<PAGE>   1

                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C, 20549


[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
      SECURITIES EXCHANGE ACT OF 1934

      For the quarterly period ended September 30, 1999
      -------------------------------------------------

[ ]   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 33-93644 and 333-50839
                       ----------------------

                          DAY INTERNATIONAL GROUP, INC.
                          -----------------------------
             (Exact name of registrant as specified in its charter)


           Delaware                                           31-1436 349
           --------                                           -----------
(State or other jurisdiction of                         (I.R.S. Employer ID No.)
 incorporation or organization)

 130 West Second Street, Suite 1700, Dayton, Ohio                 45402
--------------------------------------------------              ----------
(Address of principal executive offices)                        (zip code)


       (937) 224-4000
-----------------------------------
(Registrant's telephone number including area code)

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
   ----   ----

The number of Common Shares of the Company, $0.01 per share par value,
outstanding as of November 15, 1999 was 23,298


<PAGE>   2




                          DAY INTERNATIONAL GROUP, INC.

                                      Index

<TABLE>
<CAPTION>

                                                                                             Pages
                                                                                             -----
Part I: Financial Information

        Item 1. Financial Statements:

                   <S>                                                                     <C>
                     Condensed Consolidated Balance Sheets as of September 30, 1999
                     and December 31, 1998                                                     3

                     Condensed Consolidated Statements of Operations for the three months
                     ended September 30, 1999 and 1998                                         4

                     Condensed Consolidated Statements of Operations for the nine months
                     ended September 30, 1999 and 1998                                         5

                     Condensed Consolidated Statements of Comprehensive (Loss) Income
                     for the three months ended September 30, 1999 and 1998                    6

                     Condensed Consolidated Statements of Comprehensive (Loss) Income
                     for the nine months ended September 30, 1999 and 1998                     6

                     Condensed Consolidated Statements of Cash Flows for the nine months
                     ended September 30, 1999 and 1998                                         7

                     Notes to Condensed Consolidated Financial Statements                    8 - 22

                 Item 2.  Management's Discussion and Analysis of Financial Condition
                          and Results of Operations                                         23 - 30

         Part II: Other Information

                 Item 1 - Legal Proceedings                                                   31

                 Item 2 - Changes in Securities and Use of Proceeds                           31

                 Item 6 - Exhibits and Reports on Form 8-K                                    31

                 Signature                                                                    31

         </TABLE>

                                       2

<PAGE>   3


PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

                 DAY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
           (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>

         ASSETS                                                     1999           1998
                                                                    ----           ----
<S>                                                             <C>            <C>
  Cash and cash equivalents                                      $     380      $   4,762
  Accounts receivable (less allowance for doubtful
      accounts of $1,743 and $1,384)                                26,185         18,630
  Inventories                                                       23,524         19,179
  Prepaid expenses and other current assets                          1,346          1,267
  Deferred tax assets                                                2,548          2,543
                                                                 ---------      ---------

         Total current assets                                       53,983         46,381

  Property, plant and equipment, net                                53,873         50,305
  Goodwill and other intangible assets                             150,071        157,799
  Deferred tax assets                                                2,482          1,523
  Other assets                                                       3,172          1,400
                                                                 ---------      ---------
TOTAL ASSETS                                                     $ 263,581      $ 257,408
                                                                 =========      =========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
  Accounts payable                                               $   5,960      $   5,905
  Accrued associate-related costs and other accrued expenses        13,477         13,229
  Income taxes payable                                               2,213          2,913
  Interest payable                                                   4,438          4,336
  Current maturities of long-term debt                               1,292          1,292
                                                                 ---------      ---------

         Total current liabilities                                  27,380         27,675

  Long-term and subordinated long-term debt                        259,851        256,223
  Deferred tax liabilities                                           1,086          1,353
  Other long-term liabilities                                       19,648         15,813
  Commitments and contingencies
                                                                 ---------      ---------

         Total liabilities                                         307,965        301,064

  Exchangeable preferred stock                                      40,402         36,627

STOCKHOLDERS' (DEFICIT) EQUITY:
  Common Shares                                                          1              1
  Additional paid-in-capital
  Contra-equity associated with the assumption of
    majority shareholder's bridge loan                             (68,772)       (68,772)
  Retained earnings (deficit)                                      (13,229)       (10,370)
  Foreign currency translation adjustment                           (2,786)        (1,142)
                                                                 ---------      ---------

         Total stockholders' (deficit) equity                      (84,786)       (80,283)
                                                                 ---------      ---------

TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY             $ 263,581      $ 257,408
                                                                 =========      =========

</TABLE>

            See notes to condensed consolidated financial statements.

                                       3


<PAGE>   4

                 DAY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                           1999          1998
                                                           ----          ----

<S>                                                   <C>           <C>
NET SALES                                               $ 44,569      $ 46,466

COST OF GOODS SOLD                                        27,942        29,206
                                                        --------      --------
GROSS PROFIT                                              16,627        17,260

SELLING, GENERAL AND ADMINISTRATIVE                        7,407         7,146
AMORTIZATION OF INTANGIBLES                                  903           641
MANAGEMENT FEES                                              276           244
                                                        --------      --------

OPERATING PROFIT                                           8,041         9,229

OTHER EXPENSES:
  Interest expense (including amortization
    of deferred financing costs of $600 in 1999 and
    $576 in 1998)                                          6,863         6,743
  Other expense (income)--net                                 69           216
                                                        --------      --------
                                                           6,932         6,890
                                                        --------      --------

INCOME BEFORE INCOME TAXES                                 1,109         2,270

INCOME TAXES                                                 480           916
                                                        --------      --------
NET INCOME                                                   629         1,354

PREFERRED STOCK DIVIDENDS                                 (1,260)       (1,110)

AMORTIZATION OF PREFERRED STOCK
  ISSUANCE COSTS                                             (42)          (42)
                                                        --------      --------

NET LOSS AVAILABLE
  TO COMMON SHAREHOLDERS                                $   (673)     $    202
                                                        ========      ========

</TABLE>

            See notes to condensed consolidated financial statements.


                                       4

<PAGE>   5


                 DAY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                             1999           1998
                                                             ----           ----

<S>                                                      <C>            <C>
NET SALES                                                 $ 130,660      $ 132,516

COST OF GOODS SOLD                                           81,730         83,047
                                                          ---------      ---------
GROSS PROFIT                                                 48,930         49,469

SELLING, GENERAL AND ADMINISTRATIVE                          22,790         21,695
COMPENSATION AND RELATED
   TRANSACTION COSTS                                                        18,018
AMORTIZATION OF INTANGIBLES                                   2,714          1,934
MANAGEMENT FEES                                                 806            722
                                                          ---------      ---------

OPERATING PROFIT                                             22,620          7,100

OTHER EXPENSES:
  Interest expense (including amortization
    of deferred financing costs of $1,800 in 1999 and
    $1,448 in 1998                                           20,608         20,714
  Other expense (income)--net                                   337            396
                                                          ---------      ---------
                                                             20,945         21,110
                                                          ---------      ---------
INCOME (LOSS) BEFORE INCOME TAXES
   AND EXTRAORDINARY ITEMS                                    1,675        (14,010)

INCOME TAXES (BENEFIT)                                          757         (2,512)
                                                          ---------      ---------

INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS                        918        (11,498)

EXTRAORDINARY LOSSES ON EARLY
  EXTINGUISHMENT OF DEBT (NET OF TAX
  BENEFIT OF $2,368)                                              -          3,552
                                                          ---------      ---------

NET INCOME (LOSS)                                               918        (15,050)

PREFERRED STOCK DIVIDENDS                                    (3,650)        (2,365)

AMORTIZATION OF PREFERRED STOCK
  ISSUANCE COSTS                                               (126)           (91)
                                                          ---------      ---------
NET LOSS AVAILABLE
  TO COMMON SHAREHOLDERS                                  $  (2,858)     $ (17,506)
                                                          =========      =========

</TABLE>

            See notes to condensed consolidated financial statements.

