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 March 31, 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(Address of Principal Executive
    
    47725Offices)
    
    (Zip Code)
 (812) 867-4156
 o þ
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer   þ
(Do not check if a smaller reporting company)
    
    Smaller Reporting Company o
 o þ




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##### 



United Components, Inc.
 Index
 Part I
    
    FINANCIAL INFORMATION
    
    
    3Item 1.
    
    Financial Statements (unaudited)
    
    
    3Condensed consolidated balance sheets  March 31, 2009 and December 31, 2008
    
    
    3Condensed consolidated income statements  Three months ended March 31, 2009 and 2008
    
    
    4Condensed consolidated statements of cash flows  Three months ended March 31, 2009 and 2008
    
    
    5Condensed consolidated statements of changes in equity  Three months ended March 31, 2009 and 2008
    
    
    6Notes to condensed consolidated financial statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    24Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    36Item 4.
    
    Controls and Procedures
    
    
    38Part II
    
    OTHER INFORMATION
    
    
    39Item 1.
    
    Legal Proceedings
    
    
    39Item 1A.
    
    Risk Factors
    
    
    39Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    39Item 3.
    
    Default Upon Senior Securities
    
    
    39Item 4.
    
    Submission of Matters to Vote of Security Holders
    
    
    39Item 5.
    
    Other Information
    
    
    39Item 6.
    
    Exhibits
    
    
    39Signatures
    
    
    
    
    40Exhibits
 2




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##### 



PART I
FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 United Components, Inc.
 
 Condensed Consolidated Balance Sheets
 (in thousands)
 March 31,
    
    
    December 31,2009
    
    
    2008(unaudited)
    
    
    (audited)AssetsCurrent assetsCash and cash equivalents
    
    $
    73,005
    
    
    $
    46,612Accounts receivable, net
    
    
    253,741
    
    
    
    261,624Inventories, net
    
    
    146,838
    
    
    
    159,444Deferred tax assets
    
    
    24,310
    
    
    
    24,245Other current assets
    
    
    19,463
    
    
    
    19,452Total current assets
    
    
    517,357
    
    
    
    511,377Property, plant and equipment, net
    
    
    163,953
    
    
    
    167,906Goodwill
    
    
    241,461
    
    
    
    241,461Other intangible assets, net
    
    
    72,470
    
    
    
    74,606Deferred financing costs, net
    
    
    2,403
    
    
    
    2,649Other long-term assets
    
    
    1,536
    
    
    
    1,823Total assets
    
    $
    999,180
    
    
    $
    999,822Liabilities
and equityCurrent liabilitiesAccounts payable
    
    $
    109,677
    
    
    $
    104,416Short-term borrowings
    
    
    6,595
    
    
    
    25,199Current maturities of long-term debt
    
    
    384
    
    
    
    422Accrued expenses and other current liabilities
    
    
    96,221
    
    
    
    85,730Total current liabilities
    
    
    212,877
    
    
    
    215,767Long-term debt, less current maturities
    
    
    418,106
    
    
    
    418,025Pension and other postretirement liabilities
    
    
    80,649
    
    
    
    79,832Deferred tax liabilities
    
    
    4,030
    
    
    
    3,560Due to UCI Holdco
    
    
    18,406
    
    
    
    17,535Other long-term liabilities
    
    
    2,760
    
    
    
    2,540Total liabilities
    
    
    736,828
    
    
    
    737,259Contingencies  Note IEquityUnited Components, Inc. shareholders equityCommon stock
    
    
    
    
    
    
    Additional paid in capital
    
    
    278,595
    
    
    
    278,430Retained earnings
    
    
    22,813
    
    
    
    21,243Accumulated
other comprehensive loss
    
    
    (41,242
    )
    
    
    (39,600
    )Total United Components, Inc. shareholders equity
    
    
    260,166
    
    
    
    260,073Noncontrolling interest
    
    
    2,186
    
    
    
    2,490Total equity
    
    
    262,352
    
    
    
    262,563Total liabilities and equity
    
    $
    999,180
    
    
    $
    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 March 31,2009
    
    
    2008Net sales
    
    $
    219,862
    
    
    $
    229,290Cost of sales
    
    
    179,598
    
    
    
    178,230Gross profit
    
    
    40,264
    
    
    
