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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Bermuda
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2851
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98-1073028
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(State or other jurisdiction of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification No.)
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Common Shares, $1.00 par value
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New York Stock Exchange
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(title of class)
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(Exchange on which registered)
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•
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General Industrial
: coatings for a wide and diverse array of applications, including HVAC, shelving, appliances and electrical storage components, metal furniture, and playground equipment as well as ACE, fencing, valves and specialized coatings used for coating the interior of metal drums and packaging.
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•
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Electrical Insulation Systems
: coatings to insulate copper wire used in motors and transformers and coatings to insulate sheets forming magnetic circuits of motors and transformers, computer elements and other electrical components.
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•
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Architectural
: exterior powder coatings typically used in the construction of commercial structures, residential windows, doors and cladding.
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•
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Transportation
: liquid and powder coatings for vehicle components, chassis and wheels to protect against corrosion, provide increased durability and impart appropriate aesthetics.
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•
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Oil & Gas
: liquid and powder products to coat tanks, pipelines, valves and fittings protecting against chemicals, corrosion and extreme temperatures in the oil & gas industry.
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•
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Coil:
coatings utilized in various applications such as metal building roof and wall panels, residential and commercial steel roofing, gutters, appliances, lighting, garage and entry doors, HVAC, office furniture and truck trailers.
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•
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Wood:
coatings utilized in original equipment manufacturers ("OEM") and aftermarket industrial wood markets, including building products, cabinets, flooring and furniture.
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•
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Independent Body Shops:
Single location body shops that utilize premium, mainstream or economy brands based on the local market.
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•
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Multi-Shop Operators ("MSOs"):
Body shops with more than one location focused on providing premium paint jobs with industry leading efficiency. MSOs use premium/mainstream coatings and state-of-the-art painting technology to increase shop productivity, allowing them to repair more vehicles faster.
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•
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Original Equipment Manufacturer ("OEM") Dealership Body Shops
: High-productivity body shops, located in OEM car dealerships, that operate like MSOs and provide premium services to customers using premium/mainstream coatings.
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•
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Our Predecessor combined financial information has been derived from the financial statements and accounting records of DuPont and reflects assumptions made by DuPont. Those assumptions and allocations may be different from the comparable expenses we would have incurred as a standalone company;
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•
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Certain general corporate expenses were historically allocated to the Predecessor period by DuPont that, while reasonable, may not be indicative of the actual expenses that would have been incurred had we been operating as a standalone company, nor are they indicative of the costs that will be incurred in the future as a standalone company;
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•
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Our working capital requirements historically were satisfied as part of DuPont’s corporate-wide cash management policies. Since becoming a standalone company, we no longer rely on DuPont for working capital. In connection with the Acquisition, we incurred a large amount of indebtedness and will therefore assume significant debt service costs. As a result, our cost of debt and capitalization is significantly different from that reflected in the Predecessor financial information; and
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•
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Following the Acquisition, we have experienced increases in our costs, including the cost to establish an appropriate accounting and reporting system, debt service obligations, providing healthcare and other costs of being a standalone company.
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•
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limit our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions, general corporate purposes or other purposes;
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•
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require us to devote a substantial portion of our annual cash flow to the payment of interest on our indebtedness;
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•
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expose us to the risk of increased interest rates as, over the term of our debt, the interest cost on a significant portion of our indebtedness is subject to changes in interest rates;
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•
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hinder our ability to adjust rapidly to changing market conditions;
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•
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limit our ability to secure adequate bank financing in the future with reasonable terms and conditions or at all; and
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•
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increase our vulnerability to and limit our flexibility in planning for, or reacting to, a potential downturn in general economic conditions or in one or more of our businesses.
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•
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reduce funds available to us for purposes such as working capital, capital expenditures, research and development, strategic acquisitions and other general corporate purposes;
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•
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restrict our ability to introduce new products or exploit business opportunities;
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•
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increase our vulnerability to economic downturns and competitive pressures in the markets in which we operate; and
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•
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place us at a competitive disadvantage.
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•
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as a result of the volatility in commodity prices, we may encounter difficulty in achieving sustained market acceptance of past or future price increases, which could have a material adverse effect on our financial position, results of operations and cash flows;
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•
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under difficult market conditions there can be no assurance that borrowings under our Revolving Credit Facility would be available or sufficient, and in such a case, we may not be able to successfully obtain additional financing on reasonable terms, or at all;
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•
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in order to respond to market conditions, we may need to seek waivers from various provisions in the credit agreement governing our Senior Secured Credit Facilities or the indentures governing the New Senior Notes, and in such case, there can be no assurance that we can obtain such waivers at a reasonable cost, if at all;
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•
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market conditions could cause the counterparties to the derivative financial instruments we may use to hedge our exposure to interest rate, commodity or currency fluctuations to experience financial difficulties and, as a result, our efforts to hedge these exposures could prove unsuccessful and, furthermore, our ability to engage in additional hedging activities may decrease or become more costly; and
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•
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market conditions could result in our key customers experiencing financial difficulties and/or electing to limit spending, which in turn could result in decreased sales and earnings for us.
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•
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our operating and financial performance and prospects;
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•
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our quarterly or annual earnings or those of other companies in our industry;
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•
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the public’s reaction to our press releases, our other public announcements and our filings with the SEC;
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changes in, or failure to meet, earnings estimates or recommendations by research analysts who track our common shares or the stock of other companies in our industry;
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•
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the failure of research analysts to cover our common shares;
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•
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strategic actions by us, our customers or our competitors, such as acquisitions or restructurings, or market rumors regarding such actions;
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•
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new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
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•
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changes in accounting standards, policies, guidance, interpretations or principles;
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•
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the impact on our profitability temporarily caused by the time lag between when we experience cost increases until these increases flow through cost of sales because of our method of accounting for inventory, or the impact from our inability to pass on such price increases to our customers;
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•
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material litigations or government investigations;
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•
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changes in general conditions in the United States and global economies or financial markets, including those resulting from war, incidents of terrorism or responses to such events;
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•
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changes in key personnel;
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•
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sales of common shares by us, Berkshire Hathaway Inc.'s affiliate ("Berkshire") or members of our management team;
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•
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the granting of restricted common shares, stock options and other equity awards;
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•
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volume of trading in our common shares; and
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•
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the realization of any risks described under this “Risk Factors” section.
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•
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a classified Board of Directors with staggered three-year terms;
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•
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directors only to be removed for cause;
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•
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restrictions on the time period in which directors may be nominated; and
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•
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our Board of Directors to determine the powers, preferences and rights of our preference shares and to issue the preference shares without shareholder approval.
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Type of Facility/Country
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Location
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Segment
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Manufacturing Facilities
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North America
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Canada
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Ajax
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Transportation
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Cornwall
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Performance
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United States of America
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Front Royal, VA
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Performance; Transportation
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Ft. Madison, IA
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Performance; Transportation
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Houston, TX
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Performance
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High Point, NC
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Performance
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Hilliard, OH
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Performance; Transportation
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Jacksonville, TX
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Performance
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Mt. Clemens, MI
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Performance; Transportation
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Orrville, OH
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Performance
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Latin America
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Argentina
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Buenos Aires
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Performance; Transportation
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Brazil
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Guarulhos
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Performance; Transportation
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Mexico
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Monterrey
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Performance
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Ocoyoacac
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Performance; Transportation
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Tlalnepantla
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Performance; Transportation
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EMEA
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Austria
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Guntramsdorf
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Performance; Transportation
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Belgium
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Mechelen
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Performance; Transportation
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France
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Montbrison
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Performance
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Germany
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Wuppertal
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Performance; Transportation
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Landshut
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Performance
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Netherlands
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Zuidland
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Performance
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Sweden
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Vastervik
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Performance
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Switzerland
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Bulle
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Performance
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Turkey
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Gebze
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Performance; Transportation
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United Kingdom
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Darlington
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Performance
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Farnham
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Performance
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Huthwaite
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Performance
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Tewksbury
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Performance
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West Bromwich
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Performance
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Asia Pacific
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Australia
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Riverstone
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Performance; Transportation
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China
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Changchun
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Performance; Transportation
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Jiading
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Performance; Transportation
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India
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Savli
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Performance; Transportation
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Malaysia
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Kuala Lumpur
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Performance
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Shah Alam
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Performance
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Thailand
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Bangplee
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Performance
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Type of Facility/Country
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Location
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Segment
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Joint Venture Manufacturing
Facilities
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China
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Chengdu
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Performance
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Dongguan
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Performance
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Huangshan
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Performance
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Qingpu
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Performance
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Shangdong
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Performance
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Colombia
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Cartagena de Indias
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Performance
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Indonesia
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Cikarang
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Performance
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Taiwan
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Taipei
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Transportation
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Guatemala
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Amatitlan
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Performance
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United States of America
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Madison, AL
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Performance
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Riverside, CA
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Performance
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Joint Venture Partner Manufacturing Facilities
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South Africa
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Port Elizabeth
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Transportation
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Russia
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Moscow
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Transportation
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Technology Centers
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China
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Shanghai
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Performance; Transportation
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Germany
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Wuppertal
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Performance; Transportation
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United States of America
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Mt. Clemens, MI
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Performance; Transportation
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Wilmington, DE
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Performance; Transportation
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Customer Training Centers
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Location by Region
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|
Number of Facilities
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North America
|
|
8
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Latin America
|
|
7
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EMEA
|
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18
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|
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Asia Pacific
|
|
14
|
|
2017
|
2016
|
||||||||||
Quarter Ended
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High
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Low
|
High
|
Low
|
||||||||
First Quarter (March 31)
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$
|
33.06
|
|
$
|
27.20
|
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$
|
29.66
|
|
$
|
20.67
|
|
Second Quarter (June 30)
|
34.10
|
|
30.67
|
|
30.45
|
|
24.80
|
|
||||
Third Quarter (September 30)
|
33.60
|
|
27.77
|
|
29.59
|
|
25.79
|
|
||||
Fourth Quarter (December 31)
|
38.20
|
|
28.04
|
|
28.37
|
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24.27
|
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•
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The period from January 1, 2013 through January 31, 2013 ("Predecessor" periods) reflect the combined results of operations of the DPC business.
