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, 2012		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. x

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, 2012, was approximately $71,980,303.

There were 20,247,134 shares of the registrant’s common stock outstanding at February 28, 2013.

DOCUMENTS INCORPORATED BY REFERENCE

Certain portions, as expressly described in this report, of the Registrant’s Proxy Statement for the 2013 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, 2012

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		10-K Pages
PART I
Item 1. Business			1
Item 1A. Risk Factors			13
Item 1B. Unresolved Staff Comments			23
Item 2. Properties			24
Item 3. Legal Proceedings			25
Item 4. Mine Safety Disclosures			25
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Repurchases of Equity Securities			26
Item 6. Selected Financial Data			27
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations			29
Item 7A. Quantitative and Qualitative Disclosures about Market Risk			53
Item 8. Financial Statements and Supplementary Data			55
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			113
Item 9A. Controls and Procedures			113
Item 9B. Other Information			116
PART III
Item 10. Directors, Executive Officers, and Corporate Governance			117
Item 11. Executive Compensation			117
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			117
Item 13. Certain Relationships and Related Transactions, and Director Independence			117
Item 14. Principal Accountant Fees and Services			118
PART IV
Item 15. Exhibits and Financial Statement Schedules			118
Signatures
Exhibit Index
Exhibits
EX-18
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

We seek:

Execute Business Model Focused on Free Cash Flow

Ongoing free cash flow (defined as net cash provided by operating activities less cash disbursed for purchases of property, plant, and equipment, net) is one of our important financial metrics. This focus keeps us disciplined regarding product pricing and margins, as well as determining and prioritizing affordable capital expenditures. To further our alignment, free cash flow is a major component of our annual bonus program for salaried and hourly colleagues. (Item 7 of this Annual Report includes a discussion of free cash flow as a non-GAAP measure).

We estimate that the demonstrated present capability of our business model (at normalized conditions) generates positive free cash flow equal to about 1% of revenues. We see a realistically achievable path to ongoing free cash flow equal to about 3% of revenues by approximately 2015. Adjusted EBITDA less capital expenditures is expected to contribute one percentage point of improvement with industry production at trend in all regions and with recent expansion investments in China and Brazil behind us. Reducing leverage to target at present market interest rate can improve cash flow by about 1% of revenues. Our business model is summarized in the table below (as percent of revenues):

		Present Capability				Achievable Improvements				Planned Capability
Adjusted EBITDA			9 - 10	%
Capital Expenditures (Capex)			(4) - (5	)%
Adjusted EBITDA Less Capex			5	%			+1	%			6	%
Interest Expense			(2.5	)%			+1	%			(1.5	)%
All Other*			(1.5	)%							(1.5	)%
Free Cash Flow			1	%			+2	%			3	%

Reduce Leverage and Interest Expense

Reducing net debt leverage (defined as total debt less cash and cash equivalents divided by Adjusted EBITDA) and interest expense are important business priorities and potential significant opportunities to improve financial results and ongoing financial strength. As of December 31, 2012, our net debt (defined as

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total debt less cash and cash equivalents) was $383.1 million, or approximately 2.0 times Adjusted EBITDA for the year ended December 31, 2012. Our long-term target for net debt leverage is 1.0 times. In addition to using free cash flow to reduce leverage, we may pursue additional asset sales, as evidenced by the accretive sale of Tower Korea in December 2012, which reduced net debt by 26%. (Item 7 of this Annual Report includes a discussion of net debt as a non-GAAP measure).

In addition to reducing the amount of net debt leverage, we also will pursue a significantly lower interest rate by re-financing our senior secured notes due 2017 at the earliest opportunity that makes business sense. We had $354.8 million of these notes outstanding at December 31, 2012 at an effective interest rate of 11.25%. The notes have annual call options up to 10% of the original principal at a price of 105, and the notes are callable in total as of September 1, 2014 at a price of 105.313. See note 6 to the consolidated financial statements for additional information on the senior secured notes.

Achieve Growth at or Above Industry

We have demonstrated the ability to win net new business from a combination of new OEM models, share gains from competitors via conquest wins, and some OEM outsourcing. We also are reasonably well-positioned geographically, with about 20% of present revenue in the secular above-average growth markets of China and Brazil. We believe our ability to win business at a return in excess of our cost of capital is a direct reflection of our core engineering strength, competitive cost and quality, and proven ability to manage complex and critical new-model launches for customers. We use processes such as Lean Six Sigma, labor best practices standardization, and advanced product quality planning (APQP) to drive productivity and quality and manage new programs on time and on budget.

We believe there can be meaningful upside growth opportunities in the future from entering additional growth markets like Mexico and India where we do not yet manufacture and from accretive acquisitions as the sector consolidates.

Manage Risk

We consider risk management an important part of operating predictably and successfully in the cyclical and capital-intensive auto parts industry. Foremost in managing risk is financial discipline, beginning during the evaluation and approval of new programs to ensure sound assumptions and projected returns in excess of our cost of capital. During each year, we carefully monitor and manage all elements of cost, with an objective of achieving productivity and other savings that at least offset customer price reductions and labor and overhead inflation. Through our commercial agreements, we are largely shielded from changes in steel prices.

In addition to our financial discipline, customer and geographic diversification can help to minimize overall risk. While there can be no assurance that future results will match past performance, we believe our ability to weather the severely depressed auto industry conditions of 2008 – 2009 without receiving customer pricing assistance or violating any financial covenants is good evidence of the company’s effective risk management.

We supply products to approximately 170 vehicle models globally for 11 of the 12 largest global OEMs. The below charts summarize our diversification by customer, region, and vehicle platform.

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Customer Diversification

We have a diversified customer mix as seven different OEMs individually accounted for 5% or more of our revenues in 2012. The below charts summarize our customer mix as a percent of revenues for the year ended December 31, 2012.

Customer
VW			23	%
Ford			21	%
Chrysler			9	%
Fiat			9	%
Volvo			7	%
Nissan			7	%
Daimler			5	%
Toyota			4	%
BMW			3	%
Honda			2	%
Chery			1	%
PSA			1	%
Geely			1	%
Other			7	%
Total			100	%

Geographic Diversification

The below chart summarizes our geographic mix as a percent of revenues for the year ended December 31, 2012.

Region
North America			44	%
Europe			37	%
Asia			10	%
South America			9	%
Total			100	%

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. The below chart summarizes our vehicle platform mix as a percent of revenues for the year ended December 31, 2012.

Vehicle Platform
Small Cars			40	%
Large Cars			19	%
Other – Light Trucks			22	%
North American Framed Vehicles			19	%
Total			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.

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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 2013 forecast.

Our Products

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

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 the year ended December 31, 2012 is shown below:

Product Group
Body structures and assemblies			55	%
Chassis, lower vehicle structures and suspension components			20	%
Complex body-in-white assemblies			24	%
Other			1	%
Total			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/V40		Complex Assembly
VW		Cayenne/Touareg/Q7		Body Structures & Complex Assembly
		Caddy Van		Body Structures
		Citigo		Body Structures
		Mii		Body Structures
		Octavia		Body Structures
		Up!		Body Structures
BMW		1/3 Series		Body Structures
Daimler		Sprinter/Crafter		Body Structures & Complex Assembly
Fiat		500		Body Structures
		Ducato		Body Structures
		Giuletta		Body Structures
		MiTo		Body Structures
		Punto		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
		C-Max		Body Structures

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OEM		Models		Product Type
Chrysler		Grand Caravan/Town & Country		Body Structures
		Grand Cherokee		Body Structures
		Wrangler		Frame Assembly
		Dart		Body Structures
Nissan		Frontier/Xterra		Body Structures & Frame Assembly
		NV Series		Frame Assembly
		Titan/Armada		Frame Assembly
		Altima		Body Structures
Toyota		Camry		Body Structures
		Tacoma		Frame Assembly
China
FAW-VW		Bora/Golf A4		Chassis
		Jetta		Chassis
Chery		A3		Chassis
		Cowin 3		Chassis
		Fulwin 2		Chassis
		Tiggo		Chassis
SAIC		Roewe 550		Chassis
Fiat		343c		Body Structures
Geely		Vision		Body Structures
		Seaview		Body Structures
South America
VW		Gol		Body Structures
		Fox		Body Structures
		Saveiro		Body Structures
Fiat		Palio/Doblo		Body Structures
		Punto		Body Structures
		Strada		Body Structures
Honda		Civic		Body Structures
		Fit		Body Structures
		City		Body Structures
PSA		Picasso		Body Structures

