Quarterly Report (10-q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________

FORM 10-Q

________________________



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

For the quarterly period ended March 31, 2015



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

For the transition period from to

Commission File Number 001-32498

________________________

Xerium Technologies, Inc.

(Exact name of registrant as specified in its charter)

________________________



DELAWARE	42-1558674
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

14101 Capital Boulevard Youngsville, North Carolina	27596
(Address of principal executive offices)	(Zip Code)

(919) 526-1400

(Registrant’s telephone number, including area code)

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

________________________

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

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

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



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

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

Act). Yes ¨ No ý

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

The number of shares of the registrant’s common stock, $0.001 par value, outstanding as of May 8, 2015 was 15,593,708.

TABLE OF CONTENTS



Part I. Financial Information
		Page
Item 1.	Unaudited Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	29

Part II. Other Information

Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30

Item 5.	Other Information	30

Item 6.	Exhibits	30

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PART I. FINANCIAL INFORMATION



ITEM 1.	UNAUDITED FINANCIAL STATEMENTS

Xerium Technologies, Inc.

Consolidated Balance Sheets

(Dollars in thousands and Unaudited)



	March 31, 2015			December 31, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	8,826		$	9,517
Accounts receivable, net	77,969			83,069
Inventories, net	75,811			83,550
Prepaid expenses	8,138			8,472
Other current assets	14,523			15,714
Total current assets	185,267			200,322
Property and equipment, net	291,590			303,617
Goodwill	56,262			61,927
Intangible assets	10,717			11,707
Non-current deferred tax asset	8,485			10,662
Other assets	8,700			5,809
Total assets	$	561,021		$	594,044
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Notes payable	$	3,267		$	244
Accounts payable	37,070			41,827
Accrued expenses	57,763			56,109
Current maturities of long-term debt	5,627			4,406
Total current liabilities	103,727			102,586
Long-term debt, net of current maturities	460,279			460,840
Liabilities under capital leases	4,395			3,945
Non-current deferred tax liability	7,321			10,416
Pension, other post-retirement and post-employment obligations	75,215			80,471
Other long-term liabilities	12,991			9,896
Commitments and contingencies
Stockholders’ deficit
Preferred stock, $0.001 par value, 1,000,000 shares authorized; no shares outstanding as of March 31, 2015 and December 31, 2014	—			—
Common stock, $0.001 par value, 20,000,000 shares authorized; 15,593,708 and 15,560,627 shares outstanding as of March 31, 2015 and December 31, 2014, respectively	16			16
Paid-in capital	429,481			428,880
Accumulated deficit	(415,335		)	(417,068		)
Accumulated other comprehensive loss	(117,069		)	(85,938		)
Total stockholders’ deficit	(102,907		)	(74,110		)
Total liabilities and stockholders’ deficit	$	561,021		$	594,044

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Xerium Technologies, Inc.

Consolidated Statements of Operations

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



	Three Months Ended March 31,
	2015			2014
Net Sales	$	121,029		$	133,384
Costs and expenses:
Cost of products sold	72,476			81,218
Selling	16,326			18,178
General and administrative	13,846			14,797
Research and development	1,962			1,946
Restructuring	2,224			4,651
	106,834			120,790
Income from operations	14,195			12,594
Interest expense, net	(9,664		)	(8,657		)
Foreign exchange gain (loss)	977			(877		)
Income before provision for income taxes	5,508			3,060
Provision for income taxes	(3,775		)	(1,893		)
Net income	$	1,733		$	1,167
Comprehensive loss	$	(29,398	)	$	(758	)

Net income per share:
Basic	$	0.11		$	0.08
Diluted	$	0.11		$	0.07
Shares used in computing net income per share:
Basic	15,560,995			15,391,391
Diluted	16,479,368			16,371,772

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Xerium Technologies, Inc.

Consolidated Statements of Cash Flows

(Dollars in thousands and unaudited)



	Three Months ended March 31,
	2015			2014
Operating activities
Net income	$	1,733		$	1,167
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation	822			509
Depreciation	7,163			8,233
Amortization of intangibles	79			416
Deferred financing cost amortization	875			716
Foreign exchange gain on revaluation of debt	(1,973		)	(1,103		)
Deferred taxes	979			(808		)
Loss on disposition of property and equipment	14			27
Provision for doubtful accounts	472			245
Change in assets and liabilities which provided (used) cash:
Accounts receivable	(592		)	(7,052		)
Inventories	1,436			(4,048		)
Prepaid expenses	25			1,600
Other current assets	(1,679		)	819
Accounts payable and accrued expenses	2,218			4,202
Deferred and other long-term liabilities	(3,571		)	(2,160		)
Net cash provided by operating activities	8,001			2,763
Investing activities
Capital expenditures	(12,155		)	(10,494		)
Proceeds from disposals of property and equipment	32			43
Net cash used in investing activities	(12,123		)	(10,451		)
Financing activities
Proceeds from borrowings	22,568			7,580
Principal payments on debt	(18,331		)	(6,600		)
Payment of financing fees	(25		)	(710		)
Payment of obligations under capital leases	(265		)	(190		)
Net cash provided by financing activities	3,947			80
Effect of exchange rate changes on cash flows	(516		)	(95		)
Net decrease in cash	(691		)	(7,703		)
Cash and cash equivalents at beginning of period	9,517			25,716
Cash and cash equivalents at end of period	$	8,826		$	18,013

Non-cash capitalized lease asset and liability	$	—		$	4,468
Accrued construction in process	$	1,519		$	—

Xerium Technologies, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(Dollars in thousands, except per share data)

1. Description of Business and Significant Accounting Policies

Description of Business

Xerium Technologies, Inc. (the "Company") is a leading global provider of industrial consumables and mechanical services 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, South America and Asia-Pacific.

Basis of Presentation

The accompanying unaudited condensed consolidated interim financial statements at March 31, 2015 and for the three months ended March 31, 2015 and 2014 include the accounts of the Company and its wholly-owned subsidiaries and have been prepared in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, such financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. The interim results presented herein are not necessarily indicative of the results to be expected for the entire year. In management’s opinion, these unaudited condensed consolidated interim financial statements contain all adjustments of a normal recurring nature necessary for a fair presentation of the financial statements for the interim periods presented. These unaudited consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2014 as reported on the Company's Annual Report on Form 10-K filed on March 4, 2015.

Accounting Policies

Inventories, net

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

The components of inventories are as follows at:



	March 31, 2015			December 31, 2014
Raw materials	$	13,229		$	18,018
Work in process	27,504			28,756
Finished goods (includes consigned inventory of $8,586 at March 31, 2015 and $8,582 at December 31, 2014)	41,262			43,072
Inventory allowances	(6,184		)	(6,296		)
	$	75,811		$	83,550

Goodwill

The Company accounts for goodwill and other intangible assets in accordance with ASC Topic 350, Intangibles—Goodwill and Other Intangible Assets (“Topic 350”). Topic 350 requires that goodwill and intangible assets that have indefinite lives not be amortized, but instead, must be tested for impairment at least annually or whenever events or business conditions warrant. During the three months ended March 31, 2015, the Company evaluated events and business conditions to determine if a test for an impairment of goodwill was warranted. No such events or business conditions took place during this period, therefore no test was determined to be warranted at March 31, 2015.

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

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Company estimates the costs that may be incurred under its warranties and records a liability in Accrued Expenses on its Consolidated Balance Sheet for such costs. Factors that affect the Company’s warranty liability include the number of units sold, historical and anticipated rates of warranty claims, cost per claim and new product introduction. The Company periodically assesses the adequacy of its recorded warranty claims and adjusts the amounts as necessary. The table below represents the changes in the Company’s warranty liability for the three months ended March 31, 2015 and 2014:



	Beginning Balance		Charged to Cost of Sales		Effect of Foreign Currency Translation			Deduction from Reserves			Ending Balance
Three Months Ended March 31, 2015:	$	2,685	$	336	$	(118	)	$	(578	)	$	2,325
Three Months Ended March 31, 2014:	$	1,629	$	327	$	(5	)	$	(422	)	$	1,529

Net Income Per Common Share

Net income per common share has been computed and presented pursuant to the provisions of ASC Topic 260, Earnings per Share (“Topic 260”). Net income per share is based on the weighted-average number of shares outstanding during the period. As of March 31, 2015 and 2014, the Company had outstanding restricted stock units (“RSUs”), deferred stock units (“DSUs”) and options.

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



	Three Months ended March 31,
	2015	2014
Weighted-average common shares outstanding–basic	15,560,995	15,391,391
Dilutive effect of stock-based compensation awards outstanding	918,373	980,381
Weighted-average common shares outstanding–diluted	16,479,368	16,371,772

Dilutive securities aggregating 21,957 and 1.7 million were outstanding for the three months ended March 31, 2015 and 2014, but were not included in the computation of diluted earnings per share for the three months ended March 31, 2015, and 2014 because the impact of including such shares would have been anti-dilutive to the earnings per share calculations.

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. Impairment charges associated with restructuring are discussed in Note 7 "Restructuring Expense". For the three months ended March 31, 2015 and 2014, the Company had no impairment charges included in restructuring expense, respectively.

New Accounting Pronouncements

In May of 2014, the FASB issued Accounting Standard Update No. 2014-09 Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Company identify the contract with the customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when it satisfies the performance obligations. The Company will also be required to disclose information regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 is required to be adopted in January of 2017. 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 is in the process of evaluating this accounting standard update.

In February of 2015, the FASB issued Accounting Standard Update No. 2015-02 Consolidation ("ASU 2015-02"). ASU 2015-02 amends the existing consolidation requirements under GAAP and will require companies to reevaluate all previous consolidation requirements. ASU 2015-02 is required to be adopted in January of 2016. The Company is in the process of evaluating this accounting standard update.

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In April of 2015, the FASB issued Accounting Standard Update No. 2015-03 Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03"). ASU 2015-03 requires debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying value of the debt liability, consistent with debt discounts. ASU 2015-03 is required to be adopted in January of 2016. The Company believes that the adoption of ASU 2015-03 will not have a material impact on its consolidated financial statements.

2. Derivatives and Hedging

Risk Management Objective of Using Derivatives

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

Cash Flow Hedges of Interest Rate Risk

From time to time, the Company uses interest rate derivatives to add stability to interest expense and to manage its exposure to interest rate movements. However, at March 31, 2015, the Company had no interest rate swaps.

Non-designated Hedges of Foreign Exchange Risk

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

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

As of March 31, 2015 and December 31, 2014, the Company had outstanding derivatives that were not designated as hedges in qualifying hedging relationships. The value of these contracts is recognized at fair value based on market exchange forward rates and is recorded in other assets or other liabilities on the Consolidated Balance Sheets. The following represents the fair value of these derivatives at March 31, 2015 and December 31, 2014 and the change in fair value included in foreign exchange gain in the three months ended March 31, 2015 and 2014:



	March 31, 2015			December 31, 2014
Fair value of derivative liability	$	(931	)	$	(524	)
	Three Months Ended March 31, 2015:			Three Months Ended March 31, 2014:
Change in fair value of derivative included in foreign exchange loss	$	(2,059	)	$	(1,211	)

The following represents the notional amounts of foreign exchange forward contracts at March 31, 2015:



	Notional Sold		Notional Purchased
Non-designated hedges of foreign exchange risk	$	12,498	$	(32,991	)

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).

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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.

3. Long term Debt

At March 31, 2015 and December 31, 2014, long term debt consisted of the following:



	March 31, 2015		December 31, 2014
Senior secured term loan facility, payable quarterly, U.S. Dollar denominated–LIBOR (minimum 1.25%) plus 4.50% (5.75%) net of $0.8 million discount. Matures May of 2019.	$	225,526	$	226,052
Senior Notes (Unsecured), payable semi-annually–U.S. Dollar denominated interest rate fixed at 8.875%. Matures June of 2018.	236,410		236,410
Notes payable, working capital loan, variable interest rate at 1.3%. Matures June 30, 2015, with one-year rollover option.	3,267		244
Other debt	3,970		2,784
Total debt	469,173		465,490
Less current maturities of long term debt and notes payable	8,894		4,650
Total long term debt	$	460,279	$	460,840

On May 17, 2013, the Company entered into a Credit and Guaranty Agreement for a $200.0 million term loan credit facility (the “Term Credit Facility”), net of a discount of $1.0 million, among the Company, certain direct and indirect U.S. subsidiaries of the Company as guarantors and certain financial institutions. The Company also entered into a Revolving Credit and Guaranty Agreement originally for a $40.0 million asset-based revolving credit facility subject to a borrowing base among Xerium Technologies, Inc., as a US borrower, Xerium Canada Inc., as Canadian borrower, certain direct and indirect U.S. subsidiaries of the Company as guarantors and certain financial institutions (the "Domestic Revolver"). On March 3, 2014, the Company entered into an amendment to the Revolving Credit and Guaranty Agreement (as amended, the “ABL Facility,” and collectively with the Term Credit Facility, the “Credit Facility”) to add the Company's German subsidiaries as European Borrowers (the "European Borrowers") and to provide for an additional $15 million European asset-based revolving credit facility subject to a European borrowing base (the "European Revolver"), increasing the aggregate availability under the ABL Facility to $55 million.

On August 18, 2014, the Company entered into the Second Amendment to Credit and Guaranty Agreement (the “Second Amendment”). Under the Second Amendment, the Company borrowed an additional $30.0 million by utilizing the Incremental Facility. The $30 million in additional borrowings was used to finance a tax amnesty payment in Brazil. The Second Amendment made no changes to the repayment and other previously disclosed terms of the Credit Facility.

The Credit Facility contains certain customary covenants that, subject to exceptions, restrict the Company's 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;

•make capital expenditures in excess of $42 million per fiscal year, subject to adjustment;

•engage in mergers, acquisitions and asset sales;

•transact with affiliates; and

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

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As of March 31, 2015, the outstanding balance of the Company's term debt under its Credit Facility and Notes was $461.9 million, which is net of a $0.8 million discount. In addition, as of March 31, 2015, an aggregate of $32.4 million is available for additional borrowings under the ABL Facility. This availability represents a borrowing base of $44.1 million under the ABL Facility less $11.7 million of that facility committed for letters of credit or additional borrowings. Additionally, at March 31, 2015, the Company had approximately $5.1 million available for borrowings under other small lines of credit.

As of March 31, 2015 and December 31, 2014, the carrying value of the Company’s debt was $469.2 million and$465.2 million, respectively, and its fair value was approximately $479.2 million and $478.2 million, respectively. The Company determined the fair value of its debt utilizing significant other observable inputs (Level 2 of the fair value hierarchy).

Capitalized Lease Liabilities

As of March 31, 2015, the Company had capitalized lease liabilities totaling $4.4 million. These amounts represent the lease on the corporate headquarters and certain other software licensing, vehicle and office equipment capitalized lease arrangements.

4. Income Taxes

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

For the three months ended March 31, 2015, the provision for income taxes was $3,775 as compared to $1,893 for the three months ended March 31, 2014. The increase in tax expense was primarily attributable to the geographic mix of earnings in the three months ended March 31, 2015, as well as an increase in the unrecognized tax benefit due to the effects of income tax audits. 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 37.1%; however, permanent income adjustments recorded against pre-tax earnings may result in an effective tax rate that is higher or lower than the statutory tax rate in these jurisdictions. The Company generates losses in certain jurisdictions for which no tax benefit is realized, as the deferred tax assets in these jurisdictions (including the net operating losses) are fully reserved in the valuation allowance. For this reason, the Company recognizes minimal income tax expense or benefit in these jurisdictions, of which the most material jurisdictions are the United States and Australia. Due to these reserves, the geographic mix of the Company’s pre-tax earnings has a direct correlation with how high or low its annual effective tax rate is relative to consolidated earnings.

