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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2005



or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



FOR THE TRANSITION PERIOD FROM TO
.



COMMISSION FILE NO. 1-13683



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REMY INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 35-1909253                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|2902 Enterprise Drive Anderson, Indiana                        |  | 46013                               
|(Address of principal executive offices)                       |  | (Zip Code)                          



(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)



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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 BY CHECK MARK WHETHER THE
REGISTRANT IS AN ACCELERATED FILER (AS DEFINED IN RULE 12B-2 OF THE EXCHANGE ACT).     Yes ̈No  x



INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS A SHELL COMPANY (AS DEFINED IN RULE 12B-2 OF THE EXCHANGE ACT).    Yes ̈No  x



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



|                       |  |                               
|---------------------- |  | ------------------------------
|                       |  | Outstanding as of Nov 11, 2005
|Common Stock  Class B |  | 2,503,024.48                  



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##### Table of Contents

Remy International, Inc. and Subsidiaries



INDEX



|              |  |                                                                                       |  |     
|------------- |  | ------------------------------------------------------------------------------------- |  | ----
|              |  |                                                                                       |  | Page
|PART I        |  | FINANCIAL INFORMATION                                                                 |  |     
|              |  |                                                                                      
|Item 1        |  | Financial Statements                                                                  |  |     
|              |  |                                                                                      
|              |  | Condensed Consolidated Balance Sheets                                                 |  | 3   
|              |  |                                                                                      
|              |  | Condensed Consolidated Statements of Operations                                       |  | 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 |  | 25  
|              |  |                                                                                      
|Item 3        |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 37  
|              |  |                                                                                      
|Item 4        |  | Controls and Procedures                                                               |  | 37  
|              |  |                                                                                      
|PART II       |  | OTHER INFORMATION                                                                     |  |     
|              |  |                                                                                      
|Item 1        |  | Legal Proceedings                                                                     |  | 39  
|              |  |                                                                                      
|Item 2        |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 40  
|              |  |                                                                                      
|Item 3        |  | Defaults Upon Senior Securities                                                       |  | 40  
|              |  |                                                                                      
|Item 4        |  | Submission of Matters to a Vote of Security Holders                                   |  | 40  
|              |  |                                                                                      
|Item 5        |  | Other Information                                                                     |  | 40  
|              |  |                                                                                      
|Item 6        |  | Exhibits                                                                              |  | 41  
|              | 
|SIGNATURES    |  | 42                                                                                   
|              | 
|EXHIBIT INDEX |  | 43                                                                                   



2



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##### Table of Contents

PART I FINANCIAL INFORMATION



Item 1. Financial Statements



Remy International, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets



|                                                |  |                   |          |   |                   |   |          |  
|----------------------------------------------- |  | ----------------- | -------- | - | ----------------- | - | -------- | -
|IN THOUSANDS,At                                 |  | September 30,2005 |          |   | December 31, 2004 |  
|                                                |  | (unaudited)       |          |   |                   |  
|Assets:                                         |  |                   |          |   |                   |   |          |  
|Current assets:                                 |  |                   |          |   |                   |   |          |  
|Cash and cash equivalents                       |  | $                 | 26,267   |   |                   | $ | 62,545   |  
|Trade accounts receivable, net                  |  |                   | 179,720  |   |                   |   | 154,333  |  
|Other receivables                               |  |                   | 11,284   |   |                   |   | 19,097   |  
|Inventories                                     |  |                   | 269,648  |   |                   |   | 217,912  |  
|Assets of discontinued operations               |  |                   | 21       |   |                   |   | 356      |  
|Other current assets                            |  |                   | 8,863    |   |                   |   | 11,214   |  
|                                                |  |                   |          |   |                   |   |          |  
|Total current assets                            |  |                   | 495,803  |   |                   |   | 465,457  |  
|                                                |  |                  
|Property, plant and equipment                   |  |                   | 369,192  |   |                   |   | 329,637  |  
|Less accumulated depreciation                   |  |                   | 206,712  |   |                   |   | 192,344  |  
|                                                |  |                   |          |   |                   |   |          |  
|Property, plant and equipment, net              |  |                   | 162,480  |   |                   |   | 137,293  |  
|                                                |  |                  
|Deferred financing costs, net                   |  |                   | 12,539   |   |                   |   | 14,842   |  
|Goodwill, net                                   |  |                   | 170,339  |   |                   |   | 106,400  |  
|Investments in joint ventures                   |  |                   | 5,870    |   |                   |   | 5,706    |  
|Other assets                                    |  |                   | 35,085   |   |                   |   | 26,060   |  
|                                                |  |                   |          |   |                   |   |          |  
|Total assets                                    |  | $                 | 882,116  |   |                   | $ | 755,758  |  
|                                                |  |                   |          |   |                   |   |          |  
|Liabilities and Stockholders Deficit:          |  |                   |          |   |                   |   |          |  
|Current liabilities:                            |  |                   |          |   |                   |   |          |  
|Accounts payable                                |  | $                 | 185,378  |   |                   | $ | 170,776  |  
|Accrued interest                                |  |                   | 19,770   |   |                   |   | 8,210    |  
|Accrued restructuring                           |  |                   | 11,426   |   |                   |   | 6,451    |  
|Liabilities of discontinued operations          |  |                   | 819      |   |                   |   | 2,799    |  
|Deferred income taxes                           |  |                   | 2,354    |   |                   |   | 3,065    |  
|Other liabilities and accrued expenses          |  |                   | 116,847  |   |                   |   | 84,157   |  
|Current maturities of long-term debt            |  |                   | 29,648   |   |                   |   | 22,890   |  
|                                                |  |                   |          |   |                   |   |          |  
|Total current liabilities                       |  |                   | 366,242  |   |                   |   | 298,348  |  
|                                                |  |                  
|Long-term debt, net of current portion (Note 6) |  |                   | 680,829  |   |                   |   | 610,330  |  
|Post-retirement benefits other than pensions    |  |                   | 16,357   |   |                   |   | 16,302   |  
|Accrued pension benefits                        |  |                   | 13,715   |   |                   |   | 13,511   |  
|Accrued restructuring                           |  |                   | 2,838    |   |                   |   | 4,407    |  
|Deferred income taxes                           |  |                   | 6,748    |   |                   |   |         |  
|Other non-current liabilities                   |  |                   | 43,929   |   |                   |   | 4,962    |  
|Commitments and contingencies                   |  |                   |          |   |                   |   |          |  
|Minority interest                               |  |                   | 13,165   |   |                   |   | 10,498   |  
|                                                |  |                  
|Stockholders deficit:                          |  |                   |          |   |                   |   |          |  
|Common stock:                                   |  |                   |          |   |                   |   |          |  
|Class B shares                                  |  |                   | 3        |   |                   |   | 3        |  
|Paid-in capital                                 |  |                   | 334,336  |   |                   |   | 334,336  |  
|Retained deficit                                |  |                   | (583,398 | ) |                   |   | (531,136 | )
|Accumulated other comprehensive loss            |  |                   | (12,648  | ) |                   |   | (5,803   | )
|                                                |  |                   |          |   |                   |   |          |  
|Total stockholders deficit                     |  |                   | (261,707 | ) |                   |   | (202,600 | )
|                                                |  |                   |          |   |                   |   |          |  
|Total liabilities and stockholders deficit     |  | $                 | 882,116  |   |                   | $ | 755,758  |  
|                                                |  |                   |          |   |                   |   |          |  



See notes to the condensed
consolidated financial statements.



3



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##### Table of Contents

Remy International, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)



|                                                                                                                                     |      |              |         |      |             |   |         |   |  |      |         |   |  |   |        
|------------------------------------------------------------------------------------------------------------------------------------ | ---- | ------------ | ------- | ---- | ----------- | - | ------- | - |  | ---- | ------- | - |  | - | -------
|IN THOUSANDS,For the three & nine months ended September 30,                                                                         |      | Three Months |         |      | Nine Months
|                                                                                                                                     | 2005 |              |         | 2004 |             |   | 2005    |   |  | 2004
|Net sales                                                                                                                            |      | $            | 315,963 |      |             | $ | 254,271 |   |  | $    | 909,872 |   |  | $ | 795,331
|Cost of goods sold                                                                                                                   |      |              | 271,470 |      |             |   | 204,239 |   |  |      | 789,510 |   |  |   | 640,736
|                                                                                                                                     |      |              |         |      |             |   |         |   |  |      |         |   |  |   |        
|Gross profit                                                                                                                         |      |              | 44,493  |      |             |   | 50,032  |   |  |      | 120,362 |   |  |   | 154,595
|                                                                                                                                     |      |              |         |     
|Selling, general and administrative expenses                                                                                         |      |              | 40,938  |      |             |   | 27,731  |   |  |      | 104,531 |   |  |   | 83,974 
|Restructuring charges                                                                                                                |      |              | 2,095   |      |             |   | 142     |   |  |      | 2,595   |   |  |   | 1,516  
|                                                                                                                                     |      |              |         |      |             |   |         |   |  |      |         |   |  |   |        
|Operating income                                                                                                                     |      |              | 1,460   |      |             |   | 22,159  |   |  |      | 13,236  |   |  |   | 69,105 
|                                                                                                                                     |      |              |         |     
|Interest expense                                                                                                                     |      |              | 18,025  |      |             |   | 14,208  |   |  |      | 50,912  |   |  |   | 44,378 
|Loss on early extinguishment of debt (Note 6)                                                                                        |      |              |        |      |             |   |        |   |  |      |        |   |  |   | 7,939  
|                                                                                                                                     |      |              |         |      |             |   |         |   |  |      |         |   |  |   |        
|Income (loss) from continuing operations before income taxes, minority interest and loss (income) from unconsolidated joint
ventures |      |              | (16,565 | )    |             |   | 7,951   |   |  |      | (37,676 | ) |  |   | 16,788 
|                                                                                                                                     |      |              |         |     
|Income tax expense                                                                                                                   |      |              | 10,799  |      |             |   | 3,364   |   |  |      | 12,370  |   |  |   | 4,448  
|Minority interest                                                                                                                    |      |              | 563     |      |             |   | 769     |   |  |      | 2,681   |   |  |   | 2,139  
|Loss (income) from unconsolidated joint ventures                                                                                     |      |              | (32     | )    |             |   | (67     | ) |  |      | (163    | ) |  |   | 701    
|                                                                                                                                     |      |              |         |      |             |   |         |   |  |      |         |   |  |   |        
|Net (loss) income from continuing operations                                                                                         |      |              | (27,895 | )    |             |   | 3,885   |   |  |      | (52,564 | ) |  |   | 9,500  
|                                                                                                                                     |      |              |         |     
|Discontinued operations:                                                                                                             |      |              |         |      |             |   |         |   |  |      |         |   |  |   |        
|Income (loss) from discontinued operations, net of tax                                                                               |      |              | (190    | )    |             |   | (25     | ) |  |      | (484    | ) |  |   | 966    
|Gain on disposal of discontinued operations, net of tax                                                                              |      |              | 107     |      |             |   | 43,162  |   |  |      | 786     |   |  |   | 43,377 
|                                                                                                                                     |      |              |         |      |             |   |         |   |  |      |         |   |  |   |        
|Net (loss) income from discontinued operations, net of tax                                                                           |      |              | (83     | )    |             |   | 43,137  |   |  |      | 302     |   |  |   | 44,343 
|                                                                                                                                     |      |              |         |      |             |   |         |   |  |      |         |   |  |   |        
|Net (loss) income                                                                                                                    |      |              | (27,978 | )    |             |   | 47,022  |   |  |      | (52,262 | ) |  |   | 53,843 
|                                                                                                                                     |      |              |         |     
|Accretion for redemption of preferred stock                                                                                          |      |              |        |      |             |   | 9,459   |   |  |      |        |   |  |   | 27,367 
|                                                                                                                                     |      |              |         |      |             |   |         |   |  |      |         |   |  |   |        
|Net (loss) income attributable to common stockholders                                                                                |      | $            | (27,978 | )    |             | $ | 37,563  |   |  | $    | (52,262 | ) |  | $ | 26,476 
|                                                                                                                                     |      |              |         |      |             |   |         |   |  |      |         |   |  |   |        



See notes to the condensed
consolidated financial statements.



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Remy International, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)



|                                                                                            |  |      |         |   |      |   |          |  
|------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | -------- | -
|IN THOUSANDS,For the nine months ended September 30,                                        |  | 2005 |         |   | 2004 |  
|Cash Flows from Operating Activities:                                                       |  |      |         |   |      |   |          |  
|Net (loss) income attributable to common stockholders                                       |  | $    | (52,262 | ) |      | $ | 26,476   |  
|Adjustments to reconcile net (loss) income to net cash used in operating activities:        |  |      |         |   |      |   |          |  
|Discontinued operations                                                                     |  |      | (302    | ) |      |   | (44,343  | )
|Depreciation and amortization                                                               |  |      | 22,499  |   |      |   | 16,641   |  
|Non-cash interest expense                                                                   |  |      | 4,360   |   |      |   | 2,939    |  
|Loss on early extinguishment of debt (Note 6)                                               |  |      |        |   |      |   | 7,939    |  
|Accretion for redemption of preferred stock                                                 |  |      |        |   |      |   | 27,367   |  
|Minority interest and loss from unconsolidated joint ventures                               |  |      | 2,518   |   |      |   | 2,840    |  
|Deferred income taxes                                                                       |  |      | 6,032   |   |      |   | (145     | )
|Accrued pension and post-retirement benefits, net                                           |  |      | 259     |   |      |   | (224     | )
|Restructuring charges                                                                       |  |      | 2,595   |   |      |   | 1,516    |  
|Cash payments for restructuring charges                                                     |  |      | (4,211  | ) |      |   | (7,798   | )
|Changes in operating assets and liabilities, net of acquisitions and restructuring charges: |  |      |         |   |      |   |          |  
|Accounts receivable                                                                         |  |      | (14,805 | ) |      |   | (12,345  | )
|Inventories                                                                                 |  |      | 5,653   |   |      |   | (16,086  | )
|Accounts payable                                                                            |  |      | 1,224   |   |      |   | (252     | )
|Other current assets and liabilities                                                        |  |      | 14,574  |   |      |   | (15,621  | )
|Other non-current assets and liabilities, net                                               |  |      | (15,437 | ) |      |   | (4,836   | )
|                                                                                            |  |      |         |   |      |   |          |  
|Net cash used in operating activities of continuing operations                              |  |      | (27,303 | ) |      |   | (15,932  | )
|                                                                                            |  |     
|Cash Flows from Investing Activities:                                                       |  |      |         |   |      |   |          |  
|Acquisitions, net of cash acquired                                                          |  |      | (57,273 | ) |      |   | (24,751  | )
|Net proceeds on sale of businesses                                                          |  |      | 611     |   |      |   | 102,987  |  
|Purchases of property, plant and equipment                                                  |  |      | (27,770 | ) |      |   | (15,429  | )
|                                                                                            |  |      |         |   |      |   |          |  
|Net cash (used in) provided by investing activities of continuing operations                |  |      | (84,432 | ) |      |   | 62,807   |  
|                                                                                            |  |     
|Cash Flows from Financing Activities:                                                       |  |      |         |   |      |   |          |  
|Proceeds from issuance of long-term debt                                                    |  |      |        |   |      |   | 275,000  |  
|Retirement of long-term debt                                                                |  |      |        |   |      |   | (200,000 | )
|Net borrowings (repayments) under revolving line of credit and other                        |  |      | 77,176  |   |      |   | (56,464  | )
|Financing costs                                                                             |  |      | (325    | ) |      |   | (12,456  | )
|Distributions to minority interests                                                         |  |      |        |   |      |   | (1,010   | )
|                                                                                            |  |      |         |   |      |   |          |  
|Net cash provided by financing activities of continuing operations                          |  |      | 76,851  |   |      |   | 5,070    |  
|                                                                                            |  |     
|Effect of exchange rate changes on cash                                                     |  |      | (757    | ) |      |   | 335      |  
|                                                                                            |  |     
|Cash flows of discontinued operations                                                       |  |      | (637    | ) |      |   | (500     | )
|                                                                                            |  |      |         |   |      |   |          |  
|Net (decrease ) increase in cash and cash equivalents                                       |  |      | (36,278 | ) |      |   | 51,780   |  
|Cash and cash equivalents at beginning of year                                              |  |      | 62,545  |   |      |   | 21,207   |  
|                                                                                            |  |      |         |   |      |   |          |  
|Cash and cash equivalents at end of period                                                  |  | $    | 26,267  |   |      | $ | 72,987   |  
|                                                                                            |  |      |         |   |      |   |          |  



See notes to the condensed
consolidated financial statements.



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##### Table of Contents

REMY INTERNATIONAL, INC. AND SUBSIDIARIES



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



AMOUNTS IN THOUSANDS, EXCEPT AS INDICATED



For the
three month and nine month periods ended September 30, 2005 and 2004



(Unaudited)



1. Basis of Presentation



The accompanying unaudited, condensed consolidated
financial statements in this Quarterly Report on Form 10-Q should be read in conjunction with the financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the year ended December 31, 2004. The
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 notes 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. Certain prior year amounts have been reclassified to conform to the current years presentation.



Operating results for the three-month and nine-month periods ended September 30, 2005 are not necessarily indicative of
the results that may be expected for the full year. The balance sheet at December 31, 2004 has been derived from the audited financial statements at that date but does not include all of the information and notes required by generally accepted
accounting principles for complete financial statements. The Company has not materially changed its significant accounting policies from those disclosed in its Form 10-K for the year ended December 31, 2004. For further information, refer to
the consolidated financial statements and notes thereto for the year ended December 31, 2004.



