##### 



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, 2005
 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 Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)14601 Highway 41 North
Evansville, Indiana
(Address of Principal Executive Offices)
    
    47725
(Zip Code)
 (812) 867-4156
 
  o þ
  o þ
  o þ




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##### 



United Components, Inc.
 Index
 Part I
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (unaudited)Condensed consolidated balance sheetsSeptember 30, 2005 and December 31, 2004Condensed consolidated income statementsThree and nine months ended September 30, 2005 and 2004Condensed consolidated statements of cash flowsNine months ended September 30, 2005 and 2004Condensed consolidated statements of changes in shareholders equityNine months ended September 30, 2005 and 2004Notes to condensed consolidated financial statementsItem 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3.
    
    Quantitative and Qualitative Disclosures About Market RiskItem 4.
    
    Controls and ProceduresPart II
    
    OTHER INFORMATIONItem 1.
    
    Legal ProceedingsItem 2.
    
    Unregistered Sales of Equity Securities and Use of ProceedsItem 3.
    
    Default Upon Senior SecuritiesItem 4.
    
    Submission of Matters to Vote of Security HoldersItem 5.
    
    Other InformationItem 6.
    
    ExhibitsSignaturesExhibits
 FORWARD-LOOKING STATEMENTS
  2




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##### 



3




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##### 



PART I
FINANCIAL INFORMATION
 Item 1. Financial Statements
 United Components, Inc.
 Condensed Consolidated Balance Sheets  (in thousands)
 September 30,
    
    
    December 31,2005
    
    
    2004AssetsCurrent assetsCash and cash equivalents
    
    $
    7,889
    
    
    $
    11,291Accounts receivable, net
    
    
    270,516
    
    
    
    238,581Inventories, net
    
    
    186,481
    
    
    
    188,212Deferred tax assets
    
    
    20,483
    
    
    
    18,578Other current assets
    
    
    20,562
    
    
    
    12,188Total current assets
    
    
    505,931
    
    
    
    468,850Property, plant and equipment, net
    
    
    205,252
    
    
    
    216,849Goodwill
    
    
    166,559
    
    
    
    166,559Other intangible assets, net
    
    
    99,313
    
    
    
    94,229Deferred financing costs, net
    
    
    6,500
    
    
    
    7,686Pension and other assets
    
    
    12,933
    
    
    
    12,772Total assets
    
    $
    996,488
    
    
    $
    966,945Liabilities and shareholders equityCurrent liabilitiesAccounts payable
    
    $
    110,815
    
    
    $
    91,505Short-term borrowings
    
    
    805
    
    
    
    1,267Current maturities of long-term debt
    
    
    39
    
    
    
    228Accrued expenses and other current liabilities
    
    
    82,198
    
    
    
    67,808Total current liabilities
    
    
    193,857
    
    
    
    160,808Long-term debt, less current maturities
    
    
    442,132
    
    
    
    456,674Pension and other postretirement liabilities
    
    
    47,637
    
    
    
    53,141Deferred tax liabilities
    
    
    12,894
    
    
    
    6,430Other liabilities
    
    
    2,019
    
    
    
    1,972Contingencies  Note H
    
    
    
    
    
    
    Total liabilities
    
    
    698,539
    
    
    
    679,025Shareholders equityCommon stock
    
    
    
    
    
    
    Additional paid in capital
    
    
    263,656
    
    
    
    263,120Retained earnings
    
    
    35,173
    
    
    
    22,074Accumulated other comprehensive income (loss)
    
    
    (880
    )
    
    
    2,726Total shareholders equity
    
    
    297,949
    
    
    
    287,920Total liabilities and shareholders equity
    
    $
    996,488
    
    
    $
    966,945
 The accompanying notes are an integral part of these statements.
 4




---



##### 



United Components, Inc.
 Condensed Consolidated Income Statements  (in thousands)
 Three Months ended September 30,
    
    
    Nine Months ended September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net sales
    
    $
    257,397
    
    
    $
    257,566
    
    
    $
    772,188
    
    
    $
    788,329Cost of sales
    
    
    205,880
    
    
    
    202,834
    
    
    
    621,293
    
    
    
    618,254Gross profit
    
    
    51,517
    
    
    
    54,732
    
    
    
    150,895
    
    
    
    170,075Operating expensesSelling and warehousing
    
    
    18,534
    
    
    
    17,436
    
    
    
    55,392
    
    
    
    55,823General and administrative
    
    
    10,755
    
    
    
    10,201
    
    
    
    35,516
    
    
    
    34,400Amortization of intangible assets
    
    
    1,708
    
    
    
    1,566
    
    
    
    4,772
    
    
    
    5,268Losses on abandonment
of an operation (Note K)
    
    
    577
    
    
    
    
    
    
    
    2,759
    
    
    
    Operating income
    
    
    19,943
    
    
    
    25,529
    
    
    
    52,456
    
    
    
    74,584Other income (expense)Interest expense, net
    
    
    (9,223
    )
    
    
    (8,099
    )
    
    
    (26,845
    )
    
    
    (26,687
    )Management fee expense
    
    
    (500
    )
    
    
    (500
    )
    
    
    (1,500
    )
    
    
    (1,500
    )Miscellaneous, net
    
    
    (180
    )
    
    
    168
    
    
    
    (323
    )
    
    
    294Income before income taxes
    
    
    10,040
    
    
    
    17,098
    
    
    
    23,788
    
    
    
    46,691Income tax expense
    
    
    4,044
    
    
    
    6,818
    
    
    
    10,689
    
    
    