As the Company continues to reorganize and restructure its operations, it is possible that deferred tax assets, for which no income tax benefit has previously been provided, may more likely than not become realized. The Company continues to evaluate future operations and will record an income tax benefit in the period where it believes it is more likely than not that the deferred tax asset will be able to be realized. Historic and future ownership changes could potentially reduce the amount of net operating loss carry-forwards available for use.

As of March 31, 2015, the Company had a gross amount of unrecognized tax benefit of $7,791, exclusive of interest and penalties. The unrecognized tax benefit increased by approximately $289 during the three months ended March 31, 2015, as a result of ongoing changes in currently reserved positions as a result of new facts or information and the effects of income tax audits, which was partially offset by decreases related to foreign currency effects. In January 2015, the Company received notice of a tax audit report which could lead to an income tax assessment of an unknown amount related to its Italian operations. The Company expects to litigate if such an assessment is received, and the Company believes it would prevail on some portion of the issues litigated. As a result of this new information, the unrecognized tax benefit was increased by $1,097 for tax, interest and penalties related to this matter in the first quarter of 2015.

The Company’s policy is to recognize interest and penalties related to income tax matters as income tax expense, which were $738 related to the unrecognized tax benefits for the three months ended March 31, 2015. The tax years 2000 through 2014 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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5. Pensions, Other Post-retirement and Post-employment Benefits

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

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

Defined Benefit Plans



	Three Months ended March 31,
	2015			2014
Service cost	$	842		$	816
Interest cost	1,670			1,650
Expected return on plan assets	(1,815		)	(1,564		)
Amortization of net loss	755			295
Net periodic benefit cost	$	1,452		$	1,197

6. Comprehensive Loss and Accumulated Other Comprehensive Loss

Comprehensive loss for the three months ended March 31, 2015 (net of tax expense of $851) and 2014 (net of tax benefits of $32) is as follows:



	Three Months ended March 31,
	2015			2014
Net income	$	1,733		$	1,167
Foreign currency translation adjustments	(32,857		)	(1,669		)
Pension liability changes under Topic 715	1,684			(275		)
Change in value of derivative instruments	42			19
Comprehensive loss	$	(29,398	)	$	(758	)

The components of accumulated other comprehensive loss for the three months ended March 31, 2015 are as follows (net of tax benefits of $7,302):



	Foreign Currency Translation Adjustment			Pension Liability Changes Under Topic 715			Change in Value of Derivative Instruments			Accumulated Other Comprehensive (Loss) Income
Balance at December 31, 2014	$	(39,014	)	$	(46,816	)	$	(108	)	$	(85,938	)
Other comprehensive income before reclassifications	(32,857		)	929			—			(31,928		)
Amounts reclassified from other comprehensive income
Amortization of actuarial losses	—			755			—			755
Amortization of interest expense	—			—			42			42
Net current period other comprehensive (loss) income	(32,857		)	1,684			42			(31,131		)
Balance at March 31, 2015	$	(71,871	)	$	(45,132	)	$	(66	)	$	(117,069	)

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For the three months ended March 31, 2015, the amortization of actuarial losses is included in cost of products sold and general and administrative expenses in the Consolidated Statements of Operations.

For the three months ended March 31, 2015, the impact on Accumulated Other Comprehensive Loss ("AOCL") due to foreign currency translation adjustments of $(32,857) was primarily the result of the decline in the Euro and Brazilian Real and the effect of that decline on our foreign subsidiaries net equity balances of $151 million (Euro) and $107 million (Brazilian Real) in Europe and Brazil, respectively. The Euro declined to $1.13 at March 31, 2015 from $1.33 at December 31, 2014. The Brazilian Real declined to $0.35 at March 31, 2015 from $0.43 at December 31, 2014.

7. Restructuring and Impairment Expense

For the three months ended March 31, 2015, the Company incurred restructuring expenses of $2,224.These included $1,300 of charges related to the closure of the Joao Pessoa, Brazil clothing facility and $924 of charges relating to headcount reductions. For the three months ended March 31, 2014, the Company incurred restructuring expenses of $4.7 million. These included charges relating to the closure of a roll cover facility in Germany, the reduction of headcount and the second phase of the closure of a clothing facility in Argentina.

The following table sets forth the significant components of the restructuring accrual (included in Accrued Expenses on our Consolidated Balance Sheet), including activity under restructuring programs for the three months ended March 31, 2015 and 2014:



	Balance at December 31, 2014		Charges		Currency Effects			Cash Payments			Balance at March 31, 2015
Severance and other benefits	$	4,880	$	881	$	(243	)	$	(1,286	)	$	4,232
Facility costs and other	818		1,343		(365		)	(1,796		)	—
Total	$	5,698	$	2,224	$	(608	)	$	(3,082	)	$	4,232



	Balance at December 31, 2013		Charges		Currency Effects			Cash Payments			Balance at March 31, 2014
Severance and other benefits	$	6,466	$	4,411	$	(46	)	$	(2,240	)	$	8,591
Facility costs and other	1,468		240		(11		)	(312		)	1,385
Total	$	7,934	$	4,651	$	(57	)	$	(2,552	)	$	9,976

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



	Three Months Ended March 31,
	2015		2014
Clothing	$	2,092	$	2,254
Roll Covers	101		2,397
Corporate	31		—
Total	$	2,224	$	4,651

8. Business Segment Information

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

Management evaluates segment performance based on earnings before interest, taxes, depreciation and amortization and before allocation of corporate charges. Such measure is then adjusted to exclude items that are of an unusual nature and are not used in measuring segment performance or are not segment specific (“Segment Earnings (Loss)”). The accounting policies of

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these segments are the same as those for the Company as a whole. Inter-segment net sales and inter-segment eliminations are not material for any of the periods presented.

Summarized financial information for the Company’s reportable segments is presented in the tables that follow for the three months ended March 31, 2015 and 2014.



	Clothing		Roll Covers		Corporate			Total
Three Months Ended March 31, 2015:
Net Sales	$	77,284	$	43,745	$	—		$	121,029
Segment Earnings (Loss)	$	21,766	$	8,091	$	(3,647	)
Three Months Ended March 31, 2014:
Net Sales	$	88,971	$	44,413	$	—		$	133,384
Segment Earnings (Loss)	$	21,392	$	7,379	$	(3,069	)

Provided below is a reconciliation of Segment Earnings (Loss) to income before provision for income taxes for the three months ended March 31, 2015 and 2014, respectively.



	Three Months ended March 31,
	2015			2014
Segment Earnings (Loss):
Clothing	$	21,766		$	21,392
Roll Covers	8,091			7,379
Corporate	(3,647		)	(3,069		)
Stock-based compensation	(822		)	(509		)
Interest expense, net	(9,664		)	(8,657		)
Depreciation and amortization	(7,242		)	(8,649		)
Restructuring expense	(2,224		)	(4,651		)
Plant startup costs	(750		)	(176		)
Income before provision for income taxes	$	5,508		$	3,060

9. Commitments and Contingencies

The Company is involved in various legal matters which have arisen in the ordinary course of business as a result of various immaterial labor claims, taxing authority reviews and other routine legal matters. As of March 31, 2015, the Company accrued an immaterial amount in its financial statements for these matters for which the Company believed the possibility of loss was probable and was able to estimate the damages. The Company does not believe that the ultimate resolution of these matters will have a material adverse effect on its financial position, results of operations or cash flow. The Company believes that any additional liability in excess of amounts provided which may result from the resolution of legal matters will not have a material adverse effect on the financial condition, liquidity or cash flow of the Company.

10. Stock-Based Compensation and Stockholders’ Deficit

The Company records stock-based compensation expense in accordance with ASC Topic 718, Accounting for Stock Compensation and has used the straight-line attribution method to recognize expense for time-based restricted stock units ("RSUs"), options and deferred stock units ("DSUs"). The Company recorded stock-based compensation expense during the three months ended March 31, 2015 and March 31, 2014 as follows:



	Three Months ended March 31,
	2015		2014
RSU, Options and DSU Awards (1)	$	822	$	509


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

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Summary of Activity under the Long-Term Incentive Plans

On March 2, 2015, the Board of Directors approved the 2015-2017 Long-Term Incentive Plan (the “2015 - 2017 LTIP”) under the 2010 Equity Incentive Plan (the “2010 Plan”). Awards under the 2015 - 2017 LTIP are time-based, performance-based and market-based. A specific target share award has been set for each participant in the 2015-2017 LTIP. Awards will be paid in the form of shares of common stock of the Company, as described below:


•	52,601 Time-based awards, or 35% of the total target award for each participant, have been granted in the form of time-based restricted stock units under the Company’s 2010 Plan. The time-based restricted stock units vest on the third anniversary of the date of grant.


•	97,681 Performance-based and Market-based awards, 65% of the total target award for each participant, have been granted in the form of performance-based stock units under the 2010 Plan. Of these units, half will vest based on the financial performance of the Company and the other half will vest based on the stock price performance of the Company.

The performance-based stock units whose vesting is subject to the financial performance of the Company (the “financial stock units”) 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, 2015 through December 31, 2017. Financial stock units that vest will convert into shares of the Company’s common stock and be paid after the close of a three-year performance period. The amount of units that vest will range from 0% to 100% of the employee's total financial stock units. Upon attainment of cumulative Adjusted EBITDA equal to 80% or less of the targeted Adjusted EBITDA, none of the financial stock units will vest. Upon attainment of more than 80% of the targeted Adjusted EBITDA, the financial stock units will begin vesting on a straight-line basis from 0% of the financial stock units at 80% of the targeted Adjusted EBITDA to 100% of the financial stock units at 100% of the targeted Adjusted EBITDA, up to a maximum payout of 100% of the financial stock units.

The market-based stock units whose vesting is subject to stock price performance of the Company (the “market-based stock units”) will vest based on the Company's total stock price change (plus dividends) over the three-year performance period of March 2, 2015 through March 2, 2018 (“TSR”) relative to the TSR over the same performance period of companies listed on the S&P Global Small Cap Index on the third anniversary of the grant date, or March 2, 2018. Market-based stock units that vest will convert into shares of the Company’s common stock and will be paid after the third anniversary of the grant date, or March 2, 2018. The amount of units that vest will range from 0% to 100% of the employee's total market-based stock units. If the Company’s TSR over the performance period is less than the 35^th percentile TSR of companies in the S&P Global Small Cap Index, then no market-based units will vest. If the Company’s TSR over the performance period is equal to the 35th percentile TSR of the companies in the S&P Global Small Cap Index, then 50% of the market-based stock units will vest. Full payout at 100% of the market-based stock units will be made if the Company’s TSR over the performance period is equal to the 55th percentile TSR of companies in the S&P Global Small Cap Index. TSR performance between the 35th and 55th percentile TSR of companies in the S&P Global Small Cap Index will result in an interpolated payout percentage of the market-based stock units between 50% and 100%.

Subject to early acceleration and payment under certain circumstances consistent with the terms of the Company’s 2015-2017 LTIP and LTIP Share Agreement thereunder, delivery of shares of common stock underlying the time-based and performance-based and market-based awards that become vested are subject to the participant’s continued service to the Company through March 2, 2018.

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, to be paid on a quarterly basis in arrears. Approximately half of the annual retainer is payable in DSUs, with the remaining half payable in DSUs, cash or a mix of both at the election of each director. The non-management directors were awarded an aggregate of 7,062 DSUs under the 2011 DSU Plan for service during the quarter ended March 31, 2015. In addition, in accordance with the 2011 DSU Plan, as amended in January of 2015, 4,951 DSUs were settled in common stock during the quarter ended March 31, 2015.

11. Supplemental Guarantor Financial Information

On May 26, 2011, the Company closed on the sale of its Notes. The Notes are unsecured obligations of the Company and are fully and unconditionally guaranteed on a senior unsecured basis by all of the domestic wholly owned subsidiaries of the Company (the “Guarantors”). In accordance with Rule 3-10 of Regulation S-X promulgated under the Securities Act of 1933,

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as amended, the following condensed consolidating financial statements present the financial position, results of operations and cash flows of Xerium Technologies, Inc. (referred to as “Parent” for the purpose of this note only) on a stand-alone parent-only basis, the Guarantors on a Guarantors-only basis, the combined non-Guarantor subsidiaries and elimination entries necessary to arrive at the information for the Parent, the Guarantors and non-Guarantor subsidiaries on a consolidated basis.

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Xerium Technologies, Inc.

Consolidating Balance Sheet—(Unaudited)

At March 31, 2015

(Dollars in thousands)



	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The Company
ASSETS
Current assets:
Cash and cash equivalents	$	735		$	(15	)	$	8,106		$	—		$	8,826
Accounts receivable, net	97			22,078			55,794			—			77,969
Intercompany receivables	(102,773		)	111,030			(8,257		)	—			—
Inventories, net	—			16,263			60,419			(871		)	75,811
Prepaid expenses	1,875			927			5,336			—			8,138
Other current assets	—			1,695			12,828			—			14,523
Total current assets	(100,066		)	151,978			134,226			(871		)	185,267
Property and equipment, net	16,701			59,242			215,647			—			291,590
Investments	798,802			183,408			—			(982,210		)	—
Goodwill	—			17,737			38,525			—			56,262
Intangible assets	8,191			1,595			931			—			10,717
Non-current deferred tax asset	—			—			8,485			—			8,485
Other assets	—			364			8,336			—			8,700
Total assets	$	723,628		$	414,324		$	406,150		$	(983,081	)	$	561,021

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Accounts payable	$	2,842		$	9,216		$	25,012		$	—		$	37,070
Accrued expenses	14,197			8,351			35,215			—			57,763
Current notes payable	—			—			3,267			—			3,267
Current maturities of long-term debt	2,772			449			2,406			—			5,627
Total current liabilities	19,811			18,016			65,900			—			103,727
Long-term debt, net of current maturities	460,279			—			—			—			460,279
Capitalized lease obligations	3,206			495			694			—			4,395
Non-current deferred tax liability	607			1,035			5,679			—			7,321
Pension, other post-retirement and post-employment obligations	22,009			1,569			51,637			—			75,215
Other long-term liabilities	200			—			12,791			—			12,991
Intercompany loans	307,868			(397,350		)	89,482			—			—
Total stockholders’ (deficit) equity	(90,352		)	790,559			179,967			(983,081		)	(102,907		)
Total liabilities and stockholders’ equity	$	723,628		$	414,324		$	406,150		$	(983,081	)	$	561,021

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Xerium Technologies, Inc.

