TWST: If you will, give us a brief summary, a bit of an historical or background sketch on Polymer Group and then bring us up to date. Over the next two to three years, what do you see as the challenges and the opportunities for your company?

Mr. Zucker: The Polymer Group is a specialty engineered materials company that operates on a global basis, and it has been growing very rapidly. As I'm sure you've seen from the historical data, we've been growing at an extraordinary rate. The growth has been both acquisitional as well as organic in nature. We are now the third largest nonwovens producer in the world, but more importantly, we have the broadest range of technologies of any nonwovens producer in the world. We're also the largest polyethylene slit film producer in North America. Probably one of the most important features of the company is that we're fully vertically integrated from basic polymer design at the molecular level all the way through the finished product to meet our customers' needs. Today, we operate 22 manufacturing plants in eight countries, including our joint venture operation near Buenos Aires, Argentina, and we have a very diversified offering with primary business lines in the medical, hygiene, wiping and industrial specialty categories. We sell over 150 products in more than 80 countries. Our customers range from Owens- Corning and Colgate-Palmolive to Duracell and Schuler, from Lucent Technologies, Alcatel and Siemens to Johnson & Johnson and Procter and Gamble, and include many others in numerous diverse product markets. A key development is one that we just recently announced to the marketplace, and that's the development and introduction of a brand new concept in the manufacture of fabrics, and Miratec' fabrics, which are made with a process we refer to as APEXTM. This is a revolutionary new system of process technologies to manufacture fabrics which exclude the labor intensive spinning, weaving or knitting processes of conventional textiles. Our APEXTM technologies provide a new way to make materials that have the appearance and characteristics of essentially any fabric, but at much more rapid speeds. For example, if you look at traditional woven shirt fabrics, conventional weaving technology can only produce a limited number of inches of production per minute, and that, only after numerous labor-intensive production processes related to the spinning and weaving of yarns. With our APEXTM technologies on the other hand, we can manufacture that fabric or almost any other, by first simply electronically scanning the design that you choose, and incidentally, that design can be a physical sample of any sort or graphically represented on the computer screen, that design is then digitized into a pattern which is used to control high energy laser systems which produce an imaging device, which I won't detail because of the many patents that are currently pending, and then subsequently, directly converting fiber into fabric at extremely high speeds without any intervening labor. Furthermore, this process can produce any combination of designs simultaneously. Whether you want embroidered patterns or herring bone patterns or a square or basket weave all side by side -- this process can produce it simultaneously without having to actually stitch together a patchwork quilt. We are now in discussions with numerous major textile and apparel manufacturers who are interested in this technology.

Key Trends

TWST: Looking at the industry that you're in, what are the key trends and the key issues that you feel will have an impact within the industry and on your company over the next two to three to five year time frame?

Mr. Zucker: There's continued industry consolidation which is true of many industries. Certainly that's true for the nonwovens businesses that we're in today. This wide-spread consolidation as well as globalization of the businesses and increased capital intensity are three very important trends. We have been to a great extent, leading in the globalization and consolidation of the industry and we currently have the broadest array of process technologies. We expect these trends toward consolidation, globalization and increased capital intensity to continue, and we are focused on positioning PGI to profit in this dynamic industry environment.


TWST: What's the competitive arena for your company? Who do you see as your head to head competition and over the next two to three years, what market shares are there, what total market is there in this area?

Mr. Zucker: With respect to nonwovens, we're the third largest producer globally. If we were looking at the top producers, Freudenberg Group GmbH would be the largest in the world followed by Du Pont, ourselves and then BBA Group Plc. As far as the global market is concerned, there's an enormous opportunity because many of the materials we produce are disposable consumer products, which are not viewed as necessities by much of the world today and actually have to be introduced as the per capita income climbs in various parts of the world, such as the ASEAN region in Asia, the Visegrad region in Europe or the Mercosur region in South America. There are sizable populations throughout the world which today are buying very small quantities of the typical hygiene, medical and wiping products which are currently widely in use in North America, Europe and Japan. Needless to say, the opportunity in China with a population of about 1.2 billion is also very attractive. Expected growth rates for nonwovens in these various markets that I've just mentioned are very high, generally double digit growth rates, whereas growth rates in the industrialized world tend to be in the conservative range of say four to eight percent, depending on the particular market segment.

TWST: What do you see are the hurdles to growth if you were looking at starting in this industry, you might compare them to the barriers to entry. Is it capital today? Is it the technology, is it having experience in various processes or in various marketplaces? Is it the relationships? What do you see as the keys as you go forward?

