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 September 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
    
    04-3759857(State or Other Jurisdiction of
    
    (I.R.S. Employer Identification No.)Incorporation or Organization)14601 Highway 41 NorthEvansville, Indiana
    
    47725(Address of Principal Executive Offices)
    
    (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 INFORMATIONItem 1. Financial Statements (unaudited)
    
    
    
    3Condensed consolidated balance sheets  September 30, 2009 and December 31, 2008
    
    
    
    3Condensed consolidated income statements  Three and nine months ended September 30, 2009 and 2008
    
    
    
    4Condensed consolidated statements of cash flows  Nine months ended September 30, 2009 and 2008
    
    
    
    5Condensed consolidated statements of changes in equity  Nine months ended September 30, 2009 and 2008
    
    
    
    6Notes to condensed consolidated financial statements
    
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    
    27Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    
    42Item 4. Controls and Procedures
    
    
    
    43Part II OTHER INFORMATION
    
    
    
    44Item 1. Legal Proceedings
    
    
    
    44Item 1A. Risk Factors
    
    
    
    44Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    
    44Item 3. Default Upon Senior Securities
    
    
    
    44Item 4. Submission of Matters to Vote of Security Holders
    
    
    
    44Item 5. Other Information
    
    
    
    44Item 6. Exhibits
    
    
    
    44Signatures
    
    
    
    45Exhibits
 2




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##### 



PART I
FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements
 United Components, Inc.
Condensed Consolidated Balance Sheets  (in thousands)
 September 30,
    
    
    December 31,2009
    
    
    2008(unaudited)
    
    
    (audited)AssetsCurrent assetsCash and cash equivalents
    
    $
    115,065
    
    
    $
    46,612Accounts receivable, net
    
    
    271,209
    
    
    
    261,624Inventories, net
    
    
    128,312
    
    
    
    159,444Deferred tax assets
    
    
    26,171
    
    
    
    24,245Other current assets
    
    
    21,285
    
    
    
    19,452Total current assets
    
    
    562,042
    
    
    
    511,377Property, plant and equipment, net
    
    
    154,938
    
    
    
    167,906Goodwill
    
    
    241,461
    
    
    
    241,461Other intangible assets, net
    
    
    68,516
    
    
    
    74,606Deferred financing costs, net
    
    
    2,004
    
    
    
    2,649Restricted cash
    
    
    9,400
    
    
    
    Other long-term assets
    
    
    6,028
    
    
    
    1,823Total assets
    
    $
    1,044,389
    
    
    $
    999,822Liabilities and equityCurrent liabilitiesAccounts payable
    
    $
    105,800
    
    
    $
    104,416Short-term borrowings
    
    
    6,111
    
    
    
    25,199Current maturities of long-term debt
    
    
    262
    
    
    
    422Accrued expenses and other current liabilities
    
    
    110,425
    
    
    
    85,730Total current liabilities
    
    
    222,598
    
    
    
    215,767Long-term debt, less current maturities
    
    
    418,333
    
    
    
    418,025Pension and other postretirement liabilities
    
    
    74,970
    
    
    
    79,832Deferred tax liabilities
    
    
    6,526
    
    
    
    3,560Due to Holdco
    
    
    26,405
    
    
    
    17,535Other long-term liabilities
    
    
    7,970
    
    
    
    2,540Total liabilities
    
    
    756,802
    
    
    
    737,259Contingencies  Note JEquityUnited Components, Inc. shareholders equityCommon stock
    
    
    
    
    
    
    Additional paid in capital
    
    
    278,648
    
    
    
    278,430Retained earnings
    
    
    43,415
    
    
    
    21,243Accumulated other comprehensive loss
    
    
    (36,455
    )
    
    
    (39,600
    )Total United Components, Inc. shareholders equity
    
    
    285,608
    
    
    
    260,073Noncontrolling interest
    
    
    1,979
    
    
    
    2,490Total equity
    
    
    287,587
    
    
    
    262,563Total liabilities and equity
    
    $
    1,044,389
    
    
    $
    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 September 30,
    
    
    Nine Months ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net sales
    
    $
    228,913
    
    
    $
    218,136
    
    
    $
    666,197
    
    
    $
    676,695Cost of sales
    
    
    173,099
    
    
    
    170,621
    
    
    
    521,847
    
    
    
    531,430Gross profit
    
    
    55,814
    
    
    
    47,515
    
    
    
    144,350
    
    
    
    145,265Operating expenseSelling and warehousing
    
    
    (14,051
    )
    
    
    (15,679
    )
    
    
    (42,435
    )
    
    
    (47,210
    )General and administrative
    
    
    (11,058
    )
    
    
    (13,028
    )
    
    
    (34,521
    )
    
    
    (38,367
    )Amortization of acquired intangible assets
    
    
    (1,398
    )
    
    
    (1,545
    )
    
    
    (4,359
    )
    
    
    (4,802
    )Restructuring costs, net (Note B)
    
    
    (394
    )
    
    
    (196
    )
    
    
    (1
    )
    
    
    (684
    )Operating income
    
    
    28,913
    
    
    
    17,067
    
    
    
    63,034
    
    
    
    54,202Other expenseInterest expense, net
    
    
    (7,220
    )
    
    
    (8,282
    )
    
    
    (23,012
    )
    
    
    (25,838
    )Management fee expense
    
    
    (500
    )
    
    
    (500
    )
    
    
    (1,500
    )
    
    
    (1,500
    )Miscellaneous, net
    
    
    (1,011
    )
    
    
    (920
    )
    
    
    (4,165
    )
    
    
    (2,429
    )Income before income taxes
    
    
    20,182
    
    
    
    7,365
    
    
    
    34,357
    
    
    
    24,435Income tax expense
    
    
    (7,200
    )
    
    
    (3,164
    )
    
    
    (12,696
    )
    
    
    (9,772
    )Net income
    
    
    12,982
    
    
    
    4,201
    
    
    
    21,661
    
    
    
    14,663Less: Loss attributable to noncontrolling interest
    
    
    (132
    )
    
    
    (239
    )
    
    
    (511
    )
    
    
    (559
    )Net income attributable to United Components, Inc.
    