Consolidating Balance Sheet

At December 31, 2014

(Dollars in thousands)



	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The Company
ASSETS
Current assets:
Cash and cash equivalents	$	605		$	(15	)	$	8,927		$	—		$	9,517
Accounts receivable, net	50			22,358			60,661			—			83,069
Intercompany receivables	(107,064		)	107,590			(526		)	—			—
Inventories, net	—			17,310			67,016			(776		)	83,550
Prepaid expenses	546			1,470			6,456			—			8,472
Other current assets	—			2,021			13,693			—			15,714
Total current assets	(105,863		)	150,734			156,227			(776		)	200,322
Property and equipment, net	12,365			59,448			231,804			—			303,617
Investments	782,633			229,109			—			(1,011,742		)	—
Goodwill	—			17,737			44,190			—			61,927
Intangible assets	9,001			1,664			1,042			—			11,707
Non-current deferred tax asset	—			—			10,662						10,662
Other assets	—			364			5,445			—			5,809
Total assets	$	698,136		$	459,056		$	449,370		$	(1,012,518	)	$	594,044

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Accounts payable	$	2,679		$	10,212		$	28,936		$	—		$	41,827
Accrued expenses	8,511			8,301			39,297			—			56,109
Current notes payable	—			—			244			—			244
Current maturities of long-term debt	2,944			—			1,462			—			4,406
Total current liabilities	14,134			18,513			69,939			—			102,586
Long-term debt, net of current maturities	460,840			—			—			—			460,840
Liabilities under capital leases	3,503			440			2			—			3,945
Non-current deferred tax liability	97			1,035			9,284			—			10,416
Pension, other post-retirement and post-employment obligations	22,070			1,200			57,201			—			80,471
Other long-term liabilities	181			—			9,715			—			9,896
Intercompany loans	289,896			(401,482		)	111,586			—			—
Total stockholders’ (deficit) equity	(92,585		)	839,350			191,643			(1,012,518		)	(74,110		)
Total liabilities and stockholders’ (deficit) equity	$	698,136		$	459,056		$	449,370		$	(1,012,518	)	$	594,044

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Xerium Technologies, Inc.

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

For the three months ended March 31, 2015

(Dollars in thousands)



	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The Company
Net sales	$	—		$	42,850		$	81,688		$	(3,509	)	$	121,029
Costs and expenses:
Cost of products sold	(348		)	29,378			46,860			(3,414		)	72,476
Selling	268			4,801			11,257			—			16,326
General and administrative	2,828			1,411			9,607			—			13,846
Research and development	232			1,196			534			—			1,962
Restructuring and impairment	7,952			175			(5,903		)	—			2,224
	10,932			36,961			62,355			(3,414		)	106,834
(Loss) income from operations	(10,932		)	5,889			19,333			(95		)	14,195
Interest (expense) income, net	(9,399		)	1,160			(1,425		)	—			(9,664		)
Foreign exchange gain (loss)	213			(141		)	905			—			977
Equity in subsidiaries income	21,669			5,223			—			(26,892		)	—
Dividend income	700			700			(1,400		)	—			—
Income before provision for income taxes	2,251			12,831			17,413			(26,987		)	5,508
Provision for income taxes	(518		)	(29		)	(3,228		)	—			(3,775		)
Net income	$	1,733		$	12,802		$	14,185		$	(26,987	)	$	1,733
Comprehensive income (loss)	$	1,631		$	13,443		$	(17,485	)	$	(26,987	)	$	(29,398	)

Xerium Technologies, Inc.

Consolidating Statement of Operations and Comprehensive Income-(Unaudited)

For the three months ended March 31, 2014

(Dollars in thousands)



	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The Company
Net sales	$	—		$	43,156		$	99,265		$	(9,037	)	$	133,384
Costs and expenses:
Cost of products sold	(419		)	29,999			60,731			(9,093		)	81,218
Selling	113			5,068			12,997			—			18,178
General and administrative	1,884			2,520			10,393			—			14,797
Research and development	276			1,118			552			—			1,946
Restructuring and impairment	(18		)	237			4,432			—			4,651
	1,836			38,942			89,105			(9,093		)	120,790
(Loss) income from operations	(1,836		)	4,214			10,160			56			12,594
Interest (expense) income, net	(8,242		)	1,395			(1,810		)	—			(8,657		)
Foreign exchange loss	(12		)	(81		)	(784		)	—			(877		)
Equity in subsidiaries income	11,731			5,892			—			(17,623		)	—
Income before provision for income taxes	1,641			11,420			7,566			(17,567		)	3,060
Provision for income taxes	(474		)	(34		)	(1,385		)	—			(1,893		)
Net income	$	1,167		$	11,386		$	6,181		$	(17,567	)	$	1,167
Comprehensive income	$	1,578		$	11,116		$	4,115		$	(17,567	)	$	(758	)

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Xerium Technologies, Inc.

Consolidating Statement of Cash Flows-(Unaudited)

For the three months ended March 31, 2015

(Dollars in thousands)



	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The Company
Operating activities
Net income	$	1,733		$	12,802		$	14,185		$	(26,987	)	$	1,733
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Stock-based compensation	752			—			70			—			822
Depreciation	361			1,719			5,083			—			7,163
Amortization of intangibles	—			69			10			—			79
Deferred financing cost amortization	852			—			23			—			875
Foreign exchange gain on revaluation of debt	(1,973		)	—			—			—			(1,973		)
Deferred tax expense	511			—			468			—			979
Loss (gain) on disposition of property and equipment	—			25			(11		)	—			14
Provision for doubtful accounts	—			49			423			—			472
Undistributed equity in earnings of subsidiaries	(21,669		)	(5,223		)	—			26,892			—
Change in assets and liabilities which provided (used) cash:
Accounts receivable	(47		)	231			(776		)	—			(592		)
Inventories	—			1,047			294			95			1,436
Prepaid expenses	(1,328		)	543			810			—			25
Other current assets	—			326			(2,005		)	—			(1,679		)
Accounts payable and accrued expenses	5,618			(947		)	(2,453		)	—			2,218
Deferred and other long-term liabilities	(42		)	347			(3,876		)	—			(3,571		)
Intercompany loans	(4,290		)	(3,343		)	7,633			—			—
Net cash (used in) provided by operating activities	(19,522		)	7,645			19,878			—			8,001
Investing activities
Capital expenditures, gross	(4,697		)	(1,103		)	(6,355		)	—			(12,155		)
Intercompany property and equipment transfers, net	—			191			(191		)	—			—
Proceeds from disposals of property and equipment	—			26			6			—			32
Net cash used in investing activities	(4,697		)	(886		)	(6,540		)	—			(12,123		)
Financing activities													—
Proceeds from borrowings	13,516			—			9,052			—			22,568
Principal payments on debt	(14,059		)	—			(4,272		)	—			(18,331		)
Dividends paid	—			(1,400		)	1,400			—			—
Payment of obligations under capital leases	(161		)	(101		)	(3		)	—			(265		)
Payment of financing fees	(34		)	—			9			—			(25		)
Intercompany loans	19,587			(5,258		)	(14,329		)	—			—
Other financing activities	5,500						(5,500		)				—
Net cash provided by (used in) financing activities	24,349			(6,759		)	(13,643		)	—			3,947
Effect of exchange rate changes on cash flows	—			—			(516		)	—			(516		)
Net increase (decrease) in cash	130			—			(821		)	—			(691		)
Cash and cash equivalents at beginning of period	605			(15		)	8,927			—			9,517
Cash and cash equivalents at end of period	$	735		$	(15	)	$	8,106		$	—		$	8,826

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Xerium Technologies, Inc.

Consolidating Statement of Cash Flows (Unaudited)

For the three months ended March 31, 2014

(Dollars in Thousands)



	Parent			Total Guarantors			Total Non Guarantors			Other Eliminations			The Company
Operating activities
Net income	$	1,167		$	11,386		$	6,181		$	(17,567	)	$	1,167
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Stock-based compensation	456			—			53			—			509
Depreciation	108			1,850			6,275			—			8,233
Amortization of intangibles	—			384			32			—			416
Deferred financing cost amortization	716			—			—			—			716
Foreign exchange gain on revaluation of debt	(1,103		)	—			—			—			(1,103		)
Deferred taxes	282			—			(1,090		)	—			(808		)
Loss on disposition of property and equipment	—			22			5			—			27
Provision for doubtful accounts	—			165			80			—			245
Undistributed equity in earnings of subsidiaries	(11,731		)	(5,892		)	—			17,623			—
Change in assets and liabilities which provided (used) cash:
Accounts receivable	(61		)	(1,762		)	(5,229		)	—			(7,052		)
Inventories	—			(387		)	(3,605		)	(56		)	(4,048		)
Prepaid expenses	201			(351		)	1,750			—			1,600
Other current assets	515			(623		)	927			—			819
Accounts payable and accrued expenses	2,767			(11		)	1,446			—			4,202
Deferred and other long-term liabilities	(182		)	(828		)	(1,150		)	—			(2,160		)
Intercompany loans	(1,171		)	1,401			(230		)	—			—
Net cash (used in) provided by operating activities	(8,036		)	5,354			5,445			—			2,763
Investing activities
Capital expenditures, gross	(5,537		)	(922		)	(4,035		)	—			(10,494		)
Intercompany property and equipment transfers, net	—			—			—			—			—
Proceeds from disposals of property and equipment	—			35			8			—			43
Net cash used in investing activities	(5,537		)	(887		)	(4,027		)	—			(10,451		)
Financing activities													—
Proceeds from borrowings	7,580			—			—			—			7,580
Principal payments on debt	(6,600		)	—			—			—			(6,600		)
Payments of obligations under capitalized leases	(126		)	(64		)	—			—			(190		)
Payment of deferred financing fees	(710		)	—			—			—			(710		)
Intercompany loans	9,994			(4,404		)	(5,590		)	—			—
Net cash provided by (used in) financing activities	10,138			(4,468		)	(5,590		)	—			80
Effect of exchange rate changes on cash flows	—			—			(95		)	—			(95		)
Net (decrease) increase in cash	(3,435		)	(1		)	(4,267		)	—			(7,703		)
Cash and cash equivalents at beginning of period	4,120			(10		)	21,606			—			25,716
Cash and cash equivalents at end of period	$	685		$	(11	)	$	17,339		$	—		$	18,013



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

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


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


•	our strategy to lower our costs in response to market changes in the paper industry by reorganizing and restructuring our operations has required us to incur significantly higher costs in the short-term and may not provide the cost reductions and results we anticipate;


•	we are subject to execution risk related to the startup of our new facilities in China and Turkey;


•	we are subject to the risk of a weaker global economy that influences the paper industry as well as local economic conditions in the areas around the world where we conduct business;


•	structural shifts in the demand for paper, for instance the shift away from newsprint, printing and writing paper in favor of digital media, may adversely impact customers' demand for our products and services and consequently our financial results;


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


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


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


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


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


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


•	we are subject to the risk of terrorist attacks or an outbreak or escalation of any insurrection or armed conflict involving the United States or any other country in which we conduct business, or any other domestic or international calamity, including natural disasters;


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


•	anti-takeover provisions could make it more difficult for a third-party to acquire us.

Other factors that could materially affect our actual results, levels of activity, performance or achievements can be found in our “Risk Factors” section in our Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on March 4, 2015. If any of these risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary significantly from what we project. Any forward-looking statement in this Quarterly Report on Form 10-Q reflects our current views with respect to future events and is subject to these and other risks, uncertainties, and assumptions relating to our operations, results of operations, growth strategy, and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, whether as a result of new information, future events, or otherwise, except as required by law.

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

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Company Overview

We are a leading global manufacturer and supplier of two types of consumable products used primarily in the production of paper—clothing and roll covers. Our operations are strategically located in the major paper-producing regions of North America, Europe, South America and Asia-Pacific. Our products play key roles in the formation and processing of paper along the length of a paper-making machine. Paper producers rely on our products and services to help improve the quality of their paper, differentiate their paper products, operate their paper-making machines more efficiently and reduce production costs.

We operate in two principal business segments: clothing and roll covers. In our clothing segment, we manufacture and sell highly engineered synthetic textile belts that transport paper as it is processed in a paper-making machine. Clothing plays a significant role in the forming, pressing and drying stages of paper production. Because paper-making processes and machine specifications vary widely, the clothing size, form, material and function is custom engineered to fit each individual paper-making machine and process. For the three months ended March 31, 2015, our clothing segment represented 64% of our net sales.

Our roll cover products provide a surface with the mechanical properties necessary to process the paper sheet in a cost-effective manner that delivers the sheet qualities desired by each paper producer. We tailor our roll covers to individual paper-making machines and processes, using different materials, treatments and finishings. In addition to manufacturing and selling new roll covers, we also provide refurbishment services for previously installed roll covers and we manufacture new and rebuilt spreader rolls. We also provide various related products and services to our customers, both directly and through third party providers, as a growing part of our overall product offering through our roll covers sales channels. For the three months ended March 31, 2015, our roll cover segment represented 36% of our net sales.

Industry Trends and Outlook

Historically, demand for our products has been driven primarily by the volume (tonnage) of paper produced on a worldwide basis, which in turn is affected by global economic conditions. Since 2000, paper producers have taken actions that seek to structurally improve the balance between the supply of, and demand for, paper in response to the industry's highly cyclical swings in profitability driven by the oversupply of paper during periods when paper producers have more aggregate capacity than the market requires. As part of these efforts, they have permanently shut down many paper-making machines or entire manufacturing facilities.

In 2010, the paper industry began to address the structural balance between the supply and demand for paper, the widespread adoption of e-commerce and digitalization of traditionally printed material has resulted in a prolonged decline in newsprint and printing and writing grades of paper. This longer term decline has been partially offset by increases in the production of packaging grades, both as a consequence of globalization of manufacturing and as a result of the increase of tissue/personal care products which have increased as global GDP has risen, particularly in the developing world.

In the near term, we expect that global paper and board manufacturers' operating rates will remain near their 2014 levels, while industry forecasters predict the growth of global paper production from 2015 to 2017 to be between approximately 0% and 1% per annum. Generally, and over time, we expect growth in paper production to be greater in Asia-Pacific, South America and Europe than in the more mature North America where demand has declined.

In response to this, we expect to continue to focus our research and development efforts on new products that deliver increased value to our customers and for which they will pay increased prices. In addition, we intend to continue to enhance and deploy our value added selling approach as part of our strategy to differentiate our products, while at the same time we remain focused on cost reduction and efficiency programs.

The negative paper industry trends described above are likely to continue. We believe that the paper industry will continue to experience an increased emphasis on cost reduction and continued paper-machine shutdown activity. These underlying industry dynamics could negatively impact our business, results of operations and financial condition and are the key drivers behind our strategy to reduce our cost structure, align our geographic footprint with anticipated growth in the Asia-Pacific regions and grow our non-paper business revenue streams.

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;

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•	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;

•the mix of paper grades being produced;

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

•the impact of currency fluctuations.

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

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

The level of our cost of products sold is primarily attributable to labor costs, raw material costs, product shipping costs, plant utilization and depreciation, with labor costs constituting the largest component. We invest in facilities and equipment that enable innovative product development and improve production efficiency and costs. Recent examples of capital spending for such purposes include faster weaving 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 $2.0 million and $1.9 million for the three months ended March 31, 2015 and 2014, respectively.

Foreign Exchange

We have a geographically diverse customer base. In the three months ended March 31, 2015, we generated approximately 39% of our net sales in North America, 33% in Europe, 19% in Asia-Pacific and 9% in South America.

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

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

During the three months ended March 31, 2015, we conducted business in nine foreign currencies. The following table provides the average exchange rate for the three months ended March 31, 2015 of the U.S. Dollar against each of the four foreign currencies in which we conduct the largest portion of our operations.