    51,060Operating expenseSelling and warehousing
    
    
    (14,298
    )
    
    
    (15,505
    )General and administrative
    
    
    (11,896
    )
    
    
    (12,528
    )Amortization of acquired intangible assets
    
    
    (1,480
    )
    
    
    (1,593
    )Costs of integration of water pump operations (Note B)
    
    
    (205
    )
    
    
    (363
    )Operating income
    
    
    12,385
    
    
    
    21,071Other expenseInterest expense, net
    
    
    (7,999
    )
    
    
    (9,142
    )Management fee expense
    
    
    (500
    )
    
    
    (500
    )Miscellaneous, net
    
    
    (1,485
    )
    
    
    (527
    )Income before income taxes
    
    
    2,401
    
    
    
    10,902Income tax expense
    
    
    (1,135
    )
    
    
    (4,176
    )Net income
    
    
    1,266
    
    
    
    6,726Less: Loss attributable to noncontrolling interest
    
    
    (304
    )
    
    
    (29
    )Net income attributable to United Components, Inc.
    
    $
    1,570
    
    
    $
    6,755
 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)
 Three Months ended March 31,2009
    
    
    2008Cash flows from operating activitiesNet income attributable to United Components, Inc.
    
    $
    1,570
    
    
    $
    6,755Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization of other intangible assets
    
    
    9,439
    
    
    
    9,072Amortization of deferred financing costs and debt discount
    
    
    404
    
    
    
    475Deferred income taxes
    
    
    405
    
    
    
    902Other non-cash, net
    
    
    355
    
    
    
    503Changes in operating assets and liabilitiesAccounts receivable
    
    
    7,061
    
    
    
    1,195Inventories
    
    
    11,735
    
    
    
    (6,715
    )Other current assets
    
    
    (198
    )
    
    
    5,167Accounts payable
    
    
    5,536
    
    
    
    (4,189
    )Accrued expenses and other current liabilities
    
    
    10,736
    
    
    
    (9,869
    )Other long-term assets
    
    
    287
    
    
    
    7Due to UCI Holdco
    
    
    871
    
    
    
    3,101Other long-term liabilities
    
    
    1,038
    
    
    
    364Net cash provided by operating activities
    
    
    49,239
    
    
    
    6,768Cash flows from investing activitiesCapital expenditures
    
    
    (4,018
    )
    
    
    (7,886
    )Proceeds from sale of other property, plant and equipment
    
    
    24
    
    
    
    58Net cash used in investing activities
    
    
    (3,994
    )
    
    
    (7,828
    )Cash flows from financing activitiesIssuances of debt
    
    
    3,672
    
    
    
    347Debt repayments
    
    
    (22,391
    )
    
    
    (18,256
    )Net cash used in financing activities
    
    
    (18,719
    )
    
    
    (17,909
    )Effect of currency exchange rate changes on cash
    
    
    (133
    )
    
    
    109Net increase (decrease) in cash and cash equivalents
    
    
    26,393
    
    
    
    (18,860
    )Cash and cash equivalents at beginning of year
    
    
    46,612
    
    
    
    41,440Cash and cash equivalents at end of period
    
    $
    73,005
    
    
    $
    22,580
 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
    
    
    
    
    
    
    230
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    230Comprehensive incomeNet income (loss)
    
    
    
    
    
    
    
    
    
    
    6,755
    
    
    
    
    
    
    
    (29
    )
    
    
    6,726
    
    
    $
    6,726Other comprehensive incomeInterest rate swaps
(after $130 of income
taxes)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (208
    )
    
    
    
    
    
    
    (208
    )
    
    
    (208
    )Foreign currency
adjustment (after $5 of
income taxes)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,010
    
    
    
    
    
    
    
    1,010
    
    
    
    1,010Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    7,528Balance at March 31, 2008
    
    $
    
    
    
    $
    277,971
    
    
    $
    18,071
    
    
    $
    7,564
    
    
    $
    3,279
    
    
    $
    306,885Balance at January 1, 2009
    
    $
    
    
    
    $
    278,430
    
    
    $
    21,243
    
    
    $
    (39,600
    )
    
    $
    2,490
    
    
    $
    262,563Recognition of stock based
compensation expense
    
    
    
    
    
    
    165
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    165Comprehensive incomeNet income (loss)
    
