Xerium (XRM) 8-K Xerium Technologies Reports Third Quarter Results

EXHIBIT 99.3

Xerium Technologies, Inc.

Reconciliation of Trailing Twelve Month Bank Adjusted EBITDA (in thousands)

	Q4 2008			Q1 2009			Q2 2009			Q3 2009			Q4 2009			Q1 2010			Q2 2010			Q3 2010			Q4 2010			Q1 2011			Q2 2011			Q3 2011
Net Income (loss)	$	(4,350	)	$	(9,448	)	$	1,601		$	(7,381	)	$	(96,765	)	$	(30,157	)	$	(40,011	)	$	(3,656	)	$	738		$	647		$	1,622		$	3,488
Goodwill impairment		—			—			—			—			80,600			—			—			—			—			—			—			—
Stock-based compensation		3,513			161			885			778			481			2,103			1,356			1,756			2,098			1,250			831			172
Depreciation		9,652			9,205			9,547			10,269			10,518			9,871			9,511			9,644			9,937			10,232			10,686			10,655
Amortization of intangibles		579			583			583			582			580			580			579			578			581			576			576			577
Curtailment/settlement gain		—			—			—			—			—			—			—			—			—			—			—			425
Deferred financing cost amortization		1,131			1,536			1,158			1,201			1,522			1,575			3,908			238			232			236			366			1,011
Unrealized foreign exhange (gain) loss on revaluation of debt		(7,762	)		(482	)		(88	)		(1,149	)		93			149			693			(1,567	)		(896	)		(610	)		(804	)		2,484
Deferred taxes		(3,530	)		633			806			1,396			4,751			558			2,174			1,573			4,309			660			549			1,037
(Gain) loss on disposition of property and equipment		(443	)		(1,233	)		(783	)		(8	)		45			86			23			(171	)		(2,043	)		(538	)		(26	)		(40	)
Asset impairment		3,517			—			—			1,667			2			—			748			2,123			19			(0	)		—			—
Non-cash interest expense related to interest rate swaps		468			397			396			859			2,165			3,211			2,147			2,160			2,203			0			—			—
Loss on extinguishment of debt		—			—			—			—			—			(0	)		—			—			—			—			2,926			—
Non-cash reorganization expenses		—			—			—			—			—			14,283			14,400			—			—			—			—			—
Reorganization expenses accrued		—			—			—			—			—			—			4,546			(3,231	)		(1,200	)		(115	)		115			—
Net change in operating assets and liabilities		21,452			(9,195	)		(13,781	)		3,093			8,350			2,575			(7,066	)		(3,821	)		1,291			(12,540	)		(9,886	)		4,266
Net cash provided by (used in) operating activities		24,232			(7,842	)		324			11,307			12,342			4,834			(6,995	)		5,626			17,269			(194	)		6,955			24,075
Cash interest expense, net		14,688			14,024			14,016			14,365			15,661			10,858			10,810			9,622			9,831			9,618			9,616			8,862
Net change in operating assets and liabilities		(21,452	)		9,195			13,781			(3,093	)		(8,350	)		(2,575	)		7,066			3,821			(1,291	)		12,532			9,886			(4,266	)
Cash income tax expense		1,087			3,259			1,891			2,028			(2,447	)		1,578			2,876			2,745			2,453			2,758			2,481			2,227
Goodwill impairment		—			—			—			—			(80,600	)		—			—			—			—			—			—			—
Stock-based compensation		(3,513	)		(161	)		(885	)		(778	)		(481	)		(2,103	)		(1,353	)		(1,756	)		(2,098	)		(1,250	)		(831	)		(172	)
Curtailment/settlement gain		—			—			—			—			—			—			—			—			—			—			—			(425	)
Asset impairment		(3,517	)		—			—			(1,667	)		(2	)		—			(748	)		(2,123	)		(19	)		0			—			—