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Currency	Three months ended March 31, 2015	Three months ended March 31, 2014
Euro	$1.13 = 1 Euro	$1.37 = 1 Euro
Brazilian Real	$0.35 = 1 Brazilian Real	$0.42 = 1 Brazilian Real
Canadian Dollar	$0.80 = 1 Canadian Dollar	$0.91 = 1 Canadian Dollar
Australian Dollar	$0.79 = 1 Australian Dollar	$0.90 = 1 Australian Dollar

In the three months ended March 31, 2015, we conducted approximately 34% of our operations in Euros, approximately 10% in the Australian Dollar, approximately 8% in the Brazilian Real (although a significant portion of Brazil net sales are in U.S. Dollars) and approximately 5% in the Canadian Dollar.

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

Domestic and Foreign Operating Results:

The following is an analysis of our domestic and foreign operations during the three months ended March 31, 2015 and March 31, 2014 and a discussion of the results of operations during those periods (in thousands):



	Three Months Ended March 31,
	2015			2014
Domestic (loss) income from operations	$	(5,043	)	$	2,378
Foreign income from operations	19,238			10,216
Total income from operations	$	14,195		$	12,594

During the three months ended March 31, 2015, domestic income from operations was lower than foreign income from operations primarily due to product mix, market differences and various unallocated corporate expenses. All earnings generated by foreign subsidiaries after 2012 will be remitted to the parent company at some point in the future. U.S. income taxes and foreign withholding taxes have been provided related to those foreign earnings. All other foreign unremitted earnings generated in years prior to 2013 will remain indefinitely reinvested, except for a portion of the earnings generated prior to 2013 related to our Brazil operations.

Cost Reduction Programs

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

For the three months ended March 31, 2015, we incurred restructuring expenses of $2.2 million.These included $1.3 million of charges related to the closure of the Joao Pessoa, Brazil clothing facility and $0.9 million of charges relating to headcount reductions. For the three months ended March 31, 2014, we incurred restructuring expenses of $4.7 million. These included charges relating to the closure of a roll cover facility in Germany, the reduction of headcount and the second phase of the closure of a clothing facility in Argentina.

Results of Operations

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



	Three Months Ended March 31,
	2015			2014
	(in thousands)
Net sales	$	121,029		$	133,384
Costs and expenses:
Cost of products sold	72,476			81,218
Selling	16,326			18,178
General and administrative	13,846			14,797
Research and development	1,962			1,946
Restructuring	2,224			4,651
	106,834			120,790
Income from operations	14,195			12,594
Interest expense, net	(9,664		)	(8,657		)
Foreign exchange gain (loss)	977			(877		)
Income before provision for income taxes	5,508			3,060
Provision for income taxes	(3,775		)	(1,893		)
Net income	$	1,733		$	1,167
Comprehensive loss	$	(29,398	)	$	(758	)

Three Months Ended March 31, 2015 Compared to the Three Months Ended March 31, 2014

Net Sales. Net sales for the three months ended March 31, 2015 decreased by $(12.4) million, or (9.3)%, to $121.0 million from $133.4 million for the three months ended March 31, 2014. For the three months ended March 31, 2015, approximately 64% of our net sales were in our clothing segment and approximately 36% were in our roll covers segment.

In our clothing segment, net sales for the three months ended March 31, 2015 decreased $(11.7) million to $77.3 million from $89.0 million for the three months ended March 31, 2014. Excluding unfavorable currency effects of $(7.2) million, the remaining decrease was primarily due to the continued decline in the graphical grade markets, mill closures in North America and Europe, as well as soft sales in Japan.

In our roll covers segment, net sales for the three months ended March 31, 2015 decreased by $(0.7) million to $43.7 million from $44.4 million for the three months ended March 31, 2014. Excluding unfavorable currency effects of $(4.0) million, the increase was primarily due to increased roll cover, new core and mechanical services sales.

Cost of Products Sold. Cost of products sold for the three months ended March 31, 2015 decreased by $(8.7) million, or (10.7)%, to $72.5 million from $81.2 million for the three months ended March 31, 2014.

In our clothing segment, cost of products sold decreased $(7.7) million in the current quarter compared to the first quarter of 2014, as a result of favorable currency effects, decreased sales volume and cost reduction programs, partially offset by unfavorable fixed cost absorption. Cost of products sold as a percentage of net sales decreased by (1.2)% to 57.1% in the three months ended March 31, 2015 from 58.3% in the three months ended March 31, 2014. This decrease was primarily due to favorable currency effects and reduced costs as a result of restructuring and cost reduction savings and operational efficiencies, partially offset by inflationary increases and unfavorable fixed cost absorption.

In our roll covers segment, cost of products sold decreased $(1.0) million in the current quarter compared to the first quarter of 2014, primarily as a result of favorable currency effects partially offset by higher sales volumes. Cost of products sold as a percentage of net sales decreased by (1.3)% to 64.8% for the three months ended March 31, 2015 from 66.1% for the three months ended March 31, 2014. This decrease was primarily due to restructuring and cost reduction savings and operational efficiencies, partially offset by unfavorable product mix.

Selling Expenses. For the three months ended March 31, 2015, selling expenses decreased by $1.9 million, or 10.4%, to $16.3 million from $18.2 million for the three months ended March 31, 2014. This decrease was primarily driven by favorable currency effects.

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General and Administrative Expenses. For the three months ended March 31, 2015, general and administrative expenses decreased by $(1.0) million, or (6.8)%, to $13.8 million from $14.8 million for the three months ended March 31, 2014, primarily as a result of favorable currency effects. These reductions were partially offset by an increase in management incentive compensation and startup costs in the first quarter of 2015.

Restructuring Expenses. For the three months ended March 31, 2015, we incurred restructuring expenses of $2.2 million. These included $1.3 million of charges related to the closure of the Joao Pessoa, Brazil clothing facility and $0.9 million of charges relating to headcount reductions.

Interest Expense, Net. Net interest expense for the three months ended March 31, 2015 was $9.7 million, up $1.0 million from $8.7 million for the three months ended March 31,2014. Increases were primarily due to increased average borrowings, and were offset by capitalized interest related to certain equipment construction projects in the first quarter of 2015.

Provision for Income Taxes. For the three months ended March 31, 2015 and 2014, the provision for income taxes was $3.8 million and $1.9 million, respectively. The increase in income tax expense was primarily attributable to the geographic mix of earnings in the first quarter of 2015 as compared to the first quarter of 2014 as well as an increase in the unrecognized tax benefit due to the effects of income tax audits. 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% to 37%. However, permanent income adjustments recorded against pre-tax earnings may result in an effective tax rate that is higher or lower than the statutory tax rate in these jurisdictions. We generate losses in certain jurisdictions for which we realize no tax benefit as the deferred tax assets in these jurisdictions (including net operating losses) are fully reserved in our valuation allowance. For this reason, we recognize minimal income tax expense or benefit in these jurisdictions, of which the most material jurisdictions are the United States and Australia. Due to these reserves, the geographic mix of our pre-tax earnings has a direct correlation with how high or low our annual effective tax rate is relative to consolidated earnings.

Liquidity and Capital Resources

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

Net cash provided by operating activities was $8.0 million for the three months ended March 31, 2015 and $2.8 million for the three months ended March 31, 2014. The $5.2 million increase was primarily due a decrease in working capital.

Net cash used in investing activities was $12.1 million for the three months ended March 31, 2015 and $10.5 million for the three months ended March 31, 2014. The increase in cash used in investing activities of $1.6 million was primarily due to the increase in capital expenditures.

Net cash provided by financing activities was $3.9 million and $0.1 million for the three months ended March 31, 2015 and 2014, respectively. The increase of $3.8 million was primarily the result of the increase of $15.0 million in borrowings and a decrease in the payment of financing fees of $0.7 million. These increases were partially offset by an increase in principal payments on debt and capital leases of $11.9 million.

As of March 31, 2015, the outstanding balance of our term debt under the Term Credit Facility and Notes (each defined below) was $461.9 million, which is net of a $0.8 million discount. In addition, as of March 31, 2015, an aggregate of $32.4 million is available for additional borrowings under the ABL Facility. This availability represents a borrowing base of $44.1 million under the ABL Facility less $11.7 million of that facility committed for letters of credit or additional borrowings. Additionally, at March 31, 2015, the Company had approximately $5.1 million available for borrowings under other small lines of credit.

We expect to incur expenses of approximately $5.0 million to $10.0 million related to the continuation of our restructuring initiatives for the remainder of 2015. We have incurred $2.2 million in the three months ended March 31, 2015. Actual restructuring costs for 2015 may substantially differ from estimates at this time, depending on the timing of the restructuring activities and the required actions to complete them.

Capital Expenditures

For the three months ended March 31, 2015, we had capital expenditures of $12.2 million. We are currently targeting capital expenditures for 2015 to be approximately $50.0 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.

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

Credit Facility and Notes

On May 17, 2013, the Company entered into a Credit and Guaranty Agreement for a $200.0 million term loan credit facility (the “Term Credit Facility”), net of a discount of $1.0 million, among the Company, certain direct and indirect U.S. subsidiaries of the Company as guarantors and certain financial institutions. The Company also entered into a Revolving Credit and Guaranty Agreement originally for a $40.0 million asset-based revolving credit facility subject to a borrowing base among Xerium Technologies, Inc, as a US borrower, Xerium Canada Inc., as Canadian borrower, certain direct and indirect U.S. subsidiaries of the Company as guarantors and certain financial institutions (the "Domestic Revolver"). On March 3, 2014, the Company entered into an amendment to the Revolving Credit and Guaranty Agreement (as amended, the “ABL Facility,” and collectively with the Term Credit Facility, the “Credit Facility”) to add the Company's German subsidiaries as European Borrowers (the "European Borrowers") and to provide for an additional $15 million European asset-based revolving credit facility subject to a European borrowing base (the "European Revolver"), increasing the aggregate availability under the ABL Facility to $55 million.

The Credit Facility contains 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;

•make capital expenditures in excess of $42 million per fiscal year, subject to adjustment;

•engage in mergers, acquisitions and asset sales;

•transact with affiliates; and

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

We are in compliance with all covenants under the Notes and Credit Facility at March 31, 2015.

Critical Accounting Policies

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

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

Our significant policies are described in the notes to the condensed consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2014. 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

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affecting the application of those accounting policies as noted in our Annual Report on Form 10-K for the year ended December 31, 2014.

Non-GAAP Financial Measures

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

EBITDA is defined as net income before interest expense, income tax provision 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) and (xiii) other non-cash losses or charges (excluding, however, any non-cash loss or charge which represents an accrual of, or a reserve for, a cash disbursement in a future period), minus (C) without duplication, to the extent any of the following were included in computing consolidated net income for such period, (i) non-cash gains with respect to the items described in clauses (vi), (vii), (ix), (xi), (xii) and (xiii) (other than, in the case of clause (xiii), any such gain to the extent that it represents a reversal of an accrual of, or reserve for, a cash disbursement in a future period) of clause (B) above and (ii) provisions for tax benefits based on income or profits. Notwithstanding the foregoing, Adjusted EBITDA, as defined in the Credit Facility and calculated below, may not be comparable to similarly titled measurements used by other companies.

Consolidated net income is defined as net income 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, as permitted under the Credit Facility and (iv) any cancellation of indebtedness income.

The following table provides 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 March 31,
	2015			2014
Net income	$	1,733		$	1,167
Stock-based compensation	822			509
Depreciation	7,163			8,233
Amortization of intangibles	79			416
Deferred financing cost amortization	875			716
Foreign exchange gain on revaluation of debt	(1,973		)	(1,103		)
Deferred tax expense	979			(808		)
Loss on disposition of property and equipment	14			27
Net change in operating assets and liabilities	(1,691		)	(6,394		)
Net cash provided by operating activities	8,001			2,763
Interest expense, excluding amortization	8,789			7,941
Net change in operating assets and liabilities	1,691			6,394
Current portion of income tax expense	2,796			2,700
Stock-based compensation	(822		)	(509		)
Foreign exchange loss on revaluation of debt	1,973			1,103
Loss on disposition of property and equipment	(14		)	(27		)
EBITDA	22,414			20,365
Stock-based compensation	822			509
Operational restructuring expenses	2,224			4,651
Plant startup costs	750			176
Adjusted EBITDA	$	26,210		$	25,701



ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

Our interest rate risks as of March 31, 2015 have not materially changed from December 31, 2014 (see Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2014). As of March 31, 2015, we had outstanding long-term debt with a carrying amount of $469.2 million with an approximate fair value of $479.2 million.

Foreign Currency Risk

As discussed in Note 6 to the Consolidated Financial Statements, the Euro, the Brazilian Real and the Canadian Dollar declined significantly from December 31, 2014. These declines had an unfavorable impact of approximately $(32.9) million on our foreign subsidiaries net equity balances at March 31, 2015.



ITEM 4.	CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures. We have carried out an evaluation, as of March 31, 2015 under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a–15(e) and 15d–15(e) under the Securities Exchange Act of 1934, as amended (the “Act”). Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Act is (i) recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms; and (ii) accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosures. No evaluation of disclosure controls and procedures can provide absolute assurance that these controls and procedures will operate effectively

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

(b) Changes in Internal Control over Financial Reporting. No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Act) occurred during the quarter ended March 31, 2015 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, 2014. See Note 9 to our Unaudited Condensed Consolidated Financial Statements for other routine litigation to which we are subject.



ITEM 1A.	RISK FACTORS

The risks described in our Annual Report on Form 10-K for the year ended December 31, 2014 have not materially changed.

ITEM 5. OTHER INFORMATION

On May 8, 2015, the Board of Directors of the Company amended the Company’s Amended and Restated By-laws (the “By-laws”) by adding a new Article 7 (and changing the number of the prior Article 7 to Article 8) designating the Court of Chancery of the State of Delaware (or, in the event that the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) as the sole and exclusive forum for certain legal actions, unless the Company consents in writing to the selection of an alternative forum (the “Amendment”).

The foregoing summary of the Amendment is qualified in its entirety by reference to the full text of the By-laws, as amended, which are filed as Exhibit 3.1 to this Quarterly Report.

ITEM 6. EXHIBITS

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

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SIGNATURES

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




	XERIUM TECHNOLOGIES, INC.
	(Registrant)

May 11, 2015	By:	/s/Clifford E. Pietrafitta
		Clifford E. Pietrafitta
		Executive Vice President and CFO
		(Principal Financial Officer)

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EXHIBIT INDEX



Exhibit Number		Description of Exhibits

3.1		Amended and Restated By-Laws of Xerium Technologies, Inc.

10.1†		Amended and Restated Non-Management Director Compensation Policy

10.2†		Form of 2015 Management Incentive Plan Award Agreement

10.3†		Form of 2015 Long Term Incentive Plan Award Agreement

31.1		Certification Statement of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification Statement of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification Statement of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification Statement of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

† Management contract or compensatory arrangement or plan

Exhibit 3.1

AMENDED AND RESTATED BY-LAWS

XERIUM TECHNOLOGIES, INC.