2. Additional Balance Sheet Information



Inventories



The components of inventory were
as follows at:



|                |  |                   |         |                  |   |        
|--------------- |  | ----------------- | ------- | ---------------- | - | -------
|                |  | September 30,2005 |         | December 31,2004
|Raw material    |  | $                 | 135,980 |                  | $ | 116,807
|Work-in-process |  |                   | 8,663   |                  |   | 7,577  
|Finished goods  |  |                   | 125,005 |                  |   | 93,528 
|                |  |                   |         |                  |   |        
|Total           |  | $                 | 269,648 |                  | $ | 217,912
|                |  |                   |         |                  |   |        



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##### Table of Contents

Warranty



The Company provides an allowance for the estimated future cost of product warranties and other defective product returns based on managements
estimate of product failure rates and customer eligibility. If these factors differ from managements estimates, revisions to the estimated warranty liability may be required. The specific terms and conditions of the warranties vary depending
upon the customer and the product sold. Changes to the Companys warranty liability, excluding discontinued operations, are summarized as follows:



|                                         |  |                   |         |   |                  |   |         |  
|---------------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                                         |  | September 30,2005 |         |   | December 31,2004 |  
|Balance at beginning of year             |  | $                 | 17,633  |   |                  | $ | 20,471  |  
|Provision and other                      |  |                   | 33,052  |   |                  |   | 39,665  |  
|Payments and charges against the accrual |  |                   | (34,924 | ) |                  |   | (42,503 | )
|Other (including acquisitions)           |  |                   | 4,533   |   |                  |   |        |  
|                                         |  |                   |         |   |                  |   |         |  
|Balance at end of period                 |  | $                 | 20,294  |   |                  | $ | 17,633  |  
|                                         |  |                   |         |   |                  |   |         |  



3. Acquisitions



2005 Acquisition



On March 18, 2005, the Company acquired substantially all of the assets and assumed certain liabilities of Unit Parts
Company (UPC). UPC is a major supplier to the automotive aftermarket for new and remanufactured starters and alternators, offering custom branding, packaging and logistics solutions as well as complete engineering and support services.
The purchase price consisted of approximately $55,300 in cash, and the assumption of approximately $69,500 in liabilities (including a preliminary estimate of approximately $5,300 in exit costs). Additionally, the purchase agreement contains a
contingent earn out to be paid over a four-year period if incremental financial performance objectives above the current performance of the combined electrical aftermarket business are attained. Contingent consideration earned and paid will increase
the purchase price and result in additional goodwill. The Company funded this acquisition with cash on hand and borrowings available under its existing revolving credit facility.



Liabilities assumed include customer obligations related to several customer contracts acquired through the acquisition.
These liabilities are reflected in Other liabilities and accrued expenses and Other non-current liabilities in the accompanying condensed consolidated balance sheet. These contracts designate the Company as the exclusive
supplier to the respective customer and require the Company to issue credits to each respective customer over several years. The following table summarizes the net present value, as of September 30, 2005, of future payments due over the next
five years under the customer obligation contracts:



|           |  |   |       
|---------- |  | - | ------
|2005       |  | $ | 4,057 
|2006       |  |   | 15,073
|2007       |  |   | 10,439
|2008       |  |   | 7,098 
|2009       |  |   | 7,555 
|Thereafter |  |   | 15,126
|           |  |   |       
|Total      |  | $ | 59,348
|           |  |   |       



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##### Table of Contents

In connection with this acquisition the Company entered into Amendment No. 2 to the Second Amended
and Restated Loan and Security Agreement, more fully described in Note 6.



UPCs results of operations are included in the Companys statement of operations beginning March 18, 2005. The purchase price allocation has not been finalized. The preliminary purchase price
allocation is summarized as follows:



|                               |  |   |        
|------------------------------ |  | - | -------
|Current assets                 |  | $ | 63,728 
|Intangible assets and goodwill |  |   | 70,827 
|Other assets                   |  |   | 22,595 
|                               |  |   |        
|Total assets                   |  | $ | 157,150
|                               |  |   |        
|Total liabilities              |  | $ | 101,873
|                               |  |   |        
|Cash paid                      |  | $ | 55,277 
|                               |  |   |        



Other



In the third quarter of 2005, the Company made cash payments totaling $225
relative to the acquisition of Delphi Corporations (Delphi) light vehicle alternator business.



In the second quarter of 2005, the Company made a final cash earn-out payment of approximately $400 relative to the 2000 acquisition of M&M Knopf Auto
Parts, L.L.C. (Knopf).



2004 Acquisitions



In the second quarter of 2004, the Company made cash earn-out payments
totaling $13,454 relative to the 2000 acquisition of Knopf. These payments were based on the achievement of certain earnings goals by Knopf during the period August 2000 to December 2003. In December 2003, $13,500 was accrued and recorded as an
adjustment to the purchase price of Knopf, resulting in an increase in goodwill.



During the second quarter of 2004, the Company made a final cash payment of $4,786 on notes issued in 2002 in connection with the Companys acquisition of the remaining shares from the minority shareholders of
Remy Korea Limited, which was acquired in 1999.



The Company
made cash payments totaling $1,023 during the second quarter of 2004 relative to the acquisition of the Delphi light vehicle alternator business.



8



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During the second quarter of 2004, in connection with settlement of the arbitration between certain of
the Companys affiliates and its former partner at its operations in Mexico, the Company recorded the purchase of the remaining shares of the Mexico joint venture from the minority shareholders. The net purchase portion of the arbitration award
of $5,488 in cash was paid in the third quarter of 2004 and resulted in a $5,101 increase in goodwill.



4. Discontinued Operations



In the second quarter of 2005, the Company completed the sale of substantially all assets and the assignment of certain liabilities of its automatic transmission remanufacturing business, AutoMatic Transmission International A/S
(AMT), based in Soborg, Denmark, for approximately $240 in cash. The estimated loss on disposal of $2,246 recorded in 2004 was reduced by $416 in the second quarter of 2005 as a result of the sale. The cash proceeds and loss on disposal
are subject to future adjustment. This business was classified as a discontinued operation in the Companys consolidated financial statements effective in the third quarter of 2004 upon completion of the plan of disposal.



Selected financial information for discontinued operations for the three
months and nine months ended September 30 is as follows:



|                         |  |              |      |   |             |   |        |      |  |   |      |   |  |   |       
|------------------------ |  | ------------ | ---- | - | ----------- | - | ------ | ---- |  | - | ---- | - |  | - | ------
|                         |  | Three Months |      |   | Nine Months
|                         |  | 2005         |      |   | 2004        |   |        | 2005 |  |   | 2004
|Net sales                |  | $            |     |   |             | $ | 15,009 |      |  | $ | 973  |   |  | $ | 62,730
|Interest expense         |  |              |     |   |             |   | 1,070  |      |  |   | 5    |   |  |   | 4,316 
|Income (loss) before tax |  |              | (190 | ) |             |   | 3      |      |  |   | (484 | ) |  |   | 1,057 
|Income tax expense       |  |              |     |   |             |   | 28     |      |  |   |     |   |  |   | 91    
|                         |  |              |      |   |             |   |        |      |  |   |      |   |  |   |       
|Net income (loss)        |  | $            | (190 | ) |             | $ | (25    | )    |  | $ | (484 | ) |  | $ | 966   
|                         |  |              |      |   |             |   |        |      |  |   |      |   |  |   |       



5. Restructuring Charges



The Companys restructuring activities are accounted
for in accordance with Statement of Financial Accounting Standards (SFAS) No. 146, Accounting for Costs Associated with Exit or Disposal Activities (SFAS No. 146) and Emerging Issues Task Force (EITF)
Issue 95-03, Recognition of Liabilities in Connection with a Purchase Business Combination (EITF 95-03).



Continuing Operations



In connection with the acquisition of UPC in the first quarter of 2005, the Company developed a plan for the consolidation and integration of the
operations of UPC with the Companys then existing electrical aftermarket remanufacturing operations. This plan included provisions for various voluntary and involuntary employee termination programs for both salary and hourly employees. A
liability of $5,250, consisting entirely of employee termination benefits, was established in the opening balance sheet of UPC for the estimated cost of the plan. This estimate is subject to change as the plan is finalized. The Company currently
estimates that payments, of which $332 in total were charged to the liability in the second and third quarters of 2005, will be made over the next fifteen to twenty-one months. Additional costs relative to this plan, the amount of which is not
currently determinable, may be incurred in future periods. The Company plans to finalize exit plans at UPC not later than March 2006.



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In 2005, the Company, in conjunction with its ongoing cost reduction initiatives, completed plans for the
closure of certain manufacturing facilities in Europe. This action resulted in a workforce reduction of approximately twenty employees and will be completed during the fourth quarter.



In the second quarter of 2005, the Company completed plans for the consolidation of certain of its electrical aftermarket
remanufacturing operations in Michigan and a reduction in force subsequent to the ramp up of insourcing activities and continued implementation of lean manufacturing initiatives in its Original Equipment Manufacturer (OEM) operations in
Mexico. This action resulted in a workforce reduction totaling approximately sixty-five employees and was completed in the third quarter.



In the third quarter of 2005, the Company, in conjunction with its ongoing cost reduction initiatives, completed plans for a reduction in force at its
headquarters operations in Anderson, Indiana. This plan consisted primarily of the elimination of approximately twenty-five salaried positions and early retirements and was completed in the third quarter.



The net restructuring charge of $2,595 for the nine months ended
September 30, 2005 consisted of $3,661 related to the actions detailed above and the prior closure of operations in Anderson, Indiana partially offset by a $1,066 credit for the reversal of accrued maintenance expenses reflecting the
Companys utilization of a previously idled Anderson, Indiana facility and the renegotiation of other maintenance agreements.



The following table summarizes the activity in the restructuring accrual of continuing operations, including the accrual established relative to the
acquisition of UPC, for the nine months ended September 30, 2005:



|                              |  |                      |        |     |                       |   |        |       |  |   |        |    
|----------------------------- |  | -------------------- | ------ | --- | --------------------- | - | ------ | ----- |  | - | ------ | ---
|                              |  | Termination Benefits |        |     | Exit/Impairment Costs |   |        | Total | 
|Reserve at December 31, 2004  |  | $                    | 5,285  |     |                       | $ | 5,573  |       |  | $ | 10,858 |    
|Provision (credit)            |  |                      | 2,951  |     |                       |   | (529   | )     |  |   | 2,422  | (b)
|Payments                      |  |                      | (3,038 | )   |                       |   | (1,173 | )     |  |   | (4,211 | )  
|Other                         |  |                      | 5,192  | (a) |                       |   | 3      |       |  |   | 5,195  |    
|                              |  |                      |        |     |                       |   |        |       |  |   |        |    
|Reserve at September 30, 2005 |  | $                    | 10,390 |     |                       | $ | 3,874  |       |  | $ | 14,264 |    
|                              |  |                      |        |     |                       |   |        |       |  |   |        |    

---

|(a) | Includes a preliminary estimate of $5,250 for exit costs established in connection with the acquisition of UPC.
|--- | ---------------------------------------------------------------------------------------------------------------

|(b) | Excludes a charge of $173 for the write-down of fixed assets.
|--- | -------------------------------------------------------------



Discontinued Operations



The restructuring charges, payments and liabilities relative to discontinued operations are classified as discontinued operations in the Companys
condensed consolidated financial statements.



The following
table summarizes the activity in the restructuring accrual of discontinued operations for the nine months ended September 30, 2005:



|                              |  |                      |   |                       |   |      |       |  |   |      |  
|----------------------------- |  | -------------------- | - | --------------------- | - | ---- | ----- |  | - | ---- | -
|                              |  | Termination Benefits |   | Exit/Impairment Costs |   |      | Total | 
|Reserve at December 31, 2004  |  | $                    |  |                       | $ | 294  |       |  | $ | 294  |  
|Provision                     |  |                      |  |                       |   |     |       |  |   |     |  
|Payments                      |  |                      |  |                       |   | (182 | )     |  |   | (182 | )
|Other                         |  |                      |  |                       |   | (112 | )     |  |   | (112 | )
|                              |  |                      |   |                       |   |      |       |  |   |      |  
|Reserve at September 30, 2005 |  | $                    |  |                       | $ |     |       |  | $ |     |  
|                              |  |                      |   |                       |   |      |       |  |   |      |  



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6. Long-Term Debt



In March 2005, the Company entered into Amendment No. 2 to the Second Amended and Restated Loan and Security Agreement (Amendment) to
reflect, among other matters, the acquisition of substantially all of the assets and the assumption of certain liabilities of UPC. Additionally, the Amendment increased the maximum draw available (subject to a borrowing base calculation) under the
asset based Senior Credit Facility from $120,000 to $145,000, eliminated the Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Fixed Charge covenants from the facility and extended the maturity of the facility
to June 30, 2008 with provisions for annual extensions thereafter.



On April 23, 2004, the Company issued $125,000 principal amount of Second Priority Senior Secured Floating Rate Notes due 2009 (the Floating Rate Notes ), bearing an interest rate of LIBOR plus 4.00%, and $150,000 principal
amount of 9 3/8% Senior Subordinated Notes due 2012 (the 9 3/8% Senior Subordinated Notes). The net proceeds from the issuance of these notes were used to pay down existing indebtedness under the Companys senior credit facilities,
including repayment of the $60,000 term loan and relevant prepayment premium, and to finance the redemption of the Companys outstanding 10 5/8% senior subordinated notes due 2006 issued on August 1, 1996, including the call premium and
accrued interest. The 10 5/8% notes were called for redemption in their entirety on April 23, 2004 at a redemption price of 101.771% of their face amount plus accrued but unpaid interest up to, but not including, the redemption date of
May 24, 2004.



In the second quarter of 2004, in
connection with the above mentioned debt redemption, repayment and amendment, the Company recorded a loss on early extinguishment of debt of $7,939. This charge consisted of: (i) a call premium of $2,479 and the write off of deferred financing
costs of $1,391 on redemption of the 10 5/8% Senior Subordinated Notes; (ii) a prepayment penalty of $1,800 and the write off of deferred financing costs of $743 on repayment of the term loan; and (iii) write off of deferred financing
costs of $1,226 and an amendment fee of $300 on the amendment and pay down of the senior credit facility. Also during the second quarter of 2004, the Company recorded additional interest for the period between the call and redemption dates of $1,281
relative to redemption of the 10 5/8% Senior Subordinated Notes.



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7. Employee Benefit Plans



The components of expense for the three-month and nine-month periods ended September 30, 2005 and 2004 for the plans
are as follows:



Pension Benefits



|                                                     |      |              |      |      |             |   |      |   |  |      |        |   |  |   |        |  
|---------------------------------------------------- | ---- | ------------ | ---- | ---- | ----------- | - | ---- | - |  | ---- | ------ | - |  | - | ------ | -
|Components of expense                                |      | Three Months |      |      | Nine Months |  
|                                                     | 2005 |              |      | 2004 |             |   | 2005 |   |  | 2004 |       
|Service costs                                        |      | $            | 545  |      |             | $ | 385  |   |  | $    | 1,543  |   |  | $ | 1,327  |  
|Interest costs                                       |      |              | 647  |      |             |   | 589  |   |  |      | 1,909  |   |  |   | 1,754  |  
|Expected return on plan assets                       |      |              | (481 | )    |             |   | (406 | ) |  |      | (1,446 | ) |  |   | (1,302 | )
|Amortization of prior service cost                   |      |              | 56   |      |             |   | 24   |   |  |      | 168    |   |  |   | 72     |  
|Recognized net actuarial loss                        |      |              | 117  |      |             |   | 84   |   |  |      | 320    |   |  |   | 279    |  
|Curtailments                                         |      |              |     |      |             |   |     |   |  |      |       |   |  |   |       |  
|                                                     |      |              |      |      |             |   |      |   |  |      |        |   |  |   |        |  
|Net periodic pension cost                            |      | $            | 884  |      |             | $ | 676  |   |  | $    | 2,494  |   |  | $ | 2,130  |  
|                                                     |      |              |      |      |             |   |      |   |  |      |        |   |  |   |        |  
|                                                     |      |              |      |     
|Post-Retirement Health Care and Life Insurance Plans |      |              |      |      |             |   |      |   |  |      |        |   |  |   |        |  
|Components of expense                                |      | Three Months |      |      | Nine Months |  
|                                                     | 2005 |              |      | 2004 |             |   | 2005 |   |  | 2004 |       
|Service costs                                        |      | $            | 90   |      |             | $ | 118  |   |  | $    | 269    |   |  | $ | 354    |  
|Interest costs                                       |      |              | 268  |      |             |   | 294  |   |  |      | 805    |   |  |   | 882    |  
|Expected return on plan assets                       |      |              |     |      |             |   |     |   |  |      |       |   |  |   |       |  
|Amortization of prior service cost                   |      |              |     |      |             |   |     |   |  |      |       |   |  |   |       |  
|Recognized net actuarial loss                        |      |              | 17   |      |             |   | 36   |   |  |      | 50     |   |  |   | 107    |  
|Curtailments                                         |      |              |     |      |             |   |     |   |  |      |       |   |  |   |       |  
|                                                     |      |              |      |      |             |   |      |   |  |      |        |   |  |   |        |  
|Net periodic pension cost                            |      | $            | 375  |      |             | $ | 448  |   |  | $    | 1,124  |   |  | $ | 1,343  |  
|                                                     |      |              |      |      |             |   |      |   |  |      |        |   |  |   |        |  



Cash Flows



The Company contributed $2,956 in the first nine months of 2005 and plans to
approximately contribute $3,795 to its pension plans for all of 2005. The post-retirement health care plan is funded as benefits are paid.