    
    
    
    
    
    
    
    
    
    1,570
    
    
    
    
    
    
    
    (304
    )
    
    
    1,266
    
    
    $
    1,266Other comprehensive incomeForeign currency
adjustment (after $(7) of
income taxes)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,642
    )
    
    
    
    
    
    
    (1,642
    )
    
    
    (1,642
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (376
    )Balance at March 31, 2009
    
    $
    
    
    
    $
    278,595
    
    
    $
    22,813
    
    
    $
    (41,242
    )
    
    $
    2,186
    
    
    $
    262,352
 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
       NOTE B  COSTS OF INTEGRATION OF WATER PUMP OPERATIONS
  7




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##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements
  NOTE C  SALES OF RECEIVABLES
    NOTE D  INVENTORIES
  March 31,
    
    
    December 31,2009
    
    
    2008Raw materials
    
    $
    49.3
    
    
    $
    55.3Work in process
    
    
    34.2
    
    
    
    34.6Finished products
    
    
    78.3
    
    
    
    84.4Valuation reserves
    
    
    (15.0
    )
    
    
    (14.9
    )$
    146.8
    
    
    $
    159.4
 8




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##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements
 NOTE E  ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
  March 31,
    
    
    December 31,2009
    
    
    2008Salaries and wages
    
    $
    4.0
    
    
    $
    2.7Bonuses and profit sharing
    
    
    1.9
    
    
    
    3.5Vacation pay
    
    
    4.7
    
    
    
    4.4Product returns
    
    
    31.7
    
    
    
    32.0Rebates, credits and discounts due customers
    
    
    12.6
    
    
    
    10.8Insurance
    
    
    13.1
    
    
    
    11.5Taxes payable
    
    
    6.5
    
    
    
    4.8Interest
    
    
    7.2
    
    
    
    2.1Other
    
    
    14.5
    
    
    
    13.9$
    96.2
    
    
    $
    85.7
 NOTE F  PRODUCT RETURNS LIABILITY
    Three Months ended March 31,2009
    
    
    2008Beginning of year
    
    $
    32.0
    
    
    $
    28.1Cost of unsalvageable parts
    
    
    (12.0
    )
    
    
    (12.0
    )Additional reductions to sales
    
    
    11.7
    
    
    
    10.9End of period
    
    $
    31.7
    
    
    $
    27.0
 9




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##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements
 NOTE G  PENSION
  Three Months ended March 31,2009
    
    
    2008Service cost
    
    $
    1.1
    
    
    $
    1.3Interest cost
    
    
    3.3
    
    
    
    3.2Expected return on plan assets
    
    
    (3.6
    )
    
    
    (3.7
    )Amortization of prior service cost and unrecognized loss
    
    
    0.1
    
    
    
    Special termination benefits
    
    
    
    
    
    
    0.2$
    0.9
    
    
    $
    1.0
 NOTE H  DEBT
  March 31,
    
    
    December 31,2009
    
    
    2008Short-term borrowings
    
    $
    6.6
    
    
    $
    5.2Revolving credit line borrowings
    
    
    
    
    
    
    20.0Capital lease obligations
    
    
    1.2
    
    
    
    1.2Term loan
    
    
    190.0
    
    
    
    190.0Senior subordinated notes
    
    
    230.0
    
    
    
    230.0Unamortized debt issuance costs
    
    
    (2.7
    )
    
    
    (2.8
    )425.1
    
    
    
    443.6Less:Short-term borrowings
    
    
    6.6
    
    
    
    5.2Revolving credit line borrowings
    
    
    
    
    
    
    20.0Current maturities
    
    
    0.4
    
    
    
    0.4Long-term debt
    
    $
    418.1
    
    
    $
    418.0
  Senior credit facility
 Term loan
  Revolving credit facility
  10




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##### 



Senior subordinated notes (the Notes )
 Short-term borrowings
 NOTE I  CONTINGENCIES
 Insurance Reserves
  Environmental
  11




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##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements
  Antitrust Litigation
     12




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##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements
        Value-added Tax Receivable
  Other Litigation
  13




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##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements
 NOTE J  GEOGRAPHIC INFORMATION
  Three Months ended March 31,2009
    
    
    2008United States
    
    $
    190.7
    
    
    $
    192.9Mexico
    
    
    5.9
    
    
    
