<PAGE>

================================================================================


                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


FOR THE QUARTERLY PERIOD ENDED April 30, 2000    COMMISSION FILE NO. 1-13683


                         DELCO REMY INTERNATIONAL, INC.
             (Exact name of registrant as specified in its charter)


<TABLE>
<S>                                                         <C>
         DELAWARE                                                    35-1909253
(State or other jurisdiction of                                     (I.R.S. Employer
incorporation or organization)                                      Identification No.)

       2902 ENTERPRISE DRIVE
        ANDERSON, INDIANA                                                46013
(Address of principal executive offices)                               (Zip Code)
</TABLE>

                                 (765) 778-6499
              (Registrant's telephone number, including area code)

                                 NOT APPLICABLE
   (Former name, former address and former fiscal year, if changed since last
                                    report)

   INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.

                 Yes X                                        No
                    ---                                         ---

   INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S CLASSES
OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.

                                           Number of common shares outstanding
         Class                                      as of June 6, 2000
----------------------                    ------------------------------------
Common Stock - Class A                                  18,118,058
Common Stock - Class B                                   6,278,055

<PAGE>

                DELCO REMY INTERNATIONAL, INC. AND SUBSIDIARIES

                                     INDEX
<TABLE>
<CAPTION>


PART I   FINANCIAL INFORMATION                                                     Page
<S>              <C>                                                              <C>

     Item 1      Financial Statements (Unaudited)

                 Condensed Consolidated Statements of Operations................     3

                 Condensed Consolidated Balance Sheets..........................     4

                 Condensed Consolidated Statements of Cash Flows................     5

                 Notes to Condensed Consolidated Financial Statements...........     6

     Item 2      Management's Discussion and Analysis of Financial Condition and
                 Results of Operations..........................................    19

PART II  OTHER INFORMATION

     Item 5      Other Information..............................................    23

     Item 6      Exhibits and Reports on Form 8-K...............................    23

SIGNATURES       ...............................................................    24

</TABLE>




                                       2
<PAGE>

                         PART I  FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS
------------------------------

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                DELCO REMY INTERNATIONAL, INC. AND SUBSIDIARIES
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                 THREE-MONTH PERIOD            NINE-MONTH PERIOD
                                                   ENDED APRIL 30               ENDED APRIL 30
                                         ----------------------------------------------------------
<S>                                          <C>            <C>            <C>            <C>
                                                 2000           1999           2000          1999
                                         ----------------------------------------------------------
                                              (IN THOUSANDS OF DOLLARS, EXCEPT FOR SHARE AMOUNTS)

Net sales                                      $274,861       $248,826       $812,087      $703,935
Cost of goods sold                              210,330        196,305        629,384       562,932
                                         ----------------------------------------------------------

Gross profit                                     64,531         52,521        182,703       141,003
Selling, general and administrative
 expenses                                        31,084         27,142         92,840        73,918

Amortization of goodwill and intangibles          1,603          1,015          4,511         3,351
                                         ----------------------------------------------------------

Operating income                                 31,844         24,364         85,352        63,734
Interest expense and other non-operating
 expenses                                       (12,760)       (12,695)       (36,682)      (34,363)
                                         ----------------------------------------------------------

Income before income taxes, minority
 interest in income of subsidiaries and
 income (loss) from unconsolidated joint
 ventures                                        19,084         11,669         48,670        29,371
Income taxes                                      7,249          4,550         18,491        11,456
Minority interest in income of
 subsidiaries                                    (1,626)          (746)        (5,053)       (2,328)
Income (loss) from unconsolidated joint
 ventures                                           (10)         1,801            (46)        3,828
                                         ----------------------------------------------------------

Net income                                     $ 10,199       $  8,174       $ 25,080      $ 19,415
                                         ==========================================================

Basic earnings per common share                   $0.42          $0.34          $1.04         $0.81
                                         ==========================================================

Diluted earnings per common share                 $0.39          $0.32          $0.97         $0.75
                                         ==========================================================

                     See Notes to Condensed Consolidated Financial Statements
</TABLE>

                                       3
<PAGE>

                     Condensed Consolidated Balance Sheets
                DELCO REMY INTERNATIONAL, INC. AND SUBSIDIARIES
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                        April 30,                          JULY 31,
                                                                          2000                               1999
                                                              ---------------------------        ---------------------------
                                                                                 (in thousands of dollars)
<S>                                                             <C>                                <C>
Assets
Current assets:
 Cash and cash equivalents                                              $ 15,343                           $ 15,309
 Trade accounts receivable, net                                          168,785                            147,988
 Other receivables                                                        16,529                             15,496
 Inventories                                                             276,126                            232,165
 Deferred income taxes                                                    15,336                             14,997
 Other current assets                                                      5,952                              2,903
                                                              ---------------------------        ---------------------------

Total current assets                                                     498,071                            428,858

Property and equipment                                                   288,387                            258,727
Less accumulated depreciation                                             81,241                             63,532
                                                              ---------------------------        ---------------------------

 Property and equipment, net                                             207,146                            195,195

Deferred financing costs                                                   9,864                             11,192
Goodwill (net of accumulated amortization)                               167,838                            137,429
Investments in joint ventures                                              5,903                              4,756
Other assets                                                               6,340                              5,233
                                                              ---------------------------        ---------------------------

 Total assets                                                           $895,162                           $782,663
                                                              ===========================        ===========================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable                                                       $137,144                           $119,339
 Accrued interest payable                                                 11,752                             11,603
 Accrued restructuring charges                                             5,493                              5,866
 Other liabilities and accrued expenses                                   48,424                             37,105
 Current debt                                                              5,010                             12,596
                                                              ---------------------------        ---------------------------

Total current liabilities                                                207,823                            186,509

Deferred income taxes                                                      4,569                              4,568
Long-term debt, less current portion                                     500,641                            434,931
Post-retirement benefits other than pensions                              23,685                             21,050
Accrued pension benefits                                                       -                              2,719
Other noncurrent liabilities                                               3,603                              3,545
Commitments and contingencies
Minority interest in subsidiaries                                         24,292                             19,821

Stockholders' equity:
 Common stock:
   Class A shares                                                            182                                182
   Class B shares                                                             63                                 63
 Paid-in capital                                                         104,176                            104,176
 Retained earnings                                                        37,232                             12,152
 Accumulated other comprehensive loss                                    (10,718)                            (6,516)
 Stock purchase plan                                                        (386)                              (537)
                                                              ---------------------------        ---------------------------

Total stockholders' equity                                               130,549                            109,520
                                                              ---------------------------        ---------------------------

 Total liabilities and stockholders' equity                             $895,162                           $782,663
                                                              ===========================        ===========================