    $
    13,114
    
    
    $
    4,440
    
    
    $
    22,172
    
    
    $
    15,222
 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)
 Nine Months ended September 30,2009
    
    
    2008Cash flows from operating activitiesNet income attributable to United Components, Inc.
    
    $
    22,172
    
    
    $
    15,222Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization of other intangible assets
    
    
    27,994
    
    
    
    27,397Amortization of deferred financing costs and debt discount
    
    
    1,119
    
    
    
    1,280Deferred income taxes
    
    
    (565
    )
    
    
    391Other non-cash, net
    
    
    (606
    )
    
    
    270Changes in operating assets and liabilities:Accounts receivable
    
    
    (9,179
    )
    
    
    (8,649
    )Inventories
    
    
    31,587
    
    
    
    (26,710
    )Other current assets
    
    
    (1,765
    )
    
    
    12,297Accounts payable
    
    
    1,128
    
    
    
    1,022Accrued expenses and other current liabilities
    
    
    24,562
    
    
    
    (3,326
    )Other long-term assets
    
    
    711
    
    
    
    118Due to Holdco
    
    
    8,870
    
    
    
    5,563Other long-term liabilities
    
    
    (409
    )
    
    
    (324
    )Net cash provided by operating activities
    
    
    105,619
    
    
    
    24,551Cash flows from investing activitiesCapital expenditures
    
    
    (10,893
    )
    
    
    (25,977
    )Proceeds from sale of property, plant and equipment
    
    
    2,483
    
    
    
    366Increase in restricted cash
    
    
    (9,400
    )
    
    
    Net cash used in investing activities
    
    
    (17,810
    )
    
    
    (25,611
    )Cash flows from financing activitiesIssuances of debt
    
    
    9,728
    
    
    
    22,798Debt repayments
    
    
    (29,142
    )
    
    
    (21,718
    )Net cash (used in) provided by financing activities
    
    
    (19,414
    )
    
    
    1,080Effect of currency exchange rate changes on cash
    
    
    58
    
    
    
    68Net increase in cash and cash equivalents
    
    
    68,453
    
    
    
    88Cash and cash equivalents at beginning of year
    
    
    46,612
    
    
    
    41,440Cash and cash equivalents at end of period
    
    $
    115,065
    
    
    $
    41,528
 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
    
    
    
    
    
    
    687
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    687Tax effect of exercise of Holdco stock options
    
    
    
    
    
    
    (144
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (144
    )Comprehensive incomeNet income (loss)
    
    
    
    
    
    
    
    
    
    
    15,222
    
    
    
    
    
    
    
    (559
    )
    
    
    14,663
    
    
    $
    14,663Other comprehensive incomeInterest rate swaps (after $3 
of income taxes)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    4
    
    
    
    4Foreign currency adjustment (after $(104) of
income taxes)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (322
    )
    
    
    
    
    
    
    (322
    )
    
    
    (322
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    14,345Balance at September 30, 2008
    
    $
    
    
    
    $
    278,284
    
    
    $
    26,538
    
    
    $
    6,444
    
    
    $
    2,749
    
    
    $
    314,015Balance at January 1, 2009
    
    $
    
    
    
    $
    278,430
    
    
    $
    21,243
    
    
    $
    (39,600
    )
    
    $
    2,490
    
    
    $
    262,563Recognition of stock based compensation expense
    
    
    
    
    
    
    218
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    218Comprehensive incomeNet income (loss)
    
    
    
    
    
    
    
    
    
    
    22,172
    
    
    
    
    
    
    
    (511
    )
    
    
    21,661
    
    
    $
    21,661Other comprehensive incomeForeign currency adjustment (after $96 of
income taxes)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    711
    
    
    
    
    
    
    
    711
    
    
    
    711Pension liability (after $1,505 of income
taxes)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,434
    
    
    
    
    
    
    
    2,434
    
    
    
    2,434Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    24,806Balance at September 30, 2009
    
    $
    
    
    
    $
    278,648
    
    
    $
    43,415
    
    
    $
    (36,455
    )
    
    $
    1,979
    
    
    $
    287,587
 The accompanying notes are an integral part of these statements.
 6




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##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
 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 (unaudited)
 NOTE B  RESTRUCTURING COSTS
 2009 Capacity Consolidation and European Realignment Actions
  Costs of Previously Closed Water Pump Facility
  NOTE C  SALES OF RECEIVABLES
    NOTE D  INVENTORIES
  September 30,
    
    
    December 31,2009
    
    
    2008Raw materials
    
    $
    44.6
    
    
    $
    55.3Work in process
    
    
    26.0
    
    
    
    34.6Finished products
    
    
    74.3
    
    
    
    84.4Valuation reserves
    
    
    (16.6
    )
    
    
    (14.9
    )$
    128.3
    
    
    $
    159.4
 8




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##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
 NOTE E  RESTRICTED CASH
  NOTE F  ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
  September 30,
    