8. Income Taxes



Income tax expense on continuing operations of $12,370 for the nine months ended September 30, 2005 included a $6,748 increase to the deferred tax
valuation allowance for unreserved domestic income tax assets, provisions for domestic state and local taxes of $375 and taxes in various foreign jurisdictions of $5,247. Income tax expense on continuing operations of $4,448 for the nine months
ended September 30, 2004 consisted of provisions for domestic and state local taxes of $897 and in foreign jurisdictions of $3,551.



In the fourth quarter of 2003, we recorded a charge of $28,320 for a deferred valuation allowance for substantially all unreserved domestic income tax
assets established prior to 2003. In the third quarter 2005, we recorded a charge of $6,748 for a deferred tax valuation allowance for the remaining unreserved domestic income tax assets.



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9. Accumulated Other Comprehensive Income (Loss)



The Companys other comprehensive income (loss) consists of unrealized net gains and losses on the translation of the
assets and liabilities of its foreign operations, currency instruments and minimum pension liability adjustments. The before tax income (loss), related income tax effect and accumulated balance for the first, second and third quarters of 2005 are as
follows:



|                                  |  |                                      |        |   |                                               |   |        |                                    |  |   |                                   |   |  |   |         |  
|--------------------------------- |  | ------------------------------------ | ------ | - | --------------------------------------------- | - | ------ | ---------------------------------- |  | - | --------------------------------- | - |  | - | ------- | -
|                                  |  | ForeignCurrencyTranslationAdjustment |        |   | UnrealizedGains(Losses) onCurrencyInstruments |   |        | MinimumPensionLiabilityAdjustments |  |   | AccumulatedOtherComprehensiveLoss |  
|Balances at December 31, 2004     |  | $                                    | 1,964  |   |                                               | $ | 439    |                                    |  | $ | (8,206                            | ) |  | $ | (5,803  | )
|Before tax (loss) income          |  |                                      | (4,300 | ) |                                               |   | 101    |                                    |  |   |                                  |   |  |   | (4,199  | )
|Income tax effect                 |  |                                      |       |   |                                               |   | 6      |                                    |  |   |                                  |   |  |   | 6       |  
|                                  |  |                                      |        |   |                                               |   |        |                                    |  |   |                                   |   |  |   |         |  
|Other comprehensive (loss) income |  |                                      | (4,300 | ) |                                               |   | 95     |                                    |  |   |                                  |   |  |   | (4,205  | )
|                                  |  |                                      |        |   |                                               |   |        |                                    |  |   |                                   |   |  |   |         |  
|Balances at March 31, 2005        |  |                                      | (2,336 | ) |                                               |   | 534    |                                    |  |   | (8,206                            | ) |  |   | (10,008 | )
|Before tax loss                   |  |                                      | (2,477 | ) |                                               |   | (270   | )                                  |  |   |                                  |   |  |   | (2,747  | )
|Income tax effect                 |  |                                      |       |   |                                               |   | (109   | )                                  |  |   |                                  |   |  |   | (109    | )
|                                  |  |                                      |        |   |                                               |   |        |                                    |  |   |                                   |   |  |   |         |  
|Other comprehensive loss          |  |                                      | (2,477 | ) |                                               |   | (161   | )                                  |  |   |                                  |   |  |   | (2,638  | )
|                                  |  |                                      |        |   |                                               |   |        |                                    |  |   |                                   |   |  |   |         |  
|Balances at June 30, 2005         |  |                                      | (4,813 | ) |                                               |   | 373    |                                    |  |   | (8,206                            | ) |  |   | (12,646 | )
|Before tax income (loss)          |  |                                      | 792    |   |                                               |   | (1,133 | )                                  |  |   |                                  |   |  |   | (341    | )
|Income tax effect                 |  |                                      |       |   |                                               |   | (339   | )                                  |  |   |                                  |   |  |   | (339    | )
|                                  |  |                                      |        |   |                                               |   |        |                                    |  |   |                                   |   |  |   |         |  
|Other comprehensive income (loss) |  |                                      | 792    |   |                                               |   | (794   | )                                  |  |   |                                  |   |  |   | (2      | )
|                                  |  |                                      |        |   |                                               |   |        |                                    |  |   |                                   |   |  |   |         |  
|Balances at September 30, 2005    |  | $                                    | (4,021 | ) |                                               | $ | (421   | )                                  |  | $ | (8,206                            | ) |  | $ | (12,648 | )
|                                  |  |                                      |        |   |                                               |   |        |                                    |  |   |                                   |   |  |   |         |  



The Companys
total comprehensive income (loss) was as follows:



|                                      |  |   |         |  
|------------------------------------- |  | - | ------- | -
|Three months ended September 30, 2005 |  | $ | (27,980 | )
|Three months ended September 30, 2004 |  |   | 47,637  |  
|Nine months ended September 30, 2005  |  |   | (59,107 | )
|Nine months ended September 30, 2004  |  |   | 55,521  |  



10. Commitments and Contingencies



The Company is party to various legal actions and
administrative proceedings and subject to various claims arising in the ordinary course of business, including those relating to commercial transactions, product liability, safety, health, taxes, environmental and other matters. The Company believes
that the ultimate liability, if any, in excess of amounts already provided for in the financial statements or covered by insurance on the disposition of these matters will not have a material adverse effect on the financial position, results of
operations or cash flows of the Company.



UAW Litigation



On April 16, 2003, the International Union, United Automobile,
Aerospace and Agriculture Implement Workers of America (UAW) and its Local Union 662 filed suit against the Company and Remy, Inc. (RI), in Federal District Court in the Southern District of Indiana, Indianapolis Division.
The lawsuit was filed under Section 301 of the Labor Management Relations Act, 29 U.S.C. Sec. 185, seeking enforcement of an expired Supplemental Unemployment Benefits plan (SUB plan). The plaintiffs allege that the SUB plan
provides supplemental unemployment benefits for 52 weeks and separation pay in an amount exceeding $20,000 for employees who were terminated as a result of the closure of RIs Anderson, Indiana production facilities at the end of March 2003.
The plaintiffs also seek to enforce terminated provisions of a health care program, which the plaintiffs allege provides the terminated employees with 25 months of continued hospital, surgical, medical, hearing aid,



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prescription drug, mental health, substance abuse and vision insurance coverage. The terminated employees were represented by the UAW and its
Local Union 662 under various agreements, which expired on March 31, 2003. The lawsuit was filed shortly after the UAW membership failed to ratify RIs last, best and final offer for a Shutdown Agreement. The UAW filed an amended complaint
on July 8, 2003 to which the Company filed an answer on July 24, 2003. Motions for summary judgment filed by the parties were denied by the Court in September 2005. The trial is scheduled for February 2006. The Company denies the material
allegations of the complaint, denies any wrongdoing and intends to defend itself vigorously, but is unable to predict whether the proceedings will have a material adverse effect on the Company.



Prison Labor Matter



In January 2004, a class action on behalf of all prisoners who worked in a South Carolina Department of Corrections
(SCDC) Services Training Program at Lieber Correctional Institute was brought against the SCDC and our former subsidiary Williams Technologies, Inc. (Williams), which was sold to Caterpillar, Inc., in September 2004. The
Plaintiffs claim that (a) they should have been paid industry prevailing wages under a South Carolina prison industries authorization statute, (b) the SCDC and Williams violated the Payment of Wages Act and (c) the SCDC and Williams
committed a tort under the South Carolina Tort Claims Act. Under the terms of the sale, the Company retained liability and responsibility for this claim. The Circuit Court for Dorchester County granted summary judgment to the Company on
April 21, 2005, and decertified the Plaintiff class. Plaintiffs filed a Notice of Appeal with the Court on May 24, 2005, and a due date for filling their Appeal Brief has not yet been set. The Company continues to deny the material
allegations of the complaint and any wrongdoing and intends to defend itself vigorously, but is unable to predict whether the proceedings will have a material adverse effect on the Company.



Import/Export Matters



The Company continues to expand globally to take advantage of global economic conditions and related cost structures. The
Company is subject to various duties and import/export taxes. The Company is in the process of reviewing its import/export processes in North America, Europe and parts of Asia to verify the appropriate import duty classification, value and duty
rate, including import value added tax. As part of this review process, the Company identified a potential exposure related to customs duties in the United States. Upon resolution of these interpretations, duties due from the Company will range from
$0 to $12,200. The Company has accrued approximately $8,100 related to this issue.



Remy Reman Facilities



The Remy Reman
facilities in Mississippi identified certain possible violations of state air laws and notified the state environmental agency under the state voluntary audit disclosure rules. The Mississippi Department of Environmental Quality (MDEQ) issued
Notices of Violation regarding alleged violations of state air laws by two of the Remy Reman facilities in Mississippi. Remy Reman resolved this liability through payment in January 2005 of approximately $170.



Franklin Power Products Facility



In September 2000, one of Franklin Power Products, Inc.s Indiana
facilities received a Finding of Violation and Order for Compliance (the Order) from the EPA requiring the facility to correct violations of its wastewater discharge permits. Franklin Power Products, Inc. has installed wastewater



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treatment equipment and is in compliance with the terms of the Order and has eliminated the discharge. In July 2004, the Company and Franklin Power Products,
Inc. entered into an agreement with the U.S. Department of Justice on behalf of the EPA, which tolled the statute of limitations on the EPAs potential claim for penalties. Since that time, the Company has been cooperating with the EPA by
providing additional information and has entered into settlement negotiations with the EPA and the Department of Justice. On resolution of these negotiations, the amount due from the Company will range from $200 to $2,400. The accompanying condensed
consolidated financial statements reflect a liability of approximately $200 related to this issue.



11. Financial Information for Subsidiary Guarantors and Non-Guarantor Subsidiaries



The Company conducts a significant portion of its business through its subsidiaries. The Companys 8 5/8% Senior Notes Due 2007, 11% Senior
Subordinated Notes Due 2009, Second Priority Senior Floating Rate Notes, and the 9 3/8% Senior Subordinated Notes are fully and unconditionally guaranteed, jointly and severally, by certain direct and indirect subsidiaries of the Company (the
Subsidiary Guarantors). Certain of the Companys subsidiaries do not guarantee the 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 September 30, 2005 and December 31, 2004 and for the three and nine-month periods
ended September 30, 2005 and 2004.



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.



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



|                                         |  |                                                          
|---------------------------------------- |  | ---------------------------------------------------------
|Subsidiary Guarantors                    |  | Non-Guarantor Subsidiaries                               
|      Ballantrae Corporation            |  |       AutoMatic Transmission International A/S          
|      Franklin Power Products, Inc.     |  |       Central Precision Limited                         
|      International Fuel Systems, Inc.  |  |       Remy Automotive Germany GmbH                      
|      M & M Knopf Auto Parts, L.L.C.    |  |       Delco Remy International (Europe) GmbH, iL        
|      Marine Corporation of America     |  |       Electro Diesel Rebuild BVBA                       
|      Nabco, Inc.                       |  |       Electro-Rebuild Tunisia S.A.R.L.                  
|      Power Investments, Inc.           |  |       Magnum Power Products, L.L.C.                     
|      Power Investments Marine, Inc.    |  |       Publitech, Inc.                                   
|      Powrbilt Products, Inc.           |  |       Remy Automotive Brasil Ltda.                      
|      Reman Holdings, L.L.C.            |  |       Remy Automotive Europe BVBA                       
|      Remy Inc.                         |  |       Remy Automotive Mexico, S. de R.L. de C.V.        
|      Remy International Holdings, Inc. |  |       Remy Automotive Poland, Sp.zo.o.                  
|      Remy Powertrain, L.P.             |  |       Remy Automotive UK Limited                        
|      Remy Reman, L.L.C.                |  |       Remy Componentes S. de R. L. de C. V.             
|      Unit Parts Company                |  |       Remy Automotive Hungary kft                       
|      World Wide Automotive, L.L.C.     |  |       Remy India Holdings, Inc.                         
|                                         |  |       Remy Korea Holdings, Inc.                         
|                                         |  |       Remy Remanufacturing de Mexico, S. de R.L. de C.V.
|                                         |  |       World Wide Automotive Distributors, Inc.          
|                                         |  |       Remy Electrical Hubei Company Limited             



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REMY INTERNATIONAL, INC. AND SUBSIDIARIES

Condensed Consolidating Balance Sheet

(Unaudited)



|                                                     |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|---------------------------------------------------- |  | ------------------------------------------- | -------- | - | -------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ------------ | -------- | ---- |  | - | -------- | -
|IN THOUSANDS,At September 30, 2005                   |  | RemyInternational,Inc. (ParentCompany Only) |          |   | SubsidiaryGuarantors |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |         
|Assets:                                              |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|Current assets:                                      |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|Cash and cash equivalents                            |  | $                                           | 1,107    |   |                      | $ | 1,970   |                           |  | $ | 23,190       |   |  | $            |         |      |  | $ | 26,267   |  
|Trade accounts receivable, net                       |  |                                             |         |   |                      |   | 135,860 |                           |  |   | 43,860       |   |  |              |         |      |  |   | 179,720  |  
|Other receivables                                    |  |                                             | 236      |   |                      |   | 2,181   |                           |  |   | 8,867        |   |  |              |         |      |  |   | 11,284   |  
|Inventories                                          |  |                                             |         |   |                      |   | 201,767 |                           |  |   | 69,233       |   |  |              | (1,352   | )(c) |  |   | 269,648  |  
|Assets of discontinued operations                    |  |                                             |         |   |                      |   |        |                           |  |   | 21           |   |  |              |         |      |  |   | 21       |  
|Other currents assets                                |  |                                             | 2,989    |   |                      |   | 2,353   |                           |  |   | 3,521        |   |  |              |         |      |  |   | 8,863    |  
|                                                     |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|Total current assets                                 |  |                                             | 4,332    |   |                      |   | 344,131 |                           |  |   | 148,692      |   |  |              | (1,352   | )    |  |   | 495,803  |  
|                                                     |  |                                             |          |   |                     
|Property, plant and equipment                        |  |                                             | 25,360   |   |                      |   | 186,523 |                           |  |   | 157,309      |   |  |              |         |      |  |   | 369,192  |  
|Less accumulated depreciation                        |  |                                             | 20,754   |   |                      |   | 123,512 |                           |  |   | 62,446       |   |  |              |         |      |  |   | 206,712  |  
|                                                     |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|Property, plant and equipment, net                   |  |                                             | 4,606    |   |                      |   | 63,011  |                           |  |   | 94,863       |   |  |              |         |      |  |   | 162,480  |  
|Deferred financing costs, net                        |  |                                             | 12,539   |   |                      |   |        |                           |  |   |             |   |  |              |         |      |  |   | 12,539   |  
|Goodwill, net                                        |  |                                             |         |   |                      |   | 158,195 |                           |  |   | 12,144       |   |  |              |         |      |  |   | 170,339  |  
|Investments in subsidiaries and joint ventures       |  |                                             | 518,586  |   |                      |   |        |                           |  |   |             |   |  |              | (512,716 | )(a) |  |   | 5,870    |  
|Other assets                                         |  |                                             | 2,710    |   |                      |   | 23,205  |                           |  |   | 9,170        |   |  |              |         |      |  |   | 35,085   |  
|                                                     |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|Total assets                                         |  | $                                           | 542,773  |   |                      | $ | 588,542 |                           |  | $ | 264,869      |   |  | $            | (514,068 | )    |  | $ | 882,116  |  
|                                                     |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|Liabilities and Stockholders (Deficit) Equity:      |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|Current liabilities:                                 |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|Accounts payable                                     |  | $                                           | 1,418    |   |                      | $ | 130,511 |                           |  | $ | 53,449       |   |  | $            |         |      |  | $ | 185,378  |  
|Intercompany accounts                                |  |                                             | 77,319   |   |                      |   | (91,751 | )                         |  |   | 15,033       |   |  |              | (601     | )(c) |  |   |         |  
|Accrued interest                                     |  |                                             | 19,653   |   |                      |   |        |                           |  |   | 117          |   |  |              |         |      |  |   | 19,770   |  
|Accrued restructuring                                |  |                                             | 567      |   |                      |   | 10,074  |                           |  |   | 785          |   |  |              |         |      |  |   | 11,426   |  
|Liabilities of discontinued operations               |  |                                             |         |   |                      |   | 26      |                           |  |   | 793          |   |  |              |         |      |  |   | 819      |  
|Deferred income taxes                                |  |                                             |         |   |                      |   | (255    | )                         |  |   | 2,609        |   |  |              |         |      |  |   | 2,354    |  
|Other liabilities and accrued expenses               |  |                                             | 6,302    |   |                      |   | 89,507  |                           |  |   | 21,038       |   |  |              |         |      |  |   | 116,847  |  
|Current maturities of long-term debt                 |  |                                             | 1,369    |   |                      |   | 1,824   |                           |  |   | 26,455       |   |  |              |         |      |  |   | 29,648   |  
|                                                     |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|Total current liabilities                            |  |                                             | 106,628  |   |                      |   | 139,936 |                           |  |   | 120,279      |   |  |              | (601     | )    |  |   | 366,242  |  
|                                                     |  |                                             |          |   |                     
|Long-term debt, net of current portion (Note 6)      |  |                                             | 656,687  |   |                      |   | 13,841  |                           |  |   | 10,301       |   |  |              |         |      |  |   | 680,829  |  
|Post-retirement benefits other than pensions         |  |                                             | 16,349   |   |                      |   |        |                           |  |   | 8            |   |  |              |         |      |  |   | 16,357   |  
|Accrued pension benefits                             |  |                                             | 12,968   |   |                      |   |        |                           |  |   | 747          |   |  |              |         |      |  |   | 13,715   |  
|Accrued restructuring                                |  |                                             |         |   |                      |   | 2,838   |                           |  |   |             |   |  |              |         |      |  |   | 2,838    |  
|Deferred income taxes                                |  |                                             | 6,748    |   |                      |   |        |                           |  |   |             |   |  |              |         |      |  |   | 6,748    |  
|Other non-current liabilities                        |  |                                             | 658      |   |                      |   | 42,412  |                           |  |   | 859          |   |  |              |         |      |  |   | 43,929   |  
|Minority interest                                    |  |                                             |         |   |                      |   | 4,375   |                           |  |   | 8,790        |   |  |              |         |      |  |   | 13,165   |  
|Stockholders (deficit) equity:                      |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|Common stock:                                        |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|Class B Shares                                       |  |                                             | 3        |   |                      |   |        |                           |  |   |             |   |  |              |         |      |  |   | 3        |  
|Paid-in capital                                      |  |                                             | 334,336  |   |                      |   |        |                           |  |   |             |   |  |              |         |      |  |   | 334,336  |  
|Retained (deficit) earnings                          |  |                                             | (583,398 | ) |                      |   | 58,284  |                           |  |   | (5,638       | ) |  |              | (52,646  | )(b) |  |   | (583,398 | )
|Subsidiary investment                                |  |                                             |         |   |                      |   | 327,338 |                           |  |   | 133,483      |   |  |              | (460,821 | )(a) |  |   |         |  
|Accumulated other comprehensive loss                 |  |                                             | (8,206   | ) |                      |   | (482    | )                         |  |   | (3,960       | ) |  |              |         |      |  |   | (12,648  | )
|                                                     |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|Total stockholders (deficit) equity                 |  |                                             | (257,265 | ) |                      |   | 385,140 |                           |  |   | 123,885      |   |  |              | (513,467 | )    |  |   | (261,707 | )
|                                                     |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|Total liabilities and stockholders (deficit) equity |  | $                                           | 542,773  |   |                      | $ | 588,542 |                           |  | $ | 264,869      |   |  | $            | (514,068 | )    |  | $ | 882,116  |  
|                                                     |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  