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•
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The years ended December 31, 2013 through 2017 ("Successor" periods) reflect the consolidated results of operations of Axalta, which include the effects of acquisition accounting commencing on the acquisition date of February 1, 2013.
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Successor
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Predecessor
|
||||||||||||||||
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Year Ended December 31,
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Period from January 1
through
January 31,
|
||||||||||||||||
(In millions, except per share data)
|
2017
|
2016
|
2015
|
2014
|
2013
|
2013
|
||||||||||||
Statements of Operations Data:
|
|
|
|
|
|
|
||||||||||||
Net sales
|
$
|
4,352.9
|
|
$
|
4,068.8
|
|
$
|
4,083.9
|
|
$
|
4,356.6
|
|
$
|
3,946.9
|
|
$
|
326.2
|
|
Other revenue
|
24.1
|
|
23.9
|
|
26.1
|
|
29.8
|
|
35.7
|
|
1.1
|
|
||||||
Total revenue
|
4,377.0
|
|
4,092.7
|
|
4,110.0
|
|
4,386.4
|
|
3,982.6
|
|
327.3
|
|
||||||
Cost of goods sold
(1)
|
2,779.6
|
|
2,527.6
|
|
2,597.3
|
|
2,897.2
|
|
2,772.8
|
|
232.2
|
|
||||||
Selling, general and administrative expenses
(2)
|
997.7
|
|
962.5
|
|
914.8
|
|
991.5
|
|
1,040.6
|
|
70.8
|
|
||||||
Venezuela asset impairment and deconsolidation charge
|
70.9
|
|
57.9
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Research and development expenses
|
65.3
|
|
57.7
|
|
51.6
|
|
49.5
|
|
40.5
|
|
3.7
|
|
||||||
Amortization of acquired intangibles
|
101.2
|
|
83.4
|
|
80.7
|
|
83.8
|
|
79.9
|
|
—
|
|
||||||
Merger and acquisition related expenses
|
—
|
|
—
|
|
—
|
|
—
|
|
28.1
|
|
—
|
|
||||||
Income from operations
|
362.3
|
|
403.6
|
|
465.6
|
|
364.4
|
|
20.7
|
|
20.6
|
|
||||||
Interest expense, net
|
147.0
|
|
178.2
|
|
196.5
|
|
217.7
|
|
215.1
|
|
—
|
|
||||||
Bridge financing commitment fees
|
—
|
|
—
|
|
—
|
|
—
|
|
25.0
|
|
—
|
|
||||||
Other expense, net
|
25.7
|
|
142.7
|
|
111.2
|
|
115.0
|
|
48.5
|
|
5.0
|
|
||||||
Income (loss) before income taxes
|
189.6
|
|
82.7
|
|
157.9
|
|
31.7
|
|
(267.9
|
)
|
15.6
|
|
||||||
Provision (benefit) for income taxes
|
141.9
|
|
38.1
|
|
62.1
|
|
0.1
|
|
(46.2
|
)
|
7.1
|
|
||||||
Net income (loss)
|
47.7
|
|
44.6
|
|
95.8
|
|
31.6
|
|
(221.7
|
)
|
8.5
|
|
||||||
Less: Net income attributable to noncontrolling interests
|
11.0
|
|
5.8
|
|
4.2
|
|
7.3
|
|
6.0
|
|
0.6
|
|
||||||
Net income (loss) attributable to controlling interests
|
$
|
36.7
|
|
$
|
38.8
|
|
$
|
91.6
|
|
$
|
24.3
|
|
$
|
(227.7
|
)
|
$
|
7.9
|
|
Per share data:
|
|
|
|
|
|
|
||||||||||||
Net income (loss) per share:
|
|
|
|
|
|
|
||||||||||||
Basic net income (loss) per share
|
$
|
0.15
|
|
$
|
0.16
|
|
$
|
0.39
|
|
$
|
0.11
|
|
$
|
(1.00
|
)
|
|
||
Diluted net income (loss) per share
|
$
|
0.15
|
|
$
|
0.16
|
|
$
|
0.38
|
|
$
|
0.11
|
|
$
|
(1.00
|
)
|
|
||
Basic weighted average shares outstanding
|
240.4
|
|
238.1
|
|
233.8
|
|
229.3
|
|
228.3
|
|
|
|||||||
Diluted weighted average shares outstanding
|
246.1
|
|
244.4
|
|
239.7
|
|
230.3
|
|
228.3
|
|
|
|||||||
|
|
|
|
|
|
|
||||||||||||
Other Financial Data:
|
|
|
|
|
|
|
||||||||||||
Cash flows from:
|
|
|
|
|
|
|
||||||||||||
Operating activities
|
$
|
540.0
|
|
$
|
559.3
|
|
$
|
409.8
|
|
$
|
251.4
|
|
$
|
376.8
|
|
$
|
(37.7
|
)
|
Investing activities
|
(689.6
|
)
|
(257.0
|
)
|
(166.2
|
)
|
(173.8
|
)
|
(5,011.2
|
)
|
(8.3
|
)
|
||||||
Financing activities
|
367.3
|
|
(232.6
|
)
|
(84.7
|
)
|
(123.2
|
)
|
5,098.1
|
|
43.0
|
|
||||||
Depreciation and amortization
|
347.5
|
|
322.1
|
|
307.7
|
|
308.7
|
|
300.7
|
|
9.9
|
|
||||||
Purchases of property, plant and equipment
|
(125.0
|
)
|
(136.2
|
)
|
(138.1
|
)
|
(188.4
|
)
|
(107.3
|
)
|
(2.4
|
)
|
|
Successor
|
||||||||||||||
|
December 31,
|
||||||||||||||
(In millions)
|
2017
|
2016
|
2015
|
2014
|
2013
|
||||||||||
Balance sheet data:
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
769.8
|
|
$
|
535.4
|
|
$
|
485.0
|
|
$
|
382.1
|
|
$
|
459.3
|
|
Working capital
(3)
|
1,233.4
|
|
977.9
|
|
955.2
|
|
854.7
|
|
918.5
|
|
|||||
Total assets
|
6,832.2
|
|
5,866.2
|
|
5,839.8
|
|
6,152.4
|
|
6,631.9
|
|
|||||
Indebtedness
|
3,915.6
|
|
3,263.9
|
|
3,441.5
|
|
3,614.3
|
|
3,822.1
|
|
|||||
Total liabilities
|
5,424.4
|
|
4,619.6
|
|
4,706.5
|
|
5,046.3
|
|
5,422.9
|
|
|||||
Total shareholders’ equity
|
1,407.8
|
|
1,246.6
|
|
1,133.3
|
|
1,106.1
|
|
1,209.0
|
|
|||||
Cash dividends declared per common share
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1)
|
Cost of goods sold includes the impacts to the Successor year ended December 31, 2013 attributable to the increases in inventory value resulting from the fair value adjustments associated with our acquisition accounting for inventories of $103.7 million.
|
(2)
|
Selling, general and administrative expense for the Successor years ended December 31, 2017, 2016 and 2015 include costs primarily associated with our Axalta Way cost-savings initiatives of
$63.8 million
,
$77.6 million
and $64.4 million, respectively. Selling, general and administrative expense for the Successor years ended December 31, 2014 and 2013 include costs primarily associated with transition-related and cost-savings initiatives of $127.1 million and $231.5 million, respectively.
|
(3)
|
Working capital is defined as current assets less current liabilities.