    
    December 31,2009
    
    
    2008Salaries and wages
    
    $
    4.4
    
    
    $
    2.7Bonuses and profit sharing
    
    
    6.6
    
    
    
    3.5Vacation pay
    
    
    4.5
    
    
    
    4.4Product returns
    
    
    36.5
    
    
    
    32.0Rebates, credits and discounts due customers
    
    
    14.8
    
    
    
    10.8Insurance
    
    
    12.3
    
    
    
    11.5Taxes payable
    
    
    8.2
    
    
    
    4.8Interest
    
    
    7.1
    
    
    
    2.1Other
    
    
    16.0
    
    
    
    13.9$
    110.4
    
    
    $
    85.7
 NOTE G  PRODUCT RETURNS LIABILITY
    Nine Months ended September 30,2009
    
    
    2008Beginning of year
    
    $
    32.0
    
    
    $
    28.1Cost of unsalvageable parts
    
    
    (37.6
    )
    
    
    (39.4
    )Additional reductions to sales
    
    
    42.1
    
    
    
    40.9End of period
    
    $
    36.5
    
    
    $
    29.6
 9




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##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
 NOTE H  PENSION
  Three Months ended September 30,
    
    
    Nine Months ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Service cost
    
    $
    1.1
    
    
    $
    1.2
    
    
    $
    3.4
    
    
    $
    3.8Interest cost
    
    
    3.3
    
    
    
    3.3
    
    
    
    9.8
    
    
    
    9.7Expected return on plan assets
    
    
    (3.6
    )
    
    
    (3.7
    )
    
    
    (10.9
    )
    
    
    (11.1
    )Amortization of prior service
cost and unrecognized loss
    
    
    0.1
    
    
    
    
    
    
    
    0.4
    
    
    
    0.1Curtailment loss
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    Special termination benefits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.2$
    0.9
    
    
    $
    0.8
    
    
    $
    2.9
    
    
    $
    2.7
   NOTE I  DEBT
  September 30,
    
    
    December 31,2009
    
    
    2008Short-term borrowings
    
    $
    6.1
    
    
    $
    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
    
    
    (2.4
    )
    
    
    (2.8
    )424.7
    
    
    
    443.6Less:Short-term borrowings
    
    
    6.1
    
    
    
    5.2Revolving credit line borrowings
    
    
    
    
    
    
    20.0Current maturities
    
    
    0.3
    
    
    
    0.4Long-term debt
    
    $
    418.3
    
    
    $
    418.0
  10




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##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
 Senior credit facility
 Term loan
   Revolving credit facility
   Covenants and other provisions
  Senior subordinated notes (the Notes)
 Short-term borrowings
 NOTE J  CONTINGENCIES
 Insurance Reserves
  11




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##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
 Environmental
   Antitrust Litigation
    12




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##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
         Value-added Tax Receivable
  13




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##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
 Patent Litigation
  Other Litigation
  NOTE K  GEOGRAPHIC INFORMATION
  Three Months ended September 30,
    
    
    Nine Months ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008United States
    
    $
    196.1
    
    
    $
    183.5
    
    
    $
    571.7
    
    
    $
    566.6Mexico
    
    
    6.0
    
    
    
    6.1
    
    
    
    18.3
    
    
    
    22.6Canada
    
    
    7.3
    
    
    
    7.3
    
    
    
    21.1
    
    
    
    23.2United Kingdom
    
    
    2.8
    
    
    
    2.7
    
    
    
    8.1
    
    
    
    10.2France
    
    
    1.6
    
    
    
    2.0
    
    
    
    5.9
    
    
    
    7.8Venezuela
    
    
    0.1
    
    
    
    2.0
    
    
    
    1.7
    
    
    
    3.5Germany
    
    
    1.6
    
    
    
    1.4
    
    
    
    3.9
    
    
    
    4.2Spain
    
    
    1.2
    
    
    
    1.2
    
    
    
    3.1
    
    
    
    3.5Other
    
    
    12.2
    
    
    
    11.9
    
    
    
    32.4
    
    
    
    35.1$
    228.9
    
    
    $
    218.1
    
    
    $
    666.2
    
    
    $
    676.7
  September 30,
    
    
    December 31,2009
    
    
    2008United States
    
    $
    198.6
    
    
    $
    201.5China
    
    
    30.4
    
    
    
    33.2Mexico
    
    
    8.7
    
    
    
    9.9Spain
    
    
    3.0
    
    
    
    2.3France
    
    
    0.1
    
    
    
    Goodwill
    
    
    241.5
    
    
    
    241.5$
    482.3
    
    
    $
    488.4
 14




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##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
 NOTE L  OTHER INFORMATION
   Three Months ended September 30,
    
    Nine Months ended September 30,2009
    
    2008
    
    2009
    
    2008Interest
    
    $
    1.6
    
    
    $
    2.7
    
    
    $
    16.9
    
    
    $
    20.2Income taxes (net of refunds)
    
    
    0.4
    
    
    
    (2.0
    )
    
    
    1.4
    
    
    
    (3.1
    )
   NOTE M  ADOPTION OF RECENTLY ISSUED ACCOUNTING GUIDANCE
 TM
 Business Combinations and Consolidation Accounting
   15




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##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
  Fair Value Accounting
    Other
  16




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##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
    NOTE N  RECENTLY ISSUED ACCOUNTING GUIDANCE, NOT YET ADOPTED
  NOTE O  FAIR VALUE ACCOUNTING
 Interest rate swap measured at fair value on a recurring basis
   Fair value of financial instruments
 Cash and cash equivalents
 17