International Operations

We have significant manufacturing operations outside the United States, and in 2012, approximately 56% 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

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machines attach additional parts, fixtures or stampings to the original metal stampings. In addition to standard production capabilities, our assembly machines also are able to perform various statistical control functions and identify improper welds and attachments. 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 29 per million parts delivered in 2012, 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 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 eight 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 customers in Europe typically shut down vehicle production during portions of July or August and during one week in December. Our North American customers typically shut down vehicle production for approximately two weeks during July and for one week during December. Our customers in Brazil and China typically shut down vehicle production during certain periods in our first quarter. Our quarterly results of operations, cash flows and liquidity may be impacted by these seasonal practices. For example, working capital is typically a use of cash during the first quarter of the year and a source of cash generation in the fourth quarter. 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 three 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 sector. 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 optimize our cost structure. We follow manufacturing practices designed to improve efficiency and quality, including manpower standardization and global inventory reduction initiatives, 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, and Benteler Automotive. 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 supplier consolidation. We expect that OEMs are increasingly focused on the global capability and financial strength of their supply base. We believe that such scrutiny of suppliers will result in additional contraction in the supply base.

In addition, most of our OEM customers manufacture products that compete with our products. We believe the recent trend has been for OEMs, on average, to increase outsourcing, and we expect that trend to continue.

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Joint Ventures

As of December 31, 2012, we had four consolidated joint ventures in China: 1) Tower Automotive (WuHu) Company, Ltd., which we refer to as “WuHu”, 2) Changchun Tower Golden Ring Automotive Products Co., Ltd., which we refer to as “TGR”, 3) (Xiangtan) DIT Automotive Products Co., Ltd., which we refer to as “Xiangtan”, and 4) Tower (Ningbo) DIT Automotive Products Co., Ltd., which we refer to as “Ningbo”.

Our WuHu joint venture, 80% owned by Tower, has plants in WuHu City and Dalian and primarily supplies Chery.

Our TGR joint venture, 60% owned by Tower, has plants in Changchun and Chengdu and primarily supplies FAW-VW and FAW.

Our Xiangtan joint venture, 51% owned by Tower, has two plants in Xiangtan and primarily supplies Geely and Fiat-GAC.

Our Ningbo joint venture, 36% owned by Tower, has two plants in Ningbo with plans to supply Geely.

Employees

As of December 31, 2012, we had approximately 9,000 employees worldwide, of whom approximately 5,800 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 Greenhouse Gas (“GHG”) emission requirements are in various stages of development. For example, the United States Environmental Protection Agency has promulgated: (1) the Greenhouse Gas Reporting Rule, which requires reporting of GHG data and other relevant information from large sources and suppliers in the United States; and (2) the GHG Tailoring Rules, which requires certain facilities with significant GHG emissions to obtain emissions permits under the authority of the Clean Air Act (typically limited to only the largest stationary sources of GHGs). Additionally, the United States Congress has considered imposing additional restrictions on GHG emissions. Any regulation of GHG emissions by either the United States Congress and/or U.S. EPA could include 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.

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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 and Ethics 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 and Ethics on our website. We will provide, free of charge, a copy of our Code of Business Conduct and Ethics 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. Except as otherwise stated, the information contained on our website or available by hyperlink from our website is not incorporated into this Annual Report on Form 10-K or other documents we file with, or furnish to, the SEC.

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, as well as by statements regarding our intent, belief, or current plans or expectations. Our forward looking statements also include, without limitation, statements regarding our anticipated future financial condition, operating results, free cash flows, net debt leverage, Adjusted EBITDA and business and financing plans and models. 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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Our substantial international operations make us vulnerable to risks associated with doing business in foreign countries.

Our international operations include manufacturing facilities in Europe, China, and Brazil, and we sell our products in each of these areas. For the year ended December 31, 2012, approximately 56% 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. 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. As of December 31, 2012, 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.

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, potential adverse effects on existing business relationships with current customers and suppliers, and decreased geographic diversification. For example, the divestiture of Seojin during 2012 has resulted in increased revenue concentration in North America and Europe. We cannot provide assurance 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.

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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. 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 three 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 provide assurance 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.

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.

The capital and credit markets provide companies with liquidity to operate and grow their businesses beyond the liquidity that operating cash flows provide. Disruptions in the capital and credit markets could 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.

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We sponsor a defined benefit pension plan that is underfunded and will require cash payments. 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, the plan will require annual cash payments in order to meet our funding obligations, adversely impacting 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.

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. The principal competitive factors include price, quality, global presence, service, product performance, design and engineering capabilities, new product innovation and timely delivery. We cannot provide assurance 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.

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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 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 our financial condition and strength, 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 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 2012, our top four customers, Volkswagen, Ford, Chrysler, and Fiat accounted for 23%, 21%, 9%, and 9% 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:

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

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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 scrap, or 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 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 customers in Brazil and China typically shut down vehicle production during certain periods in our first quarter. Such seasonality may adversely affect our quarterly results of operations, cash flows and liquidity.

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 manufacturing locations because of loss of business or consolidation of manufacturing facilities, the employee severance, asset retirement and other costs 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, but we cannot provide assurance that plants will not have to be closed.

Our business could be adversely affected by labor disruptions.

As of December 31, 2012, we had approximately 9,000 employees, of whom approximately 5,800 were covered under collective bargaining agreements that expire at various times. 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 provide assurance 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.

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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 provide assurance 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.

Our ability to utilize our net operating loss carryforwards may be limited and delayed.

As of December 31, 2012, we had U.S. net operating loss carryforwards of $206.2 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.

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.

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.

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. As of December 31, 2012, we had approximately $64.8 million of goodwill on our consolidated balance sheet that could be subject to impairment. 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.

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, 2012, our total debt, including capital lease obligations, was $497 million. That indebtedness 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 provide assurance 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:

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

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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 provide assurance 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, 2012, we had $484 million (net of $7.2 million 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 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.

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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:

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, 2012, the average daily trading volume of our common stock on the New York Stock Exchange was approximately 42,000 shares, or less than 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 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, our stockholder’s may 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 provide assurance 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 February 28, 2013 we had 20,247,134 shares of common stock outstanding. Of these outstanding shares, 7,779,268 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 held by our controlling shareholder, on behalf of Cerberus. The shares held by our controlling shareholder are considered “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.

Our controlling shareholder has 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. As these shares are registered, they can be freely sold in the public market. These shares are currently included in an effective registration statement.

