UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

Form 10-K

 

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

For the fiscal year ended:		Commission file number:
December 31, 2011		001-34903

 

TOWER INTERNATIONAL, INC.

(Exact name of Registrant as specified in its charter)

Delaware		27-3679414
(State of Incorporation)		(IRS Employer Identification Number)

17672 Laurel Park Drive North, Suite 400 E Livonia, Michigan		48152
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (248) 675-6000

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered
Common Stock, par value $.01 per share		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
None

 

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15d of the Act. Yes o No x

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 x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

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

Large accelerated filer o       Accelerated filer x       Non-accelerated filer o       Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes o No x

The aggregate market value of the common stock held by non-affiliates of the registrant, computed by reference to the average high and low trading prices of the common stock as of the closing of trading on June 30, 2011, was approximately $177,881,000.

There were 19,683,032 shares of the registrant’s common stock outstanding at March 5, 2012.

DOCUMENTS INCORPORATED BY REFERENCE

Certain portions, as expressly described in this report, of the Registrant’s Proxy Statement for the 2012 Annual Meeting of the Stockholders are incorporated by reference into Part III.

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TOWER INTERNATIONAL, INC. — FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2011
  
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		10-K Pages
PART I
Item 1. Business			1
Item 1A. Risk Factors			14
Item 1B. Unresolved Staff Comments			27
Item 2. Properties			27
Item 3. Legal Proceedings			28
Item 4. Mine Safety Disclosures			28
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Repurchases of Equity Securities			29
Item 6. Selected Financial Data			30
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			33
Item 7A. Quantitative and Qualitative Disclosures about Market Risk			55
Item 8. Financial Statements and Supplementary Data			57
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			107
Item 9A. Controls and Procedures			107
Item 9B. Other Information			107
PART III
Item 10. Directors, Executive Officers, and Corporate Governance			108
Item 11. Executive Compensation			108
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			108
Item 13. Certain Relationships and Related Transactions, and Director Independence			109
Item 14. Principal Accountant Fees and Services			109
PART IV
Item 15. Exhibits and Financial Statement Schedules			110
Signatures			117
Exhibit Index			118
Exhibits
EX-21
EX-23
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101.INS
EX-101.SCH
EX-101.CAL
EX-101.LAB
EX-101.PRE

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Our Industry

We believe OEMs produce a majority of their structural metal components and assemblies internally. While OEM policies differ and may be especially impacted by their own capacity utilization, the capital expenditures associated with internal production can be substantial. We believe that longer term, OEMs may outsource a greater proportion of their stamping requirements because of this capital and fixed-cost intensity and we may benefit from this shift in our customer preferences. In addition, we believe OEMs will increasingly favor global vehicle platforms supported by larger, more capable and financially strong suppliers. Given our global manufacturing footprint, cost structure and integrated design, engineering and program management capabilities, we are well-positioned to take advantage of these potential opportunities.

Our Strategy

Our strategy is to strengthen our leadership position as a supplier to the global automotive industry and to expand opportunistically into non-automotive markets, seeking to capitalize on opportunities beyond the expected automotive industry recovery. We believe that our core strengths described below position us to continue to provide a high-quality, compelling value proposition to our customers, enabling profitable growth. We also believe it is important to maintain a sound balance sheet and that the reduction of our debt over the long-term will enhance stockholder values. Specific strategic objectives include:

Revenue Growth

Our strategy for revenue growth has three main pillars: organic automotive growth, expansion into markets adjacent to the automotive industry, and opportunistic acquisitions and joint ventures.

Organic Automotive Growth :  Although near-term uncertainties exist in some parts of the world, we believe that vehicle growth will be above-average over the next three-to-five years. Having significantly improved our cost structure over the last several years, we believe that we are poised to benefit from the long-term cyclical recovery in the European and North American markets and to grow in developing markets like Brazil and China, which we believe have above-average secular growth prospects. Capacity expansions in China and Brazil are expected to lead to more significant growth in subsequent years while maintaining good geographic, customer and platform diversification. For example, we launched an additional facility in Contagem, Brazil during the fourth quarter of 2011.

Expansion into Other Non-Automotive Markets :  We intend to continue to leverage our integrated engineering, manufacturing and program management expertise to pursue growth opportunities in non-automotive markets. Although this is expected to be a minor percentage of our business for several years, we believe there is a significant longer term opportunity for expansion and diversification of our revenue.

Opportunistic Acquisitions and Joint Ventures :  We intend to analyze and pursue acquisition opportunities where we believe we can add value and realize synergies by improving operating results through the application of our processes. We anticipate that the automotive structural metals and assemblies sector will experience increased consolidation and believe that we are well-positioned to participate successfully in that evolution. We also intend to seek suitable partners to set up additional joint ventures in developing automotive markets such as China, which we believe have above-average secular growth prospects. Further, to support our expansion into non-automotive markets, we may pursue acquisitions that align with our non-automotive initiatives such as the acquisition of substantially all of the assets of W Industries, which operates in the defense and aerospace industry, during the second quarter of 2011.

We are expanding capacity at our existing joint ventures in China through additional facilities located in Chengdu, Changchun, and Dalian. In addition, we reached an agreement with Xiangtan Ditong Automotive Industrial Machinery Co., Ltd. (DIT) in July 2011 to form a joint venture in which we exercise control that was approved by the Chinese government in September 2011. During the fourth quarter of 2011, the joint venture partner contributed its facility located in Xiangtan, China. In February 2012, one of our foreign subsidiaries reached an agreement with Ningbo Beilun Ditong Auto Parts Co., Ltd. (a subsidiary of Ditong Automotive Products Co., Ltd) and Zhejiang Jirun Automobile Co.Ltd. (a subsidiary of Geely Automobile Co,.Ltd), subject to the approval of the Chinese government, to form a majority-owned joint venture located in Ningbo, China. As a result of these actions, we have increased our manufacturing presence in China from two plants to seven plants which will better position us to participate in the expected growth.

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Maintain a Sound Balance Sheet

We consider it critical to maintain a sound balance sheet and intend to de-lever the balance sheet over time. During 2010, we refinanced a substantial portion of our long-term debt extending maturities through 2017. Additionally, during 2011 we amended and extended our revolving credit facility which will now mature in 2016. Although near-term cash requirements to fund expansion are expected to limit our cash flow generation, we believe lowering our debt will enhance stockholder value and we intend to reduce our debt when it is practical to do so.

Intense Focus on Cash Flow

We have a common focus and an alignment of management incentives throughout our company on the importance of operating cash flow. For example, we track cash on a daily basis and our global bonus program is partly tied to cash flow metrics. This common focus and aligned incentive with respect to cash flow among all our employees helps us in seeking to create value for our stockholders.

Our Competitive Strengths

Geographic Diversification

We are well-diversified geographically, which positions us to participate in growth opportunities as they occur over time around the world and mitigates the impact of regional production fluctuations on our business. These potential opportunities range from near-term cyclical volume recovery in North America to continued growth in emerging markets such as Brazil and China. Proximity to end customers is especially important in our business because size and weight make our products difficult and expensive to transport. Our geographic mix as a percent of revenues for 2011, 2010 and 2009 is shown below:

Geographic Mix (% of Revenues)

		Year Ended December 31,
Region		2011				2010				2009
Europe			35	%			36	%			40	%
North America			35	%			32	%			29	%
South Korea			15	%			14	%			12	%
South America			9	%			10	%			10	%
China			6	%			8	%			9	%
Total			100	%			100	%			100	%

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Customer Diversification

We have a well-diversified customer mix as eight different OEMs individually accounted for 5% or more of our revenues in 2011. European OEMs, including Volvo and Opel, were our biggest customer group in 2011, followed by Asian OEMs, including Hyundai/Kia and Chery, and North American OEMs, such as Ford, General Motors, and Chrysler (which we refer to as the “Detroit 3”). With this customer diversification, we believe we are well-positioned to participate in the anticipated automotive industry recovery, while also mitigating our exposure to any individual customer. The below charts summarize our customer mix as a percent of revenues in 2011, 2010 and 2009.

Customer Mix (% of Revenues)

		Year Ended December 31,
Customer		2011				2010				2009
Ford			17	%			13	%			13	%
VW			17	%			16	%			17	%
Hyundai/Kia			14	%			13	%			10	%
Fiat			9	%			11	%			13	%
Chrysler			7	%			7	%			5	%
Volvo			7	%			8	%			10	%
Nissan			6	%			7	%			6	%
Daimler			5	%			5	%			5	%
BMW			4	%			4	%			5	%
Toyota			3	%			5	%			5	%
PSA			2	%			1	%			1	%
Chery			1	%			2	%			3	%
Honda			1	%			2	%			2	%
Other			7	%			6	%			5	%
Total			100	%			100	%			100	%

Customer Mix by Region (% of Revenues)

		Year Ended December 31,
OEM		2011				2010				2009
European OEMs			47	%			49	%			54	%
Asian OEMs			27	%			30	%			28	%
Detroit 3 OEMs			25	%			21	%			18	%
Other			1	%			—				—
Total			100	%			100	%			100	%

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Platform Diversification

Our products are offered on a diverse mix of vehicle platforms, reflecting the balanced portfolio approach of our business model and the breadth of our product capabilities. We believe that our platform diversification provides us an opportunity to participate in an industry recovery without being overly exposed to a single vehicle model or OEM. We supply products to approximately 176 vehicle models globally to 13 of the 15 largest OEMs based on 2011 production volumes.

Vehicle Platform Mix (% of Revenues)

		Year Ended December 31,
Vehicle Platform		2011				2010				2009
Small Cars			37	%			43	%			49	%
Large Cars			26	%			24	%			21	%
Other – Light Trucks			19	%			13	%			12	%
North American Framed Vehicles			18	%			20	%			18	%
Total			100	%			100	%			100	%

The term “small cars” refers to passenger cars that are classified by IHS Automotive®, or IHS, in the smallest three of IHS’s four categories of passenger cars, the term “large cars” refers to the largest category of passenger cars, multi-purpose vehicles and cross-over vehicles that are based on a unibody structure, the term “other – light trucks” refers to SUVs that are based on a unibody structure, minivans, and light trucks in the international regions, and the term “North American framed vehicles” refers to vehicles such as pick-up trucks and SUVs that are built on a full-frame structure.

The reports prepared by IHS referred to in this Annual Report are subscription-based. All references in this report to historical industry production volumes, projections, estimates or other data attributable to IHS are based on data available from the IHS February 2012 forecast.

Competitive Cost Structure

Based on the cost improvement actions taken and the results we have achieved, we believe we have a competitive cost structure. For example, we believe our labor rate for hourly production workers is at a competitive level for our sector. Our pension plan is frozen and does not accrue additional benefits and our post-retirement life insurance plan is capped. In addition, our current leadership team actively focuses on constantly improving our productivity and manufacturing throughput, which we refer to as efficiencies, to further improve our cost structure.

We measure our operating efficiencies in manufacturing and purchasing cost reductions as a percentage of our material and manufacturing costs. We believe the typical percentage for our industry is approximately 2% to 3%. Our ability to control our costs is directly linked to our ability to offset price reductions and other cost increases with reductions in operating costs through the implementation of various manufacturing, purchasing, administrative and other efficiencies. We seek to drive costs out of our operations through several ongoing initiatives, including the use of Lean Six Sigma principles and labor best practices standardization.

Our Products

We produce a broad range of structural components and assemblies, many of which are critical to the structural integrity of a vehicle.

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Product Offerings

Body structures and assemblies

Body structures and assemblies form the basic upper body structure of the vehicle and include structural metal components such as body pillars, roof rails and side sills. This category also includes Class A surfaces and assemblies, which are the “exterior skin” of the vehicle — body sides, hoods, doors, fenders and pickup truck boxes. These components form the appearance of the vehicle, calling for flawless surface finishes.

Chassis, lower vehicle structures and suspension components

Lower vehicle frames and structures include chassis structures that make up the “skeleton” of a vehicle and which are critical to overall performance, particularly in the areas of noise, vibration and harshness, handling and crash management. These products include pickup truck and SUV full frames, automotive engine and rear suspension cradles, floor pan components, and cross members that form the basic lower body structure of the vehicle. These heavy gauge metal stampings carry the load of the vehicle, provide crash integrity, and are critical to the strength and safety of vehicles. We manufacture a wide variety of stamped, formed and welded suspension components including control arms, suspension links, track bars, spring and shock towers, shackles, twist axles, radius arms, stabilizer bars, trailing axles and brackets.

Complex body-in-white assemblies

Complex body-in-white assemblies are comprised of multiple components and sub-assemblies welded to form major portions of the vehicle’s body structure. We refer to body-in-whites as the manufacturing stage in which the vehicle body sheet metal has been assembled or designed but before the components and trim have been added. Examples of complex assemblies include front and rear floor pan assemblies and door/pillar assemblies.

Other

We also manufacture a variety of other automotive products and defense and aerospace products.

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Product Mix

We have a well-diversified product group mix. Our product group mix as a percent of revenues for 2011, 2010 and 2009 is shown below:

Product Group Mix (% of Revenues)

		Year Ended December 31,
Product Group		2011				2010				2009
Body structures and assemblies			52	%			53	%			56	%
Complex body-in-white assemblies			24	%			20	%			17	%
Chassis, lower vehicle structures and suspension components			22	%			26	%			25	%
Other			2	%			1	%			2	%
Total			100	%			100	%			100	%

Overview of Major Vehicle Models

The following table presents an overview of the major vehicle models for which we supply products:

OEM		Models		Product Type
Europe
Volvo		S40 / V50 / C30 / C70		Complex Assembly
VW		Cayenne / Touareg / Q7		Body Structures & Complex Assembly
		Octavia		Body Structures
		Caddy Van		Body Structures
		up!		Body Structures
		Citigo		Body Structures
		Mii		Body Structures
BMW		1 / 3 Series		Body Structures
Daimler		Sprinter / Crafter		Body Structures & Complex Assembly
Fiat		500		Body Structures
		Bravo		Body Structures
		Ducato		Body Structures
		MiTo		Body Structures
		Punto		Body Structures
		Giuletta		Body Structures
Opel		Astra		Body Structures
North America
Ford		Econoline		Frame Assembly
		Explorer		Complex Assembly
		Expedition / Navigator		Body Structures
		F-Series		Body Structures
		Focus		Body Structures
		Taurus / MKS		Complex Assembly
Chrysler		Grand Caravan / Town & Country		Body Structures
		Wrangler		Frame Assembly
		Grand Cherokee		Body Structures
Nissan		Frontier / Xterra / Pathfinder		Body Structures & Frame Assembly
		Titan / Armada		Frame Assembly
		NV Series		Frame Assembly
Toyota		Camry		Body Structures

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OEM		Models		Product Type
Asia
Hyundai		Bongo Truck		Body Structures & Frame Assembly
		Carens		Body Structures
		Carnival		Frame Assembly
		Forte		Body Structures
		Mohave		Frame Assembly
		Morning		Body Structures
		Sorento		Body Structures & Frame Assembly
		Sportage		Body Structures
		Tucson ix		Body Structures
		K5		Body Structures
		Starex		Body Structures
		Pride		Body Structures
FAW-VW		Bora / Golf A4		Chassis
		Jetta		Chassis
Chery		Cowin 3		Chassis
		Tiggo		Chassis
		Fulwin 2		Chassis
		A3		Chassis
SAIC		Roewe 550		Chassis
Fiat		343c		Body Structures
Geely		SV5		Body Structures
South America
VW		Gol		Body Structures
		Saveiro		Body Structures
		Fox		Body Structures
Fiat		Palio / Doblo		Body Structures
		Punto		Body Structures
		Strada		Body Structures
Honda		Civic		Body Structures
		Fit		Body Structures

International Operations

We have significant manufacturing operations outside the United States, and in 2011, approximately 65% of our revenues originated outside the United States. For information regarding potential risks associated with our international operations, see “Risk Factors — We are subject to risks related to our international operations.” See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and note 16 to our consolidated financial statements for further information regarding our international operations.