|
•
|
adverse developments in economic conditions and, particularly, in conditions in the automotive and transportation industries;
|
•
|
volatility in the capital, credit and commodities markets;
|
•
|
our inability to successfully execute on our growth strategy;
|
•
|
increased competition;
|
•
|
weather conditions or severe storms that may temporarily reduce the demand for some of our products;
|
•
|
reduced demand for some of our products as a result of improved safety features on vehicles and insurance company influence;
|
•
|
risks of the loss or change in purchasing levels of any of our significant customers or the consolidation of MSOs, distributors and/or body shops;
|
•
|
our reliance on our distributor network and third-party delivery services for the distribution and export of certain of our products;
|
•
|
credit risk exposure from our customers;
|
•
|
price increases or interruptions in our supply of raw materials;
|
•
|
failure to develop and market new products and manage product life cycles;
|
•
|
business disruptions, security threats and security breaches, including security risks to our information technology systems;
|
•
|
risks associated with our outsourcing strategies;
|
•
|
risks associated with our non-U.S. operations;
|
•
|
currency-related risks;
|
•
|
terrorist acts, conflicts, wars and natural disasters that may materially adversely affect our business, financial condition and results of operations;
|
•
|
failure to comply with the anti-corruption laws of the United States and various international jurisdictions;
|
•
|
failure to comply with anti-terrorism laws and regulations and applicable trade embargoes;
|
•
|
risks associated with protecting data privacy;
|
•
|
significant environmental liabilities and costs as a result of our current and past operations or products, including operations or products related to our business prior to the Acquisition;
|
•
|
transporting certain materials that are inherently hazardous due to their toxic nature;
|
•
|
litigation and other commitments and contingencies;
|
•
|
ability to recruit and retain the experienced and skilled personnel we need to compete;
|
•
|
unexpected liabilities under any pension plans applicable to our employees;
|
•
|
work stoppages, union negotiations, labor disputes and other matters associated with our labor force;
|
•
|
our ability to protect and enforce intellectual property rights;
|
•
|
intellectual property infringement suits against us by third parties;
|
•
|
our ability to realize the anticipated benefits of any acquisitions and divestitures;
|
•
|
our joint ventures’ ability to operate according to our business strategy should our joint venture partners fail to fulfill their obligations;
|
•
|
risk that the insurance we maintain may not fully cover all potential exposures;
|
•
|
the risk of impairment charges related to goodwill, identifiable intangible assets and fixed assets;
|
•
|
risks associated with changes in tax rates or regulations, including unexpected impacts of the new U.S. Tax Cuts and Jobs Act legislation, which may differ with further regulatory guidance and changes in our current interpretations and assumptions;
|
•
|
our substantial indebtedness;
|
•
|
our ability to obtain additional capital on commercially reasonable terms may be limited;
|
•
|
any statements of belief and any statements of assumptions underlying any of the foregoing;
|
•
|
other factors disclosed in this Annual Report on Form 10-K and our other filings with the Securities and Exchange Commission; and
|
•
|
other factors beyond our control.
|
•
|
Performance Coatings:
Net sales increased
11.5%
driven by stronger volumes in our industrial end-market, including the impacts of acquisitions, combined with organic volume growth in EMEA and Asia and increases in average selling price in our refinish end-market. Performance Coatings volumes were impacted in 2017 due partially to the absence of our now deconsolidated Venezuelan operations and impacts from distributor working capital adjustments in North America.
|
•
|
Transportation Coatings:
Net sales increased modestly by
0.4%
compared to 2016 with offsetting impacts from stronger volumes in both our light vehicle and commercial vehicle end-markets and lower average selling prices in our light vehicle end-market, primarily in North America and Asia.
|
(In millions)
|
Year Ended December 31,
|
2017 vs 2016
|
2016 vs 2015
|
||||||||||
|
2017
|
2016
|
2015
|
% change
|
% change
|
||||||||
Performance Coatings
|
|
|
|
|
|
||||||||
Refinish
|
$
|
1,645.2
|
|
$
|
1,679.7
|
|
$
|
1,698.7
|
|
(2.1
|
)%
|
(1.1
|
)%
|
Industrial
|
1,029.9
|
|
718.8
|
|
683.1
|
|
43.3
|
%
|
5.2
|
%
|
|||
Total Net sales Performance Coatings
|
2,675.1
|
|
2,398.5
|
|
2,381.8
|
|
11.5
|
%
|
0.7
|
%
|
|||
Transportation Coatings
|
|
|
|
|
|
||||||||
Light Vehicle
|
1,322.8
|
|
1,337.7
|
|
1,310.6
|
|
(1.1
|
)%
|
2.1
|
%
|
|||
Commercial Vehicle
|
355.0
|
|
332.6
|
|
391.5
|
|
6.7
|
%
|
(15.0
|
)%
|
|||
Total Net sales Transportation Coatings
|
1,677.8
|
|
1,670.3
|
|
1,702.1
|
|
0.4
|
%
|
(1.9
|
)%
|
|||
Total Net sales
|
$
|
4,352.9
|
|
$
|
4,068.8
|
|
$
|
4,083.9
|
|
7.0
|
%
|
(0.4
|
)%
|
•
|
fluctuations in overall economic activity within the geographic markets in which we operate;
|
•
|
underlying growth in one or more of our end-markets, either worldwide or in particular geographies in which we operate;
|
•
|
the type of products used within existing customer applications, or the development of new applications requiring products similar to ours;
|
•
|
changes in product sales prices (including volume discounts and cash discounts for prompt payment);
|
•
|
changes in the level of competition faced by our products, including price competition and the launch of new products by competitors;
|
•
|
our ability to successfully develop and launch new products and applications;
|
•
|
changes in buying habits of our customers (including our distributors); and
|
•
|
fluctuations in foreign exchange rates.
|
•
|
Production materials costs
. We purchase a significant amount of the materials used in production on a global lowest-cost basis.
|
•
|
Employee costs
. These include the compensation and benefit costs, including share-based compensation expense, for employees involved in our manufacturing operations. These costs generally increase on an aggregate basis as production volumes increase and may decline as a percent of net sales as a result of economies of scale associated with higher production volumes.
|
•
|
Depreciation expense.
Property, plant and equipment are stated at cost and depreciated or amortized on a straight-line basis over their estimated useful lives. Property, plant and equipment acquired through the Acquisition were recorded at their estimated fair value on the acquisition date resulting in a new cost basis for accounting purposes.
|
•
|
Other
. Our remaining cost of sales consists of freight costs, warehousing expenses, purchasing costs, costs associated with closing or idling of production facilities, functional costs supporting manufacturing, product claims and other general manufacturing expenses, such as expenses for utilities and energy consumption.
|
•
|
changes in the price of raw materials;
|
•
|
production volumes;
|
•
|
the implementation of cost control measures aimed at improving productivity, including reduction of fixed production costs, refinements in inventory management and the coordination of purchasing within each subsidiary and at the business level; and
|
•
|
fluctuations in foreign exchange rates.
|
•
|
compensation and benefit costs for management, sales personnel and administrative staff, including share-based compensation expense. Expenses relating to our sales personnel increase or decrease principally with changes in sales volume due to the need to increase or decrease sales personnel to meet changes in demand. Expenses relating to administrative personnel generally do not increase or decrease directly with changes in sales volume; and
|
•
|
depreciation, advertising and other selling expenses, such as expenses incurred in connection with travel and communications.
|
•
|
changes in sales volume, as higher volumes enable us to spread the fixed portion of our administrative expense over higher sales;
|
•
|
changes in our customer base, as new customers may require different levels of sales and marketing attention;
|
•
|
new product launches in existing and new markets, as these launches typically involve a more intense sales activity before they are integrated into customer applications;
|
•
|
customer credit issues requiring increases to the allowance for doubtful accounts; and
|
•
|
fluctuations in foreign exchange rates.
|
•
|
EBITDA and Adjusted EBITDA:
|
•
|
do not reflect the significant interest expense on our debt, including the Senior Secured Credit Facilities and the New Senior Notes (as defined herein); and
|
•
|
eliminate the impact of income taxes on our results of operations;
|
•
|
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any expenditures for such replacements; and
|
•
|
other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures.