    8.7Canada
    
    
    6.5
    
    
    
    7.5United Kingdom
    
    
    1.8
    
    
    
    3.3France
    
    
    1.9
    
    
    
    3.1Venezuela
    
    
    0.9
    
    
    
    0.7Germany
    
    
    1.2
    
    
    
    1.5Spain
    
    
    0.8
    
    
    
    1.0Other
    
    
    10.2
    
    
    
    10.6$
    219.9
    
    
    $
    229.3Net long-lived assets by country are as follows (in millions):March 31,
    
    
    December 31,2009
    
    
    2008United States
    
    $
    196.3
    
    
    $
    201.5China
    
    
    32.0
    
    
    
    33.2Mexico
    
    
    9.5
    
    
    
    9.9Spain
    
    
    2.5
    
    
    
    2.3Goodwill
    
    
    241.5
    
    
    
    241.5$
    481.8
    
    
    $
    488.4
 NOTE K  OTHER INFORMATION
    NOTE L CONCENTRATION OF RISK
  14




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##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements
  NOTE M  ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENTS
     15




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##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements
    NOTE N  RECENT ACCOUNTING PRONOUNCEMENTS, NOT YET ADOPTED
  
  16




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##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements
  NOTE O  GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS
    17




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##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements
 Note O (continued)
 Consolidating Condensed Balance Sheet
March 31, 2009  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsAssetsCurrent assetsCash and cash equivalents
    
    $
    73,005
    
    
    $
    
    
    
    $
    66,828
    
    
    $
    680
    
    
    $
    5,497Accounts receivable, net
    
    
    253,741
    
    
    
    
    
    
    
    
    
    
    
    238,696
    
    
    
    15,045Inventories, net
    
    
    146,838
    
    
    
    
    
    
    
    
    
    
    
    127,893
    
    
    
    18,945Deferred tax assets
    
    
    24,310
    
    
    
    
    
    
    
    255
    
    
    
    24,613
    
    
    
    (558
    )Other current assets
    
    
    19,463
    
    
    
    
    
    
    
    1,287
    
    
    
    7,229
    
    
    
    10,947Total current assets
    
    
    517,357
    
    
    
    
    
    
    
    68,370
    
    
    
    399,111
    
    
    
    49,876Property, plant and equipment, net
    
    
    163,953
    
    
    
    
    
    
    
    1,039
    
    
    
    121,055
    
    
    
    41,859Investment in subsidiaries
    
    
    
    
    
    
    (255,736
    )
    
    
    228,608
    
    
    
    27,128
    
    
    
    Goodwill
    
    
    241,461
    
    
    
    
    
    
    
    241,461
    
    
    
    
    
    
    
    Other intangible assets, net
    
    
    72,470
    
    
    
    
    
    
    
    8,410
    
    
    
    63,870
    
    
    
    190Deferred financing costs, net
    
    
    2,403
    
    
    
    
    
    
    
    2,403
    
    
    
    
    
    
    
    Other long-term assets
    
    
    1,536
    
    
    
    
    
    
    
    365
    
    
    
    1,049
    
    
    
    122Total assets
    
    $
    999,180
    
    
    $
    (255,736
    )
    
    $
    550,656
    
    
    $
    612,213
    
    
    $
    92,047Liabilities
and equityCurrent liabilitiesAccounts payable
    
    $
    109,677
    
    
    $
    
    
    
    $
    939
    
    
    $
    91,955
    
    
    $
    16,783Short-term borrowings
    
    
    6,595
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,595Current maturities of long-term debt
    
    
    384
    
    
    
    
    
    
    
    325
    
    
    
    59
    
    
    
    Accrued expenses and other current liabilities
    
    
    96,221
    
    
    
    
    
    
    
    12,714
    
    
    
    77,873
    
    
    
    5,634Total current liabilities
    
    
    212,877
    
    
    
    
    
    
    
    13,978
    
    
    
    169,887
    
    
    
    29,012Long-term debt, less current maturities
    
    
    418,106
    
    
    
    
    
    
    
    417,669
    
    
    
    437
    
    
    
    Pension and other postretirement liabilities
    
    
    80,649
    
    
    
    
    
    
    
    10,518
    
    
    
    68,984
    
    
    
