SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
(Mark One)
[ ] Annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934
[X] Transitional report pursuant to Section 15(d) of the Securities Exchange
Act of 1934
For the transition period from August 1, 1998 to December 31, 1998
Commission file number: 333-69715
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Delco Remy America
Salaried 401(k) Savings Plan(1)
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Delco Remy International, Inc.
2902 Enterprise Drive
Anderson, Indiana 46013
(1) Effective January 1, 1999, the "Delco Remy America Salaried 401(k) Savings
Plan" was amended, restated and renamed the "Delco Remy International
401(k) Retirement and Savings Plan," and sponsorship of the Plan was
transferred from Delco Remy America, Inc. to Delco Remy International, Inc.
Additionally, effective as of August 1, 1998, the Plan changed from a
fiscal plan year ending July 31 to a calendar plan year ending December 31.
Because the initial Form 11-K filing was filed concurrently with the Form
S-8 Registration Statement for the Plan on or about December 23, 1998, this
transitional report was required for the short plan year ending December
31, 1998. Form 11-K Annual Reports relating to the above plan for periods
beginning after December 31, 1998 will be filed under the name of the
"Delco Remy International 401(k) Retirement and Savings Plan."
<PAGE>
REQUIRED INFORMATION
A. Financial Statements and Schedules:
Report of Independent Auditors
Statement of Net Assets Available for Benefits
Statement of Changes in Net Assets Available for Benefits
Notes to Financial Statements
Schedule of Assets Held for Investment Purposes
Schedule of Reportable Transactions
B. Exhibits
Consent of Independent Auditors
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereto duly authorized.
Delco Remy America
Salaried 401(k) Savings Plan(2)
(Name of Plan)
Date June 29, 1999 Delco Remy America, Inc., Administrator
By: /s/ Roderick English
--------------------------------------
Roderick English, Vice President -
Human Resources and Communications
(2) See footnote 1, above.
<PAGE>
Financial Statements and Schedules
Delco Remy America Salaried 401(k)
Savings Plan
Five months ended December 31, 1998
and years ended July 31, 1998 and 1997
with Report of Independent Auditors
<PAGE>
Delco Remy America Salaried 401(k) Savings Plan
Financial Statements and Schedules
Five months ended December 31, 1998 and years ended July 31, 1998 and 1997
Contents
Report of Independent Auditors ....................................1
Financial Statements
Statements of Net Assets Available for Benefits....................2
Statements of Changes in Net Assets Available for Benefits.........4
Notes to Financial Statements......................................7
Schedules
Schedule of Assets Held for Investment Purposes...................14
Schedule of Reportable Transactions...............................15
<PAGE>
Report of Independent Auditors
Plan Administrator
Delco Remy America Salaried 401(k) Savings Plan
We have audited the accompanying statements of net assets available for benefits
of the Delco Remy America Salaried 401(k) Savings Plan (the Plan) as of December
31, 1998 and July 31, 1998 and 1997, and the related statements of changes in
net assets available for benefits for the five months ended December 31, 1998
and the years ended July 31, 1998 and 1997. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1998 and July 31, 1998 and 1997, and the changes in its net assets
available for benefits for the five months ended December 31, 1998 and the years
ended July 31, 1998 and 1997, in conformity with generally accepted accounting
principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of December 31, 1998 and reportable transactions
for the year then ended, are presented for purposes of additional analysis and
are not a required part of the financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. These supplemental schedules are the responsibility of the Plan's
management. The Fund Information in the statements of net assets available for
benefits and the statements of changes in net assets available for benefits is
presented for purposes of additional analysis rather than to present the net
