<PAGE>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                            ------------------------

                                    FORM 10-Q

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

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003

                   COMMISSION FILE NOS. 33-93644 AND 333-51839

                          DAY INTERNATIONAL GROUP, INC.
                             130 West Second Street
                               Dayton, Ohio 45402
                                 (937) 224-4000

State of Incorporation:             Delaware

IRS Employer Identification No.:    31-1436349

Securities Registered Pursuant to Section 12 (b) of the Act:  None

Securities Registered Pursuant to Section 12 (g) of the Act:  None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X        No

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes         No X

There were 23,298 Common Shares of the Company, $0.01 per share par value,
outstanding as of August 1, 2003.


<PAGE>



                          DAY INTERNATIONAL GROUP, INC.
                                      INDEX
<TABLE>
<CAPTION>
                                                                                                        Page
<S>      <C>                                                                                           <C>
PART I   FINANCIAL INFORMATION

Item 1.  Financial Statements:

         Condensed Consolidated Balance Sheets as of June 30, 2003 and December 31, 2002                  3

         Condensed Consolidated Statements of Operations for the three and six months
         ended June 30, 2003 and 2002                                                                     4

         Condensed Consolidated Statements of Cash Flows for the six months ended June
         30, 2003 and 2002                                                                                5

         Notes to Condensed Consolidated Financial Statements                                             6

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of
         Operations                                                                                      19

Item 3.  Quantitative and Qualitative Disclosures About Market Risk                                      23

Item 4.  Controls and Procedures                                                                         24

PART II  OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K                                                                25

Signature                                                                                                25
</TABLE>




                                       2
<PAGE>


                          PART I FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

                 DAY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                       JUNE 30, 2003 AND DECEMBER 31, 2002
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
     ASSETS                                                                        2003            2002
<S>                                                                           <C>             <C>
Cash and cash equivalents                                                       $   1,435       $     996
Accounts receivable (less allowance for doubtful accounts of $2,590 and
  $2,735)                                                                          35,456          32,782
Inventories (Note B)                                                               41,043          34,851
Other current assets                                                                7,306           6,064
                                                                                ---------       ---------
     Total current assets                                                          85,240          74,693

Property, plant and equipment, net of accumulated depreciation of $42,919
     and $37,817                                                                   75,722          74,319
Goodwill                                                                          128,927         127,080
Intangible assets (net of accumulated amortization of $42,649 and $39,462)         23,664          26,696
Other assets                                                                       19,481          17,089
                                                                                ---------       ---------
TOTAL ASSETS                                                                    $ 333,034       $ 319,877
                                                                                =========       =========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Accounts payable                                                                $   8,201       $   8,228
Current maturities of long-term debt                                               12,605          12,597
Other current liabilities                                                          30,539          22,334
                                                                                ---------       ---------
     Total current liabilities                                                     51,345          43,159

Long-term and subordinated long-term debt                                         236,986         239,548
Other long-term liabilities                                                        31,437          29,974
Redeemable preferred stock (Note C)                                               134,017         126,646

STOCKHOLDERS' EQUITY (DEFICIT):
  Common shares                                                                         1               1
  Contra-equity associated with the assumption of majority shareholder's
     bridge loan                                                                  (68,772)        (68,772)
  Retained earnings (deficit)                                                     (52,990)        (49,139)
  Accumulated other comprehensive income (loss)                                     1,010          (1,540)
                                                                                ---------       ---------
     Total stockholders' equity (deficit)                                        (120,751)       (119,450)
                                                                                ---------       ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                            $ 333,034       $ 319,877
                                                                                =========       =========
</TABLE>

            See notes to condensed consolidated financial statements.

                                       3
<PAGE>


                 DAY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               THREE AND SIX MONTHS ENDED JUNE 30, 2003 AND 2002
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                               THREE MONTHS                      SIX MONTHS
                                                            2003            2002            2003            2002
<S>                                                    <C>             <C>             <C>             <C>
NET SALES                                                $  70,139       $  64,034       $ 138,958       $ 125,220

COST OF GOODS SOLD                                          45,356          40,166          89,493          79,320
                                                         ---------       ---------       ---------       ---------

GROSS PROFIT                                                24,783          23,868          49,465          45,900

SELLING, GENERAL AND ADMINISTRATIVE                         15,419          13,974          29,968          26,378
RESTRUCTURING COSTS (Note G)                                                   (45)                            118
AMORTIZATION OF INTANGIBLES                                    206             201             407             401
MANAGEMENT FEES                                                250             250             500             500
                                                         ---------       ---------       ---------       ---------

OPERATING PROFIT                                             8,908           9,488          18,590          18,503

OTHER EXPENSES:
  Interest expense (including amortization of
     deferred financing cost of $587, $587, $1,174
     and $1,174)                                             6,629           6,703          13,154          13,473
  Other (income) expense                                       465            (597)           (312)           (446)
                                                         ---------       ---------       ---------       ---------
                                                             7,094           6,106          12,842          13,027
                                                         ---------       ---------       ---------       ---------

INCOME BEFORE INCOME TAXES                                   1,814           3,382           5,748           5,476

INCOME TAX EXPENSE                                             742           1,328           2,227           2,149
                                                         ---------       ---------       ---------       ---------

INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
     ACCOUNTING PRINCIPLE                                    1,072           2,054           3,521           3,327

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
     (NET OF TAX EXPENSE OF $394) (Note I)                                                                     616
                                                         ---------       ---------       ---------       ---------

NET INCOME                                                   1,072           2,054           3,521           3,943

ACCUMULATING PREFERRED STOCK DIVIDENDS (Note C)             (4,816)         (4,158)         (9,574)         (8,264)
AMORTIZATION OF PREFERRED STOCK ISSUANCE COSTS                 (47)            (47)            (94)            (94)
                                                         ---------       ---------       ---------       ---------

NET LOSS AVAILABLE TO COMMON SHAREHOLDERS                $  (3,791)      $  (2,151)      $  (6,147)      $  (4,415)
                                                         =========       =========       =========       =========
</TABLE>

            See notes to condensed consolidated financial statements.