Adopted: May 8, 2015

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ARTICLE 1 - STOCKHOLDERS	1

1.1. PLACE OF MEETINGS	1
1.2. ANNUAL MEETING	1
1.3. SPECIAL MEETING	1
1.4. NOTICE OF MEETINGS	1
1.5. VOTING LIST	1
1.6. QUORUM	2
1.7. ADJOURNMENTS	2
1.8. VOTING	2
1.9. PROXY REPRESENTATION	2
1.10. ACTION AT MEETING	2
1.11. NOMINATION OF DIRECTORS	3
1.12. NOTICE OF BUSINESS AT ANNUAL MEETINGS	3

ARTICLE 2 - DIRECTORS	4

2.1. GENERAL POWERS	4
2.2. NUMBER; ELECTION AND QUALIFICATION	4
2.3. TERM OF OFFICE	5
2.4. REMOVAL	5
2.5. RESIGNATION	5
2.6. VACANCIES	5
2.7. REGULAR MEETINGS	5
2.8. SPECIAL MEETINGS	5
2.9. NOTICE OF SPECIAL MEETINGS	5
2.10. MEETINGS BY TELEPHONE CONFERENCE CALLS	5
2.11. QUORUM	5
2.12. ACTION AT MEETING	6
2.13. ACTION BY CONSENT	6
2.14. COMMITTEES	6
2.15. COMPENSATION OF DIRECTORS	6

ARTICLE 3 - OFFICERS	6

3.1. ENUMERATION	6
3.2. ELECTION	6
3.3. QUALIFICATION	6
3.4. TERM OF OFFICE	6
3.5. RESIGNATION AND REMOVAL	6



3.6. VACANCIES	7
3.7. CHAIRMAN OF THE BOARD	7
3.8. CHIEF EXECUTIVE OFFICER	7
3.9. PRESIDENT	7
3.10. CHIEF FINANCIAL OFFICER	7
3.11. VICE PRESIDENTS	7
3.12. SECRETARY AND ASSISTANT SECRETARIES	7
3.13. TREASURER AND ASSISTANT TREASURERS	8
3.14. CONTROLLERS	8
3.15. OTHER OFFICERS, ASSISTANT OFFICERS AND AGENTS	8
3.16. SALARIES	8

ARTICLE 4 - CAPITAL STOCK	8

4.1. ISSUANCE OF STOCK	8
4.2. CERTIFICATES OF STOCK	8
4.3. TRANSFERS	9
4.4. LOST, STOLEN OR DESTROYED CERTIFICATES	9
4.5. RECORD DATE	9
4.6. DIVIDENDS	9

ARTICLE 5 - RECORDS AND REPORTS	9

5.1. MAINTENANCE AND INSPECTION OF RECORDS	9
5.2. INSPECTION BY DIRECTOR	10
5.3. REPRESENTATION OF SHARES OF OTHER CORPORATIONS	10

ARTICLE 6 - GENERAL PROVISIONS	10

6.1. FISCAL YEAR	10
6.2. CORPORATE SEAL	10
6.3. WAIVER OF NOTICE	10
6.4. CORPORATE CONTRACTS AND INSTRUMENTS; HOW EXECUTED	10
6.5. EVIDENCE OF AUTHORITY	10
6.6. CERTIFICATE OF INCORPORATION	11
6.7. TRANSACTIONS WITH INTERESTED PARTIES	11
6.8. CONSTRUCTION; DEFINITIONS	11
6.9. PROVISIONS ADDITIONAL TO PROVISIONS OF LAW	11
6.10. PROVISIONS CONTRARY TO PROVISIONS OF LAW; SEVERABILITY	11
6.11. INCONSISTENT PROVISIONS	11
6.12. SECTION HEADINGS	12

ARTICLE 7 - FORUM SELECTION	12

ARTICLE 8 - AMENDMENTS	12

ARTICLE 1 - STOCKHOLDERS

1.1 Place of Meetings. All meetings of stockholders shall be held at such place, within or without the State of Delaware, or, if so determined by the Board of Directors of the Corporation (the “Board of Directors”) in its sole discretion, at no place (but rather by means of remote communication), as may be designated from time to time by the Board of Directors, or, if not so designated, at the principal executive office of the Corporation.

1.2 Annual Meeting. The annual meeting of stockholders for the election of directors and for the transaction of such other business as may properly be brought before the meeting shall be held at such date and time as shall be fixed by the Board of Directors and stated in the notice of the meeting. If no annual meeting is held in accordance with the foregoing provisions, a special meeting may be held in lieu of the annual meeting, and any action taken at that special meeting shall have the same effect as if it had been taken at the annual meeting, and in such case all references in these Amended and Restated By-Laws (the “By-Laws”) to the annual meeting of stockholders shall be deemed to refer to such special meeting.

1.3 Special Meeting. A special meeting of the stockholders may be called at any time by the Chairman of the Board, the Chief Executive Officer, two or more directors, or by one director in the event that there is only a single director in office.

1.4 Notice of Meetings. Except as otherwise provided by law, written notice of each meeting of stockholders, whether annual or special, shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. The notices of all meetings shall state the place, if any, the date, the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and the hour of the meeting. The notice of a special meeting shall state, in addition, the purpose or purposes for which the meeting is called. Notice of any meeting of stockholders shall be given either personally or by mail, electronic mail, telecopy, telegram or other electronic or wireless means. Notices not personally delivered shall be sent charges prepaid and shall be addressed to the stockholder at the address of that stockholder appearing on the books of the Corporation. Notice shall be deemed to have been given at the time when delivered personally or deposited in the mail or at the time of transmission when sent by electronic mail, telecopy, telegram or other electronic means. An affidavit of the mailing or other means of giving any notice of any stockholders’ meeting, executed by the secretary, assistant secretary or any transfer agent of the Corporation giving the notice, shall be prima facie evidence of the giving of such notice or report.

1.5 Voting List. The officer who has charge of the stock ledger of the Corporation shall prepare, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for a period of at least ten (10) days prior to the meeting, for any purpose germane to the meeting on either, at the Corporation’s sole discretion, (a) a reasonably accessible electronic network (for which such information required to access the electronic network shall be provided with the notice of the meeting) or (b) during ordinary business hours at the Corporation’s principal place of business. If the meeting is to be held at a place, the list shall also be produced and kept at the time and place of the meeting during the whole time of the meeting, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting.

1.6 Quorum. Except as otherwise provided by law, the Amended and Restated Certificate of Incorporation of the Corporation (the “Certificate of Incorporation”) or these By-Laws, the holders of a majority in voting power of the outstanding shares of capital stock of the Corporation present in person, by means of remote communication, if authorized, or represented by proxy, shall constitute a quorum for the transaction of business.

1.7 Adjournments. Any meeting of stockholders may be adjourned to any other time and to any other place at which a meeting of stockholders may be held under these By-Laws by the stockholders present or represented at the meeting and entitled to vote, although less than a quorum, which hold a majority of the voting power so present or represented or, if no stockholder is present, by any officer entitled to preside at or to act as secretary of such meeting. It shall not be necessary to notify any stockholder of any adjournment of less than thirty (30) days if the time and place of the adjourned meeting are announced at the meeting at which adjournment is taken, unless after the adjournment a new record date is fixed for the adjourned meeting. At the adjourned meeting, the Corporation may transact any business that could have been transacted at the original meeting.

1.8 Voting. Each stockholder shall have one vote for each share of capital stock entitled to vote and held of record by such stockholder, unless otherwise provided by the Delaware General Corporation Law (the “DGCL”), the Certificate of Incorporation or these By-Laws. Each stockholder of record entitled to vote at a meeting of stockholders may vote in person or by electronic means, as determined by the Board of Directors in its sole discretion.

Any stockholder entitled to vote on any matter may vote part of the shares in favor of the proposal and refrain from voting the remaining shares or, except when the matter is the election of directors, may vote them against the proposal; but if the stockholder fails to specify the number of shares that the stockholder is voting affirmatively, it will be conclusively presumed that the stockholder’s approving vote is with respect to all shares that the stockholder is entitled to vote.

1.9 Proxy Representation. Every stockholder may authorize another person or persons to act for him by proxy in all matters in which a stockholder is entitled to participate, whether by waiving notice of any meeting, objecting to or voting or participating at a meeting, or expressing consent or dissent without a meeting. The delivery of a proxy on behalf of a stockholder consistent with telephonic or electronically transmitted instructions obtained pursuant to procedures of the Corporation reasonably designed to verify that such instructions have been authorized by such stockholder shall constitute execution and delivery of the proxy by or on behalf of the stockholder. No proxy shall be voted or acted upon after three years from its date unless such proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and, if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the Corporation generally. The authorization of a proxy may but need not be limited to specified action, provided, however, that if a proxy limits its authorization to a meeting or meetings of stockholders, unless otherwise specifically provided such proxy shall entitle the holder thereof to vote at any adjourned session but shall not be valid after the final adjournment thereof. A proxy purporting to be authorized by or on behalf of a stockholder, if accepted by the Corporation in its discretion, shall be deemed valid unless challenged at or prior to its exercise, and the burden of proving invalidity shall rest on the challenger.

1.10 Action at Meeting. When a quorum is present at any meeting, a majority of the votes properly cast upon any question shall decide the question, except when a larger vote is required by law, by the Certificate of Incorporation or by these By-Laws. No written ballot shall be required for any election unless requested by a stockholder present or represented at the meeting and entitled to vote in the election.

1.11 Nomination of Directors. Only persons who are nominated in accordance with the procedures set forth in this Section 1.11 shall be eligible for election as directors. The nomination for election to the Board of Directors at a meeting of stockholders may be made by the Board of Directors or by any stockholder of the Corporation entitled to vote for the election of directors at such meeting who complies with the notice procedures set forth in this Section 1.11. Such nominations, other than those made by the Board of Directors, shall be made by notice in writing delivered or mailed by first class United States mail, postage prepaid, to the Secretary, and received at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that if the annual meeting is not held within thirty (30) days before or after such anniversary date, or in the case of a special meeting, then such nomination shall be delivered or mailed and received by the Secretary not later than the close of business on the tenth day following the date on which the notice of the meeting is mailed or public disclosure is made, whichever occurs first. Such notice shall set forth: (a) as to each proposed nominee, (i) the name, age, business address and, if known, residence address of each such nominee, (ii) the principal occupation or employment of each such nominee, (iii) the class and number of shares of stock of the Corporation that are beneficially owned by each such nominee, (iv) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nominations are to be made by the stockholder, and (v) any other information concerning the nominee that must be disclosed as to nominees in proxy solicitations pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “1934 Act”), including such person’s written consent to be named as a nominee and to serve as a director if elected; and (b) as to the stockholder giving the notice, (i) the name and address, as they appear on the Corporation’s books, of such stockholder, and (ii) the class and number of shares of the Corporation that are beneficially owned by such stockholder. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as a director of the Corporation.

The chair of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not properly brought before the meeting in accordance with the provisions of this Section 1.11, and if he or she should so determine, the chair shall so declare to the meeting and the defective nomination shall be disregarded.

Notwithstanding the foregoing provisions of this Section 1.11, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual meeting of stockholders of the Corporation to present a nomination, such nomination shall be disregarded, notwithstanding that proxies in respect of such vote may have been received by the Corporation.

Notwithstanding the foregoing provisions of this Section 1.11, a stockholder shall also comply with all applicable requirements of the 1934 Act and the rules and regulations thereunder with respect to the matters set forth in this Section 1.11. Nothing in this Section 1.11 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the 1934 Act.

1.12 Notice of Business at Annual Meetings. At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be: (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors; (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors; or (c) otherwise properly brought before the meeting by a stockholder. For business to be properly brought before an annual meeting by a stockholder, if such business relates to the election of directors of the Corporation, the procedures in Section 1.11 must be

complied with. If such business relates to any other matter, the stockholder must have given timely notice thereof in writing to the Secretary. To be timely, a stockholder’s notice must be delivered to or mailed by first class United States mail, postage prepaid, and received by the Secretary at the principal executive offices of the Corporation not less than ninety (90) calendar days nor more than one hundred twenty (120) calendar days in advance of the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that if the annual meeting is not held within thirty (30) days before or after such anniversary date, then for the notice by the stockholder to be timely it must be so received not later than the close of business on the tenth day following the date on which the notice of the meeting was mailed or public disclosure of the meeting was made, whichever occurs first. A stockholder’s notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting: (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting; (b) the name and address, as they appear on the Corporation’s books, of the stockholder proposing such business; (c) the class and number of shares of the Corporation that are beneficially owned by the stockholder; and (d) any material interest of the stockholder in such business. Notwithstanding anything in these By-Laws to the contrary, no business shall be conducted at any annual meeting except in accordance with the procedures set forth in this Section 1.12, except that any stockholder proposal that complies with Rule 14a-8 of the proxy rules, or any successor provision promulgated under the 1934 Act that is to be included in the Corporation’s proxy statement for an annual meeting of stockholders shall be deemed to comply with the requirements of this Section 1.12.

The chair of the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 1.12, and if he or she should so determine, the chair shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.

Notwithstanding the foregoing provisions of this Section 1.12, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual meeting of stockholders of the Corporation to present business, such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation.

Notwithstanding the foregoing provisions of this Section 1.12, a stockholder shall also comply with all applicable requirements of the 1934 Act and the rules and regulations thereunder with respect to the matters set forth in this Section 1.12. Nothing in this Section 1.12 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the 1934 Act.

ARTICLE 2 - DIRECTORS

2.1 General Powers. The business and affairs of the Corporation shall be managed by or under the direction of a Board of Directors, who may exercise all of the powers of the Corporation except as otherwise provided by law, the Certificate of Incorporation or these By-Laws. In the event of a vacancy in the Board of Directors, the remaining directors, except as otherwise provided by law, may exercise the powers of the full Board of Directors until the vacancy is filled.

2.2 Number; Election and Qualification. The number of directors that shall constitute the whole Board of Directors shall initially be seven (7). Except as otherwise provided by the Certificate of Incorporation, the number of directors that shall constitute the whole Board of Directors shall be established from time to time by resolution of the Board of Directors. The directors shall be elected at the annual meeting of

stockholders by such stockholders as have the right to vote on such election. The directors need not be stockholders of the Corporation.

2.3 Term of Office. Each director shall hold office for a term that will expire at the annual meeting of stockholders immediately following such director’s election, and until his or her successor shall have been elected, or until his or her sooner death, resignation or removal from office.

2.4 Removal. Any director may be removed, with or without cause, by the affirmative vote of a majority in voting power of the outstanding shares of capital stock of the Corporation cast at a meeting of stockholders called for that purpose.

2.5 Resignation. Any director may resign at any time by delivering his or her written resignation to the Corporation at its principal office or to the Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.

2.6 Vacancies. Any vacancy in the Board, however occurring, including a vacancy resulting from an enlargement of the Board, shall be filled only by a vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director.

2.7 Regular Meetings. The regular meetings of the Board of Directors may be held without notice at such time and place, either within or without the State of Delaware, as shall be determined from time to time by the Board of Directors; provided, that any director who is absent when such a determination is made shall be given notice of the determination. A regular meeting of the Board of Directors may be held without notice immediately after and at the same place as the annual meeting of stockholders.

2.8 Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, the Chief Executive Officer, two or more directors, or by one director in the event that there is only a single director in office.

2.9 Notice of Special Meetings. Notice of any special meeting of the Board of Directors shall be given to each director by the Secretary or by the officer or one of the directors calling the meeting. The notices of any special meeting shall state the place, if any, the date, and the hour of the meeting. The notice shall be duly given to each director: (a) by giving notice to such director in person or by telephone at least twenty four (24) hours in advance of the meeting; (b) by sending a telegram, telecopy, electronic mail or other means of electronic transmission, or delivering written notice by hand, to the director’s last known business or home address (including any facsimile number or email address) at least twenty four (24) hours in advance of the meeting; or (c) by mailing written notice to the director’s last known business or home address at least seventy two (72) hours in advance of the meeting. Notice shall be deemed to have been given at the time when delivered personally or by telephone, at the time of transmission when sent by telegram, telecopy, electronic mail or other means of electronic transmission, or when deposited in the mail when given by mail. A notice or waiver of notice of a special meeting of the Board of Directors need not specify the purposes of the meeting.

