UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2009
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 333-107219
 UNITED COMPONENTS, INC.
  Delaware
(State or Other Jurisdiction of 
Incorporation or Organization)
    
    04-3759857
(I.R.S. Employer Identification No.)14601 Highway 41 North 
Evansville, Indiana
(Address of Principal Executive Offices)
    
    47725
(Zip Code)
 (812) 867-4156
 o þ
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller Reporting Company o(Do not check if a smaller reporting company)
 o þ




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##### 



United Components, Inc.
 Index
 Part I FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements (unaudited)
    
    
    3Condensed consolidated balance sheets  June 30, 2009 and December 31, 2008
    
    
    3Condensed consolidated income statements  Three and six months ended June 30, 2009
and 2008
    
    
    4Condensed consolidated statements of cash flows  Six months ended June 30, 2009
and 2008
    
    
    5Condensed consolidated statements of changes in equity  Six months ended June 30,
2009 and 2008
    
    
    6Notes to condensed consolidated financial statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    28Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    43Item 4. Controls and Procedures
    
    
    44Part II OTHER INFORMATION
    
    
    45Item 1. Legal Proceedings
    
    
    45Item 1A. Risk Factors
    
    
    45Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    45Item 3. Default Upon Senior Securities
    
    
    45Item 4. Submission of Matters to Vote of Security Holders
    
    
    45Item 5. Other Information
    
    
    45Item 6. Exhibits
    
    
    46Signatures
    
    
    47Exhibits
  2




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##### 



PART I
FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 United Components, Inc.
 
 Condensed Consolidated Balance Sheets  (in thousands)
 June 30,
    
    
    December 31,2009
    
    
    2008(unaudited)
    
    
    (audited)AssetsCurrent assetsCash and cash equivalents
    
    $
    90,645
    
    
    $
    46,612Accounts receivable, net
    
    
    249,528
    
    
    
    261,624Inventories, net
    
    
    137,473
    
    
    
    159,444Deferred tax assets
    
    
    25,723
    
    
    
    24,245Other current assets
    
    
    19,471
    
    
    
    19,452Total current assets
    
    
    522,840
    
    
    
    511,377Property, plant and equipment, net
    
    
    159,753
    
    
    
    167,906Goodwill
    
    
    241,461
    
    
    
    241,461Other intangible assets, net
    
    
    70,312
    
    
    
    74,606Deferred financing costs, net
    
    
    2,164
    
    
    
    2,649Restricted cash
    
    
    9,400
    
    
    
    Other long-term assets
    
    
    6,604
    
    
    
    1,823Total assets
    
    $
    1,012,534
    
    
    $
    999,822Liabilities and equityCurrent liabilitiesAccounts payable
    
    $
    105,257
    
    
    $
    104,416Short-term borrowings
    
    
    5,792
    
    
    
    25,199Current maturities of long-term debt
    
    
    318
    
    
    
    422Accrued expenses and other current liabilities
    
    
    97,147
    
    
    
    85,730Total current liabilities
    
    
    208,514
    
    
    
    215,767Long-term debt, less current maturities
    
    
    418,218
    
    
    
    418,025Pension and other postretirement liabilities
    
    
    76,340
    
    
    
    79,832Deferred tax liabilities
    
    
    6,444
    
    
    
    3,560Due to Holdco
    
    
    20,135
    
    
    
    17,535Other long-term liabilities
    
    
    8,284
    
    
    
    2,540Total liabilities
    
    
    737,935
    
    
    
    737,259Contingencies  Note JEquityUnited Components, Inc. shareholders equityCommon stock
    
    
    
    
    
    
    Additional paid in capital
    
    
    278,650
    
    
    
    278,430Retained earnings
    
    
    30,301
    
    
    
    21,243Accumulated other comprehensive loss
    
    
    (36,463
    )
    
    
    (39,600
    )Total United Components, Inc. shareholders equity
    
    
    272,488
    
    
    
    260,073Noncontrolling interest
    
    
    2,111
    
    
    
    2,490Total equity
    
    
    274,599
    
    
    
    262,563Total liabilities and equity
    
    $
    1,012,534
    
    
    $
    999,822
 The accompanying notes are an integral part of these statements.
 3




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##### 



United Components, Inc.
 
 Condensed Consolidated Income Statements  (in thousands)
 Three Months ended June 30,
    
    
    Six Months ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net sales
    
    $
    217,422
    
    
    $
    229,269
    
    
    $
    437,284
    
    
    $
    458,559Cost of sales
    
    
    169,150
    
    
    
    182,579
    
    
    
    348,748
    
    
    
    360,809Gross profit
    
    
    48,272
    
    
    
    46,690
    
    
    
    88,536
    
    
    
    97,750Operating (expense) incomeSelling and warehousing
    
    
    (14,086
    )
    
    
    (16,026
    )
    
    
    (28,384
    )
    
    
    (31,531
    )General and administrative
    
    
    (11,567
    )
    
    
    (12,811
    )
    
    
    (23,463
    )
    
    
    (25,339
    )Amortization of acquired intangible assets
    
    
    (1,481
    )
    
    
    (1,664
    )
    
    
    (2,961
    )
    
    
    (3,257
    )Restructuring gains (costs), net (Note B)
    
    
    598
    
    
    
    (125
    )
    
    
    393
    
    
    
    (488
    )Operating income
    
    
    21,736
    
    
    
    16,064
    
    
    
    34,121
    
    
    
    37,135Other expenseInterest expense, net
    
    
    (7,793
    )
    
    
    (8,414
    )
    
    
    (15,792
    )
    
    
    (17,556
    )Management fee expense
    
    
    (500
    )
    
    
    (500
    )
    
    
    (1,000
    )
    
    
    (1,000
    )Miscellaneous, net
    
    
    (1,669
    )
    
    
    (982
    )
    
    
    (3,154
    )
    
    
    (1,509
    )Income before income taxes
    
    
    11,774
    
    
    
    6,168
    
    
    
    14,175
    
    
    
    17,070Income tax expense
    
    
    (4,361
    )
    
    
    (2,432
    )
    
    
    (5,496
    )
    
    
    (6,608
    )Net income
    
    
    7,413
    
    
    
    3,736
    
    
    
    8,679
    
    
    
    10,462Less: Loss attributable to noncontrolling
interest
    
    
    (75
    )
    
    
    (291
    )
    
    
    (379
    )
    
    
    (320
    )Net income attributable to United
Components, Inc.
    
    $
    7,488
    
    
    $
    4,027
    
    
    $
    9,058
    
    
    $
    10,782
 The accompanying notes are an integral part of these statements.
 4




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##### 



United Components, Inc.
 
 Condensed Consolidated Statements of Cash Flows  (in thousands)
 Six Months ended June 30,2009
    
    
    2008Cash flows from operating activitiesNet income attributable to United Components, Inc.
    