---

|(a) | Elimination of investments in subsidiaries.
|--- | -------------------------------------------

|(b) | Elimination of investments in subsidiaries earnings.
|--- | -----------------------------------------------------

|(c) | Elimination of intercompany profit in inventory.
|--- | ------------------------------------------------



16



---

##### Table of Contents

REMY INTERNATIONAL, INC. AND SUBSIDIARIES

Condensed Consolidating Balance Sheet



|                                                     |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|---------------------------------------------------- |  | ------------------------------------------- | -------- | - | -------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ------------ | -------- | ---- |  | - | -------- | -
|IN THOUSANDS,At December 31, 2004                    |  | RemyInternational,Inc. (ParentCompany Only) |          |   | SubsidiaryGuarantors |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |         
|ASSETS:                                              |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|Current assets:                                      |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|Cash and cash equivalents                            |  | $                                           | 40,740   |   |                      | $ | 689     |                           |  | $ | 21,116       |   |  | $            |         |      |  | $ | 62,545   |  
|Trade accounts receivable, net                       |  |                                             |         |   |                      |   | 109,923 |                           |  |   | 44,410       |   |  |              |         |      |  |   | 154,333  |  
|Other receivables                                    |  |                                             | 1,685    |   |                      |   | 3,584   |                           |  |   | 13,828       |   |  |              |         |      |  |   | 19,097   |  
|Inventories                                          |  |                                             |         |   |                      |   | 149,338 |                           |  |   | 69,925       |   |  |              | (1,351   | )(c) |  |   | 217,912  |  
|Assets of discontinued operations                    |  |                                             |         |   |                      |   |        |                           |  |   | 356          |   |  |              |         |      |  |   | 356      |  
|Other currents assets                                |  |                                             | 1,700    |   |                      |   | 1,912   |                           |  |   | 7,602        |   |  |              |         |      |  |   | 11,214   |  
|                                                     |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|Total current assets                                 |  |                                             | 44,125   |   |                      |   | 265,446 |                           |  |   | 157,237      |   |  |              | (1,351   | )    |  |   | 465,457  |  
|                                                     |  |                                             |          |   |                     
|Property, plant and equipment                        |  |                                             | 2,610    |   |                      |   | 181,525 |                           |  |   | 145,502      |   |  |              |         |      |  |   | 329,637  |  
|Less accumulated depreciation                        |  |                                             | 203      |   |                      |   | 134,842 |                           |  |   | 57,299       |   |  |              |         |      |  |   | 192,344  |  
|                                                     |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|Property, plant and equipment, net                   |  |                                             | 2,407    |   |                      |   | 46,683  |                           |  |   | 88,203       |   |  |              |         |      |  |   | 137,293  |  
|Deferred financing costs, net                        |  |                                             | 14,842   |   |                      |   |        |                           |  |   |             |   |  |              |         |      |  |   | 14,842   |  
|Goodwill, net                                        |  |                                             |         |   |                      |   | 94,255  |                           |  |   | 12,145       |   |  |              |         |      |  |   | 106,400  |  
|Investments in subsidiaries and joint ventures       |  |                                             | 426,358  |   |                      |   |        |                           |  |   |             |   |  |              | (420,652 | )(a) |  |   | 5,706    |  
|Other assets                                         |  |                                             | 4,519    |   |                      |   | 12,456  |                           |  |   | 9,085        |   |  |              |         |      |  |   | 26,060   |  
|                                                     |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|Total assets                                         |  | $                                           | 492,251  |   |                      | $ | 418,840 |                           |  | $ | 266,670      |   |  | $            | (422,003 | )    |  | $ | 755,758  |  
|                                                     |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|LIABILITIES AND STOCKHOLDERS (DEFICIT) EQUITY:      |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|Current liabilities:                                 |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|Accounts payable                                     |  | $                                           | 1,583    |   |                      | $ | 110,434 |                           |  | $ | 58,759       |   |  | $            |         |      |  | $ | 170,776  |  
|Intercompany accounts                                |  |                                             | 64,243   |   |                      |   | (92,507 | )                         |  |   | 28,865       |   |  |              | (601     | )(c) |  |   |         |  
|Accrued interest                                     |  |                                             | 8,105    |   |                      |   |        |                           |  |   | 105          |   |  |              |         |      |  |   | 8,210    |  
|Accrued restructuring                                |  |                                             |         |   |                      |   | 6,074   |                           |  |   | 377          |   |  |              |         |      |  |   | 6,451    |  
|Liabilities of discontinued operations               |  |                                             |         |   |                      |   | 436     |                           |  |   | 2,363        |   |  |              |         |      |  |   | 2,799    |  
|Deferred income taxes                                |  |                                             |         |   |                      |   |        |                           |  |   | 3,065        |   |  |              |         |      |  |   | 3,065    |  
|Other liabilities and accrued expenses               |  |                                             | 8,010    |   |                      |   | 62,289  |                           |  |   | 13,858       |   |  |              |         |      |  |   | 84,157   |  
|Current maturities of long-term debt                 |  |                                             |         |   |                      |   | 1,455   |                           |  |   | 21,435       |   |  |              |         |      |  |   | 22,890   |  
|                                                     |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|Total current liabilities                            |  |                                             | 81,941   |   |                      |   | 88,181  |                           |  |   | 128,827      |   |  |              | (601     | )    |  |   | 298,348  |  
|                                                     |  |                                             |          |   |                     
|Long-term debt, net of current portion (Note 6)      |  |                                             | 583,857  |   |                      |   | 15,249  |                           |  |   | 11,224       |   |  |              |         |      |  |   | 610,330  |  
|Post-retirement benefits other than pensions         |  |                                             | 16,302   |   |                      |   |        |                           |  |   |             |   |  |              |         |      |  |   | 16,302   |  
|Accrued pension benefits                             |  |                                             | 13,510   |   |                      |   |        |                           |  |   | 1            |   |  |              |         |      |  |   | 13,511   |  
|Accrued restructuring                                |  |                                             |         |   |                      |   | 4,407   |                           |  |   |             |   |  |              |         |      |  |   | 4,407    |  
|Other non-current liabilities                        |  |                                             | 1,561    |   |                      |   | 2,370   |                           |  |   | 1,031        |   |  |              |         |      |  |   | 4,962    |  
|Minority interest                                    |  |                                             |         |   |                      |   | 2,055   |                           |  |   | 8,443        |   |  |              |         |      |  |   | 10,498   |  
|                                                     |  |                                             |          |   |                     
|Stockholders (deficit) equity:                      |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|Common stock:                                        |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|Class B Shares                                       |  |                                             | 3        |   |                      |   |        |                           |  |   |             |   |  |              |         |      |  |   | 3        |  
|Paid-in-capital                                      |  |                                             | 334,336  |   |                      |   |        |                           |  |   |             |   |  |              |         |      |  |   | 334,336  |  
|Retained (deficit) earnings                          |  |                                             | (531,136 | ) |                      |   | 37,002  |                           |  |   | (981         | ) |  |              | (36,021  | )(b) |  |   | (531,136 | )
|Subsidiary investment                                |  |                                             |         |   |                      |   | 270,048 |                           |  |   | 115,333      |   |  |              | (385,381 | )(a) |  |   |         |  
|Accumulated other comprehensive (loss) income        |  |                                             | (8,123   | ) |                      |   | (472    | )                         |  |   | 2,792        |   |  |              |         |      |  |   | (5,803   | )
|                                                     |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|Total stockholders (deficit) equity                 |  |                                             | (204,920 | ) |                      |   | 306,578 |                           |  |   | 117,144      |   |  |              | (421,402 | )    |  |   | (202,600 | )
|                                                     |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  
|Total liabilities and stockholders (deficit) equity |  | $                                           | 492,251  |   |                      | $ | 418,840 |                           |  | $ | 266,670      |   |  | $            | (422,003 | )    |  | $ | 755,758  |  
|                                                     |  |                                             |          |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |          |  

---

|(a) | Elimination of investments in subsidiaries.
|--- | -------------------------------------------

|(b) | Elimination of investments in subsidiaries earnings.
|--- | -----------------------------------------------------

|(c) | Elimination of intercompany profit in inventory.
|--- | ------------------------------------------------



17



---

##### Table of Contents

REMY INTERNATIONAL, INC. AND SUBSIDIARIES

Condensed Consolidating Statement of Operations

(Unaudited)



|                                                                                                                              |  |                                             |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|----------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------- | ------- | - | -------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ------------ | ------- | ---- |  | - | ------- | -
|IN THOUSANDS,For the three months ended September 30, 2005                                                                    |  | RemyInternational,Inc. (ParentCompany Only) |         |   | SubsidiaryGuarantors |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |        
|Net sales                                                                                                                     |  | $                                           |        |   |                      | $ | 283,873 |                           |  | $ | 124,567      |   |  | $            | (92,477 | )(a) |  | $ | 315,963 |  
|Cost of goods sold                                                                                                            |  |                                             |        |   |                      |   | 247,992 |                           |  |   | 115,955      |   |  |              | (92,477 | )(a) |  |   | 271,470 |  
|                                                                                                                              |  |                                             |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Gross profit                                                                                                                  |  |                                             |        |   |                      |   | 35,881  |                           |  |   | 8,612        |   |  |              |        |      |  |   | 44,493  |  
|                                                                                                                              |  |                                             |         |   |                     
|Selling, general and administrative expenses                                                                                  |  |                                             | 5,509   |   |                      |   | 27,038  |                           |  |   | 8,391        |   |  |              |        |      |  |   | 40,938  |  
|Restructuring charges                                                                                                         |  |                                             | 857     |   |                      |   | 351     |                           |  |   | 887          |   |  |              |        |      |  |   | 2,095   |  
|                                                                                                                              |  |                                             |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Operating (loss) income                                                                                                       |  |                                             | (6,366  | ) |                      |   | 8,492   |                           |  |   | (666         | ) |  |              |        |      |  |   | 1,460   |  
|                                                                                                                              |  |                                             |         |   |                     
|Interest expense                                                                                                              |  |                                             | 16,181  |   |                      |   | 1,439   |                           |  |   | 405          |   |  |              |        |      |  |   | 18,025  |  
|                                                                                                                              |  |                                             |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Income (loss) from continuing operations before income taxes, minority interest and income from unconsolidated joint ventures |  |                                             | (22,547 | ) |                      |   | 7,053   |                           |  |   | (1,071       | ) |  |              |        |      |  |   | (16,565 | )
|                                                                                                                              |  |                                             |         |   |                     
|Income tax expense                                                                                                            |  |                                             | 7,366   |   |                      |   | 70      |                           |  |   | 3,363        |   |  |              |        |      |  |   | 10,799  |  
|Minority interest                                                                                                             |  |                                             |        |   |                      |   | 386     |                           |  |   | 177          |   |  |              |        |      |  |   | 563     |  
|Income from unconsolidated joint ventures                                                                                     |  |                                             |        |   |                      |   |        |                           |  |   | (32          | ) |  |              |        |      |  |   | (32     | )
|Equity in earnings of subsidiaries                                                                                            |  |                                             | (1,935  | ) |                      |   |        |                           |  |   |             |   |  |              | 1,935   | (b)  |  |   |        |  
|                                                                                                                              |  |                                             |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Net (loss) income from continuing operations                                                                                  |  |                                             | (27,978 | ) |                      |   | 6,597   |                           |  |   | (4,579       | ) |  |              | (1,935  | )    |  |   | (27,895 | )
|                                                                                                                              |  |                                             |         |   |                     
|Discontinued operations:                                                                                                      |  |                                             |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Loss from discontinued operations, net of tax                                                                                 |  |                                             |        |   |                      |   | (153    | )                         |  |   | (37          | ) |  |              |        |      |  |   | (190    | )
|Gain on disposal of discontinued operations, net of tax                                                                       |  |                                             |        |   |                      |   | 107     |                           |  |   |             |   |  |              |        |      |  |   | 107     |  
|                                                                                                                              |  |                                             |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Net loss from discontinued operations, net of tax                                                                             |  |                                             |        |   |                      |   | (46     | )                         |  |   | (37          | ) |  |              |        |      |  |   | (83     | )
|                                                                                                                              |  |                                             |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Net (loss) income                                                                                                             |  |                                             | (27,978 | ) |                      |   | 6,551   |                           |  |   | (4,616       | ) |  |              | (1,935  | )    |  |   | (27,978 | )
|                                                                                                                              |  |                                             |         |   |                     
|Accretion for redemption of preferred stock                                                                                   |  |                                             |        |   |                      |   |        |                           |  |   |             |   |  |              |        |      |  |   |        |  
|                                                                                                                              |  |                                             |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Net (loss) income attributable to common stockholders                                                                         |  | $                                           | (27,978 | ) |                      | $ | 6,551   |                           |  | $ | (4,616       | ) |  | $            | (1,935  | )    |  | $ | (27,978 | )
|                                                                                                                              |  |                                             |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  

---

|(a) | Elimination of intercompany sales and cost of sales.
|--- | ----------------------------------------------------

|(b) | Elimination of equity in net income of consolidated subsidiaries.
|--- | -----------------------------------------------------------------



18



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##### Table of Contents

REMY INTERNATIONAL, INC. AND SUBSIDIARIES

Condensed Consolidating Statement of Operations

(Unaudited)



|                                                                                                                              |  |                                                |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|----------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------- | ------- | - | -------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ------------ | ------- | ---- |  | - | ------- | -
|IN THOUSANDS,For the three months ended September 30, 2004                                                                    |  | Remy International, Inc. (Parent Company Only) |         |   | SubsidiaryGuarantors |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |        
|Net sales                                                                                                                     |  | $                                              |        |   |                      | $ | 233,008 |                           |  | $ | 106,763      |   |  | $            | (85,500 | )(a) |  | $ | 254,271 |  
|Cost of goods sold                                                                                                            |  |                                                |        |   |                      |   | 195,347 |                           |  |   | 94,392       |   |  |              | (85,500 | )(a) |  |   | 204,239 |  
|                                                                                                                              |  |                                                |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Gross profit                                                                                                                  |  |                                                |        |   |                      |   | 37,661  |                           |  |   | 12,371       |   |  |              |        |      |  |   | 50,032  |  
|                                                                                                                              |  |                                                |         |   |                     
|Selling, general and administrative expenses                                                                                  |  |                                                | 5,104   |   |                      |   | 17,200  |                           |  |   | 5,427        |   |  |              |        |      |  |   | 27,731  |  
|Restructuring charges (credit)                                                                                                |  |                                                | 109     |   |                      |   | 43      |                           |  |   | (10          | ) |  |              |        |      |  |   | 142     |  
|                                                                                                                              |  |                                                |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Operating (loss) income                                                                                                       |  |                                                | (5,213  | ) |                      |   | 20,418  |                           |  |   | 6,954        |   |  |              |        |      |  |   | 22,159  |  
|Interest expense                                                                                                              |  |                                                | 13,177  |   |                      |   | 602     |                           |  |   | 429          |   |  |              |        |      |  |   | 14,208  |  
|                                                                                                                              |  |                                                |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Income (loss) from continuing operations before income taxes, minority interest and income from unconsolidated joint ventures |  |                                                | (18,390 | ) |                      |   | 19,816  |                           |  |   | 6,525        |   |  |              |        |      |  |   | 7,951   |  
|Income tax expense                                                                                                            |  |                                                | 912     |   |                      |   | 83      |                           |  |   | 2,369        |   |  |              |        |      |  |   | 3,364   |  
|Minority interest                                                                                                             |  |                                                |        |   |                      |   | 608     |                           |  |   | 161          |   |  |              |        |      |  |   | 769     |  
|Income from unconsolidated joint ventures                                                                                     |  |                                                |        |   |                      |   |        |                           |  |   | (67          | ) |  |              |        |      |  |   | (67     | )
|Equity in earnings of subsidiaries                                                                                            |  |                                                | (22,109 | ) |                      |   |        |                           |  |   |             |   |  |              | 22,109  | (b)  |  |   |        |  
|                                                                                                                              |  |                                                |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Net income (loss) from continuing operations                                                                                  |  |                                                | 2,807   |   |                      |   | 19,125  |                           |  |   | 4,062        |   |  |              | (22,109 | )    |  |   | 3,885   |  
|Discontinued operations:                                                                                                      |  |                                                |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Income (loss) from discontinued operations, net of tax                                                                        |  |                                                |        |   |                      |   | (348    | )                         |  |   | 323          |   |  |              |        |      |  |   | (25     | )
|Gain (loss) on disposal of discontinued operations, net of tax                                                                |  |                                                | 44,215  |   |                      |   | 747     |                           |  |   | (1,800       | ) |  |              |        |      |  |   | 43,162  |  
|                                                                                                                              |  |                                                |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Income (loss) from discontinued operations, net of tax                                                                        |  |                                                | 44,215  |   |                      |   | 399     |                           |  |   | (1,477       | ) |  |              |        |      |  |   | 43,137  |  
|                                                                                                                              |  |                                                |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Net income (loss)                                                                                                             |  |                                                | 47,022  |   |                      |   | 19,524  |                           |  |   | 2,585        |   |  |              | (22,109 | )    |  |   | 47,022  |  
|                                                                                                                              |  |                                                |         |   |                     
|Accretion for redemption of preferred stock                                                                                   |  |                                                | 9,459   |   |                      |   |        |                           |  |   |             |   |  |              |        |      |  |   | 9,459   |  
|                                                                                                                              |  |                                                |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  
|Net income (loss) attributable to common stockholders                                                                         |  | $                                              | 37,563  |   |                      | $ | 19,524  |                           |  | $ | 2,585        |   |  | $            | (22,109 | )    |  | $ | 37,563  |  
|                                                                                                                              |  |                                                |         |   |                      |   |         |                           |  |   |              |   |  |              |         |      |  |   |         |  