|
|
Year Ended December 31,
|
||||||||
|
2017
|
2016
|
2015
|
||||||
Net income
|
$
|
47.7
|
|
$
|
44.6
|
|
$
|
95.8
|
|
Interest expense, net
|
147.0
|
|
178.2
|
|
196.5
|
|
|||
Provision for income taxes
|
141.9
|
|
38.1
|
|
62.1
|
|
|||
Depreciation and amortization
|
347.5
|
|
322.1
|
|
307.7
|
|
|||
EBITDA
|
684.1
|
|
583.0
|
|
662.1
|
|
|||
Debt extinguishment and refinancing related costs (a)
|
13.4
|
|
97.6
|
|
2.5
|
|
|||
Foreign exchange remeasurement losses (b)
|
7.4
|
|
30.6
|
|
93.7
|
|
|||
Long-term employee benefit plan adjustments (c)
|
1.4
|
|
1.5
|
|
(0.3
|
)
|
|||
Termination benefits and other employee related costs (d)
|
35.3
|
|
61.8
|
|
36.6
|
|
|||
Consulting and advisory fees (e)
|
(0.1
|
)
|
10.4
|
|
23.9
|
|
|||
Transition-related costs (f)
|
7.7
|
|
—
|
|
(3.4
|
)
|
|||
Offering and transactional costs (g)
|
18.4
|
|
6.0
|
|
(1.5
|
)
|
|||
Stock-based compensation (h)
|
38.5
|
|
41.1
|
|
30.2
|
|
|||
Other adjustments (i)
|
3.6
|
|
5.0
|
|
(5.8
|
)
|
|||
Dividends in respect of noncontrolling interest (j)
|
(3.0
|
)
|
(3.0
|
)
|
(4.7
|
)
|
|||
Deconsolidation impacts and impairments (k)
|
78.5
|
|
68.4
|
|
30.6
|
|
|||
Adjusted EBITDA
|
$
|
885.2
|
|
$
|
902.4
|
|
$
|
863.9
|
|
(a)
|
During the years ended December 31, 2017 and 2016 we refinanced our indebtedness, resulting in losses of
$13.0 million
and
$88.0 million
, respectively. In addition, during the years ended December 31, 2017, 2016 and 2015 we prepaid outstanding principal on our term loans, resulting in non-cash losses on extinguishment of
$0.4 million
,
$9.6 million
and
$2.5 million
, respectively. We do not consider these items to be indicative of our ongoing operating performance.
|
(b)
|
Eliminates foreign exchange gains and losses resulting from the remeasurement of assets and liabilities denominated in foreign currencies, net of the impacts of our foreign currency instruments used to hedge our balance sheet exposures. Exchange effects attributable to the remeasurement of our Venezuelan subsidiary represented losses of
$1.8 million
,
$23.5 million
,
$51.5 million
for the years ended December 31, 2017, 2016 and 2015, respectively.
|
(c)
|
Eliminates the non-cash, non-service components of long-term employee benefit costs.
|
(d)
|
Represents expenses primarily related to employee termination benefits and other employee-related costs associated with our Axalta Way initiatives, which are not considered indicative of our ongoing operating performance.
|
(e)
|
Represents fees paid to consultants, and associated true-ups to estimates, for professional services primarily related to our Axalta Way initiatives, which are not considered indicative of our ongoing operating performance.
|
(f)
|
Represents integration costs related to the 2017 acquisition of the Industrial Wood business that was a carve-out business from Valspar and changes in estimates associated with the transition from DuPont to a standalone entity, including certain Acquisition indemnities. We do not consider these items to be indicative of our ongoing operating performance.
|
(g)
|
Represents acquisition-related expenses, including changes in the fair value of contingent consideration, as well as $10.0 million of costs associated with contemplated merger activities during the three months ended December 31, 2017 and costs associated with the 2016 secondary offerings of our common shares by Carlyle, all of which are not considered indicative of our ongoing operating performance.
|
(h)
|
Represents non-cash costs associated with stock-based compensation, including
$8.2 million
of expense during the year ended December 31, 2015 attributable to the accelerated vesting of all issued and outstanding stock options issued under the 2013 Plan. This acceleration was the result of a change in control that occurred in conjunction with Carlyle's ownership interest falling below 50% and triggering a liquidity event ("Change in Control").
|
(i)
|
Represents costs for certain non-operational or non-cash (gains) and losses unrelated to our core business and which we do not consider indicative of our ongoing operations, including equity investee dividends, indemnity losses (gains) associated with the Acquisition, losses (gains) on sale and disposal of property, plant and equipment, losses (gains) on the remaining foreign currency derivative instruments, Carlyle management fees incurred prior to the Change in Control and non-cash fair value inventory adjustments associated with our business combinations.
|
(j)
|
Represents the payment of dividends to our joint venture partners by our consolidated entities that are not 100% owned, which are reflected to show the cash operating performance of these entities on Axalta's financial statements.
|
(k)
|
During the year ended December 31, 2017, we recorded a loss in conjunction with the deconsolidation of our Venezuelan subsidiary of
$70.9 million
. During the year ended December 31, 2016 and 2015, we recorded non-cash impairments at our Venezuelan subsidiary of
$68.4 million
and
$30.6 million
, respectively, associated with our operational long-lived assets and a real estate investment (See Note 25 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K). Additionally, during the year ended December 31, 2017, we recorded non-cash impairment charges related to certain manufacturing facilities previously announced for closure of
$7.6 million
. We do not consider these to be indicative of our ongoing operating performance.
|
|
Year Ended December 31,
|
|||||
(In millions)
|
2017
|
2016
|
||||
Net sales
|
$
|
4,352.9
|
|
$
|
4,068.8
|
|
Other revenue
|
24.1
|
|
23.9
|
|
||
Total revenue
|
4,377.0
|
|
4,092.7
|
|
||
Cost of goods sold
|
2,779.6
|
|
2,527.6
|
|
||
Selling, general and administrative expenses
|
997.7
|
|
962.5
|
|
||
Venezuela asset impairment and deconsolidation charge
|
70.9
|
|
57.9
|
|
||
Research and development expenses
|
65.3
|
|
57.7
|
|
||
Amortization of acquired intangibles
|
101.2
|
|
83.4
|
|
||
Income from operations
|
362.3
|
|
403.6
|
|
||
Interest expense, net
|
147.0
|
|
178.2
|
|
||
Other expense, net
|
25.7
|
|
142.7
|
|
||
Income before income taxes
|
189.6
|
|
82.7
|
|
||
Provision for income taxes
|
141.9
|
|
38.1
|
|
||
Net income
|
47.7
|
|
44.6
|
|
||
Less: Net income attributable to noncontrolling interests
|
11.0
|
|
5.8
|
|
||
Net income attributable to controlling interests
|
$
|
36.7
|
|
$
|
38.8
|
|
|
Year Ended December 31,
|
|||||
(In millions)
|
2016
|
2015
|
||||
Net sales
|
$
|
4,068.8
|
|
$
|
4,083.9
|
|
Other revenue
|
23.9
|
|
26.1
|
|
||
Total revenue
|
4,092.7
|
|
4,110.0
|
|
||
Cost of goods sold
|
2,527.6
|
|
2,597.3
|
|
||
Selling, general and administrative expenses
|
962.5
|
|
914.8
|
|
||
Venezuela asset impairment
|
57.9
|
|
—
|
|
||
Research and development expenses
|
57.7
|
|
51.6
|
|
||
Amortization of acquired intangibles
|
83.4
|
|
80.7
|
|
||
Income from operations
|
403.6
|
|
465.6
|
|
||
Interest expense, net
|
178.2
|
|
196.5
|
|
||
Other expense, net
|
142.7
|
|
111.2
|
|
||
Income before income taxes
|
82.7
|
|
157.9
|
|
||
Provision for income taxes
|
38.1
|
|
62.1
|
|
||
Net income
|
44.6
|
|
95.8
|
|
||
Less: Net income attributable to noncontrolling interests
|
5.8
|
|
4.2
|
|
||
Net income attributable to controlling interests
|
$
|
38.8
|
|
$
|
91.6
|
|
|
Year Ended December 31,
|
|||||
(In millions)
|
2017
|
2016
|
||||
Net Sales
|
|
|
||||
Performance Coatings
|
$
|
2,675.1
|
|
$
|
2,398.5
|
|
Transportation Coatings
|
1,677.8
|
|
1,670.3
|
|
||
Total
|
$
|
4,352.9
|
|
$
|
4,068.8
|
|
Segment Adjusted EBITDA
|
|
|
||||
Performance Coatings
