10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2007

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 333-107219

UNITED COMPONENTS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware (State or Other Jurisdiction of Incorporation or Organization)	04-3759857 (I.R.S. Employer Identification No.)
14601 Highway 41 North Evansville, Indiana (Address of Principal Executive Offices)	47725 (Zip Code)

(812) 867-4156
(Registrant’s Telephone Number, Including Area Code)

     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 o No þ

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (check one):

Large accelerated filer o                Accelerated filer o                Non-accelerated filer þ

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

     Yes o No þ

     The registrant had 1,000 shares of its $0.01 par value common stock outstanding as of November 13, 2007.

United Components, Inc.

Index
Part I	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Condensed consolidated balance sheets — September 30, 2007 and December 31, 2006
	Condensed consolidated income statements — Three and nine months ended September 30, 2007 and 2006
	Condensed consolidated statements of cash flows — Nine months ended September 30, 2007 and 2006
	Condensed consolidated statements of changes in shareholder’s equity — Nine months ended September 30, 2007 and 2006
	Notes to condensed consolidated financial statements
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Item 4.	Controls and Procedures
Part II	OTHER INFORMATION
Item 1.	Legal Proceedings
Item 1A.	Risk Factors
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.	Default Upon Senior Securities
Item 4.	Submission of Matters to Vote of Security Holders
Item 5.	Other Information
Item 6.	Exhibits
Signatures
Exhibits

2

PART I
FINANCIAL INFORMATION

Item 1. Financial Statements

United Components, Inc.

Condensed Consolidated Balance Sheets (unaudited)
(in thousands)

	September 30,			December 31,
	2007			2006
Assets
Current assets
Cash and cash equivalents	$	15,396		$	31,523
Accounts receivable, net		268,102			228,996
Inventories, net		154,222			158,024
Deferred tax assets		27,133			33,920
Other current assets		33,594			29,389
Total current assets		498,447			481,852
Property, plant and equipment, net		167,816			164,621
Goodwill		241,461			239,835
Other intangible assets, net		85,712			95,354
Deferred financing costs, net		4,150			5,310
Pension and other assets		9,757			9,452
Assets held for sale		1,600			6,077
Total assets	$	1,008,943		$	1,002,501
Liabilities and shareholder’s equity
Current liabilities
Accounts payable	$	99,588		$	92,720
Short-term borrowings		9,967			8,657
Current maturities of long-term debt		611			462
Accrued expenses and other current liabilities		103,551			99,039
Total current liabilities		213,717			200,878
Long-term debt, less current maturities		453,035			491,478
Pension and other postretirement liabilities		35,636			40,430
Deferred tax liabilities		19,956			17,350
Due to Holdco		7,754			—
Minority interest		3,380			3,738
Other long-term liabilities		2,474			3,845
Total liabilities		735,952			757,719
Contingencies – Note N
Shareholder’s equity Common stock		—			—
Additional paid in capital		277,057			273,749
Retained earnings (deficit)		(1,136	)		(26,433	)
Accumulated other comprehensive income (loss)		(2,930	)		(2,534	)
Total shareholder’s equity		272,991			244,782
Total liabilities and shareholder’s equity	$	1,008,943		$	1,002,501

The accompanying notes are an integral part of these statements.

3

United Components, Inc.

Condensed Consolidated Income Statements (unaudited)
(in thousands)

	Three Months ended September 30,						Nine Months ended September 30,
	2007			2006			2007			2006
Net sales	$	230,742		$	238,298		$	729,159		$	683,371
Cost of sales		177,185			193,173			566,666			546,321
Gross profit		53,557			45,125			162,493			137,050
Operating (expense) income
Selling and warehousing		(15,092	)		(14,946	)		(46,047	)		(45,401	)
General and administrative		(10,790	)		(9,670	)		(36,900	)		(31,204	)
Amortization of acquired intangible assets		(1,694	)		(1,875	)		(5,303	)		(4,804	)
Costs of integration of water pump operations and resulting asset impairment losses (Note C)		(222	)		(829	)		(696	)		(5,429	)
Costs of closing facilities and consolidating operations and gain from sale of assets (Note E)		—			(813	)		1,546			(6,275	)
Trademark impairment loss (Note F)		—			—			(3,600	)		—
Operating income		25,759			16,992			71,493			43,937
Other (expense) income
Interest expense, net		(10,175	)		(11,804	)		(31,038	)		(31,743	)
Write-off of deferred financing costs (Note M)		—			—			—			(2,625	)
Management fee expense		(500	)		(500	)		(1,500	)		(1,500	)
Miscellaneous, net		(917	)		147			(1,972	)		92
Income before income taxes		14,167			4,835			36,983			8,161
Income tax expense		(5,772	)		(2,727	)		(14,056	)		(4,090	)
Net income from continuing operations		8,395			2,108			22,927			4,071
Discontinued operations (Note D)
Net income (loss) from discontinued operations, net of tax		—			(46	)		—			1,895
Gain (loss) on sale of discontinued operations, net of tax		2,707			—			2,707			(18,272	)
		2,707			(46	)		2,707			(16,377	)
Net income (loss)	$	11,102		$	2,062		$	25,634		$	(12,306	)

The accompanying notes are an integral part of these statements.

4

United Components, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)

	Nine Months ended September 30,
	2007			2006
Cash flows from operating activities of continuing operations
Net income (loss)	$	25,634		$	(12,306	)
Less:
Net income from discontinued operations, net of tax		—			1,895
Gain (loss) on sale of discontinued operations, net of tax		2,707			(18,272	)
Net income from continuing operations		22,927			4,071
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangible assets		26,556			25,412
Amortization of deferred financing costs and debt discount		1,634			1,775
Deferred income taxes		6,850			(3,759	)
Gain on sale of Mexican land and building		(1,764	)		—
Non-cash write off of deferred financing costs		—			2,625
Non-cash asset write-downs described in Notes C and E		—			6,052
Non-cash trademark impairment loss described in Note F		3,600			—
Other non-cash, net		3,368			2,440
Changes in operating assets and liabilities
Accounts receivable		(39,106	)		(5,302	)
Inventories		3,802			13,875
Other current assets		(3,984	)		(703	)
Accounts payable		6,868			(14,009	)
Accrued expenses and other current liabilities		5,806			1,418
Other assets		(208	)		889
Due to Holdco		7,754			—
Other long-term liabilities		(6,237	)		531
Net cash provided by operating activities of continuing operations		37,866			35,315
Cash flows from investing activities of continuing operations
Proceeds from sale of Mexican land and building (Note E)		6,685			—
Acquisition of ASC Industries, Inc., net of cash acquired		—			(121,734	)
Proceeds from sale of discontinued operations, net of transaction costs and cash sold		2,202			36,300
Capital expenditures		(25,080	)		(16,279	)
Proceeds from sale of other property, plant and equipment		1,408			1,006
Net cash used in investing activities of continuing operations		(14,785	)		(100,707	)
Cash flows from financing activities of continuing operations
Issuances of debt		15,367			113,000
Debt repayments		(54,556	)		(34,538	)
Financing fees		—			(3,636	)
Shareholder’s equity contributions		—			8,515
Net cash (used in) provided by financing activities of continuing operations		(39,189	)		83,341
Discontinued operations
Net cash used in operating activities of discontinued operations		—			(298	)
Net cash used in investing activities of discontinued operations		—			(2,653	)
Effect of currency exchange rate change on cash of discontinued operations		—			137
Effect of currency exchange rate changes on cash		(19	)		78
Net (decrease) increase in cash and cash equivalents		(16,127	)		15,213
Cash and cash equivalents at beginning of year		31,523			26,182
Less cash and cash equivalents of discontinued operations at end of period		—			2,236
Cash and cash equivalents of continuing operations at end of period	$	15,396		$	39,159

The accompanying notes are an integral part of these statements.

5

United Components, Inc.

Condensed Consolidated Statements of Changes in Shareholder’s Equity (unaudited)
(in thousands)

								Accumulated
			Additional		Retained			Other			Total
	Common		Paid In		Earnings			Comprehensive			Shareholder’s			Comprehensive
	Stock		Capital		(Deficit)			Income (Loss)			Equity			Income (Loss)
Balance at January 1, 2006	$	—	$	263,636	$	17,546		$	(836	)	$	280,346
Additions to paid in capital				8,515								8,515
Recognition of stock based compensation expense				1,174								1,174
Comprehensive loss
Net loss						(12,306	)					(12,306	)	$	(12,306	)
Other comprehensive income
Interest rate swaps									199			199			199
Foreign currency adjustment									1,699			1,699			1,699
Minimum pension liability adjustment									598			598			598
Total comprehensive loss														$	(9,810	)
Balance at September 30, 2006	$	—	$	273,325	$	5,240		$	1,660		$	280,225
Balance at January 1, 2007	$	—	$	273,749	$	(26,433	)	$	(2,534	)	$	244,782
Effect of adopting FIN 48						(337	)					(337	)
Recognition of stock based compensation expense				2,837								2,837
Tax effect of exercise of Holdco stock options				471								471
Comprehensive income
Net income						25,634						25,634		$	25,634
Other comprehensive loss
Interest rate swaps									(361	)		(361	)		(361	)
Foreign currency adjustment									(35	)		(35	)		(35	)
Total comprehensive income														$	25,238
Balance at September 30, 2007	$	—	$	277,057	$	(1,136	)	$	(2,930	)	$	272,991

The accompanying notes are an integral part of these statements.

6

United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE A — GENERAL AND BASIS OF FINANCIAL STATEMENT PRESENTATION

General

United Components, Inc. (“UCI”) is an indirect wholly-owned subsidiary of UCI Holdco, Inc. (“Holdco”). Holdco and UCI are corporations formed at the direction of The Carlyle Group. At September 30, 2007, affiliates of The Carlyle Group owned 91.6% of Holdco’s common stock, and the remainder was owned by certain members of UCI’s senior management and board of directors. As of September 30, 2007, Holdco had $257.0 million of Floating Rate Senior PIK Notes ( the “Holdco Notes”) outstanding. While UCI has no direct obligation under the Holdco Notes, UCI is the sole source of cash generation for Holdco. The Holdco Notes are not recorded on UCI’s balance sheets and the related interest expense is not included in UCI’s income statements. See Note M.

On May 25, 2006, UCI acquired all of the capital stock of ASC Industries, Inc. and its subsidiaries (“ASC”). See Note B.

On June 30, 2006, UCI sold its driveline components operation and its specialty distribution operation. See Note D.

On November 30, 2006, UCI sold its lighting systems operation. See Note D.

UCI operates in one business segment through its subsidiaries. UCI manufactures and distributes vehicle parts primarily servicing the vehicle replacement parts market in North America and Europe.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of UCI, its wholly-owned subsidiaries and a 51% owned joint venture. All significant intercompany accounts and transactions have been eliminated. In these notes to the financial statements, the term “UCI” refers to UCI and its subsidiaries.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with 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 footnotes required by accounting principles generally accepted in the United States for complete financial statements.

The December 31, 2006 consolidated balance sheet has been derived from the audited financial statements included in UCI’s annual report on Form 10-K for the year ended December 31, 2006. The financial statements at September 30, 2007 and for the three and nine months ended September 30, 2007 and 2006 are unaudited. In the opinion of UCI, these financial statements include all adjustments necessary for a fair presentation of the financial position and results of operations for such periods.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of sales and expenses during the reporting period. The estimates and assumptions include estimates of the collectibility of accounts receivable and the realizability of inventory, goodwill and other intangible assets. They also include estimates of cost accruals, environmental liabilities, warranty and other product returns, insurance reserves, income taxes, pensions and other postretirement benefits and other factors. Management has exercised reasonableness in deriving these estimates; however, actual results could differ from these estimates.

These financial statements should be read in conjunction with the financial statements and notes thereto included in UCI’s annual report on Form 10-K for the year ended December 31, 2006.

Operating results for the three and nine months ended September 30, 2007 are not necessarily indicative of the results that may be expected for the year ended December 31, 2007.