                              See Notes to Condensed Consolidated Financial Statements
</TABLE>

                                       4
<PAGE>

                Condensed Consolidated Statements of Cash Flows
                DELCO REMY INTERNATIONAL, INC. AND SUBSIDIARIES
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                               NINE-MONTH PERIOD
                                                                                ENDED APRIL 30,
                                                                   ---------------------------------------
<S>                                                                  <C>                    <C>
                                                                         2000                   1999
                                                                   ----------------       ----------------
                                                                           (IN THOUSANDS OF DOLLARS)
Operating activities:
Net income                                                                 $ 25,080               $ 19,415
Adjustments to reconcile net income to net cash provided by
 operating activities:
 Depreciation                                                                20,777                 13,614
 Amortization                                                                 4,511                  3,351
 Minority interest in income of subsidiaries                                  5,053                  2,328
 (Income) loss from unconsolidated joint ventures                                46                 (3,828)
 Deferred income taxes                                                            -                  5,547
 Post-retirement benefits other than pensions                                 2,635                  2,871
 Accrued pension benefits                                                    (2,739)                (1,679)
 Non-cash interest expense                                                    1,321                  1,207
 Changes in operating assets and liabilities, net of
  acquisitions:
   Accounts receivable                                                        2,695                (19,167)
   Inventories                                                              (25,448)               (14,955)
   Accounts payable                                                          10,400                 19,042
   Other current assets and liabilities                                       2,307                 (6,816)
   Accrued restructuring charges                                               (373)               (11,322)
   Other non-current assets and liabilities, net                             (2,989)                (1,652)
                                                                   ----------------       ----------------

Net cash provided by operating activities                                    43,276                  7,956

INVESTING ACTIVITIES:
Acquisitions, net of cash acquired                                          (67,646)               (41,748)
Purchases of property and equipment                                         (28,779)               (18,023)
                                                                   ----------------       ----------------

Net cash used in investing activities                                       (96,425)               (59,771)

FINANCING ACTIVITIES:
Net borrowings under revolving line of credit and other                      54,933                 51,802
Distributions to minority interests                                          (1,200)                     -
                                                                   ----------------       ----------------

Net cash provided by financing activities                                    53,733                 51,802
Effect of exchange rate changes on cash                                        (550)                  (390)
                                                                   ----------------       ----------------

Net increase (decrease) in cash and cash equivalents                             34                   (403)
Cash and cash equivalents at beginning of period                             15,309                  8,113
                                                                   ----------------       ----------------

Cash and cash equivalents at end of period                                 $ 15,343               $  7,710
                                                                   ================       ================

                            See Notes to Condensed Consolidated Financial Statements
</TABLE>

                                       5
<PAGE>

                DELCO REMY INTERNATIONAL, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
                           (IN THOUSANDS OF DOLLARS)


1.  Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X.  Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.  In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for a fair presentation
have been included.  Operating results for the three-month and nine-month
periods ended April 30, 2000 are not necessarily indicative of the results that
may be expected for the full fiscal year. The balance sheet at July 31, 1999 has
been derived from the audited financial statements at that date but does not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. For further
information, refer to the consolidated financial statements and footnotes
thereto for the year ended July 31, 1999 in Form 10-K.

2. ADDITIONAL BALANCE SHEET INFORMATION

<TABLE>
<S>                                                  <C>                       <C>
                                                         APRIL 30,                  JULY 31,
Inventory:                                                 2000                      1999
                                                   --------------------      --------------------

Raw material                                              $138,569                  $121,725
Work-in-process                                             50,286                    50,725
Finished goods                                              87,271                    59,715
                                                   --------------------      --------------------

Total                                                     $276,126                  $232,165
                                                   ====================      ====================
</TABLE>

3. COMPREHENSIVE INCOME

The Company's other comprehensive income consists of unrealized gains and losses
on the translation of the assets and liabilities of its foreign operations.
Comprehensive income was $5,302 and $8,760 for the three- month periods ending
April 30, 2000 and 1999, respectively, and $20,878 and $19,906 for the nine-
month periods ending April 30, 2000 and 1999, respectively.  The unrealized
other comprehensive net loss of $4,202 in the first three quarters of fiscal
2000 primarily reflects the weakening of the Irish Punt, Hungarian Forint and
Belgian Franc against the U.S. Dollar, partially offset by the strengthening of
the South Korean Won against the U.S. Dollar between July 31, 1999 and April 30,
2000.

                                       6
<PAGE>

4. EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income available to common
stockholders by the weighted average number of common stock shares outstanding
during the period.  Diluted earnings per share is computed by dividing net
income available to common stockholders by the weighted average number of common
stock shares outstanding during the period plus potential dilutive instruments,
including stock options, warrants and the stock purchase plan.

The following table sets forth the numerator and denominator for the computation
of basic and diluted earnings per share:

<TABLE>
<CAPTION>
                                                        THREE-MONTH PERIOD                         NINE-MONTH PERIOD
                                                          ENDED APRIL 30,                           ENDED APRIL 30,
                                              --------------------------------------   ---------------------------------------
<S>                                             <C>                <C>                    <C>              <C>
                                                        2000            1999                     2000             1999
                                              ------------------ -------------------   ------------------- -------------------
Numerator:
Net income                                          $    10,199     $     8,174              $    25,080      $    19,415
                                              ================== ===================   =================== ===================

DENOMINATOR:
Denominator for basic earnings per share
 (weighted average shares)                           24,240,713      23,859,570               24,223,913       23,825,522

Effect of dilutive securities:
    Warrants                                          1,679,726       1,679,787                1,679,759        1,679,805
    Stock purchase plan and stock options                79,445         305,450                   84,541          367,391
                                              ------------------ -------------------   ------------------- -------------------
Denominator for diluted earnings per share
  (weighted average shares and assumed
   conversions)                                      25,999,884      25,844,807               25,988,213       25,872,718
                                              ================== ===================   =================== ===================
</TABLE>

5. RESTRUCTURING CHARGES

In May 1998, the Company offered an incentive separation payment to DRA hourly
employees through a voluntary employee termination program (VTEP).  By the
program's completion date on July 10, 1998, 337 employees had accepted the
Company's offer.  A charge of $26,515 was recorded for these separation costs,
$9,975 of which were paid in fiscal year 1998, $11,565 of which were paid in
fiscal year 1999 and $1,109 of which were paid in the first three quarters of
fiscal year 2000.  Approximately $2,541 are to be paid in the fourth quarter of
fiscal year 2000 and $1,325 are to be paid in fiscal year 2001.

                                       7
<PAGE>

The following table summarizes the status of the reserves for restructuring
charges:

<TABLE>
<CAPTION>
                                                  Termination          Exit/Impairment
                                                   Benefits                 Costs                      Total
                                             ------------------     ----------------------     ------------------
<S>                                            <C>                    <C>                        <C>
Reserve at July 31, 1999                                 $4,975                      $ 891                 $5,866
Payments and charges in the three month
 period ended October 31, 1999                             (455)                        (8)                  (463)
                                             ------------------     ----------------------     ------------------
Reserve at October 31, 1999                               4,520                        883                  5,403
Payments and charges in the three month
 period ended January 31, 2000                             (605)                       (21)                  (626)
                                             ------------------     ----------------------     ------------------
Reserve at January 31, 2000                               3,915                        862                  4,777
Payments and charges in the three month
 period ended April 30, 2000                                (49)                      (285)                  (334)

Reserve established in acquisition of
 business                                                 1,050                          -                  1,050
                                             ------------------     ----------------------     ------------------
Reserve at April 30, 2000                                $4,916                      $ 577                 $5,493
                                             ==================     ======================     ==================
</TABLE>

6.  ACQUISITIONS

On March 10, 2000, Reman Holdings, Inc., a wholly owned subsidiary of the
Company, purchased 100% of the capital shares of M&M Knopf Auto Parts, Inc.
("Knopf") from certain shareholders.  The purchase price of approximately
$61,000, net of cash acquired and including the payoff of certain debt of Knopf,
was funded through proceeds from the Company's Senior Credit Facility and is
subject to certain adjustments.  The acquisition will be accounted for under the
purchase method.  Accordingly, the assets and liabilities were recorded based
upon their fair values at the date of acquisition and resulting goodwill of
approximately $34,000 will be amortized over 30 years.  The purchase price is
subject to an additional contingent payment of cash and/or common stock of the
Company in fiscal year 2005, subject to the achievement by Knopf of certain
earnings goals.  The amount of this payment can not currently be determined.
This additional contingent purchase price, if any, will increase the goodwill
recorded for the acquisition and will be amortized over its remaining useful
life.  Results of operations for Knopf are included in the Company's financial
statements effective March 1, 2000.  Knopf is engaged in automotive component
recovery and exchange.

