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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004

or

FOR THE TRANSITION PERIOD FROM                      TO                     .

COMMISSION FILE NO. 1-13683

REMY INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

(765) 778-6499

(Registrant’s telephone number, including area code)

DELCO REMY INTERNATIONAL, INC.

(Former name, former address and former fiscal year, if changed since last report)

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

Yes x    No ¨

INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS AN ACCELERATED FILER (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.

Remy International, Inc. and Subsidiaries

INDEX

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PART I FINANCIAL INFORMATION

Remy International, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

See notes to the condensed consolidated financial statements.

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Remy International, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

See notes to the condensed consolidated financial statements.

4

Remy International, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

See notes to the condensed consolidated financial statements.

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REMY INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AMOUNTS IN THOUSANDS, EXCEPT SHARE AMOUNTS AND AS INDICATED

For the three and nine month periods ended September 30, 2004 and 2003

(Unaudited)

Introduction

In July 2004, the Board of Directors of Delco Remy International, Inc. approved changing the name of the Company from Delco Remy International, Inc. to Remy International, Inc. The name change became effective on August 1, 2004. The Company will continue to market certain starters and heavy-duty alternators for original equipment and aftermarket customers under the Delco Remy brand name, which is licensed to the Company by General Motors. The costs incurred through September 30, 2004 related to the name change were not material to the Company’s consolidated financial position or results of operations.

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, 2003. 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. The Company reclassified operating results and cash flows in 2003 to reflect the classification of the Company’s transmission remanufacturing businesses, Williams Technologies, Inc. (“Williams”), JAX Reman, L.L.C. (“JAX”) and AutoMatic Transmission International A/S (“AMT”), as discontinued operations. The Company also reclassified the balance sheet at December 31, 2003 to reflect the classification of these businesses as discontinued operations. For more information on this matter refer to Note 4 and Note 7.

Operating results for the three-month and nine-month periods ended September 30, 2004 are not necessarily indicative of the results that may be expected for the full year. The balance sheet at December 31, 2003 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, 2003. For further information, refer to the consolidated financial statements and notes thereto for the year ended December 31, 2003.

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2. Additional Balance Sheet Information

Inventories

The components of inventory were as follows at:

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:

3. Acquisitions

2004 Acquisitions

In the second quarter of 2004, the Company made cash earn-out payments totaling $13,454 relative to the 2000 acquisition of M&M Knopf Auto Parts, Inc. (“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 (formerly known as (“fka”) Delco 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 Delphi Corporation’s (“Delphi”) light vehicle alternator business.

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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 (see Note 13), 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.

2003 Acquisitions

During the nine months ended September 30, 2003, the Company completed the acquisition of 51% of Hubei Delphi Automotive Generators Company, Ltd. (“Hubei”), a manufacturer of automotive and heavy duty generators for the original equipment market and aftermarket based in China, for $3,600 in cash. Net assets acquired were $8,100 ($3,800 net of minority interest), including cash of $3,600.

The Company also made payments of $459 on notes issued in connection with the acquisition of certain parts of the Delphi light vehicle alternator business in the fourth quarter of 2002.

During the nine months ended September 30, 2003, the Company made payments totaling $3,064 under contractual put agreements to purchase additional shares from the minority shareholders of World Wide Automotive, L.L.C. (“World Wide”) (fka World Wide Automotive, Inc.), which was acquired in 1997. These payments increased the Company’s ownership percentage of World Wide from 94.0% to 97.2%. The Company purchased the remaining minority shareholders’ interest in World Wide during the fourth quarter of 2003.

The Company made payments totaling $3,375 during the nine months ended September 30, 2003 under contractual put agreements to purchase additional shares from the minority shareholder of Power Investments, Inc. (“Power”), which was acquired in 1996. These payments increased the Company’s ownership percentage of Power from 93.4% to 97.7%. The Company purchased the remaining minority shareholders’ interest in Power during the fourth quarter of 2003.

During the nine months ended September 30, 2003, the Company made a payment of $2,648 on notes issued in 2002 in connection with the acquisition of the remaining shares from the minority shareholders of Remy Korea.