2.10 Meetings by Telephone Conference Calls. Any meeting of the Board of Directors or any committee of the Board of Directors may be held by conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear one another. Participation by such means shall be deemed to constitute presence in person at the meeting.

2.11 Quorum. A majority of the total number of directors then in office shall constitute a quorum at all meetings of the Board of Directors. In the event one or more of the directors shall be disqualified to vote at any meeting, then the required quorum shall be reduced by one for each such director so disqualified.

Notwithstanding anything to the contrary in the two immediately preceding sentences, a quorum shall not in any case be less than one-third (1/3) of the total number of directors constituting the whole Board of Directors. In the absence of a quorum at any such meeting, a majority of the directors present may adjourn the meeting from time to time without further notice, other than announcement at the meeting, until a quorum shall be present.

2.12 Action at Meeting. At any meeting of the Board of Directors at which a quorum is present, the vote of a majority of those present shall be sufficient to take any action, unless a different vote is specified by law, the Certificate of Incorporation or these By-Laws.

2.13 Action by Consent. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee of the Board of Directors may be taken without a meeting, if all members of the Board or committee, as the case may be, consent to the action in writing and the written consents are filed with the minutes of proceedings of the Board of Directors or committee of the Board of Directors, as applicable.

2.14 Committees. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution of the Board of Directors and subject to the provisions of the DGCL, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation and may authorize the seal of the Corporation to be affixed to all papers that may require it. Each such committee shall keep minutes and make such reports as the Board of Directors may from time to time request. Except as the Board of Directors may otherwise determine, any committee may adopt a charter and make rules for the conduct of its business, but unless otherwise provided by the Board of Directors or in such charter or rules, its business shall be conducted as nearly as possible in the same manner as is provided in these By-Laws for the Board of Directors.

2.15 Compensation of Directors. The members of the Board of Directors may be paid such compensation for their services and such reimbursement for expenses of attendance at meetings as the Board of Directors may from time to time determine. No such payment shall preclude any director from serving the Corporation or any of its parent or subsidiary corporations in any other capacity and receiving compensation for such service.

ARTICLE 3 - OFFICERS

3.1 Enumeration. The officers of the Corporation shall include a Chief Executive Officer, Chief Financial Officer and Secretary. The Board may appoint other officers with such other titles as it may deem appropriate, including, without limitation, President, Treasurer, and one or more Vice Presidents, Assistant Treasurers, Assistant Secretaries, and Controllers.

3.2 Election. The Chief Executive Officer, Chief Financial Officer and Secretary shall be elected annually by the Board at its first meeting following the annual meeting of stockholders. Other officers may be appointed by the Board at such meeting or at any other meeting.

3.3 Qualification. No officer need be a stockholder of the Corporation. Any two or more offices may be held by the same person.

3.4 Term of Office. Except as otherwise provided by law, by the Certificate of Incorporation or by these By-Laws, each officer shall hold office until his or her successor is elected, unless a different term is

specified in the vote choosing or appointing him or her, or until his or her sooner death, resignation or removal.

3.5 Resignation and Removal. Any officer may resign by delivering his or her written resignation to the Corporation at its principal office or to the Chief Executive Officer or Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event. Any officer may be removed at any time, with or without cause, by vote of the Board of Directors at any regular or special meeting.

3.6 Vacancies. The Board of Directors may fill any vacancy occurring in any office for any reason and may, in its discretion, leave unfilled for such period as it may determine any offices other than those of Chief Executive Officer, Chief Financial Officer and Secretary. Each such successor shall hold office for the unexpired term of his or her predecessor and until his or her successor is elected and qualified, or until his or her earlier death, resignation or removal.

3.7 Chairman of the Board. The Board of Directors may appoint a Chairman of the Board. If the Board of Directors appoints a Chairman of the Board, he or she shall perform such duties and possess such powers as the Board of Directors may from time to time prescribe. Unless the Board of Directors otherwise specifies, the Chairman of the Board, or if there is none the Chief Executive Officer, the President or any Vice President, in the order named, shall preside, or designate the person who shall preside, at all meetings of stockholders and of the Board of Directors.

3.8 Chief Executive Officer. The Chief Executive Officer shall, subject to the direction of the Board of Directors, have general charge and supervision of the business of the Corporation. The Chief Executive Officer shall perform such other duties and shall have such other powers as the Board of Directors may from time to time prescribe.

3.9 President. The President, if there is one, shall perform such duties and possess such powers as the Board of Directors or the Chief Executive Officer may from time to time prescribe. In the event of the absence, inability or refusal to act of the Chief Executive Officer, the President shall perform the duties of the Chief Executive Officer and when so performing shall have all the powers of and be subject to all the restrictions upon the office of the Chief Executive Officer.

3.10 Chief Financial Officer. The Chief Financial Officer shall perform such duties and possess such powers as the Board of Directors or the Chief Executive Officer may from time to time prescribe. The Chief Financial Officer shall have the custody of the corporate funds and securities; shall keep full and accurate all books and accounts of the Corporation as shall be necessary or desirable in accordance with applicable law or generally accepted accounting principles; shall deposit all monies and other valuable effects in the name and to the credit of the Corporation as may be ordered by the Chairman of the Board or the Board of Directors; shall cause the funds of the Corporation to be disbursed when such disbursements have been duly authorized, taking proper vouchers for such disbursements; and shall render to the Board of Directors, at its regular meeting or when the Board of Directors so requires, an account of the Corporation.

3.11 Vice Presidents. Any Vice President shall perform such duties and possess such powers as the Board of Directors or the Chief Executive Officer may from time to time prescribe. In the event of the absence, inability or refusal to act of the President, the Vice President (or if there shall be more than one, the Vice Presidents in the order determined by the Board of Directors) shall perform the duties of the President and when so performing shall have all the powers of and be subject to all the restrictions upon the President.

The Board of Directors may assign to any Vice President the title of Executive Vice President, Senior Vice President or any other title selected by the Board of Directors.

3.12 Secretary and Assistant Secretaries. The Secretary shall perform such duties and shall have such powers as the Board of Directors or the Chief Executive Officer may from time to time prescribe. In addition, the Secretary shall perform such duties and have such powers as are incident to the office of the Secretary, including without limitation the duty and power to give notices of all meetings of stockholders and special meetings of the Board of Directors, to attend all meetings of stockholders and the Board of Directors and keep a record of the proceedings, to maintain a stock ledger and prepare lists of stockholders and their addresses as required, to be custodian of corporate records and the corporate seal and to affix and attest to the same on documents.

Any Assistant Secretary shall perform such duties and possess such powers as the Board of Directors, the Chief Executive Officer or the Secretary may from time to time assign. In the event of the absence, inability or refusal to act of the Secretary, the Assistant Secretary (or if there shall be more than one, the Assistant Secretaries in the order determined by the Board of Directors) shall perform the duties and exercise the powers of the Secretary.

In the absence of the Secretary or any Assistant Secretary at any meeting of stockholders or directors, the person presiding at the meeting shall designate a temporary secretary to keep a record of the meeting.

3.13 Treasurer and Assistant Treasurers. The Treasurer, if there is one, shall perform such duties and shall have such powers as the Board of Directors or the Chief Executive Officer may from time to time prescribe.

The Assistant Treasurers shall perform such duties and possess such powers as the Board of Directors, the Chief Executive Officer or the Treasurer may from time to time prescribe. In the event of the absence, inability or refusal to act of the Treasurer, the Assistant Treasurer (or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors) shall perform the duties and exercise the powers of the Treasurer.

3.14 Controllers. Any Controller shall perform such duties and possess such powers as the Board of Directors, the Chief Executive Officer or any Vice President may from time to time prescribe.

3.15 Other Officers, Assistant Officers and Agents. Officers, assistant officers and agents, if any, other than those whose duties are provided for in these By-Laws, shall have such authority and perform such duties as may from time to time be prescribed by resolution of the Board of Directors.

3.16 Salaries. Officers of the Corporation shall be entitled to such salaries, compensation or reimbursement as shall be fixed or allowed from time to time by the Board of Directors or a committee thereof.

ARTICLE 4 - CAPITAL STOCK

4.1 Issuance of Stock. Subject to the provisions of the Certificate of Incorporation, the whole or any part of any unissued balance of the authorized capital stock of the Corporation or the whole or any part of any balance of the authorized capital stock of the Corporation held in its treasury may be issued, sold, transferred or otherwise disposed of in such manner, for such consideration and on such terms as the Board of Directors may determine.

4.2 Certificates of Stock. Every holder of stock of the Corporation shall be entitled to have a certificate, in such form as may be prescribed by law and by the Board of Directors, certifying the number and class of shares owned in the Corporation. Each such certificate shall be signed by, or in the name of the Corporation by, the Chairman of the Board of Directors, the Chief Executive Officer or the President, and the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Corporation. Any or all of the signatures on the certificate may be a facsimile.

Each certificate for shares of stock that are subject to any restriction on transfer pursuant to the Certificate of Incorporation, the By-Laws, applicable securities laws or any agreement among any number of stockholders or among such holders and the Corporation shall have conspicuously noted on the face or back of the certificate either the full text of the restriction or a statement of the existence of such restriction.

4.3 Transfers. Except as otherwise established by rules and regulations adopted by the Board of Directors, and subject to applicable law, shares of stock may be transferred on the books of the Corporation by the surrender to the Corporation or its transfer agent of the certificate representing such shares properly endorsed or accompanied by a written assignment or power of attorney properly executed, and with such proof of authority or the authenticity of signature as the Corporation or its transfer agent may reasonably require. Except as may be otherwise required by law, by the Certificate of Incorporation or by these By-Laws, the Corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect to such stock, regardless of any transfer, pledge or other disposition of such stock, until the shares have been transferred on the books of the Corporation in accordance with the requirements of these By-Laws.

4.4 Lost, Stolen or Destroyed Certificates. The Corporation may issue a new certificate of stock in place of any previously issued certificate alleged to have been lost, stolen, or destroyed, upon such terms and conditions as the Board of Directors may prescribe, including the presentation of reasonable evidence of such loss, theft or destruction and the giving of such indemnity as the Board of Directors may require for the protection of the Corporation or any transfer agent or registrar.

4.5 Record Date. The Board of Directors may fix in advance a date as a record date for the determination of the stockholders entitled to notice of or to vote at any meeting of stockholders, or entitled to receive payment of any dividend or other distribution or allotment of any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action. Such record date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action to which such record date relates.

If no record date is fixed, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day before the day on which notice is given, or, if notice is waived, at the close of business on the day before the day on which the meeting is held. The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating to such purpose.

A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

4.6 Dividends. Subject to limitations contained in the DGCL, the Certificate of Incorporation and these By-Laws, the Board of Directors may declare and pay dividends upon the shares of capital stock of the

Corporation, which dividends may be paid either in cash, in property or in shares of the capital stock of the Corporation.

ARTICLE 5 - RECORDS AND REPORTS

5.1 Maintenance and Inspection of Records. The Corporation shall, either at its principal executive office or at such place or places as designated by the Board of Directors, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these By-Laws as amended to date, accounting books and other records.

The Board of Directors shall have power from time to time to determine to what extent and at what times and places and under what conditions and regulations the accounts and books of the Corporation, or any of them, shall be open to the inspection of stockholders; and no stockholder shall have any right to inspect any account or book or document of the Corporation except as conferred by the laws of the State of Delaware, except as otherwise provided in these By-Laws or unless and until authorized to do so by resolution of the Board of Directors.

5.2 Inspection by Director. Any director shall have the right to examine the Corporation’s stock ledger, a list of its stockholders and its other books and records for a purpose reasonably related to his or her position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is entitled to the inspection sought. The Court may summarily order the Corporation to permit the director to inspect any and all books and records, the stock ledger, and the stock list and to make copies or extracts therefrom. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the Court may deem just and proper.

5.3 Representation of Shares of Other Corporations. The Chief Executive Officer or the Secretary, or any other officer of this Corporation authorized by the Board of Directors is authorized to vote, represent, and exercise on behalf of this Corporation all rights incident to any and all shares or other ownership interests of any other corporation or entity standing in the name of this Corporation. The authority herein granted may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.

ARTICLE 6 - GENERAL PROVISIONS

6.1 Fiscal Year. The fiscal year of the Corporation shall end on December 31, except as from time to time otherwise designated by the Board of Directors.

6.2 Corporate Seal. The corporate seal shall be in such form as shall be approved by the Board of Directors.

6.3 Waiver of Notice. Whenever any notice is required to be given by law, by the Certificate of Incorporation or by these By-Laws, a waiver of such notice either in writing signed by the person entitled to such notice or such person’s duly authorized attorney, or by telegraph, cable, electronic mail or any other available method, whether before, at or after the time of the meeting to which such notice relates, or the appearance of such person or persons at such meeting in person, by means of remote communications, if authorized, or by proxy, shall be deemed equivalent to such notice. Where such an appearance is made for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the ground that the meeting has not been lawfully called or convened, the appearance shall not be deemed equivalent to notice.

6.4 Corporate Contracts and Instruments; How Executed. The Board of Directors, except as otherwise provided in these By-Laws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the Board of Directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.

6.5 Evidence of Authority. A certificate by the Secretary, any Assistant Secretary, or any temporary secretary, as to any action taken by the stockholders, the Board of Directors, a committee of the Board of Directors, or any officer or representative of the Corporation shall, as to all persons who rely on the certificate in good faith, be conclusive evidence of such action.

6.6 Certificate of Incorporation. All references in these By-Laws to the Certificate of Incorporation shall be deemed to refer to the Amended and Restated Certificate of Incorporation of the Corporation, as amended or restated and in effect from time to time.

6.7 Transactions with Interested Parties. No contract or transaction between the Corporation and one or more of the directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of the directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or a committee of the Board of Directors that authorizes the contract or transaction or solely because his, her or their votes are counted for such purpose, if:

(1) The material facts as to his, her or their relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee of the Board of Directors in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum;

(2) The material facts as to his, her or their relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or

(3) The contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board of Directors, a committee of the Board of Directors, or the stockholders.

Interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee that authorizes the contract or transaction.

6.8 Construction; Definitions. Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the DGCL shall govern the construction of these By-Laws. Without limiting the generality of this provision, (a) the singular number includes the plural, and the plural number includes the singular; (b) the term “person” includes a corporation, a partnership, an entity and a natural person; and (c) all pronouns include the masculine, feminine or neuter, singular or plural, as the identity of the person or persons may require.

6.9 Provisions Additional to Provisions of Law. All restrictions, limitations, requirements and other provisions of these By-Laws shall be construed, insofar as possible, as supplemental and additional to all provisions of law applicable to the subject matter thereof and shall be fully complied with in addition to the said provisions of law unless such compliance shall be illegal.