In April 2000, the Company acquired Elmot-DR, Sp.z.o.o., a Polish manufacturer
of starters and alternators for the OEM and aftermarket in Europe, for
approximately $675.  In August 1999, the Company acquired Engine Master, a
remanufacturer of engines located in Dallas, Texas, for approximately $5,700.

                                       8
<PAGE>

The unaudited pro forma consolidated results of operations, assuming the
acquisitions of Williams Technologies, Inc. (Williams) (acquired on November 13,
1998), Remy Korea Limited (Remy Korea) (additional 31% interest acquired on June
25, 1999) and Knopf had been consummated as of the beginning of the preceding
year, are as follows:
<TABLE>
<CAPTION>


                              Nine Months Ended  Nine Months Ended
                               April 30, 2000     April 30, 1999
                              -----------------  -----------------
<S>                           <C>                <C>

     Net sales                      $853,655           $782,108
     Net income                       29,578             27,557
     Basic earnings per share           1.22               1.16
     Diluted earnings per share         1.14               1.07
</TABLE>

The pro forma consolidated financial information has been prepared for
comparative purposes only and does not purport to present what the Company's
consolidated results of operations would actually have been if the operations
were combined during the periods presented and is not intended to project future
results or trends of operations.



7. FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS AND NON-GUARANTOR
SUBSIDIARIES

The Company conducts a significant portion of its business through subsidiaries.
The Senior Notes and the Senior Subordinated Notes are fully and unconditionally
guaranteed, jointly and severally, by certain direct and indirect subsidiaries
(the Subsidiary Guarantors). Certain of the Company's subsidiaries do not
guarantee the Senior Notes or the Senior Subordinated Notes (the Non-Guarantor
Subsidiaries). The claims of creditors of Non-Guarantor Subsidiaries have
priority over the rights of the Company to receive dividends or distributions
from such subsidiaries.

Presented below is condensed consolidating financial information for the
Company, the Subsidiary Guarantors and the Non-Guarantor Subsidiaries at April
30, 2000 and July 31, 1999 and for the three month and nine month periods ended
April 30, 2000 and 1999.

The equity method has been used by the Company with respect to investments in
subsidiaries. The equity method has been used by Subsidiary Guarantors with
respect to investments in Non-Guarantor Subsidiaries. Separate financial
statements for Subsidiary Guarantors are not presented based on management's
determination that they do not provide additional information that is material
to investors.

                                       9
<PAGE>

The following table sets forth the Guarantor and direct Non-Guarantor
Subsidiaries:

<TABLE>
<CAPTION>
             GUARANTOR SUBSIDIARIES                              NON-GUARANTOR SUBSIDIARIES
---------------------------------------------------------------------------------------------------------
<S>                                                <C>
Delco Remy America, Inc.                           Delco Remy Hungary RT (formerly Autovill RT Ltd.)
Nabco, Inc.                                        Power Investments Canada Ltd.
The A&B Group, Inc.                                Delco Remy UK Limited
A&B Enterprises, Inc.                              Delco Remy International (Europe) GmbH
Dalex, Inc.                                        Remy India Holdings, Inc.
A&B Cores, Inc.                                    Remy Korea Holdings, Inc.
R&L Tool Company, Inc.                             Alberta Ltd.
MCA, Inc. of Mississippi                           World Wide Automotive Distributors, Inc.
Power Investments, Inc.                            Kraftube, Inc.
Franklin Power Products, Inc.                      Tractech (Ireland) Ltd.
International Fuel Systems, Inc.                   Central Precision Limited
Marine Drive Systems, Inc.                         Electro Diesel Rebuild BVBA
Marine Corporation of America                      Electro Rebuild Tunisia S.A.R.L. (Tunisia)
Powrbilt Products, Inc.                            Delco Remy Mexico, S. de R.L. de C.V.
World Wide Automotive, Inc.                        Publitech, Inc.
Ballantrae Corporation                             Delco Remy Brazil, Ltda.
Tractech Inc.                                      Western Reman Ltd. (Canada)
Williams Technologies, Inc.                        Engine Rebuilders Ltd.
Western Reman, Inc.                                Reman Transport Ltd.
Engine Master, L.P.                                Delco Remy Remanufacturing
M & M Knopf Auto Parts, Inc.                       Delco Remy Germany GmbH
                                                   Remy Componentes S. de R. L. de C. V.
                                                   Delco Remy Belgium BVBA
                                                   Magnum Power Products, LLC
                                                   Elmot-DR, Sp.z.o.o.
---------------------------------------------------------------------------------------------------------
</TABLE>

                                       10
<PAGE>

                DELCO REMY INTERNATIONAL, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                FOR THE THREE MONTH PERIOD ENDED APRIL 30, 2000
                                  (UNAUDITED)
                           (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                             DELCO REMY
                                         INTERNATIONAL INC.                           NON-
                                               (PARENT           SUBSIDIARY         GUARANTOR
                                            COMPANY ONLY)        GUARANTORS       SUBSIDIARIES       ELIMINATIONS      CONSOLIDATED
                                    -----------------------------------------------------------------------------------------------

<S>                                     <C>                   <C>                 <C>              <C>                 <C>
Net sales                               $         -                  $280,044          $97,377     $  (102,560)(a)         $274,861
Cost of goods sold                                -                   232,580           80,310        (102,560)(a)          210,330
                                    -----------------------------------------------------------------------------------------------

Gross profit                                      -                    47,464           17,067                -              64,531
Selling, general and administrative
 expenses                                      3,231                   20,611            7,242                -              31,084
Amortization of goodwill and
 intangibles                                      16                    1,414              173                -               1,603
                                    -----------------------------------------------------------------------------------------------
Operating (loss) income                       (3,247)                  25,439            9,652                -              31,844
Interest expense and other
 non-operating expenses                       (7,585)                  (4,287)            (888)               -             (12,760)
                                    -----------------------------------------------------------------------------------------------

Income (loss) before income taxes,
 minority interest in income of
 subsidiaries, loss from
 unconsolidated joint ventures and
 equity in earnings of subsidiaries          (10,832)                  21,152            8,764                -              19,084
Income taxes (benefit)                        (2,196)                   8,079            1,366                -               7,249
Minority interest in income of
 subsidiaries                                     -                      (655)            (971)               -              (1,626)
Loss from unconsolidated  joint
 ventures                                         -                         -              (10)               -                 (10)
Equity in earnings of subsidiaries            18,835                        -                -          (18,835)(b)               -
                                    -----------------------------------------------------------------------------------------------

Net income (loss)                           $ 10,199                 $ 12,418          $ 6,417         $(18,835)           $ 10,199
                                    ===============================================================================================
</TABLE>

-------------------------------------------------------------------------------
(a)  Elimination of intercompany sales and cost of sales.
(b)  Elimination of equity in net income of consolidated subsidiaries.