7

United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE B — ACQUISITION OF ASC INDUSTRIES, INC.

On May 25, 2006 (the “ASC Acquisition Date”), UCI acquired all of the outstanding capital stock of ASC Industries, Inc. and its subsidiaries. This transaction is referred to herein as the “ASC Acquisition.”

The ASC Acquisition is accounted for under the purchase method of accounting and, accordingly, the results of operations of ASC have been included in UCI’s results beginning on the ASC Acquisition Date.

For all periods prior to April 1, 2007, the information included herein has been based on an allocation of the preliminary ASC Acquisition purchase price. This allocation was based on preliminary estimates of the fair value of the assets acquired and liabilities assumed. In the second quarter of 2007, the allocation of the ASC Acquisition purchase price was finalized. The impact of finalizing the allocation was not material.

The final allocation of the ASC Acquisition purchase price is as follows (in millions):

Cash	$	3.7
Accounts receivable		11.4
Inventory		40.8
Property, plant and equipment		27.3
Acquired intangible assets		18.6
Goodwill		74.9
Other assets		2.2
Accounts payable and accrued liabilities		(25.5	)
Notes payable		(10.0	)
Capital lease obligations		(1.2	)
Other liabilities		(5.0	)
Deferred income taxes		(9.8	)
	$	127.4

For information regarding the purchase price of the ASC Acquisition, the preliminary allocation of that purchase price and the financing for the ASC Acquisition, see UCI’s annual report on Form 10-K for the year ended December 31, 2006.

Pro Forma Information

The unaudited pro forma income statement information presented below is based on the historical income statements of UCI and ASC and has been adjusted on a pro forma basis to give effect to the ASC Acquisition and the related financing as if they had occurred on January 1, 2006. The pro forma adjustments give effect to (i) the allocation of the ASC Acquisition purchase price, (ii) UCI’s ASC Acquisition related financing, and (iii) the repayment by ASC of $81.6 million of ASC debt and other ASC obligations from the proceeds received in connection with the ASC Acquisition.

The unaudited pro forma financial information does not purport to represent what the results of operations would have been had the ASC Acquisition occurred as of the date indicated, or what results will be in future periods.

Pro forma financial information for the nine months ended September 30, 2006 is as follows (in millions):

	Nine Months ended
	September 30, 2006
Net sales	$	725.3
Operating income		45.9
Net income from continuing operations		4.1
Net income (loss)		(12.3	)

The pro forma results include the losses described in Notes C, E and M.

8

United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE C — COSTS OF INTEGRATION OF WATER PUMP OPERATIONS AND RESULTING ASSET IMPAIRMENT LOSSES

Before the ASC Acquisition, UCI manufactured and distributed water pumps for all market channels. UCI has completed integrating its pre-acquisition water pump operations with the water pump operations of ASC. All domestic water pump manufacturing has been combined at ASC’s manufacturing facilities. UCI’s pre-acquisition water pump facility was closed as of July 2007.

2006 Background Information

The water pump integration process began in June of 2006. In the full year 2006, UCI recorded a total of $10.9 million of expenses related to the integration, of which $3.9 million was recorded in “Cost of sales” and $7.0 million was recorded in “Costs of integration of water pump operations and resulting asset impairment losses.” These expenses included: (i) impairment of land, building and equipment, (ii) employee severance, (iii) write-off of component parts that were not usable when all production transitioned to the ASC product design, (iv) costs and operating inefficiencies caused by the wind-down of the pre-acquisition water pump facility, and (v) other costs directly related to completing the integration.

2007 Update

In 2007, UCI recorded additional pre-tax expenses and a gain related to the water pump integration. For the nine months ended September 30, 2007, $0.7 million of these costs are included in “Costs of integration of water pump operations and resulting asset impairment losses” and $4.3 million of these costs are included in “Cost of sales.” The 2007 expenses and gain are as follows (in millions):

	Three Months ended		Nine Months ended
	September 30, 2007		September 30, 2007
Severance	$	0.2	$	1.6
Pension plan curtailment gain		—		(0.9	)
Production wind-down costs		0.8		2.1
Other directly related costs		0.8		2.2
	$	1.8	$	5.0

The after-tax effect of these items is a net loss of $1.1 million and $3.1 million in the three and nine month periods of 2007, respectively.

The $2.1 million of production wind-down costs presented in the table above include inefficiencies and unabsorbed overhead resulting from extraordinarily low levels of production during the second quarter wind-down. By the end of the second quarter, UCI ceased production at the pre-ASC Acquisition water pump facility.

The $2.2 million of other costs presented in the table above include transportation expenses and other costs that were directly related to completing the integration.

The following table presents the December 31, 2006 and September 30, 2007 accrued severance and other accrued liabilities balances related to the water pump integration costs (in millions).

	Accrued			Other
	severance			liabilities
December 31, 2006 balance	$	1.4		$	0.2
Additional loss provision		1.6			—
Payments		(2.6	)		(0.2	)
September 30, 2007 balance	$	0.4		$	—

In addition to the $1.6 million of severance expense recorded in the first three quarters of 2007, $1.7 million was recorded in the full year 2006. Of the total $3.3 million of severance cost, $0.3 million was paid in 2006 and $2.6 million was paid in the first three quarters of 2007. The remainder will be paid in the fourth quarter of 2007.

9

United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

2006 Loss Provisions

In 2006, UCI recorded the following pre-tax expenses and losses (in millions):

	Three Months ended		Nine Months ended
	September 30, 2006		September 30, 2006
Land, building, & equipment impairment losses	$	—	$	4.3
Severance		—		0.3
Raw materials write-off		0.3		0.3
Other integration costs		0.5		0.5
	$	0.8	$	5.4

The after-tax effect of these losses was a loss of $0.5 million and $3.3 million in the three and nine month periods of 2006, respectively.

NOTE D — DISCONTINUED OPERATIONS

2006 Sales of Operations

On June 30, 2006, UCI sold its driveline components operation and its specialty distribution operation. These operations were sold to two separate buyers for a combined $33.4 million in cash, net of fees and expenses. In connection with the driveline components transaction, UCI retained $4.9 million of pension liabilities. In the second quarter of 2006, UCI recorded an $18.3 million after tax loss on the sale of these discontinued operations.

On November 30, 2006, UCI sold its lighting systems operation for $37.2 million in cash, net of fees and expenses. The final sale price was subject to post-closing adjustments related to working capital and the subsequent sale of a lighting systems building. In the third quarter of 2007, the final working capital amounts were settled favorably and the building was sold. Accordingly, UCI recorded an additional $2.7 million gain in the third quarter of 2007 on the sale of its lighting systems operation. In addition, the final sale price could be increased by up to $2.2 million if the lighting systems operation makes structural changes to its pension plan before March 2008, and if such changes result in a reduction in the actuarially determined deficit. The Company does not yet have sufficient information to determine the likelihood of this additional sale price increase occurring.

2006 Results of Discontinued Operations

The operating results of all three of the sold operations are presented as discontinued operations in the income statements for the three and nine months ended September 30, 2006. Net sales and income (loss) before income taxes for these discontinued operations is presented below (in millions):

	Three Months ended			Nine Months ended
	September 30, 2006			September 30, 2006
Net sales	$	14.1		$	113.2
Income (loss) before income taxes		(0.5	)		4.1

The pre-tax income (loss) amounts presented in the above table include deductions for allocated interest expense of $0.1 million and $0.3 million for the three and nine months ended September 30, 2006, respectively. Interest expense is allocated to discontinued operations in accordance with EITF Issue No. 87-24, which requires allocation of interest expense to discontinued operations to the extent UCI is required to repay debt as a result of a disposition transaction.

10

United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE E — COSTS OF CLOSING FACILITIES AND CONSOLIDATING OPERATIONS AND GAIN FROM SALE OF ASSETS

2006 Loss Provision

The following table summarizes the costs of closing facilities for the third quarter of 2006 and the nine months ended September 30, 2006 (in millions):

	Asset
	Write-downs		Severance		Other		Total
Third quarter of 2006 losses
Closure of Canadian facility	$	—	$	—	$	—	$	—
Closure of Mexican facility		—		—		0.8		0.8
	$	—	$	—	$	0.8	$	0.8
Nine months ended September 30, 2006 losses
Closure of Canadian facility	$	0.4	$	0.4	$	0.1	$	0.9
Closure of Mexican facility		1.0		2.0		2.4		5.4
	$	1.4	$	2.4	$	2.5	$	6.3

Closure of Canadian facility

In March 2006, UCI decided to close its Canadian facility, which manufactured and distributed mechanical fuel pumps. This production and distribution was transferred to UCI’s fuel pump operations in Fairfield, Illinois.

Closure activities began in the second quarter of 2006 and were completed in the third quarter of 2006. The severance and other costs were paid in the second and third quarters of 2006.

After tax, the combined loss for the above closure-related costs was $0.6 million.

Closure of Mexican facility

In April 2006, UCI announced its plan to close its Mexican filter manufacturing plant and transfer production to its Albion, Illinois filter manufacturing facility. The shutdown and transfer of production began in the second quarter and was, for the most part, completed by the end of the third quarter of 2006. The Mexican plant ceased operations in the third quarter of 2006.

In the third quarter of 2006, UCI incurred $0.8 million of pre-tax costs related to closing the Mexican plant and consolidating operations in Illinois. These costs were primarily professional fees and equipment dismantling and transportation costs.

In the nine months ended September 30, 2006, UCI recorded pre-tax losses of $5.4 million related to closing the Mexican plant and consolidating operations in Illinois. These losses included $2.0 million for severance costs, $1.0 million of non-cash equipment and inventory write-offs and $2.4 million of other cash costs, which were primarily for dismantling and transporting equipment and for professional fees.

After tax, the combined losses recorded in the nine months ended September 30, 2006 were $3.6 million.

2007 Update

In the first quarter of 2007, UCI sold the land and building and certain building improvements, which were formerly used by the Mexican manufacturing operation. The sale proceeds were $6.7 million, net of fees and expenses. The $4.5 million net book value of the land and building was classified as “Assets held for sale” in the December 31, 2006 balance sheet. The $0.4 million of building improvements were classified as “Property, plant and equipment, net.” In the first quarter of 2007, UCI recorded a $1.8 million pre-tax gain on the sale. Also, in the first half of 2007, UCI incurred $0.2 million of additional costs associated with the closure of the Mexican facility.

11

United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE F — TRADEMARK IMPAIRMENT LOSS

In the second quarter of 2007, UCI recognized a trademark impairment loss of $3.6 million. This non-cash loss was due to a customer’s decision to market a significant portion of UCI-supplied products under the customer’s own private label brand, instead of UCI’s brand. The customer’s decision to market using its own private label brand is not expected to affect sales of these products.

NOTE G — TERMINATION OF PAY-ON-SCAN PROGRAM

Until the second quarter of 2007, a portion of the products sold to AutoZone, Inc. (“AutoZone”) were sold under an AutoZone program called Pay-on-Scan. Under this program, UCI retained title to its products at AutoZone locations, and a sale was not recorded until an AutoZone customer purchased the product. In the second quarter of 2007, AutoZone and UCI terminated the Pay-on-Scan program for these UCI products. Accordingly, sales of these products are now recorded when the product is received at an AutoZone location.

As part of the termination of the Pay-on-Scan program, AutoZone purchased all of the products at its locations that were previously under the Pay-on-Scan program. In the second quarter of 2007, UCI recorded $12.1 million of sales for these products.

NOTE H — SALES OF RECEIVABLES

UCI has agreements to sell undivided interests in certain of its receivables to several factoring companies, which in turn have the right to sell an undivided interest to a financial institution or other third party. UCI enters into these agreements, at its discretion, when it determines that the cost of factoring is less than the cost of servicing its receivables with existing debt. Pursuant to these agreements, UCI sold $78.2 million and $31.4 million of receivables during the nine months ended September 30, 2007 and 2006, respectively. If receivables had not been factored, $48.7 million and $18.3 million of additional receivables would have been outstanding at September 30, 2007 and December 31, 2006, respectively.