---

|(a) | Elimination of intercompany sales and cost of sales.
|--- | ----------------------------------------------------

|(b) | Elimination of equity in net loss of consolidated subsidiaries.
|--- | ---------------------------------------------------------------



19



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##### Table of Contents

REMY INTERNATIONAL, INC. AND SUBSIDIARIES

Condensed Consolidating Statement of Operations

(Unaudited)



|                                                                                                                              |  |                                                |         |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |         |  
|----------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------- | ------- | - | -------------------- | - | ------- | ------------------------- |  | - | ------------ | - |  | ------------ | -------- | ---- |  | - | ------- | -
|IN THOUSANDS,For the nine months ended September 30, 2005                                                                     |  | Remy International, Inc. (Parent Company Only) |         |   | SubsidiaryGuarantors |   |         | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated |         
|Net sales                                                                                                                     |  | $                                              |        |   |                      | $ | 826,807 |                           |  | $ | 371,205      |   |  | $            | (288,140 | )(a) |  | $ | 909,872 |  
|Cost of goods sold                                                                                                            |  |                                                |        |   |                      |   | 730,399 |                           |  |   | 347,251      |   |  |              | (288,140 | )(a) |  |   | 789,510 |  
|                                                                                                                              |  |                                                |         |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |         |  
|Gross profit                                                                                                                  |  |                                                |        |   |                      |   | 96,408  |                           |  |   | 23,954       |   |  |              |         |      |  |   | 120,362 |  
|                                                                                                                              |  |                                                |         |   |                     
|Selling, general and administrative expenses                                                                                  |  |                                                | 15,226  |   |                      |   | 69,684  |                           |  |   | 19,621       |   |  |              |         |      |  |   | 104,531 |  
|Restructuring charges (credit)                                                                                                |  |                                                | 909     |   |                      |   | (402    | )                         |  |   | 2,088        |   |  |              |         |      |  |   | 2,595   |  
|                                                                                                                              |  |                                                |         |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |         |  
|Operating (loss) income                                                                                                       |  |                                                | (16,135 | ) |                      |   | 27,126  |                           |  |   | 2,245        |   |  |              |         |      |  |   | 13,236  |  
|                                                                                                                              |  |                                                |         |   |                     
|Interest expense                                                                                                              |  |                                                | 46,163  |   |                      |   | 3,485   |                           |  |   | 1,264        |   |  |              |         |      |  |   | 50,912  |  
|                                                                                                                              |  |                                                |         |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |         |  
|Income (loss) from continuing operations before income taxes, minority interest and income from unconsolidated joint ventures |  |                                                | (62,298 | ) |                      |   | 23,641  |                           |  |   | 981          |   |  |              |         |      |  |   | (37,676 | )
|Income tax expense                                                                                                            |  |                                                | 6,589   |   |                      |   | 290     |                           |  |   | 5,491        |   |  |              |         |      |  |   | 12,370  |  
|Minority interest                                                                                                             |  |                                                |        |   |                      |   | 2,319   |                           |  |   | 362          |   |  |              |         |      |  |   | 2,681   |  
|Income from unconsolidated joint ventures                                                                                     |  |                                                |        |   |                      |   |        |                           |  |   | (163         | ) |  |              |         |      |  |   | (163    | )
|Equity in earnings of subsidiaries                                                                                            |  |                                                | (16,625 | ) |                      |   |        |                           |  |   |             |   |  |              | 16,625   | (b)  |  |   |        |  
|                                                                                                                              |  |                                                |         |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |         |  
|Net (loss) income from continuing operations                                                                                  |  |                                                | (52,262 | ) |                      |   | 21,032  |                           |  |   | (4,709       | ) |  |              | (16,625  | )    |  |   | (52,564 | )
|                                                                                                                              |  |                                                |         |   |                     
|Discontinued operations:                                                                                                      |  |                                                |         |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |         |  
|Loss from discontinued operations, net of tax                                                                                 |  |                                                |        |   |                      |   | (120    | )                         |  |   | (364         | ) |  |              |         |      |  |   | (484    | )
|Gain on disposal of discontinued operations, net of tax                                                                       |  |                                                |        |   |                      |   | 370     |                           |  |   | 416          |   |  |              |         |      |  |   | 786     |  
|                                                                                                                              |  |                                                |         |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |         |  
|Net income from discontinued operations, net of tax                                                                           |  |                                                |        |   |                      |   | 250     |                           |  |   | 52           |   |  |              |         |      |  |   | 302     |  
|                                                                                                                              |  |                                                |         |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |         |  
|Net (loss) income                                                                                                             |  |                                                | (52,262 | ) |                      |   | 21,282  |                           |  |   | (4,657       | ) |  |              | (16,625  | )    |  |   | (52,262 | )
|                                                                                                                              |  |                                                |         |   |                     
|Accretion for redemption of preferred stock                                                                                   |  |                                                |        |   |                      |   |        |                           |  |   |             |   |  |              |         |      |  |   |        |  
|                                                                                                                              |  |                                                |         |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |         |  
|Net (loss) income attributable to common stockholders                                                                         |  | $                                              | (52,262 | ) |                      | $ | 21,282  |                           |  | $ | (4,657       | ) |  | $            | (16,625  | )    |  | $ | (52,262 | )
|                                                                                                                              |  |                                                |         |   |                      |   |         |                           |  |   |              |   |  |              |          |      |  |   |         |  

---

|(a) | Elimination of intercompany sales and cost of sales.
|--- | ----------------------------------------------------

|(b) | Elimination of equity in earnings of subsidiaries.
|--- | --------------------------------------------------



20



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##### Table of Contents

REMY INTERNATIONAL, INC. AND SUBSIDIARIES

Condensed Consolidating Statement of Operations

(Unaudited)



|                                                                                                                            |  |                                             |         |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |        
|--------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------- | ------- | - | -------------------- | - | ------------------------- |  | - | ------------ | - |  | ------------ | -------- | ---- |  | - | -------
|IN THOUSANDS,For the nine months ended September 30, 2004                                                                   |  | RemyInternational,Inc. (ParentCompany Only) |         |   | SubsidiaryGuarantors |   | Non-GuarantorSubsidiaries |  |   | Eliminations |   |  | Consolidated
|Net sales                                                                                                                   |  | $                                           |        |   |                      | $ | 739,700                   |  | $ | 332,709      |   |  | $            | (277,078 | )(a) |  | $ | 795,331
|Cost of goods sold                                                                                                          |  |                                             |        |   |                      |   | 606,249                   |  |   | 311,565      |   |  |              | (277,078 | )(a) |  |   | 640,736
|                                                                                                                            |  |                                             |         |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |        
|Gross profit                                                                                                                |  |                                             |        |   |                      |   | 133,451                   |  |   | 21,144       |   |  |              |         |      |  |   | 154,595
|                                                                                                                            |  |                                             |         |   |                     
|Selling, general and administrative expenses                                                                                |  |                                             | 14,948  |   |                      |   | 51,805                    |  |   | 17,221       |   |  |              |         |      |  |   | 83,974 
|Restructuring charges                                                                                                       |  |                                             | 110     |   |                      |   | 1,116                     |  |   | 290          |   |  |              |         |      |  |   | 1,516  
|                                                                                                                            |  |                                             |         |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |        
|Operating (loss) income                                                                                                     |  |                                             | (15,058 | ) |                      |   | 80,530                    |  |   | 3,633        |   |  |              |         |      |  |   | 69,105 
|Interest expense                                                                                                            |  |                                             | 40,907  |   |                      |   | 1,859                     |  |   | 1,612        |   |  |              |          |      |  |   | 44,378 
|Loss on early extinguishment of debt (Note 6)                                                                               |  |                                             | 7,939   |   |                      |   |                          |  |   |             |   |  |              |         |      |  |   | 7,939  
|                                                                                                                            |  |                                             |         |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |        
|Income (loss) from continuing operations before income taxes, minority interest and loss from unconsolidated joint ventures |  |                                             | (63,904 | ) |                      |   | 78,671                    |  |   | 2,021        |   |  |              |         |      |  |   | 16,788 
|Income tax expense                                                                                                          |  |                                             | 1,896   |   |                      |   | 1,314                     |  |   | 1,238        |   |  |              |         |      |  |   | 4,448  
|Minority interest                                                                                                           |  |                                             |        |   |                      |   | 1,484                     |  |   | 655          |   |  |              |         |      |  |   | 2,139  
|Loss from unconsolidated joint ventures                                                                                     |  |                                             |        |   |                      |   |                          |  |   | 701          |   |  |              |         |      |  |   | 701    
|Equity in earnings of subsidiaries                                                                                          |  |                                             | (75,428 | ) |                      |   |                          |  |   |             |   |  |              | 75,428   | (b)  |  |   |       
|                                                                                                                            |  |                                             |         |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |        
|Net income (loss) from continuing operations                                                                                |  |                                             | 9,628   |   |                      |   | 75,873                    |  |   | (573         | ) |  |              | (75,428  | )    |  |   | 9,500  
|Discontinued operations:                                                                                                    |  |                                             |         |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |        
|Income (loss) from discontinued operations, net of tax                                                                      |  |                                             |        |   |                      |   | 1,709                     |  |   | (743         | ) |  |              |         |      |  |   | 966    
|Gain (loss) on disposal of discontinued operations, net of tax                                                              |  |                                             | 44,215  |   |                      |   | 962                       |  |   | (1,800       | ) |  |              |         |      |  |   | 43,377 
|                                                                                                                            |  |                                             |         |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |        
|Net income (loss) from discontinued operations, net of tax                                                                  |  |                                             | 44,215  |   |                      |   | 2,671                     |  |   | (2,543       | ) |  |              |         |      |  |   | 44,343 
|                                                                                                                            |  |                                             |         |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |        
|Net income (loss)                                                                                                           |  |                                             | 53,843  |   |                      |   | 78,544                    |  |   | (3,116       | ) |  |              | (75,428  | )    |  |   | 53,843 
|                                                                                                                            |  |                                             |         |   |                     
|Accretion for redemption of preferred stock                                                                                 |  |                                             | 27,367  |   |                      |   |                          |  |   |             |   |  |              |         |      |  |   | 27,367 
|                                                                                                                            |  |                                             |         |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |        
|Net (loss) income attributable to common stockholders                                                                       |  | $                                           | 26,476  |   |                      | $ | 78,544                    |  | $ | (3,116       | ) |  | $            | (75,428  | )    |  | $ | 26,476 
|                                                                                                                            |  |                                             |         |   |                      |   |                           |  |   |              |   |  |              |          |      |  |   |        

---

|(a) | Elimination of intercompany sales and cost of sales.
|--- | ----------------------------------------------------

|(b) | Elimination of equity in net loss of consolidated subsidiaries.
|--- | ---------------------------------------------------------------



21



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REMY INTERNATIONAL, INC. AND SUBSIDIARIES

Condensed Consolidating Statement of Cash Flows

(Unaudited)



|                                                                                                   |  |                                                |         |   |                      |   |         |                            |  |   |              |   |  |              |         |      |  |   |         |  
|-------------------------------------------------------------------------------------------------- |  | ---------------------------------------------- | ------- | - | -------------------- | - | ------- | -------------------------- |  | - | ------------ | - |  | ------------ | ------- | ---- |  | - | ------- | -
|IN THOUSANDS,For the nine months ended September 30, 2005                                          |  | Remy International, Inc. (Parent Company Only) |         |   | SubsidiaryGuarantors |   |         | Non-Guarantor Subsidiaries |  |   | Eliminations |   |  | Consolidated |        
|Cash Flows from Operating Activities:                                                              |  |                                                |         |   |                      |   |         |                            |  |   |              |   |  |              |         |      |  |   |         |  
|Net (loss) income attributable to common stockholders                                              |  | $                                              | (52,262 | ) |                      | $ | 21,282  |                            |  | $ | (4,657       | ) |  | $            | (16,625 | )(a) |  | $ | (52,262 | )
|Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: |  |                                                |         |   |                      |   |         |                            |  |   |              |   |  |              |         |      |  |   |         |  
|Discontinued operations                                                                            |  |                                                |        |   |                      |   | (250    | )                          |  |   | (52          | ) |  |              |        |      |  |   | (302    | )
|Depreciation and amortization                                                                      |  |                                                | 1,871   |   |                      |   | 11,129  |                            |  |   | 9,499        |   |  |              |        |      |  |   | 22,499  |  
|Non-cash interest expense                                                                          |  |                                                | 2,569   |   |                      |   | 1,791   |                            |  |   |             |   |  |              |        |      |  |   | 4,360   |  
|Minority interest and loss from unconsolidated joint ventures                                      |  |                                                |        |   |                      |   | 2,319   |                            |  |   | 199          |   |  |              |        |      |  |   | 2,518   |  
|Equity in earnings of subsidiaries                                                                 |  |                                                | (16,625 | ) |                      |   |        |                            |  |   |             |   |  |              | 16,625  |      |  |   |        |  
|Deferred income taxes                                                                              |  |                                                | 6,748   |   |                      |   | (255    | )                          |  |   | (461         | ) |  |              |        |      |  |   | 6,032   |  
|Post retirement benefits other than pensions and accrued pension benefits, net                     |  |                                                | (495    | ) |                      |   |        |                            |  |   | 754          |   |  |              |        |      |  |   | 259     |  
|Restructuring charges (credits)                                                                    |  |                                                | 909     |   |                      |   | (402    | )                          |  |   | 2,088        |   |  |              |        |      |  |   | 2,595   |  
|Cash payments for restructuring charges                                                            |  |                                                | (501    | ) |                      |   | (2,266  | )                          |  |   | (1,444       | ) |  |              |        |      |  |   | (4,211  | )
|Changes in operating assets and liabilities, net of acquisitions and restructuring charges:        |  |                                                |         |   |                      |   |         |                            |  |   |              |   |  |              |         |      |  |   |         |  
|Accounts receivable                                                                                |  |                                                |        |   |                      |   | (15,355 | )                          |  |   | 550          |   |  |              |        |      |  |   | (14,805 | )
|Inventories                                                                                        |  |                                                |        |   |                      |   | 3,596   |                            |  |   | 2,057        |   |  |              |        |      |  |   | 5,653   |  
|Accounts payable                                                                                   |  |                                                | (165    | ) |                      |   | 2,408   |                            |  |   | (1,019       | ) |  |              |        |      |  |   | 1,224   |  
|Intercompany accounts                                                                              |  |                                                | 13,076  |   |                      |   | 756     |                            |  |   | (13,832      | ) |  |              |        |      |  |   |        |  
|Other current assets and liabilities                                                               |  |                                                | 11,360  |   |                      |   | (7,286  | )                          |  |   | 10,500       |   |  |              |        |      |  |   | 14,574  |  
|Other non-current assets and liabilities, net                                                      |  |                                                | (20,791 | ) |                      |   | 1,512   |                            |  |   | 3,842        |   |  |              |        |      |  |   | (15,437 | )
|                                                                                                   |  |                                                |         |   |                      |   |         |                            |  |   |              |   |  |              |         |      |  |   |         |  
|Net cash (used in) provided by operating activities of continuing operations                       |  |                                                | (54,306 | ) |                      |   | 18,979  |                            |  |   | 8,024        |   |  |              |        |      |  |   | (27,303 | )
|                                                                                                   |  |                                                |         |   |                     
|Cash Flows from Investing Activities:                                                              |  |                                                |         |   |                      |   |         |                            |  |   |              |   |  |              |         |      |  |   |         |  
|Acquisitions, net of cash acquired                                                                 |  |                                                | (57,048 | ) |                      |   | (225    | )                          |  |   |             |   |  |              |        |      |  |   | (57,273 | )
|Net proceeds on sale of businesses                                                                 |  |                                                |        |   |                      |   | 371     |                            |  |   | 240          |   |  |              |        |      |  |   | 611     |  
|Purchases of property, plant and equipment                                                         |  |                                                | (2,154  | ) |                      |   | (16,036 | )                          |  |   | (9,580       | ) |  |              |        |      |  |   | (27,770 | )
|                                                                                                   |  |                                                |         |   |                      |   |         |                            |  |   |              |   |  |              |         |      |  |   |         |  
|Net cash used in investing activities of continuing operations                                     |  |                                                | (59,202 | ) |                      |   | (15,890 | )                          |  |   | (9,340       | ) |  |              |        |      |  |   | (84,432 | )
|                                                                                                   |  |                                                |         |   |                     
|Cash Flows from Financing Activities:                                                              |  |                                                |         |   |                      |   |         |                            |  |   |              |   |  |              |         |      |  |   |         |  
|Net borrowings (repayments) under revolving line of credit and other                               |  |                                                | 74,200  |   |                      |   | (1,039  | )                          |  |   | 4,015        |   |  |              |        |      |  |   | 77,176  |  
|Deferred financing costs                                                                           |  |                                                | (325    | ) |                      |   |        |                            |  |   |             |   |  |              |        |      |  |   | (325    | )
|                                                                                                   |  |                                                |         |   |                      |   |         |                            |  |   |              |   |  |              |         |      |  |   |         |  
|Net cash provided by (used in) financing activities of continuing operations                       |  |                                                | 73,875  |   |                      |   | (1,039  | )                          |  |   | 4,015        |   |  |              |        |      |  |   | 76,851  |  
|                                                                                                   |  |                                                |         |   |                     
|Effect of exchange rate changes on cash                                                            |  |                                                |        |   |                      |   |        |                            |  |   | (757         | ) |  |              |        |      |  |   | (757    | )
|                                                                                                   |  |                                                |         |   |                     
|Cash flows of discontinued operations                                                              |  |                                                |        |   |                      |   | (769    | )                          |  |   | 132          |   |  |              |        |      |  |   | (637    | )
|                                                                                                   |  |                                                |         |   |                      |   |         |                            |  |   |              |   |  |              |         |      |  |   |         |  
|Net (decrease) increase in cash and cash equivalents                                               |  |                                                | (39,633 | ) |                      |   | 1,281   |                            |  |   | 2,074        |   |  |              |        |      |  |   | (36,278 | )
|Cash and cash equivalents at beginning of year                                                     |  |                                                | 40,740  |   |                      |   | 689     |                            |  |   | 21,116       |   |  |              |        |      |  |   | 62,545  |  
|                                                                                                   |  |                                                |         |   |                      |   |         |                            |  |   |              |   |  |              |         |      |  |   |         |  
|Cash and cash equivalents at end of period                                                         |  | $                                              | 1,107   |   |                      | $ | 1,970   |                            |  | $ | 23,190       |   |  | $            |        |      |  | $ | 26,267  |  
|                                                                                                   |  |                                                |         |   |                      |   |         |                            |  |   |              |   |  |              |         |      |  |   |         |  