                                       4
<PAGE>
                 DAY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                     SIX MONTHS ENDED JUNE 30, 2003 AND 2002
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                             2003          2002
<S>                                                                        <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                 $ 3,521       $ 3,943
Adjustments to reconcile net income to net cash provided by operating
     activities:
  Cumulative effect of change in accounting principle                                       (616)
  Depreciation and amortization                                              7,938         6,995
  Deferred income taxes                                                     (2,031)        1,136
  Foreign currency (gain) loss                                              (1,119)         (359)
  Net (gain) loss on disposal of assets                                        774           157
  Change in operating assets and liabilities                                (1,656)       (5,399)
                                                                           -------       -------
     Net cash provided by operating activities                               7,427         5,857

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for acquisition                                                   (1,000)
Capital expenditures                                                        (4,312)       (3,454)
Proceeds from sale of property                                                 939
                                                                           -------       -------
     Net cash used in investing activities                                  (4,373)       (3,454)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on term loan                                                       (6,347)       (6,300)
Net proceeds from revolving credit facility                                  3,650         4,150
                                                                           -------       -------
     Net cash used in financing activities                                  (2,697)       (2,150)

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                         82           (81)
                                                                           -------       -------

Net increase (decrease) in cash and cash equivalents                           439           172
Cash and cash equivalents at beginning of period                               996           609
                                                                           -------       -------

Cash and cash equivalents at end of period                                 $ 1,435       $   781
                                                                           =======       =======

NON-CASH TRANSACTIONS:
  Preferred stock dividends                                                $ 7,278       $ 8,264
                                                                           =======       =======
  Amortization of preferred stock discount                                 $    94       $    94
                                                                           =======       =======
  Short-term note payable for acquisition                                  $   952       $
                                                                           =======       =======
</TABLE>

            See notes to condensed consolidated financial statements.


                                       5
<PAGE>
                          DAY INTERNATIONAL GROUP, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 (IN THOUSANDS)

A.       BASIS OF PRESENTATION

The balance sheet as of December 31, 2002, is condensed financial information
derived from the audited balance sheet. The interim financial statements are
unaudited. The financial statements of Day International Group, Inc. have been
prepared in accordance with accounting principles generally accepted in the
United States and, in the opinion of management, reflect all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation in
accordance with accounting principles generally accepted in the United States
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.       INVENTORIES

Inventories as of June 30, 2003 and December 31, 2002, consist of:

<TABLE>
<CAPTION>
                       2003         2002
<S>                 <C>          <C>
Finished goods       $24,539      $20,510
Work in process        5,607        4,935
Raw materials         10,897        9,406
                     -------      -------
                     $41,043      $34,851
                     =======      =======
</TABLE>

C.       REDEEMABLE PREFERRED STOCK

The Company's 12 1/4% Senior Exchangeable Preferred Stock require that dividends
must be paid in cash after March 15, 2003. The Company has not paid cash
dividends after March 15, 2003, because of certain restrictions in the Company's
Senior Secured Credit Agreement and Notes Indentures limiting the ability to pay
cash dividends. If not paid for four consecutive quarters, the holders of the
Exchangeable Preferred Stock have the right to elect two directors to the Board
of Directors until the dividends in arrears have been paid. All dividends
through March 15, 2003, have been in the form of additional fully-paid and
non-assessable shares of Exchangeable Preferred Stock. Dividends-in-arrears were
$1,960 as of June 30, 2003.

D.       BUSINESS SEGMENTS

The Company produces precision-engineered products, specializing in the design
and customization of consumable image-transfer products for the graphic arts
(printing) industry and consumable fiber handling products for the textile
industry. The Image Transfer segment designs, manufactures and markets
high-quality printing blankets and sleeves, pressroom chemicals and automatic
dampening systems used primarily in the offset and flexographic printing
industries. The Textile Products segment manufactures and markets precision
engineered rubber cots and aprons sold to textile yarn spinners and other
engineered rubber products sold to diverse markets.

                                       6
<PAGE>
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.

<TABLE>
<CAPTION>
                                      THREE MONTHS                   SIX MONTHS
                                     2003       2002               2003       2002
Third party sales:
<S>                              <C>          <C>              <C>          <C>
  Image Transfer                 $  57,523    $  51,719        $ 113,122    $ 102,172
  Textile Products                  12,616       12,315           25,836       23,048
                                 ---------    ---------        ---------    ---------
    Total                        $  70,139    $  64,034        $ 138,958    $ 125,220
                                 =========    =========        =========    =========

Segment operating profit:
  Image Transfer                 $   9,082    $   8,934        $  18,647    $  18,631
  Textile Products                   1,427        1,958            2,981        2,963
                                 ---------    ---------        ---------    ---------
    Total                        $  10,509    $  10,892        $  21,628    $  21,594
                                 =========    =========        =========    =========
</TABLE>

The following is a reconciliation of the segment operating profit reported above
to the amount reported in the consolidated financial statements:
<TABLE>
<CAPTION>
                                                 THREE MONTHS                   SIX MONTHS
                                                 2003       2002                2003       2002
<S>                                          <C>          <C>               <C>          <C>
Segment operating profit                     $  10,509    $  10,892         $  21,628    $  21,594
APB #16 depreciation and amortization           (1,007)        (897)           (1,849)      (1,811)
Non-allocated corporate expenses                  (138)        (101)             (282)        (261)
Restructuring costs                                             45                            (118)
Amortization of intangibles                       (206)        (201)             (407)        (401)
Management fees                                   (250)        (250)             (500)        (500)
                                             ---------    ---------         ---------    ---------
    Total operating profit                   $   8,908    $   9,488         $  18,590    $  18,503
                                             =========    =========         =========    =========
</TABLE>


E.       COMPREHENSIVE INCOME (LOSS)

Total comprehensive income (loss) is comprised of net income, net currency
translation gains and losses and net unrealized gains and losses on cash flow
hedges. Total comprehensive income for the three months ended June 30, 2003 and
2002 was $3,325 and $5,158. Total comprehensive income for the six months ended
June 30, 2003 and 2002 was $6,071 and $5,812.

                                       7
<PAGE>
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, PolyOne, have agreed to indemnify the Company
for certain of the costs associated with these matters.

G.       RESTRUCTURING COSTS

A pre-tax charge of $500 was recorded in the first quarter of 2001 for severance
and termination costs for relocating the Textile Products operations from the
Asheville, North Carolina, facility to the Greenville, South Carolina, facility.
During the first quarter of 2002, the Company incurred additional relocation
costs of $109, recorded a charge of $157 for write-off of fixed assets and
recorded a reversal of $103 of the reserve for severance costs. As of June 30,
2002, final severance payments have been paid to 48 associates.