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##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
 Trade accounts receivable
 Trade accounts payable
 Short-term borrowings
 Long-term debt
  Interest rate swaps
  NOTE P  GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS
    18




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##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
 Note P (continued)
 Consolidating Condensed Balance Sheet
September 30, 2009  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsAssetsCurrent assetsCash and cash equivalents
    
    $
    115,065
    
    
    $
    
    
    
    $
    104,867
    
    
    $
    49
    
    
    $
    10,149Accounts receivable, net
    
    
    271,209
    
    
    
    
    
    
    
    
    
    
    
    253,502
    
    
    
    17,707Inventories, net
    
    
    128,312
    
    
    
    
    
    
    
    
    
    
    
    110,787
    
    
    
    17,525Deferred tax assets
    
    
    26,171
    
    
    
    
    
    
    
    255
    
    
    
    26,294
    
    
    
    (378
    )Other current assets
    
    
    21,285
    
    
    
    
    
    
    
    3,956
    
    
    
    8,823
    
    
    
    8,506Total current assets
    
    
    562,042
    
    
    
    
    
    
    
    109,078
    
    
    
    399,455
    
    
    
    53,509Property, plant and equipment, net
    
    
    154,938
    
    
    
    
    
    
    
    812
    
    
    
    114,451
    
    
    
    39,675Investment in subsidiaries
    
    
    
    
    
    
    (297,626
    )
    
    
    268,388
    
    
    
    29,238
    
    
    
    Goodwill
    
    
    241,461
    
    
    
    
    
    
    
    241,461
    
    
    
    
    
    
    
    Other intangible assets, net
    
    
    68,516
    
    
    
    
    
    
    
    7,403
    
    
    
    60,945
    
    
    
    168Deferred financing costs, net
    
    
    2,004
    
    
    
    
    
    
    
    2,004
    
    
    
    
    
    
    
    Restricted cash
    
    
    9,400
    
    
    
    
    
    
    
    
    
    
    
    9,400
    
    
    
    Other long-term assets
    
    
    6,028
    
    
    
    
    
    
    
    367
    
    
    
    5,464
    
    
    
    197Total assets
    
    $
    1,044,389
    
    
    $
    (297,626
    )
    
    $
    629,513
    
    
    $
    618,953
    
    
    $
    93,549Liabilities and equityCurrent liabilitiesAccounts payable
    
    $
    105,800
    
    
    $
    
    
    
    $
    2,632
    
    
    $
    87,492
    
    
    $
    15,676Short-term borrowings
    
    
    6,111
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,111Current maturities of long-term debt
    
    
    262
    
    
    
    
    
    
    
    203
    
    
    
    59
    
    
    
    Accrued expenses and other current liabilities
    
    
    110,425
    
    
    
    
    
    
    
    16,532
    
    
    
    88,223
    
    
    
    5,670Total current liabilities
    
    
    222,598
    
    
    
    
    
    
    
    19,367
    
    
    
    175,774
    
    
    
    27,457Long-term debt, less current maturities
    
    
    418,333
    
    
    
    
    
    
    
    417,925
    
    
    
    408
    
    
    
    Pension and other postretirement liabilities
    
    
    74,970
    
    
    
    
    
    
    
    10,506
    
    
    
    63,279
    
    
    
    1,185Deferred tax liabilities
    
    
    6,526
    
    
    
    
    
    
    
    20,613
    
    
    
    (14,656
    )
    
    
    569Due to Holdco
    
    
    26,405
    
    
    
    
    
    
    
    26,405
    
    
    
    
    
    
    
    Other long-term liabilities
    
    
    7,970
    
    
    
    
    
    
    
    
    
    
    
    6,115
    
    
    
    1,855Intercompany payables (receivables)
    
    
    
    
    
    
    
    
    
    
    (150,911
    )
    
    
    144,766
    
    
    
    6,145Total equity
    
    
    287,587
    
    
    
    (297,626
    )
    
    
    285,608
    
    
    
    243,267
    
    
    
    56,338Total liabilities and equity
    
    $
    1,044,389
    
    
    $
    (297,626
    )
    
    $
    629,513
    
    
    $
    618,953
    
    
    $
    93,549
 19




---



##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
 Note P (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
 20




---



##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
 Note P (continued)
 Consolidating Condensed Income Statement
Three Months Ended September 30, 2009  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsNet sales
    
    $
    228,913
    
    
    $
    (25,466
    )
    
    $
    
    
    
    $
    217,992
    
    
    $
    36,387Cost of sales
    
    
    173,099
    
    
    
    (25,466
    )
    
    
    
    
    
    
    166,876
    
    
    
    31,689Gross profit
    
    
    55,814
    
    
    
    
    
    
    
    
    
    
    
    51,116
    
    
    
    4,698Operating (expense) incomeSelling and warehousing
    
    
    (14,051
    )
    
    
    
    
    
    
    (251
    )
    
    
    (12,317
    )
    
    
    (1,483
    )General and administrative
    
    
    (11,058
    )
    
    
    
    
    
    
    (3,944
    )
    
    
    (5,929
    )
    
    
    (1,185
    )Amortization of acquired intangible assets
    
    
    (1,398
    )
    
    
    
    
    
    
    (2
    )
    
    
    (1,420
    )
    
    
    24Restructuring costs
    
    
    (394
    )
    
    
    
    
    
    
    
    
    
    
    (93
    )
    
    
    (301
    )Operating income (loss)
    
    
    28,913
    
    
    
    
    
    
    
    (4,197
    )
    
    
    31,357
    
    
    
