UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

Commission File Number: 333-107219

UNITED COMPONENTS, INC.

(812) 867-4156

     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 o No þ

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).

     Yes o No þ

     The registrant had 1,000 shares of its $0.01 par value common stock outstanding as of May 11, 2005.

United Components, Inc.

Index

FORWARD-LOOKING STATEMENTS

In this periodic report on Form 10-Q, United Components, Inc. (“UCI”) makes some “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. These statements are included throughout this report on Form 10-Q and relate to analyses and other information based on forecasts of future results and estimates of amounts not yet determinable. These forward-looking statements are identified by their use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will,” “continue,” and other similar terms and phrases, including references to assumptions.

These forward-looking statements are based on the Company’s expectations and beliefs concerning future events affecting the Company. They are subject to uncertainties and factors relating to the Company’s operations and business environment, all of which are difficult to predict and many of which are beyond the Company’s control. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct. They can be affected by inaccurate assumptions we make or by known or unknown risks and uncertainties. Many factors mentioned in our discussion in this report will be important in determining future results.

Although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, we can give no assurance that we will attain these expectations or that any deviations will not be material. Except as otherwise required by the Federal securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained in this periodic report on Form 10-Q to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

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PART I
FINANCIAL INFORMATION

Item 1. Financial Statements

United Components, Inc.

Condensed Consolidated Balance Sheets (unaudited)
(in thousands)

The accompanying notes are an integral part of these statements.

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United Components, Inc.

Condensed Consolidated Income Statements (unaudited)
(in thousands)

The accompanying notes are an integral part of these statements.

4

United Components, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)

The accompanying notes are an integral part of these statements.

5

United Components, Inc.

Condensed Consolidated Statements of Changes in Shareholder’s Equity (unaudited)
(in thousands)

The accompanying notes are an integral part of these statements.

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United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE A — GENERAL AND BASIS OF FINANCIAL STATEMENT PRESENTATION

General

United Components, Inc. (“UCI”) is a wholly owned subsidiary of UCI Acquisition Holdings, Inc. UCI Acquisition Holdings, Inc. and United Components, Inc. are corporations formed at the direction of The Carlyle Group. At March 31, 2005, affiliates of The Carlyle Group own 98.6% of UCI Acquisition Holdings, Inc.’s common stock, and the remainder is owned by certain members of senior management and UCI’s Board of Directors.

On June 20, 2003, United Components, Inc. purchased, from UIS, Inc. and UIS Industries, Inc., their vehicle parts businesses. This acquisition is referred to in these notes to the financial statements as the “Acquisition”.

The Company operates in one business segment through its subsidiaries. The Company manufactures and distributes vehicle parts primarily servicing the vehicle replacement parts market in North America and Europe.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of UCI and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. In these notes to the financial statements, the term the “Company” refers to UCI and its subsidiaries.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

The December 31, 2004 consolidated balance sheet has been derived from the audited financial statements included in the Company’s annual report on Form 10-K for the year ended December 31, 2004. The financial statements at March 31, 2005 and for the three-month periods ended March 31, 2005 and 2004 are unaudited. In the opinion of the Company, these financial statements include all adjustments necessary for a fair presentation of the financial position and results of operations for such periods. Such adjustments include normal recurring adjustments and, in the case of the income statement for the 2004 period, include the effects of the preliminary allocation of the Acquisition purchase price. For all periods subsequent to March 31, 2004, the financial information presented in these financial statements and related notes reflects the final allocation of the Acquisition purchase price. The final allocation had no impact on previously reported results of operations.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of sales and expenses during the reporting period. The estimates and assumptions include estimates of the collectibility of accounts receivable and the realizability of inventory, goodwill and other intangible assets. They also include estimates of cost accruals, environmental liabilities, warranty and product returns, insurance reserves, income taxes, pensions and other postretirement benefits and other factors. Management has exercised reasonableness in deriving these estimates; however, actual results could differ from these estimates.

These financial statements 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.

Operating results for the three months ended March 31, 2005 are not necessarily indicative of the results that may be expected for the year ended December 31, 2005.

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United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE B — SALES OF RECEIVABLES

The Company has agreements to sell undivided interests in certain of its receivables to a factoring company, which in turn has the right to sell an undivided interest to a financial institution or other third party. The Company enters these agreements at its discretion when it determines that the cost of factoring is less than the cost of servicing its receivables with existing debt. Pursuant to these agreements, the Company sold $5.1 million of receivables during the 2005 quarter which would otherwise have been outstanding at March 31, 2005. The Company retained no rights or interest and has no obligations with respect to the sold receivables. The Company does not service the receivables after the sales.

The sales of receivables were accounted for as a sale in accordance with SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”. The sold receivables were removed from the balance sheet at the time of sales. The costs of the sales were a 0.25% agent’s fee and a discount deducted by the factoring company, which is calculated based on LIBOR plus 1.5%. These costs were $57 thousand in the first quarter of 2005 and are recorded in miscellaneous, net.