During the fourth quarter of 2001, the Company ceased operations at its Transfer
Media facility in Longwood, Florida. A pre-tax charge of $3,010 was recorded in
2001 for severance costs for 55 associates, write-off of abandoned assets and
costs related to closing the facility. As of June 30, 2002, final severance
payments have been paid to all associates and the remaining reserve of $45 for
severance costs was reversed in the second quarter of 2002.

A pre-tax charge of $988 was recorded during the fourth quarter of 2001 for
severance costs for 21 associates, costs for relocating the Pressroom Chemicals
German sales office and the U.S. sales and administrative functions and loss on
the sale of fixed assets. As of June 30, 2002, final severance payments have
been paid to 20 associates.


                                       8
<PAGE>
Below is a summary of the amounts charged against the reserves for severance and
facility shutdown in 2002:
<TABLE>
<CAPTION>
                                           TEXTILE             IMAGE
                                          PRODUCTS          TRANSFER
<S>                                    <C>               <C>
Balance at December 31, 2001             $     392         $   1,508
Reversal of reserve                           (103)
Charges against the reserve for:
    Severance costs                           (193)             (549)
    Facility shutdown                                           (417)
                                         ---------         ---------
Balance at March 31, 2002                       96               542
Reversal of reserve                                              (45)
Charges against the reserve for:
    Severance costs                            (46)             (160)
    Facility shutdown                                            (32)
                                         ---------         ---------
Balance at June 30, 2002                 $      50         $     305
                                         =========         =========
</TABLE>

As of December 31, 2002, all restructuring programs had been completed.

H.       STOCK-BASED COMPENSATION

As permitted by SFAS No. 123, "Accounting for Stock-Based Compensation," the
Company applies the intrinsic value method of recognition and measurement under
Accounting Principles Board Opinion No. 25 to its stock options and warrants. No
compensation expense related to employee stock options or warrants issued to
directors is reflected in net income. The following table illustrates the effect
on net income if compensation cost for all outstanding and unvested stock option
and warrants had been determined based on their fair values at the grant date,
consistent with the method prescribed by SFAS No. 123:

<TABLE>
<CAPTION>
                                                          THREE MONTHS                SIX MONTHS
                                                       2003          2002          2003          2002
<S>                                                <C>           <C>           <C>           <C>
Net income-as reported                              $ 1,072       $ 2,054       $ 3,521       $ 3,943
Less-stock-based compensation expense
   determined using fair value based method in
   SFAS No. 123                                        (208)         (316)         (416)         (632)
                                                    -------       -------       -------       -------
Pro forma net income                                $   864       $ 1,738       $ 3,105       $ 3,311
                                                    =======       =======       =======       =======
</TABLE>

                                       9
<PAGE>
I.       NEW ACCOUNTING PRINCIPLES

In July 2001, the Financial Accounting Standards Board (the "FASB") issued SFAS
Nos. 141, "Business Combinations" and 142, "Goodwill and Other Intangible
Assets." These statements prohibit amortization of goodwill for periods
beginning after December 15, 2001. Instead an annual review of the
recoverability of the goodwill and intangible assets is required. These
Statements were adopted as of January 1, 2002. As of January 1, 2002, the
Company recognized pre-tax income of $1,010 for the cumulative effect of the
change in accounting principle for the amount of the unamortized deferred credit
related to the excess over cost arising from the TPO acquisition.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." This statement
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity and
will require that the Company's redeemable preferred stock be recorded in the
same manner as long-term debt. The statement is effective for the Company as of
July 1, 2003, with no early adoption allowed. Beginning in the third quarter of
2003, the Company will reflect the redeemable preferred stock as long-term debt
and accrued dividends will be shown as interest expense. This statement will
have no effect on the net loss available to common shareholders, cash flows of
the Company or the Company's compliance with its debt covenants.

J.       SUPPLEMENTAL CONSOLIDATING INFORMATION

The Company has outstanding $100,000, 11-1/8% Senior Notes and $115,000, 9 1/2%
Senior Subordinated Notes (collectively, the "Notes"). The Company has no assets
or operations other than its wholly-owned investment in Day International, Inc.
("Day International" or "Guarantor"). Day International has provided a full and
unconditional guarantee of the Notes. The wholly-owned foreign subsidiaries of
Day International are not guarantors with respect to the Notes and do not have
any credit arrangements senior to the Notes. The only intercompany eliminations
are the normal intercompany eliminations with regard to intercompany sales and
the Company's investment in the wholly-owned non-guarantor subsidiaries.
Intercompany notes are in place, which effectively transfers the interest
expense from the Company to Day International. The following are the
supplemental combining condensed balance sheets as of June 30, 2003 and December
31, 2002, and the supplemental combining condensed statements of operations and
cash flows for the three and six months ended June 30, 2003 and 2002, 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.


                                       10
<PAGE>
                          DAY INTERNATIONAL GROUP, INC.
                 SUPPLEMENTAL COMBINING CONDENSED BALANCE SHEET
                                  JUNE 30, 2003
<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                   $       249  $      (249) $     1,435  $            $     1,435
Accounts receivable-net                                       11,617       23,839                    35,456
Inventories                                                   20,055       20,988                    41,043
Other current assets                                           5,219        2,087                     7,306
                                            -----------  -----------  -----------  -----------   ----------

    TOTAL CURRENT ASSETS                            249       36,642       48,349                    85,240
Intercompany                                    248,254       (3,266)       9,628     (254,616)
Property, plant and equipment, net                            46,816       28,906                    75,722
Investment in subsidiaries                      (35,753)      39,708       (3,790)        (165)
Intangible and other assets                                  152,815       19,257                   172,072

                                            -----------  -----------  -----------  -----------   ----------
    TOTAL ASSETS                            $   212,750  $   272,715  $   102,350  $  (254,781)  $  333,034
                                            ===========  ===========  ===========  ===========   ==========

