ANDERSON, IN -- Remy International, Inc. reported its financial results for the three and six month periods ended June 30.Net sales for the second quarter set an all-time record increasing $59.8 million to $372.2 million, a 19.2 percent increase, compared with $312.3 million reported in the corresponding period last year.

Sales increased in all product categories as compared to the second quarter of 2005. Automotive OEM sales increased 36.5 percent primarily relating to the continued ramp up of the alternator business and pass through of commodity price increases. Powertrain sales increased 36.9 percent due to a strong demand for diesel engine parts. Heavy duty OEM sales remain strong and were up 6.6 percent. Electrical aftermarket sales increased 8.7 percent due to unusually strong sales into the retail segment of the automotive aftermarket.

The company reported an Adjusted EBITDA for the second quarter of $24.7 million, an $18.5 million increase, compared to Adjusted EBITDA of $6.2 million in the second quarter 2005. Higher sales were the largest contributor to the increase in Adjusted EBITDA, although the company continues to benefit from the restructuring actions taken in the prior year. The second quarter 2005 Adjusted EBITDA was negatively impacted by the $6.0 million charge related to the probable underpayment of U.S. Import Duty for prior years and the significant startup and integration costs incurred in respect to the company's Mexican Operations.

The company reported operating income of $12.9 million in the second quarter 2006, compared with an operating loss of $3.1 million in the second quarter 2005. Net loss for the second quarter decreased $11.1 million to $10.3 million compared with a $21.4 million net loss reported in the corresponding period last year.

Net sales of $723.8 million in the first six months of 2006 increased $129.9 million, or 21.9 percent, over the comparable period in 2005. Adjusted EBITDA for the six months ended June 30, of $48.6 million increased $21.8 million and operating income of $28.6 million increased $16.8 million compared with the same period of 2005.

Net cash used in operating activities for the six months ending June 30, was $5.9 million, compared with net cash used in operating activities of $38.0 million for the corresponding period last year. The cash usage for the first six months of 2006 includes $9.4 million for previously announced restructuring payments, which were $7.8 million higher than payments made in the first six months of 2005, including a payment related to the UAW settlement reached in January 2006.

In addition to the improvement in operating income, continued streamlining of the supply chain and control of inventory despite the sales increase contributed to the reduced cash usage. The company's liquidity at June 30, was approximately $101.6 million, consisting of $84.9 million of availability on its senior credit facility in addition to unrestricted cash of $16.7 million on the consolidated balance sheet. The company continues to invest in strategic capital programs, but strong control resulted in $8.2 million lower capital spending for the first six months of 2006 compared to the same period in 2005.

Commenting on the second quarter 2006 results, John H. Weber, president and CEO stated, "I am pleased with the second quarter results, which also reflects two consecutive quarters of improvement being achieved in the fundamental performance of the business. We continue to see strong sales and improvements in Adjusted EBITDA in our core OEM related business and remain focused on strong control of cash spending in light of our difficult capital structure."

In respect to the outlook for the remainder of 2006, Weber commented, "Conditions in the Electrical aftermarket business represent our largest challenge for the next six months. As a result, Adjusted EBITDA for 2006 is expected to fall closer to the lower end of the range of guidance provided previously. However, due to our increased focus on cash flow and liquidity, we currently remain optimistic that we will achieve our cash flow goals."

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