                                       11
<PAGE>

                DELCO REMY INTERNATIONAL, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                 FOR THE NINE MONTH PERIOD ENDED APRIL 30, 2000
                                  (UNAUDITED)
                           (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                             DELCO REMY
                                         INTERNATIONAL INC.                           NON-
                                               (PARENT           SUBSIDIARY         GUARANTOR
                                            COMPANY ONLY)        GUARANTORS       SUBSIDIARIES       ELIMINATIONS      CONSOLIDATED
                                    -----------------------------------------------------------------------------------------------

<S>                                     <C>                   <C>                 <C>              <C>                 <C>
Net sales                               $           -                $821,502         $279,612     $  (289,027)(a)         $812,087
Cost of goods sold                                  -                 691,697          226,714        (289,027)(a)          629,384
                                    -----------------------------------------------------------------------------------------------

Gross profit                                        -                 129,805           52,898                -             182,703
Selling, general and administrative
 expenses                                        9,900                 60,420           22,520                -              92,840
Amortization of goodwill and
 intangibles                                        94                  3,728              689                -               4,511
                                    -----------------------------------------------------------------------------------------------

Operating (loss) income                         (9,994)                65,657           29,689                -              85,352
Interest expense and other
 non-operating expenses                        (21,538)               (12,979)          (2,165)               -             (36,682)
                                    -----------------------------------------------------------------------------------------------

Income (loss) before income taxes,
 minority interest in income of
 subsidiaries, loss from
 unconsolidated joint ventures and
 equity in earnings of subsidiaries            (31,532)                52,678           27,524                -              48,670
Income taxes (benefit)                          (8,992)                20,995            6,488                -              18,491
Minority interest in income of
 subsidiaries                                       -                  (1,999)          (3,054)               -              (5,053)
Loss from unconsolidated  joint
 ventures                                           -                       -              (46)               -                 (46)
Equity in earnings of subsidiaries              47,620                      -                -          (47,620)(b)               -
                                    -----------------------------------------------------------------------------------------------

Net income (loss)                             $ 25,080               $ 29,684         $ 17,936         $(47,620)           $ 25,080
                                    ===============================================================================================
</TABLE>

------------------------------------------------------------------------------
(a) Elimination of intercompany sales and cost of sales.
(b)  Elimination of equity in net income of consolidated subsidiaries.

                                       12
<PAGE>

                DELCO REMY INTERNATIONAL, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                FOR THE THREE MONTH PERIOD ENDED APRIL 30, 1999
                                  (UNAUDITED)
                           (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                             DELCO REMY
                                         INTERNATIONAL INC.                            NON-
                                               (PARENT            SUBSIDIARY         GUARANTOR
                                            COMPANY ONLY)         GUARANTORS       SUBSIDIARIES       ELIMINATIONS      CONSOLIDATED
                                    ------------------------------------------------------------------------------------------------

<S>                                     <C>                    <C>                 <C>              <C>                 <C>
Net sales                                 $       -              $  250,886          $ 70,940         $(73,000)(a)        $248,826
Cost of goods sold                                -                 211,008            58,297          (73,000)(a)         196,305
                                    ------------------------------------------------------------------------------------------------

Gross profit                                      -                  39,878            12,643               -              52,521
Selling, general and administrative
 expenses                                      3,397                 18,202             5,543               -              27,142
Amortization of goodwill and
 intangibles                                      15                    893               107               -               1,015
                                    ------------------------------------------------------------------------------------------------

Operating (loss) income                       (3,412)                20,783             6,993               -              24,364
Interest expense and other
 non-operating expenses                       (6,698)                (4,587)           (1,410)              -             (12,695)
                                    ------------------------------------------------------------------------------------------------

Income (loss) before income taxes,
 minority interest in income of
 subsidiaries, income from
 unconsolidated joint ventures and
 equity in earnings of subsidiaries          (10,110)                16,196             5,583               -              11,669
Income taxes (benefit)                        (1,592)                 4,575             1,567               -               4,550
Minority interest in income of
 subsidiaries                                     -                    (416)             (330)              -                (746)
Income from unconsolidated joint
 ventures                                         -                      -              1,801               -               1,801
Equity in earnings of subsidiaries            16,692                     -                 -           (16,692)(b)
                                    ------------------------------------------------------------------------------------------------

Net income (loss)                         $    8,174             $   11,205          $  5,487         $(16,692)           $ 8,174
                                    ================================================================================================
</TABLE>

----------------------------------------------------------------------
(a)  Elimination of intercompany sales and cost of sales.
(b)  Elimination of equity in net income of consolidated subsidiaries.

                                       13
<PAGE>

                DELCO REMY INTERNATIONAL, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
                 FOR THE NINE MONTH PERIOD ENDED APRIL 30, 1999
                                  (UNAUDITED)
                           (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                             DELCO REMY
                                         INTERNATIONAL INC.                            NON-
                                               (PARENT            SUBSIDIARY         GUARANTOR
                                            COMPANY ONLY)         GUARANTORS       SUBSIDIARIES       ELIMINATIONS      CONSOLIDATED
                                    ------------------------------------------------------------------------------------------------
<S>                                     <C>                    <C>                 <C>              <C>                 <C>
Net sales                                   $     -                $709,114          $191,536         $(196,715)(a)       $703,935
Cost of goods sold                                -                 601,953           157,694          (196,715)(a)        562,932
                                    ------------------------------------------------------------------------------------------------

Gross profit                                      -                 107,161            33,842                -             141,003
Selling, general and administrative
 expenses                                      8,475                 50,231            15,212                -              73,918
Amortization of goodwill and
 intangibles                                      45                  2,954               352                -               3,351
                                    ------------------------------------------------------------------------------------------------

Operating (loss) income                       (8,520)                53,976            18,278                -              63,734
Interest expense and other
 non-operating expenses                      (20,529)               (11,902)           (1,932)               -             (34,363)
                                    ------------------------------------------------------------------------------------------------

Income (loss) before income taxes,
 minority interest in income of
 subsidiaries, income from
 unconsolidated joint ventures and
 equity in earnings of subsidiaries          (29,049)                42,074            16,346                -              29,371



Income taxes (benefit)                        (3,926)                10,612             4,770                -              11,456
Minority interest in income of
 subsidiaries                                     -                  (1,654)             (674)               -              (2,328)
Income from unconsolidated joint
 ventures                                         -                      -              3,828                -               3,828
Equity in earnings of subsidiaries            44,538                     -                 -            (44,538)(b)             -
                                    ------------------------------------------------------------------------------------------------

Net income (loss)                           $ 19,415               $ 29,808          $ 14,730         $ (44,538)          $ 19,415
                                    ================================================================================================
</TABLE>

-------------------------------------------------------------------------
(a)  Elimination of intercompany sales and cost of sales.
(b)  Elimination of equity in net income of consolidated subsidiaries.