assets available for benefits and changes in net assets available for benefits
for each fund. The supplemental schedules and Fund Information have been
subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Ernst & Young LLP
May 21, 1999
<PAGE>
Delco Remy America Salaried 401(k) Savings Plan
<TABLE>
<CAPTION>
Statement of Net Assets Available for Benefits, with Fund Information
<S> <C> <C> <C> <C> <C> <C>
December 31, 1998
Fund Information
-------------------------------------------------------------------------------------
Vanguard
Vanguard Fixed
Money Income
Market Securities
Prime Short-Term Fidelity Vanguard Fidelity Fidelity
Portfolio Corporate Balanced Index 500 Emerging Contra
Reserves, Inc. Portfolio Fund Trust Growth Fund Fund
-------------------------------------------------------------------------------------
Assets:
Investments, at fair value: $ 1,353,294 $ 284,179 $1,351,271 $3,360,415 $2,608,098 $575,378
-------------------------------------------------------------------------------------
Net assets available for benefits $ 1,353,294 $ 284,179 $1,351,271 $3,360,415 $2,608,098 $575,378
=====================================================================================
<C> <C> <C>
Templeton
Foreign
Fund Loan Fund Total
--------------------------------------------
Assets:
Investments, at fair value: $ 176,015 $ 344,524 $10,053,174
--------------------------------------------
Net assets available for benefits $ 176,015 $ 344,524 $10,053,174
============================================
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
Delco Remy America Salaried 401(k) Savings Plan
<TABLE>
<CAPTION>
Statement of Net Assets Available for Benefits, with Fund Information
<S> <C> <C> <C> <C> <C> <C>
July 31, 1998
Fund Information
-------------------------------------------------------------------------------------
Vanguard
Vanguard Fixed
Money Income
Market Securities
Prime Short-Term Fidelity Vanguard Fidelity Fidelity
Portfolio Corporate Balanced Index 500 Emerging Contra
Reserves, Inc. Portfolio Fund Trust Growth Fund Fund
-------------------------------------------------------------------------------------
Assets:
Investments, at fair value: $ 1,242,897 $ 188,747 $1,134,950 $ 2,959,157 $ 2,207,520 $ 434,092
Receivables:
Participant contributions - - - - - -
-------------------------------------------------------------------------------------
Net assets available for benefits $ 1,242,897 $ 188,747 $1,134,950 $ 2,959,157 $ 2,207,520 $ 434,092
=====================================================================================
<C> <C> <C> <C>
Templeton
Foreign Temporary
Fund Loan Fund Fund Total
------------------------------------------------------------
Assets:
Investments, at fair value: $ 165,768 $ 343,315 $ - $ 8,676,446
Receivables:
Participant contributions - - 19,285 19,285
------------------------------------------------------------
Net assets available for benefits $ 165,768 $ 343,315 $ 19,285 $ 8,695,731
============================================================
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
July 31, 1997
Fund Information
-------------------------------------------------------------------------------------
Vanguard
Vanguard Fixed
Money Income
Market Securities
Prime Short-Term Fidelity Vanguard Fidelity Fidelity
Portfolio Corporate Balanced Index 500 Emerging Contra
Reserves, Inc. Portfolio Fund Trust Growth Fund Fund
-------------------------------------------------------------------------------------
Assets:
Investments, at fair value: $ 1,066,948 $ 144,390 $ 862,378 $ 1,727,353 $ 1,380,904 $ 193,721
Receivables:
Participant contributions 11,819 1,874 8,326 16,881 15,749 1,862
Employer matching contributions 2,941 344 1,477 3,107 2,971 328
Interest on investments 25 172 - - - -
-------------------------------------------------------------------------------------
1,081,733 146,780 872,181 1,747,341 1,399,624 195,911
Liabilities:
Refund of participant contributions payable - - - - - -
-------------------------------------------------------------------------------------
Net assets available for benefits $ 1,081,733 $ 146,780 $ 872,181 $ 1,747,341 $ 1,399,624 $ 195,911
=====================================================================================