LIABILITIES AND
STOCKHOLDERS' EQUITY
(DEFICIT)
Accounts payable                            $            $     3,199  $     5,002  $            $     8,201
Current maturities of long-term debt             12,511                        94                    12,605
Other current liabilities                         4,292        9,587       16,660                    30,539
                                            -----------  -----------  -----------  -----------   ----------
    TOTAL CURRENT LIABILITIES                    16,803       12,786       21,756                    51,345
Intercompany                                    (53,062)     300,490       (3,221)    (244,207)
Long-term and subordinated long-term
   debt                                         235,743                     1,243                   236,986
Other long-term liabilities                                   22,168        9,269                    31,437
Redeemable preferred stock                      134,017                                             134,017
Total stockholders' equity (deficit)           (120,751)     (62,729)      73,303      (10,574)    (120,751)
                                            -----------  -----------  -----------  -----------   ----------
    TOTAL LIABILITIES AND
   STOCKHOLDERS' EQUITY
   (DEFICIT)                                $   212,750  $   272,715  $   102,350  $  (254,781)  $  333,034
                                            ===========  ===========  ===========  ===========   ==========
</TABLE>

                                       11
<PAGE>

                          DAY INTERNATIONAL GROUP, INC.
               SUPPLEMENTAL CONSOLIDATING CONDENSED BALANCE SHEET
                                DECEMBER 31, 2002
<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                    $       496  $      (496) $       996  $            $       996
Accounts receivable-net                                        11,365       21,417                    32,782
Inventories                                                    19,165       15,686                    34,851
Other current assets                                            4,754        1,310                     6,064
                                             -----------  -----------  -----------  -----------   ----------

    TOTAL CURRENT ASSETS                             496       34,788       39,409                    74,693
Intercompany                                     250,883      (13,166)      13,644     (251,361)
Property, plant and equipment, net                             48,256       26,063                    74,319
Investment in subsidiaries                       (39,309)      35,588       (4,918)       8,639
Intangible and other assets                                   153,258       17,607                   170,865
                                             -----------  -----------  -----------  -----------   ----------
    TOTAL ASSETS                             $   212,070  $   258,724  $    91,805  $  (242,722)  $  319,877
                                             ===========  ===========  ===========  ===========   ==========

LIABILITIES AND
STOCKHOLDERS' EQUITY
(DEFICIT)
Accounts payable                             $            $     3,593  $     4,635  $            $     8,228
Current maturities of long-term debt              12,511                        86                    12,597
Other current liabilities                          4,196        6,318       11,820                    22,334
                                             -----------  -----------  -----------  -----------   ----------

    TOTAL CURRENT LIABILITIES                     16,707        9,911       16,541                    43,159
Intercompany                                     (50,205)     295,916       11,110     (256,821)
Long-term and subordinated long-term
   debt                                          238,372                     1,176                   239,548
Other long-term liabilities                                    21,639        8,335                    29,974
Redeemable preferred stock                       126,646                                             126,646
Total stockholders' equity (deficit)            (119,450)     (68,742)      54,643       14,099     (119,450)
                                             -----------  -----------  -----------  -----------   ----------
    TOTAL LIABILITIES AND
   STOCKHOLDERS' EQUITY
   (DEFICIT)                                 $   212,070  $   258,724  $    91,805  $  (242,722)  $  319,877
                                             ===========  ===========  ===========  ===========   ==========
</TABLE>

                                       12
<PAGE>
                          DAY INTERNATIONAL GROUP, INC.
            SUPPLEMENTAL COMBINING CONDENSED STATEMENT OF OPERATIONS
                        THREE MONTHS ENDED JUNE 30, 2003
<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                                     $            $    36,095  $    34,044  $             $    70,139
Cost of goods sold                                              23,249       22,107                     45,356
                                              -----------  -----------  -----------  -----------   -----------

    Gross profit                                                12,846       11,937                     24,783
Selling, general and administrative                    14        8,671        6,734                     15,419
Amortization of intangibles                                        206                                     206
Management fees                                                    250                                     250
                                              -----------  -----------  -----------  -----------   -----------

    Operating profit                                  (14)       3,719        5,203                      8,908
Other expenses (income):
  Equity in (earnings) of subsidiaries             (1,080)      (2,652)                    3,732
  Interest expense                                               6,587           42                      6,629
  Other (income) expense                               (1)        (326)         792                        465
                                              -----------  -----------  -----------  -----------   -----------

    Income before income taxes                      1,067          110        4,369       (3,732)        1,814
Income tax expense (benefit)                           (5)        (970)       1,717                        742
                                              -----------  -----------  -----------  -----------   -----------

    Net income                                $     1,072  $     1,080  $     2,652  $    (3,732)  $     1,072
                                              ===========  ===========  ===========  ===========   ===========
</TABLE>


                                       13
<PAGE>
                          DAY INTERNATIONAL GROUP, INC.
            SUPPLEMENTAL COMBINING CONDENSED STATEMENT OF OPERATIONS
                        THREE MONTHS ENDED JUNE 30, 2002
<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                                     $            $    36,913  $    27,121  $             $    64,034
Cost of goods sold                                              23,197       16,969                     40,166
                                              -----------  -----------  -----------  -----------   -----------

    Gross profit                                                13,716       10,152                     23,868
Selling, general and administrative                    38        8,501        5,435                     13,974
Restructuring costs                                                (45)                                    (45)
Amortization of intangibles                                        201                                     201
Management fees                                                    250                                     250
                                              -----------  -----------  -----------  -----------   -----------

    Operating profit                                  (38)       4,809        4,717                      9,488
Other expenses (income):
  Equity in (earnings) of subsidiaries             (2,076)      (2,835)                    4,911
  Interest expense                                               6,703                                   6,703
  Other (income) expense                               (1)        (896)         300                       (597)
                                              -----------  -----------  -----------  -----------   -----------

    Income before income taxes                      2,039        1,837        4,417       (4,911)        3,382
Income tax expense (benefit)                          (15)        (239)       1,582                      1,328
                                              -----------  -----------  -----------  -----------   -----------

    Net income                                $     2,054  $     2,076  $     2,835  $    (4,911)  $     2,054
                                              ===========  ===========  ===========  ===========   ===========
</TABLE>


                                       14
<PAGE>
                          DAY INTERNATIONAL GROUP, INC.
            SUPPLEMENTAL COMBINING CONDENSED STATEMENT OF OPERATIONS
                         SIX MONTHS ENDED JUNE 30, 2003