|
$
|
564.2
|
|
$
|
549.7
|
|
Transportation Coatings
|
321.0
|
|
352.7
|
|
||
Total
|
$
|
885.2
|
|
$
|
902.4
|
|
|
Year Ended December 31,
|
|||||
(In millions)
|
2016
|
2015
|
||||
Net Sales
|
|
|
||||
Performance Coatings
|
$
|
2,398.5
|
|
$
|
2,381.8
|
|
Transportation Coatings
|
1,670.3
|
|
1,702.1
|
|
||
Total
|
$
|
4,068.8
|
|
$
|
4,083.9
|
|
Segment Adjusted EBITDA
|
|
|
||||
Performance Coatings
|
$
|
549.7
|
|
$
|
535.8
|
|
Transportation Coatings
|
352.7
|
|
328.1
|
|
||
Total
|
$
|
902.4
|
|
$
|
863.9
|
|
|
Year Ended December 31,
|
||||||||
(In millions)
|
2017
|
2016
|
2015
|
||||||
Net cash provided by (used for):
|
|
|
|
||||||
Operating activities:
|
|
|
|
||||||
Net income
|
$
|
47.7
|
|
$
|
44.6
|
|
$
|
95.8
|
|
Depreciation and amortization
|
347.5
|
|
322.1
|
|
307.7
|
|
|||
Amortization of deferred financing costs and original issue discount
|
8.0
|
|
17.8
|
|
20.6
|
|
|||
Debt extinguishment and refinancing related costs
|
13.4
|
|
97.6
|
|
2.5
|
|
|||
Deferred income taxes
|
91.7
|
|
(15.9
|
)
|
(6.2
|
)
|
|||
Realized and unrealized foreign exchange (gains) losses, net
|
(3.6
|
)
|
35.5
|
|
93.7
|
|
|||
Stock-based compensation
|
38.5
|
|
41.1
|
|
30.2
|
|
|||
Asset impairments
|
7.6
|
|
68.4
|
|
30.6
|
|
|||
Venezuela deconsolidation charge
|
70.9
|
|
—
|
|
—
|
|
|||
Other non-cash items
|
4.4
|
|
(1.9
|
)
|
12.5
|
|
|||
Net income adjusted for non-cash items
|
626.1
|
|
609.3
|
|
587.4
|
|
|||
Changes in operating assets and liabilities
|
(86.1
|
)
|
(50.0
|
)
|
(177.6
|
)
|
|||
Operating activities
|
540.0
|
|
559.3
|
|
409.8
|
|
|||
Investing activities
|
(689.6
|
)
|
(257.0
|
)
|
(166.2
|
)
|
|||
Financing activities
|
367.3
|
|
(232.6
|
)
|
(84.7
|
)
|
|||
Effect of exchange rate changes on cash
|
17.1
|
|
(19.3
|
)
|
(58.0
|
)
|
|||
Net increase in cash
|
$
|
234.8
|
|
$
|
50.4
|
|
$
|
100.9
|
|
|
December 31,
|
|||||
(In millions)
|
2017
|
2016
|
||||
2024 Dollar Term Loans
|
$
|
1,960.0
|
|
$
|
—
|
|
2023 Dollar Term Loans
|
—
|
|
1,545.0
|
|
||
2023 Euro Term Loans
|
472.5
|
|
417.6
|
|
||
2024 Dollar Senior Notes
|
500.0
|
|
500.0
|
|
||
2024 Euro Senior Notes
|
399.7
|
|
349.7
|
|
||
2025 Euro Senior Notes
|
536.9
|
|
469.8
|
|
||
Short-term and other borrowings
|
94.8
|
|
39.8
|
|
||
Unamortized original issue discount
|
(9.1
|
)
|
(10.0
|
)
|
||
Deferred financing costs, net
|
(39.2
|
)
|
(48.0
|
)
|
||
|
$
|
3,915.6
|
|
$
|
3,263.9
|
|
Less:
|
|
|
||||
Short term borrowings
|
$
|
12.9
|
|
$
|
8.3
|
|
Current portion of long-term borrowings
|
24.8
|
|
19.6
|
|
||
Long-term debt
|
$
|
3,877.9
|
|
$
|
3,236.0
|
|
|
Year Ended December 31, 2017
|
|||||||
(In millions)
|
Principal
|
Average Effective
Interest Rate
|
Interest
Expense
|
|||||
Term Loans
|
$
|
2,432.5
|
|
3.5
|
%
|
$
|
80.0
|
|
Revolving Credit Facility
|
—
|
|
N/A
|
|
1.9
|
|
||
Senior Notes
|
1,436.6
|
|
4.5
|
%
|
62.2
|
|
||
Short-term and other borrowings
|
94.8
|
|
Various
|
|
2.9
|
|
||
Total
|
$
|
3,963.9
|
|
|
$
|
147.0
|
|
|
Year Ended December 31, 2016
|
|||||||
(In millions)
|
Principal
|
Average Effective
Interest Rate
|
Interest
Expense
|
|||||
Term Loans
|
$
|
1,962.6
|
|
4.4
|
%
|
$
|
100.3
|
|
Revolving Credit Facility
|
—
|
|
N/A
|
|
3.0
|
|
||
Senior Notes
|
1,319.5
|
|
6.1
|
%
|
69.9
|
|
||
Short-term and other borrowings
|
39.8
|
|
Various
|
|
5.0
|
|
||
Total
|
$
|
3,321.9
|
|
|
$
|
178.2
|
|
|
Contractual Obligations Due In:
|
||||||||||||||
(In millions)
|
Total
|
2018
|
2019-2020
|
2021-2022
|
Thereafter
|
||||||||||
Debt, including current portion (1)
|
|
|
|
|
|
||||||||||
Senior Secured Credit Facilities, consisting of the following:
|
|
|
|
|
|
||||||||||
Term Loan Facilities:
|
|
|
|
|
|
||||||||||
2024 Dollar Term Loans
|
$
|
1,960.0
|
|
$
|
20.0
|
|
$
|
40.0
|
|
$
|
40.0
|
|
$
|
1,860.0
|
|
2023 Euro Term Loans
|
472.5
|
|
4.8
|
|
9.5
|
|
9.5
|
|
448.7
|
|
|||||
Senior Notes, consisting of the following:
|
|
|
|
|
|
||||||||||
2024 Dollar Senior Notes
|
500.0
|
|
—
|
|
—
|
|
—
|
|
500.0
|
|
|||||
2024 Euro Senior Notes
|
399.7
|
|
—
|
|
—
|
|
—
|
|
399.7
|
|
|||||
2025 Euro Senior Notes
|
536.9
|
|
—
|
|
—
|
|
—
|
|
536.9
|
|
|||||
Other borrowings (2)
|
41.8
|
|
13.1
|
|
1.7
|
|
27.0
|
|
—
|
|
|||||
Interest payments (3)
|
907.2
|
|
143.2
|
|
284.1
|
|
277.8
|
|
202.1
|
|
|||||
Sale-leaseback financing (4)
|
110.8
|
|
5.3
|
|
10.8
|
|
11.3
|
|
83.4
|
|
|||||
Operating leases
|
134.7
|
|
41.8
|
|
46.0
|
|
26.7
|
|
20.2
|
|
|||||
Pension contributions (5)
|
16.2
|
|
16.2
|
|
—
|
|
—
|
|
—
|
|
|||||
Purchase obligations (6)
|
175.2
|
|
93.9
|
|
63.3
|
|
6.6
|
|
11.4
|
|
|||||
Uncertain tax positions, including interest and penalties (7)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Total
|
$
|
5,255.0
|
|
$
|
338.3
|
|
$
|
455.4
|
|
$
|
398.9
|
|
$
|
4,062.4
|
|
(1)
|
During the year ended December 31, 2017, we refinanced our 2023 Dollar Term Loans with our 2024 Dollar Term Loans (see Note 20 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K). This resulted in a significant increase in our obligations for the years after 2022. Amounts assume that the Senior Secured Credit Facilities and New Senior Notes are repaid upon maturity, and the Revolving Credit Facility remains undrawn, which may or may not reflect future events.
|
(2)
|
Other borrowings exclude debt associated with two of our leases treated as indebtedness, discussed within end-note 4.
|
(3)
|
Future interest payments include commitment fees on the unused portion of the Revolving Credit Facility, and reflect the interest payments on our Current Term Loans and New Senior Notes. Future interest payments assume December 31, 2017 variable interest rates will prevail throughout all future periods. Amounts represent the timing of interest accruals. Actual interest payments and repayment amounts may change depending on impact of interest rates on variable rate indebtedness and changes in currency exchange rates.
|
(4)
|
During the year ended December 31, 2017, we began treating one of our leases as a sale-leaseback financing obligation, which was previously treated as a build-to-suit lease. During the year ended December 31, 2016, we also recognized one of our leases as a sale-leaseback financing. The cash rental costs to be paid over the terms of these leases are reflected within the table above.
|
(5)
|
We expect to make contributions to our defined benefit pension plans beyond 2018; however, the amount of any contributions is dependent on the future economic environment and investment returns, and we are unable to reasonably estimate the pension contributions beyond 2018.
|
(6)
|
Purchase obligations include various commitments, including contractual commitments to acquire ownership interests in a joint venture and pay contingent consideration and deferred consideration, as a result of business acquisitions completed in 2016 and 2017. At December 31, 2017, we are committed to pay $53.9 million in two equal installments (2018 and 2019) related to the purchase of remaining joint venture interests, as well as $12.4 million of contingent and deferred consideration payable in 2018 related to previously closed acquisitions. In addition, we have $15.8 million in interest rate caps which will be paid from 2018 through 2021.
|
(7)
|
At December 31, 2017, we had approximately
$18.4 million
of gross uncertain tax positions, including interest and penalties that could result in potential payments. Due to the high degree of uncertainty regarding future timing of cash flows associated with these liabilities, we are unable to estimate the years in which settlement will occur with the respective taxing authorities.