4. Business Divestiture

On September 1, 2004 the Company completed a stock sale of its two wholly-owned subsidiaries, Williams and JAX, to Caterpillar, Inc. (“CAT”) for $105,000. The Company realized cash proceeds of $102,665 and recorded an estimated gain of $44,215, net of income taxes and deal-related costs and subject to future adjustment. The historical results for these companies are treated as discontinued operations beginning in the third quarter of 2004 and all prior periods have been reclassified accordingly. For more information on discontinued operations see Note 7 below.

5. Corporate Reorganization

Effective September 30, 2004, the stockholders of the Company formed a new holding company, Remy Worldwide Holdings, Inc. (“Remy Holdings”), to own all of the outstanding stock of Remy International, Inc. The Company’s stockholders exchanged all of their stock for identical shares

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in Remy Holdings with the same number and class of shares and percentage ownership of Remy Holdings and the same relative rights and preferences in the equity value of Remy Holdings, as they previously held in the Company. As a result, the Company is now a wholly-owned subsidiary of Remy Holdings and the stockholders of the Company became stockholders of Remy Holdings. The Company will continue to be the issuer of its outstanding notes and the reporting company with the Securities and Exchange Commission.

In conjunction with the formation of the new holding company, all of the outstanding shares of the Company’s Series A Preferred Stock were cancelled. The cancellation is reflected in the condensed consolidated balance sheet as a reclassification of the Preferred Stock to Paid-in Capital, which increased stockholders’ equity by $334,336 and was the amount attributable to the outstanding Series A Preferred Stock as of September 30, 2004. Since the Company’s Preferred Stock was cancelled, the accretion of Preferred Stock dividends will no longer be reflected in the Company’s financial statements, effective October 1, 2004.

As a result of the reorganization the Company’s Class A and Class C Common Stock were converted into the same number of shares of Class B Common Stock. Accordingly, as of September 30, 2004, the Company had an aggregate of 2,503,024.48 shares of Class B Common Stock outstanding, consisting of 1,000.00 shares of converted Class A Common Stock, 16,687.00 shares of converted Class C Common Stock, and 2,485,337.48 shares of Class B Common Stock previously outstanding.

6. Accounts Receivable Programs

The Company participates in two programs that accelerate the collection of accounts receivable. Under one program, the Company sells the accounts of certain of its aftermarket customers to banks, on a non-recourse basis, at a discount. At September 30, 2004 and 2003, the amount of receivables under this program was approximately $29,700 and $23,700, respectively. The second program is an early pay plan under which a third party acts as paying agent for one of the Company’s customers. The accounts are paid, at a discounted rate, in five to seven days after shipment instead of the regular terms. This program is also without recourse. The amount covered by this plan at September 30, 2004 and 2003 was approximately $11,700 and $13,700, respectively.

7. Discontinued Operations

In the third quarter of 2004, the Company completed the sale of its wholly-owned remanufactured transmission subsidiaries, Williams and JAX, to CAT for $105,000 in cash. The Company realized cash proceeds of $102,665 and recorded an estimated gain of $44,215, net of income taxes and deal-related costs and subject to future adjustment. In the third quarter the Company also committed to a plan to dispose of its automatic transmission remanufacturing business, AMT, based in Soborg, Denmark. An estimated loss of $1,800 was recorded in connection with this action. As a result of the sale of Williams and JAX and the plan of disposition for AMT, the operating results, balance sheets and cash flows of these businesses, comprising the Company’s remanufactured transmission business, were classified as discontinued operations effective in the third quarter of 2004. All prior periods have been reclassified.

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During the first quarter of 2003, the Company successfully completed the sale of Tractech, Inc. and Kraftube, Inc. In connection with the sale, the Company recorded an estimated gain on the sale of $2,417 in the first quarter of 2003, subject to adjustment based on the financial performance of these businesses in 2004 through 2008. In the third quarter we recorded an additional gain of $107 and for the nine months ended September 30, 2004 a total of $323 has been recorded. The operating results, balance sheets and cash flows of these businesses were classified as discontinued operations effective in the first quarter of 2004.

In the first quarter of 2003, the Company completed plans to exit its contract remanufacturing operation for gas engines in Beaumont, Texas. The operating results, balance sheets and cash flows of this business were also classified as discontinued operations effective in the first quarter of 2003.