The sales of receivables were accounted for as a sale in accordance with SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” The sold receivables were removed from the balance sheet at the time of the sales. The costs of the sales were an agent’s fee and a discount deducted by the factoring companies. These costs were $0.8 million and $2.0 million in the three and nine months ended September 30, 2007, respectively, and $0.3 million and $0.6 million in the three and nine months ended September 30, 2006, respectively. These costs are recorded in “Miscellaneous, net.”

NOTE I — INVENTORIES

The components of inventory are as follows (in millions):

	September 30,			December 31,
	2007			2006
Raw materials	$	52.4		$	47.2
Work in process		33.7			32.7
Finished products		86.0			97.8
Valuation reserves		(17.9	)		(19.7	)
	$	154.2		$	158.0

12

United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE J — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consists of the following (in millions):

	September 30,		December 31,
	2007		2006
Salaries and wages	$	3.0	$	2.9
Bonuses		5.2		7.5
Vacation pay		4.8		4.5
Product returns		27.5		28.6
Rebates, credits and discounts due customers		10.4		10.2
Insurance		10.5		10.2
Taxes payable		15.4		9.3
Interest		8.6		3.7
Other		18.2		22.1
	$	103.6	$	99.0

NOTE K — PRODUCT RETURNS LIABILITY

The liability for product returns is included in “Accrued expenses and other current liabilities.” This liability includes accruals for parts returned under warranty and for parts returned because of customer excess quantities. UCI provides warranties for its products’ performance. Warranty periods vary by part, but generally are either one year or indefinite. In addition to returns under warranty, UCI allows its customers to return quantities of parts that the customer determines to be in excess of its current needs. Customer rights to return excess quantities vary by customer and by product category. Generally, they are contractually limited to 3% to 5% of the customer’s purchases in the preceding year. In some cases, UCI does not have a contractual obligation to accept excess quantities. However, common practice for UCI and the industry is to accept periodic returns of excess quantities from on-going customers. If a customer elects to cease purchasing from UCI and change to another vendor, it is industry practice for the new vendor, and not UCI, to accept any returns of inventory previously sold.

The changes in UCI’s product returns liability are as follows (in millions):

	Nine Months ended September 30,
	2007			2006
Beginning of year	$	28.6		$	26.2
Addition due to ASC Acquisition		—			1.2
Cost of unsalvageable parts		(35.8	)		(37.5	)
Additional reductions to sales		34.7			34.7
End of period	$	27.5		$	24.6

NOTE L — PENSION

The following are the components of net periodic pension expense (in millions):

	Three Months ended September 30,						Nine Months ended September 30,
	2007			2006			2007			2006
Service cost	$	1.6		$	1.6		$	4.8		$	5.4
Interest cost		2.9			2.9			8.8			8.7
Expected return on plan assets		(3.5	)		(3.5	)		(10.5	)		(9.9	)
Amortization of prior service cost and unrecognized loss		—			0.1			0.1			0.4
Curtailment gain		—			—			(0.9	)		—
	$	1.0		$	1.1		$	2.3		$	4.6

As a result of closing one of UCI’s water pump operations in the second quarter of 2007 (see Note C), UCI recorded a $0.9 million curtailment gain. This gain is included in “Costs of integration of water pump operations and resulting asset impairment losses.”

13

United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE M — DEBT

UCI’s debt is summarized as follows (in millions):

	September 30,			December 31,
	2007			2006
Notes payable	$	10.0		$	8.6
Capital lease obligations		2.2			1.1
Term loan		225.0			265.0
Senior subordinated notes		230.0			230.0
Unamortized debt discount		(3.6	)		(4.1	)
		463.6			500.6
Less
Short-term borrowings		10.0			8.6
Current maturities		0.6			0.5
Long-term debt	$	453.0		$	491.5

In the three months ended March 31, 2007, UCI used cash on hand to voluntarily repay $40.0 million of its term loan. As a result of this voluntary early repayment, UCI recorded a $0.4 million accelerated write-off of deferred financing costs. This cost is included in “Interest expense, net” for the nine months ended September 30, 2007.

In connection with the ASC Acquisition, in May 2006, UCI entered into an Amended and Restated Credit Agreement, which replaced UCI’s previously existing senior credit facility, and provided for additional borrowing capacity of $113 million. In addition to new borrowings to finance a portion of the ASC Acquisition purchase price, UCI replaced the $217 million term loan that was outstanding under its previously existing senior credit facility with a term loan borrowing under the new credit facility. In May 2006, UCI recorded a $2.6 million loss to write off the unamortized deferred financing costs related to the previously outstanding debt, which was replaced by the borrowing under the new credit facility. This $2.6 million loss has been recorded as “Write-off of deferred financing costs” for the nine months ended September 30, 2006.

The debt set forth above does not include the Holdco Notes. While UCI has no direct obligation under the Holdco Notes, UCI is the sole source of cash generation for Holdco. Interest on the Holdco Notes is payable “in kind” through December 2011, so that Holdco has no cash interest payments until that date.

NOTE N — CONTINGENCIES

Environmental

UCI is subject to a variety of Federal, state, local and foreign environmental laws and regulations, including those governing the discharge of pollutants into the air or water, the management and disposal of hazardous substances or wastes and the cleanup of contaminated sites. UCI has been identified as a potentially responsible party for contamination at two sites. One of these sites is a former facility in Edison, New Jersey, where a state agency has ordered UCI to continue with the monitoring and investigation of chlorinated solvent contamination. UCI has informed the agency that this contamination was caused by another party at a neighboring facility and has initiated a lawsuit against that party for damages and to compel it to take responsibility for any further investigation or remediation. The second site is a previously owned site in Solano County, California, where UCI, at the request of the regional water board, is investigating and analyzing the nature and extent of the contamination and is conducting some remediation. Based on currently available information, management believes that the cost of the ultimate outcome of these environmental matters will not exceed the $1.9 million accrued at September 30, 2007 by a material amount, if at all. However, because all investigation and analysis has not yet been completed and because of the inherent uncertainty in such environmental matters, it is reasonably possible that the ultimate outcome of these matters could have a material adverse effect on results for a single quarter.

14

United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

Litigation

UCI is subject to various other contingencies, including routine legal proceedings and claims arising out of the normal course of business. These proceedings primarily involve commercial claims, product liability claims, personal injury claims and workers’ compensation claims. The outcome of these lawsuits, legal proceedings and claims cannot be predicted with certainty. Nevertheless, UCI believes that the outcome of any currently existing proceedings, even if determined adversely, would not have a material adverse effect on its financial condition or results of operations.

NOTE O — INCOME TAXES

Adoption of FIN 48

On January 1, 2007, UCI adopted the provisions of Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes.” The effect was immaterial to UCI’s financial statements.

As of the adoption date, UCI had tax effected unrecognized benefits of $3.2 million, of which $2.1 million, if recognized, would change the effective tax rate.

While most of UCI’s business is conducted within the United States, UCI also conducts business in several foreign countries. As a result, UCI and/or one or more of its subsidiaries files income tax returns in the U.S. federal tax jurisdiction and in many state and foreign tax jurisdictions. In the normal course of business, UCI is subject to examination by tax authorities in these tax jurisdictions. With few exceptions, UCI is not subject to examination by federal, state or foreign tax authorities for tax years ending on or before 2003. Other than routine inquiries, UCI and its subsidiaries are not currently under examination by tax authorities.

UCI expects the total unrecognized tax benefits to decline by approximately $0.6 million during the next 12 months. This decline is primarily due to the elimination of a temporary timing difference resulting from the passage of time. $0.2 million of this amount will impact the effective tax rate.

2006 effective income tax rates

In the three and nine month periods of 2006, the effective income tax rates for continuing operations were 56.4% and 50.1%, respectively. The differences from the statutory rate were primarily due to (i) the impact of certain foreign earnings, which are taxed both locally and in the United States, and (ii) the impact of certain foreign losses for which tax benefits were not recorded because of uncertain realizability.

Intercompany payable to Holdco

For federal and certain state tax purposes, UCI is included in the consolidated tax returns of Holdco. UCI’s stand-alone financial statements report UCI’s income tax liabilities and refunds receivable as income taxes payable and receivable until they are settled in cash with the taxing jurisdictions. To the extent UCI’s tax on its taxable income is offset by Holdco’s taxable losses, UCI records that portion of its tax expense as a payable to Holdco.

In the first nine months of 2007, Holdco’s taxable losses partially offset UCI’s current taxable income. Accordingly, UCI has recorded an $8.5 million payable to Holdco.

Net operating loss utilization

In 2007, UCI is electing to carry back its 2006 federal net operating loss to the 2004 tax year. Accordingly, to reflect the resulting refund receivable, $7.3 million is included in “Other current assets” at September 30, 2007. This amount was previously classified as a deferred tax asset.

15

United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE P — GEOGRAPHIC INFORMATION

UCI had the following net sales by country (in millions):

	Three Months ended				Nine Months ended
	September 30,				September 30,
	2007		2006		2007		2006
United States	$	193.4	$	203.4	$	615.6	$	583.3
Mexico		9.4		10.1		29.2		29.1
Canada		8.7		7.1		25.9		20.0
United Kingdom		3.4		3.9		10.5		9.4
Germany		1.0		0.8		3.2		3.0
Spain		0.7		0.8		2.9		2.7
France		1.9		1.7		6.0		6.1
Venezuela		1.7		1.9		5.0		3.9
Other		10.5		8.6		30.9		25.9
	$	230.7	$	238.3	$	729.2	$	683.4

Net long-lived assets by country are as follows (in millions):

	September 30,		December 31,
	2007		2006
United States	$	229.5	$	244.4
China		24.8		20.8
Mexico		11.9		12.4
Spain		2.8		3.2
Goodwill		241.5		239.8
	$	510.5	$	520.6

NOTE Q — STOCK OPTIONS

In the first quarter of 2007, the Compensation Committee of the Board of Directors accelerated the vesting of approximately 10% of the then outstanding stock options and also lowered the levels of profitability and cash generation required to achieve future accelerated vesting, including those for the 2007 year. This resulted in $0.2 million and $1.3 million more expense in the three and nine months ended September 30, 2007, respectively, than would have been incurred had the changes not been made. Earlier vesting affects when stock option expense is recognized, but does not affect the ultimate total expense. Consequently, accelerating the vesting results in recording more of the total expense this year and less in later years. Total expense related to stock options was $0.6 million and $2.8 million, respectively, for the three and nine months ended September 30, 2007, and $0.4 million and $1.2 million, respectively, for the three and nine months ended September 30, 2006.

In the first nine months of 2007, UCI employees exercised options to purchase 117,666 shares of Holdco common stock.

NOTE R — OTHER INFORMATION

At September 30, 2007, 1,000 shares of common stock were authorized, issued and outstanding. The par value of each share of common stock is $0.01 per share.

Cash payments for interest and income taxes (net of refunds) are as follows (in millions):

	Three Months ended					Nine Months ended
	September 30,					September 30,
	2007		2006			2007			2006
Interest	$	4.5	$	5.6		$	25.0		$	24.4
Income taxes (net of refunds)		0.8		(0.7	)		(0.2	)		(1.8	)

16

United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

The components of other comprehensive income (loss) for the nine months ended September 30, 2007 and 2006 are as follows (in millions):

	Nine Months ended September 30,
	2007						2006
	Pre-tax			After-tax			Pre-tax		After-tax
Interest rate swaps	$	(0.6	)	$	(0.4	)	$	0.3	$	0.2
Foreign currency adjustment		(0.2	)		—			2.6		1.7
Pension liability adjustment		—			—			1.0		0.6

In the nine months ended September 30, 2007, approximately $13 million of aluminum castings and other materials were purchased from related parties. The related parties are UCI’s joint venture partner in China and its affiliates. UCI owns 51% of this joint venture.