|
(In millions)
|
|
||
2018
|
$
|
40.5
|
|
2019
|
26.5
|
|
|
2020
|
25.7
|
|
|
2021
|
25.7
|
|
|
2022
|
52.4
|
|
|
Thereafter
|
3,778.6
|
|
|
Total
|
$
|
3,949.4
|
|
|
Year Ended December 31,
|
||||||||
|
2017
|
2016
|
2015
|
||||||
Net sales
|
$
|
4,352.9
|
|
$
|
4,068.8
|
|
$
|
4,083.9
|
|
Other revenue
|
24.1
|
|
23.9
|
|
26.1
|
|
|||
Total revenue
|
4,377.0
|
|
4,092.7
|
|
4,110.0
|
|
|||
Cost of goods sold
|
2,779.6
|
|
2,527.6
|
|
2,597.3
|
|
|||
Selling, general and administrative expenses
|
997.7
|
|
962.5
|
|
914.8
|
|
|||
Venezuela asset impairment and deconsolidation charge
|
70.9
|
|
57.9
|
|
—
|
|
|||
Research and development expenses
|
65.3
|
|
57.7
|
|
51.6
|
|
|||
Amortization of acquired intangibles
|
101.2
|
|
83.4
|
|
80.7
|
|
|||
Income from operations
|
362.3
|
|
403.6
|
|
465.6
|
|
|||
Interest expense, net
|
147.0
|
|
178.2
|
|
196.5
|
|
|||
Other expense, net
|
25.7
|
|
142.7
|
|
111.2
|
|
|||
Income before income taxes
|
189.6
|
|
82.7
|
|
157.9
|
|
|||
Provision for income taxes
|
141.9
|
|
38.1
|
|
62.1
|
|
|||
Net income
|
47.7
|
|
44.6
|
|
95.8
|
|
|||
Less: Net income attributable to noncontrolling interests
|
11.0
|
|
5.8
|
|
4.2
|
|
|||
Net income attributable to controlling interests
|
$
|
36.7
|
|
$
|
38.8
|
|
$
|
91.6
|
|
Basic net income per share
|
$
|
0.15
|
|
$
|
0.16
|
|
$
|
0.39
|
|
Diluted net income per share
|
$
|
0.15
|
|
$
|
0.16
|
|
$
|
0.38
|
|
Basic weighted average shares outstanding
|
240.4
|
|
238.1
|
|
233.8
|
|
|||
Diluted weighted average shares outstanding
|
246.1
|
|
244.4
|
|
239.7
|
|
|
Year Ended December 31,
|
||||||||
|
2017
|
2016
|
2015
|
||||||
Net income
|
$
|
47.7
|
|
$
|
44.6
|
|
$
|
95.8
|
|
Other comprehensive income (loss), before tax:
|
|
|
|
||||||
Foreign currency translation adjustments
|
85.6
|
|
(59.5
|
)
|
(164.3
|
)
|
|||
Unrealized gain on securities
|
0.4
|
|
0.3
|
|
0.3
|
|
|||
Unrealized gain (loss) on derivatives
|
0.9
|
|
2.0
|
|
(5.5
|
)
|
|||
Unrealized gain (loss) on pension and other benefit plan obligations
|
31.3
|
|
(28.9
|
)
|
(2.2
|
)
|
|||
Other comprehensive income (loss), before tax
|
118.2
|
|
(86.1
|
)
|
(171.7
|
)
|
|||
Income tax provision (benefit) related to items of other comprehensive income
|
6.6
|
|
(4.9
|
)
|
(2.1
|
)
|
|||
Other comprehensive income (loss), net of tax
|
111.6
|
|
(81.2
|
)
|
(169.6
|
)
|
|||
Comprehensive income (loss)
|
159.3
|
|
(36.6
|
)
|
(73.8
|
)
|
|||
Less: Comprehensive income attributable to noncontrolling interests
|
13.2
|
|
5.7
|
|
0.6
|
|
|||
Comprehensive income (loss) attributable to controlling interests
|
$
|
146.1
|
|
$
|
(42.3
|
)
|
$
|
(74.4
|
)
|
|
December 31,
|
|||||
|
2017
|
2016
|
||||
Assets
|
|
|
||||
Current assets:
|
|
|
||||
Cash and cash equivalents
|
$
|
769.8
|
|
$
|
535.4
|
|
Restricted cash
|
3.1
|
|
2.7
|
|
||
Accounts and notes receivable, net
|
870.2
|
|
801.9
|
|
||
Inventories
|
608.6
|
|
529.7
|
|
||
Prepaid expenses and other
|
63.9
|
|
50.3
|
|
||
Total current assets
|
2,315.6
|
|
1,920.0
|
|
||
Property, plant and equipment, net
|
1,388.6
|
|
1,315.7
|
|
||
Goodwill
|
1,271.2
|
|
964.1
|
|
||
Identifiable intangibles, net
|
1,428.2
|
|
1,130.3
|
|
||
Other assets
|
428.6
|
|
536.1
|
|
||
Total assets
|
$
|
6,832.2
|
|
$
|
5,866.2
|
|
Liabilities, Shareholders’ Equity
|
|
|
||||
Current liabilities:
|
|
|
||||
Accounts payable
|
$
|
554.9
|
|
$
|
474.2
|
|
Current portion of borrowings
|
37.7
|
|
27.9
|
|
||
Other accrued liabilities
|
489.6
|
|
440.0
|
|
||
Total current liabilities
|
1,082.2
|
|
942.1
|
|
||
Long-term borrowings
|
3,877.9
|
|
3,236.0
|
|
||
Accrued pensions
|
279.1
|
|
249.1
|
|
||
Deferred income taxes
|
152.9
|
|
160.2
|
|
||
Other liabilities
|
32.3
|
|
32.2
|
|
||
Total liabilities
|
5,424.4
|
|
4,619.6
|
|
||
Commitments and contingent liabilities (Note 8)
|
|
|
||||
Shareholders’ equity
|
|
|
||||
Common shares, $1.00 par, 1,000.0 shares authorized, 243.9 and 240.5 shares issued and outstanding at December 31, 2017 and 2016, respectively
|
242.4
|
|
239.3
|
|
||
Capital in excess of par
|
1,354.5
|
|
1,294.3
|
|
||
Accumulated deficit
|
(21.4
|
)
|
(58.1
|
)
|
||
Treasury shares, at cost, 2.0 and 0.0 shares at December 31, 2017 and 2016, respectively
|
(58.4
|
)
|
—
|
|
||
Accumulated other comprehensive loss
|
(241.0
|
)
|
(350.4
|
)
|
||
Total Axalta shareholders’ equity
|
1,276.1
|
|
1,125.1
|
|
||
Noncontrolling interests
|
131.7
|
|
121.5
|
|
||
Total shareholders’ equity
|
1,407.8
|
|
1,246.6
|
|
||
Total liabilities and shareholders’ equity
|
$
|
6,832.2
|
|
$
|
5,866.2
|
|
|
Common
Shares
|
Capital In
Excess Of
Par
|
Treasury Shares, at cost
|
Accumulated
Deficit
|
Accumulated
Other
Comprehensive
Loss
|
Noncontrolling
Interests
|
Total
|
||||||||||||||
Balance December 31, 2014
|
$
|
229.8
|
|
$
|
1,144.7
|
|
$
|
—
|
|
$
|
(232.4
|
)
|
$
|
(103.3
|
)
|
$
|
67.3
|
|
$
|
1,106.1
|
|
Comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||||||||
Net income
|
—
|
|
—
|
|
—
|
|
91.6
|
|
—
|
|
4.2
|
|
95.8
|
|
|||||||
Net unrealized gain on securities, net of tax of $0.0 million
|
—
|
|
—
|
|
—
|
|
—
|
|
0.3
|
|
—
|
|
0.3
|
|
|||||||
Net realized and unrealized loss on derivatives, net of tax of $2.1 million
|
—
|
|
—
|
|
—
|
|
—
|
|
(3.4
|
)
|
—
|
|
(3.4
|
)
|
|||||||
Long-term employee benefit plans, net of tax of $0.0 million
|
—
|
|
—
|
|
—
|
|
—
|
|
(2.2
|
)
|
—
|
|
(2.2
|
)
|
|||||||
Foreign currency translation, net of tax of $0.0 million
|
—
|
|
—
|
|
—
|
|
—
|
|
(160.7
|
)
|
(3.6
|
)
|
(164.3
|
)
|
|||||||
Total comprehensive income (loss)
|
—
|
|
—
|
|
—
|
|
91.6
|
|
(166.0
|
)
|
0.6
|
|
(73.8
|
)
|
|||||||
Recognition of stock-based compensation
|
—
|
|
30.2
|
|
—
|
|
—
|
|
—
|
|
—
|
|
30.2
|
|
|||||||
Exercises of stock options and associated tax benefits
|
7.2
|
|
63.9
|
|
—
|
|
—
|
|
—
|
|
—
|
|
71.1
|
|
|||||||
Noncontrolling interests of acquired subsidiaries
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
4.3
|
|
4.3
|
|
|||||||
Dividends declared to noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(4.7
|
)
|
(4.7
|
)
|
|||||||
Balance December 31, 2015
|
$
|
237.0
|
|
$
|
1,238.8
|
|
$
|
—
|
|
$
|
(140.8
|
)
|
$
|
(269.3
|
)
|
$
|
67.5
|
|
$
|
1,133.2
|
|
Comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||||||||