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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 29 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 (2 locations)

United States

Manufacturing

601,700

Owned/Leased

(1)

Bellevue, Ohio (2 locations)

United States

Manufacturing

363,700

Owned

Bluffton, Ohio

United States

Manufacturing

196,200

Leased

Chicago, Illinois

United States

Manufacturing

423,700

Leased

Clinton Township, Michigan

United States

Manufacturing

385,300

Leased

Detroit, Michigan (2 locations)

United States

Manufacturing

320,000

Owned

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

(3)

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

Upper Sandusky, Ohio

United States

Manufacturing

80,000

Leased

(3)

International Locations

Gent

Belgium

Manufacturing

346,700

Leased

Neprevazka

Czech Republic

Manufacturing

63,900

Leased

Artern

Germany

Manufacturing

150,000

Owned

Bergisch-Gladbach

Germany

Corporate Office/ Technical Center

99,400

Owned

(4)

Buchholz

Germany

Manufacturing

79,900

Owned

Duisburg

Germany

Manufacturing

110,000

(6)

Kaarst

Germany

Purchasing Office

3,300

Leased

Zwickau

Germany

Manufacturing

492,000

Owned/Leased

(5)

Caserta

Italy

Manufacturing

262,500

Owned

Melfi

Italy

Manufacturing

73,600

Owned

Turin

Italy

Manufacturing/Office/ Technical Center

180,300

Owned

Opole

Poland

Manufacturing

146,000

(5)

Malacky

Slovakia

Manufacturing

518,200

Owned

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Facility

Country

Description of Use

Square Feet

Ownership

Changchun (2 locations)

China

Manufacturing/Office/ Technical Center

249,100

(7)

Chengdu

China

Manufacturing

93,200

(7)

Dalian

China

Manufacturing

72,700

(2) (7)

Ningbo (2 locations)

China

Manufacturing

232,500

(2) (8)

Shanghai

China

Office

3,500

Leased

WuHu

China

Manufacturing/Office/ Technical Center

308,500

(7)

Xiangtan (2 locations)

China

Manufacturing/Office

292,800

(7)

Hyderabad

India

Engineering/Design/ Technical Center

4,600

Leased

Yokohama

Japan

Sales/Engineering/ Technical Center

2,500

Leased

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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 February 28, 2013, we had 20,247,134 shares of common stock, $0.01 par value, outstanding, of which 7,779,268 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 2012 and 2011:

		2012								2011
High and Low Closing Prices per Share		High Price				Low Price				High Price				Low Price
Fourth Quarter		$	8.56			$	6.00			$	12.77			$	9.51
Third Quarter			11.17				6.91				18.00				9.86
Second Quarter			13.73				9.70				18.06				13.91
First Quarter			14.24				10.67				18.82				15.85

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, 2012. 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 New York Stock Exchange). Each of the indices shown assumes that all dividends paid were reinvested.

Comparison of Cumulative Total Return

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		10/15/2010				12/31/2010				12/31/2011				12/31/2012
Tower International, Inc.		$	100.00				130.55				79.26				59.41
S&P 500		$	100.00				106.81				106.81				121.12
S&P Supercomposite Auto Parts and Equipment Index		$	100.00				121.91				104.50				103.08

Dividends  — We did not declare or pay any common stock dividends during 2012 or 2011 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 2012.

Item 6. Selected Financial Data

The following tables set forth selected consolidated financial data of Tower International, Inc. for periods after the Corporate Conversion and selected consolidated financial data of Tower Automotive, LLC, for periods prior to the Corporate Conversion but subsequent to July 31, 2007, the date on which we acquired substantially all of the assets and assumed certain specific liabilities of Tower Automotive, Inc. and its United States subsidiaries in connection with the bankruptcy proceedings of Tower Automotive, Inc. and such subsidiaries and acquired the capital stock of substantially all of the foreign subsidiaries of Tower Automotive, Inc. The selected consolidated balance sheet data as of December 31, 2012 and 2011 and the selected consolidated statement of operations data for the years ended December 31, 2012, 2011 and 2010 have been derived from our audited consolidated financial statements and related notes that we have included elsewhere in this Annual Report. The selected consolidated balance sheet data as of December 31, 2010, 2009 and 2008, the selected consolidated statement of operations data for the years ended December 31, 2009 and 2008 have been derived from audited consolidated financial statements that are not presented in this Annual Report. As with our consolidated financial statements for the years ended December 31, 2012, 2011, and 2010, we adjusted the information in the consolidated financial statements for the years ended December 31, 2009 and 2008, where appropriate, to account for our change in accounting for pension and for discontinued operations.

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.

		Year Ended December 31,
		2012				2011				2010				2009				2008
		(in millions except share and per share data)
Statement of Operations Data:
Revenues		$	2,084.9			$	2,053.7			$	1,721.3			$	1,444.0			$	1,912.0
Cost of Sales (1)			1,871.3				1,851.9				1,534.2				1,358.6				1,799.1
Gross profit			213.6				201.8				187.1				85.5				112.9
Gross profit margin			10.2	%			9.8	%			10.9	%			5.9	%			5.9	%
Selling, general, and administrative expenses (2)		$	134.0			$	151.6			$	138.0			$	113.6			$	133.5
Amortization expense			4.6				4.6				3.3				2.8				3.0
Restructuring and asset impairment charges, net			10.7				2.7				14.3				13.2				4.2
Operating income/(loss)			64.3				43.0				31.6				(44.1	)			(27.7	)
Operating income/(loss) margin			3.1	%			2.1	%			1.8	%			-3.1	%			-1.4	%
Interest expense, net		$	53.8			$	53.5			$	58.6			$	50.7			$	52.5
Income/(loss) from continuing operations			(4.8	)			(25.1	)			(42.7	)			(60.0	)			(99.6	)
Net income/(loss) (3)			25.0				(18.2	)			(27.0	)			(57.2	)			(88.5	)
Net income attributable to the non-controlling interests			7.0				5.1				8.4				8.9				6.6

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		Year Ended December 31,
		2012				2011				2010				2009				2008
		(in millions except share and per share data)
Net income/(loss) attributable to Tower International, Inc.			18.0				(23.3	)			(35.4	)			(66.1	)			(95.1	)
Preferred unit dividends (4)			—				—				10.7				16.1				14.9
Income/(loss) available to common stockholders			18.0				(23.3	)			(46.1	)			(82.2	)			(110.0	)
Basic income/(loss) per share:
Income/(loss) from continuing operations			(0.58	)			(1.56	)			(4.46	)			(6.81	)			(9.72	)
Income/(loss) from discontinued operations			1.48				0.36				1.13				0.22				0.89
Income/(loss) per share			0.90				(1.20	)			(3.33	)			(6.59	)			(8.83	)
Weighted average basic shares outstanding (in thousands)			20,081				19,364				13,866				12,468				12,468
Diluted income/(loss) per share:
Income/(loss) from continuing operations			(0.58	)			(1.56	)			(4.46	)			(6.81	)			(9.72	)
Income/(loss) from discontinued operations			1.46				0.36				1.13				0.22				0.89
Income/(loss) per share			0.88				(1.20	)			(3.33	)			(6.59	)			(8.83	)
Weighted average diluted shares outstanding (in thousands)			20,447				19,364				13,866				12,468				12,468
Cash dividends declared per share			—				—				—				—				—

		December 31,
		2012				2011				2010				2009				2008
		(in millions)
Balance Sheet Data:
Cash and cash equivalents		$	113.9			$	135.0			$	150.3			$	149.8			$	126.8
Total assets			1,238.1				1,397.4				1,340.2				1,334.4				1,269.8
Total debt (5)			497.0				583.5				558.2				669.5				628.1
Redeemable preferred units (4)			—				—				—				170.9				155.2
Total stockholders' equity/(deficit)			140.9				97.5				111.6				(147.2	)			(88.5	)

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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. 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, 2012, 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, 2012 Compared with the Year Ended December 31, 2011

Automobile production volumes increased during the year ended December 31, 2012 in three of our four major markets compared to the year ended December 31, 2011, the exception being a decline in Europe. The following table presents production volumes in specified regions according to IHS for the year ended December 31, 2012 compared to the year ended December 31, 2011 (in millions of units produced):

		Europe				China				North America				Brazil
2012 production volumes			19.2				16.9				15.4				3.2
2011 production volumes			20.1				15.8				13.1				3.1
Increase/(decrease)			(0.9	)			1.1				2.3				0.1
Percentage change			(4	)%			7	%			18	%			1	%

The following table presents selected financial information for the years ended December 31, 2012 and 2011 (in millions).