    $
    9,058
    
    
    $
    10,782Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization of other intangible assets
    
    
    18,805
    
    
    
    18,475Amortization of deferred financing costs and debt discount
    
    
    801
    
    
    
    876Deferred income taxes
    
    
    (199
    )
    
    
    1,006Other non-cash, net
    
    
    (1,246
    )
    
    
    1,178Changes in operating assets and liabilities:Accounts receivable
    
    
    12,510
    
    
    
    5,526Inventories
    
    
    22,395
    
    
    
    (15,704
    )Other current assets
    
    
    126
    
    
    
    6,755Accounts payable
    
    
    617
    
    
    
    5,251Accrued expenses and other current liabilities
    
    
    11,182
    
    
    
    (9,313
    )Other long-term assets
    
    
    (165
    )
    
    
    (29
    )Due to Holdco
    
    
    2,600
    
    
    
    5,014Other long-term liabilities
    
    
    1,575
    
    
    
    229Net cash provided by operating activities
    
    
    78,059
    
    
    
    30,046Cash flows from investing activitiesCapital expenditures
    
    
    (7,530
    )
    
    
    (17,274
    )Proceeds from sale of property, plant and equipment
    
    
    2,436
    
    
    
    261Increase in restricted cash
    
    
    (9,400
    )
    
    
    Net cash used in investing activities
    
    
    (14,494
    )
    
    
    (17,013
    )Cash flows from financing activitiesIssuances of debt
    
    
    6,543
    
    
    
    1,249Debt repayments
    
    
    (26,177
    )
    
    
    (20,718
    )Net cash used in financing activities
    
    
    (19,634
    )
    
    
    (19,469
    )Effect of currency exchange rate changes on cash
    
    
    102
    
    
    
    186Net increase (decrease) in cash and cash equivalents
    
    
    44,033
    
    
    
    (6,250
    )Cash and cash equivalents at beginning of year
    
    
    46,612
    
    
    
    41,440Cash and cash equivalents at end of period
    
    $
    90,645
    
    
    $
    35,190
 The accompanying notes are an integral part of these statements.
 5




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##### 



United Components, Inc.
 
 Condensed Consolidated Statements of Changes in Equity  (in thousands)
 United Components, Inc. Shareholders EquityAccumulatedAdditional
    
    
    
    
    
    
    OtherCommon
    
    
    Paid In
    
    
    Retained
    
    
    Comprehensive
    
    
    Noncontrolling
    
    
    
    
    
    
    ComprehensiveStock
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Interest
    
    
    Total Equity
    
    
    Income (Loss)Balance at
January 1, 2008
    
    $
    
    
    
    $
    277,741
    
    
    $
    11,316
    
    
    $
    6,762
    
    
    $
    3,308
    
    
    $
    299,127Recognition of
stock based
compensation
expense
    
    
    
    
    
    
    461
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    461Tax effect of
exercise of Holdco
stock options
    
    
    
    
    
    
    (131
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (131
    )Comprehensive incomeNet income (loss)
    
    
    
    
    
    
    
    
    
    
    10,782
    
    
    
    
    
    
    
    (320
    )
    
    
    10,462
    
    
    $
    10,462Other
comprehensive
incomeInterest rate
swaps (after
$63 of income
taxes)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (103
    )
    
    
    
    
    
    
    (103
    )
    
    
    (103
    )Foreign
currency
adjustment
(after $0 of
income taxes)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,644
    
    
    
    
    
    
    
    1,644
    
    
    
    1,644Total comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    12,003Balance at June 30,
2008
    
    $
    
    
    
    $
    278,071
    
    
    $
    22,098
    
    
    $
    8,303
    
    
    $
    2,988
    
    
    $
    311,460Balance at January
1, 2009
    
    $
    
    
    
    $
    278,430
    
    
    $
    21,243
    
    
    $
    (39,600
    )
    
    $
    2,490
    
    
    $
    262,563Recognition of
stock based
compensation
expense
    
    
    
    
    
    
    220
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    220Comprehensive incomeNet income (loss)
    
    
    
    
    
    
    
    
    
    
    9,058
    
    
    
    
    
    
    
    (379
    )
    
    
    8,679
    
    
    $
    8,679Other
comprehensive
incomeForeign
currency
adjustment
(after $111
of income
taxes)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    703
    
    
    
    
    
    
    
    703
    
    
    
    703Pension
liability
(after $1,505
of income
taxes)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,434
    
    
    
    
    
    
    
    2,434
    
    
    
    2,434Total comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    11,816Balance at June 30,
2009
    
    $
    
    
    
    $
    278,650
    
    
    $
    30,301
    
    
    $
    (36,463
    )
    
    $
    2,111
    
    
    $
    274,599
 The accompanying notes are an integral part of these statements.
 6




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United Components, Inc.

Notes to Condensed Consolidated Financial Statements
 NOTE A  GENERAL AND BASIS OF FINANCIAL STATEMENT PRESENTATION
 General
   Basis of Presentation
       7




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United Components, Inc.
Notes to Condensed Consolidated Financial Statements
 NOTE B  RESTRUCTURING COSTS
  2009
    
    
    2008Three months ended June 30Post employment benefit plans curtailment
    
    $
    (0.1
    )
    
    $
    Asset write-offs
    
    
    (0.7
    )
    
    
    Gain on sale of building, net of moving costs
    
    
    1.4
    
    
    
    Costs of previously closed water pump facility
    
    
    0.0
    
    
    
    (0.1
    )$
    0.6
    
    
    $
    (0.1
    )Six months ended June 30Post employment benefit plans curtailment
    
    $
    (0.1
    )
    
    $
    Asset write-offs
    
    
    (0.7
    )
    
    
    Gain on sale of building, net of moving costs
    
    
    1.4
    
    
    
    Costs of previously closed water pump facility
    
    
    (0.2
    )
    
    
    (0.5
    )$
    0.4
    
    
    $
    (0.5
    )
 2009 Capacity Consolidation and European Realignment Actions
    Costs of Previously Closed Water Pump Facility
  NOTE C  SALES OF RECEIVABLES
  8




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United Components, Inc.
Notes to Condensed Consolidated Financial Statements
   NOTE D  INVENTORIES
  June 30,
    
    
    December 31,2009
    
    
    2008Raw materials
    
    $
    45.6
    
    
    $
    55.3Work in process
    
    
    31.4
    
    
    
    34.6Finished products
    
    
    76.3
    
    
    
    84.4Valuation reserves
    
    
    (15.8
    )
    
    
    (14.9
    )$
    137.5
    
    
    $
    159.4
 NOTE E  RESTRICTED CASH
  NOTE F  ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
  June 30,
    