Mr. Zucker: Actually, all of the above. Right now, we believe that the most significant barrier to entry is the technology itself and the advancements in the technology that are, in fact, in process today. As manufacturing assets become more advanced and sophisticated, the nonwovens business will become increasingly capital intensive, creating an additional barrier to new investors as well as some smaller existing producers. Additionally, scale of manufacturing capability and strategic location of manufacturing assets around the world are essential for any global producer. With 22 plants in eight countries, PGI is well positioned to serve our customers globally, and we continue to invest in

new manufacturing facilities in developing regions where our key customers are actively targeting under-penetrated markets. Needless to say, that customer relationships are very important and that's certainly been one of our strengths. We've developed extraordinary relationships with many of our customers, including several of the largest consumer products companies in the world, to whom PGI serves as a key supplier on a global basis. Essentially, all of the factors that you've listed apply.

TWST: When you look at the opportunities in front of you, what capital needs do you see, how would you meet those requirements over the next three to five years?

Mr. Zucker: We're well positioned. We've put in additional installed capacity that should take us comfortably into the year 2000. Going forward beyond that, if you're asking in terms of our fiscal objectives or policies with regard to our capital structure, certainly we want to use debt prudently to take advantage of compelling strategic opportunities, but we want to follow through with the repayment of debt from operational cash flow to reduce leverage. Ultimately, once the message has been properly conveyed to the market and they have developed a greater appreciation for the high-technology aspect of the Company, the fact that we're going to be introducing some incredible new products, and that we command significant shares in certain markets, then I am confident that we'll see our share value increase. Perhaps at that point, we'll consider an additional secondary equity offering.

TWST: When you look at your overall acquisition strategy and how it was applied in the Dominion nonwovens acquisition, have your criteria changed based on your experience in that acquisition? Are there other areas or other technologies, other criteria now that you would look at based on what you've been able to learn from that acquisition?

Mr. Zucker: First let me say that we are extremely pleased with our progress relative to the integration of the Dominion acquisition, which was an important contributor during the first quarter of 1998, during which we experienced year-to-year growth in sales and operating profit of 50% and 42%, respectively. And on June 12, we announced that we are on target with respect to meeting our current second quarter 1998 consensus EPS estimate, as reported by First Call. Our acquisition strategy has met my expectations and has been working well. Our focus has been on getting the broadest range of technologies under one roof, which we have now achieved, and second, penetrating new market segments which we've achieved through some of these acquisitions. For example, as part of the Dominion acquisition, we acquired Netherlands-based Geca Tapes which positions PGI in Europe as a key supplier of fiber-optic and wire cable wrap materials to Siemens Corporation, Lucent Technologies, Alcatel and other cable and communication companies. Finally, we have also paid particular attention to geographic expansion, which is necessary to continue to be a global producer and a major supplier to some of the world's leading companies. I'm very pleased with what we've accomplished.

TWST: What are the time lines, the time frame in which an investor should have an awareness when they look at your ongoing business, the way you generate customers, the way you respond to their needs and demands? And secondly, what results, what time line do you see from your acquisitions?

Mr. Zucker: Certainly I think we're making very significant progress and we're focused on meeting the commitments we've made to the marketplace with regard to the introductions of new products, geographic expansion and the implementation of other aspects of our stated growth strategy.


TWST: From an investor's viewpoint, when they look at your business cycle, what are the time lines that they should understand with respect to your marketing efforts, your creation of revenues and the flow of those revenues on to the bottom line? What does that time line look like and what should they understand about your business model from that perspective?

Mr. Zucker: As to the cyclicality, the business is basically stable and non-cyclical year over year. However, there is some seasonality during the course of the year. Generally speaking, the first and second quarters are the weakest quarters of the year and the third and fourth quarters are the strongest. This has to do with certain ordering patterns of our customers which are related to the way they market their products. With respect to capital expenditures, once a capital expenditure has been committed, it generally takes about a year to implement, however, in most cases, we have the lines in which we've invested capital essentially sold out before we start them up. So that as the lines are ramped-up, they should expect a nearly straight line growth pattern of filling out line production as the lines are debugged and brought up to full capacity. As to the most recent announcement that we made with regard to the installation of the new APEX line, which produces Miratec', we anticipate that line to begin operation around Christmas of this year. So it won't have a material impact on sales for 1998.

TWST: And then looking at the acquisitions as you roll into them or as you look at possible acquisitions, what are the time lines that you consider with respect to those types of investments?

Mr. Zucker: Looking retrospectively, we were able to very quickly integrate our recent acquisitions into our operations and improve the operating cash flow of the acquired units, generally within one year. Right now, as it relates to the most recent acquisition, which was the nonwovens business of Dominion Textile, the integration process is going very well, as I mentioned. We still have some overhead to be taken out ' and you'll see there's already been a substantial reduction in that overhead ' as it relates to the corporate facility and that will continue through the second quarter and finally trail off in the third quarter of this year.