    18,659Net income
    
    $
    5,996
    
    
    $
    10,280
    
    
    $
    13,099
    
    
    $
    28,032
 The accompanying notes are an integral part of these statements.
 5




---



##### 



United Components, Inc.
 Condensed Consolidated Statements of Cash Flows  (in thousands)
 Nine Months ended September 30,2005
    
    
    2004Cash flows from operating activities:Net income
    
    $
    13,099
    
    
    $
    28,032Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation
    
    
    24,416
    
    
    
    26,705Amortization of intangible assets
    
    
    4,772
    
    
    
    5,268Amortization of deferred financing costs
and debt issuance costs
    
    
    1,660
    
    
    
    2,183Deferred income taxes
    
    
    5,896
    
    
    
    3,397Other non-cash, net
    
    
    1,079
    
    
    
    874Changes in operating assets and liabilitiesAccounts receivable
    
    
    (33,284
    )
    
    
    (36,618
    )Inventories
    
    
    743
    
    
    
    (22,462
    )Other current assets
    
    
    (2,846
    )
    
    
    (3,277
    )Accounts payable
    
    
    20,287
    
    
    
    30,909Accrued expenses and other current liabilities
    
    
    3,018
    
    
    
    18,099Other assets
    
    
    (157
    )
    
    
    1,020Other liabilities
    
    
    (426
    )
    
    
    1,470Net cash provided by operating activities
    
    
    38,257
    
    
    
    55,600Cash flows from investing activities:Final Acquisition purchase price payment
    
    
    
    
    
    
    (8,000
    )Capital expenditures
    
    
    (26,389
    )
    
    
    (28,636
    )Proceeds from sale of property, plant and equipment
    
    
    161
    
    
    
    399Net cash used in investing activities
    
    
    (26,228
    )
    
    
    (36,237
    )Cash flows from financing activities:Issuances of debt
    
    
    33,000
    
    
    
    467Debt repayments
    
    
    (48,667
    )
    
    
    (40,591
    )Shareholders equity contribution
    
    
    536
    
    
    
    1,735Net cash used in financing activities
    
    
    (15,131
    )
    
    
    (38,389
    )Effect of exchange rate changes on cash
    
    
    (300
    )
    
    
    56Net decrease in cash and cash equivalents
    
    
    (3,402
    )
    
    
    (18,970
    )Cash and cash equivalents at beginning of year
    
    
    11,291
    
    
    
    46,130Cash and cash equivalents at end of period
    
    $
    7,889
    
    
    $
    27,160
 The accompanying notes are an integral part of these statements.
 6




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##### 



United Components, Inc.
 Condensed Consolidated Statements of Changes in Shareholders Equity  (in thousands)
 AccumulatedAdditional
    
    
    Retained
    
    
    Other
    
    
    TotalCommon
    
    
    Paid In
    
    
    Earnings
    
    
    Comprehensive
    
    
    Shareholders
    
    
    ComprehensiveStock
    
    
    Capital
    
    
    (Deficit)
    
    
    Income (Loss)
    
    
    Equity
    
    
    IncomeBalance at January 1, 2004
    
    $
    
    
    
    $
    261,385
    
    
    $
    (8,755
    )
    
    $
    1,460
    
    
    $
    254,090Additions to paid in capital
    
    
    
    
    
    
    1,735
    
    
    
    
    
    
    
    
    
    
    
    1,735Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    28,032
    
    
    
    
    
    
    
    28,032
    
    
    $
    28,032Other comprehensive incomeInterest rate swaps
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (497
    )
    
    
    (497
    )
    
    
    (497
    )Foreign currency adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    588
    
    
    
    588
    
    
    
    588Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    28,123Balance at September 30, 2004
    
    $
    
    
    
    $
    263,120
    
    
    $
    19,277
    
    
    $
    1,551
    
    
    $
    283,948Balance at January 1, 2005
    
    $
    
    
    
    $
    263,120
    
    
    $
    22,074
    
    
    $
    2,726
    
    
    $
    287,920Additions to paid in capital
    
    
    
    
    
    
    536
    
    
    
    
    
    
    
    
    
    
    
    536Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    13,099
    
    
    
    
    
    
    
    13,099
    
    
    $
    13,099Other comprehensive incomeInterest rate swaps
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (344
    )
    
    
    (344
    )
    
    
    (344
    )Foreign currency adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,262
    )
    
    
    (3,262
    )
    
    
    (3,262
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    9,493Balance at September 30, 2005
    
    $
    
    
    
    $
    263,656
    
    
    $
    35,173
    
    
    $
    (880
    )
    
    $
    297,949
 The accompanying notes are an integral part of these statements.
 7




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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
       8




---



##### 



United Components, Inc.
 Notes to Condensed Consolidated Financial Statements
 NOTE B  SALES OF RECEIVABLES
    NOTE C  INVENTORIES
  September 30,
    
    
    December 31,2005
    
    
    2004Raw materials
    
    $
    26,978
    
    
    $
    34,461Work in process
    
    
    53,510
    
    
    
    49,376Finished products
    
    
    127,475
    
    
    
    125,620Valuation reserves
    
    
    (21,482
    )
    
    
    (21,245
    )$
    186,481
    
    
    $
    188,212
 9




---



##### 



United Components, Inc.
 Notes to Condensed Consolidated Financial Statements
 NOTE D  ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
  September 30,
    
    
    December 31, 20042005
    
    

2004Salaries and wages
    
    $
    4,174
    
    
    $
    2,756Bonuses
    
    
    3,030
    
    
    