		International								Americas								Consolidated
		Year Ended December 31,								Year Ended December 31,								Year Ended December 31,
		2012				2011				2012				2011				2012				2011
Revenues		$	945.9			$	981.6			$	1,139.0			$	1,072.1				2,084.9			$	2,053.7
Cost of sales			844.0				870.1				1,027.3				981.8				1,871.3				1,851.9
Gross profit			101.9				111.5				111.7				90.3				213.6				201.8
Selling, general, and administrative expenses			44.6				51.4				89.4				100.1				134.0				151.5
Amortization			2.5				2.7				2.1				1.9				4.6				4.6
Restructuring and asset impairments			2.1				(0.2	)			8.6				2.9				10.7				2.7
Operating income/(loss)		$	52.7			$	57.6			$	11.6			$	(14.6	)			64.3				43.0
Interest expense, net																			53.8				53.5
Other expense																			—				1.3
Provision for income taxes																			15.3				13.3
Income from discontinued operations, net of tax																			29.8				6.9
Noncontrolling interest, net of tax																			7.0				5.1
Net income/(loss) attributable to Tower International, Inc.																		$	18.0			$	(23.3	)

Comparison of Periods — GAAP Analysis of Consolidated Results

Revenues

Total revenues increased during the year ended December 31, 2012 by $31.2 million or 2% from the year ended December 31, 2011, reflecting primarily higher volume in both our Americas segment ($113.9 million) and our International segment ($33 million). Revenues were positively impacted by the strengthening of the Chinese Rmb against the U.S. dollar ($4.4 million), but were negatively impacted by the strengthening of the U.S. dollar against foreign currencies in our International segment, primarily the Euro ($62.2 million), and in our Americas segment, primarily the Brazilian Real ($36 million). Revenues were also negatively impacted by unfavorable pricing ($21.9 million).

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

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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 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 $11.8 million or 6% from the year ended December 31, 2011 to the year ended December 31, 2012, and our gross profit margin increased from 9.8% during 2011 to 10.2% in 2012, as explained by higher volume ($29.3 million), offset by higher capacity related fixed costs ($15 million), unfavorable product mix ($14.8 million) and unfavorable foreign exchange ($14.1 million, excluding the impact on depreciation). All other factors were net favorable by $26.4 million. Cost of sales was reduced by favorable efficiencies ($31.9 million), lower pension actuarial loss ($14 million), lower depreciation ($9.7 million), and lower launch costs ($9.6 million). These factors were offset partially by unfavorable pricing and economics ($39.8 million) and the non-recurrence of a favorable settlement associated with a value added tax audit in Brazil ($2.7 million).

Total gross profit was positively impacted by a reduction in the depreciation included in cost of sales from $93.9 million during the year ended December 31, 2011 to $84.2 million during the year ended December 31, 2012. The decrease reflected primarily a portion of our assets becoming fully depreciated in 2011 in our International segment and the strengthening of the U.S. dollar against foreign currencies, offset partially by the depreciation at Tower Defense and Aerospace (TD&A) that was acquired in April 2011.

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

Total SG&A decreased $17.5 million or 12% from the year ended December 31, 2011, reflecting primarily lower compensation expense related to the IPO and senior notes offering ($11.9 million), SG&A efficiencies ($2.9 million), the costs incurred during the second quarter of 2011 related to the acquisition of substantially all of the assets of W Industries, which is now TD&A ($1.1 million), and the strengthening of the U.S. dollar against foreign currencies, offset partially by higher compensation expense associated with stock options and RSUs ($2.8 million).

Amortization Expense

Total amortization expense remained consistent at $4.6 million from the year ended December 31, 2012. 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 $8 million from the year ended December 31, 2011. During 2012, we incurred charges of $10.7 million which consisted of the recurring costs for maintaining our North American closed plants, severance costs in Europe and Brazil to reduce fixed costs, and the costs incurred to close two manufacturing facilities and relocate the operations to two of our existing manufacturing facilities in the Americas segment. During 2011, we incurred charges of $2.7 million 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.

Interest Expense, net

Interest expense, net, increased $0.3 million or 1% from the year ended December 31, 2011, reflecting primarily the non-recurrence of a favorable settlement relating to the interest associated with a value added tax audit in Brazil in 2011 ($4.3 million), additional interest on increased borrowings at our foreign locations ($2.5 million), and the higher interest expense associated with our Amended ABL Revolver and new Letter of Credit Facility ($1.3 million). These factors were offset partially by the lower interest expense on our senior secured notes due to the repurchases made during 2011 ($3.7 million) and the strengthening of the U.S. dollar against foreign currencies.

Provision for Income Taxes

Income tax expense from continuing operations increased $2 million or 15% from the year ended December 31, 2011. The income tax expense increased primarily because of a non-cash charge of $6.5 million for the recording of a valuation allowance on our deferred tax assets in Brazil. This expense was offset partially by a $2.6 million tax benefit for the favorable conclusion of tax audits in our International segment.

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Our analysis for the second quarter of 2012 showed that a three-year historical cumulative loss existed in Brazil. We looked to near-term projections and coupled them with recent historical results to analyze our cumulative income/(loss) position in Brazil. During the second quarter of 2012, the deterioration in short-term macroeconomic conditions, which included further declines in production volumes from our key customers, was worse than anticipated, resulting in lower projected earnings in the near-term. Based on the guidance in FASB ASC No. 740, we determined that we were unable to overcome the negative evidence of a three-year cumulative operating loss, in light of these deteriorating conditions. As a result, at June 30, 2012, we could no longer assert it was more likely than not that we would realize our deferred tax assets in Brazil. If our operations in Brazil generate sufficient profitability in the future, the valuation allowance could be reversed in whole or in part in a future period.

Our consolidated 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. The actual income tax expense is higher than the expected income tax expense based on statutory rates primarily because we have not recorded tax benefits on net losses incurred in certain jurisdictions. We have not recorded income tax benefits on current year losses in the U.S., Netherlands and Brazil due to the uncertainty of the future realization of the deferred tax assets generated by the losses. We continually evaluate our net deferred tax asset positions and the necessity of establishing or removing valuation allowances in all jurisdictions. We record valuation allowances when a history of cumulative losses exists and there is significant uncertainty related to the future realization of the deferred tax assets.

Noncontrolling Interest, Net of Tax

The adjustment to our earnings required to give effect to the elimination of noncontrolling interests increased $1.9 million or 37% from the year ended December 31, 2011, reflecting increased earnings in our Chinese joint ventures during 2012.

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,
		2012				2011				2012				2011				2012				2011
Adjusted EBITDA		$	85.4			$	96.5			$	108.3			$	104.7			$	193.7			$	201.2
Intercompany charges			9.4				9.1				(9.4	)			(9.1	)			—				—
Restructuring and asset impairments			(2.1	)			0.2				(8.6	)			(2.9	)			(10.7	)			(2.7	)
Depreciation and amortization			(39.5	)			(46.4	)			(53.4	)			(56.3	)			(92.9	)			(102.7	)
Acquisition costs and other			(0.3	)			(0.4	)			(0.1	)			(1.1	)			(0.4	)			(1.5	)
Incentive compensation related to funding events (a)			(0.2	)			(1.4	)			(6.0	)			(16.7	)			(6.2	)			(18.1	)
Pension actuarial loss			—				—				(19.2	)			(33.2	)			(19.2	)			(33.2	)
Operating income/(loss)		$	52.7			$	57.6			$	11.6			$	(14.6	)			64.3				43.0
Interest expense, net																			(53.8	)			(53.5	)
Other expense (b)																			—				(1.3	)
Provision for income taxes																			(15.3	)			(13.3	)
Income from discontinued operations, net of tax																			29.8				6.9
Noncontrolling interest, net of tax																			(7.0	)			(5.1	)
Net income/(loss) attributable to Tower International, Inc.																		$	18.0			$	(23.3	)

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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, 2012 and 2011 (in millions) as well as an explanation of variances:

		International								Americas								Consolidated
		Revenues				Adjusted EBITDA (c)				Revenues				Adjusted EBITDA (c)				Revenues				Adjusted EBITDA (c)
2012 results		$	945.9			$	85.4			$	1,139.0			$	108.3			$	2,084.9			$	193.7
2011 results		$	981.6			$	96.5			$	1,072.1			$	104.7			$	2,053.7			$	201.2
Variance		$	(35.7	)		$	(11.1	)		$	66.9			$	3.6			$	31.2			$	(7.5	)
Variance attributable to:
Volume and mix		$	33.0			$	(12.1	)		$	113.9			$	11.6			$	146.9			$	(0.5	)
Foreign exchange			(57.8	)			(6.1	)			(36.0	)			(2.4	)			(93.8	)			(8.5	)
Pricing and economics			(10.9	)			(15.0	)			(11.0	)			(22.6	)			(21.9	)			(37.6	)
Efficiencies			—				19.1				—				12.8				—				31.9
Selling, general, and administrative expenses and other items (d)			—				3.0				—				4.2				—				7.2
Total		$	(35.7	)		$	(11.1	)		$	66.9			$	3.6			$	31.2			$	(7.5	)

Adjusted EBITDA

Consolidated Company:   Consolidated Adjusted EBITDA decreased by $7.5 million or 4% from the year ended December 31, 2011, reflecting additional volume-related fixed costs ($15 million), unfavorable product mix ($14.8 million), and unfavorable foreign exchange ($8.5 million), offset partially by higher volume ($29.3 million). All other factors were net favorable by $1.5 million. Favorable efficiencies ($31.9 million) and favorable SG&A expenses and other items ($7.2 million) were offset partially by unfavorable pricing and economics ($37.6 million).

International Segment:   In our International segment, Adjusted EBITDA decreased by $11.1 million or 12% from the year ended December 31, 2011, reflecting unfavorable product mix ($10.5 million), additional volume-related fixed costs ($8.8 million), unfavorable foreign exchange ($6.1 million), offset partially by higher volumes ($7.2 million). All other factors were net favorable by $7.1 million. Favorable efficiencies ($19.1 million) and favorable SG&A and other items ($3 million), were offset partially by unfavorable pricing and economics ($15 million), principally product pricing and labor costs. SG&A expenses and other items reflect primarily lower launch ($1.8 million).

Americas Segment:   In our Americas segment, Adjusted EBITDA improved by $3.6 million or 3% from the year ended December 31, 2011, reflecting primarily higher volumes ($21.4 million) offset partially by additional volume-related fixed costs ($6.2 million), unfavorable product mix ($4.3 million), and unfavorable foreign exchange ($2.4 million). All other factors were net unfavorable by $5.6 million. Favorable efficiencies ($12.8 million) and favorable SG&A expenses and other items ($4.2 million) were more than offset by unfavorable pricing and economics ($22.6 million), principally product pricing and labor costs. SG&A spending and other items reflect primarily lower launch costs ($7.8 million), favorable SG&A efficiencies

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($3.6 million), offset partially by higher compensation expense associated with stock options and RSUs ($2.8 million) and the non-recurrence of a favorable settlement associated with a value added tax audit in Brazil ($2.7 million).

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				China				North America				Brazil
2011 production volumes			20.2				16.0				13.1				3.1
2010 production volumes			18.7				14.5				11.9				3.2
Increase			1.5				1.5				1.2				(0.1	)
Percentage change			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		$	981.6			$	871.8			$	1,072.1			$	849.5			$	2,053.7			$	1,721.3
Cost of sales			870.1				761.8				981.8				772.4				1,851.9				1,534.2
Gross profit			111.5				110.0				90.3				77.1				201.8				187.1
Selling, general, and administrative expenses			51.4				57.1				100.1				80.9				151.5				138.0
Amortization			2.7				2.4				1.9				0.9				4.6				3.3
Restructuring and asset impairments			(0.2	)			3.3				2.9				11.0				2.7				14.3
Operating income/(loss)		$	57.6			$	47.2			$	(14.6	)		$	(15.7	)			43.0				31.5
Interest expense, net																			53.5				58.6
Other expense																			1.3				1.3
Provision for income taxes																			13.3				14.4
Income from discontinued operations, net of tax																			6.9				15.7
Noncontrolling interest, net of tax																			5.1				8.4
Net loss attributable to Tower International, Inc.																		$	(23.3	)		$	(35.5	)

Comparison of Periods — GAAP Analysis of Consolidated Results

Revenues

Total revenues increased during the year ended December 31, 2011 by $332.4 million or 19% from the year ended December 31, 2010, reflecting primarily higher volume in both our Americas segment ($209.3 million) and our International segment ($46.9 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) and the Chinese Rmb ($7.7 million), and in our Americas segment, primarily the Brazilian Real ($11.9 million). In addition, revenues were positively impacted by favorable pricing ($15.6 million), related primarily to higher steel recoveries in our International segment.

Gross Profit

Total gross profit increased by $14.7 million or 8% from the year ended December 31, 2010 to the year ended December 31, 2011, and our gross profit margin decreased from 10.9% during 2010 to 9.8% in 2011, as

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partially explained by higher volume ($56.1 million) and favorable foreign exchange ($9 million, excluding the impact on depreciation) offset partially by unfavorable product mix ($15.8 million). All other factors were net unfavorable by $34.6 million. Cost of sales was increased by unfavorable pricing and economics ($44.9 million), the actuarial loss in 2011 on our pension plan ($33.2 million), higher launch costs ($7.4 million), and the non-recurrence of customer cost recoveries ($3.6 million). These factors were offset partially by favorable efficiencies ($45.4 million) and the favorable settlement associated with a value added tax audit in Brazil ($2.7 million).

Total gross profit was positively impacted by a reduction in the depreciation included in cost of sales from $98.8 million during the year ended December 31, 2010 to $93.9 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 depreciation at TD&A that was acquired in April 2011.

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

Total SG&A increased $13.5 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 ($7.1 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, which is now TD&A ($1.1 million), and the strengthening of foreign currencies against the U.S. dollar, offset partially by SG&A efficiencies ($1.8) million, and 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 $11.6 million 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 related to the equipment specifically purchased for use with a failed solar agreement, less any salvage value.

Interest Expense, net

Interest expense, net, decreased $5.1 million or 9% 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 ABL Revolver and letter of credit facility ($1.8 million), and the strengthening of foreign currencies against the U.S. dollar. 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.

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Provision for Income Taxes

Income tax expense from continuing operations decreased $1.1 million or 8% from the year ended December 31, 2010. The income tax expense decreased primarily because we made an election which eliminated the need to maintain a $1 million deferred tax liability on the potential payment of dividends.

Our consolidated 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. The actual income tax expense is higher than the expected income tax expense based on statutory rates primarily because we have not recorded tax benefits on net losses incurred in certain jurisdictions. We did not record income tax benefits on current year losses in the U.S. and the Netherlands due to the uncertainty of the future realization of the deferred tax assets generated by the losses. We continually evaluate our net deferred tax asset positions and valuation allowances in all jurisdictions. We record valuation allowances when a history of cumulative losses exists and there is significant uncertainty related to the future realization of the deferred tax assets.

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		$	96.5			$	104.0			$	104.7			$	59.7			$	201.2			$	163.7
Intercompany charges			9.1				0.5				(9.1	)			(0.5	)			—				—
Restructuring and asset impairments			0.2				(3.3	)			(2.9	)			(11.0	)			(2.7	)			(14.3	)
Depreciation and amortization			(46.4	)			(52.3	)			(56.3	)			(53.4	)			(102.7	)			(105.7	)
Acquisition costs and other			(0.4	)			(1.1	)			(1.1	)			(0.1	)			(1.5	)			(1.2	)
Incentive compensation related to funding events (a)			(1.4	)			(0.6	)			(16.7	)			(10.4	)			(18.1	)			(11.0	)
Pension actuarial gain/(loss)			—				—				(33.2	)			—				(33.2	)			—
Operating income/(loss)		$	57.6			$	47.2			$	(14.6	)		$	(15.7	)			43.0				31.5
Interest expense, net																			(53.5	)			(58.6	)
Other expense (b)																			(1.3	)			(1.3	)
Provision for income taxes																			(13.3	)			(14.4	)
Income from discontinued operations, net of tax																			6.9				15.7
Noncontrolling interest, net of tax																			(5.1	)			(8.4	)
Net loss attributable to Tower International, Inc.																		$	(23.3	)		$	(35.5	)