In the second quarter of 2002, the Company completed plans to exit its retail aftermarket gas engine business. In connection with the discontinuance of the business, a charge of $28,248 was recorded in 2002 to write down the relevant assets to their estimated realizable value. An additional charge of $2,824 was recorded in 2002 for the estimated cost of employee termination benefits and closure of facilities. In the third quarter of 2004, the Company reduced its estimated loss on the disposal of this business by $639.

The Company currently expects to make additional total cash payments relative to its discontinued operations, which have been fully accrued, of approximately $3,500 in last three months of 2004.

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

8. 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”).

Continuing Operations

In the first quarter of 2004, the Company completed plans for the closure and consolidation of certain manufacturing and distribution facilities in Mexico.

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In 2003, the Company completed plans for the following restructuring actions and transfers of production to lower-cost facilities:

A total charge of $1,516 was recorded in the first nine months of 2004 relative to the 2004 and 2003 actions. This charge consisted of $717 for the cost of voluntary and involuntary employee separation programs and other miscellaneous costs of $799.

For the nine months ended September 30, 2003, the Company recorded a net restructuring charge of $47,263 relative to the restructuring actions listed above. A total charge of $48,968 was recorded for the full year 2003 for the estimated cost of the 2003 actions. This charge consisted of $14,381 for the estimated cost of various voluntary and involuntary employee separation programs associated with the resulting workforce reductions of approximately 710 employees; $29,233 for the impairment of fixed assets and capital leases; $9,066 for the impairment of operating leases; a post-employment benefit curtailment gain of $7,216; a pension plan curtailment charge of $1,835; and other miscellaneous costs of $1,669.

Relative to the employee termination programs established in 2003 and 2004, $1,057, $420 and $56 were paid in the first, second and third quarters of 2004, respectively, $8,405 was paid in 2003 and $3,926 and $1,234 are expected to be paid in the last three months of 2004 and in 2005, respectively. The Company currently expects to record additional charges of approximately $500 in connection with these actions in the last three months of 2004.

In 2002, the Company recorded a net restructuring credit of $4,375 consisting of a $4,916 post-employment benefit curtailment gain and a $541 pension curtailment charge related to the closure and realignment of certain manufacturing operations announced in 2001 as discussed below.

In 2001, the Company recorded a restructuring charge of $30,098 in conjunction with plans for the closure and realignment of certain manufacturing facilities and administrative functions in the U.S., Canada and Europe. This charge consisted of $23,328 for the estimated cost of various voluntary and involuntary employee separation programs associated with workforce reductions of approximately 800 production and administrative employees and asset impairment and other miscellaneous costs totaling $6,770. Relative to the employee termination programs established in 2001, $4,737 was paid in the first quarter of 2004, $4,802 was paid in 2003, $12,709 was paid in 2002 and $1,080 was paid in 2001.

The following table summarizes the activity in the restructuring accrual of continuing operations for the nine months ended September 30, 2004:

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Discontinued Operations

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

In 2003, the Company completed plans for the closure of its aftermarket transmission remanufacturing facility in Jacksonville, Florida.

In the first nine months of 2004, the Company recorded restructuring charges in its discontinued operations of $421, consisting of $346 of employee termination benefit costs and $75 of other costs.

In 2003, the company recorded restructuring charges in its discontinued operations of $929, consisting of $646 of employee termination benefit costs and $283 of asset impairment and other costs.

Relative to the termination charges in 2003 and 2004, $222 was paid in 2003, $706 was paid in the first nine months of 2004 and $64 is expected to be paid in the last three months of 2004.

In 2002, the Company recorded restructuring charges in its discontinued operations of $2,824, consisting of $1,053 of employee termination benefits and $1,771 of asset impairment and other costs. Relative to the employee termination programs established in 2002, $736 and $317 were paid in 2003 and 2002, respectively.

In 2001, the Company recorded restructuring charges in its discontinued operations of $9,251, consisting of $3,399 of employee termination benefits and $5,852 of asset impairment and other costs. Cash payments for termination programs established in 2001 of $199, $2,225 and $975 were made in 2003, 2002 and 2001, respectively.

