PENDLETON, Ind. -- Remy International has released its operating results for the second quarter ended June 30. Sales for the second quarter were $279.4 million, EBITDAR was $39 million and net income was $15.2 million, the company said. These results include a $3.5 million increase in the warranty reserve. Without this one-time, non-cash balance sheet adjustment, EBITDAR would have been $42.5 million and net income would have been $18.7 million.

In the second quarter of 2009 the company reported sales of $234 million, EBITDAR of $37.6 million and net income of $9.4 million. The reported 2009 numbers include the effects of several one-time transactions and inventory sales. The 2009 comparable numbers, without those one time transactions, are $198.5 million in sales, $25.8 million in EBITDAR and net income of negative $2.5 million.

"These results were driven by improved light duty and heavy duty off-highway segment sales, increased passenger car and freight miles driven and strong management action to continue to control costs, maintain price discipline and expand our business," said John Weber, Remy International president and CEO. "We continued to effectively contain costs so incremental sales are contributing materially to bottom line results."

OE sales were up 75 percent in the second quarter from last year's depressed levels, led by significant increases in light duty and heavy duty motors and alternators, the company said.

Hybrid sales were up 20 percent in the second quarter versus the second quarter of 2009. During the second quarter, Remy said it continued its stream of new hybrid business wins, such as the recent agreement with Enova (for commercial vehicle applications in North America and China) and AMP (a company engaged in emission-free electric vehicles).

Net working capital (accounts receivable plus inventory less accounts payable) turns in the second quarter 2010 improved 34 percent from second quarter 2009 and 15 percent over 2009 year-end. Change in cash balance was $14.2 million for the second quarter 2010.

"Our liquidity remains fully sufficient to meet our needs and we expect it to remain so for the rest of the year. Availability remains strong at approximately $80 million. We exceeded all our covenants for the second quarter and forecast to exceed all financial covenants for 2010," added Fred Knechtel, Remy International CFO and treasurer.

During the second quarter of 2010 the company revised the assumptions and methodology used to calculate certain future warranty claim obligations related to sales prior to June 30. Based on this analysis, the company adjusted its estimated obligations, which resulted in a $3.5 million increase to the warranty reserve. The company believes that this change in estimate better reflects the company's obligations of all warranty claims.

"This change in estimate gives us confidence that we are accurately reflecting the future obligations of our warranty claims and by no means reflects any negative changes to our quality. By any measure, whether it is the number of claims or claims as a percent of sales, our quality has continued to dramatically improve every year for the past four years," noted Weber.

Remy also announced that it has agreed to a non-binding confidential term sheet with holders owning 84 percent of its outstanding preferred share to exchange their shares for newly issued shares of company common stock. As part of this exchange offer the company will commence a rights offering to existing common shareholders to offer them the right to purchase common shares at the same price as the exchange. The company says it will solicit shareholder approval as required by its charter next month.

For more information about Remy, visit http://www.remyinc.com.