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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		$	981.6			$	96.5			$	1,072.1			$	104.7			$	2,053.7			$	201.2
2010 results		$	871.8			$	104.0			$	849.5			$	59.7			$	1,721.3			$	163.7
Variance		$	109.8			$	(7.5	)		$	222.6			$	45.0			$	332.4			$	37.5
Variance attributable to:
Volume and mix		$	46.9			$	7.9			$	209.3			$	32.4			$	256.2			$	40.3
Foreign exchange			48.7				5.6				11.9				1.0				60.6				6.6
Pricing and economics			14.2				(31.8	)			1.4				(15.5	)			15.6				(47.3	)
Efficiencies			—				19.9				—				25.5				—				45.4
Selling, general, and administrative expenses and other items			—				(9.1	)			—				1.6				—				(7.5	)
Total		$	109.8			$	(7.5	)		$	222.6			$	45.0			$	332.4			$	37.5

Adjusted EBITDA

Consolidated Company:   Consolidated Adjusted EBITDA improved by $37.5 million or 23% from the year ended December 31, 2010, reflecting higher volume ($56.1 million) and favorable foreign exchange ($6.6 million) offset partially by unfavorable product mix ($15.8 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 $9.4 million; favorable efficiencies ($45.4 million) were more than offset by unfavorable pricing and economics ($47.3 million) and unfavorable SG&A expenses and other items ($7.5 million).

International Segment:   In our International segment, Adjusted EBITDA decreased by $7.5 million or 7% from the year ended December 31, 2010, as explained by higher volumes ($7.9 million) and favorable foreign exchange ($5.6 million). All other factors were net unfavorable by $14.5 million. Unfavorable pricing and economics ($31.8 million), principally product pricing and labor costs, were offset partially by favorable efficiencies ($19.9 million). In addition, SG&A and other items contributed unfavorably during the year ended December 31, 2011 ($9.1 million) resulting from higher launch costs ($5.4 million) and the non-recurrence of customer cost recoveries ($2.8 million).

Americas Segment:   In our Americas segment, Adjusted EBITDA improved by $45 million or 75% 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 $11.6 million. Favorable efficiencies ($25.5 million) and lower SG&A expenses and other items ($1.6 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) and 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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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,
		2012				2011				2010
Employee termination costs		$	2.6			$	1.4			$	0.6
Other exit costs			7.5				1.3				3.7
Asset impairments			0.6				—				10.0
Total		$	10.7			$	2.7			$	14.3

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 2012 relate to the ongoing maintenance expense of facilities closed in our Americas segment as a result of prior actions, costs incurred to close two manufacturing facilities and relocate the operations to two of the Company’s existing manufacturing facilities, and severance costs in Europe and Brazil to reduce fixed costs.

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. The additional charges incurred relate 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 2013 related primarily 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.

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Cash Flows and Working Capital

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

		Year Ended December 31,
		2012				2011				2010
Net cash provided by/(used in):
Operating activities		$	101.4			$	86.9			$	86.5
Investing activities			(119.8	)			(123.1	)			(101.7	)
Financing activities			9.8				27.1				14.7

Net Cash Provided by Operating Activities

During the year ended December 31, 2012, we generated $101.4 million of cash flow from operations compared with $86.9 million during the year ended December 31, 2011. The primary reason for this increase was the favorable fluctuation in working capital items. During the year ended December 31, 2012, we utilized $8.5 million of cash through working capital items compared to $22 million during 2011. The $8.5 million of cash utilized through working capital items in 2012 reflects primarily the net effect of payments and receipts of trade payables and receivables, which was $12.3 unfavorable during 2012, and higher inventory of $4.8 million (excluding the discontinued operation), offset partially by the timing of the net effect of payments and receipts of customer funded tooling, which was $3.6 million favorable during 2012. The $22 million of cash utilized through working capital items in 2011 reflects primarily the timing of the net effect of payments and receipts of customer funded tooling, which was $19.2 million unfavorable during 2011 and increased inventory of $10.4 million due to higher sales (excluding the inventory of the discontinued operation).

During the year ended December 31, 2011, we generated $86.9 million of cash flow from operations compared with $86.5 million during the year ended December 31, 2010. The primary reason for this increase was the higher production volumes during 2011 which increased our revenues and profitability which was offset partially by an unfavorable fluctuation in working capital items. During the year ended December 31, 2011, we utilized $22 million of cash through working capital items compared to generation of $26.5 million in 2010. The $22 million of cash utilized through working capital items in 2011 reflects primarily the timing of the net effect of payments and receipts of customer funded tooling, which was $19.2 million unfavorable during 2011 and increased inventory of $10.4 million due to higher sales (excluding the inventory of the discontinued operation). The $26.5 million of cash generated through working capital items in 2010 reflects primarily the timing of the net effect of payments and receipts of customer funded tooling, which was $21.1 million favorable during 2010.

Net Cash Used in Investing Activities

Net cash utilized in investing activities was $119.8 million during 2012 compared to $123.1 million during 2011. The $3.3 million change in cash used reflects the increase in capital expenditures related primarily to the timing of program launches and expansion in China which were more than offset by the acquisition of substantially all of the assets of W Industries that occurred in 2011.

Net cash utilized in investing activities was $123.1 million during 2011 compared to net cash utilized of $101.7 million during 2010. The $21.4 million increase 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 Provided by Financing Activities

Net cash provided by financing activities was $9.8 million during 2012 compared with $27.1 million during 2011. The $17.3 million change was attributable primarily to lower borrowings in 2012 and the non-recurrence of the repurchase of our senior secured notes. In 2011, we repurchased $42 million of our senior secured notes.

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Net cash provided by financing activities was $27.1 million during 2011 compared with $14.7 million during 2010. The $12.3 million change was attributable primarily to increased borrowings to assist in the funding of operations offset partially by the redemption of $42 million of our senior secured notes and $5.1 million purchase of treasury stock.

Working Capital

We manage our working capital by monitoring key metrics principally associated with inventory, accounts receivable and accounts payable. Excluding the inventory at our discontinued operation, our quarterly average days on hand increased to 17 days during the fourth quarter of 2012, from 16 days during the fourth quarter of 2011. Our inventory levels decreased from $85.1 million at December 31, 2011 to $81.3 million at December 31, 2012, of which $8.6 million related to the divestiture of our South Korean subsidiary. Excluding the inventory from our discontinued operation, the increase in inventory was primarily due to erratic OEM production schedules, production of inventory builds to support the transfer of facilities in North America, and the inventory at our new joint venture in Xiangtan, China. We are implementing additional inventory control measures during 2013 in an effort to reduce inventory days on hand to lower levels.

We have continued our efforts to match the 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. Our accounts receivable balance decreased from $328 million as of December 31, 2011 to $266.1 million as of December 31, 2012, of which $23.4 million related to the divestiture of our South Korean subsidiary. The remaining change reflects primarily the decrease of accounts receivable related to customer funded tooling, which resulted from the timing of customer programs.

Our accounts payable balance decreased from $395.3 million as of December 31, 2011 to $264.9 million as of December 31, 2012, of which $83 million related to the divestiture of our South Korean subsidiary. The remaining change reflects primarily the decrease of accounts payable related to customer funded tooling, which resulted from the timing of customer programs.

On December 31, 2012 and 2011, we had working capital balances of $94 million and ($9.9) million, respectively. The change in working capital balance is attributable primarily to the divestiture of our South Korean operation, which historically had negative working capital. 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 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 working capital is also affected by our net position in respect to customer funded tooling with our customers. Tooling costs represent costs incurred by us in the development of new tooling used in the manufacture of our products. All pre-production tooling costs, incurred for tools that we will not own and that will be used in producing products supplied under long-term supply agreements, are expensed as incurred unless the supply agreement provides us with the non-cancellable right to use the tools or the reimbursement of such costs is contractually guaranteed by the customer. Generally, when the customer awards a contract to us, the customer agrees to reimburse us for certain of our tooling costs. As the tooling is developed, we experience cash outflows because we bear the costs, and we typically do not receive reimbursement from our customers until the manufacture of the particular program commences. This timing delay causes our working capital to fluctuate between periods due to the timing of the cash inflows and outflows.