The following table summarizes the activity in the restructuring accrual of discontinued operations for the nine months ended September 30, 2004:

9. Long-Term Debt

On September 1, 2004, the Company amended its senior credit facility to change certain definitions and to adjust certain financial covenants to reflect the sale of Williams and JAX. The revised covenant calculation for Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) was lowered from $108,000 to $99,000 for the rolling twelve-month period ending December 31, 2004, reflecting the sale of the transmission business.

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%

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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.

The Floating Rate Notes mature on April 15, 2009. Interest is due each January 15, April 15, July 15 and October 15 commencing July 15, 2004. The Floating Rate Notes are guaranteed by substantially all of the Company’s domestic subsidiaries (the “Guarantors”). The Floating Rate Notes and the related guarantees are senior obligations secured by a second-priority lien, subject to certain exceptions and permitted liens, on all of the Company’s and the Guarantors’ existing and future property and assets that secure the Company’s obligations under its existing credit facilities. In the event of enforcement of the lien securing the Floating Rate Notes and the related guarantees, the proceeds thereof will first be applied to repay obligations secured by the first-priority liens, including the Company’s obligations under its senior credit facilities.

The 9 3/8% Senior Subordinated Notes mature on April 15, 2012. Interest is due each April 15 and October 15, commencing October 15, 2004. The 9 3/8% Senior Subordinated Notes are guaranteed by the Guarantors on a senior subordinated basis and, with the related guarantees, are unsecured senior subordinated obligations, ranking junior to all the Company’s senior debt, including borrowings under its credit facilities, the Floating Rate Notes and the Company’s outstanding 8 5/8% Senior Notes due in 2007.

In connection with the above offering, the Company amended its senior credit facilities to reflect the extinguishment of the $60,000 term loan, provide for borrowings of up to $120,000 under its asset based revolving credit facility, and extend the maturity date from March 31, 2006 to June 30, 2007.

In the second quarter of 2004, in connection with the above debt redemption, repayments and amendment, the Company recorded a loss on early extinguishment of debt of $7,939. This charge consisted of: (i) 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) 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.

Required principal payments of long-term debt and capitalized leases are as follows:

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10. 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 2004 are as follows:

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

11. Employee Benefit Plans

Agreements with GM

In connection with the Company’s separation from General Motors Corporation (“GM”), the Company and GM agreed to allocate the responsibility for employee pension benefits and post-retirement health care and life insurance on a pro-rata basis between Remy Inc. (“RI”) (fka Delco Remy America, Inc.), a wholly-owned subsidiary and GM. The allocation is primarily determined upon years of service with RI and aggregate years of service with RI and GM. Effective August 1, 1994, RI established hourly (collectively bargained union employees) and salaried pension and post-retirement health care and life insurance plans which are similar to the plans previously offered by GM.

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Pension and Post-Retirement Health Care and Life Insurance Plans

RI has defined benefit pension plans covering substantially all of its employees. The plan covering salaried employees provides benefits that are based upon years of service and final estimated average compensation. Pursuant to the March 31, 2003 Plant Shut-Down Agreement, there are no remaining active hourly employees. Benefits for former hourly employees are based on stated amounts for each year of service. RI’s funding policy is to contribute amounts to provide the plans with sufficient assets to meet future benefit payment requirements consistent with actuarial determinations of the funding requirements of federal laws. Plan assets are primarily invested in mutual funds, which invest in both debt and equity instruments.

RI maintains hourly and salaried benefit plans that provide post-retirement health care and life insurance to retirees and eligible dependents. RI retains the right to modify or terminate the plans providing these benefits. The salaried plan has cost sharing features such as deductibles and co-payments. Salaried employees hired January 1, 1993 and after are not eligible for the above-described post-retirement benefits. It is RI’s policy to fund these benefits as claims are incurred.

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 was signed into law on December 8, 2003. The enactment of this Act is not expected to have a significant effect on the Company’s plan. The APBO and net periodic postretirement benefit costs do not reflect any effect of the Act. The effects of the Act shall be incorporated in the next measurement of plan obligations as required by SFAS No. 106.

The components of expense for the three-month and nine-month periods ended September 30, 2004 and 2003 for the plans are as follows:

Pension Benefits

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Cash Flows

The Company contributed $2,978 in the first nine months of 2004 and plans to contribute $3,753 to its pension plans for all of 2004. The post-retirement health care plan is funded as benefits are paid.