Unrealized foreign exhange (gain) loss on revaluation of debt		7,762			482			88			1,149			(93	)		(149	)		(693	)		1,567			896			610			804			(2,484	)
Gain (loss) on disposition of property and equipment		443			1,233			783			8			(45	)		(86	)		(23	)		171			2,043			538			26			40
Non-cash reorganization expenses		—			—			—			—			—			(14,283	)		(18,946	)		3,231			1,200			115			(115	)		—
Loss on extinguishment of debt		—			—			—			—			—			0			—			—			—			—			(2,926	)		—
EBITDA		19,726			20,189			29,998			23,319			(64,015	)		(1,927	)		(8,004	)		22,904			30,284			24,727			25,896			27,857
Unrealized foreign exhange (gain) loss on revaluation of debt		285			—			—			—			—			—			—			—			(1	)		—			—			(1	)
Amendment/termination costs																							—
Change in fair value of interest rate swaps		(468	)		(398	)		(397	)		(859	)		(2,164	)								—
Changes in value of other derivatives		—			—			—			—			—									—
Operational Restructuring Expense		—			114			1,026			87			1,184			1,567			1,796			1,199			2,552			168			542			577
Inventory write-offs under restructuring programs		256			103			142			104			(0	)		—			—			—			—			—			—			—
Growth program costs		—			—			—			—			—									0
Non-cash Compensation and related expenses		1,237			161			885			778			481			2,389			1,041			2,067			1,812			1,250			831			172
Non-cash impairment charges		3,517			—			—			1,667			80,602			—			748			2,123			19			(0	)		—			—
Non-recurring expenses resulting from cost reduction programs
Change in accounting policies		—			—			—			—			—			(1,400	)		—			—			—			—			—			—
Financial restructuring costs (see note B below)		—			—			—			—			—			9,563			15,251			799			584			—			—			—
Write-off of deferred financing costs as “reorganization items”								—			—			—			14,283			—			—			—			—			—			—
Expenses Incurred in connection with indebtedness or refinancing transaction		—			—			—			—			—			—			14,400			—			—			—			2,926			—
Adjusted EBITDA for the quarter as previously reported	$	24,549		$	20,169		$	31,652		$	25,096		$	16,088		$	24,476		$	25,230		$	29,094		$	35,250		$	26,145		$	30,195		$	28,606
Less: disallowed items under New Credit Agreement:
Unrealized foreign exchange gain on revaluation of debt		—			—			—			—			—			—			—			—			—			—			—			—
Amendment/termination costs
Change in fair value of interest rate swaps		468			398			397			859			2,164
Changes in value of other derivatives		—			—			—			—			—
Growth program costs		—			—			—			—			—
Plus: new items under the New Credit Agreement:
Non-cash change in or adoption of accounting policies
Financial Restructuring Costs								274			1,961			6,501
Non-cash expense from granting of Common Stock		1,628
Non-cash expense relating to pension or benefit arrangements
Proforma Adjusted EBITDA under the New Credit Agreement	$	26,647		$	20,567		$	32,325		$	27,916		$	24,753		$	24,476		$	25,230		$	29,093		$	35,251		$	26,145		$	30,195		$	28,606
Adjusted EBITDA for the trailing twelve months (“TTM”)										$	107,455		$	105,561		$	109,470		$	102,375		$	103,552		$	114,050		$	115,719		$	120,684		$	120,197