                                       5

<PAGE>   6

                 DAY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

        CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
                 THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                 (IN THOUSANDS)

                                              1999       1998
                                              ----       ----
NET INCOME                                  $  629     $1,354

FOREIGN CURRENCY TRANSLATION ADJUSTMENT      1,114        483
                                            ------     ------
COMPREHENSIVE NET INCOME                    $1,743     $1,837
                                            ======     ======



                 DAY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES

        CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
                  NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                 (IN THOUSANDS)

                                              1999          1998
                                              ----          ----

NET INCOME (LOSS)                           $    918      $(15,050)

FOREIGN CURRENCY TRANSLATION ADJUSTMENT       (1,644)          571
                                            --------      --------
COMPREHENSIVE NET LOSS                      $   (726)     $(14,479)
                                            ========      ========

            See notes to condensed consolidated financial statements.

                                       6

<PAGE>   7


                 DAY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                               1999           1998
                                                               ----           ----
<S>                                                       <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                          $     918      $ (15,050)
Adjustments to reconcile net income (loss)
  to net cash provided by operating activities:
  Extraordinary loss on early extinguishment of debt                          3,552
  Depreciation and amortization                               11,731          9,754
  Deferred income taxes                                         (959)        (3,765)
  Non-cash charge related to stock option awards                   -          8,585
  Change in operating assets and liabilities                  (4,740)        (1,196)
                                                           ---------      ---------
         Net cash provided by operating activities             6,950          1,880
                                                           ---------      ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures                                          (4,281)        (5,383)
Cash paid for acquisition                                    (10,464)             -
                                                           ---------      ---------
         Net cash used in investing activities               (14,745)        (5,383)
                                                           ---------      ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of 2008 notes                                        111,134
Proceeds from issuance of exchangeable preferred stock                       32,986
Proceeds from issuance of common stock                                          230
Proceeds from issuance of term loans                                         40,000
Contributions from shareholders                                               4,573
Repayment of existing credit facility                                       (30,902)
Repayment of bridge loan                                                   (140,000)
Payment of consent fee                                                       (6,500)
Payments of deferred financing fees                                          (2,742)
Payments on term loan                                           (969)        (8,000)
Net borrowings on revolving credit facility                    4,590          2,000
                                                           ---------      ---------
         Net cash provided by financing activities             3,621          2,779
                                                           ---------      ---------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                         (208)           546
                                                           ---------      ---------

CASH AND CASH EQUIVALENTS:
Net (decrease) in cash and cash  equivalents                  (4,382)          (178)
Cash and cash equivalents at beginning  of period              4,762            780
                                                           ---------      ---------
Cash and cash equivalents at end of period                 $     380      $     602
                                                           =========      =========

SUPPLEMENTAL CASH FLOW DISCLOSURES
NON CASH TRANSACTIONS:
  Assumption of bridge loan                                               $ 140,000
                                                                          =========
  Preferred stock dividends                                $   3,650      $   2,365
                                                           =========      =========
  Amortization of preferred stock discount                 $     126      $      91
                                                           =========      =========
  Capital contribution                                                    $   4,530
                                                                          =========

</TABLE>
            See notes to condensed consolidated financial statements.

                                       7

<PAGE>   8

                          DAY INTERNATIONAL GROUP, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 (IN THOUSANDS)

A. BASIS OF PRESENTATION - The balance sheet as of December 31, 1998 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
generally accepted accounting principles 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.

B. ACQUISITIONS AND RELATED TRANSACTIONS - On January 16, 1998, affiliates of
Greenwich Street Capital Partners, Inc. ("Greenwich Street") and SG Capital
Partners LLC ("SGCP") acquired substantially all of the common stock of the
Company for approximately $206 million (the "Acquisition"), with the Company's
management retaining the balance of the common stock. In conjunction with the
Acquisition, the Company entered into a $60 million Senior Secured Credit
Facility (the "Senior Secured Credit Facility") consisting of a $40 million Term
Loan (the "Term Loan") and a $20 million Revolving Credit Facility (the
"Revolving Credit Facility"). Proceeds from the Term Loan were used to repay the
Company's then existing credit facility and to pay certain acquisition related
fees and expenses. As a result of such repayment of the Company's then existing
Credit Facility, $0.7 million of deferred financing fees were written off as an
extraordinary item. The Acquisition also resulted in compensation related
expenses of $17.0 million associated with employment agreements with certain key
members of management and amendments to the Company's Stock Option Plan.

On March 18, 1998, the Company successfully completed a Consent Solicitation
(the "Consent") with respect to its $100.0 million 11 1/8% Senior Subordinated
Notes which are due in 2005 (the "2005 Notes"). The Consent permitted the
Company to issue $115.0 million of 9 1/2% Senior Subordinated Notes (the "2008
Notes") and $35.0 million of 12 1/4% Exchangeable Preferred Stock (the
"Exchangeable Preferred Stock"). The Consent also allowed the Company to assume
a $140.0 million Bridge Loan (the "Bridge Loan") incurred by its majority
shareholder in connection with the Acquisition, and effected certain other
changes to the Indenture governing the 2005 Notes, including the elimination of
the provisions of the Indenture subordinating the 2005 Notes to other
indebtedness of the Company. As consideration for the Consent, the Company paid
a Consent fee of $65 for every $1,000 of notes held. The proceeds from the
issuance of the 2008 Notes and the Exchangeable Preferred Stock were used to
repay the Bridge Loan and to pay other financing fees and expenses. Expenses
associated with obtaining the Consent were approximately $1.0 million. As a
result of the repayment of the Bridge Loan, $5.2 million of deferred financing
fees and expenses were also written off as an extraordinary item. The
Acquisition did not require a change in the Company's historical basis of
accounting since the Company's 2005 Notes remained outstanding following the
Acquisition.

                                       8

<PAGE>   9

Effective December 31, 1998, the Company acquired the stock of Rotec
Hulsensysteme GmbH ("Rotec") and entered into a five-year noncompete agreement
with the selling shareholders. The acquisition was financed through an
additional $10 million term loan under the Senior Secured Credit Facility and
additional equity from the Company's two major shareholders and was accounted
for as a purchase in accordance with Accounting Principles Board Opinion No. 16.

Effective September 30, 1999, the Company acquired the Textile Products
Operations of Armstrong World Industries, Inc. ("TPO"). The acquisition was
financed through the Revolving Credit Line of the Senior Secured Credit Facility
along with a portion of the proceeds from the Convertible Preferred Stock
referred to in Note C. The acquisition has been accounted for as a purchase in
accordance with Accounting Principles Board Opinion No. 16 in the September 30,
1999 balance sheet.

TPO manufactures and markets precision engineered rubber cots, aprons and other
fabricated rubber components used by the worldwide textile industry under the
brand name of Accotex. Day intends to continue to market the product lines
acquired under the Accotex brand name where permitted.

C. SUBSEQUENT EVENTS - On October 19, 1999 the Company completed its acquisition
of the stock of privately-held Varn International for $59.3 million in cash,
plus expenses. The purchase price is subject to certain adjustments for changes
in working capital and future revenue growth.

The acquisition was financed through the private placement of $38.5 million of
18% convertible cumulative preferred stock (the "Convertible Preferred Stock")
and by amending and restating the existing $60 million Senior Secured Credit
Facility ($40 million term and $20 million revolver). The Amended and Restated
Senior Secured Credit Facility provides for a $70 million Term Loan and a $20
million Revolving Credit Facility. The Revolving Credit Facility includes a $10
million letter of credit subfacility ($530 of letters of credit were outstanding
at October 19, 1999) and a $1 million swingline loan subfacility. The amounts
available under the Revolving Credit Facility are subject to a borrowing base
limitation (defined generally as $5 million plus 50% of eligible domestic
inventory and 80% of eligible domestic accounts receivable). At October 18,
1999, $19.5 million was available under the Senior Secured Credit Facility. The
Senior Secured Credit Facility requires a commitment fee of 1/2% a year on the
unused portion of the revolving line of credit. Interest on the term loan is
based on the banks' base rate plus 1.75% or the LIBOR rate plus 2.75%. Interest
rates on LIBOR borrowings are fixed for one, two, three or six month periods at
the Company's discretion.