Minority interest income (loss) was $(0.1) million and $0.5 million for the three months ended September 30, 2007 and 2006, respectively, and $0.1 million and $0.7 million for the nine months ended September 30, 2007 and 2006, respectively. Minority interest income (loss) is recorded in “Miscellaneous, net.”

NOTE S — NEW ACCOUNTING PRONOUNCEMENTS

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This statement is effective for fiscal years beginning after November 15, 2007. UCI has not evaluated the impact of this statement on its financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Including an Amendment of SFAS No. 115.” SFAS No. 159 permits companies to choose to measure certain financial instruments and other items at fair value. This statement is effective for fiscal years beginning after November 15, 2007. UCI has not evaluated the impact of this statement on its financial statements.

17

United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE T — GUARANTOR AND NON-GUARANTOR FINANCIAL STATEMENTS

The senior credit facilities are secured by substantially all the assets of UCI. The senior subordinated notes (the “Notes”) are unsecured and rank equally in right of payment with any of UCI’s future senior subordinated indebtedness. The Notes are subordinated to indebtedness and other liabilities of UCI’s subsidiaries that are not guarantors of the Notes. The Notes and senior credit facility borrowings are guaranteed on a full and unconditional and joint and several basis by UCI’s domestic subsidiaries.

The condensed financial information that follows includes condensed financial statements for (a) UCI, which is the issuer of the Notes and borrower under the senior credit facilities, (b) the domestic subsidiaries, which guarantee the Notes and borrowings under the senior credit facilities (the “Guarantors”), (c) the foreign subsidiaries (the “Non-Guarantors”), and (d) consolidated UCI. Also included are consolidating entries, which principally consist of eliminations of investments in consolidated subsidiaries and intercompany balances and transactions. All goodwill is included in UCI’s balance sheet.

Separate financial statements of the Guarantor subsidiaries are not presented because their guarantees are full and unconditional and joint and several, and UCI believes separate financial statements and other disclosures regarding the Guarantor subsidiaries are not material to investors.

18

United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE T (continued)

Consolidating Condensed Balance Sheet
September 30, 2007
(in thousands)

	UCI											Non-
	Consolidated		Eliminations			UCI			Guarantors			Guarantors
Assets
Current assets
Cash and cash equivalents	$	15,396	$	—		$	12,934		$	(776	)	$	3,238
Accounts receivable, net		268,102		—			—			254,610			13,492
Inventories, net		154,222		—			—			134,471			19,751
Deferred tax assets		27,133		—			1,157			26,070			(94	)
Other current assets		33,594		—			14,423			10,154			9,017
Total current assets		498,447		—			28,514			424,529			45,404
Property, plant and equipment, net		167,816		—			1,830			126,457			39,529
Investment in subsidiaries				(242,003	)		229,412			12,591			—
Goodwill		241,461		—			241,461			—			—
Other intangible assets, net		85,712		—			12,300			73,412			—
Deferred financing costs, net		4,150		—			4,150			—			—
Pension and other assets		9,757		—			383			9,213			161
Assets held for sale		1,600		—			—			1,600			—
Total assets	$	1,008,943	$	(242,003	)	$	518,050		$	647,802		$	85,094
Liabilities and shareholder’s equity
Current liabilities
Accounts payable	$	99,588	$	—		$	509		$	83,357		$	15,722
Short-term borrowings		9,967		—			—			—			9,967
Current maturities of long-term debt		611		—			449			162			—
Accrued expenses and other current liabilities		103,551		—			28,591			70,663			4,297
Total current liabilities		213,717		—			29,549			154,182			29,986
Long-term debt, less current maturities		453,035		—			452,507			528			—
Pension and other postretirement liabilities		35,636		—			—			34,302			1,334
Deferred tax liabilities		19,956		—			16,049			2,121			1,786
Due to Holdco		7,754		—			7,754			—			—
Minority interest		3,380		—			—			—			3,380
Other long-term liabilities		2,474		—			—			1,833			641
Intercompany payables (receivables)				—			(260,800	)		247,100			13,700
Total shareholder’s equity		272,991		(242,003	)		272,991			207,736			34,267
Total liabilities and shareholder’s equity	$	1,008,943	$	(242,003	)	$	518,050		$	647,802		$	85,094

19

United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE T (continued)

Consolidating Condensed Balance Sheet
December 31, 2006
(in thousands)

	UCI											Non-
	Consolidated		Eliminations			UCI			Guarantors			Guarantors
Assets
Current assets
Cash and cash equivalents	$	31,523	$	—		$	30,212		$	(1,767	)	$	3,078
Accounts receivable, net		228,996		—			—			216,472			12,524
Inventories, net		158,024		—			—			139,973			18,051
Deferred tax assets		33,920		—			(658	)		34,029			549
Other current assets		29,389		—			2,583			18,380			8,426
Total current assets		481,852		—			32,137			407,087			42,628
Property, plant and equipment, net		164,621		—			199			132,153			32,269
Investment in subsidiaries				(169,432	)		152,960			16,472			—
Goodwill		239,835		—			239,835			—			—
Other intangible assets, net		95,354		—			14,267			81,087			—
Deferred financing costs, net		5,310		—			5,310			—			—
Pension and other assets		9,452		—			303			8,908			241
Assets held for sale		6,077		—			—			1,600			4,477
Total assets	$	1,002,501	$	(169,432	)	$	445,011		$	647,307		$	79,615
Liabilities and shareholder’s equity
Current liabilities
Accounts payable	$	92,720	$	—		$	2,866		$	76,578		$	13,276
Short-term borrowings		8,657		—			—			—			8,657
Current maturities of long-term debt		462		—			—			462			—
Accrued expenses and other current liabilities		99,039		—			14,093			81,169			3,777
Total current liabilities		200,878		—			16,959			158,209			25,710
Long-term debt, less current maturities		491,478		—			490,906			572			—
Pension and other postretirement liabilities		40,430		—			—			38,159			2,271
Deferred tax liabilities		17,350		—			12,552			2,174			2,624
Minority interest		3,738		—			—			—			3,738
Other long-term liabilities		3,845		—			—			3,845			—
Intercompany payables (receivables)				—			(320,188	)		317,588			2,600
Total shareholder’s equity		244,782		(169,432	)		244,782			126,760			42,672
Total liabilities and shareholder’s equity	$	1,002,501	$	(169,432	)	$	445,011		$	647,307		$	79,615

20

United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE T (continued)

Consolidating Condensed Income Statement
Three Months Ended September 30, 2007
(in thousands)

	UCI												Non-
	Consolidated			Eliminations			UCI			Guarantors			Guarantors
Net sales	$	230,742		$	(17,612	)	$	—		$	218,941		$	29,413
Cost of sales		177,185			(17,612	)		—			166,638			28,159
Gross profit		53,557			—			—			52,303			1,254
Operating (expense) income
Selling and warehousing		(15,092	)		—			(202	)		(14,292	)		(598	)
General and administrative		(10,790	)		—			(5,239	)		(4,727	)		(824	)
Amortization of acquired intangible assets		(1,694	)		—			—			(1,694	)		—
Costs of integration of water pump operations and resulting asset impairment losses		(222	)		—			—			(222	)		—
Operating income (loss)		25,759			—			(5,441	)		31,368			(168	)
Other (expense) income
Interest expense, net		(10,175	)		—			(10,040	)		20			(155	)
Intercompany interest					—			7,565			(7,314	)		(251	)
Management fee expense		(500	)		—			(500	)		—			—
Miscellaneous, net		(917	)		—			—			(797	)		(120	)
Income (loss) before income taxes		14,167			—			(8,416	)		23,277			(694	)
Income tax (expense) benefit		(5,772	)		—			3,133			(8,700	)		(205	)
Increase (decrease) before equity in earnings of subsidiaries		8,395			—			(5,283	)		14,577			(899	)
Equity in earnings of subsidiaries					(12,216	)		13,678			(1,462	)		—
Discontinued operations
Gain (loss) on sale of discontinued operations, net of tax		2,707			—			2,707			—			—
Net income (loss)	$	11,102		$	(12,216	)	$	11,102		$	13,115		$	(899	)

21

United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE T (continued)

Consolidating Condensed Income Statement
Three Months Ended September 30, 2006
(in thousands)

	UCI												Non-
	Consolidated			Eliminations			UCI			Guarantors			Guarantors
Net sales	$	238,298		$	(13,489	)	$	—		$	229,322		$	22,465
Cost of sales		193,173			(13,489	)		—			185,043			21,619
Gross profit		45,125			—			—			44,279			846
Operating (expense) income
Selling and warehousing		(14,946	)		—			(425	)		(13,429	)		(1,092	)
General and administrative		(9,670	)		—			(3,044	)		(5,092	)		(1,534	)
Amortization of acquired intangible assets		(1,875	)		—			—			(1,875	)		—
Costs of integration of water pump operations and resulting asset impairment losses		(829	)		—			—			(829	)		—
Costs of closing facilities and consolidating operations		(813	)		—			—			(813	)		—
Operating income (loss)		16,992			—			(3,469	)		22,241			(1,780	)
Other (expense) income
Interest expense, net		(11,804	)		—			(11,378	)		(278	)		(148	)
Intercompany interest					—			12,728			(12,046	)		(682	)
Management fee expense		(500	)		—			(500	)		—			—
Miscellaneous, net		147			—			—			155			(8	)
Income (loss) before income taxes		4,835			—			(2,619	)		10,072			(2,618	)
Income tax benefit (expense)		(2,727	)		—			2,560			(3,734	)		(1,553	)
Decrease (increase) from continuing operations before equity in earnings of subsidiaries		2,108			—			(59	)		6,338			(4,171	)
Equity in earnings of subsidiaries					2,691			2,121			(4,812	)		—
Discontinued operations:
Net income (loss) from discontinued operations, net of tax		(46	)		—			—			—			(46	)
Net (loss) income	$	2,062		$	2,691		$	2,062		$	1,526		$	(4,217	)

22

United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE T (continued)

Consolidating Condensed Income Statement
Nine Months Ended September 30, 2007
(in thousands)

	UCI												Non-
	Consolidated			Eliminations			UCI			Guarantors			Guarantors
Net sales	$	729,159		$	(46,080	)	$	—		$	690,507		$	84,732
Cost of sales		566,666			(46,080	)		—			532,719			80,027
Gross profit		162,493			—			—			157,788			4,705
Operating (expense) income
Selling and warehousing		(46,047	)		—			(574	)		(42,342	)		(3,131	)
General and administrative		(36,900	)		—			(13,809	)		(19,110	)		(3,981	)
Amortization of acquired intangible assets		(5,303	)		—			—			(5,303	)		—
Costs of integration of water pump operations		(696	)		—			—			(696	)		—
Costs of closing facilities and consolidating operations and gain from sale of assets		1,546			—			—			—			1,546
Trademark impairment loss		(3,600	)		—			—			(3,600	)		—
Operating income (loss)		71,493			—			(14,383	)		86,737			(861	)
Other (expense) income
Interest expense, net		(31,038	)		—			(30,564	)		(38	)		(436	)
Intercompany interest					—			23,565			(22,779	)		(786	)
Management fee expense		(1,500	)		—			(1,500	)		—			—
Miscellaneous, net		(1,972	)		—			—			(2,028	)		56
Income (loss) before income taxes		36,983			—			(22,882	)		61,892			(2,027	)
Income tax (expense) benefit		(14,056	)		—			8,428			(23,101	)		617
Increase (decrease) from continuing operations before equity in earnings of subsidiaries		22,927			—			(14,454	)		38,791			(1.410	)
Equity in earnings of subsidiaries					(34,880	)		37,381			(2,501	)		—
Discontinued operations Gain (loss) on sale of discontinued operations, net of tax		2,707			—			2,707			—			—
Net income (loss)	$	25,634		$	(34,880	)	$	25,634		$	36,290		$	(1,410	)

23

United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE T (continued)

Consolidating Condensed Income Statement
Nine Months Ended September 30, 2006
(in thousands)