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REMY INTERNATIONAL, INC. AND SUBSIDIARIES

Condensed Consolidating Statement of Cash Flows

(Unaudited)



|                                                                                                   |  |                                               |          |   |                      |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|-------------------------------------------------------------------------------------------------- |  | --------------------------------------------- | -------- | - | -------------------- | - | ------- | -------------------------- |  | - | ------------ | - |  | ------------ | ------- | - |  | - | -------- | -
|IN THOUSANDS,For the nine months ended September 30, 2004                                          |  | Remy International, Inc. (Parent Company Only |          |   | SubsidiaryGuarantors |   |         | Non-Guarantor Subsidiaries |  |   | Eliminations |   |  | Consolidated |        
|Cash Flows from Operating Activities:                                                              |  |                                               |          |   |                      |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Net income (loss) attributable to common stockholders                                              |  | $                                             | 26,476   |   |                      | $ | 78,544  |                            |  | $ | (3,116       | ) |  | $            | (75,428 | ) |  | $ | 26,476   |  
|Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: |  |                                               |          |   |                      |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Discontinued operations                                                                            |  |                                               | (44,215  | ) |                      |   | (2,671  | )                          |  |   | 2,543        |   |  |              |        |   |  |   | (44,343  | )
|Depreciation and amortization                                                                      |  |                                               | 767      |   |                      |   | 7,885   |                            |  |   | 7,989        |   |  |              |        |   |  |   | 16,641   |  
|Non-cash interest expense                                                                          |  |                                               | 2,939    |   |                      |   |        |                            |  |   |             |   |  |              |        |   |  |   | 2,939    |  
|Loss on early extinguishment of debt (Note 6)                                                      |  |                                               | 7,939    |   |                      |   |        |                            |  |   |             |   |  |              |        |   |  |   | 7,939    |  
|Accretion for redemption of preferred stock                                                        |  |                                               | 27,367   |   |                      |   |        |                            |  |   |             |   |  |              |        |   |  |   | 27,367   |  
|Minority interest and loss from unconsolidated joint ventures, net                                 |  |                                               |         |   |                      |   | 1,484   |                            |  |   | 1,356        |   |  |              |        |   |  |   | 2,840    |  
|Equity in earnings of subsidiaries                                                                 |  |                                               | (75,428  | ) |                      |   |        |                            |  |   |             |   |  |              | 75,428  |   |  |   |         |  
|Deferred income taxes                                                                              |  |                                               | 1,066    |   |                      |   | 973     |                            |  |   | (2,184       | ) |  |              |        |   |  |   | (145     | )
|Accrued pension and post-retirement benefits, net                                                  |  |                                               | (224     | ) |                      |   |        |                            |  |   |             |   |  |              |        |   |  |   | (224     | )
|Restructuring charges                                                                              |  |                                               | 110      |   |                      |   | 1,116   |                            |  |   | 290          |   |  |              |        |   |  |   | 1,516    |  
|Cash payments for restructuring charges                                                            |  |                                               |         |   |                      |   | (7,276  | )                          |  |   | (522         | ) |  |              |        |   |  |   | (7,798   | )
|Changes in operating assets and liabilities, net of acquisitions and restructuring charges:        |  |                                               |          |   |                      |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Accounts receivable                                                                                |  |                                               |         |   |                      |   | (6,414  | )                          |  |   | (5,931       | ) |  |              |        |   |  |   | (12,345  | )
|Inventories                                                                                        |  |                                               |         |   |                      |   | (20,673 | )                          |  |   | 4,587        |   |  |              |        |   |  |   | (16,086  | )
|Accounts payable                                                                                   |  |                                               | (1,774   | ) |                      |   | 30,200  |                            |  |   | (28,678      | ) |  |              |        |   |  |   | (252     | )
|Intercompany accounts                                                                              |  |                                               | (4,738   | ) |                      |   | (58,593 | )                          |  |   | 63,331       |   |  |              |        |   |  |   |         |  
|Other current assets and liabilities                                                               |  |                                               | 13,864   |   |                      |   | (13,326 | )                          |  |   | (16,159      | ) |  |              |        |   |  |   | (15,621  | )
|Other non-current assets and liabilities, net                                                      |  |                                               | (8,144   | ) |                      |   | 9,824   |                            |  |   | (6,516       | ) |  |              |        |   |  |   | (4,836   | )
|                                                                                                   |  |                                               |          |   |                      |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Net cash (used in) provided by operating activities of continuing operations                       |  |                                               | (53,995  | ) |                      |   | 21,073  |                            |  |   | 16,990       |   |  |              |        |   |  |   | (15,932  | )
|                                                                                                   |  |                                               |          |   |                     
|Cash Flows from Investing Activities:                                                              |  |                                               |          |   |                      |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Acquisitions, net of cash acquired                                                                 |  |                                               | (5,488   | ) |                      |   | (13,669 | )                          |  |   | (5,594       | ) |  |              |        |   |  |   | (24,751  | )
|Net proceeds on sale of businesses                                                                 |  |                                               | 102,663  |   |                      |   | 324     |                            |  |   |             |   |  |              |        |   |  |   | 102,987  |  
|Purchases of property, plant and equipment                                                         |  |                                               | (812     | ) |                      |   | (8,010  | )                          |  |   | (6,607       | ) |  |              |        |   |  |   | (15,429  | )
|                                                                                                   |  |                                               |          |   |                      |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Net cash provided by (used in) investing activities of continuing operations                       |  |                                               | 96,363   |   |                      |   | (21,355 | )                          |  |   | (12,201      | ) |  |              |        |   |  |   | 62,807   |  
|                                                                                                   |  |                                               |          |   |                     
|Cash Flows from Financing Activities:                                                              |  |                                               |          |   |                      |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Proceeds from issuance of long-term debt                                                           |  |                                               | 275,000  |   |                      |   |        |                            |  |   |             |   |  |              |        |   |  |   | 275,000  |  
|Retirement of long-term debt                                                                       |  |                                               | (200,000 | ) |                      |   |        |                            |  |   |             |   |  |              |        |   |  |   | (200,000 | )
|Net repayments under revolving line of credit and other                                            |  |                                               | (52,096  | ) |                      |   | (858    | )                          |  |   | (3,510       | ) |  |              |        |   |  |   | (56,464  | )
|Financing costs                                                                                    |  |                                               | (12,456  | ) |                      |   |        |                            |  |   |             |   |  |              |        |   |  |   | (12,456  | )
|Distributions to minority interests                                                                |  |                                               |         |   |                      |   |        |                            |  |   | (1,010       | ) |  |              |        |   |  |   | (1,010   | )
|                                                                                                   |  |                                               |          |   |                      |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Net cash provided by (used in) financing activities of continuing operations                       |  |                                               | 10,448   |   |                      |   | (858    | )                          |  |   | (4,520       | ) |  |              |        |   |  |   | 5,070    |  
|                                                                                                   |  |                                               |          |   |                     
|Effect of exchange rate changes on cash                                                            |  |                                               |         |   |                      |   |        |                            |  |   | 335          |   |  |              |        |   |  |   | 335      |  
|Cash flows of discontinued operations                                                              |  |                                               |         |   |                      |   | 1,077   |                            |  |   | (1,577       | ) |  |              |        |   |  |   | (500     | )
|                                                                                                   |  |                                               |          |   |                      |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Net increase (decrease) in cash and cash equivalents                                               |  |                                               | 52,816   |   |                      |   | (63     | )                          |  |   | (973         | ) |  |              |        |   |  |   | 51,780   |  
|                                                                                                   |  |                                               |          |   |                     
|Cash and cash equivalents at beginning of year                                                     |  |                                               | 1        |   |                      |   | 249     |                            |  |   | 20,957       |   |  |              |        |   |  |   | 21,207   |  
|                                                                                                   |  |                                               |          |   |                      |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  
|Cash and cash equivalents at end of period                                                         |  | $                                             | 52,817   |   |                      | $ | 186     |                            |  | $ | 19,984       |   |  | $            |        |   |  | $ | 72,987   |  
|                                                                                                   |  |                                               |          |   |                      |   |         |                            |  |   |              |   |  |              |         |   |  |   |          |  



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12. Subsequent Events



Powrbilt shut down



On October 27, 2005 the Company announced the closure of Powrbilt Products, a remanufacturer of big bore diesel engines used in heavy duty commercial
and industrial applications, located in Mansfield, Texas. Production at the twenty person facility will cease in December 2005 and the facility will close by January 31, 2006. Powrbilt Products had sales of $1,900 during the nine-months ended
September 30, 2006. Charges for closing Powrbilt Products are not expected to be material.



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Item 2. REMY INTERNATIONAL, INC. AND SUBSIDIARIES



MANAGEMENTS DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

AMOUNTS IN MILLIONS, EXCEPT AS INDICATED

For the three and nine month periods ended September 30, 2005 and 2004



Introduction



The following managements discussion and analysis of financial condition and results of operations should be read in conjunction with our Annual
Report on Form 10-K for the year ended December 31, 2004, including the financial statements and accompanying notes.



On March 18, 2005, we acquired substantially all of the assets and assumed certain liabilities of Unit Parts Company, which we refer to as UPC (see
Note 3 to our condensed consolidated financial statements in Item 1). The assets and liabilities of UPC are included in our condensed consolidated balance sheet at September 30, 2005. The operating results of UPC for the period
March 18 through September 30, 2005 are included in our condensed consolidated statements of operations and cash flows for the periods ended September 30, 2005 and are reflected in the Electrical aftermarket discussion of net sales
and gross profit below.



Our results for the third quarter
continue to be impacted by challenging issues in the automotive parts supply industry, including product price reductions attributable to intense competition and customer requirements, higher costs for commodities including steel, transportation and
energy, lower customer production levels, and general uncertainty resulting from the Delphi bankruptcy and related matters. Future results may be affected by bankruptcies and labor disruptions at supplier and customers. Results of operations and
cash flows for 2005 and 2004 also reflect the classification of our remanufactured transmission, retail gas engine and contract remanufacturing gas engine businesses as discontinued operations.



Three Months Ended September 30, 2005 Compared to Three Months Ended
September 30, 2004



Net Sales



|                       |  |      |       |      |   |                      |  |   |         |   |  |       |  
|---------------------- |  | ---- | ----- | ---- | - | -------------------- |  | - | ------- | - |  | ----- | -
|Product Categories     |  | 2005 |       | 2004 |   | Increase/ (Decrease) |  |   | %Change |  
|Automotive OEM         |  | $    | 80.6  |      | $ | 72.3                 |  | $ | 8.3     |   |  | 11.5  | %
|Heavy duty OEM         |  |      | 50.4  |      |   | 46.4                 |  |   | 4.0     |   |  | 8.6   |  
|Electrical aftermarket |  |      | 138.6 |      |   | 95.9                 |  |   | 42.7    |   |  | 44.5  |  
|Powertrain             |  |      | 34.0  |      |   | 23.5                 |  |   | 10.5    |   |  | 44.7  |  
|Core services          |  |      | 12.4  |      |   | 16.2                 |  |   | (3.8    | ) |  | (23.5 | )
|                       |  |      |       |      |   |                      |  |   |         |   |  |       |  
|Total Net Sales        |  | $    | 316.0 |      | $ | 254.3                |  | $ | 61.7    |   |  | 24.3  | %
|                       |  |      |       |      |   |                      |  |   |         |   |  |       |  



Automotive OEM net
sales increased due to the ramp up of the alternator business and the impact of new business awards received in 2004, partially offset by price reductions and lower customer demand primarily in North America. Included in revenue is $1.2 million for
new hybrid samples. Heavy-duty OEM sales increased due to continued strong demand from Class 5  8 truck customers. Year over year OEM sales were also favorably impacted by the weak U.S. dollar. Electrical aftermarket sales increased primarily
as a result of the acquisition of UPC near the end of the first quarter of 2005. Net sales of UPC for the three months ended September 30, 2004, which were not



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included in our consolidated results for this period, were approximately $33.5 million. Powertrain sales increased due to higher diesel engine, parts and
locomotive product volume. The year over year decline in third party sales in the core services business reflects soft market conditions.



Gross Profit



Gross profit of $44.5 million in the third quarter of 2005 declined $5.5 million, or 11.1%, compared with the third quarter of 2004, and as a percentage
of net sales was 14.1% in 2005 compared with 19.7% in 2004. Automotive OEM gross profit declined $4.7 million due to price reductions, lower customer demand, higher material and fuel costs and adverse currency impact, partially offset by the ramp up
of the alternator business and the impact of new business awards received in 2004. Heavy-duty OEM gross profit declined $5.9 million due to higher material and fuel costs, partially offset by increased sales volume. OEM gross profit was also
negatively impacted on a year over year basis by launch costs associated with initial insourcing of components from Korean suppliers to our Mexican operations. Electrical aftermarket gross profit increased $5.5 million due to higher sales as a
result of the UPC acquisition, partially offset by the impact of the soft market conditions and the additional cost of integrating the UPC acquisition. Powertrain gross profit increased $0.6 million primarily as a result of higher sales, partially
offset by unfavorable product mix. Gross profit on core services decreased $1.0 million due to lower sales and unfavorable pricing.



Selling, General and Administrative Expenses



Selling, general and administrative, which we refer to as SG&A, expenses of $40.9 million in the third quarter of 2005 increased $13.2 million, or
47.6%, compared to the third quarter of 2004. As a percentage of net sales, SG&A expenses were 13.0% in the third quarter of 2005 compared with 10.9% in the third quarter of 2004. The increase was mainly due to unfavorable foreign exchange
impact, an increase in the provision for bad debt expense as one core services customer filed for bankruptcy protection, an increase in non recourse accounts receivable factoring costs, non restructuring related severance and higher expenditures in
systems, marketing initiatives and product engineering, in part required to support future business including developing samples for the new hybrid technology and expansion in China.



Restructuring Charges



In the third quarter of 2005, we recorded a restructuring charge of $2.1 million relative to: (i) a reduction in force at our headquarters in
Anderson, Indiana, which was initiated in the third quarter of 2005; (ii) the 2003 closure of our starter and alternator manufacturing operations in Anderson, Indiana; and (iii) the consolidation of certain operations in Europe. This
charge consisted of employee termination benefits, including early retirement, totaling $1.6 million and other costs of $0.5 million.



In the third quarter of 2004, we recorded a restructuring charge of $0.1 million, consisting primarily of employee termination benefits, relative to the
closure of manufacturing operations in Anderson, Indiana and the closure and consolidation of our electrical aftermarket remanufacturing and distribution facilities in Reed City, Michigan.



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##### Table of Contents

Operating Income



Operating income of $1.5 million and $22.2 million in the third quarter of 2005 and 2004, respectively, reflects the net sales, gross profit, SG&A
expense and restructuring charge factors discussed above.