<C> <C> <C> <C>
Templeton
Foreign Temporary
Fund Loan Fund Fund Total
------------------------------------------------------------
Assets:
Investments, at fair value: $ 176,737 $ 184,804 $ - $ 5,737,235
Receivables:
Participant contributions 1,565 - 29,217 87,293
Employer matching contributions 272 - - 11,440
Interest on investments - - - 197
------------------------------------------------------------
178,574 184,804 29,217 5,836,165
Liabilities:
Refund of participant contributions payable - - 13,568 13,568
------------------------------------------------------------
Net assets available for benefits $ 178,574 $ 184,804 $ 15,649 $ 5,822,597
============================================================
<FN>
See accompanying notes
</FN>
</TABLE>
<PAGE>
Delco Remy America Salaried 401(k) Savings Plan
<TABLE>
<CAPTION>
Statement of Changes in Net assets Available for Benefits, with Fund Information
<S> <C> <C> <C> <C> <C> <C>
Five Months ended December 31, 1998
Fund Information
-------------------------------------------------------------------------------------
Vanguard
Vanguard Fixed
Money Income
Market Securities
Prime Short-Term Fidelity Vanguard Fidelity Fidelity
Portfolio Corporate Balanced Index 500 Emerging Contra
Reserves, Inc. Portfolio Fund Trust Growth Fund Fund
-------------------------------------------------------------------------------------
Additions:
Employee voluntary contributions $ 73,640 $ 20,342 $ 84,391 $ 194,003 $ 175,025 $ 47,824
Company contributions 44,844 11,237 36,750 82,023 75,067 25,360
Rollover contributions 7,120 5,398 5,647 5,403 5,649 -
Interest and dividends 27,601 5,915 104,127 31,099 152,184 -
-------------------------------------------------------------------------------------
Total additions 153,205 42,892 230,915 312,528 407,925 73,184
Deductions:
Benefits paid to participants 46,111 24,887 79,087 139,220 99,949 12,345
Administrative expenses 1,593 296 1,501 3,705 2,737 -
-------------------------------------------------------------------------------------
Total deductions 47,704 25,183 80,588 142,925 102,686 12,345
-------------------------------------------------------------------------------------
105,501 17,709 150,327 169,603 305,239 60,839
Interfund transfers 4,896 77,714 62,016 (63,691) (84,274) 17,368
Net appreciation (depreciation) in
fair value of investments - 9 3,978 295,346 179,613 63,079
-------------------------------------------------------------------------------------
Net increase (decrease) 110,397 95,432 216,321 401,258 400,578 141,286
Net assets available for benefits:
Beginning of period 1,242,897 188,747 1,134,950 2,959,157 2,207,520 434,092
-------------------------------------------------------------------------------------
End of period $1,353,294 $ 284,179 $1,351,271 $ 3,360,415 $ 2,608,098 $ 575,378
=====================================================================================
<C> <C> <C> <C>
Templeton
Foreign Temporary
Fund Loan Fund Fund Total
------------------------------------------------------------
Additions:
Employee voluntary contributions $ 25,473 $ - $ - $ 620,698
Company contributions 12,551 - - 287,832
Rollover contributions 246 - - 29,463
Interest and dividends 16,591 12,730 - 350,247
-------------------------------------------------------------
Total additions 54,861 12,730 - 1,288,240
Deductions:
Benefits paid to participants 6,657 27,552 - 435,808
Administrative expenses - - - 9,832
-------------------------------------------------------------
Total deductions 6,657 27,552 - 445,640
-------------------------------------------------------------
48,204 (14,822) - 842,600
Interfund transfers (10,775) 16,031 (19,285) -
Net appreciation (depreciation) in
fair value of investments (27,182) - - 514,843
-------------------------------------------------------------
Net increase (decrease) 10,247 1,209 (19,285) 1,357,443
Net assets available for benefits:
Beginning of period 165,768 343,315 19,285 8,695,731
-------------------------------------------------------------
End of period $ 176,015 $ 344,524 $ - $10,053,174
=============================================================
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
Delco Remy America Salaried 401(k) Savings Plan
<TABLE>
<CAPTION>
Statement of Changes in Net assets Available for Benefits, with Fund Information