    4,245Vacation pay
    
    
    6,084
    
    
    
    5,721Pension and other postretirement liabilities
    
    
    8,793
    
    
    
    4,039Product returns
    
    
    13,424
    
    
    
    15,291Rebates, credits and discounts due customers
    
    
    9,168
    
    
    
    6,475Insurance
    
    
    10,877
    
    
    
    9,337Interest
    
    
    8,199
    
    
    
    1,751Taxes payable
    
    
    2,578
    
    
    
    4,081Other
    
    
    15,871
    
    
    
    14,112$
    82,198
    
    
    $
    67,808
 NOTE E  PRODUCT RETURNS LIABILITY
  Nine Months ended September 30,2005
    
    
    2004Beginning of year
    
    $
    15,291
    
    
    $
    13,999Returned parts expense
    
    
    (30,390
    )
    
    
    (28,080
    )Additional loss provision
    
    
    28,523
    
    
    
    30,502End of period
    
    $
    13,424
    
    
    $
    16,421
 NOTE F  PENSION
  Three Months ended
    
    
    Nine Months endedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Service cost
    
    $
    2,216
    
    
    $
    2,035
    
    
    $
    6,780
    
    
    $
    6,104Interest cost
    
    
    3,225
    
    
    
    2,922
    
    
    
    9,673
    
    
    
    8,816Expected return on plan assets
    
    
    (3,487
    )
    
    
    (3,321
    )
    
    
    (10,459
    )
    
    
    (10,074
    )Amortization of transition asset
    
    
    5
    
    
    
    
    
    
    
    17
    
    
    
    Amortization of prior service cost
    
    
    23
    
    
    
    
    
    
    
    67
    
    
    
    Amortization of unrecognized gain
    
    
    11
    
    
    
    
    
    
    
    31
    
    
    
    $
    1,993
    
    
    $
    1,636
    
    
    $
    6,109
    
    
    $
    4,846
 10




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##### 



United Components, Inc.
 Notes to Condensed Consolidated Financial Statements
 NOTE G  DEBT
    NOTE H  CONTINGENCIES
 Environmental
  Litigation
  11




---



##### 



United Components, Inc.
 Notes to Condensed Consolidated Financial Statements
 NOTE I  GEOGRAPHIC INFORMATION
  Three Months ended
    
    
    Nine Months endedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004United States
    
    $
    211,256
    
    
    $
    214,397
    
    
    $
    627,151
    
    
    $
    651,947Canada
    
    
    9,492
    
    
    
    8,138
    
    
    
    25,903
    
    
    
    25,638United Kingdom
    
    
    7,205
    
    
    
    9,391
    
    
    
    27,404
    
    
    
    30,300Mexico
    
    
    8,473
    
    
    
    6,534
    
    
    
    22,277
    
    
    
    20,084Germany
    
    
    3,048
    
    
    
    3,015
    
    
    
    10,619
    
    
    
    9,860Spain
    
    
    837
    
    
    
    766
    
    
    
    2,981
    
    
    
    2,728Belgium
    
    
    1,389
    
    
    
    1,480
    
    
    
    5,219
    
    
    
    5,134France
    
    
    2,457
    
    
    
    1,954
    
    
    
    8,256
    
    
    
    6,007Sweden
    
    
    1,093
    
    
    
    1,231
    
    
    
    4,476
    
    
    
    4,344Other
    
    
    12,147
    
    
    
    10,660
    
    
    
    37,902
    
    
    
    32,287$
    257,397
    
    
    $
    257,566
    
    
    $
    772,188
    
    
    $
    788,329
  September 30,
    
    
    December 31,2005
    
    
    2004United States
    
    $
    270,209
    
    
    $
    268,947United Kingdom
    
    
    36,113
    
    
    
    43,932Mexico
    
    
    13,461
    
    
    
    13,708Spain
    
    
    3,673
    
    
    
    4,366Canada
    
    
    542
    
    
    
    583Goodwill
    
    
    166,559
    
    
    
    166,559$
    490,557
    
    
    $
    498,095
 12




---



##### 



United Components, Inc.
 Notes to Condensed Consolidated Financial Statements
 NOTE J  STOCK OPTIONS
  Three Months ended
    
    
    Nine Months endedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net income as reported
    
    $
    6.0
    
    
    $
    10.3
    
    
    $
    13.1
    
    
    $
    28.0Pro forma stock-based
compensation expense,
net of tax
    
    
    0.4
    
    
    
    0.5
    
    
    
    1.1
    
    
    
    1.5Pro forma net income
    
    $
    5.6
    
    
    $
    9.8
    
    
    $
    12.0
    
    
    $
    26.5
  NOTE K  ABANDONMENT OF AN OPERATION
     NOTE L  INCOME TAXES
  13




---



##### 



United Components, Inc.
 Notes to Condensed Consolidated Financial Statements
 NOTE M  NEW ACCOUNTING PRONOUNCEMENTS
     14




---



##### 



United Components, Inc.
 Notes to Condensed Consolidated Financial Statements
   NOTE N  OTHER INFORMATION
   Three Months ended
    
    Nine Months endedSeptember 30,
    
    September 30,2005
    
    2004
    
    2005
    
    2004Interest
    
    $
    3,158
    
    
    $
    3,079
    
    
    $
    20,298
    
    
    $
    18,916Income taxes (net of refunds)
    
    
    4,021
    
    
    
    10,828
    
    
    
    13,330
    
    
    
    13,383
 15




---



##### 



United Components, Inc.
 Notes to Condensed Consolidated Financial Statements
 NOTE O  GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS
     16