The term loans mature in 21 consecutive quarterly installments, commencing on
March 31, 2000. Principal payments are to be made in the following amounts:
installments 1-4, $1.9 million per installment; installments 5-8, $2.5 million
per installment; installments 9-20, $3.7 million per installment; and
installment 21, $7.5 million.

Varn is a leading worldwide supplier of pressroom chemicals to the printing
industry. Varn also manufactures the Kompac brand of automatic dampening systems
for printing presses through its Graph Tech subsidiary. Headquartered in
Oakland, New Jersey, Varn has manufacturing facilities in Addison,

                                       9

<PAGE>   10

IL; Houston, TX; Ontario, Canada; Manchester, England; Willich, Germany;
Johannesburg, South Africa; Melbourne, Australia; Kuala Lumpur, Malaysia and a
joint venture in Foshan, China.


The following summarizes the changes in stockholders' (deficit) equity for the
nine months ended September 30, 1999:


<TABLE>
<CAPTION>

(dollars in thousands)
                                                                                         FOREIGN
                                       COMMON SHARES                        RETAINED     CURRENCY
                                       -------------          CONTRA        EARNINGS    TRANSLATION
                                    SHARES       AMOUNT       EQUITY       (DEFICIT)    ADJUSTMENT
                                    ------       ------       ------       ---------    ----------
<S>                                <C>         <C>          <C>           <C>           <C>
Balance at December 31, 1998        23,298      $      1     $(68,772)     $(10,370)     $ (1,142)

Net income                                                                      918

Preferred stock dividends                                                    (3,650)

Amortization of preferred
    stock discount                                                             (126)

Foreign currency
    translation adjustment               -             -            -             -        (1,644)
                                  --------      --------     --------      --------      --------
Balance at September 30, 1999       23,298      $      1     $(68,772)     $(13,228)     $ (2,786)
                                  ========      ========     ========      ========      ========
</TABLE>


D. INVENTORIES

Inventories as of  September 30, 1999 and December 31, 1998 consist of:

                                                     SEPTEMBER 30, DECEMBER 31,
                                                         1999         1998
                                                         ----         ----

Finished Goods                                          $12,596     $ 9,762
Work in Progress                                          5,810       5,220
Raw Materials                                             5,118       4,197
                                                        -------     -------
                                                        $23,524     $19,179
                                                        =======     =======

The acquisition of the Armstrong Textile Products Operations increased
inventories by approximately $4,500 as of September 30, 1999.

                                       10
<PAGE>   11

E. BUSINESS SEGMENTS

The Company produces precision-engineered rubber products, specializing in the
design and customization of consumable image-transfer products for the graphic
arts (printing) industry and fiber handling products for the textile industry.
The Company's printing components division ("Image Transfer") designs,
manufactures and markets high-quality printing blankets and sleeves for use in
offset printing.

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.

                                 THREE MONTHS ENDED SEPTEMBER 30, 1999
                                 -------------------------------------
                             IMAGE
                            TRANSFER             TEXTILE             TOTALS
                            --------             -------             ------

Third party sales            $37,400              $7,169             $44,569
Operating profit              10,694                 262              10,956

                                 THREE MONTHS ENDED SEPTEMBER 30, 1998
                                 -------------------------------------
                             IMAGE
                            TRANSFER             TEXTILE             TOTALS
                            --------             -------             ------

Third party sales            $38,192              $8,282             $46,474
Operating profit              10,667                 641              11,308

                                 NINE MONTHS ENDED SEPTEMBER 30, 1999
                                 ------------------------------------
                             IMAGE
                            TRANSFER             TEXTILE             TOTALS
                            --------             -------             ------

Third party sales           $108,731             $21,929            $130,660
Operating profit              29,265               1,012              30,277

                                 NINE MONTHS ENDED SEPTEMBER 30, 1998
                                 ------------------------------------
                             IMAGE
                            TRANSFER             TEXTILE             TOTALS
                            --------             -------             ------

Third party sales           $106,904             $25,621            $132,525
Operating profit              28,490               2,685              31,175


                                       11
<PAGE>   12


The following is a reconciliation of the operating profit reported above to the
amount reported in the Consolidated Financial Statements:

                                                 THREE MONTHS ENDED
                                                 ------------------
                                                    SEPTEMBER 30,
                                                    -------------
                                                  1999          1998
                                                  ----          ----

Segment operating profit                       $ 10,956      $ 11,308
APB #16 depreciation and amortization            (1,622)       (1,022)
Non allocated corporate expenses                   (114)         (172)
Amortization of intangibles                        (903)         (641)
Management fees                                    (276)         (244)
                                               --------      --------

         Total operating profit                $  8,041      $  9,229
                                               ========      ========


                                                  NINE MONTHS ENDED
                                                  -----------------
                                                    SEPTEMBER 30,
                                                    -------------
                                                  1999         1998
                                                  ----         ----

Segment operating profit                       $ 30,277      $ 31,175
APB #16 depreciation and amortization            (3,666)       (3,066)
Non allocated corporate expenses                   (471)         (335)
Compensation and related transaction costs                    (18,018)
Amortization of intangibles                      (2,714)       (1,934)
Management fees                                    (806)         (722)
                                               --------      --------

         Total operating profit                $ 22,620      $  7,100
                                               ========      ========

F. 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, M.A. Hanna, have agreed to indemnify
the Company for certain of the costs associated with these matters.

                                       12

<PAGE>   13



G. SUPPLEMENTAL CONSOLIDATING INFORMATION - The Company issued $100,000 of 11
1/8% Senior Notes in conjunction with the purchase of Day International, Inc.,
("Day") from M.A. Hanna and in March 1998, the Company issued $115,000 of 9
1/2% Senior Subordinated Notes in conjunction with the acquisition of the
Company by Greenwich (collectively, the "Notes"). As a result of the 1995
acquisition, Day International, Inc. ("Day International" or "Guarantor")
became a wholly-owned subsidiary of the Company (which has no assets or
operations other than its investment in Day International). Day 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. In 1996, intercompany notes were put in place through a
dividend which effectively transfers the interest expense from Day
International Group, Inc. to Day International, Inc. The following are the
supplemental combined condensed balance sheets as of September 30, 1999 and
December 31, 1998 and the supplemental combined condensed statements of
operations and cash flows for the three and nine months ended September 30,
1999 and 1998 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.

                                       13

<PAGE>   14



                          DAY INTERNATIONAL GROUP, INC.

                 SUPPLEMENTAL COMBINING CONDENSED BALANCE SHEET
                               SEPTEMBER 30, 1999


<TABLE>
<CAPTION>


                                                          DAY
                                           DAY           INTER-
                                          INTER-        NATIONAL         NON
                                         NATIONAL         INC.        GUARANTOR
                                        GROUP, INC.    (GUARANTOR)   SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                        -----------    -----------   ------------   ------------   ------------
<S>                                     <C>           <C>            <C>            <C>             <C>
ASSETS
Cash and cash equivalents                $   1,014      $  (1,430)     $     796                     $     380
Accounts receivable -- net                                 12,638         13,547                        26,185
Inventories                                                13,461         10,063                        23,524
Other assets                                                2,717          1,177                         3,894
                                         ---------      ---------      ---------      ---------      ---------
         TOTAL CURRENT ASSETS                1,014         27,386         25,583             --         53,983
Intercompany                               261,143             --                     $(261,143)            --
Property, plant and equipment -- net                       40,385         13,488                        53,873
Investment in subsidiaries                 (51,454)        32,698                        18,755             --
Intangible and other assets                               136,967         18,758                       155,725
                                         ---------      ---------      ---------      ---------      ---------
         TOTAL ASSETS                    $ 210,703      $ 237,437      $  57,829      $(242,388)     $ 263,581
                                         =========      =========      =========      =========      =========
LIABILITIES AND
  STOCKHOLDERS' EQUITY (DEFICIT)
Accounts payable                                        $   3,282      $   3,830      $  (1,152)     $   5,960
Current maturities of long-term debt     $   1,292                                                       1,292
Accrued associate-related costs and
  other expenses                             4,438          8,840          6,850                        20,128
                                         ---------      ---------      ---------      ---------      ---------
         TOTAL CURRENT LIABILITIES           5,730         12,122         10,680         (1,152)        27,380
Intercompany                               (13,279)       262,341         14,056       (263,118)            --
Long-term and subordinated long-term
  debt                                     259,851                                                     259,851
Other long-term liabilities                                13,936          6,798                        20,734
Exchangeable preferred stock                40,402                                                      40,402
Total stockholders' equity (deficit)       (82,001)       (50,962)        26,295         21,882        (84,786)
                                         ---------      ---------      ---------      ---------      ---------
TOTAL LIABILITIES AND STOCKHOLDERS'
  EQUITY (DEFICIT)                       $ 210,703      $ 237,437      $  57,829      $(242,388)     $ 263,581
                                         =========      =========      =========      =========      =========

</TABLE>


                                       14
<PAGE>   15


                          DAY INTERNATIONAL GROUP, INC.