Manufacturing and Operations

Our manufacturing operations consist primarily of stamping and welding operations, system and modular assembly operations, coating, and other ancillary operations. Stamping involves passing metal through dies in a stamping press to form the metal into three-dimensional parts. We produce stamped parts using precision single-stage, progressive and transfer presses, ranging in size from 150 to 4,500 tons, which perform multiple functions to convert raw material into finished products. We invest in our press technology to increase flexibility, improve safety and minimize die changeover time.

We feed stampings into assembly operations that produce complex assemblies through the combination of multiple parts that are welded or fastened together. Our assembly operations are performed on either dedicated, high-volume welding/fastening machines or on flexible cell-oriented robotic lines. The assembly machines attach additional parts, fixtures or stampings to the original metal stampings. In addition to standard

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production capabilities, our assembly machines also are able to perform various statistical control functions and identify improper welds and attachments. From time to time we work with manufacturers of fixed/robotic welding systems to develop faster, more flexible machinery.

We require significant quantities of steel in the manufacture of our products. Our products use various grades and thicknesses of steel and aluminum, including high-strength, hot- and cold-rolled, galvanized, organically coated, stainless, and aluminized steel. Although changing steel prices affect our results, we seek to be neutral with respect to steel pricing over time, with the intention of neither making nor losing money as steel prices fluctuate. The pricing of our products includes a component for steel which increases as steel prices increase and decreases as steel prices decrease. For our North American customers and several of our other customers, we purchase steel through our customers’ resale programs, where our customers actually negotiate the cost of steel for us. In other cases, we procure steel directly from the mills, negotiating our own price and seeking to pass through steel price increases and decreases to our customers.

We focus on achieving superior product quality at the lowest operating costs possible and concentrate on improving our manufacturing processes to drive out inefficiencies. We seek to continually improve our processes in efforts to improve our cost competitiveness and to achieve higher quality. We continue to adapt our capacity to customer demand, both by expanding capabilities in growth areas and by reallocating capacity away from demand segments in decline.

We are committed to sustaining Lean Six Sigma principles throughout our manufacturing processes. We utilize Lean Six Sigma principles to increase the efficiency of our operations and to reduce operating costs, thereby improving our cost competitiveness. We have accomplished efficiency improvements while at the same time improving our quality, with customer-reported defects averaging about 30 per million parts delivered in 2011, which we believe is world-class performance.

Supply Base — Manufactured Components and Raw Materials

We purchase various manufactured components and raw materials for use in our manufacturing processes. All of these components and raw materials are available from numerous sources. We employ just-in-time manufacturing and sourcing systems enabling us to meet customer requirements for faster deliveries while minimizing our need to carry significant inventory levels. The primary raw material used to produce the majority of our products is steel. We purchase hot- and cold-rolled, galvanized, organically coated, stainless and aluminized steel from a variety of suppliers. We purchase a portion of our steel from certain of our customers through various OEM resale programs. The purchases through customer resale programs have buffered the impact of price swings associated with the procurement of steel. The remainder of our steel purchasing requirements are met through contracts with steel producers and market purchases. In addition, we procure small- and medium-sized stampings, fasteners, tubing, and rubber products.

Sales, Marketing and Distribution

Our sales and marketing efforts are designed to create awareness of our engineering, program management, manufacturing and assembly expertise, and to translate our leadership position into contract wins. We have developed a sales team that consists of an integrated group of professionals, including skilled engineers and program managers, which we believe provides the appropriate mix of operational and technical expertise needed to interface successfully with OEMs. We sell directly to OEMs through our sales and engineering teams at our technical and customer service centers strategically located around the world. Bidding on automotive OEM platforms typically encompasses many months of engineering and business development activity. We integrate our sales force directly into our operating team and work closely with our customers throughout the process of developing and manufacturing a product. Our proximity to our customer base enables us to enjoy close relationships with our customers and positions us well to seek future business awards.

Customers

We have developed long-standing business relationships with our automotive customers around the world. We work together with our customers in various stages of production, including development, component sourcing, quality assurance, manufacturing and delivery. With a diverse mix of products and facilities in major

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markets worldwide, we believe we are well-positioned to meet customer needs. We believe we have a strong, established reputation with customers for providing high-quality products at competitive prices, as well as for timely delivery and customer service. Given that the automotive OEM business involves long-term production contracts awarded on a platform-by-platform basis, we believe we can leverage our strong customer relationships to obtain new platform awards.

Customer Support

We have nine engineering and sales locations throughout the world, including a 24-hour engineering support center in India. We believe that we provide effective customer solutions, products and service to our customers globally. Our customer service group is organized into customer-dedicated teams within regions to provide more focused service to our clients.

Seasonality

Our business is seasonal. Our customers in Europe typically shut down vehicle production during portions of July or August and during one week in our fourth quarter. Our North American customers typically shut down vehicle production for approximately two weeks during July and for one week during December. Our quarterly results of operations, cash flows and liquidity may be impacted by these seasonal practices. For example, our working capital is directly impacted which typically results in a use of cash during the first half of the year and cash generation in the second half of the year. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion on working capital.

Competition

We principally compete for new business both at the beginning of the development of new models and upon the redesign of existing models. New-model development generally begins two to five years before the marketing of such models to the public. Once a supplier has been designated to supply parts for a new program, an OEM usually will continue to purchase those parts from the designated producer for the life of the program, although not necessarily for a redesign. OEMs typically rigorously evaluate suppliers based on many criteria such as quality, price/cost competitiveness, system and product performance, reliability and timeliness of delivery, new product and technology development capability, excellence and flexibility in operations, degree of global and local presence, effectiveness of customer service and overall management capability.

We believe that we compete effectively with other leading suppliers in our market. The strength and breadth of our program management and engineering capabilities, as well as our geographic, customer and platform diversification, provide the necessary scale to attempt to optimize our cost structure. We follow manufacturing practices designed to improve efficiency and quality, including manpower standardization and global inventory reduction initiatives, all of which enable us to manage inventory so that we can deliver quality components and systems to our customers in the quantities and at the times ordered.

Our major competitors include: Magna International, Inc. (Cosma division), Gestamp Automocion, Martinrea International, Gruppo Magnetto, Benteler Automotive, Sungwoo, and Hwashin. We compete with other competitors with respect to certain of our products and in particular geographic markets. The number of our competitors has decreased in recent years and we believe will continue to decline due to continued supplier consolidation and the recent economic downturn. We expect that OEMs will continue to be increasingly focused on the financial strength and viability of their supply base. We believe that such scrutiny of suppliers will result in additional contraction in the supply base and may force combinations of some suppliers.

In addition, a number of our major OEM customers manufacture products that compete with our products. Our OEM customers tend to outsource less when they have idle capacity. Although these OEM customers have indicated that they will continue to rely on outside suppliers, they could elect to increase the extent to which they manufacture products to meet their own requirements or to compete with us.

Joint Ventures

Joint ventures represent an important strategic part of our business. We have used our joint ventures to enter into new geographic markets, such as China, to gain new customers and/or strengthen our position with existing customers, and to develop new technologies.

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When we enter new geographic markets where we have not previously established substantial local experience and infrastructure, teaming with a local partner can reduce capital investment by leveraging pre-existing infrastructure. In addition, local partners in these markets can provide knowledge and insight into local customs and practices and access to local suppliers of raw materials and components. All of these advantages can reduce the risk, thereby enhancing the prospect for success of entry into a new geographic market.

Joint ventures can also be an effective means to acquire new customers and strengthen relationships with existing customers. Through joint venture arrangements, partners can access technology that they would otherwise be required to develop independently, thereby reducing the time and cost of development. Moreover, they can provide the opportunity to create synergies and applications of the technology that would not otherwise be possible.

As of December 31, 2011, we had three consolidated joint ventures in China: TWA WuHu, which we refer to as WuHu, Changchun Tower Golden Ring Automotive Products Co., Ltd., which we refer to as TGR, and Xiangtan Ditong Automotive Industrial Machinery Co., Ltd. (DIT), which we refer to as Xiangtan. In February 2012, one of our foreign subsidiaries reached an agreement with Ningbo Beilun Ditong Auto Parts Co., Ltd. (a subsidiary of Ditong Automotive Products Co., Ltd) and Zhejiang Jirun Automobile Co.Ltd. (a subsidiary of Geely Automobile Co,.Ltd), subject to the approval of the Chinese government, to form a majority-owned joint venture located in Ningbo, China.

Our WuHu joint venture consists of an 80% equity interest in WuHu, a joint venture limited liability company located in WuHu City, Anhui Province, China. This joint venture primarily serves to supply Chery with front and rear lower vehicle structure modules and their respective replacement platforms.

Our TGR joint venture consists of a 60% equity interest in TGR, a joint venture limited liability company located in the City of Changchun, Jilin Province, China. Our TGR joint venture primarily supplies FAW-VW Automotive Company Limited and FAW Automotive Company Limited with structure based components, including sub-frames, cross members with motor carriers, rear axles, frame front-ends, and control arms and the structural components for other vehicles.

Our Xiangtan joint venture consists of a 50% equity interest in Xiangtan, a joint venture limited liability company located in Xiangtan, Hunan Province, China. Presently, this joint venture primarily supplies Geely with underbody stampings, but is constructing a new facility to service the Fiat/Guangzhou Automotive joint venture in Changsha, China with chassis, body, and roll formed assemblies.

Employees

As of December 31, 2011, we had approximately 8,600 employees worldwide, of whom approximately 5,500 were covered under collective bargaining agreements that expire at various times.

We are not aware of any work stoppages since the inception of the Predecessor Company in 1993. A strike or slow-down by one of our unions could have a material adverse effect on our business. We believe that our relations with our employees are satisfactory.

Environmental Matters

We are subject to various domestic and foreign federal, state and local laws and regulations governing the protection of the environment and health and safety, including those regulating soil, surface water and groundwater contamination; the generation, storage, handling, use, disposal and transportation of hazardous materials; the emission and discharge of materials, including greenhouse gases, or GHGs, into the environment; and the health and safety of our employees. We are also required to obtain environmental permits from governmental authorities for certain operations. We have taken steps to comply with these numerous and sometimes complex laws, regulations and permits. We have also achieved ISO-14001 registration for substantially all of our facilities. While compliance with environmental requirements has not had a material impact on our capital expenditures, earnings or competitive position, we have made and will continue to make capital and other expenditures pursuant to such requirements and, if we violate or fail to comply with these requirements, could be subject to fines, penalties or litigation.

Environmental laws, regulations and permits, and the enforcement thereof, change frequently and have tended to become more stringent over time. In particular, more rigorous GHG emission requirements are in various

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stages of development. For example, the United States Congress has considered legislation that would establish a nationwide limit on GHGs, and the Environmental Protection Agency, or EPA, has issued regulations limiting GHG emissions from mobile and stationary sources pursuant to the federal Clean Air Act. Any regulation of GHG emissions, including through a cap-and-trade system, technology mandate, emissions tax, reporting requirement or other program, could subject us to significant costs, including those relating to emission credits, pollution control equipment, monitoring and reporting, as well as increased energy and raw material prices. In addition, our OEM customers may seek price reductions from us to account for their increased costs resulting from GHG regulations. Further, growing pressure to reduce GHG emissions from mobile sources could reduce automobile sales, thereby reducing demand for our products and ultimately our revenues. Although there is still significant uncertainty surrounding the scope, timing and effect of future GHG regulation, any such regulation could have a material adverse impact on our business, financial condition, results of operations, reputation, product demand and liquidity.

We also could be responsible for costs relating to any contamination at our, or a predecessor entity’s, current or former owned or operated properties or third party waste disposal sites, even if we were not at fault. Some of these locations have been impacted by environmental releases, and soil or groundwater contamination is being addressed at certain of these sites. In addition to potentially significant investigation and remediation costs, contamination can give rise to third party claims for fines or penalties, natural resource damages, personal injury or property damage. Our costs and liabilities associated with environmental contamination could be substantial and may be material to our business, financial condition, results of operations or cash flows.

Segment Overview

See note 16 to our consolidated financial statements for information on our operating and reportable segments.

Public Information

We maintain a website at http://www.towerinternational.com . We will make available on our website, free of charge, the proxy statements and reports on Forms 8-K, 10-K and 10-Q that we file with the United States Securities and Exchange Commission, or SEC, as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. Additionally, we have adopted and posted on our website a Code of Business Conduct that applies to, among other people, our principal executive officer, principal financial officer and principal accounting officer. We intend to disclose any waivers of the Code of Business Conduct on our website. We will provide, free of charge, a copy of our Code of Business Conduct to any person who requests such a copy. All such requests should be directed to our Executive Director, Investor & External Relations, c/o Tower International, Inc., 17672 Laurel Park Drive North, Suite 400 E, Livonia, Michigan 48152.

Disclosure Regarding Forward-Looking Statements

This Annual Report contains statements which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. The forward-looking statements can be identified by the words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” “intend,” “project,” and other similar expressions. Forward-looking statements are made as of the date of this report and are based upon management’s current expectations and beliefs concerning future developments and their potential effects on us. Such forward-looking statements are not guarantees of future performance. The following important factors, and those important factors described elsewhere in this Annual Report, including the matters set forth under the captions entitled “Risk Factors” and “Quantitative and Qualitative Disclosures About Market Risk” could cause our actual results to differ materially from estimates or expectations reflected in such forward-looking statements:

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Any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

This Annual Report also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. We have not independently verified the statistical and other industry data generated by independent parties that is contained in this Annual Report and, accordingly, we cannot assure you of its accuracy or completeness. In addition, projections, assumptions and estimates of our future performance and the future performance of the industries in which we operate are necessarily subject to a high degree of uncertainty and risk.

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We are subject to risks related to our international operations.

Our international operations include manufacturing facilities in Europe, China, South Korea, and Brazil, and we sell our products in each of these areas. For the year ended December 31, 2011, approximately 65% of our revenues were derived from operations outside the United States. International operations are subject to various risks that could have a material adverse effect on those operations and our business as a whole, including:

Foreign exchange rate fluctuations could cause a decline in our financial condition, results of operations and cash flows.