	UCI												Non-
	Consolidated			Eliminations			UCI			Guarantors			Guarantors
Net sales	$	683,371		$	(24,593	)	$	—		$	646,538		$	61,426
Cost of sales		546,321			(24,593	)		—			516,694			54,220
Gross profit		137,050			—			—			129,844			7,206
Operating (expense) income
Selling and warehousing		(45,401	)		—			(1,100	)		(40,742	)		(3,559	)
General and administrative		(31,204	)		—			(10,598	)		(16,099	)		(4,507	)
Amortization of acquired intangible assets		(4,804	)		—			—			(4,804	)		—
Costs of integration of water pump operations and resulting asset impairment losses		(5,429	)		—			—			(5,429	)		—
Costs of closing facilities and consolidating operations		(6,275	)		—			—			(5,021	)		(1,254	)
Operating income (loss)		43,937			—			(11,698	)		57,749			(2,114	)
Other (expense) income
Interest expense, net		(31,743	)		—			(31,526	)		(20	)		(197	)
Intercompany interest					—			33,052			(31,240	)		(1,812	)
Write-off of deferred financing costs		(2,625	)		—			(2,625	)		—			—
Management fee expense		(1,500	)		—			(1,500	)		—			—
Miscellaneous, net		92			—			—			92			—
Income (loss) before income taxes		8,161			—			(14,297	)		26,581			(4,123	)
Income tax (expense) benefit		(4,090	)		—			5,759			(9,695	)		(154	)
Increase (decrease) from continuing operations before equity in earnings of subsidiaries		4,071			—			(8,538	)		16,886			(4,277	)
Equity in earnings of subsidiaries					(8,855	)		14,504			(5,649	)		—
Discontinued operations
Net income from discontinued operations, net of tax		1,895			—			—			1,509			386
Loss on sale of discontinued operations, net of tax		(18,272	)		—			(18,272	)		—			—
Net income (loss)	$	(12,306	)	$	(8,855	)	$	(12,306	)	$	12,746		$	(3,891	)

24

United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE T (continued)

Consolidating Condensed Statement of Cash Flows
Nine Months Ended September 30, 2007
(in thousands)

	UCI											Non-
	Consolidated			Eliminations		UCI			Guarantors			Guarantors
Net cash provided by (used in) operating activities	$	37,866		$	—	$	20,691		$	15,021		$	2,154
Cash flows from investing activities
Proceeds from sale of Mexican land and building		6,685			—		—			—			6,685
Proceeds from sale of discontinued operations, net of transaction costs and cash sold		2,202			—		2,202			—			—
Capital expenditures		(25,080	)		—		(16	)		(14,652	)		(10,412	)
Proceeds from sale of other property, plant and equipment		1,408			—		—			966			442
Net cash (used in) provided by investing activities		(14,785	)		—		2,186			(13,686	)		(3,285	)
Cash flows from financing activities
Issuances of debt		15,367			—		—			—			15,367
Debt repayments		(54,556	)		—		(40,155	)		(344	)		(14,057	)
Net cash (used in) provided by financing activities		(39,189	)		—		(40,155	)		(344	)		1,310
Effect of currency exchange rate changes on cash		(19	)		—		—			—			(19	)
Net (decrease) increase in cash and cash equivalents		(16,127	)		—		(17,278	)		991			160
Cash and cash equivalents at beginning of year		31,523			—		30,212			(1,767	)		3,078
Cash and cash equivalents at end of period	$	15,396		$	—	$	12,934		$	(776	)	$	3,238

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United Components, Inc.

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE T (continued)

Consolidating Condensed Statement of Cash Flows
Nine Months Ended September 30, 2006
(in thousands)

	UCI											Non-
	Consolidated			Eliminations		UCI			Guarantors			Guarantors
Net cash provided by (used in) operating activities of continuing operations	$	35,315		$	—	$	15,609		$	10,493		$	9,213
Cash flows from investing activities of continuing operations
Acquisition of ASC Industries, Inc., net of cash acquired		(121,734	)		—		(121,734	)		—			—
Proceeds from sale of discontinued operations, net of transaction costs and cash sold		36,300			—		36,300			—			—
Capital expenditures		(16,279	)		—		(2,300	)		(11,130	)		(2,849	)
Proceeds from sale of other property, plant and equipment		1,006			—		—			814			192
Net cash used in investing activities of continuing operations		(100,707	)		—		(87,734	)		(10,316	)		(2,657	)
Cash flows from financing activities of continuing operations
Issuances of debt		113,000			—		113,000			—			—
Debt repayments		(34,538	)		—		(34,435	)		(103	)		—
Financing fees		(3,636	)		—		(3,636	)		—			—
Shareholder’s equity contributions		8,515			—		8,515			—			—
Net cash provided by (used in) financing activities of continuing operations		83,341			—		83,444			(103	)		—
Discontinued operations
Net cash provided by operating activities of discontinued operations		(298	)		—		—			369			(667	)
Net cash used in investing activities of discontinued operations		(2,653	)		—		—			(806	)		(1,847	)
Effect of currency exchange rate change on cash of discontinued operations		137			—		—			—			137
Effect of currency exchange rate changes on cash		78			—		—			—			78
Net increase in cash and cash equivalents		15,213			—		11,319			(363	)		4,257
Cash and cash equivalents at beginning of year		26,182			—		20,029			1,307			4,846
Less cash and cash equivalents of discontinued operations at end of period		2,236			—		—			—			2,236
Cash and cash equivalents at end of period	$	39,159		$	—	$	31,348		$	944		$	6,867

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

In this periodic report on Form 10-Q, United Components, Inc. makes some “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. These statements are included throughout this report on Form 10-Q and relate to analyses and other information based on forecasts of future results and estimates of amounts not yet determinable. These forward-looking statements are identified by their use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will,” “continue,” and other similar terms and phrases, including references to assumptions.

These forward-looking statements are based on UCI’s expectations and beliefs concerning future events affecting UCI. They are subject to uncertainties and factors relating to UCI’s operations and business environment, all of which are difficult to predict and many of which are beyond UCI’s control. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct. They can be affected by inaccurate assumptions we make or by known or unknown risks and uncertainties. Many factors mentioned in our discussion in this report will be important in determining future results. UCI cautions the reader that these uncertainties and factors, including those discussed in Item 1A of UCI’s 2006 annual report on Form 10-K, Item 1A in this report and in other SEC filings, could cause UCI’s actual results to differ materially from those stated in the forward-looking statements.

Although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, we can give no assurance that we will attain these expectations or that any deviations will not be material. Except as otherwise required by the Federal securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained in this periodic report on Form 10-Q to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Overview

Sales. We are among North America’s largest and most diversified companies servicing the vehicle replacement parts market, or the aftermarket. We supply a broad range of filtration products, fuel and cooling systems, and engine management systems to the automotive, trucking, marine, mining, construction, agricultural and industrial vehicle markets. We estimate that about 80% of our net sales in 2006 were made in the aftermarket, to a customer base that includes some of the largest and fastest growing companies servicing the aftermarket. The aftermarket has grown at an average annual rate of approximately 3.7% from 2000 through 2006. We believe that, while growth rates may vary, this trend will generally continue, at least in the near term. We believe we are well positioned to participate in that growth.

Because most of our sales are to the aftermarket, we believe that our sales are primarily driven by the number of vehicles on the road, the average age of those vehicles, the average number of miles driven per year, the mix of light trucks to passenger cars on the road and the relative strength of our sales channels. Historically, our sales have not been materially adversely affected by market cyclicality, as we believe that our aftermarket sales are less dependent on economic conditions than our sales to OEMs, due to the non-discretionary nature of vehicle maintenance and repair.

Management believes that UCI has leading market positions in our primary product lines. We continue to expand our product and service offerings to meet the needs of our customers. We believe that a key competitive advantage is that we offer one of the most comprehensive lines of products in the vehicle replacement parts market, consisting of over 39,000 parts. This product breadth, along with our extensive manufacturing and distribution capabilities, product innovation, and reputation for quality and service, makes us a leader in our industry.

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However, it is also important to note that in 2006 and 2005, approximately 24% of our total net sales were derived from our business with AutoZone. Our failure to maintain a healthy relationship with AutoZone stores would result in a significant decrease in our net sales. Even if we maintain our relationship, this sales concentration with one customer increases the potential impact to our business that could result from any changes in the economic terms of this relationship. Historically, we sold a small number of products under an AutoZone program called Pay-on-Scan. Under this program, we retained title to the product at AutoZone locations, and we recorded sales for the product when an AutoZone customer purchased it. In the second quarter of 2007, AutoZone and UCI terminated the Pay-on-Scan program for these products. Accordingly, sales of these products are now recorded when received by AutoZone. We do not expect this change to have a material effect on our on-going financial results. As part of the termination of the Pay-on-Scan program, AutoZone purchased all of the products at its locations that were previously under the Pay-on-Scan program. In the second quarter of 2007, we recorded $12.1 million of sales for these products.

Cost of sales. Cost of sales includes all costs of manufacturing required to bring a product to a ready-for-sale condition. Such costs include direct and indirect materials (net of vendor consideration), direct and indirect labor costs (including pension, postretirement and other fringe benefits), supplies, utilities, freight, depreciation, insurance, information technology costs and other costs. Cost of sales also includes all costs to procure, package and ship products that we purchase and resell. The two largest components of our cost of sales are labor and steel.

Since early in 2004, global demand for steel has been high and has resulted in supplier-imposed price increases and/or surcharges for this raw material. While we have been, and expect to continue to be, able to obtain sufficient quantities to satisfy our needs, we have been required to pay significantly higher prices for the material. In 2005 and into the beginning of 2006, the prices UCI paid for steel stabilized. However, the cost of certain types of steel used by UCI increased again in the third quarter of 2006. It is uncertain whether this trend will continue. We have implemented price increases on certain products with high steel content, but these existing price increases have not been sufficient to offset all of the steel cost increases. The higher cost of steel, net of UCI’s price increases, adversely affected pre-tax income by approximately $2.5 million in 2005 compared to 2004, and $0.5 million in 2006 compared to 2005. The impact of higher steel prices, net of our price increases, adversely affected pre-tax income by approximately $1.0 million and $2.3 million in the three and nine months ended September 30, 2007, respectively, compared to the corresponding periods of 2006. The impact of steel costs, net of our price increases, is forecasted to be approximately $2.3 million unfavorable for the full year 2007 compared to 2006. This forecast is based on assumptions regarding the future cost of steel and our ability to increase selling prices on products with high steel content. Actual events could vary significantly from our assumptions. Consequently, the actual effect of higher steel costs could be significantly different than our forecast.

Selling and warehousing expenses. Selling and warehousing expenses primarily include sales and marketing, warehousing and distribution costs. Our major cost elements include salaries and wages, pension and fringe benefits, depreciation, advertising and information technology costs.

General and administrative expenses. General and administrative expenses primarily include executive, accounting and administrative personnel salaries and fringe benefits, professional fees, pension benefits, insurance, provision for doubtful accounts, rent and information technology costs.

Recent Developments

On March 14, 2007, Charles T. Dickson resigned as Executive Vice President and Chief Financial Officer and as a member of the Board of Directors of UCI. His resignation was effective as of March 30, 2007. David Barron served as acting Chief Financial Officer from March 30, 2007 until June 11, 2007, when Daniel J. Johnston was elected as Executive Vice President and Chief Financial Officer. Mr. Johnston had been the Vice President and Chief Financial Officer of Solae, LLC, a manufacturer of soy-based food ingredients, since 2006. From 1994 to 2005, he was employed by United Industries Corporation, a manufacturer of consumer packaged goods, most recently as Executive Vice President and Chief Financial Officer from 2001 to 2005.

