Consistent with its debt reduction strategy, during the fourth quarter of 2008 the Company made total debt payments of approximately $2 million, which, along with currency effects, reduced total debt by approximately $13 million to $617 million at December 31, 2008 from $630 million at September 30, 2008.

Excluding currency effects shown in the table below, fourth quarter 2008 net sales decreased 1.8% from the fourth quarter of 2007, with a decline of 3.4% in the clothing segment and an increase of 1.3% in the roll covers segment. See “Clothing Segment Highlights and “Roll Covers Segment Highlights” for further discussion. Net sales for the 2008 fourth quarter were $149.4 million, a 9.1% decrease from net sales for the 2007 fourth quarter of $164.2 million.

Gross margins remained relatively constant at 39.3% of net sales for the 2008 fourth quarter, compared to 39.7% for the 2007 fourth quarter, even though the Company offered price incentives to sell consigned inventories and convert customers to “make and ship” for the purposes of reducing working capital.

The Company recorded restructuring and impairment expenses of $10.1 million during the fourth quarter of 2008, including (i) a $7.1 million charge related to the previously announced plan to cease production at its Huyck Wangner clothing facility in Geelong, Australia by the end of the first quarter 2009 and to discontinue construction of its Vietnam clothing facility, (ii) asset impairment charges in the U.S. of approximately $1.0 million based upon the Company’s evaluation under SFAS No. 144, and (iii) an approximately $2.0 million charge related to the Company’s streamlining its operating structure and to improve its long-term competitiveness by closing and/or transferring production from certain of its manufacturing facilities and through headcount reductions.

Income from operations was $6.5 million in the fourth quarter of 2008 as compared with a loss from operations of $164.1 million in the fourth quarter of 2007, when the Company recorded a non-cash charge for goodwill impairment of $185.3 million related to its roll covers segment. Excluding the non-cash charge for goodwill impairment in the 2007 quarter, the decrease in income from operations in the fourth quarter of 2008 as compared with the fourth quarter or 2007 is also due to increased specific bad debt reserves of $4.5 million in 2008. See Non-GAAP Financial Measures “Impact of Significant 2008 and 2007 Events” below. Income from operations also decreased due to increased restructuring and impairments expenses of $8.5 million and a decrease in gross margins of $6.5 million.

Net loss for the fourth quarter of 2008 was $4.3 million, or a loss of $0.09 per diluted share, compared to a net loss for the fourth quarter of 2007 of $168.0 million, or a loss of $3.69 per diluted share. Included in the fourth quarter of 2007 is a non-cash charge for goodwill impairment of $185.3 million (less $18.3 million tax effect thereon). The fourth quarter of 2008 includes an increase in expense for specific bad debts of $4.5 million (less $0.5 million tax effect thereon). See Non-GAAP Financial Measures “Impact of Significant 2008 and 2007 Events” below. Also contributing to the net loss for the fourth quarter of 2008 as compared to the fourth quarter of 2007 were increased restructuring and impairments expenses of $8.5 million and a decrease in gross margins of $6.5 million.

Net cash generated by operating activities was $24.2 million for the 2008 fourth quarter, compared to $40.5 million for the fourth quarter of 2007. The decrease is principally attributable to lower net income, after adjusting for non-working capital changes, partially offset by the favorable working capital changes as a result of ongoing efforts to target a reduction in days sales outstanding and increases in inventory turns and days payables outstanding.

Adjusted EBITDA (as defined by the Company’s amended credit facility) was $24.6 million for the 2008 fourth quarter, compared to $36.5 million for the 2007 fourth quarter. See “EBITDA and Adjusted EBITDA Reconciliation” below.

In order to improve performance, the Company continues to target a reduction in days of receivables and increases in inventory turns and days of payables outstanding. During the 2008 fourth quarter, as compared with the 2007 fourth quarter, the Company reported that accounts receivables, as measured as a ratio of days of receivables, improved from 67 days to 54 days; inventory turns improved to 4.6 versus 3.2; and days of payables improved to 49 days compared to 45 days.

Cash on hand at December 31, 2008 was $34.7 million, compared to cash on hand at September 30, 2008 of $18.4 million, and $24.2 million at December 31, 2007.