<S> <C> <C> <C> <C> <C> <C>
Year ended July 31, 1998
Fund Information
-------------------------------------------------------------------------------------
Vanguard
Vanguard Fixed
Money Income
Market Securities
Prime Short-Term Fidelity Vanguard Fidelity Fidelity
Portfolio Corporate Balanced Index 500 Emerging Contra
Reserves, Inc. Portfolio Fund Trust Growth Fund Fund
-------------------------------------------------------------------------------------
Additions:
Employee voluntary contributions $ 216,650 $ 38,453 $ 194,154 $ 453,995 $ 385,359 $ 81,132
Company contributions 99,602 16,228 69,774 158,330 146,922 35,607
Rollover contributions 24,041 9,729 2,017 59,431 20,910 11,694
Interest and dividends 60,427 9,858 112,797 47,489 297,919 58
-------------------------------------------------------------------------------------
Total additions 400,720 74,268 378,742 719,245 851,110 128,491
Deductions:
Benefits paid to participants 169,047 3,140 26,647 48,737 91,290 1,573
Administrative expenses 2,729 396 2,419 5,588 4,042 -
-------------------------------------------------------------------------------------
Total deductions 171,776 3,536 29,066 54,325 95,332 1,573
-------------------------------------------------------------------------------------
228,944 70,732 349,676 664,920 755,778 126,918
Interfund transfers (67,780) (28,717) (108,538) 171,818 (48,621) 51,730
Net appreciation in
fair value of investments - (48) 21,631 375,078 100,739 59,533
-------------------------------------------------------------------------------------
Net increase 161,164 41,967 262,769 1,211,816 807,896 238,181
Net assets available for benefits:
Beginning of year 1,081,733 146,780 872,181 1,747,341 1,399,624 195,911
-------------------------------------------------------------------------------------
End of year $1,242,897 $ 188,747 $1,134,950 $ 2,959,157 $ 2,207,520 $ 434,092
=====================================================================================
<C> <C> <C> <C>
Templeton
Foreign Temporary
Fund Loan Fund Fund Total
------------------------------------------------------------
Additions:
Employee voluntary contributions $ 60,136 $ - $ 19,285 $1,449,164
Company contributions 23,451 - - 549,914
Rollover contributions 9,295 - - 137,117
Interest and dividends 16,266 21,379 - 566,193
------------------------------------------------------------
Total additions 109,148 21,379 19,285 2,702,388
Deductions:
Benefits paid to participants 2,929 2,278 - 345,641
Administrative expenses - - - 15,174
------------------------------------------------------------
Total deductions 2,929 2,278 - 360,815
------------------------------------------------------------
106,219 19,101 19,285 2,341,573
Interfund transfers (93,653) 139,410 (15,649) -
Net appreciation in
fair value of investments (25,372) - - 531,561
------------------------------------------------------------
Net increase (12,806) 158,511 3,636 2,873,134
Net assets available for benefits:
Beginning of year 178,574 184,804 15,649 5,822,597
------------------------------------------------------------
End of year $ 165,768 $ 343,315 $ 19,285 $8,695,731
============================================================
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
Delco Remy America Salaried 401(k) Savings Plan
<TABLE>
<CAPTION>
Statement of Changes in Net assets Available for Benefits, with Fund Information
<S> <C> <C> <C> <C> <C> <C>
Year ended July 31, 1997
Fund Information
-------------------------------------------------------------------------------------
Vanguard
Vanguard Fixed
Money Income
Market Securities
Prime Short-Term Fidelity Vanguard Fidelity Fidelity
Portfolio Corporate Balanced Index 500 Emerging Contra
Reserves, Inc. Portfolio Fund Trust Growth Fund Fund
-------------------------------------------------------------------------------------
Additions:
Employee voluntary contributions $ 307,393 $ 46,507 $ 191,518 $ 361,319 $ 384,269 $ 37,136
Company contributions 66,120 6,041 28,736 56,888 62,116 4,520
Rollover contributions 36,218 91,172 46,419 126,807 99,544 77,793
Interest and dividends 50,860 8,444 28,314 20,531 297 -
-------------------------------------------------------------------------------------