    
    December 31,2009
    
    
    2008Salaries and wages
    
    $
    3.3
    
    
    $
    2.7Bonuses and profit sharing
    
    
    4.1
    
    
    
    3.5Vacation pay
    
    
    4.5
    
    
    
    4.4Product returns
    
    
    34.7
    
    
    
    32.0Rebates, credits and discounts due customers
    
    
    13.9
    
    
    
    10.8Insurance
    
    
    13.5
    
    
    
    11.5Taxes payable
    
    
    5.7
    
    
    
    4.8Interest
    
    
    1.8
    
    
    
    2.1Other
    
    
    15.6
    
    
    
    13.9$
    97.1
    
    
    $
    85.7
 9




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United Components, Inc.
Notes to Condensed Consolidated Financial Statements
 NOTE G  PRODUCT RETURNS LIABILITY
     Six Months ended June 30,2009
    
    
    2008Beginning of year
    
    $
    32.0
    
    
    $
    28.1Cost of unsalvageable parts
    
    
    (24.5
    )
    
    
    (25.5
    )Additional reductions to sales
    
    
    27.2
    
    
    
    28.1End of period
    
    $
    34.7
    
    
    $
    30.7
 NOTE H  PENSION
  Three Months ended June 30,
    
    
    Six Months ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Service cost
    
    $
    1.1
    
    
    $
    1.3
    
    
    $
    2.2
    
    
    $
    2.6Interest cost
    
    
    3.3
    
    
    
    3.2
    
    
    
    6.6
    
    
    
    6.4Expected return on plan assets
    
    
    (3.6
    )
    
    
    (3.7
    )
    
    
    (7.3
    )
    
    
    (7.4
    )Amortization of prior service
cost and unrecognized loss
    
    
    0.1
    
    
    
    
    
    
    
    0.3
    
    
    
    Curtailment loss
    
    
    0.2
    
    
    
    
    
    
    
    0.2
    
    
    
    Special termination benefits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2$
    1.1
    
    
    $
    0.8
    
    
    $
    2.0
    
    
    $
    1.8
   10




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United Components, Inc.
Notes to Condensed Consolidated Financial Statements
 NOTE I  DEBT
  June 30,
    
    
    December 31,2009
    
    
    2008Short-term borrowings
    
    $
    5.8
    
    
    $
    5.2Revolving credit line borrowings
    
    
    
    
    
    
    20.0Capital lease obligations
    
    
    1.0
    
    
    
    1.2Term loan
    
    
    190.0
    
    
    
    190.0Senior subordinated notes
    
    
    230.0
    
    
    
    230.0Unamortized debt issuance costs
    
    
    (2.5
    )
    
    
    (2.8
    )424.3
    
    
    
    443.6Less:Short-term borrowings
    
    
    5.8
    
    
    
    5.2Revolving credit line borrowings
    
    
    
    
    
    
    20.0Current maturities
    
    
    0.3
    
    
    
    0.4Long-term debt
    
    $
    418.2
    
    
    $
    418.0
  Senior credit facility
 Term loan
  Revolving credit facility
   Covenants and other provisions
  11




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United Components, Inc.
Notes to Condensed Consolidated Financial Statements
 Senior subordinated notes (the Notes)
 Short-term borrowings
 NOTE J  CONTINGENCIES
 Insurance Reserves
  Environmental
   12




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United Components, Inc.
Notes to Condensed Consolidated Financial Statements
 Antitrust Litigation
      13




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United Components, Inc.
Notes to Condensed Consolidated Financial Statements
       Value-added Tax Receivable
  Other Litigation
  14




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United Components, Inc.
Notes to Condensed Consolidated Financial Statements
 NOTE K  GEOGRAPHIC INFORMATION
  Three Months ended June 30,
    
    
    Six Months ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008United States
    
    $
    184.9
    
    
    $
    190.2
    
    
    $
    375.6
    
    
    $
    383.1Mexico
    
    
    6.4
    
    
    
    7.8
    
    
    
    12.3
    
    
    
    16.5Canada
    
    
    7.3
    
    
    
    8.4
    
    
    
    13.8
    
    
    
    15.8United Kingdom
    
    
    3.5
    
    
    
    4.3
    
    
    
    5.3
    
    
    
    7.6France
    
    
    2.4
    
    
    
    2.7
    
    
    
    4.3
    
    
    
    5.8Venezuela
    
    
    0.7
    
    
    
    0.8
    
    
    
    1.6
    
    
    
    1.6Germany
    
    
    1.1
    
    
    
    1.2
    
    
    
    2.3
    
    
    
    2.8Spain
    
    
    1.1
    
    
    
    1.3
    
    
    
    1.9
    
    
    
    2.3Other
    
    
    10.0
    
    
    
    12.6
    
    
    
    20.2
    
    
    
    23.1$
    217.4
    
    
    $
    229.3
    
    
    $
    437.3
    
    
    $
    458.6
  June 30,
    
    
    December 31,2009
    
    
    2008United States
    
    $
    204.9
    
    
    $
    201.5China
    
    
    31.1
    
    
    
    33.2Mexico
    
    
    9.4
    
    
    
    9.9Spain
    
    
    2.8
    
    
    
    2.3Goodwill
    
    
    241.5
    
    
    
    241.5$
    489.7
    
    
    $
    488.4
 NOTE L  OTHER INFORMATION
   Three Months ended June 30,
    
    
    Six Months ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Interest
    
    $
    12.7
    
    
    $
    13.8
    
    
    $
    15.3
    
    
    $
    17.4Income taxes (net of refunds)
    
    
    0.6
    
    
    
    1.6
    
    
    
    1.0
    
    
    
    (1.0
    )
   NOTE M  CONCENTRATION OF RISK
  15




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United Components, Inc.
Notes to Condensed Consolidated Financial Statements
   NOTE N  ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS
      16




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##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements
        NOTE O  RECENT ACCOUNTING PRONOUNCEMENTS, NOT YET ADOPTED
  17




---



##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements
 FASB Accounting Standards Codification
 NOTE P  FAIR VALUE ACCOUNTING
 Interest rate swap measured at fair value on a recurring basis
   Fair value of financial instruments
 Cash and cash equivalents
 Trade accounts receivable
 Trade accounts payable
 Short-term borrowings
 Long-term debt
  Interest rate swaps
  18




---



##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements
 NOTE Q  GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS
    19




---



##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements
 Note Q (continued)
 Consolidating Condensed Balance Sheet
June 30, 2009  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsAssetsCurrent assetsCash and cash equivalents
    
    $
    90,645
    
    
    $
    
    
    
    $
    82,107
    
    
    $
    (29
    )
    
    $
    8,567Accounts receivable, net
    
    
    249,528
    
    
    
    
    
    
    
    
    
    
    