                 SUPPLEMENTAL COMBINING CONDENSED BALANCE SHEET
                                DECEMBER 31, 1998


<TABLE>
<CAPTION>
                                                          DAY
                                            DAY         INTER-
                                           INTER-       NATIONAL          NON
                                          NATIONAL        INC.         GUARANTOR
                                         GROUP, INC.   (GUARANTOR)    SUBSIDIARIES  ELIMINATIONS   CONSOLIDATED
                                         -----------   -----------    ------------  ------------   ------------
<S>                                    <C>            <C>             <C>            <C>           <C>
ASSETS
Cash and cash equivalents                $   3,256      $    (955)     $   2,461                     $   4,762
Accounts receivable -- net                                 10,147          8,483                        18,630
Inventories                                                11,450          7,729                        19,179
Other assets                                                2,527          1,283                         3,810
                                         ---------      ---------      ---------      ---------      ---------
         TOTAL CURRENT ASSETS                3,256         23,169         19,956             --         46,381
Intercompany                               253,367             --                     $(253,367)            --
Property, plant and equipment -- net                       36,812         13,493                        50,305
Investment in subsidiaries                 (52,370)        28,561                        23,809             --
Intangible and other assets                               142,819         17,903                       160,722
                                         ---------      ---------      ---------      ---------      ---------
         TOTAL ASSETS                    $ 204,253      $ 231,361      $  51,352      $(229,558)     $ 257,408
                                         =========      =========      =========      =========      =========
LIABILITIES AND
  STOCKHOLDERS' EQUITY (DEFICIT)
Accounts payable                                        $   2,702      $   3,337      $    (134)     $   5,905
Current maturities of long-term debt     $   1,292                                                       1,292
Accrued associate-related costs and
  other expenses                             4,336          9,261          6,881                        20,478
                                         ---------      ---------      ---------      ---------      ---------
         TOTAL CURRENT LIABILITIES           5,628         11,963         10,218           (134)        27,675
Intercompany                               (15,082)       255,984         12,331       (253,233)            --
Long-term and subordinated long-term
  debt                                     256,223                                                     256,223
Other long-term liabilities                                14,187          2,979                        17,166
Exchangeable preferred stock                36,627                                                      36,627
Total stockholders' equity (deficit)       (79,143)       (50,773)        25,824         23,809        (80,283)
                                         ---------      ---------      ---------      ---------      ---------
TOTAL LIABILITIES AND STOCKHOLDERS'
  EQUITY (DEFICIT)                       $ 204,253      $ 231,361      $  51,352      $(229,558)     $ 257,408
                                         =========      =========      =========      =========      =========
</TABLE>

                                       15

<PAGE>   16


                          DAY INTERNATIONAL GROUP, INC.

            SUPPLEMENTAL COMBINING CONDENSED STATEMENT OF OPERATIONS
                      THREE MONTHS ENDED SEPTEMBER 30, 1999

<TABLE>
<CAPTION>

                                                               DAY
                                                DAY           INTER-
                                               INTER-        NATIONAL        NON
                                              NATIONAL         INC.       GUARANTOR
                                             GROUP, INC.   (GUARANTOR)   SUBSIDIARIES  ELIMINATIONS   CONSOLIDATED
                                             -----------   -----------   ------------  ------------   ------------
<S>                                          <C>           <C>           <C>            <C>            <C>
Net sales                                     $     --      $ 31,739      $ 12,830       $     --       $ 44,569
Cost of goods sold                                            18,892         9,050                        27,942
                                              --------      --------      --------       --------       --------
         Gross profit                               --        12,847         3,780             --         16,627
Selling, general and administrative                  1         5,145         2,261                         7,407
Amortization of intangibles                                      822            81                           903
Management fees                                                  276                                         276
                                              --------      --------      --------       --------       --------
         Operating income                           (1)        6,604         1,438             --          8,041
Other expenses (income):
Equity in (earnings) loss of subsidiaries         (625)         (762)                       1,387             --
Interest expense                                               6,863                                       6,863
Other (income) expense                              (9)          (33)          111                            69
                                              --------      --------      --------       --------       --------
         Income (before income taxes               633           536         1,327         (1,387)         1,109
Income taxes (benefit)                               4           (89)          565                           480
                                              --------      --------      --------       --------       --------
         Net income                           $    629      $    625      $    762       $ (1,387)      $    629
                                              ========      ========      ========       ========       ========

</TABLE>

                                       16

<PAGE>   17



                          DAY INTERNATIONAL GROUP, INC.

            SUPPLEMENTAL COMBINING CONDENSED STATEMENT OF OPERATIONS
                      THREE MONTHS ENDED SEPTEMBER 30, 1998

<TABLE>
<CAPTION>

                                                               DAY
                                                  DAY         INTER-
                                                 INTER-       NATIONAL        NON
                                                NATIONAL        INC.       GUARANTOR
                                               GROUP, INC.  (GUARANTOR)   SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                               -----------  -----------   ------------   ------------   ------------
<S>                                          <C>           <C>           <C>          <C>            <C>
Net sales                                      $     --      $ 36,527      $  9,939     $             $ 46,466
Cost of goods sold                                             21,851         7,355                     29,206
                                               --------      --------      --------     --------      --------
         Gross profit                                --        14,676         2,584           --        17,260
Selling, general and administrative                  18         5,233         1,895                      7,146
Amortization of intangibles                                       629            12                        641
Management fees                                                   244                                      244
                                               --------      --------      --------     --------      --------
         Operating income                           (18)        8,570           677           --         9,229
Other expenses (income):
Equity in loss (earnings) of subsidiaries        (1,362)         (273)                     1,635            --
Interest expense                                                6,743                                    6,743
Other (income) expense                               (5)           42           179                        216
                                               --------      --------      --------     --------      --------
         Income (loss) before income taxes        1,349         2,058           498       (1,635)        2,270
Income taxes (benefit)                               (5)          696           225                        916
                                               --------      --------      --------     --------      --------
         Net income (loss)                     $  1,354      $  1,362      $    273     $ (1,635)     $  1,354
                                               ========      ========      ========     ========      ========

</TABLE>

                                       17

<PAGE>   18

                          DAY INTERNATIONAL GROUP, INC.