    1,753Other (expense) incomeInterest expense, net
    
    
    (7,220
    )
    
    
    
    
    
    
    (7,169
    )
    
    
    (6
    )
    
    
    (45
    )Intercompany interest
    
    
    
    
    
    
    
    
    
    
    6,334
    
    
    
    (6,221
    )
    
    
    (113
    )Management fee expense
    
    
    (500
    )
    
    
    
    
    
    
    (500
    )
    
    
    
    
    
    
    Miscellaneous, net
    
    
    (1,011
    )
    
    
    
    
    
    
    
    
    
    
    (1,011
    )
    
    
    Income (loss) before income taxes
    
    
    20,182
    
    
    
    
    
    
    
    (5,532
    )
    
    
    24,119
    
    
    
    1,595Income tax (expense) benefit
    
    
    (7,200
    )
    
    
    
    
    
    
    1,749
    
    
    
    (8,057
    )
    
    
    (892
    )Increase (decrease) before equity in earnings of subsidiaries
    
    
    12,982
    
    
    
    
    
    
    
    (3,783
    )
    
    
    16,062
    
    
    
    703Equity in earnings of subsidiaries
    
    
    
    
    
    
    (17,958
    )
    
    
    16,897
    
    
    
    1,061
    
    
    
    Net income (loss)
    
    
    12,982
    
    
    
    (17,958
    )
    
    
    13,114
    
    
    
    17,123
    
    
    
    703Less: Loss attributable to noncontrolling interest
    
    
    (132
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (132
    )Net income (loss) attributable to United Components, Inc.
    
    $
    13,114
    
    
    $
    (17,958
    )
    
    $
    13,114
    
    
    $
    17,123
    
    
    $
    835
 21




---



##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
 Note P (continued)
 Consolidating Condensed Income Statement
Nine Months Ended September 30, 2009  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsNet sales
    
    $
    666,197
    
    
    $
    (80,582
    )
    
    $
    
    
    
    $
    633,835
    
    
    $
    112,944Cost of sales
    
    
    521,847
    
    
    
    (80,582
    )
    
    
    
    
    
    
    502,469
    
    
    
    99,960Gross profit
    
    
    144,350
    
    
    
    
    
    
    
    
    
    
    
    131,366
    
    
    
    12,984Operating (expense) incomeSelling and warehousing
    
    
    (42,435
    )
    
    
    
    
    
    
    (410
    )
    
    
    (37,886
    )
    
    
    (4,139
    )General and administrative
    
    
    (34,521
    )
    
    
    
    
    
    
    (11,883
    )
    
    
    (18,802
    )
    
    
    (3,836
    )Amortization of acquired intangible assets
    
    
    (4,359
    )
    
    
    
    
    
    
    
    
    
    
    (4,359
    )
    
    
    Restructuring gains (costs), net
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    (449
    )
    
    
    448Operating income (loss)
    
    
    63,034
    
    
    
    
    
    
    
    (12,293
    )
    
    
    69,870
    
    
    
    5,457Other (expense) incomeInterest expense, net
    
    
    (23,012
    )
    
    
    
    
    
    
    (22,837
    )
    
    
    (19
    )
    
    
    (156
    )Intercompany interest
    
    
    
    
    
    
    
    
    
    
    19,382
    
    
    
    (18,978
    )
    
    
    (404
    )Management fee expense
    
    
    (1,500
    )
    
    
    
    
    
    
    (1,500
    )
    
    
    
    
    
    
    Miscellaneous, net
    
    
    (4,165
    )
    
    
    
    
    
    
    
    
    
    
    (4,165
    )
    
    
    Income (loss) before income taxes
    
    
    34,357
    
    
    
    
    
    
    
    (17,248
    )
    
    
    46,708
    
    
    
    4,897Income tax (expense) benefit
    
    
    (12,696
    )
    
    
    
    
    
    
    6,514
    
    
    
    (16,795
    )
    
    
    (2,415
    )Increase (decrease) before equity in earnings of subsidiaries
    
    
    21,661
    
    
    
    
    
    
    
    (10,734
    )
    
    
    29,913
    
    
    
    2,482Equity in earnings of subsidiaries
    
    
    
    
    
    
    (35,472
    )
    
    
    32,906
    
    
    
    2,566
    
    
    
    Net income (loss)
    
    
    21,661
    
    
    
    (35,472
    )
    
    
    22,172
    
    
    
    32,479
    
    
    
    2,482Less: Loss attributable to noncontrolling interest
    
    
    (511
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (511
    )Net income (loss) attributable to United Components, Inc.
    
    $
    22,172
    
    
    $
    (35,472
    )
    
    $
    22,172
    
    
    $
    32,479
    
    
    $
    2,993
 22




---



##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
 Note P (continued)
 Consolidating Condensed Income Statement
Three Months Ended September 30, 2008  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsNet sales
    
    $
    218,136
    
    
    $
    (23,368
    )
    
    $
    
    
    
    $
    207,878
    
    
    $
    33,626Cost of sales
    
    
    170,621
    
    
    
    (23,368
    )
    
    
    
    
    
    
    161,387
    
    
    
    32,602Gross profit
    
    
    47,515
    
    
    
    
    
    
    
    
    
    
    
    46,491
    
    
    
    1,024Operating expenseSelling and warehousing
    
    
    (15,679
    )
    
    
    
    
    
    
    (299
    )
    
    
    (14,002
    )
    
    
    (1,378
    )General and administrative
    
    
    (13,028
    )
    
    
    
    
    
    
    (4,428
    )
    
    
    (6,993
    )
    