Critical Accounting Policies and Estimates

The methods, estimates and judgments we use in applying our most critical accounting policies have a significant impact on the results we report in our financial statements. We evaluate our estimates and judgments on an on-going basis. We base our estimates on historical experience and on assumptions that we believe to be reasonable under the circumstances. Our experience and assumptions form the basis for our judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may vary from what we anticipate, and different assumptions or estimates about the future could change our reported results.

28

We believe the following accounting policies are the most critical in that they significantly affect our financial statements, and they require our most significant estimates and complex judgments.

Inventory. We record inventory at the lower of cost or market. Cost is principally determined using standard cost, which approximates the first-in, first-out (FIFO) method. Estimated market value is based on assumptions for future demand and related pricing. If actual market conditions are less favorable than those projected by management, reductions in the value of inventory may be required.

Revenue recognition. We record sales when title transfers to the customer, the sale price is fixed and determinable, and the collection of the related accounts receivable is reasonably assured. In the case of sales to the aftermarket, UCI recognizes revenue when these conditions are met for its direct customers, which are the aftermarket retailers and distributors.

Where we have sales rebate programs with some of our customers, we estimate amounts due under these sales rebate programs when the sales are recorded. Net sales relating to any particular shipment are based upon the amounts invoiced for the shipped goods less estimated future rebate payments. These estimates are based upon our historical experience, current trends and UCI’s expectations regarding future experience. Revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known.

Additionally, we have agreements with our customers that provide for sales discounts, marketing allowances, return allowances and performance incentives. Any discount, allowance or incentive is treated as a reduction to sales, based on estimates of the criteria that give rise to the discount, allowance or incentive, such as sales volume and marketing spending. We routinely review these criteria and our estimating process and make adjustments as facts and circumstances change. Historically, we have not found material differences between our estimates and actual results.

In order to obtain exclusive contracts with certain customers, we may incur up-front cost or assume the cost of product return liabilities. These costs are capitalized and amortized over the life of the contract. The amortized amounts are recorded as a reduction of sales.

Product returns. Credits for parts returned under warranty and parts returned because of customer excess quantities are estimated and recorded at the time of the related sales. These estimates are based on historical experience, current trends and UCI’s expectations regarding future experience. Revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known. Our customers have the right, in varying degrees, to return excess quantities of product. Any significant increase in the amount of product returns above historical levels could have a material adverse effect on our financial results.

Impairment of intangible assets and tangible fixed assets. Our goodwill and other intangible assets with indefinite lives are held at historical cost. Our other intangible assets with finite lives and tangible fixed assets are held at historical cost, net of amortization and depreciation. We periodically evaluate the realizability of our intangible assets. We also perform a review of these intangible assets and tangible fixed assets if an indicator of impairment, such as an operating loss or a significant adverse change in the business or market place, exists. If we determine that the historical carrying value of any of these assets has been impaired, we record the amount of the impairment as a charge against income. In the second quarter of 2007, UCI recorded a $3.6 million trademark impairment loss. See Note F to the financial statements included in this Form 10-Q.

Tests for impairment involve management’s estimates of future cash flows. Such estimates require numerous assumptions including, but not limited to, assumptions regarding future economic and market conditions, competition, customer relations, pricing, raw material costs, production costs, selling, general and administrative costs, and income and other taxes. These estimates require judgment and are, by their nature, subjective.

Retirement benefits. Pension obligations are actuarially determined and are affected by assumptions including discount rate, life expectancy, annual compensation increases and the expected rate of return on plan assets. Changes in the discount rate, and differences between actual results and assumptions, will affect the amount of pension expense we recognize in future periods.

Postretirement health obligations are actuarially determined and are based on assumptions including discount rate, life expectancy and health care cost trends. Changes in the discount rate, and differences between actual results and assumptions, will affect the amount of expense we recognize in future periods. A one percent increase or decrease in the assumed health care cost trends would result in a $48,000 annual increase and a $41,000 annual decrease in postretirement health costs, respectively.

29

Insurance reserves. Our insurance for workers’ compensation, automobile, product and general liability include high deductibles for which we are responsible. Deductibles for which we are responsible are recorded in accrued expenses. Estimates of such losses involve substantial uncertainties including litigation trends, the severity of reported claims, and incurred but not yet reported claims. External actuaries are used to assist us in estimating these losses.

Environmental expenditures. Our expenditures for environmental matters fall into two categories. The first category is routine compliance with applicable laws and regulations related to the protection of the environment. The costs of such compliance are based on actual charges and do not require significant estimates.

The second category of expenditures is for matters related to investigation and remediation of contaminated sites. The impact of this type of expenditure requires significant estimates by management. The estimated cost of the ultimate outcome of these matters is included as a liability in UCI’s September 30, 2007 balance sheet. This estimate is based on all currently available information, including input from outside legal and environmental professionals, and numerous assumptions. Management believes that the ultimate outcome of these matters will not exceed the $1.9 million accrued at September 30, 2007 by a material amount, if at all. However, because all investigation and site analysis has not yet been completed and because of the inherent uncertainty in such environmental matters, there can be no assurance that the ultimate outcome of these matters will not be significantly different than our estimates.

Acquisition of ASC Industries, Inc. On May 25, 2006, UCI acquired ASC Industries, Inc. The results of ASC have been included in UCI’s results since that date. For all periods prior to April 1, 2007, the information included herein has been based on a preliminary allocation of the preliminary ASC Acquisition purchase price. This allocation was based on preliminary estimates of the fair value of the assets acquired and liabilities assumed. In the second quarter of 2007, the allocation of the ASC Acquisition purchase price was finalized. The impact of finalizing the allocation was not material.

30

Results of Operations

The following table is UCI’s unaudited condensed consolidated income statements for the three and nine months ended September 30, 2007 and 2006. The amounts are presented in thousands of dollars.

	Three Months ended September 30,						Nine Months ended September 30,
	2007			2006			2007			2006
Net sales	$	230,742		$	238,298		$	729,159		$	683,371
Cost of sales		177,185			193,173			566,666			546,321
Gross profit		53,557			45,125			162,493			137,050
Operating (expense) income
Selling and warehousing		(15,092	)		(14,946	)		(46,047	)		(45,401	)
General and administrative		(10,790	)		(9,670	)		(36,900	)		(31,204	)
Amortization of acquired intangible assets		(1,694	)		(1,875	)		(5,303	)		(4,804	)
Costs of integration of water pump operations and resulting asset impairment losses		(222	)		(829	)		(696	)		(5,429	)
Costs of closing facilities and consolidating operations and gain from sale of assets		—			(813	)		1,546			(6,275	)
Trademark impairment loss		—			—			(3,600	)		—
Operating income		25,759			16,992			71,493			43,937
Other (expense) income
Interest expense, net		(10,175	)		(11,804	)		(31,038	)		(31,743	)
Write-off of deferred financing costs		—			—			—			(2,625	)
Management fee expense		(500	)		(500	)		(1,500	)		(1,500	)
Miscellaneous, net		(917	)		147			(1,972	)		92
Income before income taxes		14,167			4,835			36,983			8,161
Income tax expense		(5,772	)		(2,727	)		(14,056	)		(4,090	)
Net income from continuing operations		8,395			2,108			22,927			4,071
Discontinued operations
Net income (loss) from discontinued operations, net of tax		—			(46	)		—			1,895
Gain (loss) on sale of discontinued operations, net of tax		2,707			—			2,707			(18,272	)
		2,707			(46	)		2,707			(16,377	)
Net income (loss)	$	11,102		$	2,062		$	25,634		$	(12,306	)

Acquisition and Sales of Operations

On May 25, 2006, UCI acquired ASC. On June 30, 2006, UCI sold its driveline components operation and its specialty distribution operation. On November 30, 2006, UCI sold its lighting systems operation. For information regarding these transactions, see Notes B and D to the financial statements included in this Form 10-Q.

The amounts presented in the table above and discussed below include the results of ASC from the May 25, 2006 acquisition date (the “ASC Acquisition Date”).

The results of the driveline components, the specialty distribution and the lighting systems operations are reported as discontinued operations in the table above. Except where specifically referred to as discontinued operations, the amounts and comparisons discussed below address only continuing operations and, therefore, exclude the results of the three operations that were sold.

31

Three Months Ended September 30, 2007 compared with the Three Months Ended September 30, 2006

Net sales. Net sales decreased $7.6 million, or 3.2%, to $230.7 million in the third quarter of 2007 compared to $238.3 million in the third quarter of 2006. This decrease includes lower sales to the retail, OEM, traditional and heavy duty channels in the 2007 quarter, partially offset by higher sales to the original equipment service channel.

Gross profit. Gross profit, as reported, was $53.6 million for the 2007 quarter and $45.1 million for the 2006 quarter. Both years included special items. The 2007 quarter included $1.6 million of water pump integration costs. The 2006 quarter included $5.9 million of non-cash ASC Acquisition-related charges, which are non-recurring after 2006. The 2006 quarter also includes $0.7 million of up-front costs to obtain new business.

The $5.9 million non-cash ASC Acquisition-related charges in the 2006 quarter are the result of writing up ASC inventory from cost to market value as required by generally accepted accounting principles in connection with the allocation of the ASC Acquisition purchase price. When the written-up inventory was sold, the higher-valued inventory was charged to cost of sales, thereby decreasing gross profit. If these 2006 sales were of inventory carried at cost, rather than written-up market value, 2006 gross profit would have been $5.9 million higher.

The $1.6 million of water pump integration costs in the 2007 quarter relate to the closing of our previously existing water pump facility and transferring production to ASC. The costs include expenses and operating inefficiencies incurred in connection with the wind-down of our previously existing facility. (See Note C to the financial statements included in this Form 10-Q for more information regarding our water pump integration.)

Excluding the special items, adjusted gross profit increased to $55.2 million in the 2007 quarter from $51.7 million in the 2006 quarter, and the related gross margin percentage increased to 23.9% in 2007 from 21.7% in 2006.

The 2007 gross profit was favorably impacted by lower warranty expense in 2007 and benefits from our facilities consolidations and other manufacturing cost reduction initiatives. These benefits were partially offset by lower sales volume and inflation-driven wage increases.

Selling and warehousing expenses. Selling and warehousing expenses were $15.1 million in the 2007 quarter, $0.2 million higher than the 2006 quarter. The 2007 increase is primarily due to the effects of inflation on employee-related and other operating costs. Selling and warehousing expenses were 6.5% of sales in the 2007 quarter and 6.3% of sales in the 2006 quarter.

General and administrative expenses. General and administrative expenses were $10.8 million in the 2007 quarter, $1.1 million higher than the 2006 quarter. The 2007 quarter includes (i) inflation-driven cost increases, (ii) $0.4 million of costs incurred in connection with the establishment of two new factories in China, and (iii) $0.2 million higher employee stock option based compensation expense.

Costs of integration of water pump operations and resulting asset impairment losses. See Note C to the financial statements included in this Form 10-Q.

Costs of closing facilities and consolidating operations and gain from sale of assets. See Note E to the financial statements included in this Form 10-Q.

Interest expense, net. Net interest expense was $1.6 million lower in the third quarter of 2007 compared to the third quarter of 2006. This decrease was due to lower debt levels, which more than offset the adverse effect of higher interest rates in 2007.

Income tax expense. Income tax expense in the 2007 quarter was $3.0 million higher than in the 2006 quarter, primarily due to higher pre-tax income in the 2007 quarter. In the 2006 quarter, the effective tax rate was 56.4%. The difference from the statutory rate was primarily due to (i) the impact of certain foreign earnings, which are taxed both locally and in the United States, and (ii) the impact of certain foreign losses for which tax benefits were not recorded because of uncertain realizability.

Net income from continuing operations. Due to the factors described above, we reported net income from continuing operations of $8.4 million for the third quarter of 2007 and net income of $2.1 million for the third quarter of 2006.

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Gain (loss) on sale of discontinued operations, net of tax. See Note D to the financial statements included in this Form 10-Q.

Net income (loss). Due to the factors described above, we reported net income of $11.1 million in the 2007 quarter compared to net income of $2.1 million in the 2006 quarter.