During the year ended December 31, 2008, the Company made senior debt repayments of $24.4 million, compared to $10.9 million during the year ended December 31, 2007. At December 31, 2008, the Company had no borrowings outstanding under its revolving lines of credit, including the revolving credit facility under its senior credit facility and lines of credit in various foreign countries that are used to facilitate local short-term operating needs. The Company had an aggregate of $45.9 million available for additional borrowings under these revolving lines of credit at December 31, 2008.

Capital expenditures in the 2008 fourth quarter were $9.9 million, compared to $24.5 million in the 2007 fourth quarter. For the fiscal year ended December 31, 2008, capital expenditures were $39.0 million, which is lower than its target range of $44 to $47 million and as compared to $47.9 million for the fiscal year ended December 31, 2007. The Company targets 2009 capital expenditures to be approximately $42 million, as it completes obligations undertaken as part of its Vietnam initiative, and that capital expenditures in 2010 will be lower than those for 2009.

As previously announced, on December 29, 2008, the Company received notification from the New York Stock Exchange (NYSE) that it was not in compliance with two NYSE standards for continued listing of the Company’s common stock on the exchange because the average closing price of the Company’s common stock was less than $1.00 per share over a consecutive 30 trading day period, and the Company’s average total market capitalization has been less than $75 million over the same period and its most recently reported stockholders’ equity was less than $75 million. The Company has six months from the date of receipt of the notification from the NYSE to bring its share price and average share price over $1.00. In addition, on February 12, 2009, the Company submitted a plan advising the NYSE of definitive actions the Company has taken, or plans to take, that would bring it into compliance with the market capitalization listing standards within 18 months of receipt of the notice, and the Company is awaiting the NYSE’s decision with respect to the plan. On February 26, 2009, the NYSE submitted to the Securities & Exchange Commission an immediately effective rule filing which suspends the NYSE’s $1.00 minimum price requirement on a temporary basis, initially through June 30, 2009. This will have the effect of extending the Company’s period for regaining compliance with the $1.00 listing standard.

Due to the global economic crisis and the lack of credit availability that may affect customer demand for products and their ability to pay their debts, the Company assessed the impact of this crisis on its customers and its industry, and changed its estimates of net realizable value of receivables and inventories during the third and fourth quarters of 2008. For example, two of the Company’s major customers, who collectively represent approximately 5% of 2008 revenues, have experienced recent financial difficulties. One of them filed for bankruptcy protection in January 2009 and we believe the other may be facing liquidity issues and potential credit refinancing during 2009. The Company has fully reserved for amounts due from these customers as of December 31, 2008; however, decreases in orders from these customers or future payment problems from these or other customers could have a material adverse effect on the Company’s sales and profitability.

The Company targets additional restructuring expenses of approximately $5 million to $6 million during 2009 primarily related to headcount reductions resulting from the integration of the regional management structure in North America and similar actions in Europe.

As a result of the Company’s previously announced decision to freeze benefit pension accruals under its Pension Plan for U.S. Salaried and Non-Union Hourly Employees and to no longer sponsor or fund its U.S. retiree health insurance program to certain retired U.S. employees, covered dependents, and beneficiaries, the Company targets a decrease in its pre-tax pension and post-retirement expense of approximately $2.8 million annually

beginning in 2009, as compared with that of 2008, based on current estimates and assumptions. Actual results may differ materially from those indicated due to a number of factors, including changes in actuarial assumptions used and actual return on retirement plan assets.

The Company reduced its workforce by nearly 100 full-time employees in the 2008 fiscal year and anticipates that approximately 200 additional reductions will be implemented in the first quarter of 2009.

As of December 31, 2008, the Company was in compliance with all financial covenants, including covenants requiring compliance with minimum interest coverage, fixed charge coverage ratios and maximum leverage ratios and plans to be in compliance of such covenants through 2009.

The Company released an additional $25.2 million in “trapped cash” during the fourth quarter, having freed $29.6 million in the third quarter of 2008 and $1.9 million in trapped cash in the second quarter. The Company defines “trapped cash” as the amount of working capital on its balance sheet that is in excess of 50 days of outstanding accounts receivable, 6 inventory turns and 48 days of accounts payable outstanding.