---



##### 



United Components, Inc.
 Notes to Condensed Consolidated Financial Statements
 Consolidating Condensed Balance Sheet
September 30, 2005  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsAssetsCurrent assetsCash and cash equivalents
    
    $
    7,889
    
    
    $
    
    
    
    $
    1,643
    
    
    $
    (140
    )
    
    $
    6,386Accounts receivable, net
    
    
    270,516
    
    
    
    
    
    
    
    
    
    
    
    247,626
    
    
    
    22,890Inventories, net
    
    
    186,481
    
    
    
    
    
    
    
    
    
    
    
    170,658
    
    
    
    15,823Deferred tax assets
    
    
    20,483
    
    
    
    
    
    
    
    (30
    )
    
    
    19,499
    
    
    
    1,014Other current assets
    
    
    20,562
    
    
    
    
    
    
    
    6,737
    
    
    
    8,106
    
    
    
    5,719Total current assets
    
    
    505,931
    
    
    
    
    
    
    
    8,350
    
    
    
    445,749
    
    
    
    51,832Property, plant and equipment, net
    
    
    205,252
    
    
    
    
    
    
    
    832
    
    
    
    155,132
    
    
    
    49,288Intercompany receivables
    
    
    
    
    
    
    (108,888
    )
    
    
    21,037
    
    
    
    85,930
    
    
    
    1,921Intercompany notes receivable
    
    
    
    
    
    
    (467,000
    )
    
    
    467,000
    
    
    
    
    
    
    
    Investment in subsidiaries
    
    
    
    
    
    
    (156,526
    )
    
    
    149,787
    
    
    
    6,739
    
    
    
    Goodwill
    
    
    166,559
    
    
    
    
    
    
    
    166,559
    
    
    
    
    
    
    
    Other intangible assets, net
    
    
    99,313
    
    
    
    
    
    
    
    17,226
    
    
    
    79,665
    
    
    
    2,422Deferred financing costs, net
    
    
    6,500
    
    
    
    
    
    
    
    6,500
    
    
    
    
    
    
    
    Pension and other assets
    
    
    12,933
    
    
    
    
    
    
    
    306
    
    
    
    12,330
    
    
    
    297Total assets
    
    $
    996,488
    
    
    $
    (732,414
    )
    
    $
    837,597
    
    
    $
    785,545
    
    
    $
    105,760Liabilities and shareholders equityCurrent liabilitiesAccounts payable
    
    $
    110,815
    
    
    $
    
    
    
    $
    5,865
    
    
    $
    91,538
    
    
    $
    13,412Short-term borrowings
    
    
    805
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    805Current maturities of long-term debt
    
    
    39
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39Accrued expenses and other current
liabilities
    
    
    82,198
    
    
    
    
    
    
    
    7,365
    
    
    
    66,032
    
    
    
    8,801Total current liabilities
    
    
    193,857
    
    
    
    
    
    
    
    13,230
    
    
    
    157,570
    
    
    
    23,057Long-term debt, less current maturities
    
    
    442,132
    
    
    
    
    
    
    
    442,115
    
    
    
    
    
    
    
    17Pension and other postretirement liabilities
    
    
    47,637
    
    
    
    
    
    
    
    
    
    
    
    31,292
    
    
    
    16,345Deferred tax liabilities
    
    
    12,894
    
    
    
    
    
    
    
    12,192
    
    
    
    2,937
    
    
    
    (2,235
    )Other liabilities
    
    
    2,019
    
    
    
    
    
    
    
    
    
    
    
    2,019
    
    
    
    Intercompany payables
    
    
    
    
    
    
    (108,888
    )
    
    
    72,111
    
    
    
    21,568
    
    
    
    15,209Intercompany notes payable
    
    
    
    
    
    
    (467,000
    )
    
    
    
    
    
    
    447,000
    
    
    
    20,000Total shareholders equity
    
    
    297,949
    
    
    
    (156,526
    )
    
    
    297,949
    
    
    
    123,159
    
    
    
    33,367Total liabilities and shareholders
equity
    
    $
    996,488
    
    
    $
    (732,414
    )
    
    $
    837,597
    
    
    $
    785,545
    
    
    $
    105,760
 17




---



##### 



United Components, Inc.
 Notes to Condensed Consolidated Financial Statements
 Consolidating Condensed Balance Sheet
December 31, 2004  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsAssetsCurrent assetsCash and cash equivalents
    
    $
    11,291
    
    
    $
    
    
    
    $
    3,916
    
    
    $
    2,114
    
    
    $
    5,261Accounts receivable, net
    
    
    238,581
    
    
    
    
    
    
    
    
    
    
    
    215,425
    
    
    
    23,156Inventories, net
    
    
    188,212
    
    
    
    
    
    
    
    
    
    
    
    169,664
    
    
    
    18,548Deferred tax assets
    
    
    18,578
    
    
    
    
    
    
    
    (250
    )
    
    
    17,825
    
    
    
    1,003Other current assets
    
    
    12,188
    
    
    
    
    
    
    
    2,123
    
    
    
    3,670
    
    
    
    6,395Total current assets
    
    
    468,850
    
    
    
    
    
    
    
    5,789
    
    
    
    408,698
    
    
    
    54,363Property, plant and equipment, net
    
    
    216,849
    
    
    
    
    
    
    
    604
    
    
    
    160,907
    
    
    
    55,338Intercompany receivables
    
    
    
    
    
    
    (58,212
    )
    
    
    
    
    
    
    58,212
    
    
    