Sources and Uses of Liquidity

Our available liquidity at December 31, 2012 was approximately $207 million, and consisted of $113.9 million of cash on hand and unutilized borrowing availability of $85.6 million and $7.8 million, respectively, under our U.S. and foreign credit facilities. A significant portion of our cash balance is located at foreign subsidiaries, including China, and is presently being used to fund growth at those locations.

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Periodically, we remit cash from China in the form of dividends, but recently we have not remitted such dividends because the cash is being used in the operations to support growth. As of December 31, 2011 and 2010, we had available liquidity of approximately $195 million and $229 million, respectively, excluding the cash and availability at our discontinued operation.

As of December 31, 2012, we had short-term debt of $73 million, of which $23.2 million related to debt in Brazil, $21.7 million related to debt in Europe, $18.5 million related to receivables factoring in Europe, $9.3 million related to debt in China, and $0.3 million of other debt. The majority of our Brazilian debt is subject to 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 receivables 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. We believe that we will be able to continue to renew the majority of our Brazilian debt and to continue the receivables factoring in Europe.

During the fourth quarter of 2012:

Free Cash Flow

Free cash flow is a non-GAAP measure that represents net cash provided by continuing operating activities less cash disbursed for purchases of property, plant, and equipment, net. We believe this metric provides useful information to our investors because management regularly reviews free cash flow as an important indicator of how much cash is generated by our normal business operations, including capital expenditures, and makes decisions based on it. Management also views free cash flow as a measure of cash available to reduce debt and grow the business. Free cash flow is calculated as follows (in millions):

		As of December 31,
		2012				2011				2010
Net cash provided by continuing operating activities		$	101.4			$	86.9			$	86.5
Cash disbursed for purchases of property, plant, and equipment, net			(119.8	)			(100.8	)			(85.0	)
Free cash flow		$	(18.4	)		$	(13.9	)		$	1.5

Free cash flow was negative $18.4 million during 2012 compared to negative $13.9 million during 2011. The $4.5 million change in free cash flow reflects primarily higher capital expenditures in 2012 related to the timing of program launches and expansion in China offset partially by a favorable change in working capital items.

Free cash flow was negative $13.9 million during 2011 compared to $1.5 million during 2010. The $15.4 million change in free cash flow reflects primarily higher capital expenditures in 2011 related to the timing of program launches and capacity expansions in China and Brazil.

Debt

As of December 31, 2012, we had outstanding indebtedness, excluding capital lease obligations, of approximately $484.5 million, which consisted of the following:

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Excluding the debt recorded at our discontinued operation, the debt balance as of December 31, 2012 is consistent with the average month end indebtedness levels experienced during the year ended December 31, 2012.

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, 2012, we were entitled to borrow $124.6 million under our Amended ABL Revolver at December 31, 2012. On that date, we had $39 million of borrowings under the Amended ABL Revolver and no letters of credit outstanding. Thus, we could have borrowed an additional $85.6 million under the Amended ABL Revolver as of December 31, 2012, calculated as follows (in millions):

Revolver borrowing base		$	124.6
Borrowings on revolver			39.0
Letters of credit outstanding on revolver			—
Availability		$	85.6

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, 2012 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% 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% 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 2012, 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

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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 Brazil, China, and receivables factoring in Europe, which is 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 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 2013 and 2021. As of December 31, 2012, our total future operating lease payments amounted to $121.8 million and the present value of minimum lease payments under our capital leases amounted to $12.5 million. As of December 31, 2012, we were committed to making lease payments of not less than $23.2 million on our operating leases and not less than $2.2 million on our capital leases during 2013.

Capital Expenditures

In general, we are awarded new automotive business two to three 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, 2012 and 2011 were $119.8 million and $100.8 million, respectively, the increase reflecting our expansion in China and the timing of program launches. Our capital spending for 2013 is expected to be approximately $85 million to $90 million.

Off-Balance Sheet Obligations

Our only off-balance sheet obligations consist of obligations under our Letter of Credit Facility. As of December 31, 2012, letters of credit outstanding were $21.9 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

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$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. On January 9, 2012, we amended our Letter of Credit Facility Agreement to reduce it from $30 million to $28 million. On June 7, 2012, we amended our Letter of Credit Facility Agreement to reduce it from $28 million to $25.5 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.

Net Debt

Net debt is a non-GAAP measure that represents total debt less cash and cash equivalents. We regard net debt as a useful measure of our outstanding debt obligations. Our use of the term “net debt” should not be understood to mean that we will use any cash on hand to repay debt. Net debt is calculated as follows (in millions):

		For the years ended December 31,
		2012				2011				2010
Total debt		$	497.0			$	583.5			$	558.2
Cash and cash equivalents			(113.9	)			(135.0	)			(150.3	)
Net debt		$	383.1			$	448.5			$	407.9

Net debt was $383.1 million as of December 31, 2012 compared to $448.5 million as of December 31, 2011. The $65.4 million change reflects primarily the divestiture of our South Korean subsidiary in 2012 offset partially by unfavorable free cash flow.

Net debt was $448.5 million as of December 31, 2011 compared to $407.9 million as of December 31, 2010. The $40.6 million change reflects primarily the acquisition of substantially all of the assets of W Industries in 2011, unfavorable free cash flow, and the purchase of treasury stock.

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Contractual Obligations and Commercial Commitments

Our contractual obligations and commercial commitments as of December 31, 2012 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		$	39			$	—			$	—			$	39.0			$	—
Senior secured notes			354.8				—				—				354.8				—
Other subsidiary indebtedness			90.7				73.0				10.9				3.3				3.5
Cash interest payments			199.7				46.6				86.4				66.2				0.5
Pension contributions (a)			84.2				15.1				31.7				23.1				14.3
Expected tax payments (b)			19.8				4.5				11.7				2.0				1.6
Capital and tooling purchase obligations (c)			103.9				103.9				—				—				—
Capital lease obligations (d)			15.1				2.2				3.5				3.2				6.2
Operating leases			121.8				23.2				38.6				27.1				32.9
Total contractual obligations at December 31, 2012		$	1,029.0			$	268.5			$	182.8			$	518.7			$	59.0

Our purchase orders for inventory are based on demand and do not require us to purchase minimum quantities.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Considerable judgment is often involved in making these determinations. Critical estimates are those that require the most difficult, subjective or complex judgments in the preparation of the financial statements and the accompanying notes. We evaluate these estimates and judgments on a regular basis. We believe our assumptions and estimates are reasonable and appropriate. However, the use of different assumptions could result in significantly different results and actual results could differ from those estimates. The following discussion of accounting estimates is intended to supplement the Summary of Significant Accounting Policies presented as note 3 to our consolidated financial statements in Item 8. Policies that are excluded from the discussion below are deemed to be either immaterial or not critical for the periods presented in this Annual Report.

Revenue Recognition

We recognize revenue once the criteria in FASB ASC No. 605, Revenue Recognition , have been met. These criteria are that persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, our price to the buyer is fixed or determinable, and collectability is reasonably assured.

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We recognize revenue as our products are shipped to our customers, at which time title and risk of loss passes to the customer. We participate in certain customers’ steel resale programs. Under these programs, we purchase steel directly from a customer’s designated steel supplier for use in manufacturing products for that customer. We take delivery and title to such steel and we bear the risk of loss and obsolescence. We invoice our customers based upon annually negotiated selling prices, which inherently includes a component for steel under these resale programs. Under guidance provided in FASB ASC No. 605-45, Principal Agent Considerations , we have substantial risks and rewards of ownership and are acting as a principal. Therefore, for sales where we participate in a customer’s steel resale program, revenue is recognized on a gross basis for the entire amount of the sales, including the component for purchases under that customer’s steel resale program.