    1,147Deferred tax liabilities
    
    
    4,030
    
    
    
    
    
    
    
    19,102
    
    
    
    (15,726
    )
    
    
    654Due to Holdco
    
    
    18,406
    
    
    
    
    
    
    
    18,406
    
    
    
    
    
    
    
    Other long-term liabilities
    
    
    2,760
    
    
    
    
    
    
    
    
    
    
    
    1,940
    
    
    
    820Intercompany payables (receivables)
    
    
    
    
    
    
    
    
    
    
    (189,183
    )
    
    
    174,748
    
    
    
    14,435Total equity
    
    
    262,352
    
    
    
    (255,736
    )
    
    
    260,166
    
    
    
    211,943
    
    
    
    45,979Total liabilities and equity
    
    $
    999,180
    
    
    $
    (255,736
    )
    
    $
    550,656
    
    
    $
    612,213
    
    
    $
    92,047
 18




---



##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements
 Note O (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 UCI 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
 19




---



##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements
 Note O (continued)
 Consolidating Condensed Income Statement
Three Months Ended March 31, 2009  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsNet sales
    
    $
    219,862
    
    
    $
    (29,629
    )
    
    $
    
    
    
    $
    209,177
    
    
    $
    40,314Cost of sales
    
    
    179,598
    
    
    
    (29,629
    )
    
    
    
    
    
    
    173,007
    
    
    
    36,220Gross profit
    
    
    40,264
    
    
    
    
    
    
    
    
    
    
    
    36,170
    
    
    
    4,094Operating expenseSelling and warehousing
    
    
    (14,298
    )
    
    
    
    
    
    
    (174
    )
    
    
    (12,849
    )
    
    
    (1,275
    )General and administrative
    
    
    (11,896
    )
    
    
    
    
    
    
    (4,298
    )
    
    
    (6,297
    )
    
    
    (1,301
    )Amortization of acquired intangible assets
    
    
    (1,480
    )
    
    
    
    
    
    
    
    
    
    
    (1,480
    )
    
    
    Costs of integration of water pump operations
    
    
    (205
    )
    
    
    
    
    
    
    
    
    
    
    (205
    )
    
    
    Operating income (loss)
    
    
    12,385
    
    
    
    
    
    
    
    (4,472
    )
    
    
    15,339
    
    
    
    1,518Other expenseInterest expense, net
    
    
    (7,999
    )
    
    
    
    
    
    
    (7,935
    )
    
    
    (7
    )
    
    
    (57
    )Intercompany interest
    
    
    
    
    
    
    
    
    
    
    6,412
    
    
    
    (6,252
    )
    
    
    (160
    )Management fee expense
    
    
    (500
    )
    
    
    
    
    
    
    (500
    )
    
    
    
    
    
    
    Miscellaneous, net
    
    
    (1,485
    )
    
    
    
    
    
    
    
    
    
    
    (1,485
    )
    
    
    Income (loss) before income taxes
    
    
    2,401
    
    
    
    
    
    
    
    (6,495
    )
    
    
    7,595
    
    
    
    1,301Income tax
(expense) benefit
    
    
    (1,135
    )
    
    
    
    
    
    
    3,309
    
    
    
    (3,802
    )
    
    
    (642
    )Increase (decrease) before equity in earnings of
subsidiaries
    
    
    1,266
    
    
    
    
    
    
    
    (3,186
    )
    
    
    3,793
    
    
    
    659Equity in earnings of subsidiaries
    
    
    
    
    
    
    (5,648
    )
    
    
    4,756
    
    
    
    892
    
    
    
    Net income
(loss)
    
    
    1,266
    
    
    
    (5,648
    )
    
    
    1,570
    
    
    
    4,685
    
    
    
    659Less: loss attributable to noncontrolling interest
    
    
    (304
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (304
    )Net
income (loss) attributable to United Components, Inc.
    