            SUPPLEMENTAL COMBINING CONDENSED STATEMENT OF OPERATIONS
                      NINE MONTHS ENDED SEPTEMBER 30, 1999

<TABLE>
<CAPTION>


                                                                DAY
                                                 DAY          INTER-
                                                INTER-        NATIONAL       NON
                                               NATIONAL         INC.      GUARANTOR
                                              GROUP, INC.   (GUARANTOR)  SUBSIDIARIES ELIMINATIONS  CONSOLIDATED
                                              -----------   -----------  -------------------------  ------------
<S>                                           <C>           <C>           <C>          <C>           <C>
Net sales                                      $     --      $ 92,417      $ 38,243     $     --      $130,660
Cost of goods sold                                             55,256        26,474                     81,730
                                               --------      --------      --------     --------      --------
         Gross profit                                --        37,161        11,769           --        48,930
Selling, general and administrative                  12        15,811         6,967                     22,790
Amortization of intangibles                                     2,468           246                      2,714
Management fees                                                   806                                      806
                                               --------      --------      --------     --------      --------
         Operating income                           (12)       18,076         4,556           --        22,620
Other expenses (income):
Equity in (earnings) loss of subsidiaries          (917)       (2,482)                     3,399            --
Interest expense                                               20,608                                   20,608
Other (income) expense                              (14)           35           316                        337
                                               --------      --------      --------     --------      --------
         Income (loss) before income taxes          919           (85)        4,240       (3,399)        1,675
Income taxes (benefit)                                1        (1,002)        1,758                        757
                                               --------      --------      --------     --------      --------
         Net income (loss)                     $    918      $    917      $  2,482     $ (3,399)     $    918
                                               ========      ========      ========     ========      ========

</TABLE>

                                       18


<PAGE>   19



                          DAY INTERNATIONAL GROUP, INC.

            SUPPLEMENTAL COMBINING CONDENSED STATEMENT OF OPERATIONS
                      NINE MONTHS ENDED SEPTEMBER 30, 1998

<TABLE>
<CAPTION>

                                                                DAY
                                                  DAY          INTER-
                                                 INTER-        NATIONAL         NON
                                                NATIONAL         INC.        GUARANTOR
                                               GROUP, INC.   (GUARANTOR)    SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                               -----------   -----------    ------------   ------------   ------------

<S>                                          <C>            <C>            <C>            <C>             <C>
Net sales                                      $      --      $ 100,627      $  31,889      $              $ 132,516
Cost of goods sold                                               60,831         22,216                        83,047
                                               ---------      ---------      ---------      ---------      ---------
         Gross profit                                 --         39,796          9,673             --         49,469
Selling, general and administrative                   47         15,863          5,785                        21,695
Compensation and related transaction costs                       18,018                                       18,018
Amortization of intangibles                                       1,900             34                         1,934
Management fees                                                     722                                          722
                                               ---------      ---------      ---------      ---------      ---------
         Operating income                            (47)         3,293          3,854             --          7,100
Other expenses (income):
Equity in loss (earnings) of subsidiaries         10,162         (2,217)                       (7,945)            --
Interest expense                                   2,797         17,917                                       20,714
Other (income) expense                               (39)            39            396                           396
                                               ---------      ---------      ---------      ---------      ---------
         Income (loss) before income taxes
             and extraordinary items             (12,967)       (12,446)         3,458          7,945        (14,010)
Income taxes (benefit)                            (1,041)        (2,712)         1,241                        (2,512)
                                               ---------      ---------      ---------      ---------      ---------
         Income (loss) before
             extraordinary items                 (11,926)        (9,734)         2,217          7,945        (11,498)
Extraordinary losses on early
    extinguishment of debt                         3,124            428             --             --          3,552
                                               ---------      ---------      ---------      ---------      ---------
         Net income (loss)                     $ (15,050)     $ (10,162)     $   2,217      $   7,945      $ (15,050)
                                               =========      =========      =========      =========      =========
</TABLE>


                                       19

<PAGE>   20


                          DAY INTERNATIONAL GROUP, INC.

            SUPPLEMENTAL COMBINING CONDENSED STATEMENT OF CASH FLOWS
                      NINE MONTHS ENDED SEPTEMBER 30, 1999

<TABLE>
<CAPTION>

                                                                     DAY
                                                        DAY         INTER-
                                                       INTER-       NATIONAL        NON
                                                      NATIONAL        INC.       GUARANTOR
                                                     GROUP, INC.  (GUARANTOR)   SUBSIDIARIES   ELIMINATIONS  CONSOLIDATED
                                                     -----------  -----------   ------------   ------------  ------------
<S>                                                  <C>          <C>           <C>           <C>            <C>
Operating Activities:
Net income                                           $    918      $    917      $  2,482      $ (3,399)     $    918
  Adjustments to reconcile net
    income to net cash provided by
    (used in) operating activities:
  Depreciation and amortization                                      10,062         1,669                      11,731
  Equity in (earnings) loss of subsidiaries              (917)       (2,482)                      3,399            --
  Deferred income taxes and other                                      (959)                                     (959)
  Changes in operating assets and liabilities             102        (1,638)       (2,372)         (832)       (4,740)
                                                     --------      --------      --------      --------      --------
Net cash provided by (used in)
  operating activities                                    103         5,900         1,779          (832)        6,950
Investing activities:
  Capital expenditures                                               (2,604)       (1,677)                     (4,281)
  Cash paid for acquisition                           (10,464)           --            --                     (10,464)
                                                     --------      --------      --------      --------      --------
Net cash used in investing activities                 (10,464)       (2,604)       (1,677)           --       (14,745)
Financing Activities:
  Payments on term loans                                 (969)                                                   (969)
  Net borrowings on credit facilities                   4,590                                                   4,590
                                                     --------      --------      --------      --------      --------
Net cash provided by financing activities               3,621            --            --            --         3,621
Intercompany transfers and dividends                    4,498        (3,771)       (1,559)          832            --
Effects of exchange rates on cash                                                    (208)                       (208)
                                                     --------      --------      --------      --------      --------
Cash and Cash Equivalents:
Net increase (decrease) in cash and
  cash equivalents                                     (2,242)         (475)       (1,665)           --        (4,382)
Cash and cash equivalents at beginning of period        3,256          (955)        2,461                       4,762
                                                     --------      --------      --------      --------      --------
Cash and cash equivalents at end of period           $  1,014      $ (1,430)     $    796      $     --      $    380
                                                     ========      ========      ========      ========      ========

</TABLE>

                                       20

<PAGE>   21


                          DAY INTERNATIONAL GROUP, INC.
            SUPPLEMENTAL COMBINING CONDENSED STATEMENT OF CASH FLOWS
                      NINE MONTHS ENDED SEPTEMBER 30, 1998

<TABLE>
<CAPTION>

                                                        DAY         DAY INTER-
                                                       INTER-        NATIONAL         NON
                                                      NATIONAL          INC.       GUARANTOR
                                                     GROUP, INC.    (GUARANTOR)   SUBSIDIARIES    ELIMINATIONS   CONSOLIDATED
                                                     -----------    -----------   ------------    ------------   ------------
<S>                                                  <C>            <C>           <C>            <C>            <C>
Operating Activities:
Net income (loss)                                    $ (15,050)     $ (10,162)     $   2,217      $   7,945      $ (15,050)
  Adjustments to reconcile net
    income (loss)to net cash provided by
    (used in) operating activities:
  Extraordinary loss on early
     extinguishment of debt                              3,124            428                                        3,552
  Depreciation and amortization                                         8,568          1,186                         9,754
  Non-cash charge related to stock
    option awards                                                       8,585                                        8,585
  Equity in (earnings) loss of subsidiaries             10,162         (2,217)                       (7,945)            --
  Deferred income taxes and other                                      (3,765)                                      (3,765)
  Changes in operating assets and liabilities            3,214         (4,683)           479           (206)        (1,196)
                                                     ---------      ---------      ---------      ---------      ---------
Net cash provided by (used in)
  operating activities                                   1,450         (3,246)         3,882           (206)         1,880
Investing activities:
  Capital expenditures                                                 (3,486)        (1,897)                       (5,383)
                                                     ---------      ---------      ---------      ---------      ---------
Net cash used in investing activities                       --         (3,486)        (1,897)            --         (5,383)
Financing Activities:
Proceeds from issuance of 2008 Notes                   111,134                                                     111,134
Proceeds from issuance of  exchangeable
   preferred stock                                      32,986                                                      32,986
Proceeds from issuance of common stock                     230                                                         230
Proceeds from issuance of term loans                    40,000                                                      40,000
Contributions from shareholders                          4,573                                                       4,573
Repayment of existing credit facility                  (30,000)                         (902)                      (30,902)
Repayment of bridge loan                              (140,000)                                                   (140,000)
Payment of consent fee                                  (6,500)                                                     (6,500)
Payment of deferred financing fees                      (2,742)                                                     (2,742)
Payments on the term loan                               (6,000)                                                     (6,000)
                                                     ---------      ---------      ---------      ---------      ---------
Net cash provided by (used in)
   financing activities                                  3,681             --           (902)            --          2,779
Intercompany transfers and dividends                    (5,286)         6,225         (1,145)           206             --
Effects of exchange rates on cash                                                        546                           546
                                                     ---------      ---------      ---------      ---------      ---------
Cash and Cash Equivalents:
Net increase (decrease) in cash and
  cash equivalents                                        (155)          (507)           484             --           (178)
Cash and cash equivalents at beginning of period           596           (320)           504                           780
                                                     ---------      ---------      ---------      ---------      ---------
Cash and cash equivalents at end of period           $     441      $    (827)     $     988       $     --      $     602
                                                     =========      =========      =========      =========      =========