Nine Months Ended September 30, 2007 compared with the Nine Months Ended September 30, 2006

Net sales. Net sales increased $45.8 million, or 6.7%, to $729.2 million in the first three quarters of 2007 compared to $683.4 million in the first three quarters of 2006. $50.3 million of the increase was due to the inclusion of ASC’s results for the entire 2007 period, whereas the 2006 period included ASC’s results only for the period after the ASC Acquisition Date. The 2007 ASC sales included $12.1 million of sales to AutoZone in connection with the termination of the Pay-on-Scan program for certain UCI products (described in the “Overview” section of this Management’s Discussion and Analysis). Both the 2007 and 2006 periods included the effects of obtaining new business. The effect of obtaining new business reduced sales in the 2007 period by $6.7 million and increased sales by approximately $4.0 million in the 2006 period. The $6.7 million reduction in the 2007 period was due to accepting returns of the inventory of our customer’s previous supplier, and the $4.0 million increase in the 2006 period was due to the initial stocking of an additional product line at an existing customer.

Excluding the impact of including ASC’s results for the entire period in 2007, versus only part of the period in 2006, and excluding the special effects of obtaining new business from both periods, sales were 0.9% higher in 2007 compared to 2006. This 0.9% increase includes higher sales to the retail, heavy duty and original equipment service channels in the 2007 period, partially offset by lower sales to the traditional and OEM channels.

Gross profit. Gross profit, as reported, was $162.5 million for the first three quarters of 2007 and $137.1 million for the first three quarters of 2006. Both years included special items. The 2007 period included $5.1 million of water pump integration costs. The 2006 period included $8.1 million of non-cash ASC Acquisition-related charges, which are non-recurring after 2006. Both periods included the gross margin effects of obtaining the new business discussed above in “Net sales,” a $4.4 million cost in 2007 and a $0.7 million benefit in 2006. The 2006 period also includes $1.5 million of up-front costs to obtain other new business.

The $8.1 million non-cash ASC Acquisition-related charges in the 2006 period are the result of writing up ASC inventory from cost to market value as required by generally accepted accounting principles in connection with the allocation of the ASC Acquisition purchase price. When the written-up inventory was sold, the higher-valued inventory was charged to cost of sales, thereby decreasing gross profit. If these 2006 sales were of inventory carried at cost, rather than written-up market value, 2006 gross profit would have been $8.1 million higher.

The $5.1 million of water pump integration costs in the 2007 period relate to the closing of our previously existing water pump facility and transferring production to ASC. The costs include $4.3 million of expenses and operating inefficiencies in connection with the wind-down of our previously existing facility and $0.8 million of costs incurred to minimize the write-off of component parts that will not be usable when all production is transitioned to the ASC product design. (See Note C to the financial statements included in this Form 10-Q for more information regarding our water pump integration.)

Excluding the special items, adjusted gross profit increased to $172.0 million in the first three quarters of 2007 from $146.0 million in 2006, and the related gross margin percentage increased to 23.4% in 2007 from 21.5% in 2006. (The gross margin percentages are based on sales before the effects of obtaining new business, which are discussed in the net sales comparison above.)

Higher sales volume in 2007 was a major factor in our gross profit increase. The 2007 gross profit was also favorably impacted by lower warranty expense in 2007 and benefits from our facilities consolidations and other manufacturing cost reduction initiatives. These benefits were partially offset by the cost of inflation-driven wage increases and higher raw material costs.

Selling and warehousing expenses. Selling and warehousing expenses were $46.0 million in the first three quarters of 2007, $0.6 million higher than in 2006. The inclusion of ASC for the entire period in 2007, versus only part of the period in 2006, increased expenses by $2.3 million. The 2007 increase also included the effects of inflation on employee-related and other operating costs. These increases were partially offset by cost reductions due to 2006 facility consolidations and headcount reductions made possible by a 2006 investment in system enhancements. Selling and warehousing expenses were 6.3% of sales in the 2007 period and 6.6% of sales in the 2006 period.

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General and administrative expenses. General and administrative expenses were $36.9 million in the first three quarters of 2007, $5.7 million higher than the first three quarters of 2006. $2.0 million of this increase was due to the inclusion of ASC for the entire period in 2007, versus only part of the period in 2006. The 2007 period also includes (i) inflation-driven cost increases, (ii) $0.4 million of costs incurred in connection with the establishment of two new factories in China, and (iii) $1.6 million higher employee stock option based compensation expense.

Of the $1.6 million increase in the stock option related expense, $1.3 million is due to accelerating vesting resulting from stock option plan changes. Earlier vesting affects when stock option expense is recognized, but does not affect the ultimate total expense. Consequently, accelerating the vesting results in recording more of the total expense this year and less in later years.

Costs of integration of water pump operations and resulting asset impairment losses. See Note C to the financial statements included in this Form 10-Q.

Costs of closing facilities and consolidating operations and gain from sale of assets. See Note E to the financial statements included in this Form 10-Q.

Trademark impairment loss. See Note F to the financial statements included in this Form 10-Q.

Interest expense, net. Net interest expense was $0.7 million lower in the first three quarters of 2007 compared to the first three quarters of 2006. The reduction was primarily due to lower debt levels, which more than offset the adverse effect of higher interest rates.

Write-off of deferred financing costs. See Note M to the financial statements included in this Form 10-Q.

Income tax expense. Income tax expense in the first three quarters of 2007 was $10.0 million higher than in the 2006 period due to higher pre-tax income in the 2007 period. In the 2006 period, the effective income tax rate was 50.1%. The difference from the statutory rate was primarily due to (i) the impact of certain foreign earnings, which are taxed both locally and in the United States, and (ii) the impact of certain foreign losses for which tax benefits were not recorded because of uncertain realizability.

Net income from continuing operations. Due to the factors described above, we reported net income from continuing operations of $22.9 million for the first three quarters of 2007 and $4.1 million for the first three quarters of 2006.

Discontinued operations. In the 2006 period, net income from discontinued operations was $1.9 million, and the net loss on the sale of discontinued operations was $18.3 million. In the 2007 period, we recorded a $2.7 million gain relating to the 2006 sale of our lighting systems operation. (See Note D to the financial statements included in this Form 10-Q.)

Net income. Due to the factors described above, we reported net income of $25.6 million in the first three quarters of 2007 compared to a net loss of $12.3 million in the first three quarters of 2006.

Liquidity and Capital Resources

At September 30, 2007 and December 31, 2006, UCI had $15.4 million and $31.5 million of cash, respectively. Outstanding debt was as follows (in millions):

	September 30,			December 31,
	2007			2006
Notes payable	$	10.0		$	8.6
Capitalized lease obligations		2.2			1.1
Term loan		225.0			265.0
Senior subordinated notes		230.0			230.0
Amount of debt requiring repayment		467.2			504.7
Unamortized debt discount		(3.6	)		(4.1	)
	$	463.6		$	500.6

In the first quarter of 2007, we used cash on hand to voluntarily repay $40.0 million of the term loan. Because of this prepayment and other prepayments made in 2006, we do not have any required repayments of the senior credit facility term loans until September 2011. UCI’s $230.0 million senior subordinated notes are due in 2013.

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Notes payable are routine short-term borrowings by our foreign operations.

The debt discussed above does not include the Holdco Notes. The Holdco Notes do not appear on our balance sheets and the related interest expense is not included in our income statements. While UCI has no direct obligation under the Holdco Notes, UCI is the sole source of cash generation for Holdco. The interest on the Holdco Notes is payable “in kind” until December 2011, so that no cash interest is payable until that date. The outstanding principal balance of the Holdco Notes was $257.0 million at September 30, 2007.

Below is a schedule of required future debt repayments. The 2007 amount is primarily routine repayments of short-term borrowings by our foreign operations. The amounts are presented in millions of dollars.

Last three months of 2007	$	10.4
2008		0.5
2009		0.5
2010		0.2
2011		100.6
Thereafter		355.0
	$	467.2

The terms of UCI’s senior credit facility permit UCI to repurchase from time to time up to $75 million in aggregate principal amount of senior subordinated notes. As of September 30, 2007, UCI had not repurchased any of the senior subordinated notes, although it may, under appropriate market conditions, do so in the future.

Our significant debt service obligation is an important factor when assessing UCI’s liquidity and capital resources. At the September 30, 2007 debt level and borrowing rates, annual interest expense, including amortization of deferred financing costs and debt discount, is approximately $40.5 million. An increase of 0.25% on our variable interest rate debt would increase the annual interest cost by $0.5 million. Our significant debt service obligation could, under certain circumstances, have a material adverse effect on results of operations and cash flow.

Our primary source of liquidity is cash flow from operations and borrowings under our $75 million revolving credit facility. Borrowings under the revolving credit facility are available to fund our working capital requirements, capital expenditures and other general corporate purposes. At September 30, 2007, $9.4 million of revolving credit borrowing capacity had been used to support outstanding letters of credit. This resulted in $65.6 million of unused borrowing capacity at September 30, 2007.

Our ability to make scheduled payments of principal or interest on, or to refinance, our indebtedness or to fund planned capital expenditures will depend on our ability to generate cash in the future. Such cash generation is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

Based on the current level of operations, we believe that cash flow from operations and available cash, together with available borrowings under its revolving credit facility, will be adequate to service debt, meet liquidity needs and fund planned capital expenditures for the next two years. For later years, we can give no assurance that our business will generate sufficient cash flow from operations, or that future borrowings will be available under our revolving credit facility in an amount sufficient to enable us to service our indebtedness or to fund other liquidity needs. In addition, as presently structured, UCI would be the sole source of cash for the payment of cash interest on the Holdco Notes beginning in 2011, and we can give no assurance that the cash for these interest payments will be available. In the future, we may need to refinance all or a portion of the principal amount of the senior subordinated notes and/or senior credit facility borrowings, on or prior to maturity. If refinancing is necessary, there can be no assurance that we will be able to secure such financing on acceptable terms, or at all.

UCI’s credit agreement for its senior credit facility permits sales of and liens on receivables, which are being sold pursuant to factoring arrangements, subject to certain limitations. We intend to factor our receivables when it is economically beneficial to do so. We have established a factoring relationship with four customers, which resulted in the sales of $78.2 million of receivables in the first nine months of 2007 and $46 million in the 2006 full year period. If receivables had not been factored, there would have been $48.7 million more receivables outstanding at September 30, 2007. $12.1 million of this amount is the result of the sales associated with the termination of the Pay-on-Scan program with AutoZone. (See Note G to the financial statements included in this Form 10-Q.) At December 31, 2006, if receivables had not been factored, there would have been $18.3 million more receivables outstanding. As the opportunities arise, we will evaluate other factoring arrangements which, if implemented, would increase the amount of receivables sold in the future.

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Net cash provided by operating activities. Net cash provided by operating activities of continuing operations for the nine months ended September 30, 2007 was $37.9 million. Profits, before deducting depreciation and amortization and the $3.6 million non-cash trademark impairment loss, and excluding the $1.8 million gain on the sale of Mexican land and building, generated $53.0 million. An increase in accounts receivable resulted in the use of $39.1 million of cash. This increase was the result of higher sales and, in certain cases, extended payment terms. Net inventory reductions generated $3.8 million of cash. An increase in accounts payable, due to normal fluctuations in the timing of purchases and payments, generated $6.9 million of cash. An increase in amounts due to Holdco had a $7.8 million positive effect on cash. This increase was primarily related to the payable due to Holdco for UCI’s use of Holdco’s federal tax benefit generated from its current taxable loss, which offset UCI’s federal current taxes payable. An increase in interest payable, which will reverse in the fourth quarter, had a $4.9 million positive effect on cash. Changes in all other assets and liabilities netted to an $0.6 million positive effect on cash.

Net cash used in investing activities. Historically, net cash used in investing activities has been for capital expenditures, offset by proceeds from the disposition of property, plant and equipment. Capital expenditures for the nine months ended September 30, 2007 and 2006 were $25.1 million and $16.3 million, respectively. In 2007, capital expenditures are expected to be in the $37 million to $39 million range, including approximately $8 million in connection with our water pump integration project and approximately $5.5 million for two new factories in China.

