PGI Reports Third Quarter and Nine-Month Results

CHARLOTTE, N.C., Nov. 12 /PRNewswire-FirstCall/ -- Polymer Group, Inc. (PGI)
(OTC Bulletin Board: POLGA/POLGB) reported results of operations for the third
quarter and nine-month period ended October 3, 2009.

(Logo: http://www.newscom.com/cgi-bin/prnh/20080903/CLW036LOGO-b)

Highlights included:
-- Gross profit for the quarter was up 16.4% over the prior year to $47.2
million and up 10.1% for the nine-month period to $139.2 million. As a
result of lower sales due to lower selling prices and lower volumes,
gross profit margins were 21.2% and 21.8% for the three-month and
nine-month period compared to 14.3% and 15.6%, respectively, for the
prior year.
-- Operating income from continuing operations for the third quarter of
2009 increased 148.9% over the same period the prior year to $18.7
million. Year-to-date, operating income from continuing operations
increased 60.9% over the first nine months of 2008.
-- For the year-to-date period, cashflow from operations increased 131.2%
to $79.5 million.
-- Following finalization of the sale of the FabPro division and the
amendment to the company's senior credit facility, net debt (defined
as
total debt less cash balances) was $289.5 million at the end of the
third quarter, approximately $100 million lower than the third quarter
2008 level of $388.9 million.

-- The company continued to execute on its growth strategy with the
purchase of the minority portion of its joint venture in Argentina and
the signing of a definitive agreement to purchase a nonwovens business
in Spain. Additionally, the company's new state-of-the-art capacity
in
Mexico was in full commercial production during the third quarter.

THIRD QUARTER RESULTS

Sales from continuing operations for the third quarter of 2009 were $223.0
million compared to $284.1 million for the third quarter of 2008. The decline
was due primarily to lower selling prices to reflect lower overall raw
material costs and lower volumes in the industrial segments, which most
affected the U.S. and European nonwovens businesses and the Canadian business
in Oriented Polymers. Volumes in Latin America and Asia were stable compared
to the prior year period. Foreign currency changes impacted sales by
approximately $9.0 million as the U.S. dollar weakened to most currencies.

While sales were lower during the third quarter of 2009, gross profit from
continuing operations increased $6.6 million to $47.1 million. Raw material
costs were significantly lower during the quarter compared to the third
quarter of 2008. During the third quarter of 2008, raw material costs
increased dramatically, resulting in a negative impact to gross profit as the
company's selling prices generally lag approximately one quarter to changes in
raw material costs. Results for the third quarter of 2009 reflected the
impact of positive mix improvements and other proactive steps the company has
taken to improve the spread of selling prices over raw material costs such
that changes in selling prices have been less than the overall decreases in
raw material costs by approximately $12.1 million compared to the third
quarter of 2008. Manufacturing costs in the Nonwovens businesses improved
$2.0 million year-over-year, offset by an increase of $2.2 million in the
Oriented Polymers business impacted by inefficiencies caused by the dramatic
reductions in volume.

Operating income for the third quarter of 2009 was $18.7 million compared to
$7.5 million in the third quarter of 2008. Included in operating income were
special charges of $1.8 million in the third quarter of 2009 primarily related
to our previously announced plant consolidations in the U.S. and restructuring
plans in Europe. Special charges amounted to $1.7 million in the third
quarter of 2008. Selling, general and administrative (SG&A) expenses for the
third quarter of 2009 were lower than the prior year period by $1.6 million,
due primarily to movement of foreign currencies against the U.S. dollar and
lower compensation expenses.

PGI reported net income attributable to PGI, including earnings from
discontinued operations, for the third quarter of $15.2 million compared to
$3.4 million in the third quarter of 2008. Earnings per share from continuing
operations were $0.32 per share for the third quarter of 2009 compared to
$0.12 per share for the third quarter of 2008. Included in net income
attributable to PGI for the quarter was $4.7 million of adjustments for
out-of-period items primarily related to income tax expense and
non-controlling interests.

PGI's chief executive officer, Veronica (Ronee) M. Hagen, stated, "We
continued to achieve solid improvement in the third quarter. Our strategy of
investing in developing regions continued to generate profitable growth in
Asia as well as in Latin America where our new investment in Mexico attained
full commercial production levels during the quarter. We improved
efficiencies throughout the business through implementation of our operational
excellence initiatives. The consumer oriented markets we serve have been very
stable and although the industrial markets remain at low volume levels, we are
seeing signs of stability in those markets."