As previously noted, the Company has prepared a reconciliation of Non-GAAP Financial Measures “Impact of Significant 2008 and 2007 Events” below to illustrate how management views the underlying operating results for the period. In summary, what is described in this reconciliation is the financial performance net of the effect of the substantial gains due to changes to certain of its U.S. pension plans and postretirement benefit plans and the impact of certain provisions for environmental matters and increased provisions for bad debts and slow-moving and obsolete inventory. The latter two items reflect the risk associated with the Company’s assessment of the global credit crisis and the potential impact on our customers.

Clothing

Roll Covers

Total

Clothing segment sales declined 11.2% in the fourth quarter of 2008 to $95.9 million from $108.0 million in the fourth quarter of 2007 primarily due to unfavorable currency effects of $8.5 million and decreased sales in North America and Europe of approximately $4.0 million, partially offset by increased sales volume in Asia-Pacific.

Overall pricing levels in the clothing segment remained essentially unchanged during the fourth quarter of 2008, compared to the fourth quarter of 2007.

Clothing segment earnings declined 12.1% in the fourth quarter of 2008 to $22.7 million from $25.8 million in the fourth quarter of 2007, resulting primarily from increases in provisions for reserves of approximately $3 million against certain bad debts and non trade receivables stemming from the Company’s assessed impact of the global economic crisis on its customers and industry.

Roll covers segment sales declined 4.8% to $53.5 million in the 2008 fourth quarter from $56.2 million in the 2007 fourth quarter. The decrease is primarily the result of unfavorable currency effects of $3.4 million, partially offset by increased sales in Asia-Pacific.

Overall pricing levels in the roll covers segment decreased by approximately 1.0% in the fourth quarter, compared to the prior year period.

Roll covers segment earnings for the quarter declined 34.1% to $9.5 million from $14.4 million in the 2007 quarter, primarily as a result of decreased gross margins due primarily to decreased pricing levels and increased inventory reserves stemming from the Company’s assessed impact of the global economic crisis on its customers and industry.

Consistent with its debt reduction strategy, during the year ended December 31, 2008, the Company made total debt payments of approximately $26 million, which, along with currency effects, reduced total debt by approximately $50 million to $617 million at December 31, 2008 from $667 million at December 31, 2007.

Net sales for 2008 increased 3.7% to $638.1 million. Excluding currency effects, 2008 net sales declined by 0.9%.

Net income for 2008 was $26.6 million or $0.58 per diluted share, compared to a net loss of $150.2 million, or a loss of $3.36 per diluted share in 2007. See Non-GAAP Financial Measures “Impact of Significant 2008 and 2007 Events” below.

Net cash generated by operating activities was $77.1 million in 2008, compared to $89.0 million in 2007.

Adjusted EBITDA (as defined by the Company’s amended credit facility), was $164.5 million, compared to $146.0 million in 2007. See “EBITDA and Adjusted EBITDA Reconciliation” below.

Current assets:

Cash and cash equivalents

Accounts receivable (net of allowance for doubtful accounts of $14,937 in 2008 and $5,367 in 2007)

Inventories

Prepaid expenses

Other current assets

Total current assets

Property and equipment, net

Goodwill

Intangible assets

Other assets

Total assets

Current liabilities:

Notes payable

Accounts payable

Accrued expenses

Current maturities of long-term debt

Long-term debt classified as current

Total current liabilities

Long-term debt, net of current maturities and long-term debt classified as current

Deferred and long-term taxes

Pension, other postretirement and postemployment obligations

Other long-term liabilities

Commitments and contingencies

Stockholders’ equity (deficit)

Preferred stock, $0.01 par value, 1,000,000 shares authorized; no shares outstanding as of December 31, 2008 and 2007

Common stock, $0.01 par value, 150,000,000 shares authorized; 46,257,772 and 46,028,003 shares outstanding as of December 31, 2008 and 2007, respectively

Paid-in capital

Accumulated deficit

Accumulated other comprehensive income (loss)

Total stockholders’ deficit

Total liabilities and stockholders’ deficit

Net sales

Costs and expenses:

Cost of products sold

Selling

General and administrative

Restructuring and impairments

Research and development

Curtailment/settlement gains

Goodwill impairment

Income (loss) from operations

Interest expense

Interest income

Foreign exchange gain (loss)

Income (loss) before provision (benefit) for income taxes

Provision (benefit) for income taxes

Net income (loss)

Net income (loss) per share:

Basic

Diluted

Cash dividends per common share

Operating activities

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Goodwill impairment

Stock-based compensation

Depreciation

Amortization of other intangibles

Deferred financing cost amortization

Unrealized foreign exchange (gain) loss on revaluation of debt

Deferred taxes

Asset impairment

Gain on disposition of property and equipment

Change in the fair value of interest rate swaps

Curtailment/settlement gain

Provision for bad debt expense

Change in assets and liabilities which provided (used) cash:

Accounts receivable

Inventories

Prepaid expenses

Other current assets

Accounts payable and accrued expenses

Deferred and other long term liabilities

Net cash provided by operating activities

Investing activities

Capital expenditures, gross

Proceeds from disposals of property and equipment

Proceeds from dispositions of businesses

Payment for acquisitions, net of cash acquired

Other

Net cash used in investing activities

Financing activities

Net increase (decrease) in borrowings (maturities of 90 days or less)

Proceeds from borrowings (maturities longer than 90 days)

Principal payments on debt

Cash dividends on common stock

Other

Net cash used in financing activities

Effect of exchange rate changes on cash flows

Net increase in cash

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Interest payments

Income tax payments

(in thousands)

Net cash provided by operating activities

Interest expense, net

Net change in operating assets and liabilities

Income tax benefit

Stock-based compensation

Deferred financing cost amortization

Deferred taxes

Asset impairment

Gain on disposition of property and equipment

Unrealized foreign exchange gain (loss) on indebtedness, net

Change in fair value of interest rate swaps

Goodwill impairment

Provision for bad debt expense

EBITDA

Amendment/termination costs

Unrealized foreign exchange (gain) loss on indebtedness, net (E)

Change in fair value of interest rate swaps (F)

Restructuring expenses (A)

Non-cash compensation and related expenses

Non-cash impairment charges (B)

Growth program costs (C)

Inventory write offs under restructuring programs

Non-recurring expenses related to cost reduction programs (D)

Adjusted EBITDA

Net cash provided by operating activities

Interest expense, net

Net change in operating assets and liabilities

Income tax provision (benefit)

Stock-based compensation

Deferred financing cost amortization

Deferred taxes

Asset impairment

Unrealized foreign exchange gain (loss) on indebtedness, net

Gain on disposition of property and equipment

Change in fair value of interest rate swaps

Goodwill impairment

Curtailment/settlement gains

Provision for bad debt expense

EBITDA

Expenses related to debt or equity financing

Amendment/termination costs (G)

Unrealized foreign exchange (gain) loss on indebtedness, net (E)

Change in fair value of interest rate swaps (F)

Change in fair value of other derivatives

Restructuring expenses (A)

Non-cash compensation and related expenses

Non-cash impairment charges (B)

Growth program costs (C)

Inventory write-offs under restructuring programs

Non-recurring expenses resulting from cost reduction programs (D)

Adjusted EBITDA

Environmental charges in connection with facilities closures pursuant to cost reduction programs (1)

Certain operating costs incurred in connection with the transition of production operations from closed facilities to other facilities (2)

Total

Net sales

Costs and expenses:

Cost of products sold (1)

Selling

General and administrative (2)

Restructuring and impairments

Research and development

Curtailment/settlement (3)

Income (loss) from operations

Interest expense

Interest income

Foreign exchange gain

Income (loss) before provision for income taxes

Provision (benefit) for income taxes (4)

Net income (loss)

Three Months Ended December 31,
2008

Adjusted EBITDA (5)

Net sales

Costs and expenses:

Cost of products sold

Selling

General and administrative

Restructuring and impairments

Research and development

Goodwill impairment

Income (loss) from operations

Interest expense

Interest income

Foreign exchange gain (loss)

Income (loss) before provision for income taxes

Provision (benefit) for income taxes

Net income (loss)

Three Months Ended December 31, 2007

Adjusted EBITDA(5)

Freezing benefit pension accruals under its Pension Plan for U.S. Salaried and Non-Union Hourly Employees (the “Pension Plan”) effective December 31, 2008 so that future service beyond December 31, 2008 will no longer be credited under the Pension Plan. Employees who

are vested as of December 31, 2008 will be entitled to their benefit earned as of December 31, 2008. Current employees who are not vested as of December 31, 2008 will be entitled to their benefit earned as of December 31, 2008 upon five years of continuous employment from date of hire.