			(957)	(3,213)
Prepaid expenses			(2,521)	(441)
Other current assets			69	(1,179)
Accounts payable and accrued expenses			6,115	528
Deferred and other long-term liabilities			(1,646)	(2,106)
Intercompany loans			0	0
Net cash provided by operating activities			8,647	2,998
Investing activities
Capital expenditures			(4,928)	(8,517)
Intercompany property and equipment transfers, net			0	0
Proceeds from disposals of property and equipment			459	290
Net cash used in investing activities			(4,469)	(8,227)
Financing activities
Proceeds from borrowings			41,625	66,578
Principal payments on debt			(44,782)	(59,282)
Dividends paid			0	0
Payment of obligations under capital leases			(2,670)	(2,794)
Payment of financing fees			0	(393)
Intercompany loans			0	0
Employee taxes paid on equity awards			(59)	(832)
Net cash (used in) provided by financing activities			(5,886)	3,277
Effect of exchange rate changes on cash flows			(763)	203
Net decrease in cash			(2,471)	(1,749)
Cash and cash equivalents at beginning of period			17,253	12,808
Cash and cash equivalents at end of period	14,782	11,059	14,782	11,059
Consolidation, Eliminations
Operating activities
Net loss	(22,390)	(46,860)	(41,663)	(47,572)
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 intangible assets			0	0
Deferred financing cost amortization			0	0
Foreign exchange loss on revaluation of debt			0	0
Deferred taxes			0	0
Asset impairment				0
Loss (gain) on disposition of property and equipment			0	0
Loss on extinguishment of debt		0		0
Provision for doubtful accounts			0	0
Undistributed equity in earnings of subsidiaries			34,993	26,454
Change in assets and liabilities which (used) provided cash:
Accounts receivable			0	0
Inventories			(66)	43
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			(6,736)	(21,075)
Investing activities
Capital expenditures			0	0
Intercompany property and equipment transfers, net			0	0
Proceeds from disposals of property and equipment			0	0
Net cash used in investing activities			0	0
Financing activities
Proceeds from borrowings			0	0
Principal payments on debt			0	0
Dividends paid			6,736	21,075
Payment of obligations under capital leases			0	0
Payment of financing fees				0
Intercompany loans			0	0
Employee taxes paid on equity awards			0	0
Net cash (used in) provided by financing activities			6,736	21,075
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	0	0
Parent | Consolidation, Eliminations
Operating activities
Net loss	(4,344)	(3,411)	(2,113)	(6,245)
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Stock-based compensation			618	2,046
Depreciation			1,153	1,157
Amortization of intangible assets			0	0
Deferred financing cost amortization			1,776	1,762
Foreign exchange loss on revaluation of debt			(136)	819
Deferred taxes			(531)	(438)
Asset impairment				0
Loss (gain) on disposition of property and equipment			0	0
Loss on extinguishment of debt		7		32
Provision for doubtful accounts			0	0
Undistributed equity in earnings of subsidiaries			(27,864)	(15,003)
Change in assets and liabilities which (used) provided cash:
Accounts receivable			(19)	40
Inventories			0	0
Prepaid expenses			(725)	(904)
Other current assets			25	0
Accounts payable and accrued expenses			3,713	(1,800)
Deferred and other long-term liabilities			(545)	(71)
Intercompany loans			34,733	21,928
Net cash provided by operating activities			10,085	3,323
Investing activities
Capital expenditures			(325)	(407)
Intercompany property and equipment transfers, net			438	(3)
Proceeds from disposals of property and equipment			0	0
Net cash used in investing activities			113	(410)
Financing activities
Proceeds from borrowings			29,311	55,213
Principal payments on debt			(29,343)	(49,556)
Dividends paid			0	0
Payment of obligations under capital leases			(965)	(1,322)
Payment of financing fees				(427)
Intercompany loans			(7,904)	(6,003)
Employee taxes paid on equity awards			(59)	(832)