"Our success in our base business has given us confidence to invest in further
growth initiatives. During October, we announced an investment to purchase
the minority interest in our Argentina operation which we believe will
contribute to profit growth in the future. Additionally, we announced an
agreement to acquire a nonwovens business in Spain that will give us a new
presence in the European hygiene market with state-of-the-art technology,"
Hagen said.

The company's continued strong cash flow generation has enabled PGI to reduce
net debt by nearly $100 million over the course of the last twelve months to
$289.5 million as of October 3, 2009 (net debt defined as total debt less cash
balances). For the first nine months, cash flows from operations increased
$45.1 million to $79.5 million. Capital expenditures for the quarter were
$18.8 million and were $33.7 million year-to-date compared to $7.5 million in
the third quarter of 2008 and $28.4 million for the first nine months of 2008.
Operating working capital, defined as accounts receivable plus inventories
less trade accounts payable and accrued liabilities, was $95.8 million and
represented 10.7% of annualized sales compared to 10.8% of annualized sales
for the third quarter of 2008. On September 1, 2009, PGI completed the sale
of Fabpro and received net proceeds from the sale of approximately $32.9
million. Of such net proceeds, $31.6 million has been applied to reduce
amounts outstanding under the first-lien term loan. Additionally, in
conjunction with the senior credit facility amendment, we repaid approximately
$24.0 million of the net outstanding borrowings.

YEAR-TO-DATE RESULTS

Net sales were $639.1 million for the nine months ended October 3, 2009, a
decrease of $173.3 million from the comparable period of fiscal 2008 net sales
of $812.4 million. The net volume declined in the Nonwovens segment by $86.8
million, predominantly in the U.S. and Europe due to the U.S. plant closure in
the third quarter of fiscal 2008, and recessionary impacts that are negatively
affecting the industrial and wiping businesses located in the U.S. and
European regions. Oriented Polymers' sales volumes continued to be negatively
impacted by reduced housing starts affecting their industrial business,
imported commodity products affecting lumber wrap volumes, reduced demand for
protective apparel fabrics and recessionary impacts. Sales were also
negatively impacted by lower selling prices due to price decreases resulting
from the pass-through of lower raw material costs. As raw material costs have
decreased, we have reduced selling prices to our customers where required by
contract terms and where appropriate based on market conditions. In general,
with respect to contracted business, there is usually a one-quarter lag
between the change in raw material cost and the change in sales price.

Gross profit was $139.2 million compared to $126.4 million the prior year,
primarily reflecting the improvement in mix and sales prices relative to
declines in raw material costs. Operating income for the first nine months
was $52.9 million compared to $32.9 million the prior year. SG&A costs
decreased $8.9 million, from $88.2 million in 2008 to $79.3 million in 2009,
due primarily to the movement of foreign currencies versus the U.S. dollar of
approximately $4.5 million, lower incentive compensation costs of
approximately $2.6 million and the absence of executive separation and
termination costs of approximately $1.6 million in fiscal 2008. Special
charges for the nine months ended October 3, 2009 of approximately $10.6
million included noncash impairment charges of $3.4 million related to the
writedown of certain property and equipment in North Little Rock, Arkansas,
and Neunkirchen, Germany to their estimated fair value less costs to sell,
restructuring and plant realignment costs comprised of: (i) $3.1 million of
severance and other shutdown costs in Europe related to the ongoing
restructuring efforts of the European operations; (ii) $3.4 million of
severance and other shutdown costs related to facilities in the United States;
and (iii) $0.2 million of severance costs related to restructuring initiatives
in Canada, and $0.3 million of abandoned acquisition costs.

Net income attributable to PGI for the first nine months of 2009 amounted to
$29.0 million, or $1.48 per share, compared to $7.2 million, or $0.37 per
share, for the first nine months of 2008. Included in net income attributable
to PGI for the year-to-date period was $2.2 million of adjustments for
out-of-period items primarily related to income tax expense and
non-controlling interests.

ADJUSTED EBITDA

Adjusted EBITDA from continuing operations, a non-GAAP financial measure
defined below, for the third quarter of 2009 was $33.4 million compared to
$23.8 million in the third quarter of 2008. For the nine months ended October
3, 2009, Adjusted EBITDA from continuing operations was $101.8 million
compared to $77.6 million for the same period of 2008.