    Intercompany notes receivable
    
    
    
    
    
    
    (482,000
    )
    
    
    482,000
    
    
    
    
    
    
    
    Investment in subsidiaries
    
    
    
    
    
    
    (146,288
    )
    
    
    135,414
    
    
    
    10,874
    
    
    
    Goodwill
    
    
    166,559
    
    
    
    
    
    
    
    166,559
    
    
    
    
    
    
    
    Other intangible assets, net
    
    
    94,229
    
    
    
    
    
    
    
    7,738
    
    
    
    84,068
    
    
    
    2,423Deferred financing costs, net
    
    
    7,686
    
    
    
    
    
    
    
    7,686
    
    
    
    
    
    
    
    Pension and other assets
    
    
    12,772
    
    
    
    
    
    
    
    272
    
    
    
    12,325
    
    
    
    175Total assets
    
    $
    966,945
    
    
    $
    (686,500
    )
    
    $
    806,062
    
    
    $
    735,084
    
    
    $
    112,299Liabilities and shareholders equityCurrent liabilitiesAccounts payable
    
    $
    91,505
    
    
    $
    
    
    
    $
    4,020
    
    
    $
    72,678
    
    
    $
    14,807Short-term borrowings
    
    
    1,267
    
    
    
    
    
    
    
    500
    
    
    
    
    
    
    
    767Current maturities of long-term debt
    
    
    228
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    228Accrued expenses and other current
liabilities
    
    
    67,808
    
    
    
    
    
    
    
    3,811
    
    
    
    56,423
    
    
    
    7,574Total current liabilities
    
    
    160,808
    
    
    
    
    
    
    
    8,331
    
    
    
    129,101
    
    
    
    23,376Long-term debt, less current maturities
    
    
    456,674
    
    
    
    
    
    
    
    456,641
    
    
    
    
    
    
    
    33Pension and other postretirement liabilities
    
    
    53,141
    
    
    
    
    
    
    
    
    
    
    
    35,911
    
    
    
    17,230Deferred tax liabilities
    
    
    6,430
    
    
    
    
    
    
    
    6,824
    
    
    
    (40
    )
    
    
    (354
    )Other liabilities
    
    
    1,972
    
    
    
    
    
    
    
    
    
    
    
    1,972
    
    
    
    Intercompany payables
    
    
    
    
    
    
    (58,212
    )
    
    
    46,346
    
    
    
    
    
    
    
    11,866Intercompany notes payable
    
    
    
    
    
    
    (482,000
    )
    
    
    
    
    
    
    462,000
    
    
    
    20,000Total shareholders equity
    
    
    287,920
    
    
    
    (146,288
    )
    
    
    287,920
    
    
    
    106,140
    
    
    
    40,148Total liabilities and shareholders
equity
    
    $
    966,945
    
    
    $
    (686,500
    )
    
    $
    806,062
    
    
    $
    735,084
    
    
    $
    112,299
 18




---



##### 



United Components, Inc.
 Notes to Condensed Consolidated Financial Statements
 Consolidating Condensed Income Statement
Three Months Ended September 30, 2005  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsNet sales
    
    $
    257,397
    
    
    $
    (3,765
    )
    
    $
    
    
    
    $
    232,456
    
    
    $
    28,706Cost of sales
    
    
    205,880
    
    
    
    (3,765
    )
    
    
    
    
    
    
    184,849
    
    
    
    24,796Gross profit
    
    
    51,517
    
    
    
    
    
    
    
    
    
    
    
    47,607
    
    
    
    3,910Operating expensesSelling and warehousing
    
    
    18,534
    
    
    
    
    
    
    
    
    
    
    
    16,702
    
    
    
    1,832General and administrative
    
    
    10,755
    
    
    
    
    
    
    
    2,828
    
    
    
    5,488
    
    
    
    2,439Amortization of intangible assets
    
    
    1,708
    
    
    
    
    
    
    
    295
    
    
    
    1,413
    
    
    
    Losses on abandonment of an operation
    
    
    577
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    577Operating income (loss)
    
    
    19,943
    
    
    
    
    
    
    
    (3,123
    )
    
    
    24,004
    
    
    
    (938
    )Other income (expense)Interest expense, net
    
    
    (9,223
    )
    
    
    
    
    
    
    (9,192
    )
    
    
    5
    
    
    
    (36
    )Intercompany interest
    
    
    
    
    
    
    
    
    
    
    9,734
    
    
    
    (9,175
    )
    
    
    (559
    )Management fee expense
    
    
    (500
    )
    
    
    
    
    
    
    (500
    )
    
    
    
    
    
    
    Miscellaneous, net
    
    
    (180
    )
    
    
    
    
    
    
    
    
    
    
    (12
    )
    
    
    (168
    )Income (loss) before income taxes
    
    
    10,040
    
    
    
    
    
    
    
    (3,081
    )
    
    
    14,822
    
    
    
    (1,701
    )Income tax expense (benefit)
    
    
    4,044
    
    
    
    
    
    
    
    (1,462
    )
    
    
    5,943
    
    
    
    (437
    )Increase (decrease) before equity in earnings
of subsidiaries
    
    
    5,996
    
    
    
    
    
    
    
    (1,619
    )
    
    
    8,879
    
    
    
    (1,264
    )Equity in earnings of subsidiaries
    
    
    
    
    
    
    (6,845
    )
    
    
    7,615
    
    
    
    (770
    )
    
    
    Net income (loss)
    
    $
    5,996
    
    
    $
    (6,845
    )
    
