ANDERSON, IN -- Remy International today announced financial results for the three and nine month periods ended Sept. 30.

Net sales for the third quarter of 2006 were $354.7 million, an increase of $38.8 million or 12 percent compared with the corresponding period last year. The third quarter sales increase occurred in all product categories. The company said automotive OEM sales increased about 15 percent and continued to reflect ramp up of the alternator business, while a 10 percent sales increase in heavy duty OEM benefited from improved demand. The sales increases in both OEM businesses were also impacted by the pass through of higher commodity price with no associated margin. Powertrain sales increased approximately 52 percent due to continued strong demand for diesel engine parts. Electrical aftermarket sales were up modestly at 1 percent.

The company incurred an $8.8 million charge to increase the accrual for warranty obligation in the third quarter of 2006. This drove the Adjusted EBITDA to $9.4 million. As a result, overall third quarter 2006 EBITDA declined $2.1 million when compared to the same quarter in 2005. In the third quarter of 2006, the company experienced an unusual increase in

warranty returns for a limited class of products primarily made in prior years, and accordingly revised the warranty obligation estimate. The company believes that the product issues causing this high level of warranty claims have been corrected. Reduced spending continues to contribute positively to current year results and represents the largest single element of lower selling, general and administrative expense. The benefit from higher sales in the third quarter of 2006 compared with the same period in 2005 was more than offset by the increase in warranty expense, with additional negative impact from commodity cost absorbed.

The company reported an operating loss of $3 million for the third quarter ended September 2006, compared to $1.5 million operating income from the comparable quarter in 2005. Net loss for the third quarter increased $2.5 million to $30.5 million compared with a net loss of $28 million for the same period last year.

Revenue for the nine months rose 18.5 percent, to $1,078.5 million from $909.9 million in last year's first nine months. Adjusted EBITDA for the nine months ended September 30, 2006 was $58 million, an increase of $19.7 million as compared with the first nine months of the prior year. Net loss for the same period in 2006 was $48.8 million compared to $52.3 million for the prior year.

Net cash provided by operating activities for the nine months ending September 30, 2006 increased $46.6 million to $19.3 million, when compared with net cash used in operating activities of $27.3 million for the corresponding period last year. Improved operating results and stringent control over working capital contributed to this improvement. Included in

the operating cash flow for the first nine months of 2006 is $12 million for restructuring payments, which is $7.7 million higher than payments made in the first nine months of 2005, including a payment related to the UAW settlement reached in the first quarter of 2006. The company continues to invest in strategic capital programs, but continued strong focus on

priorities resulted in a net decrease in capital expenditures of $9.7 million for the first nine months of 2006 when compared to the same period in 2005. Cash interest expense for the first nine months of 2006 was $57.4 million, or $10.9 million higher than for the comparable period in 2005. This increase reflects both higher borrowings and increased interest on

variable rate loans. The company's liquidity at Sept. 30 was $118.6 million, consisting of $93.3 million of availability on its senior credit facility in addition to unrestricted cash of $25.3 million on the consolidated balance sheet.

"I am pleased that through three quarters of 2006, financial results continue to reflect year-over-year EBITDA growth, significant improvement for the year in cash flow from continuing operations and continued strong liquidity," said John Weber, president and chief executive officer of Remy International. "Despite the improvement achieved this year, I remain dissatisfied with the overall profitability of the company, with a major example being the increasing warranty cost associated with products sold in prior years. We deal with issues head on, and if a new issue is identified we will take the appropriate actions. We continue to face challenging marketplace conditions and will balance profitability, growth and current cash needs."

The company is updating guidance for the full year 2006. Sales are expected to approximate $1.4 billion. The updated Adjusted EBITDA is expected to be in the range of $70-80 million. Cash provided by operating activities is expected to range from $10-20 million, unchanged from prior guidance, while capital expenditures should approximate $30 million. The company continues to make all scheduled interest payments as required by our loan agreements and indentures.

The company also is announcing that Rothschild Inc. has been retained to provide advice and assistance regarding refinancing alternatives. John Weber said, "We continue to make progress on the potential divestiture of non-core businesses. Rothschild's role is to assist us in the optimal application of proceeds from such divestitures. It is important we access the best advice we can to help us make the right decisions."

For more information about Remy International, go to: http://www.remyinc.com