<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                                     $            $    71,808  $    67,150  $             $   138,958
Cost of goods sold                                              46,652       42,841                     89,493
                                              -----------  -----------  -----------  -----------   -----------

    Gross profit                                                25,156       24,309                     49,465
Selling, general and administrative                    59       17,157       12,752                     29,968
Amortization of intangibles                                        407                                     407
Management fees                                                    500                                     500
                                              -----------  -----------  -----------  -----------   -----------

    Operating profit                                  (59)       7,092       11,557                     18,590
Other expenses (income):
  Equity in (earnings) of subsidiaries             (3,556)      (5,991)                    9,547
  Interest expense                                              13,078           76                     13,154
  Other (income) expense                               (1)      (1,993)       1,682                       (312)
                                              -----------  -----------  -----------  -----------   -----------

    Income before income taxes                      3,498        1,998        9,799       (9,547)        5,748
Income tax expense (benefit)                          (23)      (1,558)       3,808                      2,227
                                              -----------  -----------  -----------  -----------   -----------

    Net income                                $     3,521  $     3,556  $     5,991  $    (9,547)  $     3,521
                                              ===========  ===========  ===========  ===========   ===========
</TABLE>


                                       15
<PAGE>
                          DAY INTERNATIONAL GROUP, INC.
            SUPPLEMENTAL COMBINING CONDENSED STATEMENT OF OPERATIONS
                         SIX MONTHS ENDED JUNE 30, 2002

<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                                     $            $    73,134  $    52,086  $             $   125,220
Cost of goods sold                                              46,450       32,870                     79,320
                                              -----------  -----------  -----------  -----------   -----------

    Gross profit                                                26,684       19,216                     45,900
Selling, general and administrative                    54       16,078       10,246                     26,378
Restructuring costs                                                118                                     118
Amortization of intangibles                                        401                                     401
Management fees                                                    500                                     500
                                              -----------  -----------  -----------  -----------   -----------

    Operating profit                                  (54)       9,587        8,970                     18,503
Other expenses (income):
  Equity in (earnings) of subsidiaries             (3,975)      (5,965)                    9,940
  Interest expense                                              13,472            1                     13,473
  Other (income) expense                               (1)      (1,253)         808                       (446)
                                              -----------  -----------  -----------  -----------   -----------

    Income (loss) before income taxes               3,922        3,333        8,161       (9,940)        5,476
Income tax expense (benefit)                          (21)        (642)       2,812                      2,149
                                              -----------  -----------  -----------  -----------   -----------

   Income (loss) before cumulative
   effect of change in accounting
   principles                                       3,943        3,975        5,349       (9,940)        3,327
Cumulative effect of change in
   accounting principles                                                        616                        616
                                              -----------  -----------  -----------  -----------   -----------

    Net income                                $     3,943  $     3,975  $     5,965  $    (9,940)  $     3,943
                                              ===========  ===========  ===========  ===========   ===========
</TABLE>

                                       16
<PAGE>
                          DAY INTERNATIONAL GROUP, INC.
            SUPPLEMENTAL COMBINING CONDENSED STATEMENT OF CASH FLOWS
                         SIX MONTHS ENDED JUNE 30, 2003

<TABLE>
<CAPTION>
                                                                   DAY
                                                      DAY        INTER-
                                                      INTER-     NATIONAL      NON-
                                                    NATIONAL       INC.     GUARANTOR
                                                   GROUP, INC. (GUARANTOR) SUBSIDIARIES  ELIMINATIONS  CONSOLIDATED
<S>                                                <C>          <C>          <C>          <C>
Cash Flows From Operating Activities:
Net income                                         $     3,521  $     3,556  $     5,991  $    (9,547)  $     3,521
  Adjustments to reconcile net income to
   net cash provided by operating
   activities:
  Depreciation and amortization                                       6,284        1,654                      7,938
  Equity in (earnings) loss of subsidiaries             (3,556)      (5,991)                    9,547
  Deferred income taxes and other                                    (1,779)        (252)                    (2,031)
  Foreign currency (gain) loss                                       (1,927)         808                     (1,119)
  Net (gain) loss on disposal of assets                                 114          660                        774
  Changes in operating assets and
   liabilities                                              96        3,232       (4,984)                    (1,656)
                                                   -----------  -----------  -----------  -----------   -----------
  Net cash provided by operating
   activities                                               61        3,489        3,877                      7,427

Cash Flows From Investing Activities:
Cash paid for acquisition                                            (1,000)                                 (1,000)
Capital expenditures                                                 (2,025)      (2,287)                    (4,312)
Proceeds from sale of property                                          939                                     939
                                                   -----------  -----------  -----------  -----------   -----------
  Net cash used in investing activities                              (2,086)      (2,287)                    (4,373)

Cash Flows From Financing Activities:
Payments on term loan                                   (6,300)                      (47)                    (6,347)
Net proceeds from revolving credit facility              3,650                                                3,650
                                                   -----------  -----------  -----------  -----------   -----------
  Net cash provided by (used in)
   financing activities                                 (2,650)                      (47)                    (2,697)

Intercompany transfers and dividends                     2,342       (1,156)      (1,186)
Effects of exchange rates on cash                                                     82                         82
                                                   -----------  -----------  -----------  -----------   -----------

Net increase (decrease) in cash and cash
   equivalents                                            (247)         247          439                        439
Cash and cash equivalents at beginning
   of period                                               496         (496)         996                        996
                                                   -----------  -----------  -----------  -----------   -----------
Cash and cash equivalents at end of
   period                                          $       249  $      (249) $     1,435  $             $     1,435
                                                   ===========  ===========  ===========  ===========   ===========
</TABLE>