We generate a significant portion of our revenues and incur a significant portion of our expenses in currencies other than the U.S. dollar. We are subject to risk if the foreign currency in which our costs are paid appreciates against the currency in which we generate revenues because the appreciation effectively increases our cost in that country. The financial condition, results of operations and cash flows of some of our operating entities are reported in foreign currencies and then translated into U.S. dollars at the applicable foreign exchange rate for inclusion in our consolidated financial statements. As a result, appreciation of the U.S. dollar against these foreign currencies generally will have a negative impact on our reported sales and profits while depreciation of the U.S. dollar against these foreign currencies will generally have a positive effect on reported revenues and profits.

A significant amount of our revenues are denominated in Euros. Economic instability in the European Union and the related decline in the value of the Euro could have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, we have increased exposure to fluctuations in the Euro due to the exchange of U.S. dollar for Euro denominated debt as a result of our retirement of our outstanding first lien term loan (see note 6 to our consolidated financial statements) and the issuance of our senior secured notes in August 2010. As of December 31, 2011, we estimated that a hypothetical change of 100 basis points in the Euro to the U.S. dollar exchange rate would have impacted our stockholders’ equity by approximately $2.9 million.

We may use a combination of natural hedging techniques and financial derivatives to protect against certain foreign currency exchange rate risks. Such hedging activities may be ineffective or may not offset more than a portion of the adverse financial impact resulting from foreign currency variations. Gains or losses associated with hedging activities also may negatively impact operating results.

Deterioration in the United States and world economies could exacerbate the difficulties experienced by our customers and suppliers in obtaining financing, which, in turn, could materially and adversely impact our business, financial condition, results of operations and cash flows.

Lending institutions have suffered and may continue to suffer losses due to their lending and other financial relationships, especially because of the general weakening of the global economy and the increased financial

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instability of many borrowers. Longer-term disruptions in the credit markets could further adversely affect our customers by making it increasingly difficult for them to obtain financing for their businesses and for their customers to obtain financing for automobile purchases. Our OEM customers typically require significant financing for their respective businesses. In addition, our OEM customers typically have related finance companies that provide financing to their dealers and customers. These finance companies have historically been active participants in the securitization markets, which have experienced severe disruptions during the global economic crisis. Our suppliers, as well as the other suppliers to our customers, may face similar difficulties in obtaining financing for their businesses. If capital is not available to our customers and suppliers, or if its cost is prohibitively high, their businesses would be negatively impacted, which could result in their restructuring or even reorganization/liquidation under applicable bankruptcy laws. Any such negative impact, in turn, could materially and negatively affect our company either through the loss of revenues to any of our customers so affected, or due to our inability to meet our commitments without excess expense resulting from disruptions in supply caused by the suppliers so affected.

Financial difficulties experienced by any major customer could have a material adverse impact on us if such customer were unable to pay for the products we provide or we experienced a loss of, or material reduction in, business from such customer. As a result of such difficulties, we could experience lost revenues, significant write-offs of accounts receivable, significant impairment charges or additional restructurings beyond the steps we have taken to date.

We sponsor a defined benefit pension plan that is underfunded and will require substantial cash payments. Additionally, if the performance of the assets in our pension plan does not meet our expectations, or if other actuarial assumptions are modified, our required contributions may be higher than we expect.

We sponsor a defined benefit pension plan that is underfunded. Although the Predecessor Company ceased benefit accruals under the plan, we anticipate that the plan may require substantial cash payments in order to meet our funding obligations. These cash contributions may be significant in future periods and could adversely impact our cash flow.

Additionally, our earnings may be impacted by the amount of income or expense recorded for our pension plan. Generally accepted accounting principles (GAAP) in the United States require that income or expense for pension plans be calculated at the annual measurement date using actuarial assumptions and calculations. These calculations reflect certain assumptions, the most significant of which relate to the capital markets, interest rates and other economic conditions. Changes in key economic indicators can change these assumptions. These assumptions, along with the actual value of assets at the measurement date, will impact the calculation of pension expense for the year. Although GAAP expense and pension contributions are not directly related, the key economic indicators that affect GAAP expense also affect the amount of cash that we would contribute to our pension plan. As a result of current economic instability, the investment portfolio of the pension plan has experienced volatility. Because the values of these pension plan assets have fluctuated and will fluctuate in response to changing market conditions, the amount of gains or losses that will be recognized in subsequent periods, the impact on the funded status of the pension plan and the future minimum required contributions, if any, could have a material adverse effect on our business, financial condition, results of operations and cash flows, but such impact cannot be determined at this time.

The automobile industry is highly cyclical and cyclical downturns in our domestic or international business segments negatively impact our business, financial condition, results of operations and cash flows.

The volume of automotive production in North America, Europe and the rest of the world has fluctuated, sometimes significantly from year-to-year, and such fluctuations give rise to changes in demand for our products. Because we have significant fixed production costs, relatively modest declines in our customers’ production levels can have a significant adverse impact on our results of operations.

The highly cyclical nature of the automotive industry presents a risk that is outside our control and that cannot be accurately predicted. Moreover, a number of factors that we cannot predict can and have impacted cyclicality in the past. Decreases in demand for automobiles generally, or in the demand for our products in particular, could materially and adversely impact our business, financial condition, results of operations and cash flows.

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Product liability claims could cause us to incur losses and damage our reputation.

Many of our products are critical to the structural integrity of a vehicle. As such, we face an inherent business risk of exposure to product liability claims in the event of the failure of our products to perform to specifications, or if our products are alleged to result in property damage, bodily injury or death. In addition, if any of our products are, or are alleged to be, defective, we may be required to participate in a recall involving those products. We are generally required under our customer contracts to indemnify our customers for product liability claims in respect of our products. In addition, we do not have insurance covering product recalls. Accordingly, we may be materially and adversely impacted by product liability claims.

The decreasing number of automotive parts customers could make it more difficult for us to compete favorably.

Our business, financial condition, results of operations and cash flows could be materially and adversely affected because the OEM customer base is consolidating. As a result, we are competing for business from fewer customers. Due to the cost focus of these major customers, we have been, and expect to continue to be, requested to reduce prices as part of our initial business quotations and over the life of contracts we have been awarded. We cannot be certain that we will be able to generate cost savings and operational improvements in the future that are sufficient to offset price reductions requested by customers and to make us profitable and position us to win additional business.

The decreasing number of automotive parts suppliers could make it more difficult for us to compete favorably.

Consolidation and bankruptcies among automotive parts suppliers are resulting in fewer and larger competitors who benefit from purchasing and distribution economies of scale. If we cannot compete favorably in the future with these larger suppliers, our business, financial condition, results of operations and cash flows could be adversely affected due to a reduction of, or inability to increase, revenues.

We may have difficulty competing favorably in the highly competitive automotive parts industry.

The automotive parts industry is highly competitive. Although the overall number of competitors has decreased due to ongoing industry consolidation, we face significant competition within each of our major product areas, including from new competitors entering the markets that we serve, and OEMs may seek to integrate vertically. The principal competitive factors include price, quality, global presence, service, product performance, design and engineering capabilities, new product innovation and timely delivery. We cannot assure you that we will be able to continue to compete favorably in these competitive markets or that increased competition will not have a material adverse effect on our business by reducing our ability to increase or maintain sales and profit margins. A number of our major OEM customers manufacture products which compete with our products. Our OEM customers tend to outsource less when they have idle capacity.

We principally compete for new business at the beginning of the development of new models and upon the redesign of existing models by major OEM customers. New model development generally begins three to five years prior to the marketing of such models to the public. Redesign of existing models begins during the life cycle of a platform, usually at least two to three years before the end of the platform’s life cycle. The failure to obtain new business on new models or to retain or increase business on redesigned existing models, could adversely affect our business, financial condition, results of operations, and cash flows. In addition, as a result of the relatively long lead times required for many of our structural components, it may be difficult in the short-term for us to obtain new revenues to replace any unexpected decline in the sale of existing products.

The inability for us, our customers and/or our suppliers to obtain and maintain sufficient capital financing, including working capital lines, and credit insurance may adversely affect our, our customers’ and our suppliers’ liquidity and financial condition.

Our working capital requirements can vary significantly, depending in part on the level, variability and timing of our customers’ worldwide vehicle production and the payment terms with our customers and suppliers. Our liquidity could also be adversely impacted if our suppliers were to suspend normal trade credit terms and require payment in advance or payment on delivery. If our available cash flows from operations are not

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sufficient to fund our ongoing cash needs, we would be required to look to our cash balances and availability for borrowings under our credit facilities to satisfy those needs, as well as potential sources of additional capital, which may not be available on satisfactory terms and in adequate amounts, if at all.

There can be no assurance that we, our customers and our suppliers will continue to have such ability. This may increase the risk that we cannot produce our products or will have to pay higher prices for our inputs. These higher prices may not be recovered in our selling prices.

Our suppliers often seek to obtain credit insurance based on the strength of the financial condition of our subsidiary with the payment obligation, which may be less robust than our consolidated financial condition. If we were to experience liquidity issues, our suppliers may not be able to obtain credit insurance and in turn would likely not be able to offer us payment terms that we have historically received. Our failure to receive such terms from our suppliers could have a material adverse effect on our liquidity.

We operate with negative working capital which could adversely affect our business, financial condition, results of operations and cash flows.

We typically operate with a negative working capital balance; therefore, a significant reduction in sales and the related reduction in accounts receivable could significantly impact our financial condition and ability to obtain additional borrowings. The borrowings available under our revolving credit facility are subject to the calculation of a borrowing base, which is based upon the value of certain of our assets, including accounts receivable, inventory and property, plant and equipment.

We may incur material costs related to legal proceedings, which could have a material adverse impact on our business, financial condition, results of operations and cash flows.

From time to time, we are involved in legal proceedings, claims or investigations that are incidental to the conduct of our business. Some of these proceedings allege damages against us relating to environmental liabilities, personal injury claims, taxes, employment matters or commercial or contractual disputes.

We cannot assure you that the costs, charges and liabilities associated with these matters will not be material, or that those costs, charges and liabilities will not exceed any amounts reserved for them in our consolidated financial statements. In future periods, we could be subject to cash costs or non-cash charges to earnings if any of these matters are resolved unfavorably to us.

We are dependent on large customers for current and future revenues. The loss of any of these customers or the loss of market share by these customers could have a material adverse impact on us.

We depend on major vehicle manufacturers for our revenues. For example, during 2011, Ford, Volkswagen, and Hyundai/Kia accounted for 17%, 17%, and 14% of our revenues, respectively. The loss of all or a substantial portion of our sales to any of our large-volume customers could have a material adverse effect on our business, financial condition, results of operations and cash flows by reducing cash flows and by limiting our ability to spread our fixed costs over a larger revenue base. We may make fewer sales to these customers for a variety of reasons, including, but not limited to:

See “— Deterioration in the United States and world economies could exacerbate the difficulties experienced by our customers and suppliers in obtaining financing, which, in turn, could materially and adversely impact our business, financial condition, results of operations and cash flows.”

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We may be unable to realize revenues represented by our awarded business, which could materially and adversely impact our business, financial condition, results of operations and cash flows.

The realization of future revenues from awarded business is inherently subject to a number of important risks and uncertainties, including the number of vehicles that our customers will actually produce, the timing of that production and the mix of options that our customers may choose.

In addition to not having a commitment from our customers regarding the minimum number of products they must purchase from us if we obtain awarded business, typically the terms and conditions of the agreements with our customers provide that they have the contractual right to unilaterally terminate our contracts with them with no notice or limited notice. If such contracts are terminated by our customers, our ability to obtain compensation from our customers for such termination is generally limited to the direct out-of-pocket costs that we incurred for raw materials and work-in-progress and in certain instances undepreciated capital expenditures.

We base a substantial part of our planning on the anticipated lifetime revenues of particular products. We calculate the lifetime revenues of a product by multiplying our expected price for a product by forecasted production volume during the length of time we expect the related vehicle to be in production. We use a third-party forecasting service, IHS, to provide long-term forecasts which allows us to determine how long a vehicle is expected to be in production. Lifetime revenues associated with a particular platform are not guaranteed and are not equivalent to backlog. If we over-estimate the production units or if a customer reduces its level of anticipated purchases of a particular platform as a result of reduced demand, our actual revenues for that platform may be substantially less than the lifetime revenues we had anticipated for that platform.

Typically, it takes two to five years from the time a manufacturer awards a program until the program is launched and production begins. In many cases, we must commit substantial resources in preparation for production under awarded customer business well in advance of the customer’s production start date. We cannot assure you that our results of operations will not be materially adversely impacted in the future if we are unable to recover these types of pre-production costs related to our customers’ cancellation of awarded business.

Our joint venture partners may have interests that are not consistent with those of the joint venture, thereby resulting in our joint venture failing to achieve the results we desire.

We have three joint ventures in China. At two of the joint ventures, our joint venture partner is also affiliated with the largest customer of the joint venture. As such, these partners may negotiate on behalf of customers of the joint venture for sales terms that are not in the best interest of the joint venture. More specifically, when acting on behalf of a customer, our joint venture partners effectively receive 100% of the benefits of revenues terms, but when acting as a joint venture partner we must share with them any benefits received by the joint venture. This may create a misalignment of incentives between us and our joint venture partners that could have a material adverse impact on our business.

Our ability to recognize revenues from non-automotive business is subject to several risks, any one of which could materially and adversely impact our business, financial condition, results of operations and cash flows

As we seek to expand into markets beyond vehicle structural components and assemblies, we expect to diversify our product revenues by leveraging our development, engineering and manufacturing capabilities in order to source necessary parts and components for other industries. Such diversification requires investments and resources that may not be available as needed. Even if we sign contracts in new non-automotive markets, we cannot guarantee that we will be successful in leveraging our capabilities into these new markets and thus in meeting the needs of these new customers and competing favorably in these new markets. If these customers experience reduced demand for their products or financial difficulties, our future prospects will be negatively affected as well.

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Disruptions in the automotive supply chain could have a material adverse impact on our business, financial condition, results of operations and cash flows.

The automotive supply chain is subject to disruptions because we, along with our customers and suppliers, attempt to maintain low inventory levels. In addition, our plants are typically located in proximity to our customers.

Disruptions could be caused by a multitude of potential problems, such as closures of one of our or our suppliers’ plants or critical manufacturing lines due to strikes, mechanical breakdowns, electrical outages, fires, explosions or political upheaval, as well as logistical complications due to weather, earthquakes, or other natural or nuclear disasters, mechanical failures, delayed customs processing and more.

Additionally, if we are the cause for a customer being forced to halt production, the customer may seek to recoup all of its losses and expenses from us. Any disruptions affecting us or caused by us could have a material adverse impact on our business, financial condition, results of operations and cash flows.

The volatility of steel prices may adversely affect our results of operations.