In the first quarter of 2007, we received $6.7 million, net of fees and expenses, from the sale of the land and building of the Mexican filtration operation that was closed in 2006. (See Note E to the financial statements included in this Form 10-Q.) In the third quarter of 2007, we received $2.2 million, net of fees and expenses, of additional proceeds from the 2006 sale of our lighting systems operation. (See Note D to the financial statements included in this Form 10-Q.)

Recent Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This statement is effective for fiscal years beginning after November 15, 2007. We have not evaluated the impact of this statement on our financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Including an Amendment of SFAS No. 115.” SFAS No. 159 permits companies to choose to measure certain financial instruments and other items at fair value. This statement is effective for fiscal years beginning after November 15, 2007. We have not evaluated the impact of this statement on our financial statements.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our exposure to market risk consists of foreign currency exchange rate fluctuations and changes in interest rates.

Foreign Currency Exposure

Currency translation. As a result of international operating activities, we are exposed to risks associated with changes in foreign exchange rates, principally exchange rates between the U.S. dollar and the Mexican peso, British pound and the Chinese Yuan. The results of operations of our foreign subsidiaries are translated into U.S. dollars at the average exchange rates for each relevant period, except for our Chinese subsidiaries where cost of sales is translated primarily at historical exchange rates. This translation has no impact on our cash flow. However, as foreign exchange rates change, there are changes to the U.S. dollar equivalent of sales and expenses denominated in foreign currencies. In the first three quarters of 2007, approximately 6% of our net sales were made by our foreign subsidiaries. Their combined net income was not significant. While these results, as measured in U.S. dollars, are subject to foreign exchange rate fluctuations, we do not consider the related risk to be material to our financial condition or results of operations.

Except for the Chinese subsidiaries, the balance sheets of our foreign subsidiaries, are translated into U.S. dollars at the closing exchange rates as of the relevant balance sheet date. Any adjustments resulting from the translation are recorded in accumulated other comprehensive income (loss) on our statement of shareholder’s equity. For our Chinese subsidiaries, non-monetary assets and liabilities are translated into U.S. dollars at historical rates and monetary assets and liabilities are translated into U.S. dollars at the closing exchange rate as of the relevant balance sheet date. Adjustments resulting from the translation of the balance sheets of our Chinese subsidiaries are recorded in our income statement. While currency exchange fluctuations between the Chinese Yuan and U.S. dollar impact our income statement, we do not consider this risk material to our financial condition or results of operations. We reduce this exposure to currency fluctuations by borrowing in China in Chinese Yuans and by maintaining cash positions only at levels necessary for operating purposes in those countries.

Currency transactions. Currency transaction exposure arises where actual sales and purchases are made by a business or company in a currency other than its own functional currency. In 2007, approximately $90.0 million of the cost of our products sold to North American customers are expected to be bought in China. The currency exchange rate from Chinese Yuan to U.S. dollars has been stable, in large part due to the economic policies of the Chinese government. However, there are no assurances that this currency exchange rate will continue to be as stable in the future. The U.S. government has stated that the Chinese government should reduce its influence over the currency exchange rate, and let market conditions control. Less influence by the Chinese government will most likely result in the Chinese Yuan strengthening against the U.S. dollar. While a change in the value of the Chinese Yuan versus the U.S. dollar could have a significant effect on the cost of our sales in the future, any change in value would not have an effect in the short term, because of our level of inventory on hand and firm dollar denominated purchase commitments. After such inventory is depleted and purchase commitments fulfilled, however, we could be forced to pay more in U.S. dollars for our purchases from China. If we are unable to negotiate commensurate price decreases from our Chinese suppliers, these higher prices would eventually translate into higher cost of sales. In that event, we would attempt to obtain corresponding price increases from our customers, but there are no assurances that we would be successful.

In the future, we expect to continue to monitor our transaction exposure to currency rate changes and may enter into currency forward and option contracts to limit the exposure, as appropriate. Gains and losses on contracts are deferred until the transaction being hedged is finalized. As of September 30, 2007, we had no foreign currency contracts outstanding. We do not engage in any speculative activities.

Interest Rate Risk

For all of 2006 and through August 10, 2007, we had interest rate swap agreements that effectively converted $80 million of variable rate debt to fixed rate debt. For the 12 months ended August 2008, we have an interest rate swap agreement that effectively converts $40 million of variable rate debt to fixed rate debt. The variable component of the interest rate on borrowings under the senior credit facilities is based on LIBOR. Under the swap agreements, we paid 4.4%, and received the then current LIBOR on $80 million through August 10, 2007 and we will pay 4.4% and will receive the then current LIBOR on $40 million for the 12-month period ending August 2008.

We utilize, and we will continue to utilize, sensitivity analyses to assess the potential effect of our variable rate debt. If variable interest rates were to increase by 0.25% per annum, the net impact would be a decrease of approximately $0.3 million of our net income and cash flow.

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Treasury Policy

Our treasury policy seeks to ensure that adequate financial resources are available for the development of our businesses while managing our currency and interest rate risks. Our policy is to not engage in speculative transactions. Our policies with respect to the major areas of our treasury activity are set forth above.

Item 4. Controls and Procedures

UCI maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in UCI’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to UCI’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by SEC Rule 13a-15(b), UCI carried out an evaluation, under the supervision and with the participation of UCI’s management, including UCI’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of UCI’s disclosure controls and procedures as of the end of the quarter covered by this report. Based on the foregoing, UCI’s Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the quarter covered by this report, UCI’s disclosure controls and procedures were effective at the reasonable assurance level.

There has been no change in UCI’s internal controls over financial reporting during UCI’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, UCI’s internal controls over financial reporting.

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PART II

OTHER INFORMATION

Item 1. Legal Proceedings

     Not Applicable.

Item 1.A. Risk Factors

Except for the risk factors described below, there have been no material changes from the risk factors previously disclosed in UCI’s annual report on Form 10-K for the year ended December 31, 2006.

Our relationship with AutoZone creates risks associated with a concentrated net sales source.

We generate a large percentage of our sales from our business with AutoZone, but we cannot assure you that AutoZone will continue to purchase from us. Sales to AutoZone accounted for approximately 24% of our total net sales in both fiscal 2006 and 2005, respectively. Several of our competitors are likely to pursue business opportunities with this customer and threaten our current position. If we fail to maintain this relationship, our net sales will be significantly diminished. Even if we maintain our relationship, our net sales concentration as a result of this relationship increases the potential impact to our business that could result from any changes in the economic terms of this relationship. Any change in the terms of our sales to this customer could have a material impact on our financial position and results of operations. Any changes could, for example, result in an increase in the time it takes for us to collect on receivables.

If the automotive aftermarket adopts more expansive return policies or practices such as extended payment terms, our cash flow and results of operations could be harmed.

We are subject to returns from customers, some of which may manage their excess inventory through returns. Arrangements with customers typically include provisions that permit them to return specified levels of their purchases. Returns have historically represented approximately 5% of our sales. If returns from our customers significantly increase, our profitability may be adversely affected. In addition, some customers in the automotive aftermarket are pursuing ways to shift their costs of working capital, including extending payment terms. To the extent customers extend payment terms, our cash flow may be adversely affected.

Our lean manufacturing, water pump integration and other cost saving plans may not be effective.

Since our formation, our strategy has included goals such as improvement of inventory management and customer delivery and plant and distribution facility consolidation. In addition, in connection with the ASC Acquisition, we integrated our water pump operations with ASC’s existing operations. While we have and will continue to implement these strategies, there can be no assurance that we will be able to do so successfully or that we will realize the projected benefits of these and other cost saving plans. If we are unable to realize these anticipated cost reductions, our financial health may be adversely affected. Moreover, our continued implementation of cost saving plans and facilities integration may disrupt our operations and performance.

We are subject to increasing pricing pressure from import activity, particularly from Asia.

Price competition from automotive aftermarket manufacturers, particularly based in Asia and other locations with lower production costs, have historically played a role and may play an increasing role in the aftermarket channels in which we compete. Pricing pressures have historically been more prevalent with respect to our filter products than our other products. While aftermarket manufacturers in these locations have historically competed primarily in markets for less technologically advanced products and manufactured a limited number of products, they are expanding their manufacturing capabilities to produce a broad range of lower cost, higher quality products and provide an expanded product offering. We plan to open two new factories in China in 2008. In the future, competitors in Asia may be able to effectively compete in our premium markets and produce a wider range of products, which may force us to move additional manufacturing capacity offshore and/or lower our prices, reducing our margins and/or decreasing our net sales.

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We could be materially adversely affected by changes or imbalances in currency exchange and other rates.

As a result of increased international production and sourcing of components and completed parts for resale, we are exposed to risks related to the effects of changes in foreign currency exchange rates, principally exchange rates between the U.S. dollar and the Chinese Yuan. The currency exchange rate from Chinese Yuan to U.S. dollars has been stable, in large part due to the economic policies of the Chinese government. However, there are no assurances that this currency exchange rate will continue to be as stable in the future. The U.S. government has stated that the Chinese government should reduce its influence over the currency exchange rate and let market conditions control. Less influence by the Chinese government will most likely result in the Chinese Yuan strengthening against the U.S. dollar. While a change in the value of the Chinese Yuan versus the U.S. dollar could have a significant effect on the cost of our sales in the future, any change in value would not have an effect in the short term, because of our level of inventory on hand and firm dollar denominated purchase commitments. After such inventory is depleted and purchase commitments fulfilled, however, we could be forced to pay more in U.S. dollars for our purchases from China. If we are unable to negotiate commensurate price decreases from our Chinese suppliers, these higher prices would eventually translate into higher costs of sales. In that event, we would attempt to obtain corresponding price increases from our customers, but there are no assurances that we would be successful.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

     Not Applicable.

Item 3. Default Upon Senior Securities

     Not Applicable.

Item 4. Submission of Matters to Vote of Security Holders

     Not Applicable.

Item 5. Other Information

     Not Applicable.

Item 6. Exhibits

Exhibit 31.1	Certification of Periodic Report by the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.
Exhibit 31.2	Certification of Periodic Report by the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.
Exhibit 32	Certification of Periodic Report by the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002.*

* This certificate is being furnished solely to accompany the report pursuant to 18 U.S.C. 1350 and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of UCI, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	UNITED COMPONENTS, INC.
Date: November 14, 2007	By: Name:	/s/ DANIEL J. JOHNSTON Daniel J. Johnston
	Title:	Chief Financial Officer

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EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Bruce M. Zorich, Chief Executive Officer of United Components, Inc. certify that:

1.	I have reviewed this quarterly report on Form 10-Q of United Components, Inc.;
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the report is being prepared;
b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: November 14, 2007	By: Name:	/s/ BRUCE M. ZORICH Bruce M. Zorich
	Title:	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Daniel Johnston, Chief Financial Officer of United Components, Inc. certify that:

1.	I have reviewed this quarterly report on Form 10-Q of United Components, Inc.;
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the report is being prepared;
b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: November 14, 2007	By: Name:	/s/ DANIEL J. JOHNSTON Daniel J. Johnston
	Title:	Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION OF PERIODIC REPORT

The undersigned officers of United Components, Inc. hereby certify pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

1.	the Quarterly Report on Form 10-Q of United Components, Inc. for the quarter ended September 30, 2007 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
2.	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of United Components, Inc.

Date: November 14, 2007
	By: Name:	/s/ BRUCE M. ZORICH Bruce M. Zorich
	Title:	Chief Executive Officer
Date: November 14, 2007
	By: Name:	/s/ DANIEL J. JOHNSTON Daniel J. Johnston
	Title:	Chief Financial Officer

The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. §. 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of UCI, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

A signed original of this written statement required by Section 906 has been provided to UCI and will be retained by UCI and furnished to the Securities and Exchange Commission or its staff upon request.