                                       14
<PAGE>

                DELCO REMY INTERNATIONAL, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATING BALANCE SHEET
                                 APRIL 30, 2000
                                  (UNAUDITED)
                           (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                  DELCO REMY
                                              INTERNATIONAL INC.                        NON-
                                                    (PARENT          SUBSIDIARY       GUARANTOR
                                                 COMPANY ONLY)       GUARANTORS     SUBSIDIARIES   ELIMINATIONS    CONSOLIDATED
                                           ------------------------------------------------------------------------------------
<S>                                        <C>                     <C>             <C>             <C>             <C>
Assets

Current assets:
Cash and cash equivalents                            $      -        $ (3,362)        $ 18,705      $       -        $ 15,343
Trade accounts receivable, net                              -         141,271           27,514              -         168,785
Other receivables                                           -           7,332            9,197              -          16,529
Inventories                                                 -         223,843           54,576         (2,293)(c)     276,126
Deferred income taxes                                       -          14,997              339              -          15,336
Other current assets                                        -           2,700            3,252              -           5,952
                                           -------------------------------------------------------------------------------------

Total current assets                                        -         386,781          113,583         (2,293)        498,071

Property and equipment                                     40         208,122           80,225              -         288,387
Less accumulated depreciation                              40          70,017           11,184              -          81,241
                                           -------------------------------------------------------------------------------------

Property and equipment, net                                 -         138,105           69,041              -         207,146

Deferred financing costs                                7,533           2,331                -              -           9,864
Goodwill, net                                               -         145,346           22,492              -         167,838
Investments in affiliates                             429,640          69,136                -       (492,873)(a)       5,903
Other assets                                            1,759             656            3,925              -           6,340
                                           -------------------------------------------------------------------------------------

Total assets                                         $438,932        $742,355         $209,041      $(495,166)       $895,162
                                           =====================================================================================

Liabilities and stockholders' equity

Current liabilities:
Accounts payable                                     $    589        $102,860         $ 33,695      $       -        $137,144
Intercompany accounts                                 (19,026)         34,299          (14,672)          (601)(c)           -
Accrued interest payable                                8,401           1,366            1,985              -          11,752
Accrued restructuring charges                               -           4,500              993              -           5,493
Other liabilities and accrued expenses                 15,940          19,478           13,006              -          48,424
Current debt                                                -           1,093            3,917              -           5,010
                                           -------------------------------------------------------------------------------------

Total current liabilities                               5,904         163,596           38,924           (601)        207,823

Deferred income taxes                                   4,560               -                9              -           4,569
Long-term debt, less current portion                  285,000         198,434           17,207              -         500,641
Post-retirement benefits other
 than pensions                                              -          23,685                -              -          23,685
Accrued pension benefits                                    -               -                -              -               -
Other non-current liabilities                           2,201           1,402                -              -           3,603
Minority interest in subsidiaries                           -          10,868           13,424              -          24,292

Stockholders' equity:
Common stock:
Class A shares                                            182              78              (78)             -             182
Class B shares                                             63               -                -              -              63
Paid-in capital                                       104,176             (61)              61              -         104,176
Subsidiary investment                                       -         266,087           96,354       (362,441)(a)           -
Retained earnings (deficit)                            37,232          78,266           53,858       (132,124)(b)      37,232
Accumulated other comprehensive loss                        -               -          (10,718)             -         (10,718)
Stock purchase plan                                      (386)              -                -              -            (386)
                                           -------------------------------------------------------------------------------------

Total stockholders' equity                            141,267         344,370          139,477       (494,565)        130,549
                                           -------------------------------------------------------------------------------------

Total liabilities and stockholders' equity           $438,932        $742,355         $209,041      $(495,166)       $895,162
                                           =====================================================================================
</TABLE>
-------------------------------------------------------------
(a)  Elimination of investments in subsidiaries.
(b)  Elimination of investments in subsidiaries' earnings.
(c)  Elimination of intercompany profit in inventory.

                                       15
<PAGE>

                DELCO REMY INTERNATIONAL, INC. AND SUBSIDIARIES
                     Condensed Consolidating Balance Sheet
                                 JULY 31, 1999
                           (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                    DELCO REMY
                                                INTERNATIONAL INC.                         NON-
                                                      (PARENT          SUBSIDIARY       GUARANTOR
                                                   COMPANY ONLY)       GUARANTORS     SUBSIDIARIES     ELIMINATIONS    CONSOLIDATED
                                           ----------------------------------------------------------------------------------------
<S>                                            <C>                    <C>            <C>              <C>              <C>
Assets

Current assets:
Cash and cash equivalents                         $          -          $   (242)      $ 15,551        $       -          $ 15,309
Trade accounts receivable, net                               -           122,957         25,031                -           147,988
Other receivables                                            -             6,657          8,839                -            15,496
Inventories                                                  -           193,264         40,543           (1,642)(c)       232,165
Deferred income taxes                                        -            14,997              -                -            14,997
Other current assets                                         -             2,125            778                -             2,903
                                           ---------------------------------------------------------------------------------------

Total current assets                                         -           339,758         90,742           (1,642)          428,858

Property and equipment                                      40           202,462         56,225                -           258,727
Less accumulated depreciation                               40            55,664          7,828                -            63,532
                                           ---------------------------------------------------------------------------------------

Property and equipment, net                                  -           146,798         48,397                -           195,195

Deferred financing costs                                 8,352             2,840              -                -            11,192
Goodwill, net                                                -           116,710         20,719                -           137,429
Investments in affiliates                              381,250                14              5         (376,513)(a)         4,756
Other assets                                             2,411               858          1,964                -             5,233
                                           ---------------------------------------------------------------------------------------

Total assets                                      $    392,013          $606,978       $161,827        $(378,155)         $782,663
                                           =======================================================================================

Liabilities and stockholders' equity

Current liabilities:
Accounts payable                                  $        636          $ 90,185       $ 28,518        $       -          $119,339
Intercompany accounts                                  (19,626)           44,513        (24,286)            (601)(c)             -
Accrued interest payable                                 9,001             2,592             10                -            11,603
Accrued restructuring charges                                -             5,866              -                -             5,866
Other liabilities and accrued expenses                  (1,250)           27,622         10,733                -            37,105
Current debt                                                 -             1,227         11,369                -            12,596
                                           ---------------------------------------------------------------------------------------

Total current liabilities                              (11,239)          172,005         26,344             (601)          186,509

Deferred income taxes                                        -             4,560              8                -             4,568
Long-term debt, less current portion                   285,000           136,867         13,064                -           434,931
Post-retirement benefits other
 than pensions                                               -            21,050              -                -            21,050
Accrued pension benefits                                     -             2,719              -                -             2,719
Other non-current liabilities                            2,216             1,329              -                -             3,545
Minority interest in subsidiaries                            -            10,663          9,158                -            19,821

Stockholders' equity:
Common stock:
Class A shares                                             182                 -              -                -               182
Class B shares                                              63                 -              -                -                63
Paid-in capital                                        104,176                 -              -                -           104,176
Subsidiary investment                                        -           209,203         83,847         (293,050)(a)             -
Retained earnings (deficit)                             12,152            48,582         35,922          (84,504)(b)        12,152
Accumulated other comprehensive loss                         -                 -         (6,516)               -            (6,516)
Stock purchase plan                                       (537)                -              -                -              (537)
                                           ---------------------------------------------------------------------------------------

Total stockholders' equity                             116,036           257,785        113,253         (377,554)          109,520
                                           ---------------------------------------------------------------------------------------

Total liabilities and stockholders' equity        $    392,013          $606,978       $161,827        $(378,155)         $782,663
                                           =======================================================================================
</TABLE>

------------------------------------------------------------
(a)  Elimination of investments in subsidiaries.
(b)  Elimination of investments in subsidiaries' earnings.
(c)  Elimination of intercompany profit in inventory.

