10-Q 1 l96849ae10vq.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002 COMMISSION FILE NO. 33-93644 AND 333-51839 DAY INTERNATIONAL GROUP, INC. 130 West Second Street Dayton, Ohio 45402 (937) 224-4000 State of Incorporation: Delaware IRS Employer Identification No.: 31-1436349 Securities Registered Pursuant to Section 12 (b) of the Act: None Securities Registered Pursuant to Section 12 (g) of the Act: None 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 X No There were 23,298 Common Shares of the Company, $0.01 per share par value, outstanding as of November 1, 2002. DAY INTERNATIONAL GROUP, INC. INDEX

2 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS DAY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2002 AND DECEMBER 31, 2001 (IN THOUSANDS)

See notes to condensed consolidated financial statements. 3 DAY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 (IN THOUSANDS)

See notes to condensed consolidated financial statements. 4 DAY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 (IN THOUSANDS)

See notes to condensed consolidated financial statements. 5 DAY INTERNATIONAL GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS) A. BASIS OF PRESENTATION The balance sheet as of December 31, 2001, is condensed financial information derived from the audited balance sheet. The interim financial statements are unaudited. The financial statements of Day International Group, Inc. (the "Company") have been prepared in accordance with accounting principles generally accepted in the United States and, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation in accordance with generally accepted accounting principles for the periods presented. The results of operations and cash flows for the interim periods presented are not necessarily indicative of the results for the full year. Certain prior year amounts have been reclassified to conform to current year presentation. B. INVENTORIES Inventories as of September 30, 2002 and December 31, 2001, consist of: 2002 2001 Finished goods $19,615 $19,094 Work in process 5,350 3,932 Raw materials 10,271 11,250 ------- ------- $35,236 $34,276 ======= ======= C. BUSINESS SEGMENTS The Company produces precision-engineered products, specializing in the design and customization of consumable image-transfer products for the graphic arts (printing) industry and consumable fiber handling products for the textile industry. The Image Transfer segment designs, manufactures and markets high-quality printing blankets and sleeves, pressroom chemicals and automatic dampening systems used primarily in the offset and flexographic printing industries. The Textile Products segment manufactures and markets precision engineered rubber cots and aprons sold to textile yarn spinners and other engineered rubber products sold to diverse markets. Segment performance is evaluated based on operating profit results compared to the annual operating plan. Intersegment sales and transfers are not material. The Company manages the two segments as separate strategic business units. They are managed separately because each business unit requires different manufacturing processes, technology and marketing strategies. 6

The following is a reconciliation of the segment operating profit reported above to the amount reported in the consolidated financial statements:

D. COMPREHENSIVE INCOME (LOSS) Total comprehensive income (loss) is comprised of net income (loss), net currency translation gains and losses and net unrealized gains and losses on cash flow hedges. Total comprehensive income (loss) for the three months ended September 30, 2002 and 2001 was $1,993 and $(153). Total comprehensive income (loss) for the nine months ended September 30, 2002 and 2001 was $7,805 and $(1,441). E. CONTINGENCIES Claims have been made against the Company for the costs of environmental remedial measures taken or to be taken. Reserves for such liabilities have been established and no insurance recoveries have been anticipated in the determination of the reserves. In management's opinion, the aforementioned claims will be resolved without material adverse effect on the results of operations, financial position or cash flows of the Company. The Company's previous parent and its parent, PolyOne, have agreed to indemnify the Company for certain of the costs associated with these matters. 7 F. RESTRUCTURING COSTS Pre-tax charges of $673 were recorded in the first three quarters of 2001 for severance and termination costs for relocating the Textile Products operations from the Asheville, North Carolina, facility to the Greenville, South Carolina, facility. During the first quarter of 2002, the Company incurred additional relocation costs of $109, recorded a charge of $157 for write-off of fixed assets and recorded a reversal of $103 of the reserve for severance costs. As of September 30, 2002, final severance payments have been paid to 49 associates. During the fourth quarter of 2001, the Company ceased operations at its Transfer Media facility in Longwood, Florida. A pre-tax charge of $3,010 was recorded in 2001 for severance costs for 55 associates, write-off of abandoned assets and costs related to closing the facility. The Company is attempting to sell the land and building. As of September 30, 2002, final severance payments have been paid to all associates and the remaining reserve of $45 for severance costs was reversed in the second quarter of 2002. A pre-tax charge of $988 was recorded during the fourth quarter of 2001 for severance costs for 21 associates, costs for relocating the Pressroom Chemicals' German sales office and the U.S. sales and administrative functions and loss on the sale of fixed assets. As of September 30, 2002, final severance payments have been paid to 20 associates. Below is a summary of the amounts charged against the reserves for severance and facility shutdown in 2002: TEXTILE IMAGE PRODUCTS TRANSFER Balance at December 31, 2001 $ 392 $ 1,508 Reversal of reserve (103) Charges against the reserve for: Severance costs (193) (549) Facility shutdown (417) ------- ------- Balance at March 31, 2002 96 542 Reversal of reserve (45) Charges against the reserve for: Severance costs (46) (160) Facility shutdown (32) ------- ------- Balance at June 30, 2002 50 305 Charges against the reserve for: Severance costs (50) (80) Facility shutdown (21) ------- ------- Balance at September 30, 2002 $ $ 204 ======= ======= 8 G. NEW ACCOUNTING PRINCIPLES In July 2001, the Financial Accounting Standards Board issued SFAS Nos. 141, "Business Combinations" and 142, "Goodwill and Other Intangible Assets." These statements will not require amortization of goodwill for periods beginning after December 15, 2001. Instead an annual review of the recoverability of the goodwill and intangible assets will be required. These Statements were adopted as of January 1, 2002. As of January 1, 2002, the Company ceased recording amortization of goodwill of approximately $3,700 per year and recognized pre-tax income of $1,010 for the cumulative effect of the change in accounting principle for the amount of the unamortized deferred credit related to the excess over cost arising from the TPO acquisition. As of June 30, 2002, the Company has completed the initial review of the recoverability of goodwill and has determined that no impairment of goodwill is indicated. The following is a reconciliation from reported net income (loss) to net income (loss) adjusted for the amortization of goodwill and the deferred credit related to an excess over cost:

H. SUPPLEMENTAL CONSOLIDATING INFORMATION The Company has outstanding $100,000, 11-1/8% Senior Notes and $115,000, 9 1/2% Senior Subordinated Notes (collectively, the "Notes"). The Company has no assets or operations other than its wholly-owned investment in Day International, Inc. ("Day International" or "Guarantor"). Day International has provided a full and unconditional guarantee of the Notes. The wholly-owned foreign subsidiaries of Day International are not guarantors with respect to the Notes and do not have any credit arrangements senior to the Notes. The only intercompany eliminations are the normal intercompany eliminations with regard to intercompany sales and the Company's investment in the wholly-owned non-guarantor subsidiaries. Intercompany notes are in place, which effectively transfers the interest expense from the Company to Day International. The following are the supplemental combining condensed balance sheets as of September 30, 2002 and December 31, 2001, and the supplemental combining condensed statements of operations and cash flows for the three and nine months ended September 30, 2002 and 2001, with the investments in the subsidiaries accounted for using the equity method. Separate complete financial statements of the Guarantor are not presented because management has determined that they are not material to the investors. 9 DAY INTERNATIONAL GROUP, INC. SUPPLEMENTAL COMBINING CONDENSED BALANCE SHEET SEPTEMBER 30, 2002

10 DAY INTERNATIONAL GROUP, INC. SUPPLEMENTAL COMBINING CONDENSED BALANCE SHEET DECEMBER 31, 2001

11 DAY INTERNATIONAL GROUP, INC. SUPPLEMENTAL COMBINING CONDENSED STATEMENT OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2002

12 DAY INTERNATIONAL GROUP, INC. SUPPLEMENTAL COMBINING CONDENSED STATEMENT OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2001

13 DAY INTERNATIONAL GROUP, INC. SUPPLEMENTAL COMBINING CONDENSED STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 2002

14 DAY INTERNATIONAL GROUP, INC. SUPPLEMENTAL COMBINING CONDENSED STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 2001

15 DAY INTERNATIONAL GROUP, INC. SUPPLEMENTAL COMBINING CONDENSED STATEMENT OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 2002

16 DAY INTERNATIONAL GROUP, INC. SUPPLEMENTAL COMBINING CONDENSED STATEMENT OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 2001

17 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SAFE HARBOR STATEMENT This Quarterly Report contains forward-looking statements within the meaning of the Securities Act of 1933. These are subject to certain risks and uncertainties, including those identified below, which could affect the Company's actual results and cause such results to differ materially from those expressed in forward-looking statements. The words "believe," "anticipate," "expect," "intend," "will likely result," "will continue," and similar expressions identify forward-looking statements. Factors that could cause actual results to differ materially from the forward-looking statements include but are not limited to (i) the effect of leverage, including the limitations imposed by the Company's various debt instruments; (ii) risks related to significant operations in foreign countries, including the translation of operating results to the U.S. dollar; (iii) the timely development and market acceptance of new products; (iv) the effect of competitive products and pricing; (v) the effect of changing general and industry specific economic conditions; (vi) the effect of environmental regulations; and (vii) the potential for technology obsolescence. While made in good faith and with a reasonable basis based on information currently available to the Company's management, there is no assurance that any such forward-looking statements will be achieved or accomplished. The Company is under no obligation to update any forward-looking statements to the extent it becomes aware that they are not achieved or likely to be achieved for any reason. BASIS OF PRESENTATION The following table sets forth selected financial information in millions of dollars and as a percentage of net sales:

18 COMPARISON OF RESULTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2002, COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2001 Net sales increased $5.9 million (9.6%) to $66.9 million. Image Transfer's sales increased $5.0 million (10.2%) to $54.1 million, primarily as a result of higher export sales from the United States and in Europe ($4.3 million) and by positive foreign currency rate changes of $1.5 million offset by lower sales volume in the United States of $1.0 million. The lower U.S. Image Transfer sales volume was as a result of the continuing weak U.S. printing industry. Textile Products' sales increased $0.9 million (7.2%) to $12.8 million, primarily as a result of higher sales volume in the United States of $0.3 million and by positive foreign currency rate changes of $0.6 million. Gross profit increased $3.2 million (15.3%) to $24.4 million. As a percentage of net sales, gross profit increased to 36.4% for the three months ended September 30, 2002, compared to 34.6% for the three months ended September 30, 2001, primarily as a result of benefits realized from the restructuring activities performed in the second half of 2001 and the first quarter of 2002. Gross profit has continued to be negatively affected by lower manufacturing yields of digital products than expected during initial startup. Selling, general and administrative expense ("SG&A") increased $1.1 million (8.1%) to $14.4 million. As a percentage of net sales, SG&A decreased slightly to approximately 21.5% from 21.8%. Foreign currency translation rate changes increased SG&A by $0.4 million in the third quarter of 2002 compared to the third quarter of 2001. Operating profit increased $3.1 million (48.5%) to $9.6 million, primarily as a result of decrease in amortization of goodwill from the adoption of SFAS No. 142 ($0.9 million) and the higher gross margin, offset by higher SG&A expenses. As a percentage of net sales, operating profit increased to 14.3% for the three months ended September 30, 2002, from 10.5% for the comparable period in 2001. Excluding the restructuring charges and the amortization of goodwill in 2001, operating profit as a percentage of net sales would have been 14.3% in 2002 and 12.1% in 2001. Image Transfer's operating profit increased $1.4 million (18.2%) to $9.0 million. As a percentage of net sales, Image Transfer's operating profit increased to 16.7% for the three months ended September 30, 2002, from 15.6% in 2001, primarily as a result of benefits realized from the restructuring activities performed in 2001. Textile Products' operating profit increased $0.6 million (40.6%) to $2.0 million, excluding the restructuring costs in 2001. As a percentage of net sales, Textile Products' operating profit (excluding the restructuring costs in 2001) increased to 15.5% for the three months ended September 30, 2002, from 11.8% in 2001, primarily as a result of increased margins on sales from the U.S. operations. Other income was $0.1 million for the three months ended September 30, 2002, compared to other income of $0.8 million for the three months ended September 30, 2001. The other (income) expense is primarily due to foreign currency transaction (gains) losses incurred in the normal course of international 19 subsidiaries doing business in other than their functional currency as well as a result of intercompany financing arrangements. The effective tax rate for the third quarter of 2002 was 41.4%. In 2001 the Company recorded income tax expense on a loss before taxes. This effect was a result of non-deductible expenses and international earnings taxable in the United States. NINE MONTHS ENDED SEPTEMBER 30, 2002, COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2001 Net sales decreased $0.5 million (0.3%) to $192.1 million. Image Transfer's sales increased $2.8 million (1.8%) to $156.2 million, primarily as a result of higher export sales from the United States and in Europe ($4.4 million) and by positive foreign currency rate changes of $1.5 million offset by lower sales volume in the United States of $5.5 million. The lower U.S. Image Transfer sales volume was as a result of the continuing weak U.S. printing industry in 2002. Textile Products' sales decreased $3.3 million (8.5%) to $35.9 million, primarily as a result of lower sales volume in the United States of $2.4 million and in Europe of $1.5 million, offset by positive foreign currency rate changes of $0.6 million. The lower U.S. Textile Products sales volume was primarily a result of customers consolidating and closing textile mills as a result of weak demand for U.S. produced textile products combined with a lower global demand for spun yarn. The strong U.S. dollar over the past several years has reduced U.S. textile exports and caused an increase of lower-cost textile imports into the United States. Gross profit increased $1.9 million (2.8%) to $70.3 million. As a percentage of net sales, gross profit increased to 36.6% for the nine months ended September 30, 2002, compared to 35.5% for the nine months ended September 30, 2001, primarily as a result of benefits realized from the restructuring activities performed in the second half of 2001, offset by lower Textile sales volumes. Gross profit has continued to be negatively affected by lower manufacturing yields of digital products than expected during initial startup. Selling, general and administrative expense ("SG&A") decreased $1.5 million (3.5%) to $40.7 million. As a percentage of net sales, SG&A decreased to approximately 21.2% from 21.9%, primarily as a result of benefits realized from the restructuring activities