Total additions 460,591 152,164 294,987 565,545 546,226 119,449
Deductions:
Benefits paid to participants 36,092 27,681 51,302 70,273 48,673 783
Administrative expenses 2,169 301 1,412 2,364 2,308 -
Participant contribution refunds - - - - - -
-------------------------------------------------------------------------------------
Total deductions 38,261 27,982 52,714 72,637 50,981 783
-------------------------------------------------------------------------------------
422,330 124,182 242,273 492,908 495,245 118,666
Interfund transfers (220,880) (80,346) (5,123) 227,208 (191,717) 46,794
Net appreciation (depreciation) in
fair value of investments - 2,190 164,377 454,076 329,661 30,451
-------------------------------------------------------------------------------------
Net increase/ (decrease) 201,450 46,026 401,527 1,174,192 633,189 195,911
Net assets available for benefits:
Beginning of year 880,283 100,754 470,654 573,149 766,435 -
-------------------------------------------------------------------------------------
End of year $1,081,733 $ 146,780 $ 872,181 $1,747,341 $1,399,624 $ 195,911
=====================================================================================
<C> <C> <C> <C>
Templeton
Foreign Temporary
Fund Loan Fund Fund Total
-----------------------------------------------------------
Additions:
Employee voluntary contributions $ 20,791 $ - $ 29,217 $1,378,150
Company contributions 2,905 - - 227,326
Rollover contributions 9,878 - - 487,831
Interest and dividends 313 8,271 - 117,030
-----------------------------------------------------------
Total additions 33,887 8,271 29,217 2,210,337
Deductions:
Benefits paid to participants 581 - - 235,385
Administrative expenses - - - 8,554
Participant contribution refunds - - 13,568 13,568
-----------------------------------------------------------
Total deductions 581 - 13,568 257,507
-----------------------------------------------------------
33,306 8,271 15,649 1,952,830
Interfund transfers 130,090 130,432 (36,458) -
Net appreciation (depreciation) in
fair value of investments 15,178 - - 995,933
-----------------------------------------------------------
Net increase/ (decrease) 178,574 138,703 (20,809) 2,948,763
Net assets available for benefits:
Beginning of year - 46,101 36,458 2,873,834
-----------------------------------------------------------
End of year $ 178,574 $ 184,804 $ 15,649 $5,822,597
===========================================================
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
Delco Remy America Salaried 401(k) Savings Plan
Notes to Financial Statements
December 31, 1998
1. Significant Accounting Policies
Investments
Investments are maintained at Keycorp Investment Management and Trust Services
("Trustee"). Investments in mutual funds are valued at fair value based on the
quoted market price as of the most recent valuation date at the end of the year.
Participant loans are valued at fair value which is estimated. Dividends on
mutual funds are recorded as investment income on the date received.
Investment options, which invest in mutual funds as described below, are
available to participants as follows:
o Vanguard Money Prime Portfolio Reserves, Inc. - This fund invests in
Treasury Bills, commercial paper, certificates of deposit and other
short-term securities with an average maturity of less than four months.
o Vanguard Fixed Income Securities Short-term Corporate Portfolio- This fund
invests in high quality, short-term bonds with an average maturity between
one and three years.
o Fidelity Balanced Fund - This fund invests in common stocks and corporate,
government and agency bonds.
o Vanguard Index 500 Trust - This fund invests in common stocks of large
companies.
o Fidelity Emerging Growth Fund - This fund invests primarily in stocks of
developing companies that have demonstrated or are expected to achieve
rapid growth in earnings and/or revenues.
<PAGE>
Delco Remy America Salaried 401(k) Savings Plan
Notes to Financial Statements (continued)
1. Significant Accounting Policies (continued)
o Fidelity Contra Fund - This fund invests primarily in stocks of smaller
companies that are undervalued.
o Templeton Foreign Fund - This fund invests primarily in stocks of
international companies consisting of bonds and other long term debt
instruments.