Interest Expense



Interest expense of $18.0 million in the third quarter of
2005 increased $3.8 million from $14.2 million in the third quarter of 2004. This increase reflected $1.1 million of interest expense charged to continuing operations in 2005 that was charged to discontinued operations in 2004, a $1.1 increase due
to increased borrowing on our senior credit facility (partially due to the UPC acquisition), which had been paid down in the third quarter of 2004 with proceeds on the sale of our remanufactured transmission business, a $0.6 million increase in
interest on our Second Priority Senior Secured Floating Rate Notes and imputed interest of $0.9 million associated with our customer obligation liabilities, primarily related to the acquisition of UPC.



Income Taxes



Income tax expense on continuing operations of $10.8 million in the third quarter ended September 30, 2005 included a
$6.7 million increase to the deferred tax valuation allowance and provision for foreign taxes of $4.1 million. Income tax expense on continuing operations of $3.4 million in the third quarter of 2004, consisted of provisions for domestic and state
local taxes of $0.3 million and in foreign jurisdictions of $3.1 million.



In the fourth quarter of 2003, we recorded a charge of $28.3 million for a deferred valuation allowance for substantially all unreserved domestic income tax assets established prior to 2003. In the third quarter 2005,
we recorded a charge of $6.7 million for a deferred tax valuation allowance for the remaining unreserved domestic income tax assets.



Minority Interest



Minority interest in income of subsidiaries of $0.6 million in the third quarter of 2005 and $0.8 million in the third quarter of 2004 consisted of
minority shareholders interest in the earnings of our joint venture with International Truck and Engine Corporation and earnings of Hubei Delphi Automotive Generators Company, Ltd., which we refer to as Hubei.



Loss (Income) From Unconsolidated Joint Ventures



The income from unconsolidated joint ventures of $0.03 million in the third
quarter of 2005 consisted of our share of income recorded by Sahney Paris Rhone Ltd., which we refer to as SPR. The income from unconsolidated joint ventures of $0.1 million in the third quarter of 2004 consisted of our share of income recorded by
SPR, partially offset by losses recorded by iPower Technologies, L.L.C., which we refer to as iPower. Our share of losses for iPower recorded in 2004 reduced the carrying value of this investment to zero. Accordingly, we discontinued recognition of
losses related to this joint venture effective in the fourth quarter of 2004. The business operations of iPower were assumed by our former joint venture partner in 2004.



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Discontinued Operations



The loss from discontinued operations of $0.2 million in the third quarter of 2005 and $0.025 million in the third quarter of 2004 consisted of
operating results recorded by our remanufactured transmission and contract and retail gas engine businesses. In the third quarter of 2005, we recorded an additional gain of $0.1 million relative to the sale of Tractech, Inc., which we refer to as
Tractech, and Kraftube, Inc., which we refer to as Kraftube, in 2003. The $43.2 million net gain on the disposal of businesses in the third quarter of 2004 consisted of a $44.2 million estimated gain on the sale of Williams Technologies, Inc., which
we refer to as Williams, and JAX Reman, L.L.C., which we refer to as JAX, an additional gain of $0.1 million on the sale of Tractech and Kraftube, a $0.6 million reduction of the loss on the discontinuance of our retail aftermarket gas engine
business and an estimated loss of $1.8 million recorded on the disposition of AutoMatic Transmission International A/S, which we refer to as AMT.



Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004



Net Sales



|                       |  |      |       |      |   |                      |  |   |         |   |  |      |  
|---------------------- |  | ---- | ----- | ---- | - | -------------------- |  | - | ------- | - |  | ---- | -
|Product Categories     |  | 2005 |       | 2004 |   | Increase/ (Decrease) |  |   | %Change |  
|Automotive OEM         |  | $    | 232.7 |      | $ | 228.9                |  | $ | 3.8     |   |  | 1.7  | %
|Heavy duty OEM         |  |      | 151.6 |      |   | 135.5                |  |   | 16.1    |   |  | 11.9 |  
|Electrical aftermarket |  |      | 376.8 |      |   | 316.4                |  |   | 60.4    |   |  | 19.1 |  
|Powertrain             |  |      | 105.6 |      |   | 70.1                 |  |   | 35.5    |   |  | 50.6 |  
|Core services          |  |      | 43.2  |      |   | 44.4                 |  |   | (1.2    | ) |  | (2.7 | )
|                       |  |      |       |      |   |                      |  |   |         |   |  |      |  
|Total Net Sales        |  | $    | 909.9 |      | $ | 795.3                |  | $ | 114.6   |   |  | 14.4 | %
|                       |  |      |       |      |   |                      |  |   |         |   |  |      |  



Automotive OEM net
sales increased due to the ramp up of the alternator business and the impact of new business awards received in 2004, largely offset by lower customer demand as a result of reduced production levels, primarily in North America, and price reductions.
Heavy-duty OEM sales increased due to continued strong demand from Class 5  8 truck customers. Year over year OEM sales were also favorably impacted by the weak U.S. dollar. Electrical aftermarket sales increased as a result of the acquisition
of UPC near the end of the first quarter of 2005, partially offset by the loss of a U.S. retail customer in mid 2004, soft market conditions and lower volume from General Motors Service Parts Organization, which we refer to as GM SPO. Net sales of
UPC for the nine months ended September 30, 2004, which were not included in our consolidated results for this period, were approximately $99.0 million. Powertrain sales increased due to higher diesel engine, parts and locomotive product
volume. The year over year decline in third party sales in the core services business reflects soft market conditions.



Gross Profit



Gross profit of $120.4 million in the first nine months of 2005 declined $34.2 million, or 22.1%, compared with the first nine months of 2004, and as a
percentage of net sales was 13.2% in 2005 compared with 19.4% in 2004. Automotive OEM gross profit declined $28.4 million due to lower customer demand, higher material and fuel costs, price reductions and adverse currency impact,



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partially offset by the ramp up of the alternator business and the impact of new business awards received in 2004. Heavy-duty OEM gross profit declined $5.1
million due to higher material and fuel costs, partially offset by increased sales volume. OEM gross profit was also negatively impacted on a year over year basis by launch costs associated with initial insourcing of components from Korean suppliers
to our Mexican operations. Electrical aftermarket gross profit decreased $3.5 million due to a charge of $6.0 million recorded in the second quarter of 2005 relative to a probable underpayment of U.S. duties on remanufactured starters and
alternators imported into the U.S. in the years 2000 to 2004, start up and integration costs associated with the relocation of certain UPC assembly operations, the impact of soft market conditions and the additional cost of integrating the UPC
acquistion, partially offset by higher sales as a result of the UPC acquisition. Powertrain gross profit increased $4.3 million primarily as a result of higher sales and cost improvements, partially offset by unfavorable product mix. Gross profit on
core services decreased $1.5 million due to lower sales and unfavorable pricing.



Selling, General and Administrative Expenses



SG&A expenses of $104.5 million in the first nine months of 2005 increased $20.6 million, or 24.5% compared to the first nine months of 2004. As a percentage of net sales, SG&A expenses were 11.5% in the first nine months of 2005
compared with 10.6% in the first nine months of 2004. The increase was mainly due to unfavorable foreign exchange impact, an increase in the provision for bad debt expense as one core services customer filed for bankruptcy protection, an increase in
non recourse accounts receivable factoring costs, non restructuring related severance and higher expenditures in systems, marketing initiatives and product engineering, in part required to support future business including developing samples for the
new hybrid technology and expansion in China.



Restructuring Charges



In the first nine months of 2005, we recorded a net
restructuring charge of $2.6 million relative to: (i) a reduction in force at our headquarters in Anderson, Indiana, which was initiated in the third quarter of 2005; (ii) the 2003 closure of our starter and alternator manufacturing
operations in Anderson, Indiana; (iii) the closure and consolidation of our electrical aftermarket remanufacturing and distribution facilities in Reed City, Michigan; (iv) the consolidation of certain operations in Europe; and (v) a
reduction in force subsequent to the ramp up of the insourcing activities mentioned above and continued implementation of lean manufacturing initiatives at our OEM operations in Mexico. This net charge consisted of employee termination benefits,
including early retirements, totaling $3.0 million, other costs of $0.7 million and a $1.1 million credit for the reversal of accrued maintenance expenses reflecting our utilization of a previously idled Anderson, Indiana facility and the
renegotiation of other maintenance agreements.



In the first
nine months of 2004, we recorded a restructuring charge of $1.5 million relative to (i) the 2003 closure of our starter and alternator manufacturing operations in Anderson, Indiana; (ii) the closure and consolidation of our electrical
aftermarket remanufacturing and distribution facilities in Reed City, Michigan; (iii) the consolidation of certain operations in Europe; (iv) continued implementation of lean manufacturing initiatives at our OEM operations in Mexico; and
(v) the consolidation of our alternator and starter remanufacturing operations in Mississippi. The charge consisted of employee termination benefits of $0.7 million and other costs of $0.8 million.



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Operating Income



Operating income of $13.2 million and $69.1 million in the first nine months of 2005 and 2004, respectively, reflects the net sales, gross profit,
SG&A expense and restructuring charge factors discussed above.



Interest
Expense



Interest expense of $50.9 million in the first
nine months of 2005 increased $6.5 million from $44.4 million in the comparable period of 2004. This increase reflected $4.3 million of interest expense charged to continuing operations in 2005 that was charged to discontinued operations in 2004,
the impact of interest on our $125.0 million Second Priority Senior Secured Floating Rate Notes and $150.0 million Senior Subordinated Notes issued in the second quarter of 2004 of $3.7 million and $4.4 million, respectively, and imputed interest of
$1.8 million associated with our customer obligation liabilities, primarily related to the acquisition of UPC, recorded in the first nine months of 2005. These items were partially offset by the retirement of our $140.0 million Senior Subordinated
Notes in the second quarter of 2004 ($5.9 million of interest recorded in the first nine months of 2004, including $1.3 million incurred for the period between the call and redemption dates) and other items, net, of $1.8 million. Interest expense on
our senior credit facility was negatively impacted on a year over year basis by borrowings associated with the acquisition of UPC in 2005.



Loss on Early Extinguishment of Debt



In connection with our refinancing actions during the second quarter of 2004, we recorded a loss on the early extinguishment of debt totaling $7.9
million. This loss consisted of: (i) a call premium of $2.5 million and the write off of deferred financing costs of $1.4 million on redemption of the 10 5/8% Senior Subordinated Notes; (ii) a prepayment penalty of $1.8 million and write
off of deferred financing costs of $0.7 million on prepayment of the term loan; and (iii) a write off of deferred financing costs of $1.2 million and other fees of $0.3 million.



Income Taxes



Income tax expense on continuing operations of $12.4 million for the nine months ended September 30, 2005 included a $6.7 million increase to the
deferred tax valuation allowance for unreserved domestic income tax assets, provisions for domestic state and local taxes of $0.4 million and taxes in various foreign jurisdictions of $5.3 million. Income tax expense on continuing operations of $4.4
million for the nine months ended September 30, 2004 consisted of provisions for domestic and state local taxes of $0.9 million and in foreign jurisdictions of $3.5 million.



In the fourth quarter of 2003, we recorded a charge of $28.3 million for a deferred valuation allowance for substantially
all unreserved domestic income tax assets established prior to 2003. In the third quarter 2005, we recorded a charge of $6.7 million for a deferred tax valuation allowance for the remaining unreserved domestic income tax assets.



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Minority Interest



Minority interest in income of subsidiaries of $2.7 million in the first nine months of 2005 consisted of minority shareholders interests in the
earnings of our joint venture with International Truck and Engine Corporation and earnings of Hubei. Minority interest in the first nine months of 2004 of $2.1 million included minority shareholders interests in the earnings of our joint
venture with International Truck and Engine Corporation and earnings of Hubei and Remy Mexico, S. de R.L. de C.V., which we refer to as RM. We purchased the remaining minority shareholders interest in RM effective in the second quarter of 2004
after finalization of the Mexico arbitration.



Loss (Income) From
Unconsolidated Joint Ventures



The income from
unconsolidated joint ventures of $0.2 million in the first nine months of 2005 consisted of our share of income recorded by SPR. The loss from unconsolidated joint ventures of $0.7 million in the first nine months of 2004 consisted of our share of
losses recorded by Hitachi Remy automotive GmbH, which we refer to as Hitachi, and iPower, partially offset by income recorded by SPR. Our share of losses for Hitachi and iPower recorded in 2004 reduced the carrying value of these investments to
zero. Accordingly, we discontinued recognition of losses related to these joint ventures effective in the fourth quarter of 2004. The business operations of iPower were assumed by our former joint venture partner in 2004.



Discontinued Operations



The loss from discontinued operations of $0.5 million in the first nine months of 2005 and income from discontinued
operations of $1.0 million in the comparable period of 2004 consisted of operating results recorded by our remanufactured transmission and contract and retail gas engine businesses. In the second quarter of 2005, we completed the sale of our
automatic transmission remanufacturing business, AMT. The estimated loss on the sale of this business of $2.2 million recorded in 2004 was reduced by $0.4 million in the second quarter of 2005 as a result of the sale. We recorded an additional gain
of $0.4 million and $0.3 million in the first nine months of 2005 and 2004, respectively, relative to the sale of Tractech and Kraftube in 2003. In the third quarter of 2004, we recorded an estimated gain of $44.2 million on the sale of Williams and
JAX and a $0.6 million reduction of the loss on the discontinuance of our retail aftermarket gas engine business.



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Liquidity and Capital Resources



Our short-term liquidity needs include required debt service (including capital lease payments), day-to-day operating
expenses, working capital requirements, the funding of capital expenditures,



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customer obligations, acquisition payments (primarily related to machinery and equipment) for previously completed business acquisitions and restructuring
actions. Long-term liquidity requirements consist primarily of principal payments of long-term debt, customer obligations, settlements under outstanding contingencies, funding of pensions and payments for contingent earn out arrangements relative to
the acquisition of UPC. These contingent earn out payments are based on incremental financial performance objectives above the current performance of the combined electrical aftermarket business and are to be paid over a four-year period. The amount
of contingent consideration, if any, is not currently determinable. Our contractual obligations are provided in the table under the section Contractual Obligations, Contingent Liabilities and Commitments appearing below. Our principal
payments on long-term capital lease obligations are presented in Note 9 to our consolidated financial statements under Item 8 of our 2004 Form 10-K.



Our principal sources of cash to fund our short-term liquidity needs consist of cash generated by operations and borrowings under our senior credit
facility. The senior credit facility is collateralized by liens on substantially all of our assets and substantially all of the assets of our domestic and certain of our foreign subsidiaries and by the capital stock of such subsidiaries. In
connection with the acquisition of UPC on March 18, 2005, we entered into Amendment No. 2 to the Second Amended and Restated Loan and Security Agreement, which we refer to as the Amendment. Among other matters, the Amendment increased the
maximum draw available (subject to a borrowing base calculation) under our senior credit facility from $120.0 million to $145.0 million, eliminated the Earnings Before Interest, Taxes, Depreciation and Amortization, which we refer to as EBITDA, and
Fixed Charge covenants from the facility and extended the maturity of the facility to June 30, 2008 with provisions for annual extensions thereafter. At September 30, 2005, the rate for the revolving credit facility was 5.40%, borrowings
were $72.4 million, and letters of credit totaled $7.0 million. Based on the collateral supporting the senior credit facility at September 30, 2005, $65.6 million was available, net of letters of credit. In addition, we had $26.3 million in
cash at September 30, 2005.



We participate in programs
that accelerate the collection of accounts receivable. Under these programs, we sell the accounts of certain of our customers to banks, on a non-recourse basis, at a discount. Included in these programs is a program we assumed in connection with our
acquisition of UPC in the first quarter of 2005 and a new program started in the third quarter of 2005 that replaced the program (discontinued in May 2005) formerly referred to as the early pay plan. This new program resulted in approximately an
$8.0 million decrease in accounts receivables at September 30, 2005, compared to June 30, 2005. As of September 30, 2005, the increase in receivables that would occur if these programs were discontinued was approximately $67.0
million.



The Company has taken various actions which we
believe will improve our future operating results and cash flows. We believe that cash generated from operations, together with the amounts available under the senior credit facility and other borrowings, will be adequate to meet our debt service,
capital expenditure, customer obligation, prior acquisition payment, restructuring and working capital requirements for at least the next twelve months, although no assurance can be given in this regard. We also continue to explore additional
financing options, both in the U.S. and abroad, in an effort to further enhance liquidity.



Cash used in operating activities of continuing operations of $27.3 million in the first nine months of 2005 reflected a $6.6 million decrease in net working capital (consisting of accounts receivable,



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inventory, accounts payable and other current assets and liabilities) from year end 2004 and cash restructuring payments of $4.2 million. Accounts receivable
increased $14.8 million in the first nine months of 2005 due primarily to stronger heavy duty OEM, diesel engine and locomotive shipments. Inventories decreased $5.7 million in the first nine months of 2005 due primarily to strong heavy duty OEM
shipments, partially offset by lower electrical aftermarket sales. Accounts payable increased $1.2 million from year end 2004. The net change in other current assets and liabilities of $14.6 million reflected timing of interest payments and the
accrual of $6.0 million of duty expense in the second quarter of 2005 relative to a possible underpayment of U.S. duties on remanufactured starters and alternators imported into the U.S. in the years 2000 to 2004, partially offset by the payment of
customer obligations. Total customer obligation payments in the first nine months of 2005 totaled approximately $15.0 million. Cash restructuring payments of $4.2 million in the first nine months of 2005 consisted of $3.0 million of employee
termination benefits relative to the 2003, 2004 and 2005 restructuring actions and $1.2 million of other items. All other non-cash and reconciling items totaled $29.7 million.