Net income
|
—
|
|
—
|
|
—
|
|
38.8
|
|
—
|
|
5.8
|
|
44.6
|
|
|||||||
Net unrealized gain on securities, net of tax of $0.0 million
|
—
|
|
—
|
|
—
|
|
—
|
|
0.3
|
|
—
|
|
0.3
|
|
|||||||
Net realized and unrealized gain on derivatives, net of tax of $0.8 million
|
—
|
|
—
|
|
—
|
|
—
|
|
1.2
|
|
—
|
|
1.2
|
|
|||||||
Long-term employee benefit plans, net of tax benefit of $5.7 million
|
—
|
|
—
|
|
—
|
|
—
|
|
(23.2
|
)
|
—
|
|
(23.2
|
)
|
|||||||
Foreign currency translation, net of tax of $0.0 million
|
—
|
|
—
|
|
—
|
|
—
|
|
(59.4
|
)
|
(0.1
|
)
|
(59.5
|
)
|
|||||||
Total comprehensive income (loss)
|
—
|
|
—
|
|
—
|
|
38.8
|
|
(81.1
|
)
|
5.7
|
|
(36.6
|
)
|
|||||||
Cumulative effect of an accounting change
|
—
|
|
—
|
|
—
|
|
43.9
|
|
—
|
|
—
|
|
43.9
|
|
|||||||
Recognition of stock-based compensation
|
—
|
|
41.1
|
|
—
|
|
—
|
|
—
|
|
—
|
|
41.1
|
|
|||||||
Exercises of stock options and associated tax benefits
|
2.3
|
|
14.4
|
|
—
|
|
—
|
|
—
|
|
—
|
|
16.7
|
|
|||||||
Noncontrolling interests of acquired subsidiaries
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
51.3
|
|
51.3
|
|
|||||||
Dividends declared to noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(3.0
|
)
|
(3.0
|
)
|
|||||||
Balance December 31, 2016
|
$
|
239.3
|
|
$
|
1,294.3
|
|
$
|
—
|
|
$
|
(58.1
|
)
|
$
|
(350.4
|
)
|
$
|
121.5
|
|
$
|
1,246.6
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
||||||||||||||
Net income
|
—
|
|
—
|
|
—
|
|
36.7
|
|
—
|
|
11.0
|
|
47.7
|
|
|||||||
Net unrealized gain on securities, net of tax of $0.0 million
|
—
|
|
—
|
|
—
|
|
—
|
|
0.4
|
|
—
|
|
0.4
|
|
|||||||
Net realized and unrealized gain on derivatives, net of tax of $0.5 million
|
—
|
|
—
|
|
—
|
|
—
|
|
0.4
|
|
—
|
|
0.4
|
|
|||||||
Long-term employee benefit plans, net of tax of $6.1 million
|
—
|
|
—
|
|
—
|
|
—
|
|
25.2
|
|
—
|
|
25.2
|
|
|||||||
Foreign currency translation, net of tax of $0.0 million
|
—
|
|
—
|
|
—
|
|
—
|
|
83.4
|
|
2.2
|
|
85.6
|
|
|||||||
Total comprehensive income
|
—
|
|
—
|
|
—
|
|
36.7
|
|
109.4
|
|
13.2
|
|
159.3
|
|
|||||||
Recognition of stock-based compensation
|
—
|
|
38.5
|
|
—
|
|
—
|
|
—
|
|
—
|
|
38.5
|
|
|||||||
Exercises of stock options and vesting of restricted stock
|
3.1
|
|
21.7
|
|
—
|
|
—
|
|
—
|
|
—
|
|
24.8
|
|
|||||||
Treasury share repurchase
|
—
|
|
—
|
|
(58.4
|
)
|
—
|
|
—
|
|
—
|
|
(58.4
|
)
|
|||||||
Dividends declared to noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(3.0
|
)
|
(3.0
|
)
|
|||||||
Balance December 31, 2017
|
$
|
242.4
|
|
$
|
1,354.5
|
|
$
|
(58.4
|
)
|
$
|
(21.4
|
)
|
$
|
(241.0
|
)
|
$
|
131.7
|
|
$
|
1,407.8
|
|
|
Year Ended December 31,
|
||||||||
|
2017
|
2016
|
2015
|
||||||
Operating activities:
|
|
|
|
||||||
Net income
|
$
|
47.7
|
|
$
|
44.6
|
|
$
|
95.8
|
|
Adjustment to reconcile net income to cash provided by operating activities:
|
|
|
|
||||||
Depreciation and amortization
|
347.5
|
|
322.1
|
|
307.7
|
|
|||
Amortization of financing costs and original issue discount
|
8.0
|
|
17.8
|
|
20.6
|
|
|||
Debt extinguishment and refinancing related costs
|
13.4
|
|
97.6
|
|
2.5
|
|
|||
Deferred income taxes
|
91.7
|
|
(15.9
|
)
|
(6.2
|
)
|
|||
Realized and unrealized foreign exchange (gains) losses, net
|
(3.6
|
)
|
35.5
|
|
93.7
|
|
|||
Stock-based compensation
|
38.5
|
|
41.1
|
|
30.2
|
|
|||
Asset impairments
|
7.6
|
|
68.4
|
|
30.6
|
|
|||
Venezuela deconsolidation charge
|
70.9
|
|
—
|
|
—
|
|
|||
Other non-cash, net
|
4.4
|
|
(1.9
|
)
|
12.5
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
||||||
Trade accounts and notes receivable
|
(15.2
|
)
|
(67.8
|
)
|
(61.1
|
)
|
|||
Inventories
|
(19.9
|
)
|
(1.7
|
)
|
(35.2
|
)
|
|||
Prepaid expenses and other
|
(84.9
|
)
|
(64.5
|
)
|
(65.6
|
)
|
|||
Accounts payable
|
39.8
|
|
32.3
|
|
(6.7
|
)
|
|||
Other accrued liabilities
|
6.7
|
|
58.7
|
|
13.4
|
|
|||
Other liabilities
|
(12.6
|
)
|
(7.0
|
)
|
(22.4
|
)
|
|||
Cash provided by operating activities
|
540.0
|
|
559.3
|
|
409.8
|
|
|||
Investing activities:
|
|
|
|
||||||
Business acquisitions (net of cash acquired)
|
(564.4
|
)
|
(114.8
|
)
|
(29.6
|
)
|
|||
Purchase of property, plant and equipment
|
(125.0
|
)
|
(136.2
|
)
|
(138.1
|
)
|
|||
Reduction of cash due to Venezuela deconsolidation
|
(4.3
|
)
|
—
|
|
—
|
|
|||
Other investing activities, net
|
4.1
|
|
(6.0
|
)
|
1.5
|
|
|||
Cash used for investing activities
|
(689.6
|
)
|
(257.0
|
)
|
(166.2
|
)
|
|||
Financing activities:
|
|
|
|
||||||
Proceeds from short-term borrowings
|
—
|
|
0.2
|
|
2.0
|
|
|||
Proceeds from long-term borrowings
|
483.6
|
|
1,604.3
|
|
—
|
|
|||
Payments on short-term borrowings
|
(14.1
|
)
|
(8.6
|
)
|
(16.9
|
)
|
|||
Payments on long-term borrowings
|
(50.0
|
)
|
(1,755.7
|
)
|
(127.3
|
)
|
|||
Financing-related costs
|
(10.4
|
)
|
(86.3
|
)
|
—
|
|
|||
Dividends paid to noncontrolling interests
|
(3.0
|
)
|
(3.0
|
)
|
(4.7
|
)
|
|||
Purchase of treasury stock
|
(58.4
|
)
|
—
|
|
—
|
|
|||
Proceeds from option exercises
|
24.8
|
|
16.7
|
|
62.4
|
|
|||
Deferred acquisition-related consideration
|
(5.2
|
)
|
—
|
|
—
|
|
|||
Other financing activities
|
—
|
|
(0.2
|
)
|
(0.2
|
)
|
|||
Cash provided by (used for) financing activities
|
367.3
|
|
(232.6
|
)
|
(84.7
|
)
|
|||
Increase in cash and cash equivalents
|
217.7
|
|
69.7
|
|
158.9
|
|
|||
Effect of exchange rate changes on cash
|
17.1
|
|
(19.3
|
)
|
(58.0
|
)
|
|||
Cash at beginning of period
|
538.1
|
|
487.7
|
|
386.8
|
|
|||
Cash at end of period
|
$
|
772.9
|
|
$
|
538.1
|
|
$
|
487.7
|
|
|
|
|
|
||||||
Cash at end of period reconciliation:
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
769.8
|
|
$
|
535.4
|
|
$
|
485.0
|
|
Restricted cash
|
3.1
|
|
2.7
|
|
2.7
|
|
|||
Cash at end of period
|
$
|
772.9
|
|
$
|
538.1
|
|
$
|
487.7
|
|
|
|
|
|
||||||
Supplemental cash flow information
|
|
|
|
||||||
Cash paid during the year for:
|
|
|
|
||||||
Interest, net of amounts capitalized
|
$
|
130.1
|
|
$
|
169.4
|
|
$
|
172.5
|
|
Income taxes, net of refunds
|
61.7
|
|
39.2
|
|
52.4
|
|
|||
Non-cash investing activities:
|
|
|
|
|
|
||||
Accrued capital expenditures
|
$
|
30.2
|
|
$
|
28.7
|
|
$
|
33.8
|
|
•
|
raw materials,
|
•
|
direct labor, and
|
•
|
manufacturing and indirect overhead.