The Temporary Fund serves an administrative function that temporarily holds
funds received into the Delco Remy America Salaried 401(k) Savings Plan (Plan)
but not yet specifically allocated into the appropriate investment fund due to
timing. Interest earned in this fund is allocated back to the other funds.
Administrative Expenses
Cash management fees are paid by the Plan. All other administrative expenses are
paid by Delco Remy America, Inc. ( "Company").
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
2. Description of the Plan
The Plan is a defined contribution plan which was established effective August
1, 1994 to provide retirement and other benefits to participants. The Plan
covers substantially all salaried employees of the Company, who have completed
90 days of employment with the Company (six months prior to January 1, 1998).
Salaried employees who transferred from General Motors Corporation ("GM") with
more than six months of continuous employment with GM are eligible for
participation in the Plan on the date of transfer (or active employment) with
the Company. The Plan is subject to the provisions of Employee Retirement Income
Security Act of 1974 (ERISA).
Participants may make voluntary pre-tax and after-tax contributions to their
account through periodic payroll deductions at rates from 1% to 15% of their
base salary. In addition, participants may elect to contribute 100% of their
share of the Company profit sharing distribution. The sum of the annual pre-tax
contributions and profit sharing contributions per participant for the year
cannot exceed the maximum contribution limitations established annually by the
Internal Revenue Service (IRS).
<PAGE>
2. Description of the Plan (continued)
The Company makes matching contributions of 50% of the sum of the pre-tax
contributions and after-tax contributions made by each participant, not to
exceed 6% of the base salary of the participant. The Board of Directors of the
Company determines the amount of nonelective contributions, if any, that the
Company will contribute each year. In addition, the Company makes monthly
Retiree Medical Contributions equal to 2% of the base salary of the
participants.
Participants are vested at all times in their pre-tax, after-tax, rollover, and
nonelective contributions. Participants are vested in Company matching
contributions and Retiree Medical Contributions after completing five years of
service with the Company, retirement, death, or age 65. Participants may
designate that their contributions be deposited in any of seven investment
options designated by the Plan administrator.
Participants are entitled to benefits beginning at normal retirement, early
retirement or death. Participants may choose one lump sum payment or a series of
monthly installments (if the participant's account balance exceeds $3,500) in a
dollar amount elected by the participant. Upon termination of employment, the
participant's vested account balance becomes payable. If the participant's
vested account balance exceeds $3,500, such distribution cannot be made without
the participant's consent. The balance of forfeited nonvested accounts was not
material as of December 31, 1998 and July 31, 1998, and will be used to reduce
future employer contributions.
Participants may make a complete or partial hardship withdrawal of their pre-tax
contributions, supplemental and rollover account balance, excluding earnings
allocated to such accounts. The withdrawal must be necessary in light of
immediate and heavy financial needs of the participant as defined by IRS
regulations. The withdrawal may not exceed the immediate heavy financial need of
the participant, and the participant must have obtained all other available
distributions. During the twelve months following a hardship withdrawal, pre-tax
contributions, after-tax contributions, profit sharing contributions and
employee contributions under any other plan maintained by the Company are
suspended. In addition, participants may withdraw all or part of their after-tax
contributions.
The minimum withdrawal of after-tax contributions is $500.
Participants may borrow from their accounts a minimum loan of $1,000 up to a
maximum of the lesser of $50,000 or one-half of the vested account balance.
<PAGE>
2. Description of the Plan (continued)
Loans bear interest at a rate of 1% above the Trustee's prime lending rate.
Payments on the outstanding loans must be made at least quarterly and the
repayment period can range from six months to five years, unless the loan is for
the purchase or construction of the participant's principle residence, in which
case the repayment period is ten years. In the event that a loan is not repaid
within the appropriate repayment period, the participant will be deemed to have
received a distribution from his account equal to the remaining principal
balance and accrued interest outstanding.