6.10 Provisions Contrary to Provisions of Law; Severability. Any article, section, subsection, subdivision, sentence, clause or phrase of these By-Laws that, upon being construed in the manner provided in Section 6.8 hereof, shall be contrary to or inconsistent with any applicable provisions of law, shall not apply so long as said provisions of law shall remain in effect, but such result shall not affect the validity or applicability of any other portions of these By-Laws, it being hereby declared that these By-Laws and each article, section, subsection, subdivision, sentence, clause or phrase thereof, would have been adopted irrespective of the fact that any one or more articles, sections, subsections, subdivisions, sentences, clauses or phrases is or are illegal.

6.11 Inconsistent Provisions. In the event that any provision of these By-Laws is or becomes inconsistent with any provision of the Certificate of Incorporation, the provision of these By-Laws shall not be given any effect to the extent of such inconsistency but shall otherwise be given full force and effect.

6.12 Section Headings. Section headings in these By-Laws are for convenience of reference only and shall not be given any substantive effect in limiting or otherwise construing any provision herein.

ARTICLE 7 – FORUM SELECTION

Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery (the “Chancery Court”) of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or to the Corporation’s stockholders, (c) any action arising pursuant to any provision of the DGCL or the Certificate of Incorporation or these By-laws (as either may be amended from time to time), or (d) any action asserting a claim against the Corporation governed by the internal affairs doctrine. If any action the subject matter of which is within the scope of the preceding sentence is filed in a court other than a court located within the State of Delaware (a “Foreign Action”) in the name of any stockholder, such stockholder shall be deemed to have consented to (i) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce the preceding sentence and (ii) having service of process made upon such stockholder in any such action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder.

ARTICLE 8 - AMENDMENTS

In furtherance of and not in limitation of the powers expressly conferred by statute, the Board of Directors is expressly authorized to adopt, amend and repeal the By-Laws in any manner not inconsistent with the DGCL or the Certificate of Incorporation, subject to the right of the stockholders, upon the affirmative vote of at least two-thirds in voting power of the then outstanding shares of capital stock of the Corporation, to adopt, amend and repeal the By-Laws, including to amend or repeal the By-Laws adopted or amended by the Board of Directors.

Xerium Technologies, Inc.

Non-Management Director Compensation Policy

Non-management directors receive an annual retainer of $132,000, which will be paid pursuant

to the Xerium Technologies, Inc. Directors’ Deferred Stock Unit Plan. Under the plan, 54% of

the retainer will be paid in the form of a grant of deferred stock units. Non-management directors will be given the opportunity to elect to receive the remainder of such retainer in deferred stock units or in cash. Please see the Directors’ Deferred Stock Unit Plan for additional information.

Each of the chairs of the Audit Committee and Compensation Committee also receive additional cash compensation at an annual rate of $10,000 per year, and the chair of the Nominating and Governance Committee, and the Lead Independent Director, if there is one, each receive additional cash compensation at an annual rate of $5,000 per year. If the Chairman of the Board is a non-management director then he or she will receive additional cash compensation at an annual rate of $55,000 per year. Directors are also reimbursed for out-of-pocket expenses for attending board and committee meetings.

XERIUM TECHNOLOGIES, INC.

MANAGEMENT INCENTIVE COMPENSATION AWARD AGREEMENT

Pursuant to the terms of the Xerium Technologies, Inc. 2015 Management Incentive Compensation Program (the “MIC”) and the Xerium Technologies, Inc. 2010 Equity Incentive Plan (the “Plan”), Xerium Technologies, Inc. (the “Company”) hereby grants to the Employee the Management Incentive Compensation Award (“MIC Award”) described below.

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

1. Payment of Award. The amount determined under Schedule 1 shall be paid to the Employee in cash not later than March 15, 2016, subject to applicable tax withholding.

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

(a) In the event a Change of Control (defined below) occurs prior to the close of the performance year with respect to the Award, for the performance period from January 1, 2015 to the date of closing of the Change of Control (the “COC Performance Year”) the applicable performance metrics specified in Schedule 1 of the Award Agreement shall be determined as follows: (i) the performance year shall be deemed to end on the effective date of such transaction; and (ii) the performance metrics shall be deemed achieved to the extent the applicable performance metrics specified in Schedule 1 of the Award Agreement for the shortened performance year described in clause (i) above are on target to be achieved based upon the financial information available to the Company. In the event such performance metrics have been achieved pursuant to the foregoing sentence for the COC Performance Year and the MIC (or an equivalent plan approved by the Board that is no less lucrative or generous than the MIC) is not continued for the period from the end of the COC Performance Year to the end of calendar year 2015, the full amount of the Award determined under Schedule 1 shall be paid to the Employee in cash promptly following the Change of Control, subject to applicable tax withholding. In the event such performance metrics have been achieved pursuant to the first sentence above for the COC Performance Year and the MIC (or an equivalent plan approved by the Board that is no less lucrative or generous than the MIC) is continued for the period from the end of the COC Performance Year to the end of the calendar year (subject to an adjustment for any payments made at the Change of Control effective date hereunder), the amount of the Award determined under Schedule 1 shall be prorated by multiplying the Award by a fraction, the numerator of which is the number of days in the COC Performance Year and the denominator of which is 365, and such Award shall be paid to the Employee in cash promptly following the Change of Control, subject to applicable tax withholding.

(b) In the event of a termination of the Employee’s employment for reasons other than (i) death or Disability, (ii) termination without Cause or (iii) termination by the Employee with Good Reason on or prior to December 31, 2015, no Award shall be payable to Employee.

(c) In the event of a termination of the Employee’s employment as a result of (i) death or Disability, (ii) termination without Cause or (iii) termination by the Employee with Good Reason on or prior to December 31, 2015, the Formula Award for such Employee determined under Schedule 1 of the Award Agreement shall be prorated by multiplying such Formula Award amount by a fraction, the numerator of which is the number of days in the performance year in which Employee was employed by the Company and the denominator of which is 365. The resulting Award shall be paid to Employee in accordance with Section 2 above.

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

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

(ii) “Change of Control” shall mean any of the following which takes place after the Effective Date: (i) any Person or “group,” within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Act”), other than the Company or any of its subsidiaries or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or one of its subsidiaries, becomes a beneficial owner, directly or indirectly, in one or a series of transactions, of securities representing fifty percent (50%) or more of the total number of votes that may be cast for the election of directors of the Company; (ii) any merger or consolidation involving the Company or any sale or other disposition of all or substantially all of the assets of the Company, or any combination of the foregoing, occurs and the beneficial owners of the Company’s voting securities outstanding immediately prior to such consolidation, merger, sale or other disposition do not, immediately following the consummation of such consolidation, merger, sale or other disposition, hold beneficial ownership, directly or indirectly, of securities representing fifty percent (50%) or more of the total number of votes that may be cast for election of directors of the surviving or resulting corporation in the case of any merger or consolidation or of the acquiring Person or Persons in the case of any sale or other disposition; or (iii) within twelve (12) months after a tender offer or exchange offer for voting securities of the Company (other than by the Company or any of its subsidiaries), individuals who are Continuing Directors shall cease to constitute a majority of the Board. For the purpose of this definition, the term “beneficial owner” (and correlative terms, including “beneficial ownership”) shall have the meaning set forth in Rule 13d-3 under the Act. provided in each such case such event is also a “change in control event” within the meaning of Treas. Reg. § 1.409A-3(i)(5)(1) (or similar applicable regulation under Section 409A of the Code).

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

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

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

3. Clawback. If an Employee receives an Award payout under the MIC based on financial statements that are subsequently required to be restated in a way that would decrease the amount of the Award to which the Employee was entitled, the Employee will refund to the Company the difference between what the Employee received and what the Employee should have received; provided that (i) the value of any difference to be refunded will be determined net of withholding and (ii) no refund will be required for Awards paid more than three years prior to the date on which the Company is required to prepare the applicable restatement. The value of any difference to be refunded will be determined in a manner consistent with regulations the Securities and Exchange Commission may adopt pursuant to Section 945 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

4. Confidentiality.

(a) Employee acknowledges that the Company and its subsidiaries continually develop Confidential Information (defined below), that the Employee may develop Confidential Information for the Company or its subsidiaries during Employee’s employment with the Company, and that Employee may learn of Confidential Information during the course of such employment. Employee will comply with the policies and procedures of the Company and its subsidiaries for protecting Confidential Information and shall never use or disclose to any Person (except as required by applicable law or for the proper performance of his duties and responsibilities to the Company and its subsidiaries), any Confidential Information obtained by Employee incident to his employment or other association with the Company or any of its subsidiaries. Employee agrees to only use the Company’s Confidential Information as necessary to perform his or her job during employment with the Company. Employee understands that this restriction shall continue to apply after his employment terminates, regardless of the reason for such termination. All documents, records, tapes and other media of every kind and description relating to the business, present or otherwise, of the Company or its subsidiaries and any copies, in whole or in part, thereof (the “Documents”), whether or not prepared by Employee, shall be the sole and exclusive property of the Company and its subsidiaries. Employee shall safeguard all Documents and shall surrender to the Company at the time his employment terminates, or at such earlier time or times as the Board or its designee may specify, all Documents then in the Employee’s possession or control.

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

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

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

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

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

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

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

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

8. Consideration and Acknowledgments. Employee acknowledges and agrees that the covenants described in Sections 4 through 8 of this Agreement are essential terms, and the underlying Management Incentive Compensation Award would not be provided by the Company in the absence of these covenants. Employee further acknowledges that these covenants are supported by adequate consideration as set forth in this Agreement, that full compliance with these covenants will not prevent Employee from earning a livelihood following the termination of his or her employment, and that these covenants do not place undue restraint on Employee and are not in conflict with any public interest. Employee further acknowledges and agrees that Employee fully understands these covenants, has had full and complete opportunity to discuss and resolve any ambiguities or uncertainties regarding these covenants before signing this Agreement, that these covenants are reasonable and enforceable in every respect, and has voluntarily agreed to comply with these covenants for their stated term. Employee agrees that in the event he or she is offered employment with a competing business at any time in the future, Employee shall immediately notify the competing business of the existence of the covenants set forth above.

9. Enforceability; General Provisions.

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

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

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

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

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

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

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

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

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

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

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

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

10. Miscellaneous.

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

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

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

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

(e) Employee Acknowledgements. Employee acknowledges that (i) Employee has had access to Company’s trade secrets and Confidential Information at the highest levels, including without limitation manufacturing and marketing strategy, customer strategy and lists, technical know-how, product and process research and development, and business plans, (ii) Employee has had access to Confidential Information regarding and has been privy to discussions and strategy sessions at the highest levels of the Company regarding all aspects, business lines and product segments of the Company, and (iii) that these trade secrets and Confidential Information would inevitably be disclosed were Employee to work for a competitor.

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

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

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

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

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

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

Xerium Technologies, Inc.

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

Acknowledged and agreed:

Employee

Signature:

Printed Name:

Date:

Schedule 1

(a) Target Award: ___% of base compensation

(b) Metrics. Two measures of performance will be used in determining the formula adjustment under the Award:

(1) 75% of the Target Award shall be based on Xerium 2015 Bank Adjusted EBITDA. The “Bank Adjusted EBITDA” means “Adjusted EBITDA,” as such term is defined in that certain Credit and Guaranty Agreement, dated as of May 17, 2013, as amended from time to time (the “Credit Agreement”), entered into by and among the Company, certain subsidiaries of the Company, Jefferies Finance LLC, as administrative agent and other agents and banks party thereto, as in effect for Xerium Technologies, Inc. for the year ended December 31, 2015.

(2) 25% of the Target Award shall be based on Xerium 2015 Working Capital Management Percentage. The "Working Capital Management Percentage" means the percentage determined by dividing the Company's total trailing twelve month sales for the period by the total Working Capital of the Company as of the date of determination. "Working Capital" shall be calculated as trade accounts receivable plus net inventory less trade accounts payable. Working capital will be measured using a 5 point, quarterly average performance to determine achievement.

(c) Currency Adjustments. The final Bank Adjusted EBITDA and Working Capital Management Percentage will be adjusted at the end of the year to reflect currency fluctuations relative to the US$ in all markets. Any adjustments made will be based on the following budgeted rates:



Foreign Exchange Rates - EBITDA		Foreign Exchange Rates - TWC
ARS	0.086548	ARS	0.076923
AUD	0.83000	AUD	0.80000
BRL	0.372898	BRL	0.363636
CAD	0.887036	CAD	0.900901
CHF	0.985487	CHF	0.970874
CNY	0.164750	CNY	0.163399
EUR	1.21000	EUR	1.200000
GBP	1.617500	GBP	1.620000
JPY	0.008833	JPY	0.008696
MXN	0.076483	MXN	0.076923
SEK	0.132986	SEK	0.133333
VND	0.000048	VND	0.000048
TRY	0.436490	TRY	0.425532

(d) Target and Formula. The minimum, target and maximum thresholds of Bank Adjusted EBITDA and Working Capital Management Percentage for 2015 shall be set by the Committee and delivered to the Employee in a separate writing; provided, however, that the amounts may be adjusted by the Committee after the initial determination of the amounts to reflect any material change of circumstance, including without limitation, the acquisition or disposition of any business by the Company or any of its subsidiaries.

Bank Adjusted EBITDA (75% of Target Award)



Bank Adjusted EBITDA	Minimum	Target	Maximum
Percentage of Target Award Payable	25%	100%	150%

Working Capital Management Percentage (25% of Target Award)



Working Capital Management Percentage	Minimum	Target	Maximum
Percentage of Target Award Payable	25%	100%	150%

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


•	Bank Adjusted EBITDA Metric below minimum: 75% of Award = no payment


•	Bank Adjusted EBITDA Metric equal to minimum: 75% of Award = 0.25X


•	Bank Adjusted EBITDA Metric at target: 75% of Award = X


•	Bank Adjusted EBITDA Metric at maximum or above: 75% of Award = 1.5X


•	Working Capital Percentage Metric below minimum: 25% of Award = no payment


•	Working Capital Percentage Metric equal to minimum: 25% of Award = 0.25X


•	Working Capital Percentage Metric at target: 25% of Award = X


•	Working Capital Percentage Metric at maximum or above: 25% of Award = 1.5X

The amount payable between the levels of Bank Adjusted EBITDA and Capital Management Percentage identified above shall be determined on the basis of straight line interpolation between points.

(e) The Committee may in its sole discretion adjust Award amount determined under subsection (e) upwards or downwards by 20% based on the following individual goals associated with the Company’s restructuring projects:

The Committee has delegated such authority (except with respect to his own Award) to the President and Chief Executive Officer of the Company.

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

A - 1

XERIUM TECHNOLOGIES, INC.

2015-2017 LONG TERM INCENTIVE PLAN

This Xerium Technologies, Inc. 2015-2017 Executive Long Term Incentive Plan (the “Executive LTIP”) contains rules supplemental to those set forth in the Xerium Technologies, Inc. 2010 Equity Incentive Plan (the “EIP”). The Executive LTIP provides for the grant of incentive award opportunities (each, an “Award”) under and subject to the terms of the EIP, which is incorporated herein by reference. In the event of any inconsistency between the Executive LTIP and applicable provisions of the EIP, the EIP shall control. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the EIP.