We utilize steel and various purchased steel products in virtually all of our products. We refer to the “net steel impact” as the combination of the change in steel prices that are reflected in customer pricing, the change in the cost to procure steel from the mills, and the change in our recovery of scrap steel, which we refer to as offal. While we strive to achieve a neutral net steel impact over time, we are not always successful in achieving that goal. Changes in steel prices may affect our liquidity because of the time difference between our payment for our steel and our collection of cash from our customers. We tend to pay for replacement materials, which are more expensive when steel prices are rising, over a much shorter period. As a result, rising steel prices may cause us to draw greater than anticipated amounts from our credit lines to cover the cash flow cycle from our steel purchases to cash collection for related accounts receivable. This cash requirement for working capital is higher in periods when we are increasing our inventory quantities.

A by-product of our production process is the generation of offal. We typically sell offal in secondary markets, which are similar to the steel markets. We generally share our recoveries from sales of offal with our customers either through scrap sharing agreements, in cases where we are on resale programs, or in the product pricing that is negotiated regarding increases and decreases in the steel price in cases where we purchase steel directly from the mills. In either situation, we may be impacted by the fluctuation in scrap steel prices, either positive or negative, in relation to our various customer agreements. Since scrap steel prices generally increase and decrease as steel prices increase and decrease, our sale of offal may mitigate the severity of steel price increases and limit the benefits we achieve through steel price declines. Any dislocation in offal and steel prices could negatively affect our business, financial condition, results of operations and cash flows.

The seasonality we experience in our business may negatively impact our quarterly results of operations, cash flows and liquidity.

Our business is seasonal. Our customers in Europe typically shut down vehicle production during portions of July or August and during one week in our fourth quarter. Our North American customers typically shut down vehicle production for approximately two weeks during July and for one week during December. Such seasonality may adversely affect our results of operations, cash flows and liquidity during the third and fourth quarters of our fiscal year.

We may incur material costs related to plant closings, which could have a material adverse impact on our business, financial condition, results of operations and cash flows.

If we must close additional manufacturing locations because of loss of business or consolidation of manufacturing facilities, the employee severance, asset retirement and other costs, including reimbursement costs relating to public subsidies, to close these facilities may be significant. In certain locations that are subject to leases, we may continue to incur material costs consistent with the initial lease terms. We continually attempt to align production capacity with demand; therefore, we cannot assure you that additional plants will not have to be closed. Historically, we have incurred significant costs related to the closure of our facilities and can provide no assurance that such costs will not be material in the future.

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The hourly workforce in the automotive industry is highly unionized and our business could be adversely affected by labor disruptions.

As of December 31, 2011, we had approximately 8,600 employees, of whom approximately 5,500 were covered under collective bargaining agreements that expire at various times. In addition, we have specific exposure to labor strikes in our International operations related primarily to the economic instability in several countries in the European Union. If major work disruptions involving our employees were to occur, our business could be adversely affected by a variety of factors, including a loss of revenues, increased costs and reduced profitability. We cannot assure you that we will not experience a material labor disruption at one or more of our facilities in the future in the course of renegotiation of our labor arrangements or otherwise.

We are subject to environmental requirements and risks as a result of which we may incur significant costs, liabilities and obligations.

We are subject to a variety of environmental and pollution control laws, regulations and permits that govern, among other things, soil, surface water and groundwater contamination; the generation, storage, handling, use, disposal and transportation of hazardous materials; the emission and discharge of materials, including greenhouse gases, or GHGs, into the environment; and health and safety. If we fail to comply with these laws, regulations or permits, we could be fined or otherwise sanctioned by regulators or become subject to litigation. Environmental and pollution control laws, regulations and permits, and the enforcement thereof, change frequently, have tended to become more stringent over time and may necessitate substantial capital expenditures or operating costs.

Under certain environmental requirements, we could be responsible for costs relating to any contamination at our, or a predecessor entity’s, current or former owned or operated properties or third-party waste-disposal sites, even if we were not at fault. Soil and groundwater contamination is being addressed at certain of these locations. In addition to potentially significant investigation and cleanup costs, contamination can give rise to third-party claims for fines or penalties, natural resource damages, personal injury or property damage.

We cannot assure you that our costs, liabilities and obligations relating to environmental matters will not have a material adverse effect on our business, financial condition, results of operations and cash flows.

Any acquisitions or divestitures we make could disrupt our business and materially harm our financial condition, results of operations and cash flows.

We may, from time to time, consider certain acquisitions or divestitures. Acquisitions and divestitures involve numerous risks, including difficulties in the assimilation of the acquired businesses, the diversion of our management’s attention from other business concerns, the assumption of unknown liabilities, undisclosed risks impacting the target and potential adverse effects on existing business relationships with current customers and suppliers. In addition, any acquisitions or divestitures could impact our financial position or create dilution for our stockholders. We cannot assure you that any acquisitions or divestitures will perform as planned or prove to be beneficial to our operations and cash flow or that we will be able to successfully integrate any acquisitions that we undertake. Any such failure could seriously harm our financial condition, results of operations and cash flows.

The value of our deferred tax assets could become impaired, which could materially and adversely affect our operating results.

As of December 31, 2011, we had approximately $16 million in net deferred income tax assets. These deferred tax assets include net operating loss carryforwards that can be used to offset taxable income in future periods and reduce income taxes payable in those future periods. We periodically determine the probability of the realization of deferred tax assets, using significant judgments and estimates with respect to, among other things, historical operating results, expectations of future earnings and tax planning strategies. If we determine in the future that there is not sufficient positive evidence to support the valuation of these assets, due to the factors described above or other factors, we may be required to further adjust the valuation allowance to reduce our deferred tax assets. Such a reduction could result in material non-cash expenses in the period in which the valuation allowance is adjusted and could have a material adverse effect on our results of operations.

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Our ability to utilize our net operating loss carryforwards may be limited and delayed. As of December 31, 2011, we had U.S. net operating loss carryforwards of approximately $190 million. Certain provisions of the United States tax code could limit our annual utilization of the net operating loss carryforwards. There can be no assurance that we will be able to utilize all of our net operating loss carryforwards and any subsequent net operating loss carryforwards in the future. There is a full valuation allowance recorded against the deferred tax asset benefit of this carryforward.

In addition, adverse changes in the underlying profitability and financial outlook of our operations in several foreign jurisdictions could lead to changes in our valuation allowances against deferred tax assets and other tax accruals that could adversely affect our financial results.

Further, as a result of our IPO, we may have an “ownership change” for purposes of Section 382 of the Internal Revenue Code if, under certain circumstances, our existing stockholders were to sell within a specified period a sufficient amount of our common stock that they then possess to cause an ownership change. If we do experience an ownership change, we may be further limited, pursuant to Section 382 of the Internal Revenue Code, in using our then-current net operating losses to offset taxable income for taxable periods (or portions thereof) beginning after such ownership change. Consequently, in the future we may be required to pay increased cash income taxes because of the Section 382 limitations on our ability to use our net operating loss carryforwards.

We have a material amount of goodwill, which, if it becomes impaired, would result in a reduction in our net income and equity.

Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired. GAAP requires that goodwill be periodically evaluated for impairment based on the fair value of the reporting unit. A significant percentage of our total assets represent goodwill primarily associated with the purchase of our assets from the Predecessor Company in 2007. Declines in our profitability or the value of comparable companies may impact the fair value of our reporting units, which could result in a write-down of goodwill and a reduction in net income.

As of December 31, 2011, we had approximately $64 million of goodwill on our consolidated balance sheet that could be subject to impairment. In addition, if we acquire new businesses in the future, we may recognize additional goodwill, which could be significant. We could also be required to recognize additional impairments in the future and such an impairment charge could have a material adverse effect on our financial position and results of operations in the period of recognition.

We may face risks relating to climate change that could have an adverse impact on our business.

Greenhouse gas emissions have increasingly become the subject of substantial international, national, regional, state and local attention. GHG emission regulations have been promulgated in certain of the jurisdictions in which we operate, and additional GHG requirements are in various stages of development. For example, the United States Congress has considered legislation that would establish a nationwide limit on GHGs. In addition, the EPA has issued regulations limiting GHG emissions from mobile and stationary sources pursuant to the federal Clean Air Act. When effective, such measures could require us to modify existing or obtain new permits, implement additional pollution control technology, curtail operations or increase our operating costs. In addition, our OEM customers may seek price reductions from us to account for their increased costs resulting from GHG regulations. Further, growing pressure to reduce GHG emissions from mobile sources could reduce automobile sales, thereby reducing demand for our products and ultimately our revenues. Thus, any additional regulation of GHG emissions, including through a cap-and-trade system, technology mandate, emissions tax, reporting requirement or other program, could adversely affect our business, results of operations, financial condition, reputation, product demand and liquidity.

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Risk Factors Relating to Our Indebtedness

We have a substantial amount of indebtedness, which could have a material adverse effect on our financial health and our ability to fund our operations, to obtain financing in the future and to react to changes in our business, and which could adversely affect the price of our common stock.

As of December 31, 2011, our total debt, including capital lease obligations, was $583.5 million. That indebtedness could limit our ability to satisfy our obligations, limit our ability to operate our businesses and impair our competitive position. For example, it could:

The borrowings available under our revolving credit facility are subject to the calculation of a borrowing base, which is based upon the value of certain of our assets, including accounts receivable, inventory and property, plant and equipment. The administrative agent for this facility causes a third party to perform an appraisal of the assets included in the calculation of the borrowing base either on an annual basis or, if our availability under the facility is less than $22.5 million during any twelve month period, as frequently as on a semi-annual basis. In addition, if certain material defaults under the facility have occurred and are continuing, the administrative agent has the right to perform any such appraisal as often as it deems necessary in its sole discretion.

We may not be able to refinance any of our debt or we may not be able to refinance our debt on commercially reasonable terms.

We cannot assure you that we will be able to refinance, extend the maturity or otherwise amend the terms of our existing indebtedness, or whether any refinancing, extension or amendment will be on commercially reasonable terms. The indebtedness issued in any refinancing of our existing indebtedness could have a significantly higher rate of interest and greater costs than our existing indebtedness. There can be no assurance that the financial terms or covenants of any new credit facility and/or other indebtedness issued to refinance our existing indebtedness will be the same or as favorable as those under our existing indebtedness.

Our ability to complete a refinancing of our existing indebtedness prior to their respective maturities is subject to a number of conditions beyond our control. For example, if a disruption in the financial markets were to occur at the time that we intended to refinance this indebtedness, we might be restricted in our ability to access the financial markets. If we were unable to make payments or refinance our debt or obtain new financing under these circumstances, we would have to consider other options, such as:

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Our debt instruments may restrict, or market or business conditions may limit, our ability to employ some of our options.

In addition, under our credit agreements, a change in control may lead the lenders to exercise remedies such as acceleration of the loan, termination of their obligations to fund additional advances and collection against the collateral securing such loan; and, in the case of our senior secured notes, a change in control may lead to one or more noteholders exercising their change of control put right.

We may be unable to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under such indebtedness, which may not be successful.

Our ability to make scheduled payments on or to refinance our debt obligations, certain of which have short-term maturities, depends on our financial condition and operating performance, which is subject to prevailing economic and competitive conditions and to financial, business and other factors beyond our control. We cannot assure you that we will maintain a level of cash flows from operating activities sufficient to permit us to pay or refinance our indebtedness, including our senior secured notes (the “notes”) and our revolving credit facility.

Our debt instruments restrict our current and future operations.

The financing documents governing our indebtedness impose significant operating and financial restrictions on us. These restrictions limit our ability and the ability of our subsidiaries to, among other things:

In addition to the restrictions and covenants listed above, certain of our financing documents require us, under certain circumstances, to comply with specified financial maintenance covenants. Any of these restrictions or covenants could limit our ability to plan for or react to market conditions or meet certain capital needs and could otherwise restrict our corporate activities.

Substantially all of our subsidiaries’ assets are pledged as collateral under secured financing arrangements.

As of December 31, 2011, we had $548.4 million (net of $8.7 original issue discount in respect of the issuance of the notes) of secured debt. Substantially all of our subsidiaries’ assets are pledged as collateral for our borrowings under our secured financing arrangements. Most of our domestic subsidiaries are either primary obligors or guarantors under a secured financing arrangement. Substantially all of our domestic subsidiaries’ assets are pledged as collateral for these guarantees. If we are unable to repay all secured borrowings when due, whether at maturity or if declared due and payable following a default, the agent or the

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lenders, as applicable, would have the right to proceed against the collateral pledged to secure the indebtedness and may sell the assets pledged as collateral in order to repay those borrowings, which could have a material adverse effect on our businesses, financial condition, results of operations and cash flows.

Risk Factors Relating to Our Common Stock

The price of our common stock may be volatile.

The price at which our common stock trades may be volatile due to a number of factors, including:

In addition, equity markets have experienced significant price and volume fluctuations that have affected the market prices for the securities of newly public companies for a number of reasons, including reasons that may be unrelated to our business or operating performance. These broad market fluctuations may result in a material decline in the market price of our common stock and you may not be able to sell your shares at prices you deem acceptable. In the past, following periods of volatility in the equity markets, securities class action lawsuits have been instituted against public companies. Such litigation, if instituted against us, could result in substantial cost and the diversion of management attention.

Our average trading volume is not substantial, which adds to the volatility of our stock price.

During the period from October 16, 2010 (the day after which our shares began trading in the public markets) through December 31, 2011, the average daily trading volume of our common stock on the New York Stock Exchange was approximately 63,000 shares, or roughly 1% of our outstanding common stock. When a relatively small number of shares are traded in a given day, the stock price can be influenced by the purchase or sale of a very small number of shares, leading to volatility in our stock price.

We are a “controlled company” within the meaning of the New York Stock Exchange corporate governance standards and, as a result, rely on exemptions from certain corporate governance requirements. Our stockholders will not have the same protections afforded to stockholders of companies that are subject to these requirements.

Cerberus, through our controlling stockholder, controls a majority of our outstanding common stock. As a result, we are a “controlled company” within the meaning of the New York Stock Exchange corporate governance standards. Under these standards, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including:

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We are utilizing these exemptions. As a result, we do not have a majority of independent directors and our nominating and corporate governance and compensation committees do not consist entirely of independent directors. Accordingly, you do not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements.

The interests of our controlling stockholder in its capacity as a stockholder may be adverse to the interests of our other stockholders.

Our controlling stockholder controls the election of our directors, determines our corporate and management policies and determines, without the consent of our other stockholders, the outcome of any corporate transaction or other matter submitted to our stockholders for approval, including potential mergers or acquisitions, asset sales and other significant corporate transactions. Our controlling stockholder also has sufficient voting power to amend our organizational documents.