Corporate Structure

TWST: Looking at your management team and looking at the various initiatives and goals that you have in front of you, are there any planned changes or adjustments to the management team? Are you looking at specific areas? Is there a focus? Are there needs that you'll be addressing over the next year or two?

Mr. Zucker: No, there won't be any major reorganization, if that's what you're asking. In fact, you've probably noted the recent announcements regarding the establishment of two chief operating officer positions, one to handle the Oriented Polymers Division and the other responsible for the Nonwovens Division. Other than that, I see no material changes in the organization.


TWST: Looking at the board of directors, what are the talents and resources that they bring to the table? What do you expect from them and over the next year or two, are you looking to make any changes or additions to the board?

Mr. Zucker: PGI's board of directors has been actively involved and focused on the Company's strategic development. Perhaps we could supplement the board with one or two other individuals who have more industry specific knowledge, but our board is very well balanced. All of them have substantial experience in a variety of industries.

TWST: For yourself, as the top manager, what are the basic business principles that you use? What have you developed to rely on, on a day- to-day and on a long term basis to set the goals and the standards and the course of conduct for your organization? What are the ABCs of business according to Jerry Zucker?

Mr. Zucker: Let me break that question into a couple of components. First of all, with respect to the managerial philosophy, I always want to hire the most capable people and surround myself with their expertise, while maintaining as flat an organizational structure as possible. Second, I would like from an organizational perspective, to remain as decentralized as we can be. I prefer to have most of the talent located at the plant sites where there's a much higher sense of urgency. I find it generally true that the managers that are closest to the customers generally make the best decisions on behalf of the company as well as the customers. Overall, I'd say the key is to maintain a very lean and focused staff.

TWST: For an investor who has the time and takes the opportunity to look at the financial statements and the reports and statements from your company over the next two to three years, what do you suggest they focus on? What would you look at or what would you suggest an investor look at to gain insight into what you're doing, how you're growing, where you're changing and where you're going?

Mr. Zucker: I think that the investors need to keep a sharp eye on technological developments of the company. We've achieved some remarkable breakthroughs in technology that have not yet hit the bottom line. It'll take the next two or three years for the investors to fully appreciate the remarkable breakthroughs that we've achieved. So I'd say more than anything else, focus on the technological developments, which are the key drivers of operating income and net income improvement.

TWST: How could the investment community improve its perception or its understanding of Polymer Group? Do you feel there are areas that are under-perceived? Are there insights that need more attention?

Mr. Zucker: I think it's an unfortunate fact that most of the coverage that we've received has been by chemical analysts or analysts that really have not been historically attuned to the particular technological features of the company. It's been a difficult issue for us to educate not only the analysts, but the public at large and the investor community at large as to certain breakthrough technologies. As you can well appreciate when the computer industry was in its infancy, the extent to which the new technology would impact our lives was not fully appreciated. This, I think, is true of some of the technology that we've developed, in particular, as I mentioned earlier, the breakthrough APEXTM technology and Miratec' fabrics. In April of this year, when we were at the Interior Design Show -- IDEA, we had a special presentation at the World Trade Center in Baltimore to introduce this new technology to the marketplace and it received an overwhelmingly positive response from both our present customer base as well as a large number of prospective customers, including a number of industry leaders that were present. A number of Wall Street analysts were also in attendance and were favorably impressed by our customers' enthusiasm.

TWST: One of the challenges that a CEO faces in dealing with Wall Street is the Street seems to have this instant gratification desire, with perhaps an over emphasis on quarterly results versus the long term vision, the building, the creation process that is part of a sustainable company over time. How do you reconcile that apparent conflict?

Mr. Zucker: I think it's a conflict that has been around for quite sometime. It's the difference between running a private company and a public company. At a private company, the focus is generally on the long term. I think it's unfortunate that many American investors look myopically on a quarter over quarter basis, but it is reality that anyone in the public sector has to deal with. I think on a long term basis, it can tend to suppress the ultimate potential of the companies by forcing management in some cases to consider taking actions that are geared primarily for short-term results.

TWST: For investors, over the next year or two, what are the concerns that they should have, what are the red flags or the warnings signals, if any, on a micro or a macro level?

Mr. Zucker: Specific to our company, we don't have any red flags to raise right now. Obviously, if the world went into a major recession, our durable goods sector would suffer to some degree. But actually, the bulk of our product portfolio is broadly distributed across a range of end product markets and is non-cyclical in nature: for example, components that are used in the production of hygiene applications such as diapers and feminine protection products as well as medical applications, alkaline battery components and others. These products are going to be purchased regardless of whether the gross domestic product of the various countries around the world are adversely impacted or not. As to the durable goods segment, everyone that's in the durable goods business will suffer to some extent. Let me close out my response to this question by saying, as always, except for historical information, the matters I've discussed in this interview are forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those described in the forward- looking statements. Investors and other readers of this transcript are directed to consider the risks and uncertainties discussed in documents filed by Polymer Group, Inc. with the Securities and Exchange Commission, including the Company's Registration Statement on Form S-4, declared effective on September 3, 1997.