    $
    5,996
    
    
    $
    8,109
    
    
    $
    (1,264
    )
 19




---



##### 



United Components, Inc.
 Notes to Condensed Consolidated Financial Statements
 Consolidating Condensed Income Statement
Three Months Ended September 30, 2004  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsNet sales
    
    $
    257,566
    
    
    $
    (3,294
    )
    
    $
    
    
    
    $
    231,682
    
    
    $
    29,178Cost of sales
    
    
    202,834
    
    
    
    (3,294
    )
    
    
    
    
    
    
    181,380
    
    
    
    24,748Gross profit
    
    
    54,732
    
    
    
    
    
    
    
    
    
    
    
    50,302
    
    
    
    4,430Operating expensesSelling and warehousing
    
    
    17,436
    
    
    
    
    
    
    
    26
    
    
    
    15,650
    
    
    
    1,760General and administrative
    
    
    10,201
    
    
    
    
    
    
    
    2,564
    
    
    
    5,507
    
    
    
    2,130Amortization of intangible assets
    
    
    1,566
    
    
    
    
    
    
    
    
    
    
    
    1,566
    
    
    
    Operating income (loss)
    
    
    25,529
    
    
    
    
    
    
    
    (2,590
    )
    
    
    27,579
    
    
    
    540Other income (expense)Interest expense, net
    
    
    (8,099
    )
    
    
    
    
    
    
    (8,143
    )
    
    
    96
    
    
    
    (52
    )Management fee expense
    
    
    (500
    )
    
    
    
    
    
    
    (500
    )
    
    
    
    
    
    
    Miscellaneous, net
    
    
    168
    
    
    
    
    
    
    
    
    
    
    
    188
    
    
    
    (20
    )Income (loss) before income taxes
    
    
    17,098
    
    
    
    
    
    
    
    (11,233
    )
    
    
    27,863
    
    
    
    468Income tax expense (benefit)
    
    
    6,818
    
    
    
    
    
    
    
    (4,979
    )
    
    
    11,550
    
    
    
    247Increase (decrease) before equity in earnings
of subsidiaries
    
    
    10,280
    
    
    
    
    
    
    
    (6,254
    )
    
    
    16,313
    
    
    
    221Equity in earnings of subsidiaries
    
    
    
    
    
    
    (16,326
    )
    
    
    16,534
    
    
    
    (208
    )
    
    
    Net income
    
    $
    10,280
    
    
    $
    (16,326
    )
    
    $
    10,280
    
    
    $
    16,105
    
    
    $
    221
 20




---



##### 



United Components, Inc.
 Notes to Condensed Consolidated Financial Statements
 Consolidating Condensed Income Statement
Nine Months Ended September 30, 2005  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsNet sales
    
    $
    772,188
    
    
    $
    (10,321
    )
    
    $
    
    
    
    $
    685,364
    
    
    $
    97,145Cost of sales
    
    
    621,293
    
    
    
    (10,321
    )
    
    
    
    
    
    
    550,604
    
    
    
    81,010Gross profit
    
    
    150,895
    
    
    
    
    
    
    
    
    
    
    
    134,760
    
    
    
    16,135Operating expensesSelling and warehousing
    
    
    55,392
    
    
    
    
    
    
    
    
    
    
    
    49,585
    
    
    
    5,807General and administrative
    
    
    35,516
    
    
    
    
    
    
    
    9,497
    
    
    
    16,730
    
    
    
    9,289Amortization of intangible assets
    
    
    4,772
    
    
    
    
    
    
    
    295
    
    
    
    4,477
    
    
    
    Losses on abandonment of an
operation
    
    
    2,759
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,759Operating income (loss)
    
    
    52,456
    
    
    
    
    
    
    
    (9,792
    )
    
    
    63,968
    
    
    
    (1,720
    )Other income (expense)Interest expense, net
    
    
    (26,845
    )
    
    
    
    
    
    
    (26,931
    )
    
    
    58
    
    
    
    28Intercompany interest
    
    
    
    
    
    
    
    
    
    
    28,498
    
    
    
    (26,938
    )
    
    
    (1,560
    )Management fee expense
    
    
    (1,500
    )
    
    
    
    
    
    
    (1,500
    )
    
    
    
    
    
    
    Miscellaneous, net
    
    
    (323
    )
    
    
    
    
    
    
    
    
    
    
    150
    
    
    
    (473
    )Income (loss) before income taxes
    
    
    23,788
    
    
    
    
    
    
    
    (9,725
    )
    
    
    37,238
    
    
    
    (3,725
    )Income tax expense (benefit)
    
    
    10,689
    
    
    
    
    
    
    
    (3,920
    )
    
    
    15,009
    
    
    
    (400
    )Increase (decrease) before equity in earnings
of subsidiaries
    
    
    13,099
    
    
    
    
    
    
    
    (5,805
    )
    
    
    22,229
    
    
    
    (3,325
    )Equity in earnings of subsidiaries
    
    
    
    
    
    
    (15,325
    )
    
    
    18,904
    
    
    
    (3,579
    )
    
    
    Net income (loss)
    
    $
    13,099
    
    
    $
    (15,325
    )
    
    $
    13,099
    
    
    $
    18,650
    
    
    $
    (3,325
    )
 21




---



##### 



United Components, Inc.
 Notes to Condensed Consolidated Financial Statements
 Consolidating Condensed Income Statement
Nine Months Ended September 30, 2004  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsNet sales
    
    $
    788,329
    
    
    $
    (11,035
    )
    
    $
    
    
    
    $
    705,015
    
    
    $
    94,349Cost of sales
    
    
    618,254
    
    
    