                                       17
<PAGE>
                          DAY INTERNATIONAL GROUP, INC.
            SUPPLEMENTAL COMBINING CONDENSED STATEMENT OF CASH FLOWS
                         SIX MONTHS ENDED JUNE 30, 2002
<TABLE>
<CAPTION>
                                                                   DAY
                                                      DAY         INTER-
                                                      INTER-     NATIONAL      NON-
                                                    NATIONAL       INC.      GUARANTOR
                                                   GROUP, INC.  (GUARANTOR) SUBSIDIARIES  ELIMINATIONS  CONSOLIDATED
<S>                                                <C>          <C>          <C>          <C>           <C>
Cash Flows From Operating Activities:
Net income                                         $     3,943  $     3,975  $     5,965  $    (9,940)  $     3,943
  Adjustments to reconcile net income to
   net cash provided by (used in)
   operating activities:
  Cumulative effect of change in
   accounting principles                                                            (616)                      (616)
  Depreciation and amortization                                       5,861        1,134                      6,995
  Equity in (earnings) loss of subsidiaries             (3,975)      (5,965)                    9,940
  Deferred income taxes and other                                     1,155          (19)                     1,136
  Foreign currency (gain) loss                                         (627)         268                       (359)
  Loss on disposal of assets                                            157                                     157
  Changes in operating assets and
   liabilities                                            (211)       1,001       (6,189)                    (5,399)
                                                   -----------  -----------  -----------  -----------   -----------
    Net cash provided by (used in)
     operating activities                                 (243)       5,557          543                      5,857

Cash Flows From Investing Activities:
Capital expenditures                                                 (2,477)        (977)                    (3,454)
                                                   -----------  -----------  -----------  -----------   -----------
  Net cash used in investing activities                              (2,477)        (977)                    (3,454)

Cash Flows From Financing Activities:
Payments on term loan                                   (6,300)                                              (6,300)
Net borrowings on credit facilities                      4,150                                                4,150
                                                   -----------  -----------  -----------  -----------   -----------
  Net cash provided by (used in)
   financing activities                                 (2,150)                                              (2,150)

Intercompany transfers and dividends                     1,978       (2,665)         687
Effects of exchange rates on cash                                                    (81)                       (81)
                                                   -----------  -----------  -----------  -----------   -----------

Net increase (decrease) in cash and cash
   equivalents                                            (415)         415          172                        172
Cash and cash equivalents at beginning
   of period                                               702         (702)         609                        609
                                                   -----------  -----------  -----------  -----------   -----------
Cash and cash equivalents at end of
   period                                          $       287  $      (287) $       781  $             $       781
                                                   ===========  ===========  ===========  ===========   ===========
</TABLE>

                                       18
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

SAFE HARBOR STATEMENT

This Quarterly Report contains forward-looking statements within the meaning of
the Securities Act of 1933. These are subject to certain risks and
uncertainties, including those identified below, which could affect the
Company's actual results and cause such results to differ materially from those
expressed in forward-looking statements. The words "believe," "anticipate,"
"expect," "intend," "will likely result," "will continue," and similar
expressions identify forward-looking statements.

Factors that could cause actual results to differ materially from the
forward-looking statements include but are not limited to (i) the effect of
leverage, including the limitations imposed by the Company's various debt
instruments; (ii) risks related to significant operations in foreign countries,
including the translation of operating results to the U.S. dollar; (iii) the
timely development and market acceptance of new products; (iv) the impact of
competitive products and pricing; (v) the effect of changing general and
industry specific economic conditions; (vi) the impact of environmental
regulations; and (vii) the potential for technology obsolescence.

While made in good faith and with a reasonable basis based on information
currently available to the Company's management, there is no assurance that any
such forward-looking statements will be achieved or accomplished. The Company is
under no obligation to update any forward-looking statements to the extent it
becomes aware that they are not achieved or likely to be achieved for any
reason.

BASIS OF PRESENTATION

The following table sets forth selected financial information in millions of
dollars and as a percentage of net sales:
<TABLE>
<CAPTION>
                                                                     THREE MONTHS                        SIX MONTHS
                                                              2003              2002             2003              2002
                                                             $        %        $       %        $        %        $       %
<S>                                                       <C>      <C>      <C>     <C>      <C>      <C>      <C>     <C>
Net sales                                                   70.1    100.0     64.0   100.0    139.0    100.0    125.2   100.0
Costs of goods sold                                         45.3     64.7     40.1    62.7     89.5     64.4     79.3    63.3
                                                          ------  -------  -------  ------   ------  -------  -------  ------
Gross profit                                                24.8     35.3     23.9    37.3     49.5     35.6     45.9    36.7
Selling, general and administrative expense                 15.4     22.0     14.0    21.8     30.0     21.5     26.4    21.1
Restructuring costs                                                                                               0.1     0.1
Amortization of intangibles                                  0.2      0.3      0.2     0.3      0.4      0.3      0.4     0.3
Management fees                                              0.3      0.3      0.2     0.4      0.5      0.4      0.5     0.4
                                                          ------  -------  -------  ------   ------  -------  -------  ------
Operating profit                                             8.9     12.7      9.5    14.8     18.6     13.4     18.5    14.8
                                                          ======  =======  =======  ======   ======  =======  =======  ======
</TABLE>

                                       19
<PAGE>
COMPARISON OF RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2003, COMPARED TO THREE MONTHS ENDED JUNE 30, 2002

Net sales increased $6.1 million (9.5%) to $70.1 million. Image Transfer's sales
increased $5.8 million (11.2%) to $57.5 million, primarily as a result of higher
sales volume in the United States of $1.0 million and in Europe of $1.5 million
and positive foreign currency rate changes of $3.4 million. The higher U.S.
Image Transfer sales volume was primarily as a result of sales from the
acquisition of a blanket manufacturer's product line in the first quarter of
2003. Europe sales volume increased primarily from market share gains in the
chemical products business in the United Kingdom and Germany. Textile Products'
sales increased $0.3 million (2.4%) to $12.6 million, primarily as a result of
positive foreign currency rate changes of $1.4 million offset by lower sales
volume in the United States of $1.0 million and in Europe of $0.1 million. The
lower U.S. Textile Products sales volume is primarily due to reduced demand in
the U.S. textile industry as a result of increased imports of low cost goods
from Asia and South America.

Gross profit increased $0.9 million (3.8%) to $24.8 million. As a percentage of
net sales, gross profit decreased to 35.3% for the three months ended June 30,
2003, compared to 37.3% for the three months ended June 30, 2002. The decrease
in the gross profit percentage was due primarily to higher spending for research
& development and higher depreciation expense resulting from capital projects
completed in 2002.

Selling, general and administrative expense ("SG&A") increased $1.4 million
(10.3%) to $15.4 million. As a percentage of net sales, SG&A increased to 22.0%
from 21.8%. Changes in foreign currency rates increased SG&A costs by $1.0
million in the second quarter of 2003 compared to the second quarter of 2002.
SG&A costs also increased as a result of higher insurance costs and higher
selling and distribution costs resulting from higher sales levels.