                                       16
<PAGE>

                DELCO REMY INTERNATIONAL, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                FOR THE NINE MONTH PERIOD ENDED APRIL 30, 2000
                                  (UNAUDITED)
                           (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                             DELCO REMY
                                         INTERNATIONAL INC.                          NON-
                                              (PARENT            SUBSIDIARY        GUARANTOR
                                           COMPANY ONLY)         GUARANTORS      SUBSIDIARIES       ELIMINATIONS      CONSOLIDATED
                                    -----------------------------------------------------------------------------------------------
<S>                                     <C>                   <C>                 <C>             <C>                 <C>
OPERATING ACTIVITIES:
Net income                                  $  25,080             $ 29,684         $ 17,936         $(47,620)(a)       $ 25,080
Adjustments to reconcile net income
 to net cash flows provided by
 (used in) operating activities:
 Depreciation                                       -               15,560            5,217                -             20,777
 Amortization                                      94                3,728              689                -              4,511
 Minority interest in income of
  subsidiaries                                      -                1,999            3,054                -              5,053
 Loss from unconsolidated joint
  ventures                                          -                    -               46                -                 46
 Equity in earnings of subsidiary            (47,620)                    -                -           47,620(a)               -
 Post-retirement benefits other
  than pensions                                     -                2,635                -                -              2,635
 Accrued pension benefits                           -               (2,739)               -                -             (2,739)
 Non-cash interest expense                        819                  502                -                -              1,321
 Changes in operating assets and
  liabilities, net of acquisitions:
  Accounts receivable                               -                  449            2,246                -              2,695
  Inventories                                       -              (17,162)          (8,286)               -            (25,448)
  Accounts payable                               (47)                7,710            2,737                -             10,400
  Other current assets and
   liabilities                                 14,555               (7,352)          (4,896)               -              2,307
  Intercompany accounts                        73,880              (80,280)           6,400                -                  -
  Accrued restructuring charges                     -               (1,366)             993                -               (373)
  Other non-current assets and
   liabilities, net                               419               (5,382)           1,974                -             (2,989)
                                    -----------------------------------------------------------------------------------------------

Net cash provided by (used in)
 operating activities                          67,180              (52,014)          28,110                -             43,276

INVESTING ACTIVITIES:
Acquisitions, net of cash acquired            (67,180)                   -             (466)               -            (67,646)
Purchases of property and equipment                 -              (12,539)         (16,240)               -            (28,779)
                                    -----------------------------------------------------------------------------------------------

Net cash used in investing
 activities                                   (67,180)             (12,539)         (16,706)               -            (96,425)

FINANCING ACTIVITIES:
Net borrowings (repayments) under
 revolving line of credit and other                 -               61,433           (6,500)               -             54,933

Distributions to minority interests                 -                    -           (1,200)               -             (1,200)
                                    -----------------------------------------------------------------------------------------------

Net cash provided by (used in)
 financing activities                               -               61,433           (7,700)               -             53,733
Effect of exchange rate changes on
 cash                                               -                    -             (550)               -               (550)
                                    -----------------------------------------------------------------------------------------------

Net increase (decrease) in cash and
 cash equivalents                                   -               (3,120)           3,154                -                 34
Cash and cash equivalents at
 beginning of period                                -                 (242)          15,551                -             15,309
                                    -----------------------------------------------------------------------------------------------

Cash and cash equivalents at end of
 period                                     $       -             $ (3,362)        $ 18,705         $      -           $ 15,343
                                    ===============================================================================================
</TABLE>

-----------------------------------------------------------
(a)  Elimination of equity in earnings of subsidiaries.

                                       17
<PAGE>

                DELCO REMY INTERNATIONAL, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                FOR THE NINE MONTH PERIOD ENDED APRIL 30, 1999
                                  (UNAUDITED)
                           (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                            DELCO REMY
                                        INTERNATIONAL INC.                           NON-
                                              (PARENT           SUBSIDIARY         GUARANTOR
                                           COMPANY ONLY)        GUARANTORS       SUBSIDIARIES     ELIMINATIONS      CONSOLIDATED
                                     --------------------------------------------------------------------------------------------
<S>                                  <C>                       <C>              <C>              <C>                <C>
OPERATING ACTIVITIES:
Net income                                   $ 19,415            $ 29,808         $ 14,730         $(44,538)          $ 19,415
Adjustments to reconcile net
 income to net cash provided by
 (used in) operating activities:
 Depreciation                                      20              10,750            2,844                -             13,614
 Amortization                                      45               2,954              352                -              3,351
 Minority interest in income of
  subsidiaries                                      -               1,654              674                -              2,328
 Income from unconsolidated joint
  ventures                                          -                   -           (3,828)               -             (3,828)
 Equity in earnings of
  subsidiaries                                (44,538)                  -                -           44,538(a)               -
 Deferred income taxes                            791               4,814              (58)               -              5,547
 Post-retirement benefits other
  than pensions                                     -               2,871                -                -              2,871
 Accrued pension benefits                           -              (1,679)               -                -             (1,679)
 Non-cash interest expense                        819                 388                -                -              1,207
 Changes in operating assets and
  liabilities, net of
  acquisitions:
  Accounts receivable                               -             (19,474)             307                -            (19,167)
  Inventories                                       -              (6,349)          (8,606)               -            (14,955)
  Accounts payable                                496              15,102            3,444                -             19,042
  Intercompany accounts                        62,169             (50,212)         (11,957)               -                  -
  Other current assets and
   liabilities                                 (6,082)             (1,741)           1,007                -             (6,816)
  Accrued restructuring charges                     -             (11,322)               -                -            (11,322)
  Other non-current assets and
   liabilities, net                             5,334             (14,322)           7,336                -             (1,652)
                                     --------------------------------------------------------------------------------------------

Net cash provided by (used in)
 operating activities                          38,469             (36,758)           6,245                -              7,956

INVESTING ACTIVITIES:
Acquisitions, net of cash acquired            (38,469)                  -           (3,279)               -            (41,748)
Purchases of property and
 equipment                                          -             (12,924)          (5,099)               -            (18,023)
                                     --------------------------------------------------------------------------------------------

Net cash used in investing
 activities                                   (38,469)            (12,924)          (8,378)               -            (59,771)

FINANCING ACTIVITIES:
Net borrowings under revolving
 line of credit and other                           -              49,575            2,227                -             51,802

                                     --------------------------------------------------------------------------------------------

Net cash provided by financing
 activities                                         -              49,575            2,227                -             51,802
Effect of exchange rate changes
 on cash                                            -                   -             (390)               -               (390)
                                     --------------------------------------------------------------------------------------------

Net decrease in cash and cash
 equivalents                                        -                (107)            (296)               -               (403)
Cash and cash equivalents at
 beginning of period                                -                 125            7,988                -              8,113
                                     --------------------------------------------------------------------------------------------

Cash and cash equivalents at end
 of period                                   $      -            $     18         $  7,692         $      -           $  7,710
                                     ============================================================================================
</TABLE>

--------------------------------------------------------------
(a)  Elimination of equity in earnings of subsidiaries.

