ANDERSON, IN — Remy International announced net sales of $255.8 million and adjusted EBITDA of $23 million for the fourth quarter, which ended Dec. 31, 2004. Net sales increased $11.7 million, or 4.8 percent, and adjusted EBITDA decreased $6.4 million, or 21.7 percent, compared with the fourth quarter of 2003. Operating income of $17.2 million in the fourth quarter of 2004 compares with an operating loss of $96.6 million in the same period of 2003. The company said the fourth quarter of 2003 reflects the special charges associated with the core inventory valuation of $103.9 million and the Mexico Arbitration award of $14.3 million, along with restructuring charges of $1.7 million.

Commenting on the fourth quarter results, Thomas Snyder, president and CEO, stated, “We were pleased with our fourth quarter year over year sales improvements in the face of challenging industry-wide conditions. Our Automotive and Heavy-Duty OEM and Powertrain groups posted strong sales improvements for the quarter. Our cost reduction efforts enabled us to maintain our gross margin despite pricing pressures, higher commodity costs and adverse currency fluctuations.”

The company said adjusted EBITDA in the fourth quarter of 2004 decreased over the same period in 2003 partly due to product mix and also due to higher product engineering and other costs for the approximately $250 million in new business awards received over the past 24 months that are being launched through 2007.

Net sales of $1,051.2 million for 2004 increased $78.4 million, or 8.1 percent, over the comparable period in 2003. Adjusted EBITDA for 2004 increased 2.8 percent to $110.3 million as compared to 2003. Operating income of $86.3 million compares with an operating loss of $82.5 million in 2003. The loss in 2003 reflects the special charges associated with the core inventory valuation of $103.9 million and the Mexico Arbitration award of $14.3 million, along with restructuring charges of $49 million.

For the year ended December 31, 2004, strong customer demand in the heavy-duty and industrial sectors, higher Automotive OEM volume from new alternator business awards and improved remanufactured diesel engine and parts volume, all contributed to the year over year sales growth, partially offset by lower sales in the electrical aftermarket.

The company’s year over year gross margin improvement was the result of cost reductions achieved and strong sales growth. Higher year over year selling, general and administrative expenses primarily reflect increased spending on product engineering, systems and marketing related to the new alternator product lines and recent sales awards.

Cash used in operating activities of $9.4 million in 2004 primarily reflects the $13.6 million Mexico Arbitration payment. Excluding this payment, $4.2 million of cash was generated from operating activities.

On March 18, 2005, the company completed the acquisition of substantially all of the assets and the assumption of certain liabilities of Unit Parts Company (UPC), based in Oklahoma City. PC is a major supplier to the automotive aftermarket for new and remanufactured starters and alternators, offering custom branding, packaging and logistics solutions as well as complete engineering and support services.

Also in March 2005, the company amended its Senior Credit Facility to reflect, among other matters, the acquisition of UPC discussed above. Additionally, the amendment increases the maximum draw under the asset based revolving credit facility from $120 million to $145 million, eliminates the EBITDA and Fixed Charge covenants from the facility and extends the maturity of the facility to June 30, 2008.

Commenting on 2005, Snyder said, “We expect our near term results to be impacted by the difficult industry environment and the adverse cost impact of the significant weakening of the U.S. dollar. However, with cost reductions, new global business awards and the recent acquisition of UPC, our full year 2005 and long-term outlook remains positive.”

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