    231,820
    
    
    
    17,708Inventories, net
    
    
    137,473
    
    
    
    
    
    
    
    
    
    
    
    118,998
    
    
    
    18,475Deferred tax assets
    
    
    25,723
    
    
    
    
    
    
    
    255
    
    
    
    25,604
    
    
    
    (136
    )Other current assets
    
    
    19,471
    
    
    
    
    
    
    
    1,383
    
    
    
    8,800
    
    
    
    9,288Total current assets
    
    
    522,840
    
    
    
    
    
    
    
    83,745
    
    
    
    385,193
    
    
    
    53,902Property, plant and equipment, net
    
    
    159,753
    
    
    
    
    
    
    
    1,054
    
    
    
    117,741
    
    
    
    40,958Investment in subsidiaries
    
    
    
    
    
    
    (274,282
    )
    
    
    246,100
    
    
    
    28,182
    
    
    
    Goodwill
    
    
    241,461
    
    
    
    
    
    
    
    241,461
    
    
    
    
    
    
    
    Other intangible assets, net
    
    
    70,312
    
    
    
    
    
    
    
    7,795
    
    
    
    62,342
    
    
    
    175Deferred financing costs, net
    
    
    2,164
    
    
    
    
    
    
    
    2,164
    
    
    
    
    
    
    
    Restricted cash
    
    
    9,400
    
    
    
    
    
    
    
    
    
    
    
    9,400
    
    
    
    Other long-term assets
    
    
    6,604
    
    
    
    
    
    
    
    367
    
    
    
    6,037
    
    
    
    200Total assets
    
    $
    1,012,534
    
    
    $
    (274,282
    )
    
    $
    582,686
    
    
    $
    608,895
    
    
    $
    95,235Liabilities and equityCurrent liabilitiesAccounts payable
    
    $
    105,257
    
    
    $
    
    
    
    $
    1,033
    
    
    $
    86,518
    
    
    $
    17,706Short-term borrowings
    
    
    5,792
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,792Current maturities of long-term debt
    
    
    318
    
    
    
    
    
    
    
    259
    
    
    
    59
    
    
    
    Accrued expenses and other current
liabilities
    
    
    97,147
    
    
    
    
    
    
    
    9,115
    
    
    
    83,041
    
    
    
    4,991Total current liabilities
    
    
    208,514
    
    
    
    
    
    
    
    10,407
    
    
    
    169,618
    
    
    
    28,489Long-term debt, less current maturities
    
    
    418,218
    
    
    
    
    
    
    
    417,795
    
    
    
    423
    
    
    
    Pension and other postretirement liabilities
    
    
    76,340
    
    
    
    
    
    
    
    10,497
    
    
    
    64,642
    
    
    
    1,201Deferred tax liabilities
    
    
    6,444
    
    
    
    
    
    
    
    19,857
    
    
    
    (13,990
    )
    
    
    577Due to Holdco
    
    
    20,135
    
    
    
    
    
    
    
    20,135
    
    
    
    
    
    
    
    Other long-term liabilities
    
    
    8,284
    
    
    
    
    
    
    
    
    
    
    
    6,477
    
    
    
    1,807Intercompany payables (receivables)
    
    
    
    
    
    
    
    
    
    
    (168,493
    )
    
    
    155,572
    
    
    
    12,921Total equity
    
    
    274,599
    
    
    
    (274,282
    )
    
    
    272,488
    
    
    
    226,153
    
    
    
    50,240Total liabilities and equity
    
    $
    1,012,534
    
    
    $
    (274,282
    )
    
    $
    582,686
    
    
    $
    608,895
    
    
    $
    95,235
 20




---



##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements
 Note Q (continued)
 Consolidating Condensed Balance Sheet
December 31, 2008  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsAssetsCurrent assetsCash and cash equivalents
    
    $
    46,612
    
    
    $
    
    
    
    $
    39,061
    
    
    $
    860
    
    
    $
    6,691Accounts receivable, net
    
    
    261,624
    
    
    
    
    
    
    
    
    
    
    
    246,101
    
    
    
    15,523Inventories, net
    
    
    159,444
    
    
    
    
    
    
    
    
    
    
    
    133,900
    
    
    
    25,544Deferred tax assets
    
    
    24,245
    
    
    
    
    
    
    
    255
    
    
    
    23,479
    
    
    
    511Other current assets
    
    
    19,452
    
    
    
    
    
    
    
    648
    
    
    
    8,602
    
    
    
    10,202Total current assets
    
    
    511,377
    
    
    
    
    
    
    
    39,964
    
    
    
    412,942
    
    
    
    58,471Property, plant and equipment, net
    
    
    167,906
    
    
    
    
    
    
    
    1,006
    
    
    
    123,579
    
    
    
    43,321Investment in subsidiaries
    
    
    
    
    
    
    (253,698
    )
    
    
    225,275
    
    
    
    28,423
    
    
    
    Goodwill
    
    
    241,461
    
    
    
    
    
    
    
    241,461
    
    
    
    
    
    
    
    Other intangible assets, net
    
    
    74,606
    
    
    
    
    
    
    
    9,025
    
    
    
    65,378
    
    
    
    203Deferred financing costs, net
    
    
    2,649
    
    
    
    
    
    
    
    2,649
    
    
    
    
    
    
    
    Other long-term assets
    
    
    1,823
    
    
    
    
    
    
    
    365
    
    
    
    1,292
    
    
    
    166Total assets
    
    $
    999,822
    
    
    $
    (253,698
    )
    
    $
    519,745
    
    
    $
    631,614
    
    
    $
    102,161Liabilities and equityCurrent liabilitiesAccounts payable
    
    $
    104,416
    
    
    $
    
    
    
    $
    4,140
    
    
    $
    86,407
    
    
    $
    13,869Short-term borrowings
    
    
    25,199
    
    
    
    
    
    
    
    20,003
    
    
    
    
    
    
    
    5,196Current maturities of long-term debt
    
    
    422
    
    
    
    
    
    
    
    363
    
    
    
    59
    
    
    
    Accrued expenses and other current
liabilities
    
    
    85,730
    
    
    
    
    
    
    
    8,356
    
    
    
    73,448
    
    
    
    3,926Total current liabilities
    
    
    215,767
    
    
    
    
    
    
    
    32,862
    
    
    
    159,914
    
    
    
    22,991Long-term debt, less current maturities
    
    
    418,025
    
    
    
    
    
    
    
    417,573
    
    
    
    452
    
    
    
    Pension and other postretirement liabilities
    
    
    79,832
    
    
    
    
    
    
    
    10,336
    
    
    
    68,276
    
    
    
    1,220Deferred tax liabilities
    
    
    3,560
    
    
    
    
    
    
    
    18,406
    
    
    