    
    (1,607
    )Amortization of acquired intangible assets
    
    
    (1,545
    )
    
    
    
    
    
    
    
    
    
    
    (1,545
    )
    
    
    Restructuring costs
    
    
    (196
    )
    
    
    
    
    
    
    
    
    
    
    (196
    )
    
    
    Operating income (loss)
    
    
    17,067
    
    
    
    
    
    
    
    (4,727
    )
    
    
    23,755
    
    
    
    (1,961
    )Other (expense) incomeInterest expense, net
    
    
    (8,282
    )
    
    
    
    
    
    
    (8,271
    )
    
    
    (7
    )
    
    
    (4
    )Intercompany interest
    
    
    
    
    
    
    
    
    
    
    6,511
    
    
    
    (6,304
    )
    
    
    (207
    )Management fee expense
    
    
    (500
    )
    
    
    
    
    
    
    (500
    )
    
    
    
    
    
    
    Miscellaneous, net
    
    
    (920
    )
    
    
    
    
    
    
    
    
    
    
    (945
    )
    
    
    25Income (loss) before income taxes
    
    
    7,365
    
    
    
    
    
    
    
    (6,987
    )
    
    
    16,499
    
    
    
    (2,147
    )Income tax (expense) benefit
    
    
    (3,164
    )
    
    
    
    
    
    
    2,494
    
    
    
    (5,913
    )
    
    
    255Increase (decrease) before equity in earnings of subsidiaries
    
    
    4,201
    
    
    
    
    
    
    
    (4,493
    )
    
    
    10,586
    
    
    
    (1,892
    )Equity in earnings of subsidiaries
    
    
    
    
    
    
    (7,462
    )
    
    
    8,933
    
    
    
    (1,471
    )
    
    
    Net income (loss)
    
    
    4,201
    
    
    
    (7,462
    )
    
    
    4,440
    
    
    
    9,115
    
    
    
    (1,892
    )Less: Loss attributable to noncontrolling interest
    
    
    (239
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (239
    )Net income (loss) attributable to United Components, Inc.
    
    $
    4,440
    
    
    $
    (7,462
    )
    
    $
    4,440
    
    
    $
    9,115
    
    
    $
    (1,653
    )
 23




---



##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
 Note P (continued)
 Consolidating Condensed Income Statement
Nine Months Ended September 30, 2008  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsNet sales
    
    $
    676,695
    
    
    $
    (70,530
    )
    
    $
    
    
    
    $
    641,645
    
    
    $
    105,580Cost of sales
    
    
    531,430
    
    
    
    (70,530
    )
    
    
    
    
    
    
    499,758
    
    
    
    102,202Gross profit
    
    
    145,265
    
    
    
    
    
    
    
    
    
    
    
    141,887
    
    
    
    3,378Operating expenseSelling and warehousing
    
    
    (47,210
    )
    
    
    
    
    
    
    (739
    )
    
    
    (42,262
    )
    
    
    (4,209
    )General and administrative
    
    
    (38,367
    )
    
    
    
    
    
    
    (13,115
    )
    
    
    (20,824
    )
    
    
    (4,428
    )Amortization of acquired intangible assets
    
    
    (4,802
    )
    
    
    
    
    
    
    
    
    
    
    (4,802
    )
    
    
    Restructuring costs
    
    
    (684
    )
    
    
    
    
    
    
    
    
    
    
    (684
    )
    
    
    Operating income (loss)
    
    
    54,202
    
    
    
    
    
    
    
    (13,854
    )
    
    
    73,315
    
    
    
    (5,259
    )Other (expense) incomeInterest expense, net
    
    
    (25,838
    )
    
    
    
    
    
    
    (25,715
    )
    
    
    (22
    )
    
    
    (101
    )Intercompany interest
    
    
    
    
    
    
    
    
    
    
    20,822
    
    
    
    (20,190
    )
    
    
    (632
    )Management fee expense
    
    
    (1,500
    )
    
    
    
    
    
    
    (1,500
    )
    
    
    
    
    
    
    Miscellaneous, net
    
    
    (2,429
    )
    
    
    
    
    
    
    
    
    
    
    (2,428
    )
    
    
    (1
    )Income (loss) before income taxes
    
    
    24,435
    
    
    
    
    
    
    
    (20,247
    )
    
    
    50,675
    
    
    
    (5,993
    )Income tax (expense) benefit
    
    
    (9,772
    )
    
    
    
    
    
    
    7,639
    
    
    
    (18,708
    )
    
    
    1,297Increase (decrease) before equity in earnings of subsidiaries
    
    
    14,663
    
    
    
    
    
    
    
    (12,608
    )
    
    
    31,967
    
    
    
    (4,696
    )Equity in earnings of subsidiaries
    
    
    
    
    
    
    (22,702
    )
    
    
    27,830
    
    
    
    (5,128
    )
    
    
    Net income (loss)
    
    
    14,663
    
    
    
    (22,702
    )
    
    
    15,222
    
    
    
    26,839
    
    
    
    (4,696
    )Less: Loss attributable to noncontrolling interest
    
    
    (559
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (559
    )Net income (loss) attributable to United Components, Inc.
    