We cannot assure you that the interests of our controlling stockholder will coincide with the interests of other holders of our common stock. Additionally, Cerberus, which controls our controlling stockholder, is in the business of making investments in companies and may, from time to time, acquire and hold interests in businesses that compete directly or indirectly with us. Our certificate of incorporation provides that neither Cerberus or its affiliates, nor members of our board of directors who are not our employees (including any directors who also serve as officers) or their affiliates, have any duty to refrain from engaging, directly or indirectly, in the same or similar business activities or lines of business in which we operate. Cerberus and our controlling stockholder may also pursue, for their own accounts, acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us. So long as our controlling stockholder continues to own a significant amount of our common stock, it will continue to be able to strongly influence or effectively control our decisions, including director and officer appointments, potential mergers or acquisitions, asset sales and other significant corporate transactions. These potential conflicts of interest could have a material adverse effect on our business, financial condition, results of operations or prospects if attractive corporate opportunities are directed by Cerberus, its affiliates or our directors to themselves or their other affiliates instead of to us.

Shares eligible for future sale may cause the market price of our common stock to decline, even if our business is doing well.

Sales of substantial amounts of our common stock in the public market, or the perception that these sales may occur, could adversely affect the price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. Our certificate of incorporation authorizes us to issue 350,000,000 shares of common stock and as of March 5, 2012 we had 19,683,032 shares of common stock outstanding. Of these outstanding shares, 7,215,166 shares of common stock are freely tradable, without restriction, in the public market unless purchased by our affiliates. The remaining 12,467,866 shares of common stock are “restricted securities,” as that term is defined in Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), which are freely tradable subject to applicable holding period, volume and other limitations under Rule 144 or Rule 701 of the Securities Act.

The holders of the restricted securities have rights, subject to some conditions, to require us to file registration statements covering its shares or to include its shares in registration statements that we may file for ourselves or other stockholders. Once we register these shares, they can be freely sold in the public market upon issuance.

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Item 2. Properties.

We are headquartered in Livonia, Michigan in a 76,300 square foot facility that we lease. This facility is utilized for management offices as well as certain customer service, engineering, human resources, information technology, finance and treasury functions. We believe that this facility is suitable for the activities conducted there.

Our manufacturing is conducted in 34 manufacturing facilities strategically located throughout North and South America, Europe and Asia. Our manufacturing facilities are supported by nine engineering and sales locations throughout the world.

The following table sets forth selected information regarding each of our facilities:

Facility

Country

Description of Use

Square Feet

Ownership

Americas Locations

Aruja

Brazil

Manufacturing/Office/ Technical Center

272,200

Owned

Betim

Brazil

Manufacturing

120,600

Owned

Contagem

Brazil

Manufacturing

144,200

Leased

Auburn, Indiana

United States

Manufacturing

162,800

Leased

Bardstown, Kentucky

United States

Manufacturing

601,700

Owned/Leased (1)

Bellevue, Ohio (2 locations)

United States

Manufacturing

363,700

Owned

Bluffton, Ohio

United States

Manufacturing

196,175

Leased

Chicago, Illinois

United States

Manufacturing

423,700

Leased

Clinton Township, Michigan

United States

Manufacturing

385,300

Leased

Elkton, Michigan

United States

Manufacturing

1,100,000

Owned

Grand Rapids, Michigan

United States

Office

5,900

Leased

Goodyear, Arizona

United States

Manufacturing

458,800

Leased (2)

Livonia, Michigan

United States

Corporate Office/Technical Center

76,300

Leased

Madison, Mississippi

United States

Manufacturing

270,500

Leased

Meridian, Mississippi

United States

Manufacturing

412,000

Leased

Milan, Tennessee

United States

Manufacturing

531,400

Leased (3)

Plymouth, Michigan

United States

Manufacturing

285,100

Leased

Smyrna, Tennessee

United States

Manufacturing

271,000

Leased

Upper Sandusky, Ohio

United States

Manufacturing

80,000

Leased (3)

Detroit, Michigan (2 locations)

United States

Manufacturing

992,000

Owned

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Facility

Country

Description of Use

Square Feet

Ownership

International Locations

Gent

Belgium

Manufacturing

346,700

Leased

Artern

Germany

Manufacturing

150,000

Owned

Bergisch-Gladbach

Germany

Corporate Office/Technical Center

99,400

Owned (4)

Zwickau

Germany

Manufacturing

492,000

Owned/Leased (5)

Duisburg

Germany

Manufacturing

110,000

(6)

Buchholz

Germany

Manufacturing

79,900

Owned

Kaarst

Germany

Purchasing Office

3,300

Leased

Caserta

Italy

Manufacturing

262,500

Owned

Turin

Italy

Manufacturing/Office /Technical Center

180,300

Owned

Melfi

Italy

Manufacturing

73,600

Owned

Opole

Poland

Manufacturing

146,000

(5)

Malacky

Slovakia

Manufacturing

518,200

Owned

WuHu

China

Manufacturing/Office/Technical Center

308,500

(7)

Dalian

China

Manufacturing

72,700

(2) / (7)

Changchun

China

Manufacturing/Office/Technical Center

249,100

(7)

Chengdu

China

Manufacturing

93,200

(7)

Xiangtan

China

Manufacturing/Office

292,800

(2) / (7)

Shanghai

China

Office

3,500

Leased

Hyderabad

India

Engineering/Design/Technical Center

4,600

Leased

Yokohama

Japan

Sales/Engineering/Technical Center

2,500

Leased

Kwangju Metropolitan City, Pyeongdong

Korea

Manufacturing

237,000

Owned (8)

Hwaseong-si, Gyeonggi-do

Korea

Manufacturing

221,900

Owned

Shiheung-si, Gyeonggi-do

Korea

Manufacturing

183,000

Owned

Ansan-si, Gyeonggi-do

Korea

Manufacturing

60,700

Owned

Yeongcheon-si

Korea

Manufacturing

49,400

Owned

Ulsan Metropolitan City

Korea

Manufacturing

53,900

Owned

Gunpo-si, Gyeonggi-do

Korea

Office / Technical Center

28,800

Owned

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information —  Our common stock trades on the New York Stock Exchange under the symbol “TOWR.” The stock began trading on October 15, 2010, in conjunction with our initial public offering. As of March 5, 2012, we had 19,683,032 shares of common stock, $0.01 par value, outstanding, of which 7,215,166 shares were not owned by Tower International Holdings, LLC (an entity owned by Cerberus), and 3 holders of record of our common stock. The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company, LLC.

The following table shows the high and low reported closing price per share of our common stock during 2011 and 2010:

		2011								2010
High and Low Closing Prices per Share		High Price				Low Price				High Price				Low Price
Fourth Quarter (beginning October 15 th in 2010)		$	12.77			$	9.51			$	17.90			$	12.72
Third Quarter			18.00				9.86				n/a				n/a
Second Quarter			18.06				13.91				n/a				n/a
First Quarter			18.82				15.85				n/a				n/a

Performance Graph —  The following graph shows the quarterly cumulative total stockholder return for our common stock during the period from October 15, 2010 to December 31, 2011. Five year historical data is not presented since our common stock commenced trading in connection with our initial public offering on October 15, 2010 and we did not have common stock outstanding prior to that date. The graph also shows the cumulative returns of the S&P 500 Index and the Dow Jones U.S. Auto Parts Index. The comparison assumes $100 was invested on October 15, 2010 (the date our common stock began trading on the NYSE). Each of the indices shown assumes that all dividends paid were reinvested.

Comparison of Cumulative Total Return

		10/15/2010				12/31/2010				3/31/2011				6/30/2011				9/30/2011				12/31/2011
Tower International, Inc.		$	100.00				130.55				124.94				130.55				72.77				79.26
S&P 500		$	100.00				106.81				112.60				112.16				96.09				106.81
Automotive Index (Dow Jones)		$	100.00				121.26				128.10				132.24				92.46				105.61

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Dividends —  We did not declare or pay any common stock dividends during 2011 or 2010 and do not anticipate paying any such dividends in the foreseeable future.

Issuer’s Purchases of Equity Securities —  We did not repurchase any of our common stock during the fourth quarter of 2011.

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You should read the following selected historical consolidated financial data in conjunction with the more detailed information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes that we have presented elsewhere in this Annual Report.

		Successor																				Predecessor Company
		Year Ended December 31,																Five Months Ended December 31, 2007				Seven Months Ended July 31, 2007
		2011				2010				2009				2008
		(in millions except share and per share data)
Statement of Operations Data:
Revenues		$	2,406.1			$	1,997.1			$	1,634.4			$	2,171.7			$	1,086.1			$	1,455.5
Cost of Sales			2,150.0				1,786.5				1,536.8				1,991.3				970.5				1,325.9
Gross profit			256.1				210.6				97.6				180.4				115.6				129.6
Gross profit margin			10.6	%			10.5	%			6.0	%			8.3	%			10.6	%			8.9	%
Selling, general, and administrative expenses (1)		$	158.4			$	144.0			$	118.3			$	138.6			$	57.0			$	77.2
Amortization expense			4.6				3.3				2.8				3.0				1.2				—
Restructuring and asset impairment charges, net			2.7				14.3				13.4				4.8				1.8				22.4
Operating income/(loss)			90.5				49.0				(36.9	)			34.0				55.5				30.0
Operating income/(loss) margin			3.8	%			2.5	%			(2.3	)%			1.6	%			5.1	%			2.1	%
Interest expense, net		$	61.2			$	65.9			$	56.9			$	60.2			$	34.0			$	65.5
Chapter 11 and related reorganization items			—				—				—				—				—				62.2
Income/(loss) from continuing operations			13.2				(28.5	)			(59.0	)			(45.7	)			18.2				(100.3	)
Net income/(loss) (2)			13.2				(28.5	)			(59.0	)			(45.7	)			18.2				(100.6	)
Net income attributable to the non- controlling interests			5.1				8.4				8.9				6.6				3.0				5.4
Net income/(loss) attributable to Tower International, Inc.			8.1				(36.9	)			(67.9	)			(52.3	)			15.2				(106.0	)
Preferred unit dividends (3)			—				10.7				16.1				14.9				8.8				—
Income/(loss) available to common stockholders			8.1				(47.6	)			(84.0	)			(67.3	)			6.4				(106.0	)
Basic income/(loss) per share:
Income/(loss) from continuing operations			0.42				(3.43	)			(6.74	)			(5.40	)			0.51				(1.79	)
Income/(loss) from discontinued operations			—				—				—				—				—				(0.01	)
Income/(loss) per share			0.42				(3.43	)			(6.74	)			(5.40	)			0.51				(1.80	)
Weighted average basic shares outstanding (in thousands)			19,364				13,866				12,468				12,468				12,468				58,807
Diluted income/(loss) per share:
Income/(loss) from continuing operations			0.40				(3.43	)			(6.74	)			(5.40	)			0.51				(1.79	)
Income/(loss) from discontinued operations			—				—				—				—				—				(0.01	)
Income/(loss) per share			0.40				(3.43	)			(6.74	)			(5.40	)			0.51				(1.80	)
Weighted average diluted shares outstanding (in thousands)			20,070				13,866				12,468				12,468				12,468				58,807
Cash dividends declared per share			—				—				—				—				—				—

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		Successor
		December 31,
		2011				2010				2009				2008				2007
		(in millions)
Balance Sheet Data:
Cash and cash equivalents		$	135.0			$	150.3			$	149.8			$	126.8			$	96.8
Total assets			1,397.4				1,340.2				1,334.4				1,269.8				1,582.9
Total debt (4)			583.5				558.2				669.5				628.1				691.7
Redeemable preferred units (3)			—				—				170.9				155.2				145.9
Total stockholders’ equity/(deficit)			97.5				111.6				(147.2	)			(88.5	)			32.6

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Factors Affecting Our Expenses

Our expenses are driven by the following factors:

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Adjusted EBITDA

We use the term Adjusted EBITDA throughout this Annual Report. We define Adjusted EBITDA as net income/(loss) before interest, taxes, depreciation, amortization, restructuring items and other adjustments described in the reconciliations provided in this report. Adjusted EBITDA is not a measure of performance defined in accordance with U.S. GAAP (“GAAP”). We use Adjusted EBITDA as a supplement to our GAAP results in evaluating our business.

Adjusted EBITDA is included in this report because it is one of the principal factors upon which our management assesses performance. Our Chief Executive Officer measures the performance of our segments on the basis of Adjusted EBITDA. As an analytical tool, Adjusted EBITDA assists us in comparing our performance over various reporting periods on a consistent basis because it excludes items that we do not believe reflect our core operating performance.

We believe that Adjusted EBITDA is useful in evaluating our performance because Adjusted EBITDA is a commonly used financial metric for measuring and comparing the operating performance of companies in our industry. We believe that the disclosure of Adjusted EBITDA offers an additional financial metric that, when coupled with the GAAP results and the reconciliation to GAAP results, provides a more complete understanding of our results of operations and the factors and trends affecting our business.

Adjusted EBITDA should not be considered as an alternative to net income/(loss) as an indicator of our performance, as an alternative to net cash provided by operating activities as a measure of liquidity, or as an alternative to any other measure prescribed by GAAP. There are limitations to using non-GAAP measures such as Adjusted EBITDA. Although we believe that Adjusted EBITDA may make an evaluation of our operating performance more consistent because it removes items that do not reflect our core operations, (i) other companies in our industry may define Adjusted EBITDA differently than we do and, as a result, it may not be comparable to similarly titled measures used by other companies in our industry; and (ii) Adjusted EBITDA excludes certain financial information that some may consider important in evaluating our performance.

We compensate for these limitations by providing disclosure of the differences between Adjusted EBITDA and GAAP results, including providing a reconciliation of Adjusted EBITDA to GAAP results, to enable investors to perform their own analysis of our operating results. For a reconciliation of consolidated Adjusted EBITDA to its most directly comparable GAAP measure, net income/(loss), see “Results of Operations” below.

Because of these limitations, Adjusted EBITDA should not be considered as a measure of the income generated by our business or discretionary cash available to us to invest in the growth of our business. Our management compensates for these limitations by analyzing both our GAAP results and Adjusted EBITDA.

Our Segments

Our management reviews our operating results and makes decisions based upon two reportable segments: the Americas and International, each of which has its own president and leadership team. For accounting purposes, we have identified four operating segments, which we have aggregated into two reportable segments. See note 16 to our consolidated financial statements. Through December 31, 2011, our businesses have had similar economic characteristics, including the nature of our products, our margins, our production processes and our customers.

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Results of Operations — Year Ended December 31, 2011 Compared with the Year Ended December 31, 2010

Automobile production volumes increased during the year ended December 31, 2011 in all major markets compared to the year ended December 31, 2010, with the exception of Brazil which remained relatively flat. The following table presents production volumes in specified regions according to IHS for the year ended December 31, 2011 compared to the year ended December 31, 2010 (in millions of units produced):

		Europe				Korea				China				North America				Brazil
2011 production volumes			20.2				4.6				16.0				13.1				3.1
2010 production volumes			18.8				4.2				15.1				11.9				3.2
Increase / (decrease)			1.4				0.4				0.9				1.2				(0.1	)
Percentage change			8	%			8	%			11	%			10	%			(1	)%

The following table presents selected financial information for the years ended December 31, 2011 and 2010 (in millions).