    (11,035
    )
    
    
    
    
    
    
    551,510
    
    
    
    77,779Gross profit
    
    
    170,075
    
    
    
    
    
    
    
    
    
    
    
    153,505
    
    
    
    16,570Operating expensesSelling and warehousing
    
    
    55,823
    
    
    
    
    
    
    
    
    
    
    
    50,372
    
    
    
    5,451General and administrative
    
    
    34,400
    
    
    
    
    
    
    
    7,718
    
    
    
    18,829
    
    
    
    7,853Amortization of intangible assets
    
    
    5,268
    
    
    
    
    
    
    
    
    
    
    
    5,268
    
    
    
    Operating income (loss)
    
    
    74,584
    
    
    
    
    
    
    
    (7,718
    )
    
    
    79,036
    
    
    
    3,266Other income (expense)Interest expense, net
    
    
    (26,687
    )
    
    
    
    
    
    
    (26,806
    )
    
    
    278
    
    
    
    (159
    )Management fee expense
    
    
    (1,500
    )
    
    
    
    
    
    
    (1,500
    )
    
    
    
    
    
    
    Miscellaneous, net
    
    
    294
    
    
    
    
    
    
    
    
    
    
    
    257
    
    
    
    37Income (loss) before income taxes
    
    
    46,691
    
    
    
    
    
    
    
    (36,024
    )
    
    
    79,571
    
    
    
    3,144Income tax expense (benefit)
    
    
    18,659
    
    
    
    
    
    
    
    (14,836
    )
    
    
    31,748
    
    
    
    1,747Increase (decrease) before equity
in earnings of subsidiaries
    
    
    28,032
    
    
    
    
    
    
    
    (21,188
    )
    
    
    47,823
    
    
    
    1,397Equity in earnings of subsidiaries
    
    
    
    
    
    
    (47,560
    )
    
    
    49,220
    
    
    
    (1,660
    )
    
    
    Net income
    
    $
    28,032
    
    
    $
    (47,560
    )
    
    $
    28,032
    
    
    $
    46,163
    
    
    $
    $1,397
 22




---



##### 



United Components, Inc.
 Notes to Condensed Consolidated Financial Statements
 Consolidating Condensed Statement of Cash Flows
Nine Months Ended September 30, 2005  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsNet cash provided by operating activities
    
    $
    38,257
    
    
    $
    
    
    
    $
    22,777
    
    
    $
    10,037
    
    
    $
    5,443Cash flows from investing activities:Capital expenditures
    
    
    (26,389
    )
    
    
    
    
    
    
    (10,086
    )
    
    
    (12,306
    )
    
    
    (3,997
    )Proceeds from sale of property, plant
and equipment
    
    
    161
    
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    146Net cash used in investing activities
    
    
    (26,228
    )
    
    
    
    
    
    
    (10,086
    )
    
    
    (12,291
    )
    
    
    (3,851
    )Cash flows from financing activities:Issuances of debt
    
    
    33,000
    
    
    
    
    
    
    
    33,000
    
    
    
    
    
    
    
    Debt repayments
    
    
    (48,667
    )
    
    
    
    
    
    
    (48,500
    )
    
    
    
    
    
    
    (167
    )Shareholders equity contribution
    
    
    536
    
    
    
    
    
    
    
    536
    
    
    
    
    
    
    
    Net cash used in financing activities
    
    
    (15,131
    )
    
    
    
    
    
    
    (14,964
    )
    
    
    
    
    
    
    (167
    )Effect of exchange rate changes on cash
    
    
    (300
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (300
    )Net increase (decrease) in cash and cash
equivalents
    
    
    (3,402
    )
    
    
    
    
    
    
    (2,273
    )
    
    
    (2,254
    )
    
    
    1,125Cash and cash equivalents at beginning of year
    
    
    11,291
    
    
    
    
    
    
    
    3,916
    
    
    
    2,114
    
    
    
    5,261Cash and cash equivalents at end of period
    
    $
    7,889
    
    
    $
    
    
    
    $
    1,643
    
    
    $
    (140
    )
    
    $
    6,386
 23




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##### 



United Components, Inc.
 Notes to Condensed Consolidated Financial Statements
 Consolidating Condensed Statement of Cash Flows
Nine Months Ended September 30, 2004  (in thousands)
 UCI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Consolidated
    
    
    Eliminations
    
    
    UCI
    
    
    Guarantors
    
    
    GuarantorsNet cash provided by operating activities
    
    $
    55,600
    
    
    $
    
    
    
    $
    27,281
    
    
    $
    20,376
    
    
    $
    7,943Cash flows from investing activities:Final Acquisition purchase price
payment
    
    
    (8,000
    )
    
    
    
    
    
    
    (8,000
    )
    
    
    
    
    
    
    Capital expenditures
    
    
    (28,636
    )
    
    
    
    
    
    
    (2,101
    )
    
    
    (22,348
    )
    
    
    (4,187
    )Proceeds from sale of property,
plant and equipment
    
    
    399
    
    
    
    
    
    
    
    
    
    
    
    132
    
    
    
    267Net cash used in investing activities
    
    
    (36,237
    )
    
    
    
    
    
    
    (10,101
    )
    
    
    (22,216
    )
    
    
    (3,920
    )Cash flows from financing activities:Issuances of debt
    
    
    467
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    467Debt repayments
    
    
    (40,591
    )
    
    
    
    
    
    
    (40,000
    )
    
    
    
    
    
    
    (591
    )Shareholders equity contribution
    
    
    1,735
    
    
    