    (15,500
    )
    
    
    654Due to Holdco
    
    
    17,535
    
    
    
    
    
    
    
    17,535
    
    
    
    
    
    
    
    Other long-term liabilities
    
    
    2,540
    
    
    
    
    
    
    
    
    
    
    
    1,732
    
    
    
    808Intercompany payables (receivables)
    
    
    
    
    
    
    
    
    
    
    (237,040
    )
    
    
    207,173
    
    
    
    29,867Total equity
    
    
    262,563
    
    
    
    (253,698
    )
    
    
    260,073
    
    
    
    209,567
    
    
    
    46,621Total liabilities and equity
    
    $
    999,822
    
    
    $
    (253,698
    )
    
    $
    519,745
    
    
    $
    631,614
    
    
    $
    102,161
 21




---



##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements
 Note Q (continued)
 Consolidating Condensed Income Statement
Three Months Ended June 30, 2009  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsNet sales
    
    $
    217,422
    
    
    $
    (25,487
    )
    
    $
    
    
    
    $
    206,666
    
    
    $
    36,243Cost of sales
    
    
    169,150
    
    
    
    (25,487
    )
    
    
    
    
    
    
    162,586
    
    
    
    32,051Gross profit
    
    
    48,272
    
    
    
    
    
    
    
    
    
    
    
    44,080
    
    
    
    4,192Operating
(expense) incomeSelling and warehousing
    
    
    (14,086
    )
    
    
    
    
    
    
    15
    
    
    
    (12,720
    )
    
    
    (1,381
    )General and administrative
    
    
    (11,567
    )
    
    
    
    
    
    
    (3,641
    )
    
    
    (6,576
    )
    
    
    (1,350
    )Amortization of acquired
intangible assets
    
    
    (1,481
    )
    
    
    
    
    
    
    2
    
    
    
    (1,459
    )
    
    
    (24
    )Restructuring
gain (losses)
    
    
    598
    
    
    
    
    
    
    
    
    
    
    
    (151
    )
    
    
    749Operating income (loss)
    
    
    21,736
    
    
    
    
    
    
    
    (3,624
    )
    
    
    23,174
    
    
    
    2,186Other (expense) incomeInterest expense, net
    
    
    (7,793
    )
    
    
    
    
    
    
    (7,733
    )
    
    
    (6
    )
    
    
    (54
    )Intercompany interest
    
    
    
    
    
    
    
    
    
    
    6,636
    
    
    
    (6,505
    )
    
    
    (131
    )Management fee expense
    
    
    (500
    )
    
    
    
    
    
    
    (500
    )
    
    
    
    
    
    
    Miscellaneous, net
    
    
    (1,669
    )
    
    
    
    
    
    
    
    
    
    
    (1,669
    )
    
    
    Income (loss) before income taxes
    
    
    11,774
    
    
    
    
    
    
    
    (5,221
    )
    
    
    14,994
    
    
    
    2,001Income tax (expense) benefit
    
    
    (4,361
    )
    
    
    
    
    
    
    1,456
    
    
    
    (4,936
    )
    
    
    (881
    )Increase (decrease) before equity
in earnings of subsidiaries
    
    
    7,413
    
    
    
    
    
    
    
    (3,765
    )
    
    
    10,058
    
    
    
    1,120Equity in earnings of subsidiaries
    
    
    
    
    
    
    (11,866
    )
    
    
    11,253
    
    
    
    613
    
    
    
    Net income (loss)
    
    
    7,413
    
    
    
    (11,866
    )
    
    
    7,488
    
    
    
    10,671
    
    
    
    1,120Less: Loss attributable to
noncontrolling interest
    
    
    (75
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (75
    )Net income (loss)
attributable to United
Components, Inc.
    
    $
    7,488
    
    
    $
    (11,866
    )
    
    $
    7,488
    
    
    $
    10,671
    
    
    $
    1,195
 22




---



##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements
 Note Q (continued)
 Consolidating Condensed Income Statement
Six Months Ended June 30, 2009  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsNet sales
    
    $
    437,284
    
    
    $
    (55,116
    )
    
    $
    
    
    
    $
    415,843
    
    
    $
    76,557Cost of sales
    
    
    348,748
    
    
    
    (55,116
    )
    
    
    
    
    
    
    335,593
    
    
    
    68,271Gross profit
    
    
    88,536
    
    
    
    
    
    
    
    
    
    
    
    80,250
    
    
    
    8,286Operating (expense) incomeSelling and warehousing
    
    
    (28,384
    )
    
    
    
    
    
    
    (159
    )
    
    
    (25,569
    )
    
    
    (2,656
    )General and administrative
    
    
    (23,463
    )
    
    
    
    
    
    
    (7,939
    )
    
    
    (12,873
    )
    
    
    (2,651
    )Amortization of acquired intangible assets
    
    
    (2,961
    )
    
    
    
    
    
    
    2
    
    
    
    (2,939
    )
    
    
    (24
    )Restructuring gains (costs), net
    
    
    393
    
    
    
    
    
    
    
    
    
    
    
    (356
    )
    
    
    749Operating income (loss)
    
    
    34,121
    
    
    
    
    
    
    
    (8,096
    )
    
    
    38,513
    
    
    
    3,704Other (expense) incomeInterest expense, net
    
    
    (15,792
    )
    
    
    
    
    
    
    (15,668
    )
    
    
    (13
    )
    
    
    (111
    )Intercompany interest
    
    
    
    
    
    
    
    
    
    
    13,048
    
    
    
    (12,757
    )
    
    
    (291
    )Management fee expense
    
    
    (1,000
    )
    
    
    
    
    
    
    (1,000
    )
    
    
    
    
    
    
    Miscellaneous, net
    
    
    (3,154
    )
    
    
    
    
    
    
    
    
    
    
    (3,154
    )
    
    
    Income (loss) before income taxes
    
    
    14,175
    
    
    
    
    
    
    
    (11,716
    )
    
    
    22,589
    
    
    
    3,302Income tax (expense) benefit
    
    
    (5,496
    )
    
    
    
    
    
    
    4,765
    
    
    
    (8,738
    )
    
    
    (1,523
    )Increase (decrease) before equity in earnings of
subsidiaries
    
    
    8,679
    
    
    
    
    
    
    
    (6,951
    )
    
    
    13,851
    
    
    
    1,779Equity in earnings of subsidiaries
    
    
    
    
    
    
    (17,514
    )
    
    
    16,009
    
    
    
    1,505
    
    
    
    Net income (loss)
    
    
    8,679
    
    
    
    (17,514
    )
    
    
    9,058
    
    
    
    15,356
    
    
    
    1,779Less: Loss attributable to noncontrolling interest
    
    
    (379
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (379
    )Net income (loss) attributable to United
Components, Inc.
    