NON-GAAP FINANCIAL MEASURE

Adjusted EBITDA (as defined below) is used in this release as a "non-GAAP
financial measure," which is a measure of the company's financial performance
that is different from measures calculated and presented in accordance with
generally accepted accounting principles, or GAAP, within the meaning of
applicable Securities and Exchange Commission rules. A non-GAAP financial
measure, such as EBITDA or Adjusted EBITDA, should not be viewed as an
alternative to GAAP measures of performance such as (1) net income determined
in accordance with GAAP or (2) operating cash flows determined in accordance
with GAAP. The calculation of Adjusted EBITDA may not be comparable to the
calculation of similarly titled measures reported by other companies.

As defined in the company's credit agreement, Adjusted EBITDA equals net
income (loss) before income and franchise tax expense (benefit), interest
expense, net, depreciation and amortization, minority interests net of cash
distributions, write-off of loan acquisition costs, non-cash compensation,
foreign currency gain and losses, net, and special charges, net of unusual or
non-recurring gains. The company presents Adjusted EBITDA, as defined in its
credit agreement, as the measurement used as a basis for determining
compliance with several covenants thereunder. It is also generally consistent
with the metric used by management as a performance measurement for certain
performance-based incentive compensation plans. In addition, the company
considers Adjusted EBITDA an important supplemental measure of its performance
and believes it is frequently used by securities analysts, investors and other
interested parties in the evaluation of companies in its industry.

Included in this release is a reconciliation of net income to Adjusted EBITDA,
which illustrates the differences in these measures of operating performance.

EARNINGS CONFERENCE CALL

PGI will conduct an investor conference call, including presentation slides,
starting at 4:20 p.m. EST on Monday, November 16, 2009. A live webcast of the
conference call and presentation material can be accessed by visiting PGI's
investor relations website at www.polymergroupinc.com. Participants inside the
U.S. and Canada can access the call by dialing 866.804.6929 (pass code:
87454806). Callers dialing from outside the U.S. and Canada can access the
call by dialing 857.350.1675 (pass code: 87454806).

Polymer Group, Inc., one of the world's leading producers of nonwovens, is a
global, technology-driven developer, producer and marketer of engineered
materials. With the broadest range of process technologies in the nonwovens
industry, PGI is a global supplier to leading consumer and industrial product
manufacturers. The company operates 14 manufacturing and converting facilities
in 8 countries throughout the world.

Safe Harbor Statement
Except for historical information contained herein, the matters set forth in
this press release are forward-looking statements, within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, that involve certain risks and uncertainties that could
cause actual results to differ materially from those described in the
forward-looking statements. These forwardlooking statements speak only as of
the date of this release. Important factors that could cause actual results
to differ materially from those discussed in such forwardlooking statements
include: general economic factors including, but not limited to, changes in
interest rates, foreign currency translation rates, consumer confidence,
trends in disposable income, changes in consumer demand for goods produced,
and cyclical or other downturns; cost and availability of raw materials, labor
and natural and other resources and the inability to pass raw material cost
increases along to customers; changes to selling prices to customers which are
based, by contract, on an underlying raw material index; substantial debt
levels and potential inability to maintain sufficient liquidity to finance our
operations and make necessary capital expenditures; inability to meet existing
debt covenants; achievement of objectives for strategic acquisitions and
dispositions; inability to achieve successful or timely start-up on new or
modified production lines; reliance on major customers and suppliers; domestic
and foreign competition; information and technological advances; risks related
to operations in foreign jurisdictions; and changes in environmental laws and
regulations. Investors and other readers are directed to consider the risks
and uncertainties discussed in documents filed by Polymer Group, Inc. with the
Securities and Exchange Commission, including the company's Annual Report on
Form 10-K and subsequent Quarterly Reports on Form 10-Q.

For further information, please contact:
Dennis Norman
Vice President - Strategy & Corporate Development
(704) 697-5186
normand@pginw.com

P O L Y M E R G R O U P, I N C.
Consolidated Statements of Operations (Unaudited)
Three Months Ended October 3, 2009,
Three Months Ended July 4, 2009 and
Three Months Ended September 27, 2008
(In Thousands, Except Per Share Data)

Three Months Three Months Three Months
Ended Ended Ended
October 3, July 4, September 27,
2009 2009 2008
-------------------------------------------
Net sales $223,022 $206,040 $284,121

Cost of goods sold 175,832 163,474 243,583
-------------------------------------------
Gross profit 47,190 42,566 40,538
-------------------------------------------
Selling, general and
administrative expenses 27,412 25,088 29,048