                                       18
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Results of Operations

<TABLE>
<CAPTION>
                                                  FOR THE THREE MONTHS                            FOR THE NINE MONTHS
                                                    ENDED APRIL 30,                                 ENDED APRIL 30,
                                    ------------------------------------------------  --------------------------------------------
<S>                                   <C>           <C>       <C>           <C>        <C>           <C>       <C>          <C>
                                              2000                    1999                     2000                   1999
                                    -----------------------  -----------------------  ----------------------  --------------------
(Thousands of Dollars)                 AMOUNT         %        AMOUNT         %         AMOUNT          %        AMOUNT        %
                                    ------------  ---------  -----------  ----------  -----------  ---------  -----------  -------
Net sales                              $274,861     100.0%    $248,826      100.0%     $812,087      100.0%    $703,935     100.0%
Cost of goods sold                      210,330      76.5%     196,305       78.9%      629,384       77.5%     562,932      80.0%
                                    ------------  ---------  -----------  ----------  -----------  ---------  -----------  -------

Gross profit                             64,531      23.5%      52,521       21.1%      182,703       22.5%     141,003      20.0%
Selling, engineering and
 administrative expenses                 31,084      11.3%      27,142       10.9%       92,840       11.4%      73,918      10.5%

Amortization of goodwill and
 intangibles                              1,603       0.6%       1,015        0.4%        4,511        0.6%       3,351       0.4%
                                    ------------  ---------  -----------  ----------  -----------  ---------  -----------  -------

Operating income                         31,844      11.6%      24,364        9.8%       85,352       10.5%      63,734       9.1%
Interest expense and other
 non-operating expenses                 (12,760)     (4.6)%    (12,695)      (5.1)%     (36,682)      (4.5)%    (34,363)     (4.9)%


Income taxes                              7,249       2.7%       4,550        1.8%       18,491        2.3%      11,456       1.6%
Minority interest                        (1,626)     (0.6)%       (746)      (0.3)%      (5,053)      (0.6)%     (2,328)     (0.3)%
Income (loss) from unconsolidated
 joint ventures                             (10)      0.0%       1,801        0.7%          (46)       0.0%       3,828       0.5%
                                    ------------  ---------  -----------  ----------  -----------  ---------  -----------  -------

Net income                             $ 10,199       3.7%    $  8,174        3.3%     $ 25,080        3.1%    $ 19,415       2.8%
                                    ============  =========  ===========  ==========  ===========  =========  ===========  =======
</TABLE>

THREE MONTHS ENDED APRIL 30, 2000 COMPARED TO THREE MONTHS ENDED APRIL 30, 1999

Net Sales  Net sales of $274.9 million in the third quarter of fiscal year 2000
increased $26.0 million, or 10.5%, from the third quarter of fiscal year 1999.
This improvement was due to sales generated by businesses acquired in fiscal
2000 (Knopf and Engine Master) and the fourth quarter of fiscal 1999 (the
additional 31% interest in Remy Korea) and higher demand from automotive and
heavy duty OEM customers and for powertrain/drive train products in the
aftermarket. These increases were partially offset by lower shipments of
electrical products in the aftermarket.

Gross Profit  Gross profit of $64.5 million increased $12.0 million, or 22.9%,
and as a percentage of sales improved from 21.1% in the third quarter of 1999 to
23.5% in the third quarter of 2000.  The growth in gross profit dollars reflects
the sales growth discussed above.  The improvement in margins was due to the
benefits of lean manufacturing initiatives, realization of cost efficiencies
generated by the OEM restructuring, leveraging of fixed manufacturing costs and
growth in the higher margin aftermarket.

Selling, General and Administrative Expenses  Selling, general and
administrative (SG&A) expenses increased $3.9 million, or 14.5%, and as a
percentage of sales increased from 10.9% to 11.3% due to the effect of
acquisitions, aftermarket marketing initiatives and enterprise-wide system
implementations.

Operating Income  Operating income of $31.8 million increased $7.5 million, or
30.7%, and as a percentage of sales improved from 9.8% in the third quarter of
fiscal year 1999 to 11.6% in fiscal year 2000.  This

                                       19
<PAGE>

improvement reflects the sales and gross margin issues discussed above,
partially offset by higher SG&A expenses.

Interest Expense and Other Non-operating Expenses  Interest expense of $12.2
million compares with $12.7 million in the third quarter of fiscal 1999.  The
average debt balance was up year over year due to acquisitions and higher
capital spending, partially offset by improved cash flow from operating
activities. Recent interest rate increases by the Fed will not begin to effect
the Company's overall cost of funds until the fourth quarter due to LIBOR locks
currently in place.

Income Taxes  Income tax expense in the third quarter of fiscal year 2000 was
$7.2 million compared to $4.6 million in the comparable period last year.  The
Company's consolidated effective income tax rate of 38.0% was down from 39.0%
due to the implementation of various tax planning initiatives and the effect of
the acquisition of certain foreign subsidiaries.

Minority Interest in Income of Subsidiaries and Income (Loss) From
Unconsolidated Joint Ventures  The year over year change in these items
primarily reflects the Company's acquisition of a majority ownership of Remy
Korea in the fourth quarter of fiscal 1999.  This subsidiary was accounted for
under the equity method prior to that.


NINE MONTHS ENDED APRIL 30, 2000 COMPARED TO NINE MONTHS ENDED APRIL 30, 1999

Net Sales  Net sales of $812.1 million in the first nine months of fiscal year
2000 increased $108.2 million, or 15.4%, from the comparable period of fiscal
year 1999.  This increase was due to the effect of the acquisitions discussed
above, the acquisition of Williams in the second quarter of fiscal 1999 and
higher demand across all major product lines and markets.

Gross Profit  Gross profit of $182.7 million increased $41.7 million, or 29.6%,
and as a percentage of sales improved from 20.0% to 22.5%.  The growth in gross
profit dollars reflects the sales growth discussed above.  The improvement in
margins was due to the benefits of lean manufacturing initiatives, realization
of cost efficiencies generated by the OEM restructuring, leveraging of fixed
manufacturing costs and growth in the higher margin aftermarket.

Selling, General and Administrative Expenses  SG&A expenses increased $18.9
million, or 25.6%, and as a percentage of sales increased from 10.5% to 11.4%
due to the effect of acquisitions, aftermarket marketing initiatives and
enterprise-wide system implementations.