Cash used in operating activities of continuing operations in the first nine months of 2004 of $15.9 million reflected a
$44.3 million increase in net working capital from year end 2003 and cash restructuring payments of $7.8 million. Accounts receivable increased $12.3 million due primarily to stronger first and second quarter shipments, partially offset by an
increase in accelerated collections under the receivables programs. Inventories increased $16.1 million in the first nine months of 2004 due to: (i) builds in support of anticipated higher future heavy duty original equipment sales;
(ii) builds for the launch of an additional remanufactured diesel engine; and (iii) lower than expected electrical aftermarket sales during the second and third quarters. The net change in other current assets and liabilities of $15.6
million consisted primarily of payments totaling $13.6 million (including VAT of $1.8 million) made in connection with settlement of the services agreement component of the arbitration with the former minority shareholders of RM. Cash restructuring
payments of $7.8 million consisted of $4.7 million and $1.6 million of employee termination benefits relative to the 2001 and 2003 and 2004 restructuring actions, respectively, and $1.5 million of other items. All other non-cash and reconciling
items totaled $36.2 million.



Cash used in investing activities
of continuing operations of $84.4 million in the first nine months of 2005 compares with cash provided of $62.8 million in the first nine months of 2004. Acquisition payments in the first nine months of 2005 consisted primarily of payments for the
acquisition of UPC. Acquisition payments in the first nine months of 2004 consisted of earn-out payments relative to the 2000 acquisition of M&M Knopf Auto Parts, Inc. ($13.4 million), the final cash payment on notes issued in 2002 in connection
with the acquisition of Remy Korea Limited ($4.9 million), purchase of the remaining shares from the minority shareholders of the Mexico joint venture ($5.5 million) and the acquisition of certain parts of the Delphi Corporation alternator business
in the fourth quarter of 2002 ($1.0 million). In the second quarter of 2005, we recorded a cash receipt of $0.2 million on the sale of AMT. Cash proceeds on the sale of Tractech and Kraftube of $0.4 million and $0.3 million were recorded in the nine
months of 2005 and 2004, respectively. In the third quarter of 2004, we recorded proceeds on the sale of Williams and JAX of $102.7 million, net of taxes and deal-related costs. Capital expenditures in both 2005 and 2004 were primarily for
production, engineering and distribution equipment and a new global Enterprise Resource Planning system. These expenditures include investments associated with the launch of new products, recently awarded business wins and establishment of new
technology centers in Europe and Asia.



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Cash provided by financing activities of continuing operations of $76.9 million in the first nine months
of 2005 consisted primarily of borrowings under our senior credit facility. Cash provided by financing activities of continuing operations of $5.1 million in the first nine months of 2004 consisted of proceeds from the issuance of long-term debt,
payments for the retirement of long-term debt and the payment of financing costs in connection with our refinancing in the third quarter of 2004. Excluding the refinancing actions, net repayments under our senior credit facilities and other debt
were $56.5 million. Also during the first quarter of 2004, $1.0 million in cash dividends were paid to the minority shareholders of Hubei.



Contingencies



We are party to various legal actions and administrative proceedings and subject to various claims arising in the ordinary course of business, including
those relating to commercial transactions, product liability, safety, health, taxes, environmental and other matters. For a description of certain of our legal proceedings, see Note 10 to the Condensed Consolidated Financial Statements in
Item 1 of this Part I.



Contractual Obligations and Contingent
Liabilities and Commitments



Our
contractual obligations as of September 30, 2005 are provided in the following table (dollars in millions):



|                                       |  |                        |     |                |   |            |  |            |     |           |   |     |  |   |    
|-------------------------------------- |  | ---------------------- | --- | -------------- | - | ---------- |  | ---------- | --- | --------- | - | --- |  | - | ---
|                                       |  | Payments Due by Period
|Contractual Obligations                |  | Total                  |     | Balanceof 2005 |   | 2006 -2008 |  | 2009 -2010 |     | After2010
|Long-Term Debt(1)                      |  | $                      | 696 |                | $ | 5          |  | $          | 249 |           | $ | 292 |  | $ | 150
|Customer Obligations(2)                |  |                        | 59  |                |   | 4          |  |            | 33  |           |   | 14  |  |   | 8  
|Capital Lease Obligations              |  |                        | 14  |                |   |           |  |            | 6   |           |   | 5   |  |   | 3  
|Pension Funding(3)                     |  |                        | 1   |                |   | 1          |  |            |    |           |   |    |  |   |   
|Other Post Retirement Benefits Funding |  |                        | 10  |                |   |           |  |            | 3   |           |   | 2   |  |   | 5  
|Operating Leases                       |  |                        | 56  |                |   | 3          |  |            | 27  |           |   | 13  |  |   | 13 
|Acquisition Payments(4)                |  |                        | 5   |                |   |           |  |            | 5   |           |   |    |  |   |   
|Employee Termination Benefits          |  |                        | 11  |                |   | 1          |  |            | 10  |           |   |    |  |   |   
|Other                                  |  |                        | 4   |                |   |           |  |            | 3   |           |   |    |  |   | 1  
|                                       |  |                        |     |                |   |            |  |            |     |           |   |     |  |   |    
|Total Contractual Cash Obligations     |  | $                      | 856 |                | $ | 14         |  | $          | 336 |           | $ | 326 |  | $ | 180
|                                       |  |                        |     |                |   |            |  |            |     |           |   |     |  |   |    

---

|(1) | These amounts include indebtedness outstanding under our senior notes, senior subordinated
notes, senior secured floating rate notes and other debt.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Reported at present value.
|--- | --------------------------

|(3) | Amounts beyond 2005 are not currently estimable.
|--- | ------------------------------------------------

|(4) | Payments in connection with the acquisition of Delphi Corporations light vehicle
alternator business, including purchasing its machinery and equipment.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------



With respect to capital expenditures, we expect spending in the last three months of 2005 to approximate $10 million.



In addition to the contractual obligations disclosed above, we also have a variety of other contractual agreements related to the procurement of materials
and other commitments. With respect to these agreements, we are not subject to any contracts that commit us to significant non-cancelable commitments. With respect to agreements related to the procurement of inventory used in our manufacturing and
remanufacturing processes, we had approximately $80 to $90 million of open purchase orders at September 30, 2005.



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Seasonality



Our business is seasonal, as our major OEM customers historically have one to two week shutdowns of operations during July and December. Our sales results
in the third and fourth quarters reflect the effects of these shutdowns. Our working capital requirements also are affected by seasonality, as we build inventory for the summer sales months in the aftermarket. Typically our working capital
requirements are highest from April through August and the change from the highest month to the lowest month (typically December) for accounts receivable, inventory and accounts payable has averaged approximately $40.0 million over the past three
calendar years, excluding UPC.



Foreign Operations



Approximately 26% of our net sales in the nine months ending
September 30, 2005 were derived from net sales made in foreign countries. We have manufacturing and other operations located in certain foreign countries. We also source components and products from our operations and other suppliers based in
foreign countries. Because of these foreign sales and operations, our business is subject to the risks of doing business abroad, including currency exchange rate fluctuations, limits on repatriation of funds, transportation and delivery risks,
compliance with foreign laws and other economic and political uncertainties.



Forward-Looking Statements



From time to time,
we make oral and written statements that may constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which we refer to as the Act, or by the Securities and Exchange Commission, which we
refer to as the SEC, in its rules, regulations and releases. We desire 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 our future performance contained in this Form 10-Q, our Annual Report on Form 10-K for the year ended December 31, 2004, and in other filings with the SEC. Any statements set forth in writing or orally by us, other than
statements of current or historical fact, may constitute forward-looking statements. These statements relate to our future plans, objectives, expectations and intentions and may be identified by words like anticipate,
believe, continue, estimate, expect, intend, may, plan, will and similar expressions. We caution readers that forward-looking statements involve risks,
uncertainties, and other factors that may cause our actual results and performance to differ materially from any future results or performance expressed or implied by these forward-looking statements. These risks, uncertainties and other factors
include, among others, the following:



| |  |  | uncertainty of future financial results;
| | - |  | ----------------------------------------



| |  |  | acquisitions;
| | - |  | -------------



| |  |  | additional financing requirements;
| | - |  | ----------------------------------



| |  |  | development of new products and services;
| | - |  | -----------------------------------------



| |  |  | the effect of competitive products or pricing;
| | - |  | ----------------------------------------------



| |  |  | costs and difficulties related to integrations of acquired businesses;
| | - |  | ----------------------------------------------------------------------



| |  |  | pending and future legal proceedings, including environmental regulatory matters;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | reliance upon or loss of a major customer;
| | - |  | ------------------------------------------



| |  |  | international operating and supply risks;
| | - |  | -----------------------------------------



| |  |  | weather conditions, including their impact on demand for our aftermarket products;
| | - |  | ----------------------------------------------------------------------------------



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| |  |  | raw material and energy costs, including the cost of steel and availability;
| | - |  | ----------------------------------------------------------------------------



| |  |  | foreign exchange rate changes;
| | - |  | ------------------------------



| |  |  | transportation and related fuel costs;
| | - |  | --------------------------------------



| |  |  | effectiveness of restructuring and cost saving initiatives;
| | - |  | -----------------------------------------------------------



| |  |  | labor relations;
| | - |  | ----------------



| |  |  | the ability to obtain and maintain adequate prices for our products;
| | - |  | --------------------------------------------------------------------



| |  |  | our substantial indebtedness and limitations under debt agreements;
| | - |  | -------------------------------------------------------------------



| |  |  | costs and risks relative to enterprise resource planning implementations;
| | - |  | -------------------------------------------------------------------------



| |  |  | customs duties claims;
| | - |  | ----------------------



| |  |  | costs related to re-sourcing and outsourcing products;
| | - |  | ------------------------------------------------------



| |  |  | costs for pension and post retirement benefit plans;
| | - |  | ----------------------------------------------------



| |  |  | the effect of economic conditions and other uncertainties, including the current conditions in the markets for OEM and Aftermarket products
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Bankruptcy filings, financial uncertainties and labor disruptions affecting suppliers and customers.
| | - |  | ----------------------------------------------------------------------------------------------------



Due to these uncertainties, we cannot assure readers that any forward-looking statements will prove to have been correct.
Our forward-looking statements speak only as of the date made. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.



Factors that May Affect Future Results



We believe that results for the remainder of 2005 will continue to be
negatively impacted by lower demand year over year in the North American car and truck market, pricing pressures and reductions, higher commodity and fuel costs, adverse currency fluctuations and investments in engineering and systems. We will
continue our efforts to improve productivity and reduce costs.



In connection with the restructuring actions initiated in 2004 and 2005, we currently expect to record additional restructuring charges of approximately $3.0 million to $5.0 million during the last three months of 2005. These actions may
also impact other operating expenses during 2005.



Item 3. Quantitative and Qualitative Disclosures About Market Risk



As of September 30, 2005, there have been no material changes in our market risk exposure as described in Item 7A contained in our Annual Report
on Form 10-K for the year ended December 31, 2004.



Item 4. Controls and Procedures



| | (a) | The Company carried out an evaluation, under the supervision and with the participation of its principal executive officer and principal financial officer, of the effectiveness of
the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the Exchange Act)) as of the end of the period covered by this report. Based on this evaluation,
the Companys principal executive officer and principal financial officer concluded that the Companys disclosure controls and procedures are effective in timely alerting it to material information required to be included in the
Companys periodic SEC reports.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | (b) | Our evaluation did not include the disclosure controls and procedures of the acquired operations of UPC, which are included in the Companys consolidated financials statements
as of September 30, 2005 and for the period from March 18, 2005 through September 30, 2005. Other than this acquisition, there have been no significant changes during the quarter ended September 30, 2005 that have materially
affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting. The Company is currently implementing a global Enterprise Resource Planning system. During the nine months ended
September 30, 2005 the Company began and substantially completed the implementation at its facilities in Mexico.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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PART II OTHER INFORMATION



Item 1. Legal Proceedings



From time to time, we are a party to various legal actions in the normal course of our business, including those related to commercial transactions, product liability, safety, health, taxes, environmental and other matters.



UAW Litigation



On April 16, 2003, the International Union, United Automobile, Aerospace and Agriculture Implement Workers of America
(UAW) and its Local Union 662 filed suit against the Company and Remy, Inc. (RI), in Federal District Court in the Southern District of Indiana, Indianapolis Division. The lawsuit was filed under Section 301 of the Labor
Management Relations Act, 29 U.S.C. Sec. 185, seeking enforcement of an expired Supplemental Unemployment Benefits plan (SUB plan). The plaintiffs allege that the SUB plan provides supplemental unemployment benefits for 52 weeks and
separation pay in an amount exceeding $20.0 million for employees who were terminated as a result of the closure of RIs Anderson, Indiana production facilities at the end of March 2003. The plaintiffs also seek to enforce terminated provisions
of a health care program, which the plaintiffs allege provides the terminated employees with 25 months of continued hospital, surgical, medical, hearing aid, prescription drug, mental health, substance abuse and vision insurance coverage. The
terminated employees were represented by the UAW and its Local Union 662 under various agreements, which expired on March 31, 2003. The lawsuit was filed shortly after the UAW membership failed to ratify RIs last, best and final
offer for a Shutdown Agreement. The UAW filed an amended complaint on July 8, 2003 to which the Company filed an answer on July 24, 2003. Motions for summary judgment filed by the parties were denied by the court in September 2005. The
trial is scheduled for February 2006. The Company denies the material allegations of the complaint, denies any wrongdoing and intends to defend itself vigorously, but is unable to predict whether the proceedings will have a material adverse effect
on the Company.



Prison Labor Matter



In January 2004, a class action on behalf of all prisoners who worked in a
South Carolina Department of Corrections (SCDC) Services Training Program at Lieber Correctional Institute was brought against the SCDC and our former subsidiary Williams Technologies, Inc. (Williams), which was sold to
Caterpillar, Inc., in September 2004. The Plaintiffs claim that (a) they should have been paid industry prevailing wage under a South Carolina prison industries authorization statute, (b) the SCDC and Williams violated the Payment of Wages
Act and (c) the SCDC and Williams committed a tort under the South Carolina Tort Claims Act. Under the terms of the sale, the Company retained liability and responsibility for this claim. The Circuit Court for Dorchester County granted summary
judgment to the Company on April 21, 2005, and decertified the Plaintiff class. Plaintiffs filed a Notice of Appeal with the Court on May 24, 2005, and a due date for filling their Appeal Brief has not yet been set. The Company continues
to deny the material allegations of the complaint and any wrongdoing and intends to defend itself vigorously, but is unable to predict whether the proceedings will have a material adverse effect on the Company.



Import/Export Matters



The Company continues to expand globally to take advantage of global economic conditions and related cost structures. The
Company is subject to various duties and import/export taxes. The Company is in the process of reviewing its import/export processes in North America, Europe and



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parts of Asia to verify the appropriate import duty classification, value and duty rate, including import value added tax. As part of this review process,
the Company identified a potential exposure related to customs duties in the United States. On resolution of these interpretations, duties due from the Company will range from $0 to $12.2 million. The Company has accrued approximately $8.1 million
related to this issue.



Remy Reman Facilities



The Remy Reman facilities in Mississippi identified certain possible
violations of state air laws and notified the state environmental agency under the state voluntary audit disclosure rules. The Mississippi Department of Environmental Quality (MDEQ) issued Notices of Violation regarding alleged violations of state
air laws by two of the Remy Reman facilities in Mississippi. Remy Reman resolved this liability through payment in January 2005 of approximately $.2 million.



Franklin Power Products Facility



In September 2000, one of Franklin Power Products, Inc.s Indiana facilities received a Finding of Violation and Order for Compliance (the
Order) from the EPA requiring the facility to correct violations of its wastewater discharge permits. Franklin Power Products, Inc. has installed wastewater treatment equipment and is in compliance with the terms of the Order and has
eliminated the discharge. In July 2004, the Company and Franklin Power Products, Inc. entered into an agreement with the U.S. Department of Justice on behalf of the EPA, which tolled the statute of limitations on the EPAs potential claim for
penalties. Since that time, the Company has been cooperating with the EPA by providing additional information and has entered into settlement negotiations with the EPA and the Department of Justice. On resolution of these negotiations, the amount
due from the Company will range from $.2 million to $2.4 million. The accompanying consolidated financial statements reflect an estimated liability of approximately $.2 million related to this issue.



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds



None.



Item 3. Defaults Upon Senior Securities



Not applicable.



Item 4. Submission of Matters to a Vote of Security Holders



None.



Item 5. Other Information



None.



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Item 6. Exhibits



|     |  |                                                                                                                                                                          
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certification by Thomas J. Snyder, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                   
|     | 
|31.2 |  | Certification by Jeffrey Potrzebowski, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                               
|     | 
|32.1 |  | Certification by Thomas J. Snyder, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.    
|     | 
|32.2 |  | Certification by Jeffrey Potrzebowski, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.



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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.



|                        |  |                          |  |                                        
|----------------------- |  | ------------------------ |  | ---------------------------------------
|                        |  | REMY INTERNATIONAL, INC.
|                        |  | (Registrant)            
|                        |  |                         
|Date: November 11, 2005 |  | By:                      |  | /s/ Jeffrey Potrzebowski               
|                        |  |                          |  | Jeffrey Potrzebowski                   
|                        |  |                          |  | Senior Vice President and              
|                        |  |                          |  | Chief Financial Officer                
|                        |  |                         
|Date: November 11, 2005 |  | By:                      |  | /s/ Amitabh Rai                        
|                        |  |                          |  | Amitabh Rai                            
|                        |  |                          |  | Vice President and Corporate Controller
|                        |  |                          |  | Principal Accounting Officer           



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EXHIBIT INDEX



|            |  |                                                                                                                                                                          
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                              
|31.1        |  | Certification by Thomas J. Snyder, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                   
|            | 
|31.2        |  | Certification by Jeffrey Potrzebowski, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                               
|            | 
|32.1        |  | Certification by Thomas J. Snyder, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.    
|            | 
|32.2        |  | Certification by Jeffrey Potrzebowski, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



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