    $
    1,570
    
    
    $
    (5,648
    )
    
    $
    1,570
    
    
    $
    4,685
    
    
    $
    963
 20




---



##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements
 Note O (continued)
 Consolidating Condensed Income Statement
Three Months Ended March 31, 2008  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsNet sales
    
    $
    229,290
    
    
    $
    (20,192
    )
    
    $
    
    
    
    $
    215,598
    
    
    $
    33,884Cost of sales
    
    
    178,230
    
    
    
    (20,192
    )
    
    
    
    
    
    
    166,342
    
    
    
    32,080Gross profit
    
    
    51,060
    
    
    
    
    
    
    
    
    
    
    
    49,256
    
    
    
    1,804Operating expenseSelling and warehousing
    
    
    (15,505
    )
    
    
    
    
    
    
    (395
    )
    
    
    (13,845
    )
    
    
    (1,265
    )General and administrative
    
    
    (12,528
    )
    
    
    
    
    
    
    (3,942
    )
    
    
    (7,199
    )
    
    
    (1,387
    )Amortization of acquired intangible assets
    
    
    (1,593
    )
    
    
    
    
    
    
    
    
    
    
    (1,593
    )
    
    
    Costs of integration of water pump operations
    
    
    (363
    )
    
    
    
    
    
    
    
    
    
    
    (363
    )
    
    
    Operating income (loss)
    
    
    21,071
    
    
    
    
    
    
    
    (4,337
    )
    
    
    26,256
    
    
    
    (848
    )Other expenseInterest expense, net
    
    
    (9,142
    )
    
    
    
    
    
    
    (9,046
    )
    
    
    (7
    )
    
    
    (89
    )Intercompany interest
    
    
    
    
    
    
    
    
    
    
    7,186
    
    
    
    (6,961
    )
    
    
    (225
    )Management fee expense
    
    
    (500
    )
    
    
    
    
    
    
    (500
    )
    
    
    
    
    
    
    Miscellaneous, net
    
    
    (527
    )
    
    
    
    
    
    
    
    
    
    
    (528
    )
    
    
    1Income (loss) before income taxes
    
    
    10,902
    
    
    
    
    
    
    
    (6,697
    )
    
    
    18,760
    
    
    
    (1,161
    )Income tax
(expense) benefit
    
    
    (4,176
    )
    
    
    
    
    
    
    2,482
    
    
    
    (6,941
    )
    
    
    283Increase (decrease) before equity in earnings of
subsidiaries
    
    
    6,726
    
    
    
    
    
    
    
    (4,215
    )
    
    
    11,819
    
    
    
    (878
    )Equity in earnings of subsidiaries
    
    
    
    
    
    
    (9,898
    )
    
    
    10,970
    
    
    
    (1,072
    )
    
    
    Net income (loss)
    
    
    6,726
    
    
    
    (9,898
    )
    
    
    6,755
    
    
    
    10,747
    
    
    
    (878
    )Less: loss attributable to noncontrolling interest
    
    
    (29
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (29
    )Net income (loss) attributable to United
Components, Inc.
    
    $
    6,755
    
    
    $
    (9,898
    )
    
    $
    6,755
    
    
    $
    10,747
    
    
    $
    (849
    )
 21




---



##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements
 Note O (continued)
 Consolidating Condensed Statement of Cash Flows
Three Months Ended March 31, 2009  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsNet cash provided by operating activities
    
    $
    49,239
    
    
    $
    
    
    
    $
    48,064
    
    
    $
    2,813
    
    
    $
    (1,638
    )Cash flows from investing activities:Capital expenditures
    
    
    (4,018
    )
    
    
    
    
    
    
    (194
    )
    
    
    (2,993
    )
    
    
    (831
    )Proceeds from sale of other property, plant
and equipment
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    9Net cash used in investing activities
    
    
    (3,994
    )
    
    
    
    
    
    
    (194
    )
    
    
    (2,978
    )
    
    
    (822
    )Cash flows from financing activities:Issuances of debt
    
    
    3,672
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,672Debt repayments
    
    
    (22,391
    )
    
    
    
    
    
    
    (20,103
    )
    
    
    (15
    )
    
    
    (2,273
    )Net cash used in financing activities
    
    
    (18,719
    )
    
    
    
    
    
    
    (20,103
    )
    
    
    (15
    )
    
    
    1,399Effect of currency exchange rate changes on cash
    
    
    (133
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (133
    )Net (decrease) increase in cash and cash
equivalents
    
    
    26,393
    
    
    
    
    
    
    
    27,767
    
    
    
    (180
    )
    
    
    (1,194
    )Cash and cash equivalents at beginning of year
    
    
    46,612
    
    
    