performed in 2001. Foreign currency translation rate changes increased SG&A by $0.4 million in the first three quarters of 2002 compared to 2001. A pre-tax charge of $0.5 million was recorded in the first quarter of 2001 for severance and termination costs to relocate the Textile Products operations from its Asheville, North Carolina, facility to its Greenville, South Carolina, facility. During the first quarter of 2002, the Company reversed $0.1 million of the reserve. Additionally, a pre-tax charge of $0.3 million has been recorded in the first quarter ended of 2002 for relocation of machinery and equipment and write-off of abandoned assets. During the fourth quarter of 2001, the Company ceased operations at its Transfer Media facility in Longwood, Florida. A pre-tax charge of $3.0 million was recorded in 2001 for severance costs for 55 associates, write-off of abandoned assets and costs related to closing the facility. As of June 30, 2002, final 20 severance payments have been paid to all associates and the remaining reserve of $0.1 million for severance costs was reversed in the second quarter of 2002. Operating profit increased $6.7 million (31.4%) to $28.1 million, primarily as a result of decrease in amortization of goodwill from the adoption of SFAS No. 142 ($2.7 million), the higher gross margin and the reduction in SG&A. As a percentage of net sales, operating profit increased to 14.6% for the nine months ended September 30, 2002, from 11.1% for the comparable period in 2001. Excluding the restructuring charges and the amortization of goodwill in 2001, operating profit as a percentage of net sales would have been 14.6% in 2002 and 12.8% in 2001. Image Transfer's operating profit increased $3.3 million (13.4%) to $27.7 million. As a percentage of net sales, Image Transfer's operating profit increased to 17.7% for the nine months ended September 30, 2002, from 15.9% in 2001, primarily as a result of benefits realized from the restructuring activities performed in 2001. Textile Products' operating profit decreased $0.5 million (8.4%) to $4.9 million, excluding the restructuring costs in 2002 and 2001, as a result of the decrease in sales volume. As a percentage of net sales, Textile Products' operating profit (excluding the restructuring costs in 2002 and 2001) was flat at 13.8% for the nine months ended September 30, 2002, compared to 2001. Other income was $0.5 million for the nine months ended September 30, 2002, compared to other expense of $0.5 million for the nine months ended September 30, 2001. The other (income) expense is primarily due to foreign currency transaction losses incurred in the normal course of international subsidiaries doing business in other than their functional currency as well as a result of intercompany financing arrangements. The effective tax rate benefit for the first three quarters of 2002 was 40.0%. The Company recorded income tax expense for 2001 on a loss before taxes. This effect is a result of non-deductible expenses and international earnings taxable in the United States. As of January 1, 2002, the Company adopted SFAS Nos. 141, "Business Combinations" and 142, "Goodwill and Other Intangible Assets" and ceased recording amortization of goodwill of approximately $3.7 million per year and recognized pre-tax income of $1.0 million for the cumulative effect of the change in accounting principle for the amount of the unamortized deferred credit related to the excess over cost arising from the TPO acquisition. As of June 30, 2002, the Company has completed the initial review of the recoverability of goodwill and has determined that no impairment of goodwill is indicated. LIQUIDITY AND CAPITAL RESOURCES The Company has historically generated sufficient funds from its operations to fund its working capital and capital expenditure requirements. The Company is able to maintain relatively low levels of working capital as its converters and distributors typically carry a greater portion of inventory and finance receivables of the Company's end users. 21 Capital expenditures were $5.6 million and $8.8 million for the nine months ended September 30, 2002 and 2001, respectively. As of September 30, 2002, there was $7.3 million outstanding under the Revolving Credit Facility and the Company had approximately $12.2 million available under the Revolving Credit Facility (calculated by applying the applicable borrowing base limitation). The Company's aggregate indebtedness at September 30, 2002, is approximately $257.6 million and the aggregate liquidation preferences of the Exchangeable Preferred Stock is $60.5 million and the Convertible Preferred Stock is $62.9 million. The Company is highly leveraged. The Company's ability to operate its business, service its debt requirements and reduce its total debt will depend upon its future operating performance, which will be affected by prevailing economic conditions and financial, business and other factors, certain of which are beyond its control, as well as the availability of revolving credit borrowings. See the Company's Annual Report on Form 10-K for a more extensive discussion of liquidity and capital resources. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS The Company conducts a significant amount of business and has operating and sales facilities in countries outside the United States. As a result, the Company is subject to business risks inherent in non-U.S. activities, including political uncertainty, import and export limitations, exchange controls and currency fluctuations. The Company believes risks related to its foreign operations are mitigated due to the political and economic stability of the countries in which its largest foreign operations are located, the stand-alone nature of the operations, the Company's limited net asset exposure, forward foreign exchange contract practices and pricing flexibility. Thus, while changes in foreign currency values do affect earnings, the longer-term economic effect of these changes should not have a material adverse effect on the Company's financial condition, results of operations or liquidity. Certain of the Company's international subsidiaries make purchases in foreign currencies, mainly intercompany transactions. As a result, they are subject to transaction exposures that arise from foreign exchange movements between the date that the foreign currency transaction is recorded and the date it is consummated. The Company has entered into forward foreign exchange contracts to protect it against such foreign exchange movements. The contract value of these foreign exchange contracts was approximately $9.0 million at September 30, 2002 and $9.3 million at December 31, 2001. These contracts generally expire within three to twelve months. Foreign currency transaction (gains) losses, included in other (income) expense, were $0.3 million and $(0.8) million for the three months ended September 30, 2002 and 2001 and zero and $0.5 million for the nine months ended September 30, 2002 and 2001. INTEREST RATE RISKS The Company is subject to market risk from exposure to changes in the interest rates based on its financing activities. The Company utilizes a mix of debt maturities along with both fixed- and variable- 22 rate debt to manage its exposure to changes in interest rates and to minimize interest expense. The Company does not expect interest rate changes to have a material effect on income or cash flows in 2002, although there can be no assurance that interest rates will not materially change. COMMODITY RISKS Rubber polymers and fabrics are key components in most of the Image Transfer and Textile products. The Company is exposed to changes in the costs of these components. In addition, Image Transfer's pressroom chemical products are exposed to changes in the cost of certain petroleum-based components. The largest raw material component in the pressroom chemical products is petroleum distillates, such as aliphatics and aromatics. When commodity prices increase, the Company has historically passed on increases to its customers to maintain its profit margins. Conversely, when commodity prices decline, the Company generally lowers its sales prices to meet competitive pressures. Because the Company has historically been able to raise sales prices to offset higher costs, management believes that a 10% change in the cost of its components could have a short-term effect until sales price increases take effect, but overall would not have a material effect on income or cash flows for a fiscal year. ITEM 4. CONTROLS AND PROCEDURES The Company maintains a system of internal accounting controls designed to provide reasonable assurance that transactions are properly recorded and summarized so that reliable financial records and reports can be prepared and assets safeguarded. In addition, a system of disclosure controls is maintained to ensure that information required to be disclosed is recorded, processed, summarized and reported in a timely manner to management responsible for the preparation and reporting of the Company's financial information. Management assesses the internal control and disclosure control systems as being effective as they encompass material matters for the three months and nine months ended September 30, 2002. To the best of management's knowledge, there were no changes in the internal control and disclosure control systems subsequent to September 30, 2002, that would significantly affect the control systems. 23 PART II OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits (99) ADDITIONAL EXHIBITS 99.1 Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 99.2 Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 b. Reports on Form 8-K None SIGNATURE 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. Day International Group, Inc. ----------------------------- (Registrant) Date: November 11, 2002 By: /s/ Thomas J. Koenig ----------------------------- Thomas J. Koenig Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) 24 CERTIFICATIONS I, Dennis R. Wolters, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Day International Group, Inc.; 2. Based on my knowledge, this quarterly 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 quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures 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 quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the board of directors: a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 11, 2002 By: /s/ Dennis R Wolters ----------------------------- Dennis R. Wolters President and Chief Executive Officer (Principal Executive Officer) 25 I, Thomas J. Koenig, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Day International Group, Inc.; 2. Based on my knowledge, this quarterly 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 quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures 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 quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the board of directors: a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 11, 2002 By: /s/ Thomas J. Koenig ----------------------------- Thomas J. Koenig Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) 26

DAY INTERNATIONAL GROUP INC 10-Q