		International								Americas								Consolidated
		Year Ended December 31,								Year Ended December 31,								Year Ended December 31,
		2011				2010				2011				2010				2011				2010
Revenues		$	1,334.0			$	1,147.6			$	1,072.1			$	849.5			$	2,406.1			$	1,997.1
Cost of sales			1,199.4				1,012.6				950.6				773.9				2,150.0				1,786.5
Gross profit			134.6				135.0				121.5				75.6				256.1				210.6
Selling, general, and administrative expenses			64.8				63.1				93.6				80.9				158.4				144.0
Amortization			2.7				2.4				1.9				0.9				4.6				3.3
Restructuring and asset impairments			(0.2	)			3.3				2.8				11.0				2.6				14.3
Operating income/(loss)		$	67.3			$	66.2			$	23.2			$	(17.2	)			90.5				49.0
Interest expense, net																			61.2				65.9
Other expense																			1.3				1.3
Provision for income taxes																			14.8				10.3
Noncontrolling interest, net of tax																			5.1				8.4
Net income/(loss) attributable to Tower International, Inc.																		$	8.1			$	(36.9	)

Comparison of Periods — GAAP Analysis of Consolidated Results

Revenues

Total revenues increased during the year ended December 31, 2011 by $409 million or 20% from the year ended December 31, 2010, reflecting primarily higher volume in both our Americas segment ($209.3 million) and our International segment ($86 million). Revenues were also positively impacted by the strengthening of foreign currencies against the U.S. dollar in our International segment, primarily the Euro ($41 million), Korean Won ($13.6 million), and Chinese RMB ($7.7 million), and in our Americas segment, primarily the Brazilian Real ($11.9 million). Revenues were also positively impacted by favorable pricing and economics ($39.5 million), related primarily to higher steel recoveries in our International segment.

Gross Profit

When we analyze our total gross profit, we separately categorize external factors — volume, product mix and foreign exchange — and all other factors which impact gross profit, which we refer to as “other factors”. When we refer to “mix,” we are referring to the relative composition of revenues and profitability of the products we sell in any given period. When we refer to “pricing and economics,” we are referring to (i) the impact of adjustments in the pricing of particular products, which we refer to as product pricing; (ii) the impact of steel price changes, taking into account the component of our product pricing attributable to steel, the cost of steel included in our cost of sales and the amounts recovered on the sale of offal, which in total

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we refer to as the net steel impact; and (iii) the impact of inflation and changes in operating costs such as labor, utilities and fuel, which we refer to as economics.

Total gross profit increased by $45.5 million or 22% from the year ended December 31, 2010 to the year ended December 31, 2011, and our gross profit margin increased from 10.5% during 2010 to 10.6% in 2011, as partially explained by higher volume ($62.8 million) and favorable foreign exchange ($10.2 million, excluding the impact on depreciation), offset partially by unfavorable product mix ($16 million). All other factors were net unfavorable by $11.5 million. Cost of sales was reduced by favorable efficiencies ($41.6 million) and the favorable settlement associated with a value added tax audit in Brazil ($2.7 million). These factors were more than offset by unfavorable pricing and economics ($47.1 million), higher launch costs ($7.4 million), and the non-recurrence of customer cost recoveries ($3.6 million).

Total gross profit was positively impacted by a reduction in the depreciation included in cost of sales from $107.2 million during the year ended December 31, 2010 to $105.4 million during the year ended December 31, 2011. The decrease reflected primarily a portion of our assets becoming fully depreciated in 2011 in our International segment, offset partially by the strengthening of foreign currencies against the U.S. dollar and the acquisition of substantially all of the assets of W Industries.

Selling, General, and Administrative Expenses (“SG&A”)

Total SG&A increased $14.4 million or 10% from the year ended December 31, 2010, reflecting primarily the higher charges for compensation costs related to the initial public offering and senior secured notes offering ($7.3 million), higher expenses associated with being a public company ($2.7 million), wage inflation ($2.7 million), the costs related to the acquisition of substantially all of the assets of W Industries during the second quarter of 2011 ($1.1 million), and the strengthening of foreign currencies against the U.S. dollar, offset partially by SG&A efficiencies ($1.6 million) and the costs related to the acquisition of a manufacturing plant in Artern, Germany during the first quarter of 2010 ($0.7 million).

Amortization Expense

Total amortization expense increased $1.3 million or 39% from the year ended December 31, 2010, reflecting primarily the amortization of the intangible asset recorded at Tower Defense & Aerospace during the second quarter of 2011, the amortization of the intangible asset recorded in Artern at the end of the first quarter of 2010, and the strengthening of foreign currencies against the U.S. dollar. Our amortization expense consists of the charges we incur to amortize certain intangible assets.

Restructuring and Asset Impairment Expense

Total restructuring and asset impairment expense decreased $11.7 million or 82% from the year ended December 31, 2010. During 2011, we incurred charges of $2.7 million which consisted of the recurring costs for maintaining our North American closed plants and severance costs in Brazil related to improved manufacturing efficiencies, which were offset partially by the favorable adjustment of a liability pertaining to our North American closed facilities. During 2010, we incurred charges of $14.3 million reflecting primarily an impairment charge taken on our non-automotive business of $7.3 million, an impairment charge taken of $2.7 million on our press shop in Bergisch Gladbach, Germany as we put it up for sale, $2.3 million related to the sale of a closed facility, and the recurring costs for maintaining our North American closed plants. The charge taken on our non-automotive business relates to the equipment specifically purchased for a contract with a solar customer that failed to materialize, less any salvage value.

Interest Expense, net

Interest expense, net, decreased $4.7 million or 7% from the year ended December 31, 2010 reflecting primarily the acceleration of debt issue costs in August 2010 upon the retirement of the first lien term loan ($5.3 million) and a favorable settlement relating to the interest associated with a value added tax audit in Brazil ($4.3 million), offset partially by the higher interest expense associated with our senior secured notes ($2.5 million), the higher interest expense associated with our Amended ABL Revolver and new Letter of Credit Facility ($1.8 million), and the strengthening of foreign currencies against the U.S. dollar. During the third quarter of 2010, we issued $430 million of senior secured notes with an original issue discount of $12.8 million and subsequently retired our first lien term loan. The weighted average annual interest rate of the first lien term loan was approximately 8% during 2010 when taking into account our interest rate swaps

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compared with the senior secured notes that bear an annual interest rate of 11.25% when taking into account the amortization of the original issue discount. On October 6, 2011 and September 30, 2011, we reduced our outstanding debt by purchasing $7.5 million and $17.5 million, respectively, of our senior secured notes in the open market and immediately retired them which resulted in the acceleration of the amortization of the original issue discount and associated debt issue costs by $0.3 million and $0.7 million, respectively. On March 30, 2011 and December 17, 2010, we redeemed $17 million and $26 million, respectively, of the senior secured notes which resulted in the acceleration of the amortization of the original issue discount and associated debt issue costs by $0.8 million and $1.2 million, respectively.

Provision for Income Taxes

Income tax expense increased $4.5 million or 44% from the year ended December 31, 2010. In the third quarter of 2010, we recorded a net discrete tax benefit of $5.8 million for reversing a South Korean valuation allowance, the recognition of tax expense attributable to interest rate swaps, and the establishment of reserves for uncertain tax positions required under FASB ASC No. 740. Excluding these one-time events, income tax expense decreased $1.3 million from the year ended December 31, 2010. The comparative $1.3 million decrease was primarily attributable to reductions in uncertain tax positions for intercompany charges. Our income tax expense varies each period depending on the level and mix of income and losses generated in the various jurisdictions in which we do business. Our effective tax rate of 52.9% is significantly higher than the expected income tax expense based on the U.S. Federal statutory rate primarily because we have not recorded tax benefits on net operating losses incurred in certain jurisdictions. The jurisdictions that have had historical cumulative losses are primarily the U.S and the Netherlands. We did not record an income tax benefit on these losses due to the uncertainty of the future realization of the deferred tax assets generated by the cumulative losses.

Noncontrolling Interest, Net of Tax

The adjustment to our earnings required to give effect to the elimination of noncontrolling interests decreased $3.3 million or 39% from the year ended December 31, 2010, reflecting decreased earnings in our Chinese joint ventures during 2011 related primarily to unfavorable product pricing.

Comparison of Periods — Non-GAAP Analysis of Adjusted EBITDA

A reconciliation of Adjusted EBITDA to net loss attributable to Tower International, Inc. for the periods presented is set forth below (in millions):

		International								Americas								Consolidated
		Year Ended December 31,								Year Ended December 31,								Year Ended December 31,
		2011				2010				2011				2010				2011				2010
Adjusted EBITDA		$	118.3			$	125.5			$	109.3			$	64.7			$	227.6			$	190.2
Intercompany charges			9.1				7.0				(9.1	)			(7.0	)			—				—
Restructuring and asset impairments			0.2				(3.3	)			(2.8	)			(11.0	)			(2.6	)			(14.3	)
Depreciation and amortization			(58.2	)			(61.3	)			(56.4	)			(53.4	)			(114.6	)			(114.7	)
Acquisition costs and other			(0.4	)			(1.0	)			(1.1	)			(0.1	)			(1.5	)			(1.1	)
Incentive compensation related to funding events (a)			(1.7	)			(0.7	)			(16.7	)			(10.4	)			(18.4	)			(11.1	)
Operating income/(loss)		$	67.3			$	66.2			$	23.2			$	(17.2	)			90.5				49.0
Interest expense, net																			(61.2	)			(65.9	)
Other expense (b)																			(1.3	)			(1.3	)
Provision for income taxes																			(14.8	)			(10.3	)
Noncontrolling interest, net of tax																			(5.1	)			(8.4	)
Net income/(loss) attributable to Tower International, Inc.																		$	8.1			$	(36.9	)

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The following table presents revenues (a GAAP measure) and Adjusted EBITDA (a non-GAAP measure) for the years ended December 31, 2011 and 2010 (in millions) as well as an explanation of variances:

		International								Americas								Consolidated
		Revenues				Adjusted EBITDA (c)				Revenues				Adjusted EBITDA (c)				Revenues				Adjusted EBITDA (c)
2011 results		$	1,334.0			$	118.3			$	1,072.1			$	109.3			$	2,406.1			$	227.6
2010 results		$	1,147.6			$	125.5			$	849.5			$	64.7			$	1,997.1			$	190.2
Variance		$	186.4			$	(7.2	)		$	222.6			$	44.6			$	409.0			$	37.4
Variance attributable to:
Volume and mix		$	86.0			$	14.4			$	209.3			$	32.4			$	295.3			$	46.8
Foreign exchange			62.3				6.5				11.9				1.0				74.2				7.5
Pricing and economics			38.1				(34.3	)			1.4				(15.5	)			39.5				(49.8	)
Efficiencies			—				16.1				—				25.5				—				41.6
Selling, general and administrative expenses and other items (d)			—				(9.9	)			—				1.2				—				(8.7	)
Total		$	186.4			$	(7.2	)		$	222.6			$	44.6			$	409.0			$	37.4

Adjusted EBITDA

Consolidated Company:   Consolidated Adjusted EBITDA improved by $37.4 million or 20% from the year ended December 31, 2010, as explained by higher volume ($62.8 million) and favorable foreign exchange ($7.5 million) offset partially by unfavorable product mix ($16 million). The unfavorable product mix relates primarily to products which required lower capital investments and have lower margins. All other factors were net unfavorable by $16.9 million; favorable efficiencies ($41.6 million) were more than offset by unfavorable pricing and economics ($49.8 million) and unfavorable SG&A expenses and other items ($8.7 million).

International Segment:   In our International segment, Adjusted EBITDA decreased by $7.2 million or 6% from the year ended December 31, 2010, reflecting higher volumes ($14.6 million) and favorable foreign exchange ($6.5 million) offset partially by unfavorable product mix ($0.2 million). All other factors were net unfavorable by $28.1 million. Unfavorable pricing and economics ($34.3 million), principally product pricing and labor costs, were offset partially by favorable efficiencies ($16.1 million). In addition, SG&A and other items contributed unfavorably during the year ended December 31, 2011 ($9.9 million) resulting from higher launch costs ($5.7 million) and the non-recurrence of customer cost recoveries ($3 million).

Americas Segment:   In our Americas segment, Adjusted EBITDA improved by $44.6 million or 69% from the year ended December 31, 2010, reflecting primarily higher volumes ($48.2 million) and favorable foreign exchange ($1 million) offset partially by unfavorable product mix ($15.8 million). All other factors were net favorable by $11.2 million. Favorable efficiencies ($25.5 million) and lower SG&A expenses and other items ($1.2 million) were offset partially by unfavorable pricing and economics ($15.5 million), principally product pricing and labor costs. SG&A spending and other items reflect primarily the favorable settlement associated with a value added tax audit in Brazil ($2.7 million), favorable SG&A efficiencies ($2.4 million), offset partially by higher expenses associated with being a public company ($2.7 million) and higher launch costs ($1.7 million).

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Results of Operations — Year Ended December 31, 2010 Compared with the Year Ended December 31, 2009

Automobile production volumes increased during the year ended December 31, 2010 in all major markets compared to the year ended December 31, 2009. The following table presents production volumes in specified regions according to IHS for the year ended December 31, 2010 compared to the year ended December 31, 2009 (in millions of units produced):

		Europe				Korea				China				North America				Brazil
2010 production volumes			18.8				4.2				14.7				11.9				3.2
2009 production volumes			16.3				3.4				10.8				8.6				2.9
Increase			2.5				0.8				3.9				3.3				0.3
Percentage change			15	%			22	%			36	%			40	%			8	%

The following table presents selected financial information for the years ended December 31, 2010 and 2009 (in millions).

		International								Americas								Consolidated
		Year Ended December 31,								Year Ended December 31,								Year Ended December 31,
		2010				2009				2010				2009				2010				2009
Revenues		$	1,147.6			$	990.5			$	849.5			$	643.9			$	1,997.1			$	1,634.4
Cost of sales			1,012.6				889.9				773.9				646.9				1,786.5				1,536.8
Gross profit/(loss)			135.0				100.6				75.6				(3.0	)			210.6				97.6
Selling, general, and administrative expenses			63.1				57.7				80.9				60.6				144.0				118.3
Amortization			2.4				2.0				0.9				0.8				3.3				2.8
Restructuring and asset impairments			3.3				12.6				11.0				0.8				14.3				13.4
Operating income/(loss)		$	66.2			$	28.3			$	(17.2	)		$	(65.2	)			49.0				(36.9	)
Interest expense, net																			65.9				56.9
Other (income)/expense																			1.3				(33.7	)
Provision/(benefit) for income taxes																			10.3				(1.1	)
Noncontrolling interest, net of tax																			8.4				8.9
Net loss attributable to Tower International, Inc.																		$	(36.9	)		$	(67.9	)

Comparison of Periods — GAAP Analysis of Consolidated Results

Revenues

Total revenues increased during the year ended December 31, 2010 by $362.7 million or 22% from the year ended December 31, 2009, reflecting primarily higher volume in both our International segment ($211.1 million) and our Americas segment ($194.5 million). Revenues were also positively impacted by the strengthening of foreign currencies against the U.S. dollar in our Americas segment, primarily the Brazilian Real ($21.2 million) and in our International segment, primarily the Korean Won ($21.2 million); however, that positive impact was more than offset by the strengthening of the U.S. dollar against the Euro in our International segment ($42.8 million). Revenues were negatively impacted by unfavorable pricing and economics ($36.9 million), primarily related to product pricing and lower steel recoveries.