The Company has the right to amend or terminate the Plan at any time. The
Company has the right to suspend contributions to the Plan at any time, whether
permanently or temporarily for any length of time.
More detailed information concerning the Plan may be found by consulting the
Summary Plan Description which is available from the Plan Administrator.
3. Investments
During the five months ended December 31, 1998 and the years ended July 31, 1998
and 1997, the Plan's investments in the various funds (including investments
purchased, sold, as well as held during the year) appreciated (depreciated) in
fair value as presented in the following table. The fair value of individual
investments that represent 5% or more of plan assets are separately identified.
<PAGE>
3. Investments (continued)
<TABLE>
<CAPTION>
<S> <C> <C>
Net
Appreciation
(Depreciation)
in Fair Value Fair Value at
During Period End of Period
-------------------------------------
Five months ended December 31 1998:
Fair value as determined by quoted market
prices:
Mutual funds:
Vanguard Money Market Prime Portfolio
Reserves, Inc. $ - $ 1,353,294
Fidelity Emerging Growth Fund 179,613
2,608,098
Fidelity Balanced Fund 3,978 1,351,271
Vanguard Index 500 Trust 295,346 3,360,415
Vanguard Fixed Income Securities
Short-term Corporate Portfolio Fund 9 284,179
Fidelity Contra Fund 63,079 575,378
Templeton Foreign Fund (27,182) 176,015
Fair value estimated:
Participant Loans - 344,524
-----------------------------------
$ 514,843 $10,053,174
===================================
Year ended July 31 1998:
Fair value as determined by quoted market
prices:
Mutual funds:
Vanguard Money Market Prime Portfolio
Reserves, Inc. $ - $1,242,897
Fidelity Emerging Growth Fund 100,739 2,207,520
Fidelity Balanced Fund 21,631 1,134,950
Vanguard Index 500 Trust 375,078 2,959,157
Vanguard Fixed Income Securities
Short-term Corporate Portfolio Fund (48) 188,747
Fidelity Contra Fund 59,533 434,092
Templeton Foreign Fund (25,372) 165,768
Fair value estimated:
Participant Loans - 343,315
===================================
$ 531,561 $8,676,446
===================================
</TABLE>
<PAGE>
3. Investments (continued)
<TABLE>
<CAPTION>
<S> <C> <C>
Net
Appreciation
(Depreciation)
in Fair Value Fair Value at
During Period End of Period
-------------------------------------
Year ended July 31 1997:
Fair value as determined by quoted market
prices:
Mutual funds:
Vanguard Money Market Prime Portfolio
Reserves, Inc. $ - $
1,066,948
Fidelity Emerging Growth Fund 329,661 1,380,904
Fidelity Balanced Fund 164,377 862,378
Vanguard Index 500 Trust 454,076 1,727,353
Vanguard Fixed Income Securities
Short-term Corporate Portfolio Fund 2,190 144,390
Fidelity Contra Fund 30,451 193,721
Templeton Foreign Fund 15,178 176,737
Fair value estimated:
Participant Loans - 184,804
------------------------------------
$ 995,933 $5,737,235
====================================
</TABLE>
4. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service
dated November 1, 1996 stating that the Plan is qualified under Section 401(a)
of the Internal Revenue Code (the "Code") and, therefore, the related trust is
exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Plan Sponsor has
indicated that it will take the necessary steps, if any, to maintain the Plan's
qualified status.
<PAGE>
5. Year 2000 (unaudited)
The Plan Sponsor has determined that it will be necessary to take certain steps
in order to ensure that the Plan's information systems are prepared to handle
year 2000 dates. The Plan Sponsor is taking a two phase approach. The first
phase addresses internal systems that must be modified or replaced to function
properly. Both internal and external resources are being utilized to replace or
modify existing software applications, and test the software and equipment for
the year 2000 modifications. The Plan Sponsor anticipates substantially
completing this phase of the project by June 1999. Costs associated with
modifying software and equipment are not estimated to be significant and will be
paid by the Plan Sponsor.