    $
    15,222
    
    
    $
    (22,702
    )
    
    $
    15,222
    
    
    $
    26,839
    
    
    $
    (4,137
    )
 24




---



##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
 Note P (continued)
 Consolidating Condensed Statement of Cash Flows
Nine Months Ended September 30, 2009  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsNet cash provided by operating activities
    
    $
    105,619
    
    
    $
    
    
    
    $
    666
    
    
    $
    78,106
    
    
    
    26,847Cash flows from investing activities:Capital expenditures
    
    
    (10,893
    )
    
    
    
    
    
    
    (704
    )
    
    
    (7,127
    )
    
    
    (3,062
    )Proceeds from sale of property, plant and equipment
    
    
    2,483
    
    
    
    
    
    
    
    
    
    
    
    61
    
    
    
    2,422Increase in restricted cash
    
    
    (9,400
    )
    
    
    
    
    
    
    
    
    
    
    (9,400
    )
    
    
    Net cash used in investing activities
    
    
    (17,810
    )
    
    
    
    
    
    
    (704
    )
    
    
    (16,466
    )
    
    
    (640
    )Cash flows from financing activities:Issuances of debt
    
    
    9,728
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,728Debt repayments
    
    
    (29,142
    )
    
    
    
    
    
    
    (20,285
    )
    
    
    (44
    )
    
    
    (8,813
    )Change in intercompany indebtedness
    
    
    
    
    
    
    
    
    
    
    86,129
    
    
    
    (62,407
    )
    
    
    (23,722
    )Net cash (used in) provided by financing activities
    
    
    (19,414
    )
    
    
    
    
    
    
    65,844
    
    
    
    (62,451
    )
    
    
    (22,807
    )Effect of currency exchange rate changes on cash
    
    
    58
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58Net increase (decrease) in cash and cash equivalents
    
    
    68,453
    
    
    
    
    
    
    
    65,806
    
    
    
    (811
    )
    
    
    3,458Cash and cash equivalents at beginning of year
    
    
    46,612
    
    
    
    
    
    
    
    39,061
    
    
    
    860
    
    
    
    6,691Cash and cash equivalents at end of period
    
    $
    115,065
    
    
    $
    
    
    
    $
    104,867
    
    
    $
    49
    
    
    $
    10,149
 25




---



##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
 Note P (continued)
 Consolidating Condensed Statement of Cash Flows
Nine Months Ended September 30, 2008  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsNet cash provided by (used in) operating activities
    
    $
    24,551
    
    
    $
    
    
    
    $
    5,593
    
    
    $
    24,656
    
    
    $
    (5,698
    )Cash flows from investing activities:Capital expenditures
    
    
    (25,977
    )
    
    
    
    
    
    
    (271
    )
    
    
    (16,406
    )
    
    
    (9,300
    )Proceeds from sale of property, plant and equipment
    
    
    366
    
    
    
    
    
    
    
    
    
    
    
    94
    
    
    
    272Net cash used in investing activities
    
    
    (25,611
    )
    
    
    
    
    
    
    (271
    )
    
    
    (16,312
    )
    
    
    (9,028
    )Cash flows from financing activities:Issuances of debt
    
    
    22,798
    
    
    
    
    
    
    
    20,003
    
    
    
    
    
    
    
    2,795Debt repayments
    
    
    (21,718
    )
    
    
    
    
    
    
    (10,289
    )
    
    
    (46
    )
    
    
    (11,383
    )Change in intercompany indebtedness
    
    
    
    
    
    
    
    
    
    
    (15,169
    )
    
    
    (10,055
    )
    
    
    25,224Net cash (used in) provided by financing activities
    
    
    1,080
    
    
    
    
    
    
    
    (5,455
    )
    
    
    (10,101
    )
    
    
    16,636Effect of currency exchange rate changes on cash
    
    
    68
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68Net increase (decrease) in cash and cash equivalents
    
    
    88
    
    
    
    
    
    
    
    (133
    )
    
    
    (1,757
    )
    
    
    1,978Cash and cash equivalents at beginning of year
    
    
    41,440
    
    
    
    
    
    
    
    36,684
    
    
    
    1,234
    
    
    
    3,522Cash and cash equivalents at end of period
    
    $
    41,528
    
    
    $
    
    
    
    $
    36,551
    
    
    $
    (523
    )
    
    $
    5,500
 26




---



##### 



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  Forward-Looking Statements
    Overview
 Sales .
  27




---



##### 



Cost of sales
  28




---



##### 



Selling and warehousing expenses
 General and administrative expenses
 Critical Accounting Policies and Estimates
  29




---



##### 



Inventory
 Revenue recognition
     Product returns.
 Impairment of intangible assets
 30




---



##### 



Retirement benefits
  Insurance reserves.
 Environmental expenditures
  31




---



##### 



Results of Operations
  Three Months ended September 30,
    
    
    Nine Months ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net sales
    
    $
    228,913
    
    
    $
    218,136
    
    
    $
    666,197
    
    
    $
    676,695Cost of sales
    
    
    173,099
    
    
    
    170,621
    
    
    
    521,847
    
    
    
    531,430Gross profit
    
    
    55,814
    
    
    
    47,515
    
    
    
    144,350
    
    
    
    145,265Operating expenseSelling and warehousing
    
    
    (14,051
    )
    
    
    (15,679
    )
    
    
    (42,435
    )
    
    
    (47,210
    )General and administrative
    
    
    (11,058
    )
    
    
    (13,028
    )
    
    
    (34,521
    )
    
    
    (38,367
    )Amortization of acquired intangible assets
    
    
    (1,398
    )
    
    
    (1,545
    )
    
    
    (4,359
    )
    
    
    (4,802
    )Restructuring costs, net
    
    
    (394
    )
    
    
    (196
    )
    
    
    (1
    )
    
    
    (684
    )Operating income
    
    
    28,913
    
    
    
    17,067
    
    
    
    63,034
    
    
    