We are generally asked to provide annual price reductions by our customers. When negotiations are underway and negotiated prices are expected to be retroactive, we accrue for such amounts as a reduction of revenue as products are shipped. We record adjustments to those accruals in the period in which the pricing is finalized with the customer or if it becomes probable and estimable that pricing negotiated with customers will vary from previous assumptions.

We enter into agreements to produce products for our customers at the beginning of a given vehicle program life. Once we enter into these agreements, fulfillment of the customers’ purchasing requirements is our obligation for the entire production period of the vehicle programs, which range from three to ten years, and generally we have no provisions to terminate these contracts. Additionally, we monitor the aging of uncollected billings and adjust the accounts receivable allowance on a quarterly basis as necessary, based on our evaluation of the probability of collection. The adjustments we have made due to the write-off of uncollectible amounts have been negligible.

Restructuring Reserves

We have recognized accruals in relation to restructuring reserves, which require the use of estimates and judgment regarding risk, loss exposure and ultimate liability. Reserves for restructuring activities are estimated primarily for activities associated with the discontinuation and consolidation of certain operations of our Company. Changes to these assumptions and estimates could materially affect the recorded liabilities and related loss.

Fair Value Measurements

FASB ASC No. 820, Fair Value Measurements, clarifies the definition of fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date (an exit price). The exit price is based on the amount that the holder of the asset or liability would receive or need to pay in an actual transaction or in a hypothetical transaction if an actual transaction does not exist, at the measurement date. In some circumstances, the entry and exit price may be the same; however, they are conceptually different.

Fair value is generally determined based on quoted market prices in active markets for identical assets or liabilities. If quoted market prices are not available, we use valuation techniques that place greater reliance on observable inputs and less reliance on unobservable inputs. In measuring fair value, we may make adjustments for risks and uncertainties, if a market participant would include such an adjustment in its pricing.

FASB ASC No. 820 establishes a fair value hierarchy that distinguishes between assumptions based on market data, referred to as observable inputs, and our assumptions, referred to as unobservable inputs. Determining where an asset or liability falls within that hierarchy depends on the lowest level input that is significant to the fair value measurement as a whole. An adjustment to the pricing method used within either Level 1 or Level 2 inputs could generate a fair value measurement that effectively falls in a lower level in the hierarchy. The hierarchy consists of three broad levels as follows:

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At December 31, 2012, the carrying value and estimated fair value of our total debt was $484.5 million and $529.1 million, respectively. At December 31, 2011, the carrying value and estimated fair value of our total debt was $568.4 million and $582.9 million, respectively. The majority of our debt at December 31, 2012 and December 31, 2011 is traded in the market and is classified as a Level 2 measurement based on the pricing methodology and the limited trading of the securities. The fair value was determined based on the quoted market values. The remainder of our debt, primarily consisting of foreign subsidiaries’ debt, is asset-backed and is classified as Level 3. As this debt carries variable rates and minimal credit risk, the book value approximates the fair value for this debt.

We have foreign exchange hedges that were measured at fair value on a recurring basis during the year ended December 31, 2012 and 2011. The fair value of the hedges was immaterial for all periods presented. These derivative financial instruments are recorded in accrued liabilities, and are all classified as Level 2 measurements determined using significant other observable inputs. We engage in foreign exchange hedges to limit exposure on foreign currency related to certain intercompany payments. These foreign exchange hedges have an immaterial impact on the consolidated financial statements for the periods presented.

The following table provides each major category of assets and liabilities measured at fair value on a nonrecurring basis during the year ended December 31, 2012 (in millions):

Quoted prices in active markets for identical assets

Significant other observable inputs

Significant unobservable inputs

Total Gains/(losses)

Level 1

Level 2

Level 3

Asset impairments

Not applicable

Not applicable

$

—

$

(0.6

)

In accordance with FASB ASC No. 360, Property, Plant, & Equipment , long-lived assets held for sale with a carrying amount of $0.6 million were written down to their fair value of $0 million, resulting in a loss of $0.6 million, which was included in our Consolidated Statement of Operations for the year ended December 31, 2012.

The Company did not have any assets or liabilities that were measured at fair value on a nonrecurring basis during the year ended December 31, 2011.

The determination of where an asset or liability falls in the hierarchy requires significant judgment. We evaluate our hierarchy disclosures each quarter based on various factors, and it is possible that an asset or liability may be classified differently from quarter to quarter. However, we expect that changes in classifications between different levels will be rare.

Most derivative contracts are not listed on an exchange and require the use of valuation models. Consistent with FASB ASC No. 820, we attempt to maximize the use of observable market inputs in our models. When observable inputs are not available, we default to unobservable inputs.

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of net assets acquired. Goodwill is not amortized but is tested for impairment on at least an annual basis. In accordance with FASB ASC No. 350, Intangibles—Goodwill and Other , goodwill is reviewed for impairment utilizing a two-step process. The first step of the impairment test requires the identification of the reporting units, and comparison of the fair value of each of these reporting units to the respective carrying value. We define our reporting units as Europe, Asia, North America, and South America. The recoverability of goodwill is evaluated at the following reporting units for which goodwill exists: Europe and South America. These reporting units exist at a lower level than our reportable segments. If the carrying value is less than the fair value, no impairment exists and the second step is not performed. In the second step, the impairment is computed by comparing the implied fair value of reporting unit goodwill with the carrying amount of that goodwill. FASB ASC No. 350 requires goodwill to be tested for impairment annually at the same time every year, and when an event occurs or circumstances change such that it is reasonably possible that impairment may exist. The annual impairment test is performed at year end.

We utilize an income approach to estimate the fair value of each of our reporting units. The income approach is based on projected debt free cash flow which is discounted to the present value using discount factors that

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consider the timing and risk of cash flows. We believe that this approach is appropriate because it provides a fair value estimate based upon the reporting units’ expected long-term operating cash flow performance. This approach also mitigates the impact of cyclical trends that occur in the industry. Fair value is estimated using recent automotive industry and specific platform production volume projections, which are based on internally-developed forecasts, as well as commercial, wage and benefit, inflation and discount rate assumptions. Other significant assumptions include terminal value growth rates, terminal value margin rates, future capital expenditures, known restructuring actions, and changes in future working capital requirements. While there are inherent uncertainties related to the assumptions used and to management’s application of these assumptions to this analysis, we believe that the income approach provides a reasonable estimate of the fair value of our reporting units. However, our assumptions and estimates may differ significantly from actual results. We also use a second approach, which is the market multiple approach, to test the reasonableness of the income approach.

The Company’s 2012 and 2011 annual goodwill impairment analysis, completed as of each year end, indicated that the carrying value of the Europe and South America reporting units was less than the respective fair values; thus, no impairment existed at either date. The Company also performed an interim goodwill impairment analysis during 2012 on the goodwill recorded in the Americas segment because the Company deemed the recording of a valuation allowance on its deferred tax assets in Brazil (see note 9) to be a triggering event. The impairment test indicated that the carrying value of the South America reporting unit was less than the fair value; thus, no impairment existed.

Income Taxes

We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the consolidated financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. We record net deferred tax assets to the extent we believe that these assets will more likely than not be realized. In making such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. Valuation allowances have been recorded where it has been determined that it is more likely than not that we will not be able to realize the net deferred tax assets. Previously established valuation allowances are reversed into income when there is compelling evidence, typically three or more consecutive years of profit or other positive evidence, that the future tax profitability will be sufficient to utilize the deferred tax asset. Due to the significant judgment involved in determining whether deferred tax assets will be realized, the ultimate resolution of these items may be materially different from the previously estimated outcome.

Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. Management is not aware of any such changes that would have a material effect on our results of operations, cash flows or financial position.

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across our global operations.

FASB ASC No. 740, Income Taxes , provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. FASB ASC No. 740 also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

We recognize tax liabilities in accordance with FASB ASC No. 740 and adjust these liabilities when its judgment changes as a result of the evaluation of new information not previously available. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which they are determined.