    $
    9,058
    
    
    $
    (17,514
    )
    
    $
    9,058
    
    
    $
    15,356
    
    
    $
    2,158
 23




---



##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements
 Note Q (continued)
 Consolidating Condensed Income Statement
Three Months Ended June 30, 2008  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsNet sales
    
    $
    229,269
    
    
    $
    (26,970
    )
    
    $
    
    
    
    $
    218,169
    
    
    $
    38,070Cost of sales
    
    
    182,579
    
    
    
    (26,970
    )
    
    
    
    
    
    
    172,029
    
    
    
    37,520Gross profit
    
    
    46,690
    
    
    
    
    
    
    
    
    
    
    
    46,140
    
    
    
    550Operating expenseSelling and warehousing
    
    
    (16,026
    )
    
    
    
    
    
    
    (45
    )
    
    
    (14,415
    )
    
    
    (1,566
    )General and administrative
    
    
    (12,811
    )
    
    
    
    
    
    
    (4,745
    )
    
    
    (6,632
    )
    
    
    (1,434
    )Amortization of acquired intangible assets
    
    
    (1,664
    )
    
    
    
    
    
    
    
    
    
    
    (1,664
    )
    
    
    Restructuring costs
    
    
    (125
    )
    
    
    
    
    
    
    
    
    
    
    (125
    )
    
    
    Operating income (loss)
    
    
    16,064
    
    
    
    
    
    
    
    (4,790
    )
    
    
    23,304
    
    
    
    (2,450
    )Other (expense) incomeInterest expense, net
    
    
    (8,414
    )
    
    
    
    
    
    
    (8,398
    )
    
    
    (8
    )
    
    
    (8
    )Intercompany interest
    
    
    
    
    
    
    
    
    
    
    7,125
    
    
    
    (6,925
    )
    
    
    (200
    )Management fee expense
    
    
    (500
    )
    
    
    
    
    
    
    (500
    )
    
    
    
    
    
    
    Miscellaneous, net
    
    
    (982
    )
    
    
    
    
    
    
    
    
    
    
    (955
    )
    
    
    (27
    )Income (loss) before income taxes
    
    
    6,168
    
    
    
    
    
    
    
    (6,563
    )
    
    
    15,416
    
    
    
    (2,685
    )Income tax (expense) benefit
    
    
    (2,432
    )
    
    
    
    
    
    
    2,663
    
    
    
    (5,854
    )
    
    
    759Increase (decrease) before equity in earnings of
Subsidiaries
    
    
    3,736
    
    
    
    
    
    
    
    (3,900
    )
    
    
    9,562
    
    
    
    (1,926
    )Equity in earnings of subsidiaries
    
    
    
    
    
    
    (5,342
    )
    
    
    7,927
    
    
    
    (2,585
    )
    
    
    Net income (loss)
    
    
    3,736
    
    
    
    (5,342
    )
    
    
    4,027
    
    
    
    6,977
    
    
    
    (1,926
    )Less: Loss attributable to noncontrolling interest
    
    
    (291
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (291
    )Net income (loss) attributable to United
Components, Inc.
    
    $
    4,027
    
    
    $
    (5,342
    )
    
    $
    4,027
    
    
    $
    6,977
    
    
    $
    (1,635
    )
 24




---



##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements
 Note Q (continued)
 Consolidating Condensed Income Statement
Six Months Ended June 30, 2008  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsNet sales
    
    $
    458,559
    
    
    $
    (47,162
    )
    
    $
    
    
    
    $
    433,767
    
    
    $
    71,954Cost of sales
    
    
    360,809
    
    
    
    (47,162
    )
    
    
    
    
    
    
    338,371
    
    
    
    69,600Gross profit
    
    
    97,750
    
    
    
    
    
    
    
    
    
    
    
    95,396
    
    
    
    2,354Operating expenseSelling and warehousing
    
    
    (31,531
    )
    
    
    
    
    
    
    (440
    )
    
    
    (28,260
    )
    
    
    (2,831
    )General and administrative
    
    
    (25,339
    )
    
    
    
    
    
    
    (8,687
    )
    
    
    (13,831
    )
    
    
    (2,821
    )Amortization of acquired intangible assets
    
    
    (3,257
    )
    
    
    
    
    
    
    
    
    
    
    (3,257
    )
    
    
    Restructuring costs
    
    
    (488
    )
    
    
    
    
    
    
    
    
    
    
    (488
    )
    
    
    Operating income (loss)
    
    
    37,135
    
    
    
    
    
    
    
    (9,127
    )
    
    
    49,560
    
    
    
    (3,298
    )Other (expense) incomeInterest expense, net
    
    
    (17,556
    )
    
    
    
    
    
    
    (17,444
    )
    
    
    (15
    )
    
    
    (97
    )Intercompany interest
    
    
    
    
    
    
    
    
    
    
    14,311
    
    
    
    (13,886
    )
    
    
    (425
    )Management fee expense
    
    
    (1,000
    )
    
    
    
    
    
    
    (1,000
    )
    
    
    
    
    
    
    Miscellaneous, net
    
    
    (1,509
    )
    
    
    
    
    
    
    
    
    
    
    (1,483
    )
    
    
    (26
    )Income (loss) before income taxes
    
    
    17,070
    
    
    
    
    
    
    
    (13,260
    )
    
    
    34,176
    
    
    
    (3,846
    )Income tax (expense) benefit
    
    
    (6,608
    )
    
    
    
    
    
    
    5,145
    
    
    
    (12,795
    )
    
    
    1,042Increase (decrease) before equity in earnings of
subsidiaries
    
    
    10,462
    
    
    
    
    
    
    
    (8,115
    )
    
    
    21,381
    
    
    
    (2,804
    )Equity in earnings of subsidiaries
    
    
    
    
    
    
    (15,240
    )
    
    
    18,897
    
    
    
    (3,657
    )
    
    
    Net income (loss)
    
    
    10,462
    
    
    
    (15,240
    )
    
    
    10,782
    
    
    
    17,724
    
    
    
    (2,804
    )Less: Loss attributable to noncontrolling interest
    
    
    (320
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (320
    )Net income (loss) attributable to United
Components, Inc.
    