    54,202Other expenseInterest expense, net
    
    
    (7,220
    )
    
    
    (8,282
    )
    
    
    (23,012
    )
    
    
    (25,838
    )Management fee expense
    
    
    (500
    )
    
    
    (500
    )
    
    
    (1,500
    )
    
    
    (1,500
    )Miscellaneous, net
    
    
    (1,011
    )
    
    
    (920
    )
    
    
    (4,165
    )
    
    
    (2,429
    )Income before income taxes
    
    
    20,182
    
    
    
    7,365
    
    
    
    34,357
    
    
    
    24,435Income tax expense
    
    
    (7,200
    )
    
    
    (3,164
    )
    
    
    (12,696
    )
    
    
    (9,772
    )Net income
    
    
    12,982
    
    
    
    4,201
    
    
    
    21,661
    
    
    
    14,663Less: Loss attributable to noncontrolling interest
    
    
    (132
    )
    
    
    (239
    )
    
    
    (511
    )
    
    
    (559
    )Net income attributable to United Components, Inc.
    
    $
    13,114
    
    
    $
    4,440
    
    
    $
    22,172
    
    
    $
    15,222
 Three Months Ended September 30, 2009 compared with the Three Months Ended September 30, 2008
 Net sales
  Gross profit.
  32




---



##### 



Selling and warehousing expenses
 General and administrative expenses
 Restructuring costs, net
 Interest expense, net
 Miscellaneous, net.
 Income tax expense
 Net income
 Net income attributable to United Components, Inc.
 Nine Months Ended September 30, 2009 compared with the Nine Months Ended September 30, 2008
 Net sales
  33




---



##### 



Gross profit.
   Selling and warehousing expenses
 General and administrative expenses
 Restructuring costs, net
 Interest expense, net
 Miscellaneous, net.
 Income tax expense
 34




---



##### 



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
   35




---



##### 



Net cash (used in) provided by financing activities
     Current Debt Capitalization and Scheduled Maturities
  September 30,
    
    
    December 31,2009
    
    
    2008Short-term borrowings
    
    $
    6.1
    
    
    $
    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
    
    
    427.1
    
    
    
    446.4Unamortized debt discount
    
    
    (2.4
    )
    
    
    (2.8
    )$
    424.7
    
    
    $
    443.6
    36




---



##### 



Remainder of 2009
    
    $
    6.22010
    
    
    0.22011
    
    
    45.22012
    
    
    145.22013
    
    
    230.1Thereafter
    
    
    0.2$
    427.1
   Managements Action Plan and Outlook
  Revolving Credit Facility
   Accounts Receivable Factoring
  37




---



##### 



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 September 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 tight controls over
discretionary spending, requiring additional approvals for all such spending across the
Company.
    Long-Term Liquidity Outlook
  Covenant Compliance
  38




---



##### 



Covenant
    
    ActualCompliance Level
    
    RatioMinimum Adjusted EBITDA to interest expense ratio
    
    
    2.75x
    
    
    
    3.68Maximum total debt to Adjusted EBITDA ratio
    
    
    4.40x
    
    
    
    3.81
  MinimumAdjusted
    
    MaximumEBITDA
    
    Total Debtto
    
    toInterest
    
    AdjustedExpense
    
    EBITDACovenant
    
    CovenantCompliance
    
    ComplianceLevel
    
    LevelQuarter 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
     39




---



##### 



dollars in millions
 Trailing FourNine Months
    
    
    Quartersended
    
    
    endedSeptember 30, 2009
    
    

September 30, 2009Net income attributable to United Components, Inc.
    
    $
    22.2
    
    
    $
    16.9Interest, net of noncontrolling interest
    
    
    23.0
    
    
    
    31.4Income tax expense, net of noncontrolling interest
    
    
    12.8
    
    
    
    10.8Depreciation, net of noncontrolling interest
    
    
    21.1
    
    
    
    28.3Amortization
    
    
    6.4
    
    
    
    8.6EBITDA
    
    
    85.5
    
    
    
    96.0Special items:Restructuring costs, net
    
    
    
    
    
    
    1.7Reduction in force severance
    
    
    2.6
    
    
    
    2.7Establishment of new facilities in China
    
    
    0.5
    
    
    
    1.1Cost to defend antitrust litigation
    
    
    1.1
    
    
    
    1.9Trademark impairment loss
    
    
    
    
    
    
    0.5One-time warranty expense
    
    
    
    
    
    
    0.9New business changeover costs and sales commitment costs
    
    
    3.7
    
    
    
    4.8Non-cash charges (stock options expense)
    
    
    0.2
    
    
    
    0.4Management fee
    
    
    1.5
    
    
    
    2.0Adjusted EBITDA
    
    $
    95.1
    
    
    $
    112.0
 40




---



##### 



CONTINGENCIES
 Environmental
   Antitrust and Patent Litigation
   Value-added Tax Receivable
  Other Litigation
  41




---



##### 



RECENTLY ISSUED ACCOUNTING GUIDANCE, NOT YET ADOPTED
  
 Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
  Foreign Currency Exposure
 Currency translation .
  Currency transactions .
   42




---



##### 



Interest Rate Risk
  Treasury Policy
  
 Item 4.
    
    Controls and Procedures
   43




---



##### 



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
  
 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. 44




---



##### 



SIGNATURES
  UNITED COMPONENTS, INC.Date: November 13, 2009
    By:
    /s/ MARK P. BLAUFUSSName:
    
    Mark P. BlaufussTitle:
    
    Chief Financial Officer and Authorized Representative 45