During the fourth quarter of 2001, the Company ceased operations at its Transfer
Media facility in Longwood, Florida. A pre-tax charge of $3.0 million was
recorded in 2001 for severance costs for 55 associates, write-off of abandoned
assets and costs related to closing the facility. As of June 30, 2002, final
severance payments had been paid to all associates and the remaining reserve of
$0.1 million for severance costs was reversed in the second quarter of 2002.

Operating profit decreased $0.6 million (6.1%) to $8.9 million. As a percentage
of net sales, operating profit decreased to 12.7% for the three months ended
June 30, 2003, from 14.8% for the comparable period in 2002. Image Transfer's
operating profit increased $0.1 million (1.7%) to $9.1 million. As a percentage
of net sales, Image Transfer's operating profit decreased to 15.8% for the three
months ended June 30, 2003, from 17.3% in 2002. Textile Products' operating
profit decreased $0.5 million (27.1%) to $1.4 million. As a percentage of net
sales, Textile Products' operating profit decreased to 11.3% for the three
months ended June 30, 2003, from 15.9% in 2002.

Other expense was $0.5 million for the three months ended June 30, 2003,
compared to other income of $0.6 million for the three months ended June 30,
2002. The other (income) expense is primarily due to foreign currency
transaction (gains) losses incurred in the normal course of international
subsidiaries doing


                                       20
<PAGE>
business in other than their functional currency as well as a result of
intercompany financing arrangements. Other expense in 2003 includes a loss of
$1.1 million from the sale of the South African business, a gain of $0.9 million
from the sale of excess land in Mauldin, South Carolina and a loss of $0.5
million on the sale and disposal of equipment from the Longwood, Florida,
facility.

The effective tax rate for the second quarter of 2003 was 40.9% compared to
39.3% in 2002.

SIX MONTHS ENDED JUNE 30, 2003, COMPARED TO SIX MONTHS ENDED JUNE 30, 2002

Net sales increased $13.7 million (11.0%) to $139.0 million. Image Transfer's
sales increased $10.9 million (10.7%) to $113.1 million, primarily as a result
of higher sales volume in Europe of $3.8 million and in the United States of
$0.9 million and positive foreign currency rate changes of $6.6 million. Europe
sales volume increased primarily from market share gains in the pressroom
chemical business in the United Kingdom and Germany. The higher U.S. Image
Transfer sales volume was primarily as a result of sales from the acquisition of
a blanket manufacturer's product line in the first quarter of 2003. Textile
Products' sales increased $2.8 million (12.1%) to $25.8 million, primarily as a
result of positive foreign currency rate changes of $2.8 million and higher
sales volumes in Europe of $0.9 million, offset by lower sales volume in the
United States of $0.9 million. The lower U.S. Textile Products sales volume is
primarily a result of lower U.S. demand for spun yarn and woven fabric, coupled
with increased imports of textile articles from low cost countries in Asia and
South America. European sales volumes are steady in light of the relatively
strong Euro. Sales to textile equipment manufacturers, while at relatively lower
prices, continued to be steady in Europe. Sales of textile products to Asia from
Europe have not been significantly affected by the SARS situation.

Gross profit increased $3.6 million (7.8%) to $49.5 million. As a percentage of
net sales, gross profit decreased to 35.6% for the six months ended June 30,
2003, compared to 36.7% for the six months ended June 30, 2002. The decrease in
the gross profit percentage was due primarily to higher spending for research &
development and higher depreciation expense resulting from capital projects
completed in 2002.

Selling, general and administrative expense ("SG&A") increased $3.6 million
(13.6%) to $30.0 million. As a percentage of net sales, SG&A increased to 21.6%
from 21.1%. Changes in foreign currency rates increased SG&A costs by $1.8
million in the first six months of 2003 compared to the first six months of
2002. SG&A costs increased as a result of higher insurance costs and higher
selling and distribution costs from higher sales levels.

A pre-tax charge of $0.5 million was recorded in the first quarter of 2001 for
severance and termination costs to relocate the Textile Products operations from
its Asheville, North Carolina, facility to its Greenville, South Carolina,
facility. During the first quarter of 2002, the Company reversed $0.1 million of
the reserve. Additionally, a pre-tax charge of $0.3 million was recorded in the
first quarter of 2002 for relocation of machinery and equipment and write-off of
abandoned assets.

During the fourth quarter of 2001, the Company ceased operations at its Transfer
Media facility in Longwood, Florida. A pre-tax charge of $3.0 million was
recorded in 2001 for severance costs for 55 associates,


                                       21
<PAGE>
 write-off of abandoned assets and costs related to closing the facility. As of
June 30, 2002, final severance payments have been paid to all associates and the
remaining reserve of $0.1 million for severance costs was reversed in the second
quarter of 2002.

Operating profit increased $0.1 million (0.5%) to $18.6 million. As a percentage
of net sales, operating profit decreased to 13.4% for the six months ended June
30, 2003, from 14.8% for the comparable period in 2002. Image Transfer's
operating profit was flat at $18.6 million. As a percentage of net sales, Image
Transfer's operating profit decreased to 16.5% for the six months ended June 30,
2003, from 18.1% in 2002. Textile Products' operating profit was flat at $3.0
million. As a percentage of net sales, Textile Products' operating profit
decreased to 11.5% for the six months ended June 30, 2003, from 12.9% in 2002.

Other income was $0.3 million for the six months ended June 30, 2003, compared
to other income of $0.4 million for the six months ended June 30, 2002. The
other (income) expense is primarily due to foreign currency transaction losses
incurred in the normal course of international subsidiaries doing business in
other than their functional currency as well as a result of intercompany
financing arrangements. Other income in 2003 includes a loss of $1.1 million
from the sale of the South African business, a gain of $0.9 million from the
sale of excess land in Mauldin, South Carolina and a loss of $0.5 million on the
sale and disposal of equipment from the Longwood, Florida, facility.

The effective tax rate benefit for the first six months of 2003 was 38.7%
compared to 39.2% for 2002.