    $
    10,782
    
    
    $
    (15,240
    )
    
    $
    10,782
    
    
    $
    17,724
    
    
    $
    (2,484
    )
 25




---



##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements
 Note Q (continued)
 Consolidating Condensed Statement of Cash Flows
Six Months Ended June 30, 2009  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsNet cash provided by (used in) operating
activities
    
    $
    78,059
    
    
    $
    
    
    
    $
    (4,961
    )
    
    $
    65,300
    
    
    $
    17,720Cash flows from investing activities:Capital expenditures
    
    
    (7,530
    )
    
    
    
    
    
    
    (339
    )
    
    
    (5,180
    )
    
    
    (2,011
    )Proceeds from sale of property, plant and
equipment
    
    
    2,436
    
    
    
    
    
    
    
    
    
    
    
    21
    
    
    
    2,415Increase in restricted cash
    
    
    (9,400
    )
    
    
    
    
    
    
    
    
    
    
    (9,400
    )
    
    
    Net cash (used in) provided by investing
activities
    
    
    (14,494
    )
    
    
    
    
    
    
    (339
    )
    
    
    (14,559
    )
    
    
    404Cash flows from financing activities:Issuances of debt
    
    
    6,543
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,543Debt repayments
    
    
    (26,177
    )
    
    
    
    
    
    
    (20,201
    )
    
    
    (29
    )
    
    
    (5,947
    )Change in intercompany indebtedness
    
    
    
    
    
    
    
    
    
    
    68,547
    
    
    
    (51,601
    )
    
    
    (16,946
    )Net cash (used in) provided by financing
activities
    
    
    (19,634
    )
    
    
    
    
    
    
    48,346
    
    
    
    (51,630
    )
    
    
    (16,350
    )Effect of currency exchange rate changes on
cash
    
    
    102
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102Net increase (decrease) in cash and cash
equivalents
    
    
    44,033
    
    
    
    
    
    
    
    43,046
    
    
    
    (889
    )
    
    
    1,876Cash and cash equivalents at beginning of year
    
    
    46,612
    
    
    
    
    
    
    
    39,061
    
    
    
    860
    
    
    
    6,691Cash and cash equivalents at end of period
    
    $
    90,645
    
    
    $
    
    
    
    $
    82,107
    
    
    $
    (29
    )
    
    $
    8,567
 26




---



##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements
 Note Q (continued)
 Consolidating Condensed Statement of Cash Flows
Six Months Ended June 30, 2008  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsNet cash provided by (used in) operating
activities
    
    $
    30,046
    
    
    $
    
    
    
    $
    (860
    )
    
    $
    33,805
    
    
    $
    (2,899
    )Cash flows from investing activities:Capital expenditures
    
    
    (17,274
    )
    
    
    
    
    
    
    (23
    )
    
    
    (10,063
    )
    
    
    (7,188
    )Proceeds from sale of property, plant and
equipment
    
    
    261
    
    
    
    
    
    
    
    
    
    
    
    91
    
    
    
    170Net cash used in investing activities
    
    
    (17,013
    )
    
    
    
    
    
    
    (23
    )
    
    
    (9,972
    )
    
    
    (7,018
    )Cash flows from financing activities:Issuances of debt
    
    
    1,249
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,249Debt repayments
    
    
    (20,718
    )
    
    
    
    
    
    
    (10,206
    )
    
    
    (30
    )
    
    
    (10,482
    )Change in intercompany indebtedness
    
    
    
    
    
    
    
    
    
    
    6,181
    
    
    
    (25,915
    )
    
    
    19,734Net cash (used in) provided by financing
activities
    
    
    (19,469
    )
    
    
    
    
    
    
    (4,025
    )
    
    
    (25,945
    )
    
    
    10,501Effect of currency exchange rate changes on
cash
    
    
    186
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    186Net (decrease) increase in cash and cash
equivalents
    
    
    (6,250
    )
    
    
    
    
    
    
    (4,908
    )
    
    
    (2,112
    )
    
    
    770Cash and cash equivalents at beginning of year
    
    
    41,440
    
    
    
    
    
    
    
    36,684
    
    
    
    1,234
    
    
    
    3,522Cash and cash equivalents at end of period
    
    $
    35,190
    
    
    $
    
    
    
    $
    31,776
    
    
    $
    (878
    )
    
    $
    4,292
 27




---



##### 



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  Forward-Looking Statements
    Overview
 Sales.
   28




---



##### 



Cost of sales
  29




---



##### 



Selling and warehousing expenses
 General and administrative expenses
 30




---



##### 



Critical Accounting Policies and Estimates
   Inventory
 Revenue recognition
     Product returns.
 Impairment of intangible assets
 31




---



##### 



Retirement benefits
  Insurance reserves.
 Environmental expenditures
  32




---



##### 



Results of Operations
  Three Months ended June 30,
    
    
    Six Months ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net sales
    
    $
    217,422
    
    
    $
    229,269
    
    
    $
    437,284
    
    
    $
    458,559Cost of sales
    
    
    169,150
    
    
    
    182,579
    
    
    
    348,748
    
    
    
    360,809Gross profit
    
    
    48,272
    
    
    
    46,690
    
    
    
    88,536
    
    
    
    97,750Operating (expense) incomeSelling and warehousing
    
    
    (14,086
    )
    
    
    (16,026
    )
    
    
    (28,384
    )
    
    
    (31,531
    )General and administrative
    
    
    (11,567
    )
    
    
    (12,811
    )
    
    
    (23,463
    )
    
    
    (25,339
    )Amortization of acquired intangible assets
    
    
    (1,481
    )
    
    
    (1,664
    )
    
    
    (2,961
    )
    
    
    (3,257
    )Restructuring gains (costs), net
    
    
    598
    
    
    
    (125
    )
    
    
    393
    
    
    
    (488
    )Operating income
    
    
    21,736
    
    
    
    16,064
    
    
    
    34,121
    
    
    
    37,135Other expenseInterest expense, net
    
    
    (7,793
    )
    
    
    (8,414
    )
    
    
    (15,792
    )
    
    
    (17,556
    )Management fee expense
    
    
    (500
    )
    
    
    (500
    )
    
    
    (1,000
    )
    
    
    (1,000
    )Miscellaneous, net
    
    
    (1,669
    )
    
    
    (982
    )
    
    
    (3,154
    )
    
    
    (1,509
    )Income before income taxes
    
    
    11,774
    
    
    
    6,168
    
    
    
    14,175
    
    
    
    17,070Income tax expense
    
    
    (4,361
    )
    
    
    (2,432
    )
    
    
    (5,496
    )
    
    
    (6,608
    )Net income
    
    
    7,413
    
    
    
    3,736
    
    
    
    8,679
    
    
    
    10,462Less: Loss attributable to noncontrolling interest
    
    
    (75
    )
    
    
    (291
    )
    
    
    (379
    )
    
    
    (320
    )Net income attributable to United
Components, Inc.
    