Operating Income  Operating income of $85.4 million increased $21.6 million, or
33.9%, and as a percentage of sales improved from 9.1% in the first three
quarters of fiscal year 1999 to 10.5% in fiscal year 2000.  This improvement
reflects the sales and gross margin issues discussed above, partially offset by
higher SG&A expenses.

Interest Expense and Other Non-operating Expenses  Interest expense of $35.8
million compares with $34.4 million in the first three quarters of fiscal 1999.
The average debt balance was up year over year due to acquisitions and higher
capital spending, partially offset by improved cash flow from operating
activities.

                                       20
<PAGE>

Recent rate increases by the Fed will not begin to effect the Company's overall
cost of funds until the fourth quarter due to LIBOR locks currently in place.

Income Taxes  Income tax expense in the first three quarters of fiscal year 2000
was $18.5 million compared to $11.5 million in the comparable period last year.
The Company's consolidated effective income tax rate of 38.0% was down from
39.0% due to the implementation of various tax planning initiatives and the
effect of the acquisition of certain foreign subsidiaries.

Minority Interest in Income of Subsidiaries and Income (Loss) From
Unconsolidated Joint Ventures  The year over year change in these items
primarily reflects the Company's acquisition of a majority ownership of Remy
Korea in the fourth quarter of fiscal 1999.  This subsidiary was accounted for
under the equity method prior to that.

LIQUIDITY AND CAPITAL RESOURCES

The Company's short-term liquidity needs include required debt service,
including capital lease payments, day to day operating expenses, working capital
requirements and the funding of capital expenditures.  Long-term liquidity
requirements include principal payments of long-term debt and the funding of
acquisitions.  The Company's principal sources of cash to fund its short-term
liquidity needs consist of cash generated by operations and borrowing under the
Senior Credit Facility.  As of April 30, 2000, borrowings under the Senior
Credit Facility were $159.9 million and utilization of letters of credit totaled
$12.2 million, leaving $127.9 million available under the $300 million facility.

In the first nine months of fiscal 2000, cash provided by operating activities
was $43.3 million compared to $8.0 million in the comparable period of fiscal
1999.  This improvement reflects increased earnings and depreciation, a smaller
increase in net working capital from year-end and lower restructuring payments
and charges.  Accounts receivable declined $2.7 million versus a $19.2 million
increase in 1999.  The $25.4 million increase in inventories reflects a seasonal
build-up in the aftermarket, which should begin to decline in the fourth
quarter.  Accounts payable increased $10.4 million due to production levels and
the timing of payments.  The Company's net trade cycle, including accounts
receivable, inventory and accounts payable days, declined compared with both
year-end and third quarter 1999.

Acquisitions in fiscal 2000 consisted of Knopf ($61.0 million), Engine Master
and Elmot, and in fiscal 1999 consisted primarily of Williams.  Capital
expenditures of $28.8 million in the first three quarters compares with $18.0
million in the comparable period of fiscal 1999.  The increase was due to
enterprise-wide system implementations and equipment supporting new products and
customers.  Total capital spending in fiscal 2000 is expected to be
approximately to $35.0 million.

The increase in net borrowings under the Company's revolving line of credit and
other debt of $54.9 million through three quarters reflects the extent to which
cash used for acquisitions and capital expenditures exceeded cash generated by
operating activities.

In late May 2000, the Company, as part of ongoing competitiveness initiatives,
offered an incentive separation payment to DRA hourly employees. The offer
expires in July 2000. The cost of this program, which is dependent on the
number and seniority level of employees accepting the separation payment, will
be recorded in the fourth quarter of fiscal 2000.

The Company believes that cash generated from operations, together with the
amounts available under the Senior Credit Facility, will be adequate to meet its
debt service requirements, capital expenditures and working capital needs for
the foreseeable future, although no assurance can be given in this regard.  The
Company's future operating performance and ability to service, extend, or
refinance its indebtedness will be

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<PAGE>

subject to future economic conditions and to financial, business and other
factors that are beyond the Company's control.

SEASONALITY

The Company's business is moderately seasonal, as its major OEM customers
historically have one- to two-week summer shutdowns of operations during the
fourth fiscal quarter.  In addition, the Company typically has shut down its own
operations for one week each July, depending on backlog, scheduled maintenance
and inventory buffers, as well as an additional week during the December
holidays. Consequently, the Company's second and fourth quarter results reflect
the effects of these shutdowns.

IMPACT OF YEAR 2000

In prior years, the Company discussed the nature and progress of its plans to
become Year 2000 ready.  In December 1999, the Company completed its remediation
and testing of all major information technology based systems.  As a result of
those planning and implementation efforts, the Company experienced no
significant disruptions in mission critical information technology and non-
information technology systems and believes those systems successfully responded
to the Year 2000 date change.  The Company expensed approximately $2.0 million
in connection with remediating its systems.  The Company is not aware of any
material problems resulting from Year 2000 issues, either with its products, its
internal systems, or the products and services of third parties.  The Company
will continue to monitor its mission critical computer applications and those of
its suppliers and vendors throughout calendar year 2000 to ensure that any
latent Year 2000 matters that may arise are addressed promptly.

FOREIGN SALES

A portion of the Company's sales are derived from sales made to customers in
foreign countries.  Because of these foreign sales, the Company's business is
subject to the risks of doing business abroad, including currency exchange rate
fluctuations, limits on repatriation of funds, compliance with foreign laws and
other economic and political uncertainties.

                                       22
<PAGE>

                           PART II OTHER INFORMATION


ITEM 5.  OTHER INFORMATION

DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS

From time to time, the Company makes oral and written statements that may
constitute "forward-looking statements" as defined in the Private Securities
Litigation Reform Act of 1995 (the "Act") or by the SEC in its rules,
regulations and releases. The Company desires to take advantage of the "safe
harbor" provisions in the Act for forward-looking statements made from time to
time, including, but not limited to, the forward-looking statements relating to
the future performance of the Company contained in Management's Discussion and
Analysis, and Notes to Condensed Consolidated Financial Statements and other
statements made in this Form 10-Q and in other filings with the SEC.

The Company cautions readers that any such forward-looking statements are based
on assumptions that the Company believes are reasonable, but are subject to a
wide range of risks including, but not limited to risks associated with the
uncertainty of future financial results, acquisitions, additional financing
requirements, development of new products and services, the effect of
competitive products or pricing, the effect of economic conditions and other
uncertainties.  Due to these uncertainties, the Company cannot assure readers
that any forward-looking statements will prove to have been correct.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

        (a)  Exhibits

             27  Financial Data Schedule (Filed via EDGAR only)

        (b)  Reports on Form 8-K

             There were no reports on Form 8-K filed during the quarter ended
             April 30, 2000.

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<PAGE>

                                  SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                      DELCO REMY INTERNATIONAL, INC.
                                      ------------------------------
                                              (Registrant)





Date:  June 12, 2000                  By: /s/ J. Timothy Gargaro
                                          ----------------------
                                              J. Timothy Gargaro
                                              Senior Vice President and
                                              Chief Financial Officer



Date:  June 12, 2000                  By: /s/ David E. Stoll
                                          ------------------
                                              David E. Stoll
                                              Vice President and Controller
                                              Chief Accounting Officer

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