Note (A) — Adjusted EBITDA for all periods above have been presented in accordance with the definition of Adjusted EBITDA in the New Credit Facility except as noted below.

Note (B) — Financial restructuring costs under the definition of Adjusted EBITDA in the New Credit Facility are not adjustments added back to net income (loss) to arrive at Adjusted EBITDA for periods beginning after the quarter ended June 30, 2011. For the three and nine months ended September 30, 2010 such items were added back to net income (loss) to arrive at Adjusted EBITDA based on the terms of the Amended and Restated Credit Facility. Had these adjustments not been in place in 2010, Adjusted EBITDA would have decreased by $794 and $25,613 in the three and nine months ended September 30, 2010 respectively.

Xerium Technologies, Inc.

Reconciliation of Total Working Capital as a Percentage of Revenue (in thousands)

	Q3 2009			Q4 2009			Q1 2010			Q2 2010			Q3 2010			Q4 2010			Q1 2011			Q2 2011			Q3 2011
Net Sales	$	130,308		$	132,437		$	135,015		$	132,827		$	135,899		$	144,593		$	143,166		$	150,378		$	148,227
Accounts Receivable	$	88,165		$	83,602		$	88,475		$	83,268		$	91,503		$	93,332		$	99,359		$	98,068		$	93,432
Inventory		82,128			78,174			75,583			72,802			78,863			81,927			90,177			98,833			91,364
Less: “Trade AP” (per calculation below)		25,212			27,652			26,057			27,029			26,517			32,779			30,834			29,162			25,955
Trade Working Capital	$	145,081		$	134,124		$	138,001		$	129,041		$	143,849		$	142,480		$	158,702		$	167,739		$	158,124
% of Net Sales		27.8	%		25.3	%		25.6	%		24.3	%		26.5	%		24.6	%		27.7	%		27.9	%		26.7	%
Calculation of Trade AP
Accounts Payable	$	27,703		$	32,124		$	30,488		$	30,923		$	31,991		$	41,686		$	37,992		$	36,270		$	33,474
Less: Deposits Received		(1,550	)		(2,014	)		(2,899	)		(2,394	)		(3,493	)		(3,415	)		(4,913	)		(5,486	)		(5,881	)
Less: Other Payables		(941	)		(2,458	)		(1,532	)		(1,500	)		(1,981	)		(5,492	)		(2,245	)		(1,622	)		(1,638	)
Trade AP	$	25,212		$	27,652		$	26,057		$	27,029		$	26,517		$	32,779		$	30,834		$	29,162		$	25,955

Xerium Technologies, Inc.

Reconciliation of Selling, General & Administrative Expenses as a Percentage of Revenue, excluding Operational Restructuring Expense and Financial Restructuring Expense

	Q3 2009			Q4 2009			Q1 2010			Q2 2010			Q3 2010			Q4 2010			Q1 2011			Q2 2011			Q3 2011
Net Sales	$	130,308		$	132,437		$	135,015		$	132,827		$	135,899		$	144,593		$	143,166		$	150,378		$	148,227
Calculation of Selling, General & Administrative Expense, excluding Operational Restructuring Expense:
Selling Expense	$	16,991		$	17,234		$	18,042		$	17,901		$	18,043		$	18,897		$	19,524		$	20,507		$	19,817
General & Administrative Expense		15,397			21,097			26,829			17,585			15,609			14,684			17,353			16,136			14,071
Research & Development Expense		2,708			3,142			2,868			2,952			2,887			2,720			3,088			2,925			2,907
Total Selling and General & Administrative Expense, excluding Operational Restructuring Expenses	$	35,127		$	41,444		$	47,760		$	38,448		$	36,582		$	36,318		$	39,992		$	39,568		$	36,795
% of Net Sales, excluding Operational Restructuring Expense		27.0	%		31.3	%		35.4	%		28.9	%		26.9	%		25.1	%		27.9	%		26.3	%		24.8	%
Calculation of Selling, General & Administrative Expense, excluding Operational and Financial Restructuring Expense:
Total Selling and General & Administrative Expense, excluding Operational Restructuring Expenses (calculated above)	$	35,127		$	41,444		$	47,760		$	38,448		$	36,582		$	36,318		$	39,992		$	39,568		$	36,795
Less: Financial Restructuring Expenses		(1,962	)		(6,500	)		(9,463	)		(459	)		—			—			—			—			—
Total Selling and General & Administrative Expense, excluding Operational and Financial Restructuring Expenses	$	33,165		$	34,944		$	38,297		$	37,989		$	36,582		$	36,318		$	39,992		$	39,568		$	36,795
% of Net Sales, excluding Operational and Financial Restructuring Expenses		25.5	%		26.4	%		28.4	%		28.6	%		26.9	%		25.1	%		27.9	%		26.3	%		24.8	%

Xerium Technologies, Inc.