    
    
    
    
    39,061
    
    
    
    860
    
    
    
    6,691Cash and cash equivalents at end of period
    
    $
    73,005
    
    
    $
    
    
    
    $
    66,828
    
    
    $
    680
    
    
    $
    5,497
 22




---



##### 



United Components, Inc.
Notes to Condensed Consolidated Financial Statements
 Note O (continued)
 Consolidating Condensed Statement of Cash Flows
Three Months Ended March 31, 2008  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsNet cash provided by operating activities
    
    $
    6,768
    
    
    $
    
    
    
    $
    (8,680
    )
    
    $
    2,623
    
    
    $
    12,825Cash flows from investing activities:Capital expenditures
    
    
    (7,886
    )
    
    
    
    
    
    
    (1
    )
    
    
    (4,479
    )
    
    
    (3,406
    )Proceeds from sale of other property, plant
and equipment
    
    
    58
    
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    47Net cash used in investing activities
    
    
    (7,828
    )
    
    
    
    
    
    
    (1
    )
    
    
    (4,468
    )
    
    
    (3,359
    )Cash flows from financing activities:Issuances of debt
    
    
    347
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    347Debt repayments
    
    
    (18,256
    )
    
    
    
    
    
    
    (10,102
    )
    
    
    (15
    )
    
    
    (8,139
    )Net cash used in financing activities
    
    
    (17,909
    )
    
    
    
    
    
    
    (10,102
    )
    
    
    (15
    )
    
    
    (7,792
    )Effect of currency exchange rate changes on cash
    
    
    109
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    109Net (decrease) increase in cash and cash
equivalents
    
    
    (18,860
    )
    
    
    
    
    
    
    (18,783
    )
    
    
    (1,860
    )
    
    
    1,783Cash and cash equivalents at beginning of year
    
    
    41,440
    
    
    
    
    
    
    
    36,684
    
    
    
    1,234
    
    
    
    3,522Cash and cash equivalents at end of period
    
    $
    22,580
    
    
    $
    
    
    
    $
    17,901
    
    
    $
    (626
    )
    
    $
    5,305
 23




---



##### 



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Forward-Looking Statements
    Overview
 Sales .
   24




---



##### 



Cost of sales
    25




---



##### 



Selling and warehousing expenses
 General and administrative expenses
 Critical Accounting Policies and Estimates
   Inventory
 26




---



##### 



Revenue recognition
     Product returns.
 Impairment of intangible assets
    27




---



##### 



Retirement benefits
  Insurance reserves.
 Environmental expenditures
  Results of Operations
  Three Months ended March 31,2009
    
    
    2008Net sales
    
    $
    219,862
    
    
    $
    229,290Cost of sales
    
    
    179,598
    
    
    
    178,230Gross profit
    
    
    40,264
    
    
    
    51,060Operating expenseSelling and warehousing
    
    
    (14,298
    )
    
    
    (15,505
    )General and administrative
    
    
    (11,896
    )
    
    
    (12,528
    )Amortization of acquired intangible assets
    
    
    (1,480
    )
    
    
    (1,593
    )Costs of integration of water pump operations
    
    
    (205
    )
    
    
    (363
    )Operating income
    
    
    12,385
    
    
    
    21,071Other expenseInterest expense, net
    
    
    (7,999
    )
    
    
    (9,142
    )Management fee expense
    
    
    (500
    )
    
    
    (500
    )Miscellaneous, net
    
    
    (1,485
    )
    
    
    (527
    )Income before income taxes
    
    
    2,401
    
    
    
    10,902Income tax expense
    
    
    (1,135
    )
    
    
    (4,176
    )Net income
    
    
    1,266
    
    
    
    6,726Less: Loss attributable to noncontrolling interest
    
    
    (304
    )
    
    
    (29
    )Net income attributable to United Components, Inc.
    