Gross Profit

Total gross profit increased by $113 million or 116% from the year ended December 31, 2009 to the year ended December 31, 2010, and our gross profit margin increased from 6% during 2009 to 10.5% in 2010, as partially explained by higher volume ($95.4 million) offset partially by unfavorable product mix ($3.8 million) and unfavorable foreign exchange ($2.9 million, excluding the impact on depreciation). All other factors were net favorable by $24.3 million. Cost of sales was reduced by manufacturing, purchasing, and other efficiencies ($47.7 million), a one-time provision in 2009 associated with a value added tax audit in Brazil ($4.7 million),

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and savings from restructuring actions undertaken in 2008 and 2009 ($3.6 million). These factors were offset partially by unfavorable pricing and economics ($42.2 million), which included the non-recurrence of a one-time adjustment to our workers’ compensation accrual in 2009 associated with our closed facilities in our Americas segment ($3 million). Gross profit was also adversely impacted by the non-recurrence of customer cost recoveries ($12.2 million), higher launch costs ($9 million), and the non-recurrence of recoveries of expenditures for customer-funded tooling ($3.1 million).

Total gross profit was positively impacted by a reduction in the depreciation included in cost of sales from $141.1 million during the year ended December 31, 2009 to $107.2 million during the year ended December 31, 2010. The reduction reflected primarily accelerated depreciation in 2009 related to certain restructuring actions taken in the Americas segment, the strengthening of the U.S. dollar against foreign currencies, and a portion of our fixed assets becoming fully depreciated in July 2009.

Selling, General, and Administrative Expenses (“SG&A”)

Total SG&A increased $25.7 million or 22% from the year ended December 31, 2009, reflecting higher bonus and higher salary costs relating in part to the hiring of additional engineering colleagues in support of new programs ($13.3 million) and acquisition costs related to the acquisition of a manufacturing plant in Artern, Germany during the first quarter of 2010 ($0.7 million). In addition, SG&A for the year ended December 31, 2010 includes a charge for compensation costs related to our Special Incentive Program ($6.7 million), restricted stock units granted under our 2010 Equity Incentive Plan ($2.9 million), and our Supplemental Value Creation Program ($1.5 million). These compensation expenses were incurred as a result of the consummation of the IPO and the notes offering (see notes 14 and 18 to our consolidated financial statements).

Amortization Expense

Total amortization expense increased $0.5 million or 18% from the year ended December 31, 2009, reflecting primarily the amortization of the intangible asset recorded for the Artern facility at the end of the first quarter. Our amortization expense consists of the charges we incur to amortize certain intangible assets.

Restructuring and Asset Impairment Expense

Total restructuring and asset impairment expense increased $0.9 million or 7% from the year ended December 31, 2009. During 2010, we incurred charges of $14.3 million reflecting primarily an impairment charge taken on our non-automotive business of $7.3 million, an impairment charge taken of $2.7 million on our press shop in Bergisch Gladbach, Germany as we put it up for sale, and $2.3 million related to the sale of a closed facility. The charge taken on our non-automotive business relates to the equipment specifically purchased for a contract with a solar customer that failed to materialize, less any salvage value. During 2009, we incurred a $13.4 million charge reflecting primarily the closure of our press shop in Bergisch Gladbach, Germany ($10.2 million) and $4 million related to the 2008 closure of our facility in Traverse City, Michigan. The 2009 charges were offset partially by $6.9 million of restructuring income related to the cancellation of an old customer program relating to our closed facility in Milwaukee, Wisconsin. The remaining charges in 2010 and 2009 related to the ongoing maintenance of closed facilities and other small restructuring actions taken.

Interest Expense, net

Interest expense, net, increased $9 million or 16% from the year ended December 31, 2009 reflecting primarily the acceleration of the amortization of our debt issue costs associated with the first lien term loan ($5.3 million) and the higher interest expense associated with our senior secured notes ($3.4 million). During the third quarter of 2010, we issued $430 million of senior secured notes with an original issue discount of $12.8 million and subsequently retired our first lien term loan. The weighted average annual interest rate of the first lien term loan was approximately 8% during 2009 and 2010 when taking into account our interest rate swaps compared with the senior secured notes that bear an annual interest rate of 11.25% when taking into account the amortization of the original issue discount. On December 17, 2010, we redeemed $26 million of the senior secured notes from a portion of the net proceeds of our initial public offering.

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Provision/(Benefit) for Income Taxes

Income tax expense increased $11.4 million from the year ended December 31, 2009. Income tax expense increased $12.3 million reflecting primarily increased foreign income taxes, relating to increased earnings in our international segment, offset partially by reduced withholding and state income taxes. During 2010, we also reversed $7.8 million (net of uncertain tax benefits) of our valuation allowance in South Korea which resulted in a tax benefit. This valuation allowance was reversed because the profitability of our South Korean operations has improved during the past two years and the expected production volumes in South Korea are remaining at or above levels experienced during 2008. In addition, income tax expense of $2 million was recognized in operations, relating to the reversal of interest rate swaps reported in accumulated other comprehensive income (AOCI), compared to a benefit of $4.9 million for 2009.

The change in income tax expense varies during each period depending on the level and mix of income and losses generated in the various jurisdictions in which we do business. Our effective tax rate differs from our statutory rate primarily due to valuation allowances recorded against tax benefits on losses incurred in certain countries, including the U.S. where we have recorded the valuation allowances due to the uncertainty of the future realization of the tax benefits associated with the losses.

Noncontrolling Interest, Net of Tax

The adjustment to our earnings required to give effect to the elimination of noncontrolling interests decreased $0.5 million or 6% from the year ended December 31, 2009, reflecting decreased earnings in our Chinese joint ventures during 2010.

Comparison of Periods — Non-GAAP Analysis of Adjusted EBITDA

A reconciliation of Adjusted EBITDA to net loss attributable to Tower International, Inc. for the periods presented is set forth below (in millions):

		International								Americas								Consolidated
		Year Ended December 31,								Year Ended December 31,								Year Ended December 31,
		2010				2009				2010				2009				2010				2009
Adjusted EBITDA		$	125.5			$	108.7			$	64.7			$	16.3			$	190.2			$	125.0
Intercompany charges			7.0				8.0				(7.0	)			(8.0	)			—				—
Restructuring and asset impairments			(3.3	)			(12.6	)			(11.0	)			(0.8	)			(14.3	)			(13.4	)
Depreciation and amortization			(61.3	)			(75.1	)			(53.4	)			(72.6	)			(114.7	)			(147.7	)
Receivable factoring charges and other			(0.3	)			(0.7	)			(0.1	)			(0.1	)			(0.4	)			(0.8	)
Acquisition costs			(0.7	)			—				—				—				(0.7	)			—
Incentive compensation related to funding events			(0.7	)			—				(10.4	)			—				(11.1	)			—
Operating income/(loss)		$	66.2			$	28.3			$	(17.2	)		$	(65.2	)			49.0				(36.9	)
Interest expense, net																			(65.9	)			(56.9	)
Other income/(expense) (a)																			(1.3	)			33.7
(Provision)/benefit for income taxes																			(10.3	)			1.1
Noncontrolling interest, net of tax																			(8.4	)			(8.9	)
Net loss attributable to Tower International, Inc.																		$	(36.9	)		$	(67.9	)

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The following table presents revenues (a GAAP measure) and Adjusted EBITDA (a non-GAAP measure) for the years ended December 31, 2010 and 2009 (in millions) as well as an explanation of variances:

		International								Americas								Consolidated
		Revenues				Adjusted EBITDA (b)				Revenues				Adjusted EBITDA (b)				Revenues				Adjusted EBITDA (b)
2010 results		$	1,147.6			$	125.5			$	849.5			$	64.7			$	1,997.1			$	190.2
2009 results			990.5				108.7				643.9				16.3				1,634.4				125.0
Variance		$	157.1			$	16.8			$	205.6			$	48.4			$	362.7			$	65.2
Variance attributable to:
Volume and mix		$	211.1			$	35.9			$	194.5			$	55.7			$	405.6			$	91.6
Foreign exchange			(21.6	)			(4.1	)			21.2				1.0				(0.4	)			(3.1	)
Pricing and economics			(31.9	)			(34.0	)			(5.0	)			(20.8	)			(36.9	)			(54.8	)
Manufacturing and purchasing efficiencies			—				24.6				—				31.2				—				55.8
Selling, general and administrative expenses and other items			(0.5	)			(5.6	)			(5.1	)			(18.7	)			(5.6	)			(24.3	)
Total		$	157.1			$	16.8			$	205.6			$	48.4			$	362.7			$	65.2

Adjusted EBITDA

Consolidated Company:   Consolidated Adjusted EBITDA improved by $65.2 million or 52% from the year ended December 31, 2009, as explained by higher volume ($95.4 million) offset partially by unfavorable product mix ($3.8 million) and unfavorable foreign exchange ($3.1 million). All other factors were net unfavorable by $23.3 million; manufacturing and purchasing efficiencies ($55.8 million) were more than offset by unfavorable pricing and economics ($54.8 million) and unfavorable SG&A expenses and other items ($24.3 million).

International Segment:   In our International segment, Adjusted EBITDA improved by $16.8 million or 15% from the year ended December 31, 2009, reflecting higher volumes ($47.3 million) offset partially by unfavorable product mix ($11.4 million) and unfavorable foreign exchange ($4.1 million). All other factors were net unfavorable by $15 million. Unfavorable pricing and economics ($34 million), principally product pricing and labor costs, were offset partially by manufacturing and purchasing efficiencies ($24.6 million). In addition, SG&A and other items contributed unfavorably during the year ended December 31, 2010 ($5.6 million) resulting from the non-recurrence of customer cost recoveries ($3.9 million), higher launch costs ($2.9 million), and increased personnel costs, primarily engineering ($2.5 million), offset partially by savings from restructuring actions undertaken in 2009 ($1.9 million).

Americas Segment:   In our Americas segment, Adjusted EBITDA improved by $48.4 million or 297% from the year ended December 31, 2009, reflecting primarily higher volumes ($48.1 million), favorable product mix ($7.6 million), and favorable foreign exchange ($1 million). All other factors were net unfavorable by $8.3 million. Manufacturing and purchasing efficiencies ($31.2 million) were offset partially by unfavorable pricing and economics ($20.8 million), principally product pricing and labor costs including higher bonus and salary costs and the non-recurrence of a one-time adjustment to our workers’ compensation accrual in 2009 associated with our closed facilities ($3 million), and higher SG&A expenses and other items ($18.7 million). The adverse impact from SG&A spending and other items resulted from the non-recurrence of customer cost recoveries ($8.3 million), higher launch costs ($6.1 million), increased personnel costs, primarily engineering ($3.4 million), the non-recurrence of recoveries of expenditures for customer-funded tooling ($3.1 million), and increased costs related to becoming a public company ($2 million), all of which were offset partially by the non-recurrence of a one-time provision in 2009 associated with a value added tax audit in Brazil ($4.7 million) and savings from restructuring actions undertaken in 2008 and 2009 ($1.7 million).

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Restructuring and Asset Impairments

The following table sets forth our net restructuring and asset impairment expense by type for the periods presented (in millions):

		Year Ended December 31,
		2011				2010				2009
Employee termination costs		$	1.4			$	0.6			$	12.9
Other exit costs			1.3				3.7				5.6
Asset impairments			—				10.0				1.8
Restructuring income			—				—				(6.9	)
Total		$	2.7			$	14.3			$	13.4

We restructure our global operations in an effort to align our capacity with demand and to reduce our costs. Restructuring costs include employee termination benefits and other incremental costs resulting from restructuring activities. These incremental costs principally include equipment and personnel relocation costs. Restructuring costs are recognized in our consolidated financial statements in accordance with FASB ASC No. 420, “ Exit or Disposal Obligations, ” and appear in our Statement of Operations under a line item entitled “restructuring and related asset impairment charges, net.” We believe the restructuring actions discussed below will help our efficiency and results of operations on a going forward basis.

The charges incurred during 2011 related to the ongoing maintenance expense of facilities closed in our Americas segment as a result of prior actions and severance costs in Brazil to improve manufacturing efficiencies.

In December 2010, we recorded an impairment charge of $7.3 million on our non-automotive business and recorded a charge of $2.3 million related to the sale of a closed facility. The charge taken on our non-automotive business related to the equipment specifically purchased for a contract with a solar customer that failed to materialize, less any salvage value. In March 2010, we recorded an impairment charge of $2.7 million on our Bergisch Gladbach, Germany facility which was closed in 2009. This charge was recorded to align the book value to fair value less costs to sell when the facility was classified as held for sale.

In July 2009, we announced that we had ceased production at our press shop in Bergisch Gladbach, Germany. This closure impacted 57 employees. Total costs of the closure of this facility were $10.2 million, which was comprised of $9.1 million of employee costs and $1.1 million of other exit costs. We recorded the entire charge of $10.2 million in 2009. In connection with our prior restructuring actions and current activities other than our Bergisch press shop and Traverse City closure, we recorded restructuring charges of approximately $6.1 million during 2009.

The additional charges incurred in 2011, 2010, and 2009 related to other severance costs and ongoing maintenance of facilities closed as a result of prior actions. We expect to continue to incur additional restructuring expense in 2012 primarily related to previously announced restructuring actions and may engage in new actions if business conditions warrant further actions. We do not anticipate that any additional expense will be significant with respect to previously announced actions. We had no restructuring income during the year ended December 31, 2011 and 2010, but we had restructuring income of $6.9 million during the year ended December 31, 2009. The restructuring income was related to the cancellation of an old customer program relating to our closed facility in Milwaukee, Wisconsin. This income was recorded in the Americas segment. As of December 31, 2009, all recoveries had been received.

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debt service obligations and fund our short-term and long-term operating requirements for at least the next 12 months with cash flow from operations, cash on hand, and borrowings under our revolving credit facility.

Cash Flows and Working Capital

The following table shows the components of our cash flows for the periods presented (in millions):

		Year Ended December 31,
		2011				2010				2009
Net cash provided by/(used in):
Operating activities		$	100.5			$	120.4			$	48.9
Investing activities			(142.7	)			(117.2	)			(86.0	)
Financing activities			26.3				(0.2	)			50.8

Net Cash Provided by Operating Activities

During the year ended December 31, 2011, we generated $100.5 million of cash flow from operations compared with $120.4 million during the year ended December 31, 2010. The primary reason for this decrease was the unfavorable fluctuation in working capital items which was offset partially by higher production volumes during 2011 that increased our revenues and profitability. During the year ended December 31, 2011, we utilized $28.8 million of cash through working capital items, reflecting primarily the timing of the net effect of payments and receipts of customer funded tooling, which was $19.9 million unfavorable during 2011 and increased inventory of $10.2 million due to higher sales.