    
    
    
    
    1,735
    
    
    
    
    
    
    
    Dividends
    
    
    
    
    
    
    
    
    
    
    5,332
    
    
    
    
    
    
    
    (5,332
    )Net cash used in financing activities
    
    
    (38,389
    )
    
    
    
    
    
    
    (32,933
    )
    
    
    
    
    
    
    (5,456
    )Effect of exchange rate changes on cash
    
    
    56
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56Net decrease in cash and cash equivalents
    
    
    (18,970
    )
    
    
    
    
    
    
    (15,753
    )
    
    
    (1,840
    )
    
    
    (1,377
    )Cash and cash equivalents at beginning of year
    
    
    46,130
    
    
    
    
    
    
    
    33,164
    
    
    
    4,448
    
    
    
    8,518Cash and cash equivalents at end of period
    
    $
    27,160
    
    
    $
    
    
    
    $
    17,411
    
    
    $
    2,608
    
    
    $
    7,141
 24




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##### 



Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Overview
 Sales .
    Cost of Sales
 25




---



##### 



Selling and Warehousing Expenses
  General and Administrative Expenses
 Critical Accounting Policies and Estimates
   Accounts receivable
 26




---



##### 



Inventory
 Revenue recognition
  Product returns .
 Impairment of intangible assets and tangible fixed assets
  Retirement benefits
  27




---



##### 



Insurance reserves .
 Environmental expenditures
 Income taxes .
 28




---



##### 



Results of Operations
  Three Months ended
    
    
    Nine Months endedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net sales
    
    $
    257.4
    
    
    $
    257.6
    
    
    $
    772.2
    
    
    $
    788.3Cost of sales
    
    
    205.9
    
    
    
    202.9
    
    
    
    621.3
    
    
    
    618.2Gross profit
    
    
    51.5
    
    
    
    54.7
    
    
    
    150.9
    
    
    
    170.1Operating expensesSelling and warehousing
    
    
    18.5
    
    
    
    17.4
    
    
    
    55.4
    
    
    
    55.8General and administrative
    
    
    10.8
    
    
    
    10.2
    
    
    
    35.4
    
    
    
    34.4Amortization of intangible assets
    
    
    1.7
    
    
    
    1.6
    
    
    
    4.8
    
    
    
    5.3Losses on abandonment of an operation
    
    
    0.6
    
    
    
    
    
    
    
    2.8
    
    
    
    Operating income
    
    
    19.9
    
    
    
    25.5
    
    
    
    52.5
    
    
    
    74.6Other income (expense)Interest expense, net
    
    
    (9.2
    )
    
    
    (8.1
    )
    
    
    (26.8
    )
    
    
    (26.7
    )Management fee expense
    
    
    (0.5
    )
    
    
    (0.5
    )
    
    
    (1.5
    )
    
    
    (1.5
    )Miscellaneous, net
    
    
    (0.2
    )
    
    
    0.2
    
    
    
    (0.4
    )
    
    
    0.3Income before income taxes
    
    
    10.0
    
    
    
    17.1
    
    
    
    23.8
    
    
    
    46.7Income tax expense
    
    
    4.0
    
    
    
    6.8
    
    
    
    10.7
    
    
    
    18.7Net income
    
    $
    6.0
    
    
    $
    10.3
    
    
    $
    13.1
    
    
    $
    28.0
 Three Months Ended September 30, 2005 Compared with the Three Months Ended September 30, 2004
 Net sales
 Gross Profit .
  29




---



##### 



Selling and warehousing expenses
 General and administrative expenses
 Losses on abandonment of an operation .
 Interest expense, net
 Income tax expense
 Net Income
 Nine Months Ended September 30, 2005 Compared with the Nine Months Ended September 30, 2004
 Net sales
 Gross Profit .
  30




---



##### 



Selling and warehousing expenses
 General and administrative expenses
 Losses on abandonment of an operation .
 Interest expense, net
 Income tax expense
 Net Income
 31




---



##### 



Liquidity and Capital Resources
  September 30,
    
    
    December 31,2005
    
    
    2004Short-term borrowings
    
    $
    0.8
    
    
    $
    1.3Capitalized leases
    
    
    0.1
    
    
    
    0.3Term loan
    
    
    217.0
    
    
    
    232.0Senior subordinated notes
    
    
    230.0
    
    
    
    230.0Debt issuance costs
    
    
    (4.9
    )
    
    
    (5.4
    )$
    443.0
    
    
    $
    458.2
  2005
    
    $
    0.82006
    
    
    2007
    
    
    0.62008
    
    
    2.32009
    
    
    107.7Thereafter
    
    
    336.5$
    447.9
   32




---



##### 



Net cash provided by operating activities
  33




---



##### 



Net cash used in investing activities
  Recent Accounting Pronouncements
     34




---



##### 



35




---



##### 



Item 3. Quantitative and Qualitative Disclosures about Market Risk
  Foreign Currency Exposure
 Currency translation
  Currency transactions .
  Interest Rate Risk
  36




---



##### 



Treasury Policy
  Item 4. Controls and Procedures
    37




---



##### 



PART II
OTHER INFORMATION
 Item 1. Legal Proceedings
  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 the Company, whether made before or
after the date hereof, regardless of any general incorporation language in such filing.
 38




---



##### 



SIGNATURES
  UNITED COMPONENTS, INC.Date:
November 10, 2005
    
    By:
    
    /s/  Charles T. DicksonName:
    
    Charles T. DicksonTitle:
    
    Chief Financial Officer
 39