NOTE C — INVENTORIES

The components of inventory are as follows (in thousands):

NOTE D — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consists of the following (in thousands):

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United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE E — PRODUCT RETURNS LIABILITY

The product returns liability is included in accrued expenses and other current liabilities. It includes accruals for parts returned due to manufacturing defects and for certain parts returned because of customer excess quantities. The changes in the Company’s product returns liability are as follows (in thousands):

NOTE F — PENSION

The following are the components of net periodic pension expense (in thousands):

NOTE G — CONTINGENCIES

Environmental

The Company is subject to a variety of Federal, state, local and foreign environmental laws and regulations, including those governing the discharge of pollutants into the air or water, the management and disposal of hazardous substances or wastes and the cleanup of contaminated sites. The Company has been identified as a potentially responsible party for contamination at two sites. One of these sites is a former facility in Edison, New Jersey, where a state agency has ordered the Company to continue with the monitoring and investigation of chlorinated solvent contamination. The Company has informed the agency that this contamination was caused by another party at a neighboring facility and has initiated a lawsuit against that party for damages and to compel it to take responsibility for any further investigation or remediation. The second site is a previously owned site in Solano County, California, where the Company, at the request of the regional water board, is investigating and analyzing the nature and extent of the contamination and is conducting some remediation. Based on currently available information, management believes that the cost of the ultimate outcome of these environmental matters will not exceed the $3.2 million accrued at March 31, 2005 by a material amount, if at all. However, because all investigation and analysis has not yet been completed and because of the inherent uncertainty in such environmental matters, it is reasonably possible that the ultimate outcome of these matters could have a material adverse effect on results for a single quarter.

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United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

Litigation

The Company is subject to various other contingencies, including routine legal proceedings and claims arising out of the normal course of business. These proceedings primarily involve commercial claims, product liability claims, personal injury claims and workers’ compensation claims. The outcome of these lawsuits, legal proceedings and claims cannot be predicted with certainty. Nevertheless, the Company believes that the outcome of any currently existing proceedings, even if determined adversely, would not have a material adverse effect on financial condition or results of operations.

NOTE H — GEOGRAPHIC INFORMATION

The Company had the following net sales by country (in thousands):

Net long-lived assets by country are as follows (in thousands):

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United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE I — STOCK OPTIONS

The Company has adopted the disclosure only provisions of SFAS 123, “Accounting for Stock-Based Compensation”. Accordingly, stock options are accounted for by the “intrinsic-value-method” of APB Opinion No. 25, “Accounting for Stock Issued to Employees”. Had the compensation cost of the stock option plan been applied using the fair-value-based method at the grant date, rather than the intrinsic-value method of accounting, the pro forma amounts would be as follows (in millions):

Pro forma disclosures for stock option accounting may not be representative of the effects on reported net income in future periods.

NOTE J — NEW ACCOUNTING PRONOUNCEMENTS

In May 2004, the FASB issued FASB Staff Position No. 106-2 (“FSP 106-2”), “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003”. FSP 106-2 provides guidance regarding accounting and disclosure related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Act”) that was signed into law in December 2003. FSP 106-2 is effective for interim and annual periods beginning after June 15, 2004. The Act introduces a prescription drug benefit under Medicare (Medicare Part D) as well as a Federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least equivalent to Medicare Part D. Benefits from the Act generally cover individuals who are age 65 or greater. Since postretirement medical coverage under the Company’s plans ceases at age 65, the Act does not have an impact on the Company’s obligations.

In December 2004, SFAS No. 123R, “Share-Based Payment” was issued. SFAS No. 123R requires the measurement of share-based payments to employees using a fair-value-based method and the recording of such expense in the income statement. The accounting provisions of SFAS No. 123R are effective for reporting periods beginning after December 15, 2005 and are to be applied prospectively. Also, in March 2005, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin 107 (“SAB 107”). SAB 107 provides clarification on the implementation of SFAS No. 123R and the relationship of SFAS No. 123R to certain SEC rules and regulations. The pro forma disclosures previously permitted under SFAS No. 123 will no longer be an alternative to financial statement recognition. See Note I for the pro forma net income as if the Company had used a fair-value-based method, similar to the methods required under SFAS No.123R, to measure compensation expense. Had SFAS No. 123R been applied in the periods disclosed, the impact would have been similar to those pro forma amounts. The future impact is dependent upon if and when additional options are granted or expire, as well as the vesting period of such options.