Net cash (used in) provided by financing activities			(8,960)	(2,927)
Effect of exchange rate changes on cash flows			0	0
Net decrease in cash			1,238	(14)
Cash and cash equivalents at beginning of period			3,578	1,368
Cash and cash equivalents at end of period	4,816	1,354	4,816	1,354
Total Guarantors | Consolidation, Eliminations
Operating activities
Net loss	17,405	26,723	35,880	34,825
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Stock-based compensation			0	0
Depreciation			3,935	4,136
Amortization of intangible assets			611	492
Deferred financing cost amortization			0	0
Foreign exchange loss on revaluation of debt			0	0
Deferred taxes			0	0
Asset impairment				49
Loss (gain) on disposition of property and equipment			101	(72)
Loss on extinguishment of debt		0		0
Provision for doubtful accounts			30	(12)
Undistributed equity in earnings of subsidiaries			(7,129)	(11,451)
Change in assets and liabilities which (used) provided cash:
Accounts receivable			623	(3,705)
Inventories			1,163	(490)
Prepaid expenses			185	402
Other current assets			(371)	(39)
Accounts payable and accrued expenses			641	1,229
Deferred and other long-term liabilities			349	337
Intercompany loans			(28,182)	(20,713)
Net cash provided by operating activities			7,836	4,988
Investing activities
Capital expenditures			(1,072)	(568)
Intercompany property and equipment transfers, net			(109)	32
Proceeds from disposals of property and equipment			22	258
Net cash used in investing activities			(1,159)	(278)
Financing activities
Proceeds from borrowings			0	0
Principal payments on debt			0	0
Dividends paid			(3,367)	(7,238)
Payment of obligations under capital leases			(1,399)	(1,296)
Payment of financing fees				0
Intercompany loans			(1,918)	3,557
Employee taxes paid on equity awards			0	0
Net cash (used in) provided by financing activities			(6,684)	(4,977)
Effect of exchange rate changes on cash flows			(2)	(1)
Net decrease in cash			(9)	(268)
Cash and cash equivalents at beginning of period			57	279
Cash and cash equivalents at end of period	48	11	48	11
Total Non Guarantors | Consolidation, Eliminations
Operating activities
Net loss	4,985	20,137	5,783	12,747
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Stock-based compensation			0	0
Depreciation			10,513	10,369
Amortization of intangible assets			2	54
Deferred financing cost amortization			88	48
Foreign exchange loss on revaluation of debt			561	(285)
Deferred taxes			(211)	750
Asset impairment				6
Loss (gain) on disposition of property and equipment			(174)	(13)
Loss on extinguishment of debt		0		0
Provision for doubtful accounts			227	154
Undistributed equity in earnings of subsidiaries			0	0
Change in assets and liabilities which (used) provided cash:
Accounts receivable			(9,467)	(1,735)
Inventories			(2,054)	(2,766)
Prepaid expenses			(1,981)	61
Other current assets			415	(1,140)
Accounts payable and accrued expenses			1,761	1,099
Deferred and other long-term liabilities			(1,450)	(2,372)
Intercompany loans			(6,551)	(1,215)
Net cash provided by operating activities			(2,538)	15,762
Investing activities
Capital expenditures			(3,531)	(7,542)
Intercompany property and equipment transfers, net			(329)	(29)
Proceeds from disposals of property and equipment			437	32
Net cash used in investing activities			(3,423)	(7,539)
Financing activities
Proceeds from borrowings			12,314	11,365
Principal payments on debt			(15,439)	(9,726)
Dividends paid			(3,369)	(13,837)
Payment of obligations under capital leases			(306)	(176)
Payment of financing fees				34
Intercompany loans			9,822	2,446
Employee taxes paid on equity awards			0	0
Net cash (used in) provided by financing activities			3,022	(9,894)
Effect of exchange rate changes on cash flows			(761)	204
Net decrease in cash			(3,700)	(1,467)
Cash and cash equivalents at beginning of period			13,618	11,161
Cash and cash equivalents at end of period	$ 9,918	$ 9,694	$ 9,918	$ 9,694