For the second phase of the project, Plan management established formal
communications with its third party service providers to determine that they
have developed plans to address their own year 2000 problems as they relate to
the Plan's operations. All third party service providers have indicated that
they will be year 2000 compliant by early 1999. If modification of data
processing systems of either the Plan, the Plan Sponsor, or its service
providers are not completed timely, the year 2000 problem could have a material
impact on the operations of the Plan. Plan management has not developed a
contingency plan, because they are confident that all systems will be year 2000
ready.
6. Subsequent Event
The Company has elected to merge into the Plan several affiliate plans effective
January 1, 1999. The Plan has also elected to change trustees effective January
1, 1999.
<PAGE>
Schedules
<PAGE>
Delco Remy America Salaried 401(k) Savings Plan
<TABLE>
<CAPTION>
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1998
EIN: 35-1909405
Plan Number: 001
<S> <C> <C> <C>
(b) (c) (d) (e)
Description of
Investment
Including Maturity
Date, Rate of
Identity of Issue, Borrower, Interest, Par or Current
Lessor, or Similar Party Maturity Value Cost Value
- -------------------------------------------------------------------------------------------------------
Mutual funds:
Vanguard Money Market Prime Portfolio
Reserves, Inc. 1,353,294 units $ 1,353,294 $ 1,353,294
Fidelity Emerging Growth Fund 82,093 units 2,110,077 2,608,098
Fidelity Balanced Fund 82,596 units 1,203,444 1,351,271
Vanguard Index 500 Trust 29,491 units 2,394,549 3,360,415
Vanguard Fixed Income Securities
Short-term Corporate Portfolio 26,216 units 283,657 284,179
Fidelity Contra Fund 29,332 units 436,614 575,378
Templeton Foreign Fund 20,979 units 208,994 176,015
-----------------------------
7,990,629 9,708,650
Participant loans Terms from 1 to 5 years
with interest rates
ranging from 9.25%
to 10% - 344,524
============================
$ 7,990,629 $10,053,174
============================
</TABLE>
<PAGE>
Delco Remy America Salaried 401(k) Savings Plan
<TABLE>
<CAPTION>
Line 27d - Schedule of Reportable Transactions
Five months ended December 31, 1998
EIN: 35-1909405
Columns (e) and (f) not used as they are not applicable. Plan Number: 001
<S> <C> <C> <C> <C> <C> <C>
(h)
Current
Value
(c) (d) (g) of Asset on (i)
(a) (b) Purchase Selling Cost Transaction Net
Identity of Party Involved Description of Asset Price Price of Asset Date Gain (Loss)
- ------------------------------------------------------------------------------------------------------------------------------------
Category (iii)
Vanguard Money Market Prime
Portfolio Reserves, Inc. Mutual Fund
Purchases $ 379,191 $ - $ 390,404 $ 390,404 $ -
Sales - 271,594 271,594 271,594 -
Fidelity Emerging Growth Fund Mutual Fund
Purchases 498,533 - 498,533 498,533 -
Sales - 273,920 250,743 273,920 23,177
Vanguard Index 500 Trust Mutual Fund
Purchases 406,847 - 406,847 406,847 -
Sales - 396,433 325,097 396,433 71,336
<FN>
Category:
(i) Single transactions in excess of 5% of plan assets.
(ii) Series of transactions other than securities transactions.
(iii) Series of securities transactions.
(iv) Transactions with or in conjunction with a person if any single transaction with that person was in excess of 5%.
</FN>
</TABLE>
CONSENT OF ERNST & YOUNG, LLP INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statement (Form
S-8) pertaining to the Delco Remy America Salaried 401(k) Savings Plan of our
report dated May 21, 1999 with respect to the financial statements of the Delco
Remy America Salaried 401(k) Savings Plan included in this Annual Report (Form
11-K) for the year ended December 31, 1998.
/s/ Ernst & Young LLP
Indianapolis, Indiana
June 25, 1999