12. Income Taxes

Income tax expense on continuing operations of $4,448 for the nine months ended September 30, 2004 consisted of provisions for federal alternative minimum tax of $260, domestic state and local taxes of $637 and taxes in various foreign jurisdictions of $3,551. In accordance with SFAS No. 109, Accounting for Income Taxes, the Company established a valuation allowance for domestic U.S. deferred tax assets in 2003, which resulted in no domestic U.S. tax provision on 2004 domestic income. Income tax expense on continuing operations of $11,494 for the nine months ended September 30, 2003 consisted of provisions in foreign jurisdictions of $8,539 and $2,955 of withholding tax on intercompany dividends.

13. 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.

Remy Mexico, S. De R.L. De C.V. Arbitration

Remy Mexico Holdings, S. de R.L. de C.V. (“RMH”), an indirect subsidiary, and GCID Autopartes, S.A. de C.V. (“GCID”), were parties to a series of agreements, including a partnership agreement. The partnership agreement created Remy Mexico, S. de R.L. de C.V. (formerly Delco Remy Mexico, S. de R.L. de C.V.) (“RM”), which operated certain manufacturing facilities in Mexico. GCID was the minority partner with a 24% ownership interest. An affiliate of the Company and RMH, Remy Componentes, S. de R.L. de C.V. (“RC”) and RM, were parties to a services agreement with an affiliate of GCID relating to the partnership, which, among other things, required the payment of fees in connection with the provision of employees to the partnership. That agreement terminated as of April 3, 2004. Another affiliate of GCID was the partnership’s landlord until April 30, 2004.

RMH and GCID signed a letter of intent on or about May 3, 2000, whereby GCID agreed to terminate certain of the agreements with RMH and to sell its partnership interest to RMH in exchange for a $13 million termination payment by RMH to GCID, but the transaction was never finalized. In June 2001, GCID declared RMH in default under the partnership agreement, alleging that RMH had failed to conduct the business of the partnership in accordance with that agreement. In August 2001, GCID instituted an arbitration proceeding before the American Arbitration Association against RMH and later added RC and a wholly-owned subsidiary, Remy, Inc. (formerly Delco Remy America, Inc.), who together with RMH and RC are referred to as the named parties. GCID and its affiliates sought damages for the alleged (i) breaches of the partnership agreement, including a requirement under the partnership that RMH buy out GCID’s partnership interest; (ii) breaches of fiduciary duty; (iii) breaches of various other contracts between and among the various parties; and (iv) tortious

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interference with contractual relations. RM terminated the lease agreement as of September 27, 2003. RM and RC relocated all operations to another facility in San Luis Potosi, Mexico as of April 30, 2004. In accordance with an interim award from the arbitration panel on March 10, 2004, RM and RC hired the employees previously provided by GCID’s affiliate under the services agreement as of April 3, 2004.

The arbitration panel issued its final award on June 25, 2004. In accordance with the final award, on July 6, 2004 GCID transferred its interest in RM to RMH and RMH, RM and RC paid GCID and its affiliates approximately $17,300 for GCID’s minority interest, the award for past services fees for the period of 1997 through 2004, and other claims, including interest. RMH, RM and RC also paid approximately $1,800 in VAT as a result of these payments.

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 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, 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. The magistrate has approved a case management plan, and the trial is currently expected to begin in January 2005. 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.

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 issued Notices of Violation regarding two of the facilities and the subsidiaries have agreed to either pay approximately $60 in penalties and spend approximately $110 in supplemental environmental projects (“SEPs”) or to pay approximately $170 in penalties if no SEPs are completed.

Franklin Power Products, Inc.

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

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equipment, 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 a Tolling Agreement with the U.S. Department of Justice on behalf of the EPA. Since that time, the Company has been cooperating with the EPA by providing additional requested information.

14. 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, 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, 2004 and December 31, 2003 and for the three-month and the nine-month periods ended September 30, 2004 and 2003.

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:

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REMY INTERNATIONAL, INC. AND SUBSIDIARIES

Condensed Consolidating Balance Sheet

(Unaudited)