During the year ended December 31, 2010, we generated $120.4 million of cash flow from operations compared with $48.9 million during the year ended December 31, 2009. The primary reason for this increase resulted from higher volumes during 2010 which increased our revenues and profitability. During 2010, we generated $40.6 million of cash through working capital items, reflecting primarily favorable timing of customer funded tooling payments and receipts of $21.1 million.

Net Cash Used in Investing Activities

Net cash utilized in investing activities was $142.7 million during 2011 compared to net cash utilized of $117.2 million during 2010. The $25.5 million change in cash used reflects the increase in capital expenditures related primarily to the timing of program launches and capacity expansions in China and Brazil and the acquisition of substantially all of the assets of W Industries in the second quarter of 2011, offset partially by the acquisition of a manufacturing plant in Artern, Germany in the first quarter of 2010.

Net cash utilized in investing activities was $117.2 million during 2010 compared to net cash utilized of $86 million during 2009. The $31.2 million increase in cash used reflects primarily our acquisition of a manufacturing plant in Artern, Germany and spending of $13 million related to our non-automotive business.

Net Cash Provided by Financing Activities

Net cash provided by financing activities was $26.3 million during 2011 compared to net cash utilized of $0.2 million during 2010. The $26.5 million change was attributable primarily to increased borrowings to assist in the funding of operations offset partially by the retirement of $42 million of our senior secured notes in 2011 compared with $26 million in 2010 and the $5.1 million purchase of treasury stock to cover the minimum statutory withholding taxes for the RSUs that vested on July 20, 2011. See note 14 to our consolidated financial statements for further discussion.

Net cash utilized by financing activities was $0.2 million during 2010 compared to net cash provided of $50.8 million during 2009. The $51 million change was primarily attributable to increased borrowings in 2009 due to the downturn in the global economy to help fund our operations, as compared with the repayment of borrowings in 2010 funded primarily from the increased generation of cash from operations, the issuance of the senior secured notes in August 2010, and the net proceeds received from our IPO. These factors were offset partially by the retirement of the first lien term loan in August 2010 and the financing costs incurred to complete the transactions.

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Working Capital

We manage our working capital by monitoring key metrics principally associated with inventory, accounts receivable and accounts payable. We have implemented various inventory control processes which have allowed us to maintain low levels of inventory days on hand; however, our inventory levels increased from $73.2 million at December 31, 2010 to $85.1 million at December 31, 2011. The increase reflects primarily the increased volume experienced during 2011. We have continued efforts to match terms on which we pay our suppliers with the payment terms we receive from our customers in an effort to remain cash flow neutral with respect to our trade payables and receivables.

On December 31, 2011 and 2010, we had working capital balances of $(9.9) million and $(10.3) million. The negative working capital balances result because we negotiate our payment terms to our vendors to either match or exceed the payment terms that we receive from our customers on our accounts receivable and our pre-paid tooling. In addition, we actively manage our inventory balances to minimize the inventory on hand which is facilitated by our customers’ just-in-time manufacturing process. We also have a substantial portion of our short-term debt that is subject to annual renewal. Historically, we have been successful in renewing this debt as it becomes due.

Our working capital usage is seasonal in nature. During the first half of the year, production and sales typically increase substantially, which causes our working capital to increase because our accounts receivable and inventory increase. In the second half of the year, production and sales typically decline as a result of scheduled customer shutdowns, which results in lower sales. The lower production and sales generally results in a reduction of accounts receivables and inventory which decreases our working capital.

Our accounts receivable balance increased from $297.1 million as of December 31, 2010 to $328 million as of December 31, 2011. The increase reflects increased revenues during the last quarter of 2011 as compared with the last quarter of 2010. Our revenues for the fourth quarter of 2011 were $614.7 million, which represented an increase of $73.1 million over our revenues during the fourth quarter of 2010. A substantial portion of this increase occurred during the last two months of the quarter. Our November and December 2011 revenues were $404.9 million as compared with $356.5 million during November and December 2010. The percentage increase in sales approximated the percentage increase in accounts receivable.

Our accounts payable balance increased from $366.8 million as of December 31, 2010 to $395.3 million as of December 31, 2011. The change approximates the increase in our accounts receivable reflecting primarily the matching of terms with our customers and vendors as described above.

Sources and Uses of Liquidity

Our available liquidity at December 31, 2011 was $258.4 million, and consisted of $135 million of cash on hand and unutilized borrowing availability of $83.6 million and $39.8 million, respectively, under our U.S. and foreign credit facilities. A significant portion of our cash balance is located at foreign subsidiaries and our ability to efficiently access cash in certain subsidiaries and foreign jurisdictions is subject to the business needs of the operations. As of December 31, 2010 and 2009, we had available liquidity in the amount of $285.4 million and $238.1 million, respectively.

As of December 31, 2011, we had short-term debt of $106.5 million, of which $52.1 million related to debt in South Korea, $22.9 million related to debt in Brazil, $19.7 million related to receivable factoring in Europe, $11.5 million related to a line of credit in Europe, and $0.3 million related to indebtedness owed to the Detroit Investment Fund. The majority of our South Korean and Brazilian debt is subject to annual renewal. Historically, we have been successful in renewing this debt on an annual basis, but we cannot assure you that this debt will continue to be renewed or, if renewed, that this debt will continue to be renewed under the same terms. The receivable factoring in Europe consists of uncommitted, demand facilities which are subject to termination at the discretion of the banks, although we have not experienced any terminations by the banks at any time since the 2007 acquisition. The secured line of credit in Europe will be repaid upon receipt of certain tooling reimbursements. We believe that we will be able to continue to renew the majority of our South Korean and Brazilian debt and to continue the borrowings in Europe.

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During the fourth quarter of 2011:

Debt

As of December 31, 2011, we had outstanding indebtedness, excluding capital lease obligations, of approximately $568.4 million, which consisted of the following:

The debt balance as of December 31, 2011 is consistent with the average month end indebtedness levels experienced during the year ended December 31, 2011.

Our asset-based revolving credit facility, which we refer to as our Amended ABL Revolver, provides for a revolving credit facility in the aggregate amount of $150 million, subject to a borrowing base limitation. Our Amended ABL Revolver provides for the issuance of letters of credit in an aggregate amount not to exceed $50 million, provided that the total amount of credit (inclusive of revolving loans and letters of credit) extended under our Amended ABL Revolver is subject to an overall cap, on any date, equal to the lesser of $150 million or the amount of the borrowing base on such date. The borrowing base is based upon the value of certain of our assets, including certain of our accounts receivable, inventory and property, plant, and equipment, and thus changes from time to time depending on the value of the assets included within the borrowing base. The administrative agent for this facility causes to be performed an appraisal of the assets (other than the accounts receivable) included in the calculation of the borrowing base either on an annual basis or, if our availability under the facility is less than the greater of (i) 15% of the total commitment (which is currently $150 million) or (ii) $22.5 million during any twelve month period, as frequently as on a semi-annual basis. In addition, if certain material defaults under the facility have occurred and are continuing, the administrative agent has the right to perform any such appraisal as often as it deems necessary in its sole discretion. Our administrative agent may make adjustments to our borrowing base pursuant to these appraisals. These adjustments may negatively impact our ability to obtain revolving loans or support our letters of credit needs under our Amended ABL Revolver. Based on the value of our assets at December 31, 2011, we were entitled to borrow $137.6 million under our Amended ABL Revolver at December 31, 2011. On that date, we had $54 million of borrowings under the Amended ABL Revolver and no letters of credit outstanding. Thus, we could have borrowed an additional $83.6 million under the Amended ABL Revolver as of December 31, 2011, calculated as follows (in millions):

Revolver borrowing base		$	137.6
Borrowings on revolver			54.0
Letters of credit outstanding on revolver			—
Availability		$	83.6

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Our Amended ABL Revolver bears interest at a base rate plus a margin or at LIBOR plus a margin. The applicable margin is determined by reference to the average availability under the Amended ABL Revolver over the preceding three months. The applicable margins as of December 31, 2011 were 2.25% and 3.25% for base rate and LIBOR based borrowings, respectively. Borrowings outstanding under our Amended ABL Revolver may vary significantly from time to time depending on our cash needs at any given time. Our Amended ABL Revolver matures in June 2016.

Our Amended ABL Revolver contains customary covenants applicable to certain of our subsidiaries, including a financial maintenance covenant ratio (the “Fixed Charge Coverage Ratio”) based on the ratio of consolidated adjusted EBITDA to consolidated fixed charges, each as defined in the agreement. If less than 12.5 percent of the total commitment is available under the facility for more than two consecutive days, we are required to maintain a consolidated Fixed Charge Coverage Ratio of not less than 1.00 to 1.00 on a rolling four quarter basis. If we are required at any time to maintain the consolidated Fixed Charge Coverage Ratio, such requirement will end if more than 12.5 percent of the total commitment is available (provided that such number cannot be less than $12.5 million) for twenty consecutive days. Our Letter of Credit Facility contains the same Fixed Charge Coverage Ratio as set forth in the Amended ABL Revolver (as such covenant is only applicable under the Letter of Credit Facility Agreement to the same extent, and at the same times, that it is applicable under the Amended Revolving Credit Facility Agreement). During the fourth quarter of 2011, we were not required to maintain the Fixed Charge Coverage Ratio; thus, were in compliance with our covenants. Our financial condition and liquidity would be adversely impacted by the violation of any of our covenants.

On August 24, 2010, we consummated the sale of $430 million aggregate principal amount of our 10.625% senior secured notes (the “notes”) due 2017. The indenture governing the notes contains a provision that gives each holder of notes the right, upon a change of control, to require the Issuers to purchase all or any part of such holder’s notes at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest. We may also redeem some or all of the notes on the terms and subject to the conditions set forth in the indenture. On December 16, 2010, we redeemed $26 million of the senior secured notes from a portion of the net proceeds of our initial public offering which resulted in a premium paid of $1.3 million. On March 30, 2011, we redeemed an additional $17 million of the senior secured notes which resulted in a premium paid of $0.9 million. On October 6, 2011 and September 30, 2011, we reduced our outstanding debt by purchasing $7.5 million and $17.5 million, respectively, of our senior secured notes in the open market and immediately retired them which resulted in a premium paid of $0.1 million and $0.4 million, respectively.

The indenture governing the notes contains customary covenants applicable to our subsidiaries and places some restrictions on Tower Automotive, LLC which became restrictions on Tower International, Inc. after the Corporate Conversion. The indenture governing the notes contains certain restrictions on, among other things, our subsidiaries’ ability to: incur debt; incur liens; declare or make distributions to us or our equity holders; repay debt; enter into mergers, acquisitions and other business combinations; engage in asset and equity sales; enter into sale and lease-back transactions; enter into restrictive agreements; and enter into transactions with affiliates. The indenture governing the notes includes customary events of default, including, but not limited to, in respect of payment defaults; breaches of covenants; bankruptcy; material judgments; failure to have perfected liens on substantially all or all the collateral securing the notes; and cross-acceleration to material indebtedness.

Our other foreign subsidiary indebtedness consists primarily of borrowings in South Korea, borrowings in Brazil, and factoring and a credit line in Europe, which are described above.

Our first lien term loan was borrowed in two tranches, a $250 million U.S. dollar denominated tranche and a €190.8 million Euro denominated tranche ($260 million at the time of the initial borrowing). Our first lien term loan carried an initial rate of interest equal to 4.00% per annum plus the applicable U.S. Dollar LIBOR or EURIBOR rate. Subsequently, the applicable margin has increased to 4.25% per annum. Our first lien term loan, scheduled to mature in July 2013, was repaid on August 24, 2010, funded principally by our offering of $430 million aggregate principal amount of senior secured notes. Under our first lien term loan agreement, we also had a $27.5 million letter of credit facility which was owned by funds and accounts managed by Cerberus Capital Management, L.P. (an affiliate of our principal stockholder). On June 13, 2011, the first lien

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term loan agreement was terminated. In connection with the termination, a $27.5 million deposit was returned to Cerberus in their capacity as a deposit lender.

Capital and Operating Leases

We maintain capital leases mainly for a manufacturing facility and certain manufacturing equipment. We have several operating leases, including leases for office and manufacturing facilities and certain equipment, with lease terms expiring between the years 2011 and 2021. As of December 31, 2011, our total future operating lease payments amounted to $130.9 million and the present value of minimum lease payments under our capital leases amounted to $15.1 million. As of December 31, 2011, we were committed to making lease payments of not less than $21.2 million on our operating leases and not less than $3.8 million on our capital leases during 2012.

Capital Expenditures

In general, we are awarded new automotive business two to five years prior to the launch of a particular program. During the pre-launch period, we typically invest significant resources in the form of capital expenditures for the purchase and installation of the machinery and equipment necessary to manufacture the awarded products. Capital expenditures for the years ended December 31, 2011 and 2010 were $120.4 million and $100.5 million, respectively, the increase reflecting primarily our expansion in China in 2011 and the timing of program launches. Our capital spending for 2012 is expected to be approximately $150 million.

Off-Balance Sheet Obligations

Our only off-balance sheet obligations consist of obligations under our Letter of Credit Facility. As of December 31, 2011, letters of credit outstanding were $26.1 million under such facility.

Our Letter of Credit Facility initially provided for the issuance of up to $38 million of letters of credit with a sublimit for Euro denominated letters of credit (with an option to increase the Letter of Credit Facility to $44.5 million in the future). On August 5, 2011, we amended our Letter of Credit Facility Agreement to reduce it from $38 million to $30 million. Upon a third party drawing on letters of credit issued under the Letter of Credit Facility, we will become obligated to pay to the lenders the amounts so drawn. The expiration date of the Letter of Credit Facility is June 13, 2014. Applicable fees are 8.5% on the total amount of the facility.

Contractual Obligations and Commercial Commitments

Our contractual obligations and commercial commitments as of December 31, 2011 are summarized below (in millions):

		Payments Due by Period
Contractual Obligatons		Total				Less than 1 Year				2 – 3 Years				4 – 5 Years				After 5 Years
Long-term debt (including current portion):
Asset based revolving credit facility		$	54.0			$	—			$	—			$	54.0			$	—
Senior secured notes			353.3				—				—				—				353.3
Other foreign subsidiary indebtedness			161.1				106.5				50.2				1.3				3.1
Cash interest payments			249.1				53.0				88.7				80.8				26.6
Pension contributions (a)			95.0				20.4				40.7				26.1				7.8
Expected tax payments (b)			16.8				—				14.2				1.7				0.9
Capital and tooling purchase obligations (c)			111.1				111.1				—				—				—
Capital lease obligations			18.3				3.8				4.0				3.2				7.3
Operating leases			127.2				21.1				33.4				30.1				42.6
Total contractual obligations at December 31, 2011		$	1,185.9			$	315.9			$	231.2			$	197.2			$	441.6