TWST: When you look at the international market, and you'd mentioned specifically the potential of China. I think that's always in people's conversation when they look at possible consumer type goods. But what areas over the next three to five years do you feel have the most potential as far as your viewpoint of bringing your technology, bringing Polymer Group into the arena?

Mr. Zucker: Just within the existing markets of the industrialized world, we still have very high growth opportunities. We're talking about growth rates in the four to eight percent range. Volume growth for many of the products we produce, rather than being driven by changes in GDP, are driven by product design changes. To give you a simple example, suppose we're producing a blood sorbent material for medical use and we want to make the product thinner. Generally speaking, when we make the product thinner, we have to add more layers of our material to achieve comparable performance characteristics. So by simple example, if we have a product that historically has had two layers and we go to the third layer, we have increased our opportunity in that product by 50 percent simply by adding another layer. Despite the fact that the number of units of product may not have changed. This is true of many of the product designs with which we're involved. Our customers are making many of their products lighter and thinner, and in doing so, they require additional layers of our products. As a result, even though our customers' actual unit sales may have only increased by four to eight percent, the volume impact on us could be substantially in excess of that amount. From an international perspective, growth in the Mercosur countries of Argentina, Brazil, Paraguay, Uruguay and Chile, with a combined population of some 220 plus million people, is just crying out for many of our disposable products, which in many cases constitute new product introductions in these emerging markets. As the population's resources increase, there's a growing middle class in all of these countries. As a result, demand for our products will increase substantially simply because these products will go from being perceived as non-essential goods to essential goods. A disposable diaper may not be viewed as an essential item to someone who's barely making enough to manage to keep food on the table, but as earnings rise, disposable diapers, such as Pampers' for example, move from being considered a luxury item to a basic necessity. This is also true in the Visegrad region which includes Poland, Hungary, and the Czech and Slovak republics. In this region, the population is now demanding products that they had never had the pleasure of using before, but once used, they quickly realize the value of these products, and as a result, they do not revert back. Despite the current problem with the Asian flu, which is having essentially no impact on us currently, the upside for us is enormous. It will take only a fraction of the population to start using our products to have an enormous impact on the volume of what we sell.

TWST: When you look at these markets, does your marketing strategy change substantially marketplace to marketplace? Do the entry level products change as you look to gain your foothold or to increase your market share? Is it hospital and hygiene versus industrial versus other applications? Are there sequences to your business as you develop your business?

Mr. Zucker: First of all, in almost all of the cases you've just described, the partnering relationships that we have with our customers plays a significant role, because in general, although not in all cases, we don't make the end-use product. There's a couple of exceptions, for example, with our wiping products, we, on a turn key basis, make wipes for our customers and deliver them to the warehouses ready to be put on the shelves. For example, we manufacture and package handi-Wipes' for Colgate Palmolive. But in most cases, we look to the customer as our partner in developing these markets. For example, in the case of a Johnson & Johnson or a Procter & Gamble or one of the numerous other customers that are making disposable products, we look to them to jointly move with us into these new or evolving markets. We help them in developing customized products to meet the needs of a particular region or market. They then do the actual marketing into the retail sector. Each culture, of course, has to be dealt with differently.

Key Strengths

TWST: What then is the essential message, the summary statement that you would give to investors? What over the next three to five years do you see and what should investors see as the strengths, and advantages as well as the highlights that distinguish Polymer Group as an investment today?

Mr. Zucker: I think that investors should keep their eye on the technology. Once again, we are, without question, a technological leader, with the broadest range of technologies. Investors will be seeing us leverage our proprietary technology vertically and horizontally to enhance our profits substantially. I think investors will also see us making a significant move towards reducing our production costs through our ongoing technological advancements which will enhance productivity, improve efficiency and increase yield. I also think that globalization will have a positive impact on Polymer Group, and we are well positioned to take advantage of the many opportunities currently evolving on a global basis.

TWST: Thank you.

JERRY ZUCKER Chairman, President & CEO Polymer Group, Inc. P.O. Box 5069 4383 Jenkins Avenue North Charleston, SC 29405 (803) 566-7293 (803) 308-0104 (FAX)

Each Chief Executive Officer who is the featured subject of a TWST Chief Executive Officer Interview is offered the opportunity to include an Investors Brief or other financial highlight material to be provided and sponsored by and for the company. This Chief Executive interview with Jerry Zucker, Chairman, President and CEO, Polymer Group Inc., is accompanied by an Investors Brief containing financial information.