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United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

In December 2004, the FASB issued SFAS No. 151, “Inventory Costs”. SFAS No. 151 primarily clarifies the accounting for inventory when there are abnormal amounts of idle facility expense, freight, handling costs and wasted materials. Under existing guidelines, items such as idle facility expense, excessive spoilage and re-handling costs may be ‘so abnormal’ as to require treatment as current period charges rather than recorded adjustments to the value of inventory. SFAS No. 151 requires that such items be recognized as current period charges regardless of whether they meet the ‘so abnormal’ criteria. The accounting provisions of SFAS No. 151 are to be applied prospectively and are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The Company does not expect SFAS No. 151 to have a material effect on its financial statements.

In December 2004, the FASB issued FASB Staff Position No. 109-1 (“FSP 109-1”), “Application of SFAS No. 109, “Accounting for Income Taxes”, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004.” FSP 109-1 states that the tax deduction of qualified domestic production activities, which is provided by the American Jobs Creation Act of 2004 (the “Jobs Act”), will be treated as a special deduction as described in SFAS No. 109. Consequently, the impact of the deduction, which was effective January 1, 2005, will be reported in the period in which the deduction is claimed on the Company’s income tax returns. The effect of FSP 109-2 is expected to be less than $0.3 million for the year ended December 31, 2005.

In December 2004, the FASB issued FASB Staff Position No. 109-2 (“FSP 109-2”), “Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004”. FSP 109-2 provides accounting and disclosure guidance related to the Jobs Act provision for the limited time 85% dividends received deduction on the repatriation of certain foreign earnings. Although adoption is effective immediately, FSP 109-2 states that a company is allowed time beyond the financial reporting period to evaluate the effects of the Jobs Act on its plan for reinvestment or repatriation of foreign earnings. The Company is evaluating the impact of the repatriation provisions of the Jobs Act and will complete its review by December 31, 2005. It is not expected that these provisions will have a material impact on the Company’s financial statements. Accordingly, as provided for in FSP 109-2, the Company has not adjusted its tax expense or net deferred tax assets to reflect the repatriation provisions of the Jobs Act.

In March 2005, the FASB issued FASB Interpretation No. 47 (“FIN 47”), “Accounting for Conditional Asset Retirement Obligations”. FIN 47 clarifies that a company must record a liability for a “conditional” asset retirement obligation if the fair value of the obligation can be reasonably estimated. FIN 47 is effective no later than the end of fiscal years ending after December 15, 2005. The Company does not expect FIN 47 to have a material effect on its financial statements.

NOTE K — OTHER INFORMATION

At March 31, 2005, 1,000 shares of common stock were authorized, issued and outstanding. The par value of each share of common stock is $0.01 per share.

Cash payments for interest and income taxes (net of refunds) are as follows (in thousands):

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United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE L — GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS

The senior credit facilities are secured by substantially all the assets of the Company. The senior subordinated notes (the “Notes”) are unsecured and rank equally in right of payment with any of the Company’s future senior subordinated indebtedness. The Notes are subordinated to indebtedness and other liabilities of UCI’s subsidiaries that are not guarantors of the Notes. The Notes and borrowings under the senior credit facilities are guaranteed on a full and unconditional and joint and several basis by UCI’s domestic subsidiaries.

The information, which follows in this Note L, includes condensed financial statements for (a) UCI, which is the issuer of the Notes and borrower under the senior credit facilities, (b) the domestic subsidiaries, which guarantee the Notes and borrowings under the senior credit facilities (the “Guarantors”), (c) the foreign subsidiaries (the “Non-Guarantors”), and (d) consolidated UCI. Also included are consolidating entries, which principally consist of eliminations of investments in consolidated subsidiaries and intercompany balances and transactions. All goodwill is included in UCI’s balance sheet.

The condensed balance sheets and the condensed income statement for the 2005 quarter, which follow in this Note L, include the final allocation of the Acquisition purchase price. The condensed income statement for the 2004 quarter is based on a preliminary allocation for the Acquisition purchase price. Preliminary purchase price allocations were based on preliminary estimates of the fair value of assets acquired and liabilities assumed.

Separate financial statements of the Guarantor subsidiaries are not presented because their guarantees are full and unconditional and joint and several, and the Company thinks separate financial statements and other disclosure regarding the Guarantor subsidiaries are not material to investors.

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United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE L (continued)

Consolidating Condensed Balance Sheet
March 31, 2005
(in thousands)

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United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE L (continued)

Consolidating Condensed Balance Sheet
December 31, 2004
(in thousands)

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United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE L (continued)

Consolidating Condensed Income Statement
Three Months Ended March 31, 2005
(in thousands)

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United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE L (continued)

Consolidating Condensed Income Statement
Three Months Ended March 31, 2004
(in thousands)

17

United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE L (continued)

Consolidating Condensed Statement of Cash Flows
Three Months Ended March 31, 2005
(in thousands)

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United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE L (continued)

Consolidating Condensed Statement of Cash Flows
Three Months Ended March 31, 2004
(in thousands)