</TABLE>

                                       21
<PAGE>   22

H. RECENTLY ISSUED ACCOUNTING STANDARD

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and for Hedging Activities." Under the Statement, every derivative is recorded
in the balance sheet as either an asset or liability measured at its fair value.
Changes in the derivatives fair value will be recognized currently in earnings
unless specific hedge criteria are met.

Day will be required to adopt this standard for its fiscal 2001 financial
statements. Based on current hedging activities, Day does not anticipate this
standard to have a material effect on its financial statements.


                                       22

<PAGE>   23

                          DAY INTERNATIONAL GROUP, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

BASIS OF PRESENTATION

The following table sets forth, for the periods shown, net sales, cost of goods
sold, gross profit, selling, general and administrative expense ("SG&A"),
amortization of intangibles and operating income in millions of dollars and as a
percentage of net sales.

<TABLE>
<CAPTION>

                                          Three Months                           Nine Months
                                          ------------                           -----------
                                          Ended September 30                     Ended September 30
                                          ------------------                     ------------------
                                       1999               1998                1999               1998
                                       ----               ----                ----               ----
                                    $         %        $        %         $         %         $         %
                                  ----     -----     ----     -----     -----     -----     -----     -----
<S>                              <C>      <C>       <C>      <C>       <C>       <C>       <C>       <C>
Net sales .................       44.6     100.0     46.5     100.0     130.7     100.0     132.5     100.0
Costs of goods sold .......       27.9      62.6     29.2      62.8      81.7      62.5      83.0      62.6
Gross profit ..............       16.6      37.4     17.3      37.2      48.9      37.5      49.5      37.4
SG&A ......................        7.4      16.6      7.1      15.3      22.8      17.4      21.7      16.4
Compensation and related
     transaction costs ....          -         -        -         -         -         -      18.0      13.6
Amortization of intangibles        0.9       2.0      0.6       1.3       2.7       2.1       1.9       1.4
Management Fees ...........        0.3       0.7      0.2       0.4       0.8       0.6       0.7       0.5
Operating income ..........        8.0      17.9      9.2      19.8      22.6      17.3       7.1       5.4

</TABLE>


COMPARISON OF RESULTS OF OPERATIONS

Three Months Ended September 30, 1999 Compared to Three Months Ended September
30, 1998

Net sales decreased to $44.6 million for the three months ended September 30,
1999 from $46.5 million for the comparable period in 1998, a decrease of $1.9
million or 4.1%. Sales volumes decreased by $1.5 million or 3.2% combined with
the effect of foreign currency translation of $0.4 million or 0.9%. Image
Transfer's sales decreased to $37.4 million for the three months ended September
30, 1999 from $38.2 million for the comparable period in 1998, an decrease of
$0.8 million or 2.1%. The acquisition of Rotec Hulsensysteme GmbH ("Rotec") at
the end of 1998 contributed $3.0 million to Image Transfer's net sales in the
three months ended September 30, 1999. Excluding sales contributed by Rotec,
Image Transfer sales decreased $3.8 million or 9.9% from the comparable period
in 1998. The decrease is mainly a result of lower domestic US sales combined
with lower US export sales to Japan and Latin America compared to the same
period a year ago. Sales in Europe were flat compared to a year ago while Mexico
is ahead of the same period a year ago. Foreign currency translation reduced
Image Transfer's revenue by $0.3 million or 0.8%. Textiles' sales were $7.2
million for the three months ended September 30, 1999 compared to $8.3 million
for the comparable period in 1998, a decrease of $1.1 million or 13.3%. Textile
sales decreased across all markets. The decline in Europe was a result of a
significant decline in

                                       23

<PAGE>   24

sales to original equipment manufacturers ("OEM's"). The decline in sales to
OEM's is a result of the reduced buying power of the yarn spinners in the
Pacific Rim markets related to their currency devaluation's coupled with delays
in purchasing of new equipment by the major yarn manufacturers due to an overall
slow down in the world-wide yarn spinning industry that began in the second half
of 1998 and continued in the first nine months of 1999. Domestic sales were
lower as increased imports of low cost Asian yarns adversely impacted domestic
yarn producers. At the same time, domestic mills were faced with higher than
normal inventories causing several yarn spinning mills to be closed in the
second half of 1998 and the first nine months of 1999. Export sales to Asian
markets were adversely impacted by the currency devaluation's which occurred in
1998 making the Day products more expensive. Sales to carpet and fiber glass
manufacturers remained strong. Foreign currency translation had no material
impact on Textile's sales this quarter.

Gross profit decreased $0.7 million to $16.6 million for the three months ended
September 30, 1999 from $17.3 million for the three months ended September 30,
1998. As a percentage of net sales, gross profit increased to 37.4% for the
three months ended September 30, 1999 from 37.2% for the comparable period in
1998. Foreign currency translation reduced gross profit $0.1 million. Changes in
market mix along with slightly higher yields from production were the major
contributors to the improved gross margins.

SG&A increased to $7.4 million for the three months ended September 30, 1999
from $7.1 million for the comparable period in 1998, an increase of $0.3 million
or 4.2%. In the quarter ended September 30, 1999, foreign currency translation
caused SG&A to decrease by $0.1 million. As a percentage of net sales, SG&A
increased to 16.6% for the third quarter of 1999 compared to 15.3% for the third
quarter of 1998. Rotec accounted for $0.5 of this increase.

Amortization of intangibles increased to $0.9 million for the three months ended
September 30, 1999 from $0.6 million for the comparable period in 1998, an
increase of $0.3 million. The increase is a result of the amortization of the
goodwill in conjunction with the Rotec acquisition.

Operating income was $8.0 million for the three months ended September 30, 1999
compared to $9.2 million for the same period in 1998. As a percentage of net
sales, operating income decreased to 17.9% for the three months ended September
30, 1999 from 19.8% for the comparable period in 1998.

The effective tax rate for the third quarter of 1999 was 43.3% compared to 40.4%
for the third quarter of 1998. The lower effective tax rate in 1998 was mainly a
result of changes in the locations where European profits were generated with
more of the profits being generated in markets with lower tax rates in 1998.