Analysis of Foreign Currency Effect

Quarter ending September 30, 2011

	Q3 09/30/2011			Q3 09/30/2010			Currency Effect Fav(Unfav)			Q3 2010 Adjusted to Current Rates			% Change to Adjusted Fav(Unfav)
	($ in millions)
Net Sales
Clothing	$	97.5		$	90.3		$	4.3		$	94.6			3.2	%
Rolls		50.7			45.6			2.1			47.7			6.6	%
Total		148.2			135.9			6.4			142.3			4.3	%
Cost of Product Sold		94.0			83.3			(4.8	)		88.1			(7.2	%)
Gross Margin		54.2			52.6			1.6			54.2			(0.0	%)
Gross Margin / Sales %		36.6	%		38.7	%
Selling		19.8			18.0			(1.2	)		19.2			(3.3	%)
General and administrative		14.0			15.7			(0.9	)		16.6			16.5	%
Research & Development		2.9			2.9			(0.1	)		3.0			2.1	%
Restructuring and Impairments		0.6			3.3			(0.0	)		3.3			83.7	%
Total Selling, G&A Expenses		37.3			39.9			(2.2	)		42.1			12.1	%
Income from Operations		16.9			12.7			(0.6	)		12.1			37.8	%
Interest Expense, Net		(9.9	)		(12.0	)		(0.5	)		(12.5	)		21.7	%
Other items - FX gain / loss		(0.3	)		0.7			(0.0	)		0.7			(134.4	%)
Loss on early extinguishment of debt		0.0			0.0			0.0			0.0			0.0	%
Reorganization Expense		0.0			(0.8	)		(0.0	)		(0.8	)		100.0	%
Total Provision for Income Taxes		3.2			4.3			(0.3	)		4.6			33.4	%
Net Income		3.5			(3.7	)		(1.4	)		(5.1	)		231.1	%
Adjusted EBITDA per Bank	$	28.6		$	29.1		$	0.3		$	29.4			(2.8	%)

Xerium Technologies, Inc.

Analysis of Foreign Currency Effect

YTD ending September 30, 2011

	YTD 09/30/2011			YTD 09/30/2010			Currency Effect Fav(Unfav)			YTD 2010 Adjusted to Current Rates			% Change to Adjusted Fav(Unfav)
	($ in millions)
Net Sales
Clothing	$	291.1		$	268.0		$	11.8		$	279.8			4.2	%
Rolls		150.7			135.7			5.3			141.0			7.1	%
Total		441.8			403.7			17.1			420.8			5.2	%
Cost of Product Sold		275.8			247.7			(12.3	)		260.0			(6.4	%)
Gross Margin		166.0			156.0			4.8			160.8			3.3	%
Gross Margin / Sales %		37.6	%		38.7	%
Selling		59.8			54.0			(3.1	)		57.1			(5.1	%)
General and administrative		47.6			60.1			(2.6	)		62.7			25.2	%
Research & Development		8.9			8.7			(0.1	)		8.8			(1.2	%)
Restructuring and Impairments		1.3			7.4			(0.3	)		7.7			86.3	%
Total Selling, G&A Expenses		117.6			130.2			(6.1	)		136.3			14.4	%
Income from Operations		48.4			25.8			(1.3	)		24.5			92.4	%
Interest Expense, Net		(29.7	)		(44.4	)		(1.1	)		(45.5	)		35.7	%
Other items - FX gain / loss		(0.3	)		0.7			(0.0	)		0.7			(136.5	%)
Loss on early extinguishment of debt		(2.9	)		0.0			0.0			0.0			0.0	%
Reorganization Expense		0.0			(44.4	)		(0.2	)		(44.6	)		100.5	%
Total Provision for Income Taxes		9.7			11.5			(0.6	)		12.1			21.2	%
Net Income		5.8			(73.8	)		(3.2	)		(77.0	)		112.1	%
Adjusted EBITDA per Bank	$	84.9		$	78.8		$	1.4		$	80.2			6.1	%