As of January 1, 2002, the Company adopted SFAS Nos. 141, "Business
Combinations" and 142, "Goodwill and Other Intangible Assets" and recognized
pre-tax income of $1.0 million for the cumulative effect of the change in
accounting principle for the amount of the unamortized deferred credit related
to the excess over cost arising from the TPO acquisition.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." This statement
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity and
will require that the Company's redeemable preferred stock be recorded in the
same manner as long-term debt. The statement is effective for the Company as of
July 1, 2003, with no early adoption allowed. Beginning in the third quarter of
2003, the Company will reflect the redeemable preferred stock as long-term debt
and accrued dividends will be shown as interest expense. This statement will
have no effect on the net loss available to common shareholders, cash flows of
the Company or the Company's compliance with its debt covenants.

LIQUIDITY AND CAPITAL RESOURCES

The Company has historically generated sufficient funds from its operations to
fund its working capital and capital expenditure requirements. The Company is
able to maintain relatively low levels of working capital as its converters and
distributors typically carry a greater portion of inventory and finance
receivables of the Company's end users.

                                       22
<PAGE>

Capital expenditures were $4.3 million and $3.5 million for the six months ended
June 30, 2003 and 2002, respectively.

As of June 30, 2003, there was $8.6 million outstanding under the Revolving
Credit Facility and the Company had approximately $10.1 million available under
the Revolving Credit Facility (calculated by applying the applicable borrowing
base limitation). The Company's aggregate indebtedness at June 30, 2003, is
approximately $249.6 million and the aggregate liquidation preferences of the
Exchangeable Preferred Stock is $66.3 million and the Convertible Preferred
Stock is $71.3 million. The Company is highly leveraged. The Company's ability
to operate its business, service its debt requirements and reduce its total debt
will depend upon its future operating performance, which will be affected by
prevailing economic conditions and financial, business and other factors,
certain of which are beyond its control, as well as the availability of
revolving credit borrowings. See the Company's Annual Report on Form 10-K for a
more extensive discussion of liquidity and capital resources.

The Company is currently in discussions regarding the issuance of a new senior
secured credit facility to refinance the existing Senior Secured Credit Facility
and the $100 million, 11-1/8% Senior Notes. The new agreement would allow the
Company to borrow at lower interest rates, extend the maturity of the Company's
indebtedness and permit additional borrowings to finance a potential future
acquisition. The Company intends to complete the refinancing in the third
quarter of 2003.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS

The Company conducts a significant amount of business and has operating and
sales facilities in countries outside the United States. As a result, the
Company is subject to business risks inherent in non-U.S. activities, including
political uncertainty, import and export limitations, exchange controls and
currency fluctuations. The Company believes risks related to its foreign
operations are mitigated due to the political and economic stability of the
countries in which its largest foreign operations are located, the stand-alone
nature of the operations, the Company's limited net asset exposure, forward
foreign exchange contract practices and pricing flexibility. Thus, while changes
in foreign currency values do affect earnings, the longer-term economic effect
of these changes should not have a material adverse effect on the Company's
financial condition, results of operations or liquidity.

Certain of the Company's international subsidiaries make purchases in foreign
currencies, mainly intercompany transactions. As a result, they are subject to
transaction exposures that arise from foreign exchange movements between the
date that the foreign currency transaction is recorded and the date it is
consummated. The Company has entered into forward foreign exchange contracts to
protect it against such foreign exchange movements. The contract value of these
foreign exchange contracts was approximately $16.6 million at June 30, 2003 and
$10.1 million at December 31, 2002. These contracts generally expire within
three to twelve months. Foreign currency transaction (gains) losses, included in
other (income) expense, were $(0.6) million and $(0.5) million for the three
months ended June 30, 2003 and 2002 and $(1.4) million and $(0.3) million for
the six months ended June 30, 2003 and 2002.

                                       23
<PAGE>
INTEREST RATE RISKS

The Company is subject to market risk from exposure to changes in the interest
rates based on its financing activities. The Company utilizes a mix of debt
maturities along with both fixed- and variable-rate debt to manage its exposure
to changes in interest rates and to minimize interest expense. The Company does
not expect interest rate changes to have a material effect on income or cash
flows in 2003, although there can be no assurance that interest rates will not
materially change.

COMMODITY RISKS

Rubber polymers and fabrics are key components in most of the Image Transfer and
Textile products. The Company is exposed to changes in the costs of these
components. In addition, Image Transfer's pressroom chemical products are
exposed to changes in the cost of certain petroleum-based components. The
largest raw material component in the pressroom chemical products is petroleum
distillates, such as aliphatics and aromatics. When commodity prices increase,
the Company has historically passed on increases to its customers to maintain
its profit margins. Conversely, when commodity prices decline, the Company
generally lowers its sales prices to meet competitive pressures. The Company is
evaluating the impact of the recent increase in petroleum prices on its raw
material costs and in some markets already has instituted price increases to
offset the impact of these increases. Because the Company has historically been
able to raise sales prices to offset higher costs, management believes that a
10% change in the cost of its components could have a short-term impact until
sales price increases take effect, but overall would not have a material effect
on income or cash flows for a fiscal year.

ITEM 4.  CONTROLS AND PROCEDURES

The Company maintains a system of internal accounting controls designed to
provide reasonable assurance that transactions are properly recorded and
summarized so that reliable financial records and reports can be prepared and
assets safeguarded. In addition, a system of disclosure controls is maintained
to ensure that information required to be disclosed is recorded, processed,
summarized and reported in a timely manner to management responsible for the
preparation and reporting of the Company's financial information.

Management assesses the internal control and disclosure control systems as being
effective as they encompass material matters as of June 30, 2003. To the best of
management's knowledge, there were no changes in the internal control and
disclosure control systems during the three months ended June 30, 2003, that
would significantly affect the control systems.


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<PAGE>
                            PART II OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         a.       Exhibits

         (31)     RULE 13a-14(a)/15d-14(a) CERTIFICATIONS
                  31.1     Chief Executive Officer Certification
                  31.2     Chief Financial Officer Certification

         (32)     SECTION 1350 CERTIFICATIONS
                  32.1     Chief Executive Officer Certification
                  32.2     Chief Financial Officer Certification

         b.       Reports on Form 8-K

         None


                                    SIGNATURE

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


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


          Date:   August 11, 2003            /s/ Thomas J. Koenig
                  ---------------           -----------------------------------
                                            Thomas J. Koenig
                                            Vice President and
                                              Chief Financial Officer
                                            (Principal Financial Officer)


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