Special charges, net 1,783 5,881 1,687
Other operating
(income) loss, net (674) (2,624) 2,301
-------------------------------------------

Operating income 18,669 14,221 7,502

Other expense (income):
Interest expense, net 5,360 6,613 7,581
Loss on extinguishment
of debt 5,085 -
Other (gain) loss, net 2,615 2,802 (3,205)
--------------------------------------------

Income before income
tax expense and discontinued
operations 5,609 4,806 3,126

Income tax expense 2,117 957 2,542
--------------------------------------------

Income from continuing
operations $3,492 $3,849 $584

Discontinued operations
Income from operations
of discontinued
business $446 $1,966 $1,100
Gain on sale of
discontinued
operations, net $8,473 $- $-
--------------------------------------------
Income from discontinued
operations $8,919 $1,966 $1,100

Net income $12,411 $5,815 $1,684

Net (income) loss
attributable to noncontrolling
interests 2,833 (1,569) 1,738
--------------------------------------------
Net income attributable
to Polymer Group, Inc $15,244 $4,246 $3,422
============================================

Average common shares
outstanding - Basic 19,686 19,638 19,336
- Diluted $19,783 $19,739 $19,474

Earnings per common share attributable to Polymer Group, Inc.:
Basic:
Continuing operations $0.32 $0.11 $0.12
Discontinued Operations 0.45 0.10 0.06
--------------------------------------------
Basic $0.77 $0.21 $0.18
============================================

Diluted $0.77 $0.21 $0.18
============================================

P O L Y M E R G R O U P, I N C.
Consolidated Statements of Operations
(Unaudited)
Nine Months Ended October 3, 2009 and
Nine Months Ended September 27, 2008
(In Thousands, Except Per Share Data)

Nine Months Nine Months
Ended Ended
October 3, September 27,
2009 2008
----------- -----------

Net sales $639,072 $812,418

Cost of goods sold 499,897 686,051
----------- -----------

Gross profit 139,175 126,367

Selling, general and
administrative
expenses 79,342 88,186

Special charges, net 10,556 4,844
Other operating
(income) loss, net (3,650) 439
----------- -----------

Operating income 52,927 32,898

Other expense (income):
Interest expense, net 19,367 23,247
Gain on reacquisition
of debt (2,431) -
Loss on extinguishment
of debt 5,085 -
Other (gain) loss, net 7,572 (2,805)
----------- -----------

Income before income
tax expense and discontinued
operations 23,334 12,456

Income tax expense 10,256 7,711
----------- -----------

Income from continuing
operations $13,078 $4,745

Discontinued operations
Income from operations
of discontinued business $4,353 $819
Gain on sale of discontinued
operations, net $8,473 $-
----------- -----------
Income from discontinued
operations $12,826 $819

Net income $25,904 $5,564

Net (income) loss
attributable to
noncontrolling interests 3,141 1,662
----------- -----------
Net income attributable
to Polymer Group, Inc $29,045 $7,226
=========== ===========

Average common shares
outstanding - Basic 19,552 19,258
- Diluted $19,591 $19,418
Earnings per common share
attributable to Polymer
Group, Inc.:
Basic:
Continuing operations $0.83 $0.33
Discontinued operations 0.65 0.04
----------- -----------
Basic $1.48 $0.37
=========== ===========

Diluted $1.48 $0.37
=========== ===========

P O L Y M E R G R O U P, I N C.
Condensed Consolidated Balance Sheets (Unaudited)
(In Thousands)

October 3, January 3,
2009 2009
---------- ----------

A S S E T S

Current assets:
Cash and cash equivalents $56,287 $45,718
Accounts receivable, net 127,375 125,818
Inventories 101,139 107,685
Other 33,881 31,950
Assets of discontinued operations - 31,760
---------- ----------
Total current assets 318,682 342,931

Property, plant and equipment,
net 339,449 338,262
Intangibles and loan
acquisition costs, net 5,772 7,938
Other assets 12,662 13,331
---------- ----------
Total assets $676,565 $702,462
========== ==========

L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y

Current liabilities:
Accounts payable and
accrued liabilities $132,733 $125,957
Current portion of long-term
debt and short-term borrowings 19,474 21,160
Other 6,388 4,266
Liabilities of discontinued
operations - 7,863
- -----
Total current liabilities 158,595 159,246

Long-term debt 326,282 392,505
Other noncurrent liabilities 60,720 57,500
------ ------
Total liabilities 545,597 609,251