Nine Months Ended September 30, 1999 Compared to Nine Months Ended September 30,
1998

Net sales were $130.7 million for the nine months ended September 30, 1999
compared to $132.5 for the same period in 1998, a decrease of $1.8 million or
1.4%. Sales volumes for the nine months ended September 30, 1999, were $1.0
million or 0.8% lower than the same period in 1998. Foreign currency

                                       24
<PAGE>   25

translation reduced sales by $0.8 million for the nine months ended September
30, 1999 compared to the same period a year ago. Image Transfer's sales
increased to $108.7 million for the nine months ended September 30, 1999 from
$106.9 million for the comparable period in 1998, an increase of $1.8 million or
1.7%. The acquisition of Rotec Hulsensysteme GmbH ("Rotec") at the end of 1998
contributed $8.2 million to Image Transfer's net sales in the nine months ended
September 30, 1999. Excluding sales contributed by Rotec, Image Transfer sales
decreased $6.4 million or 6.0% from the comparable period in 1998. The decrease
is mainly a result of lower US domestic and export sales to Japan and Latin
America compared to the same period a year ago combined with lower sales in the
UK. Foreign currency translation reduced Image Transfer's revenue by $0.6
million or 0.6%. Textiles' sales were $21.9 million for the nine months ended
September 30, 1999 compared to $25.6 million for the comparable period in 1998;
a decrease of $3.7 million or 14.5%. Foreign currency translation accounted for
$0.2 million of the decrease. Textile sales decreased across all markets. The
decline in Europe was a result of a significant decline in sales to original
equipment manufacturers ("OEM's"). The decline in sales to OEM's is a result of
the reduced buying power of the yarn spinners in the Pacific Rim markets related
to their currency devaluation's coupled with delays in purchasing of new
equipment by the major yarn manufacturers due to an overall slow down in the
world-wide yarn spinning industry that began in the second half of 1998 and
continued in the first nine months of 1999. Domestic sales were lower as
increased imports of low cost Asian yarns adversely impacted domestic yarn
producers. At the same time, domestic mills were faced with higher than normal
inventories causing several yarn spinning mills to be closed in the second half
of 1998 and the first nine months of 1999. Export sales to Asian markets were
adversely impacted by the currency devaluation's which occurred in 1998 making
the Day products more expensive. Sales to carpet and fiber glass manufacturers
remained strong.

Gross profit for the nine months ended September 30, 1999 was $48.9 million
compared to $49.5 million for the nine months ended September 30, 1998, a
decrease of $0.6 million or 1.2%. As a percentage of net sales, gross profit
also remained virtually constant at 37.5% for the nine months ended September
30, 1999 compared to 37.4% for the same period of 1998. Gross profit decreased
$0.1 million as a result of foreign currency translation.

SG&A increased to $22.8 million for the nine months ended September 30, 1999
from $21.7 million for the comparable period in 1998, an increase of $1.1
million or 5.1%. The acquisition of Rotec on December 31, 1998 accounted for
$1.4 million of this increase. The increase in SG&A as a percent of sales is a
result of the fixed component of SG&A supporting the decreased sales volumes.
For the nine months ended September 30, 1999, foreign currency translation
decreased SG&A by $0.1 million. As a percentage of net sales, SG&A increased to
17.4% from 16.4%.

Amortization of intangibles increased to $2.7 million for the nine months ended
September 30, 1999 from $1.9 million for the comparable period in 1998, an
increase of $0.8 million. The increase is a result of the amortization of the
goodwill in conjunction with the Rotec acquisition.

In 1998, compensation and related acquisition costs include $8.6 million as a
result of changes in the Company's stock option plan, $8.4 million related to
amounts payable under certain management employment agreements and $1.0 million
of expenses associated with obtaining the Consent. All of

                                       25
<PAGE>   26

these items arose out of the Acquisition and related transactions.

Operating income decreased to $22.6 million for the nine months ended September
30, 1999 from $25.1 million, excluding the compensation and related acquisition
costs, for the comparable period in 1998, a decrease of $2.5 million or 10.0%.
As a percentage of net sales (excluding the compensation and related acquisition
costs), operating income decreased to 17.3% for the nine months ended September
30, 1999 from 18.9% for the comparable period in 1998.

The effective tax rate for the first nine months of 1999 was an expense of 45.3%
compared to a benefit of 24.5% for the first nine months of 1998, including the
effect of the extraordinary item. The higher income tax percentage in 1999
compared to 1998 is mainly a result of the establishment of a deferred tax
valuation allowance in 1998 and more profits generated in markets with lower
rates in 1998.

LIQUIDITY AND CAPITAL RESOURCES

The Company has historically generated funds from its operations and its working
capital requirements have not exhibited seasonal fluctuations. Utilizing
converters to distribute the majority of its products, the Company is able to
maintain relatively minimal levels of working capital as the converters carry
the majority of inventory and maintain the receivables of the end users.

Cash Flows From Operating Activities. Cash flows provided by operations for the
nine months ended September 30, 1999 were $6.9 million compared to $1.9 million
for the nine months ended September 30, 1998. For the nine months ended
September 30, 1999, cash flows from operations were adversely impacted by a $4.5
million increase in working capital requirements. Cash flows from operations in
1998 were impacted by $9.5 million of compensation and related transaction costs
associated with the Acquisition.

Cash Flows From Investing Activities. The Company's expenditures for property,
plant and equipment were $7.1 million, $5.1 million and $5.2 million for 1998,
1997 and 1996, respectively. The Company believes that capital expenditures of
$9.0 million to $11.0 million over the next several years (inclusive of the
Rotec, Armstrong TPO and Varn businesses) will be sufficient to maintain its
market position. The Company expects to fund these capital expenditures from
cash flow from operations. Capital expenditures were $4.3 million and $5.4
million for the nine months ended September 30, 1999 and 1998, respectively.

Effective September 30, 1999, the Company acquired the Textile Products
Operations of Armstrong World Industries, Inc. The acquisition was financed
through the Revolving Credit Line of the Senior Secured Credit Facility along
with a portion of the proceeds from the Convertible Preferred Stock. The
acquisition has been accounted for as a purchase in accordance with Accounting
Principles Board Opinion No. 16. in the September 30, 1999 balance sheet.

                                       26


<PAGE>   27

Cash Flows From Financing Activities. In the first nine months of 1999,
excluding the acquisition of the Textile Products Operations of Armstrong World
Industries, Inc., the Company repaid $5.9 million on its revolving line of
credit and $1.0 million on its term loans.

On October 19, 1999 the Company completed its acquisition of the stock of
privately-held Varn International for $59.3 million in cash, plus expenses. The
purchase price is subject to certain adjustments for changes in working capital
and future revenue growth.

The acquisition was financed through the private placement of $38.5 million of
18% convertible cumulative preferred stock and by amending and restating the
existing $60 million Senior Secured Credit Facility ($40 million term and $20
million revolver). The Amended and Restated Senior Secured Credit Facility
provides for a $70 million Term Loan and a $20 million Revolving Credit
Facility. The Revolving Credit Facility includes a $10 million letter of credit
subfacility ($530 of letters of credit were outstanding at October 18, 1999) and
a $1 million swingline loan subfacility. The amounts available under the
Revolving Credit Facility are subject to a borrowing base limitation (defined
generally as $5 million plus 50% of eligible domestic inventory and 80% of
eligible domestic accounts receivable). At October 18, 1999, $19.5 million was
available under the Senior Secured Credit Facility (calculated by applying the
applicable borrowing base limitation). The Senior Secured Credit Facility
requires a commitment fee of 1/2% a year on the unused portion of the revolving
line of credit. Interest on the term loan is based on the banks' base rate plus
1.75% or the LIBOR rate plus 2.75%. Interest rates on LIBOR borrowings are fixed
for one, two, three or six month periods at the Company's discretion.

The term loans mature in 21 consecutive quarterly installments, commencing on
March 31, 2000. Principal payments are to be made in the following amounts:
installments 1-4, $1.9 million per installment; installments 5-8, $2.5 million
per installment; installments 9-20, $3.7 million per installment; and
installment 21, $7.5 million.

In January 1998, the Company entered into a $60 million Senior Secured Credit
Facility, concurrent with the Acquisition. The facility consisted of a $40
million Term Loan and a $20 million Revolving Credit Facility. During the nine
months ended September 30, 1998, the Company made $6.0 million in payments on
the Term Loan. The proceeds from the Term Loan were used to repay the Company's
then existing US Credit Facility and to pay certain of the expenses associated
with the Acquisition.

Also, during the nine months ended September 30, 1998, the Company paid the
holders of the existing 2005 Notes a $6.5 million Consent Fee so as to permit
the Company to issue $115.0 million of 9 1/2% Senior Subordinated Notes due in
2008 (the "2008 Notes") and $35.0 million of 12 1/4% Exchangeable Preferred
Stock (the "Exchangeable Preferred Stock"). The Consent Agreement also allowed
the Company to assume the $140.0 million Bridge Loan (the "Bridge Loan") of its
new majority shareholder. The proceeds from the issuance of the 2008 Notes and
the Exchangeable Preferred Stock were used to repay the Bridge Loan and to pay
other financing fees and expenses. The Company also received a capital
contribution of $9.1 million from its majority shareholder in the nine months
ended September 30, 1998 which was used to pay certain financing fees and
expenses.