1.Administration; Eligibility. The Executive LTIP shall be administered by the Committee as described in the EIP. The Committee may in its discretion consult with outside advisors or internal Company resources for purposes of making any determinations in connection with its administration of the Program. Eligibility to participate in the Executive LTIP shall be limited to executive officers who are selected by the Committee to participate in the Executive LTIP from among those individuals who are eligible to participate in the EIP. Each selected individual who signs and returns an agreement (Award Agreement) in substantially the form of Exhibit A shall be a participant (“Participant”) in this Executive LTIP. Participation in any Award shall not entitle a Participant to share in any future Awards or in any other future awards of the Company or its subsidiaries.

2. Determination of Number of Shares. The number of shares of Common Stock covered by an Award (the “LTIP Shares”) shall be as determined by the Committee and set forth in Schedule 1 to the Award Agreement.

3. Determination of Time-Based Versus Performance-Based LTIP Shares. Participants will receive thirty-five percent (35%) of their LTIP Shares in the form of time-based Restricted Stock Units as described in Section 4 below (“Time-Based RSUs”) and have the remainder of their LTIP Shares (sixty-five percent (65%)) credited to them as performance-based stock units (“Performance Stock Units”) as described in Section 5 below, to be earned and vested subject to satisfaction of certain performance conditions. The performance period is the three-year period comprising a three year period beginning on the date of each Participant’s grant and ending on the third (3^rd) anniversary of such grant date.

4. General Terms of Time-Based RSUs. Any LTIP Shares that are to be conveyed in the form of Time-Based RSUs will be granted as of the date set forth in Schedule 1 to the Award Agreement. The Award Agreement provides that the RSUs shall vest on the third (3^rd) anniversary of such grant date and settle in shares of Common Stock as soon as administratively possible after the third (3^rd) anniversary of such grant date, but in all events before the 15^th day of the third month following December 31 following the third (3^rd) anniversary of such grant date.

5. General Terms of Performance Stock Units. The determination of the number of shares of Common Stock to be delivered at the end of the three-year performance period with respect to the Performance Stock Units (the “Performance Shares”) shall be made in accordance with the provisions of the Award Agreement. The Award Agreement provides that the Performance Stock Units will vest based on achievement of certain performance goals described in Schedule 2. Vested Performance Shares will be delivered in shares of Common Stock as soon as administratively possible after the third (3^rd) anniversary of such grant date, but in all events before the 15^th day of the third month following December 31 following the third (3^rd) anniversary of such grant date.

6. Forfeiture Upon Termination of Employment. Except as provided in the Award Agreement with respect to a Change of Control, death or Disability or a termination of employment by the Company without Cause or by the Participant with Good Reason (as “Disability”, “Cause” and “Good Reason” are defined in the Award Agreement), notwithstanding vesting under Section 4 or Section 5, no Time-Based RSUs or Performance Shares shall be payable to or in respect of a Participant unless the Participant is employed by the Company or a subsidiary on the third (3^rd) anniversary of such grant date.

7. Tax Withholding. The minimum tax withholding amount with respect to any payments being made in Common Stock may be satisfied by means of share withholding at the time the Award is settled as provided in the Award Agreement.

8. Intent to be Exempt from Section 162(m). The portion of the Award paid in Time-Based RSUs is not intended to qualify for the performance-based compensation exception under Section 162(m) of the Code. The portion of the Award paid in Performance Shares is intended to qualify to the extent possible for the performance-based compensation exception under Section 162(m) of the Code.

9. Nature of Awards. Awards hereunder are intended as Stock Unit Awards pursuant to the EIP. The Executive LTIP is unfunded.

10. Availability of Stock. If, when Time-Based RSUs or Performance Shares become payable, the number of shares of Common Stock needed exceeds the number of shares then available under the EIP, or exceeds any limit established by the Board on the number of shares delivered in the same fiscal year, the Company will pay out the value of any share that was not delivered in cash on the date otherwise scheduled for delivery of shares and determine its value by using the per-share closing price of the Common Stock on the date immediately preceding the date the shares would have been delivered had there been a sufficient number available. Any substitution of cash for shares in such event shall be applied pro rata to all Participants entitled to a distribution by reason of the same event.

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

12. Amendment. The Committee may amend the Executive LTIP at any time and from time to time, and may terminate the Executive LTIP, in each case subject only to such limitations, if any, as the EIP may impose.

13. 409A. This Executive LTIP and the Time-Based RSUs and Performance Stock Units granted thereunder shall be construed and administered consistent with the intent that they at all times be in compliance with or exempt from the requirements of Section 409A of the Code and the regulations promulgated thereunder.

EXHIBIT A

XERIUM TECHNOLOGIES, INC.

LTIP SHARE AGREEMENT

(2015-2017 Executive LTIP)

Pursuant to the terms of the Xerium Technologies, Inc. Long Term Incentive Plan effective for fiscal years 2015 through 2017 (the “2015-2017 Executive LTIP”) and the Xerium Technologies, Inc. 2010 Equity Incentive Plan (the “Plan”), Xerium Technologies, Inc. (the “Company”) hereby grants to (the “Employee”) the LTIP Shares described below.

1. The LTIP Share Award. The LTIP Share Award is subject to the terms and conditions of this LTIP Share Agreement, the 2015-2017 Executive LTIP and the Plan. The Company hereby grants LTIP Shares to the Employee, the number of LTIP Shares specified on Schedule 1, as of the date specified on Schedule 1, subject to the terms and conditions of this Agreement and the Plan (the “Award”). An Award shall be paid hereunder, only to the extent that the Employee has a nonforfeitable right to such portion of the Award, as provided in this Agreement. The Employee’s rights to the LTIP Shares are subject to the restrictions described in this Agreement and the Plan in addition to such other restrictions, if any, as may be imposed by law.

2. Definitions. The following definitions will apply for purposes of this Agreement. Capitalized terms not defined in the Agreement are used as defined in the Plan.

(a) “Agreement” means this LTIP Share Agreement granted by the Company and agreed to by the Employee.

(b) “Cause” has the meaning ascribed to it in the written employment agreement between the Company and the Employee (as in effect on the date hereof).

(c) “Change of Control” shall mean any of the following which takes place after the Grant Date: (i) any Person or “group,” within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Act”), other than the Company or any of its subsidiaries or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or one of its subsidiaries, becomes a beneficial owner, directly or indirectly, in one or a series of transactions, of securities representing fifty percent (50%) or more of the total number of votes that may be cast for the election of directors of the Company; (ii) any merger or consolidation involving the Company or any sale or other disposition of all or substantially all of the assets of the Company, or any combination of the foregoing, occurs and the beneficial owners of the Company’s voting securities outstanding immediately prior to such consolidation, merger, sale or other disposition do not, immediately following the consummation of such consolidation, merger, sale or other disposition, hold beneficial ownership, directly or indirectly, of securities representing fifty percent (50%) or more of the total number of votes that may be cast for election of directors of the surviving or resulting corporation in the case of any merger or consolidation or of the acquiring Person or Persons in the case of any sale or other disposition; or (iii) within twelve (12) months after a tender offer or exchange offer for voting securities of the Company (other than by the Company or any of its subsidiaries), individuals who are Continuing Directors shall cease to constitute a majority of the Board. For the purpose of this definition, the term “beneficial owner” (and correlative terms, including “beneficial ownership”) shall have the meaning set forth in Rule 13d-3 under the Act. provided in each such case such event is also a “change in control event” within the meaning of Treas. Reg. § 1.409A-3(i)(5)(1) (or similar applicable regulation under Section 409A of the Code).

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

(e) “Common Stock” means the common stock of the Company, $0.01 par value.

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

(g) “Disability” has the meaning ascribed to it in the written employment agreement between the Company and the Employee (as in effect on the date hereof).

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

(i) “Good Reason Termination” shall mean a termination of employment by the Employee with “Good Reason,” as such term is defined in the written employment agreement between the Company and the Employee (as in effect on the date hereof), where the Employee provides notice of the Good Reason event within 90 days of its occurrence and provides the Company at least 30 days to cure such matter.

(j) “Grant Date” means the date specified on Schedule 1.

(k) “NYSE” means the New York Stock Exchange.

(l) “Person” means any individual, partnership, limited liability company, corporation, association, trust, joint venture, unincorporated organization, or other entity or group, and “Affiliated Person” means, with respect to any Person, any other Person that directly or indirectly controls or is controlled by or is under common control with such Person.

(m) “Pro Rata Portion” shall mean the product of (x) a fraction, the numerator of which is, as of the time of measurement, the number of months (rounded down to the nearest whole number) occurring since the Grant Date and the denominator of which is 36 and (y) 100% of the LTIP Shares not previously Vested.

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

3. Vesting. Subject to Sections 5 and 6 below:

(a) Time-Based RSUs shall become Vested on the third (3^rd) anniversary of the Grant Date.

(b) Performance Shares shall become Vested in accordance with the criteria set out in Schedule 2.

(c) Notwithstanding subsections (a) and (b), except as provided in Sections 5 and 6, all LTIP Shares shall be forfeited if Employee’s employment terminates for any reason whatsoever before the third (3^rd) anniversary of the Grant Date.

4. Payment of Award. Subject to Sections 5 and 6 below, as soon as practicable after the third (3^rd) anniversary of the Grant Date, and in all events before the 15^th day of the third month following December 31 following the third (3^rd) anniversary of the Grant Date, the Company shall issue to the Employee that number of shares of Common Stock as equals that number of LTIP Shares which have become Vested.

5. Change of Control. In the event of a Change of Control, then all Time-Based RSUs and Performance Shares shall become fully and immediately Vested as though 100% of the target performance goals were achieved, as described in Schedule 2 and if Employee incurred a Change of Control Termination all Time-Based RSUs and Performance Shares otherwise forfeited upon such termination shall become fully and immediately Vested, and shall be distributed in shares and to the extent practicable shall be distributed immediately preceding the effective time of the Change of Control transaction with respect to LTIP Shares that become Vested in connection with a Change of Control.

6. Termination of Employment.

(a) Resignation or Termination by the Company. If the Employee ceases to be employed by the Company Group as a result of resignation, dismissal or any other reason, then the portion of the Award that has not previously Vested shall be forfeited automatically; provided that in the event of a termination of Employee’s employment by a member of the Company Group without Cause, as a result of death or Disability or a Good Reason Termination, a portion of the LTIP Shares (both Time-Based RSUs and Performance Shares) equal to the Pro Rata Portion of the LTIP Shares as of the time of termination shall Vest immediately prior to such termination and be distributed as soon as practicable thereafter, and in all events before the 15^th day of the third month following the end of the calendar year in which such LTIP Shares became Vested.

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

7. Dividends. No dividend equivalents shall be paid on LTIP Shares (either Time-Based RSUs or Performance Shares).

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

9. Miscellaneous.

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

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

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

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

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

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

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

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

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

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

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

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

IN WITNESS WHEREOF, Xerium Technologies, Inc. has executed this LTIP Share Agreement as of the date first written above.

Xerium Technologies, Inc.

By:
Name:     Harold Bevis
Title:     President and CEO

Acknowledged and agreed:

Employee

By:
Name:

Schedule 1

Grant Date: March 2, 2015

Number of LTIP Shares:

Allocation of LTIP Shares Granted:



Number of Time-Based RSUs	Number of Performance Shares

Schedule 2

•

Vesting of Performance Shares shall occur in two (2) ways: 50% of the Employee’s Performance Shares shall vest based on the Company’s three-year cumulative Adjusted EBITDA goal (“Adjusted EBTIDA Performance Shares”) and 50% of the Employee’s Performance Shares shall vest based upon a Relative Total Shareholder Return (“TSR”) against companies in the Selected Index (“TSR Performance Shares”):


•	Performance Metrics


•	Cumulative Adjusted EBITDA:


•	Cumulative Adjusted EBITDA Target: The Cumulative Adjusted EBITDA target for the 2015-2017 performance period shall be such amount as is set by the Compensation Committee after review of the three-year business plan (“Target”).

•

Cumulative Adjusted EBITDA Payout: The Adjusted EBITDA Performance Shares that may vest will range from 0% to 100% of the Employee’s total Adjusted EBITDA Performance Shares. Upon attainment of Cumulative Adjusted EBIDTA equal to 80% or less of the Target, none of the Adjusted EBITDA Performance Shares will vest. Upon attainment of more than 80% of the Target, the Adjusted EBITDA Performance Shares will begin vesting on a straight-line basis from 0% at 80% of Target to 100% at 100% of Target, up to a maximum payout of 100% of the Adjusted EBITDA Performance Shares.

The following table sets forth the performance requirements and respective payout amounts.



Table of Adjusted EBITDA Performance Payout

Adjusted EBITDA Achievement		Payout %

100.0	%	100.0	%
99.0	%	95.0	%
98.0	%	90.0	%
97.0	%	85.0	%
96.0	%	80.0	%
95.0	%	75.0	%
94.0	%	70.0	%
93.0	%	65.0	%
92.0	%	60.0	%
91.0	%	55.0	%
90.0	%	50.0	%
89.0	%	45.0	%
88.0	%	40.0	%
87.0	%	35.0	%
86.0	%	30.0	%
85.0	%	25.0	%
84.0	%	20.0	%
83.0	%	15.0	%
82.0	%	10.0	%
81.0	%	5.0	%
80.0	%	0.0	%


•	TSR


•	TSR Definition: TSR is a comparison over time of the stock performance of the Company to the stock performance of companies in the Selected Index. Stock performance for the Company is the change in share price of the Company plus any dividends. The final TSR determination will be measured based on 30-day average stock prices at the Grant Date to the third (3rd) anniversary of the Grant Date.


•	Selected Index: The Selected Index is the S&P Global Small Cap Index. The companies in the Selected Index are those listed on the index on the third (3^rd) anniversary of the Grant Date.


•	TSR Target: The Company TSR Target performance for the three-year performance period is TSR that exceeds the 55^th percentile TSR of companies in the Selected Index.


•	TSR Payout: The TSR Performance Shares that may vest will range from 0% to 100% of the Employee’s total TSR Performance Shares. The following table sets forth the performance requirements and the respective payout amounts based on the Company’s TSR relative to the TSR percentiles of companies in the Selected Index:



Table of TSR Payout At Target and Below

XRM TSR as a Percentile of Index Companies		Payout %

55.0	%	100.0	%
53.0	%	95.0	%
51.0	%	90.0	%
49.0	%	85.0	%
47.0	%	80.0	%
45.0	%	75.0	%
43.0	%	70.0	%
41.0	%	65.0	%
39.0	%	60.0	%
37.0	%	55.0	%
35.0	%	50.0	%
Less than 35.0%		0.0	%

Exhibit 31.1

CHIEF EXECUTIVE OFFICER CERTIFICATION

I, Harold C. Bevis, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: May 11, 2015

/s/ Harold C. Bevis

Harold C. Bevis

President and Chief Executive Officer

(Principal Executive Officer)

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”);

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

Date: May 11, 2015

/s/ Clifford E. Pietrafitta

Clifford E. Pietrafitta

Executive Vice President and CFO

(Principal Financial Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO

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

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

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

1) the Company’s Form 10-Q for the period ended March 31, 2015, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2) the information contained in the Company’s Form 10-Q for the period ended March 31, 2015, fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Harold C. Bevis

Harold C. Bevis

President and Chief Executive Officer

(Principal Executive Officer)

May 11, 2015

Exhibit 32.2

CERTIFICATION PURSUANT TO

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

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

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

1) the Company’s Form 10-Q for the period ended March 31, 2015, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

/s/ Clifford E. Pietrafitta

Clifford E. Pietrafitta

Executive Vice President and CFO

(Principal Financial Officer)

May 11, 2015

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