    $
    1,570
    
    
    $
    6,755
 28




---



##### 



Three Months Ended March 31, 2009 compared with the Three Months Ended March 31, 2008
 Net sales
  Gross profit.
   Selling and warehousing expenses
 General and administrative expenses
 Costs of integration of water pump operations
 Interest expense, net
 29




---



##### 



Miscellaneous, net.
 Income tax expense
 Net
income
 Liquidity and Capital Resources
 Historical Cash Flows
 Net cash provided by operating activities
 Net cash used in investing activities
 Net cash provided by / used in financing activities
    30




---



##### 



Current Debt Capitalization and Scheduled Maturities
  March 31,
    
    
    December 31,2009
    
    
    2008Short-term borrowings
    
    $
    6.6
    
    
    $
    5.2Revolving credit line borrowings
    
    
    
    
    
    
    20.0Capitalized leases
    
    
    1.2
    
    
    
    1.2Term loan
    
    
    190.0
    
    
    
    190.0Senior subordinated notes
    
    
    230.0
    
    
    
    230.0Amount of debt requiring repayment
    
    
    427.8
    
    
    
    446.4Unamortized debt discount
    
    
    (2.7
    )
    
    
    (2.8
    )$
    425.1
    
    
    $
    443.6
     Remainder of 2009
    
    $
    6.92010
    
    
    0.22011
    
    
    45.22012
    
    
    145.22013
    
    
    230.1Thereafter
    
    
    0.2$
    427.8
   31




---



##### 



Managements Action Plan and Outlook
  Revolving Credit Facility
     Accounts Receivable Factoring
   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 March 31, 2009, we had approximately 4,700 employees
as compared to approximately 4,900 and 5,200 at December 31, 2008 and December 31, 2007,
respectively. 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.
 32




---



##### 



Long-Term Liquidity Outlook
  Covenant Compliance
   Covenant
    
    ActualCompliance Level
    
    RatioMinimum Adjusted EBITDA to interest expense ratio
    
    
    2.60x
    
    
    
    3.31xMaximum total debt to Adjusted EBITDA ratio
    
    
    4.60x
    
    
    
    4.02x
 33




---



##### 



MinimumAdjusted
    
    MaximumEBITDA
    
    Total Debtto
    
    toInterest
    
    AdjustedExpense
    
    EBITDACovenant
    
    CovenantCompliance
    
    ComplianceLevel
    
    LevelQuarter ending June 30, 2009
    
    
    2.65x
    
    
    
    4.50xQuarter 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
     34




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##### 



dollars in millions
 Trailing FourThree Months
    
    
    Quartersended
    
    
    endedMar.
31, 2009
    
    

Mar.
31, 2009Net income attributable to United Components, Inc.
    
    $
    1.6
    
    
    $
    4.7Interest, net of noncontrolling interest
    
    
    8.0
    
    
    
    33.1Income tax expense, net of noncontrolling interest
    
    
    1.2
    
    
    
    4.9Depreciation, net of noncontrolling interest
    
    
    7.1
    
    
    
    27.7Amortization
    
    
    2.1
    
    
    
    8.9EBITDA
    
    
    20.0
    
    
    
    79.3Special items:Cost of integration of water pump operations and the
resulting asset impairment losses
    
    
    0.2
    
    
    
    2.2Reduction in
force severance and facilities consolidation
    
    
    1.0
    
    
    
    1.4Trademark impairment loss
    
    
    
    
    
    
    0.5Cost of defending class action litigation
    
    
    0.5
    
    
    
    4.5One-time warranty expense
    
    
    
    
    
    
    6.7New business changeover cost and sales commitment costs
    
    
    2.4
    
    
    
    6.3Establishment of new facilities in China
    
    
    0.4
    
    
    
    2.6Non-cash charges (stock options expense)
    
    
    0.2
    
    
    
    0.8Management fee
    
    
    0.5
    
    
    
    2.0Adjusted EBITDA
    
    $
    25.2
    
    
    $
    106.3
 Contingencies
 Environmental
   Antitrust Litigation
  35




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##### 



Value-added Tax Receivable
  Other Litigation
  RECENT ACCOUNTING PRONOUNCEMENTS, NOT YET ADOPTED
     
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
  Foreign Currency Exposure
 Currency translation .
 36




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##### 



Currency transactions .
    Interest Rate Risk
  37




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##### 



Treasury Policy
  
 Item 4. Controls and Procedures
     38




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##### 



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. 39




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##### 



SIGNATURES
  UNITED COMPONENTS, INC.Date: May 14, 2009
    
    By:
    
    /s/ DANIEL J. JOHNSTONName: Daniel J. JohnstonTitle: Chief Financial Officer and Authorized Representative
 40