Total PGI shareholders' equity 122,756 80,272
Noncontrolling interests 8,212 12,939
----- ------
Total equity 130,968 93,211
------- ------
Total liabilities and equity $676,565 $702,462
======== ========

P O L Y M E R G R O U P, I N C.
Selected Financial Data (Unaudited)
(In Thousands)

Three Months Three Months Three Months
Ended Ended Ended
October 3, July 4, September 27,
2009 2009 2008
---------------------------------------------

Selected Financial Data
-------------------------
Depreciation and amortization
expense included in operating
income $12,296 $12,103 $11,622

Noncash compensation
costs included in operating
income $970 $1,382 $495

Amortization of loan
acquisition costs $329 $273 $345

Capital expenditures $18,819 $11,451 $7,503

Special charges, net
----------------------
Asset Impairment charges $251 $1,593 $-
Restructuring and plant
realignment costs 1,266 4,204 1,512
Other 266 84 175
------------------------------------------
$1,783 $5,881 $1,687

Other operating (income) loss,
net including Foreign Currency
(Gain) Loss
-----------------------------
United States $(1,002) $(337) $195
Canada 432 38 25
Europe 39 (380) (178)
Asia (49) 27 39
Latin America (94) (1,972) 2,220
------------------------------------------
$(674) $(2,624) $2,301

Franchise Taxes 44 94 40

Adjusted EBITDA
-----------------
The following table reconciles Adjusted EBITDA to net income
(loss) attributable to Polymer Group Inc. for the periods presented:

Net income (loss)
attributable to
Polymer Group, Inc. $15,244 $4,246 $3,422
Income & franchise tax
expense (benefit) 2,161 1,051 2,582
Interest expense, net 5,360 6,613 7,581
Depreciation and amortization
expense included in operating
income 12,296 12,103 11,622
Minority interests, net
of tax & cash disbursements (2,833) 1,569 (1,738)
Non-cash compensation 970 1,382 495
Foreign currency (gain)
loss, net 1,839 203 (1,295)
Special charges, net 1,783 5,881 1,687
Fees paid for refinancing of
credit agreement 1,739 - -
Less gain on sale of
discontinued operation (8,473) - -
Less income from discontinued
operations (446) (1,966) (1,100)
Unusual or non-recurring
charges (gains), net 3,770 (526) 559
------------------------------------------

Adjusted EBITDA $33,410 $30,556 $23,815
==========================================

P O L Y M E R G R O U P, I N C.
Selected Financial Data (Unaudited)
(In Thousands)

Nine Months Nine Months
Ended Ended
October 3, September 27,
2009 2008
----------- -------------

Selected Financial Data
-------------------------
Depreciation and amortization
expense included in operating
income $36,270 $36,120

Noncash compensation
costs included
in operating income $2,775 $2,695

Amortization of Loan
acquisition costs $937 $1,036

Capital expenditures $33,709 $28,414

Special charges, net
----------------------
Asset Impairment charges $3,444 -
Restructuring and plant
realignment costs 6,754 4,262
Other 358 582
----------- -------------
$10,556 $4,844

Other operating (income) loss,
net including Foreign Currency
(Gain) Loss

United States $(1,755) $348
Canada 582 (129)
Europe (622) 156
Asia (11) 464
Latin America (1,844) (400)
----------- -------------
$(3,650) $439

Adjusted EBITDA
-----------------
The following table reconciles Adjusted EBITDA to net income for the
periods presented:

Net income (loss) attributable
to Polymer Group, Inc. $29,045 $7,226
Income & franchise tax
expense (benefit) 10,665 8,986
Interest expense, net 19,367 23,247
Depreciation and amortization
expense included in operating
income 36,270 36,120
Minority interests, net
of tax & cash disbursements (3,141) (1,662)
Non-cash compensation 2,775 2,696
Foreign currency (gain)
loss, net 4,105 (3,562)
Special charges, net 10,556 4,844
Fees paid for refinancing of
credit agreement 1,739
Less gain on sale of
discontinued operation (8,473)
Less income from discontinued
operations (4,353) (819)
Unusual or non-recurring
charges (gains), net 3,246 560
----------- -------------

Adjusted EBITDA $101,801 $77,636
=========== =============

SOURCE Polymer Group, Inc.

Dennis Norman, Vice President - Strategy & Corporate Development of Polymer
Group, Inc., +1-704-697-5186, normand@pginw.com