                                       27
<PAGE>   28

As a result of the additional debt incurred by the Company in conjunction with
the Acquisition and subsequent events, the Company is highly leveraged. The
Company's aggregate indebtedness is approximately $261.1 million and the
aggregate liquidation preference of the Exchangeable Preferred Stock is $42.2
million.

The level of the Company's indebtedness could have important consequences
including: (i) a substantial portion of the Company's cash flow from operations
must be dedicated to debt service and will not be available for other purposes;
(ii) the Company's ability to obtain additional debt financing in the future for
working capital, capital expenditures, research and development or acquisitions
may be limited; (iii) the Company's level of indebtedness could limit its
flexibility in reacting to changes in its industries and economic conditions
generally.

The Company's ability to pay principal and interest on the Notes and dividends
on the Exchangeable Preferred Stock and to satisfy its other debt obligations,
including its debt obligations under the 2005 Notes, 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 under the
Revolving Credit Facility (which is subject to borrowing base limitations) or a
successor facility. The Company anticipates that its operating cash flow,
together with borrowings under the Revolving Credit Facility, will be sufficient
to meet its operating expenses and capital expenditures and to service its debt
requirements as they become due. However, there can be no assurance that the
Company's cash flow, availability under the Revolving Credit Facility and other
capital resources will be sufficient for payment of principal and interest on
its indebtedness, including the Senior Secured Credit Facility, the 2005 Notes
and the 2008 Notes, for the payment of periodic cash dividends on the
Exchangeable Preferred Stock, for any redemption of the Exchangeable Preferred
Stock for cash, or if the exchange debentures (the "Exchange Debentures") have
been issued in exchange for the Exchangeable Preferred Stock, the payment of
principal or cash interest on the Exchange Debentures. If the Company's cash
flow, availability under the Revolving Credit Facility and other capital
resources are insufficient to fund the Company's debt service obligations, the
Company may be forced to reduce or delay capital expenditures, to sell assets,
to restructure or refinance its indebtedness, or to seek additional equity
capital. There can be no assurance that any of such measures could be
implemented on satisfactory terms, or if implemented, would be successful or
would permit the Company to meet its debt service obligations.

Year 2000. The Year 2000 issue relates to the inability of information systems
to recognize and process date-sensitive information beyond January 1, 2000.

The Company recognizes the importance of the Year 2000 issue and now believes it
is substantially complete in its efforts to identify and rectify all potential
Year 2000 problems related to its Information Technology ("IT") systems,
manufacturing equipment, vendors and customers.

A Year 2000 committee has been established consisting of senior members of
management along with members of the IT and the facilities' engineering
departments. The committee's objective is to ensure that the Company will be
able to continue to service its customers, both internal and external, after

                                       28
<PAGE>   29


January 1, 2000. The scope of the Year 2000 project includes (i) information
technology, both hardware and software; (ii) non-IT systems or embedded
technology such as micro controllers contained in various manufacturing and lab
equipment, environmental and safety systems, facilities and utilities; and (iii)
readiness of key third parties, including suppliers and customers and electronic
data interchange, where applicable, with those key third parties. If the
necessary modifications and conversions are not made on a timely basis, the Year
2000 issue could have a material impact on the Company's operations.

The Company is using internal resources, and where necessary, external resources
to perform most of the testing and remediation functions. Upgrades to the
Company's business system were completed and tested by the end of July 1999. A
complete inventory of all equipment (manufacturing and otherwise) has been
completed and communication with the manufacturers of the equipment has
commenced to determine whether the equipment is Year 2000 compliant. Letters
have been sent to all significant vendors and customers requesting them to
confirm the status of their Year 2000 projects. Responses have been received
from a majority of the vendors and customers and follow-up efforts are in
process with those who have not yet responded.

The Company's historical and estimated costs of remediation of all potential
Year 2000 problems have not been and are not anticipated to be material to the
Company's results of operations or financial position, and will be funded
through operating cash flows. Total costs associated with the remediation of the
Year 2000 issues (including systems, software, and non-IT systems replaced as a
result of Year 2000 issues) are currently estimated to be less than $1 million.
The largest cost factor to date has been the expenditure of management and
associates' time in attention to Year 2000 and related issues. Estimated
remediation costs are based on management's best estimates. There can be no
guarantee that these estimates will be achieved and actual results could differ
materially from those anticipated, particularly if unanticipated Year 2000
issues arise.

While the Company expects to make the necessary modifications or changes to both
its internal IT and non-IT systems and existing product base in a timely
fashion, there can be no assurance that the Company's internal systems will not
be materially adversely affected by the advent of Year 2000.

In the event of a failure as a result of Year 2000 issues, the Company could
lose or have trouble accessing accurate internal data, resulting in incomplete
or inaccurate accounting of Company financial results, the Company's
manufacturing operating systems could be impaired, and the Company could be
required to expend significant resources to address such failures. In an effort
intended to minimize potential disruption to its internal systems, the Company
intends to perform additional hard-disk back-up of its rudimentary systems and
critical information in advance of the Year 2000.

Similarly, in the event of a failure as a result of Year 2000 issues in any
systems of third parties with whom the Company interacts, the Company could lose
or have trouble accessing or receive inaccurate third party data, experience
internal and external communications difficulties or have difficulty obtaining
components that are Year 2000 compliant from its vendors. The Company could also
experience a slowdown or reduction of sales if Year 2000 issues adversely affect
customers. In an effort

                                       29
<PAGE>   30

to mitigate the potential impact of any failures, the Company has developed and
documented contingency plans for each critical area of the business.

Euro. The Company began accepting orders in the Euro and making payments in the
Euro effective January 1, 1999. Business system upgrades that allow for
transactions in the Euro are installed at the Company's European facilities.
Customers and suppliers have been contacted indicating the Company's ability to
transact business in the Euro on January 1, 1999 and price lists have been
modified accordingly. The Company does not anticipate any material impact to its
revenues, expenses or results of operations as a result of the adoption of the
Euro.

                                       30



<PAGE>   31




                          DAY INTERNATIONAL GROUP, INC.
                           Part II: Other Information

Item 1. Legal Proceedings - None

Item 2. Changes in Securities and Use of Proceeds - None

Item 6. Exhibits and Reports on Form 8-K

        a. Reports on Form 8-K - During the quarter ended September 30, 1999, no
           reports on Form 8-K were filed. On October 28, 1999 a report on Form
           8-K was filed related to the Acquisition or Disposition of Assets for
           the acquisition of Varn International.

        b. Exhibits

           2.1 Purchase Agreement between Armstrong World Industries, Inc. and
           Armstrong World Industries GmbH, as Sellers and Day International,
           Inc., as Buyer (portions omitted pursuant to a request for
           confidential treatment)

           27 Financial Data Schedule


                                   SIGNATURE

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


                                                 Day International Group, Inc.
                                                 -----------------------------
                                                       (Registrant)

Date:  November 15, 1999                         /s/ Thomas J. Koenig
       -----------------                         --------------------
                                                 Thomas J. Koenig
                                                 Vice President and
                                                 Chief Financial Officer

                                       31

<PAGE>   32


This copy of the Purchase Agreement by and among Day International, Inc.,
Armstrong World Industries, Inc. and Armstrong World Industries GmbH does not
include the exhibits and schedules to such Agreement because these attachments
do not contain information which is material to an investment decision. These
attachments consist of various ancillary agreements relating to the Purchase
Agreement, including a Service Agreement and a Lease Agreement with respect to
the acquired businesses' operations in Germany, and the disclosure schedules
qualifying the sellers' representations and warranties in the Purchase
Agreement. A list of all of these attachments appears in the Table of Contents
of the filed copy of the Purchase Agreement. We agree to furnish a copy of any
such omitted attached supplementally to the Commission upon the Commission's
request.