    $
    7,488
    
    
    $
    4,027
    
    
    $
    9,058
    
    
    $
    10,782
 Three Months Ended June 30, 2009 compared with the Three Months Ended June 30, 2008
 Net sales
  Gross profit.
 33




---



##### 



Selling and warehousing expenses
 General and administrative expenses
 Restructuring gains (costs), net
 Interest expense, net
 Miscellaneous,
net.
 Income tax expense
 Net income
 Net income attributable to United Components, Inc.
 Six Months Ended June 30, 2009 compared with the Six Months Ended June 30, 2008
 Net sales
 34




---



##### 



Gross profit.
   Selling and warehousing expenses
 General and administrative expenses
 Restructuring gains (costs), net
 Interest expense, net
 Miscellaneous, net.
 35




---



##### 



Income tax expense
 Net income
 Net income attributable to United Components, Inc.
 Liquidity and Capital Resources
 Historical Cash Flows
 Net cash provided by operating activities
 Net cash used in investing activities
   36




---



##### 



Net cash used in financing activities
    Current Debt Capitalization and Scheduled Maturities
  June 30,
    
    
    December 31,2009
    
    
    2008Short-term borrowings
    
    $
    5.8
    
    
    $
    5.2Revolving credit line borrowings
    
    
    
    
    
    
    20.0Capitalized leases
    
    
    1.0
    
    
    
    1.2Term loan
    
    
    190.0
    
    
    
    190.0Senior subordinated notes
    
    
    230.0
    
    
    
    230.0Amount of debt requiring repayment
    
    
    426.8
    
    
    
    446.4Unamortized debt discount
    
    
    (2.5
    )
    
    
    (2.8
    )$
    424.3
    
    
    $
    443.6
     Remainder of 2009
    
    $
    6.02010
    
    
    0.22011
    
    
    45.22012
    
    
    145.22013
    
    
    230.1Thereafter
    
    
    0.1$
    426.8
 37




---



##### 



Managements Action Plan and Outlook
  Revolving
Credit Facility
   Accounts
Receivable Factoring
   38




---



##### 



Short-Term
Liquidity Outlook
   
    
    Employment cost savings  We have implemented hourly and salaried workforce reductions
across all overhead and selling, general and administrative cost centers to align staffing
levels with current business levels. At June 30, 2009, we had approximately 4,400 employees
as compared to approximately 4,900 at December 31, 2008. Additionally, we have implemented
wage freezes, suspended certain matching contributions to defined contribution and profit
sharing plans and other cost reduction activities.
 
    
    Additional cost savings  We have critically evaluated overall overhead and selling,
general and administrative discretionary spending and have instituted zero-based
discretionary spending, requiring additional approvals for all such spending across the
Company.
    Long-Term
Liquidity Outlook
  Covenant Compliance
  39




---



##### 



Covenant
    
    ActualCompliance Level
    
    RatioMinimum Adjusted EBITDA to interest expense ratio
    
    
    2.65x
    
    
    
    3.32xMaximum total debt to Adjusted EBITDA ratio
    
    
    4.50x
    
    
    
    4.12x
  MinimumAdjusted
    
    MaximumEBITDA
    
    Total Debtto
    
    toInterest
    
    AdjustedExpense
    
    EBITDACovenant
    
    CovenantCompliance
    
    ComplianceLevel
    
    LevelQuarter ending September 30, 2009
    
    
    2.75x
    
    
    
    4.40xQuarter ending December 31, 2009
    
    
    2.80x
    
    
    
    4.10xQuarter ending March 31, 2010
    
    
    3.00x
    
    
    
    3.75xQuarter ending June 30, 2010
    
    
    3.00x
    
    
    
    3.75xQuarter ending September 30, 2010 and thereafter
    
    
    3.00x
    
    
    
    3.50x
     40




---



##### 



dollars in millions
 Trailing FourSix Months
    
    
    Quartersended
    
    
    endedJune 30, 2009
    
    
    June 30, 2009Net income attributable to United Components, Inc.
    
    $
    9.1
    
    
    $
    8.2Interest, net of noncontrolling interest
    
    
    15.8
    
    
    
    32.5Income tax expense, net of noncontrolling interest
    
    
    5.5
    
    
    
    6.8Depreciation, net of noncontrolling interest
    
    
    14.2
    
    
    
    28.0Amortization
    
    
    4.3
    
    
    
    8.8EBITDA
    
    
    48.9
    
    
    
    84.3Special items:Restructuring (gains) costs, net
    
    
    (0.4
    )
    
    
    1.5Reduction in force severance
    
    
    2.2
    
    
    
    2.6Establishment of new facilities in China
    
    
    0.5
    
    
    
    1.4Cost to defend antitrust litigation
    
    
    0.8
    
    
    
    3.3Trademark impairment loss
    
    
    
    
    
    
    0.5One-time warranty expense
    
    
    
    
    
    
    0.9New business
changeover costs and sales commitment costs
    
    
    3.5
    
    
    
    6.6Non-cash charges (stock options expense)
    
    
    0.2
    
    
    
    0.6Management fee
    
    
    1.0
    
    
    
    2.0Adjusted EBITDA
    
    $
    56.7
    
    
    $
    103.7
 CONTINGENCIES
 Environmental
   Antitrust Litigation
  41




---



##### 



Value-added Tax Receivable
  Other Litigation
  RECENT ACCOUNTING PRONOUNCEMENTS, NOT YET ADOPTED
  FASB Accounting Standards Codification
 42




---



##### 



Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
  Foreign Currency Exposure
 Currency translation.
  Currency transactions.
    43




---



##### 



Interest Rate Risk
  Treasury Policy
  
 Item 4.
    
    Controls and Procedures
  Changes in Internal Control over Financial Reporting
     44




---



##### 



PART II
 OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
      
 Item 1.A.
    
    Risk Factors
  
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3.
    
    Default Upon Senior Securities
  
 Item 4.
    
    Submission of Matters to Vote of Security Holders
  
 Item 5.
    
    Other Information
  45




---



##### 



Item 6.
    
    Exhibits
 Exhibit 31.1
    
    Certification of Periodic Report by the Chief Executive
Officer pursuant to Rule 13a-14(a) of the Securities Exchange
Act of 1934.Exhibit 31.2
    
    Certification of Periodic Report by the Chief Financial
Officer pursuant to Rule 13a-14(a) of the Securities Exchange
Act of 1934.Exhibit 32
    
    Certification of Periodic Report by the Chief Executive
Officer and Chief Financial Officer pursuant to 18 U.S.C.
1350, as created by Section 906 of the Sarbanes-Oxley Act of
2002.*
 
 *
    
    This certificate is being furnished solely to accompany the report pursuant to 18 U.S.C. 1350
and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, and is not to be incorporated by reference into any filing of UCI, whether made
before or after the date hereof, regardless of any general incorporation language in such
filing. 46




---



##### 



SIGNATURES
  UNITED COMPONENTS, INC.Date: August 14, 2009
    
    By:
    
    /s/ DANIEL J. JOHNSTONName: Daniel J. JohnstonTitle: Chief Financial Officer and
Authorized Representative
 47