|
|
June 1, 2017 (As Initially Reported)
|
Measurement Period Adjustments
|
June 1, 2017
(As Adjusted)
|
||||||
Accounts and notes receivable—trade
|
$
|
23.3
|
|
$
|
—
|
|
$
|
23.3
|
|
Inventories
|
24.9
|
|
(0.2
|
)
|
24.7
|
|
|||
Prepaid expenses and other
|
0.2
|
|
—
|
|
0.2
|
|
|||
Property, plant and equipment
|
23.0
|
|
0.1
|
|
23.1
|
|
|||
Identifiable intangibles
|
254.2
|
|
4.9
|
|
259.1
|
|
|||
Accounts payable
|
(22.4
|
)
|
0.2
|
|
(22.2
|
)
|
|||
Other accrued liabilities
|
(5.1
|
)
|
0.4
|
|
(4.7
|
)
|
|||
Net assets acquired before goodwill on acquisition
|
298.1
|
|
5.4
|
|
303.5
|
|
|||
Goodwill on acquisition
|
132.6
|
|
(5.8
|
)
|
126.8
|
|
|||
Net assets acquired
|
$
|
430.7
|
|
$
|
(0.4
|
)
|
$
|
430.3
|
|
|
For the years ended
|
|||||
(in millions, except per share data)
|
December 31, 2017
|
December 31, 2016
|
||||
Net sales
|
$
|
4,454.2
|
|
$
|
4,293.1
|
|
Net income
|
$
|
55.0
|
|
$
|
45.9
|
|
Net income attributable to controlling interests
|
$
|
44.0
|
|
$
|
40.1
|
|
Net income per share (Basic)
|
$
|
0.18
|
|
$
|
0.17
|
|
Net income per share (Diluted)
|
$
|
0.18
|
|
$
|
0.16
|
|
|
Performance
Coatings
|
Transportation
Coatings
|
Total
|
||||||
December 31, 2015
|
$
|
869.0
|
|
$
|
62.3
|
|
$
|
931.3
|
|
Goodwill from acquisitions
|
64.2
|
|
15.5
|
|
79.7
|
|
|||
Foreign currency translation
|
(43.8
|
)
|
(3.1
|
)
|
(46.9
|
)
|
|||
December 31, 2016
|
$
|
889.4
|
|
$
|
74.7
|
|
$
|
964.1
|
|
Goodwill from acquisitions
|
207.2
|
|
—
|
|
207.2
|
|
|||
Purchase accounting adjustments
|
(15.2
|
)
|
—
|
|
(15.2
|
)
|
|||
Foreign currency translation
|
107.8
|
|
7.3
|
|
115.1
|
|
|||
December 31, 2017
|
$
|
1,189.2
|
|
$
|
82.0
|
|
$
|
1,271.2
|
|
December 31, 2017
|
Gross Carrying
Amount
|
Accumulated
Amortization
|
Net Book
Value
|
Weighted average
amortization periods (years)
|
||||||
Technology
|
$
|
498.0
|
|
$
|
(213.6
|
)
|
$
|
284.4
|
|
10.5
|
Trademarks—indefinite-lived
|
277.2
|
|
—
|
|
277.2
|
|
Indefinite
|
|||
Trademarks—definite-lived
|
102.6
|
|
(17.7
|
)
|
84.9
|
|
15.9
|
|||
Customer relationships
|
945.1
|
|
(176.8
|
)
|
768.3
|
|
19.0
|
|||
Other
|
16.6
|
|
(3.2
|
)
|
13.4
|
|
4.8
|
|||
Total
|
$
|
1,839.5
|
|
$
|
(411.3
|
)
|
$
|
1,428.2
|
|
|
December 31, 2016
|
Gross Carrying
Amount
|
Accumulated
Amortization
|
Net Book
Value
|
Weighted average
amortization periods (years)
|
||||||
Technology
|
$
|
417.1
|
|
$
|
(153.6
|
)
|
$
|
263.5
|
|
10.2
|
Trademarks—indefinite-lived
|
273.2
|
|
—
|
|
273.2
|
|
Indefinite
|
|||
Trademarks—definite-lived
|
55.0
|
|
(11.4
|
)
|
43.6
|
|
14.8
|
|||
Customer relationships
|
672.6
|
|
(123.3
|
)
|
549.3
|
|
18.7
|
|||
Other
|
2.4
|
|
(1.7
|
)
|
0.7
|
|
4.6
|
|||
Total
|
$
|
1,420.3
|
|
$
|
(290.0
|
)
|
$
|
1,130.3
|
|
|
In Process Research and Development
|
Activity
|
||
Balance at December 31, 2015
|
$
|
1.6
|
|
Completed
|
—
|
|
|
Abandoned
|
—
|
|
|
Acquired
|
—
|
|
|
Foreign currency translation
|
(0.1
|
)
|
|
Balance at December 31, 2016
|
$
|
1.5
|
|
Completed
|
—
|
|
|
Abandoned
|
(1.7
|
)
|
|
Acquired
|
2.3
|
|
|
Foreign currency translation
|
0.2
|
|
|
Balance at December 31, 2017
|
$
|
2.3
|
|
2018
|
$
|
110.8
|
|
2019
|
$
|
109.5
|
|
2020
|
$
|
109.3
|
|
2021
|
$
|
108.7
|
|
2022
|
$
|
106.5
|
|
Balance at December 31, 2014
|
$
|
48.5
|
|
Expense recorded
|
31.9
|
|
|
Payments made
|
(33.8
|
)
|
|
Foreign currency translation
|
(5.3
|
)
|
|
Balance at December 31, 2015
|
$
|
41.3
|
|
Expense recorded
|
58.5
|
|
|
Payments made
|
(31.0
|
)
|
|
Foreign currency translation
|
(2.7
|
)
|
|
Balance at December 31, 2016
|
$
|
66.1
|
|
Expense recorded
|
36.2
|
|
|
Payments made
|
(36.1
|
)
|
|
Foreign currency translation
|
6.8
|
|
|
Venezuela deconsolidation impact
|
(1.5
|
)
|
|
Balance at December 31, 2017
|
$
|
71.5
|
|
|
Operating
Leases
|
||
2018
|
$
|
41.8
|
|
2019
|
26.6
|
|
|
2020
|
19.4
|
|
|
2021
|
14.9
|
|
|
2022
|
11.8
|
|
|
Thereafter
|
20.2
|
|
|
Total minimum payments
|
$
|
134.7
|
|
|
Year Ended December 31,
|
|||||
|
2017
|
2016
|
||||
Change in benefit obligation:
|
|
|
||||
Projected benefit obligation at beginning of year
|
$
|
547.6
|
|
$
|
541.7
|
|
Service cost
|
9.0
|
|
10.7
|
|
||
Interest cost
|
13.8
|
|
15.1
|
|
||
Participant contributions
|
1.3
|
|
1.0
|
|
||
Actuarial losses (gains), net
|
(13.8
|
)
|
57.4
|
|
||
Plan curtailments, settlements and special termination benefits
|
(12.9
|
)
|
(2.0
|
)
|
||
Benefits paid
|
(23.3
|
)
|
(21.8
|
)
|
||
Business combinations and other adjustments
|
51.2
|
|
—
|
|
||
Currency translation adjustment
|
64.0
|
|
(54.5
|
)
|
||
Projected benefit obligation at end of year
|
636.9
|
|
547.6
|
|
||
Change in plan assets:
|
|
|
||||
Fair value of plan assets at beginning of year
|
288.7
|
|
278.4
|
|
||
Actual return on plan assets
|
22.2
|
|
41.1
|
|
||
Employer contributions
|
27.4
|
|
27.0
|
|
||
Participant contributions
|
1.3
|
|
1.0
|
|
||
Benefits paid
|
(23.3
|
)
|
(21.8
|
)
|
||
Settlements
|
(13.9
|
)
|
(1.2
|
)
|
||
Business combinations and other adjustments
|
32.4
|
|
—
|
|
||
Currency translation adjustment
|
30.2
|
|
(35.8
|
)
|
||
Fair value of plan assets at end of year
|
365.0
|
|
288.7
|
|
||
Funded status, net
|
$
|
(271.9
|
)
|
$
|
(258.9
|
)
|
Amounts recognized in the consolidated balance sheets consist of:
|
|
|
||||
Other assets
|
$
|
19.2
|
|
$
|
0.3
|
|
Other accrued liabilities
|
(12.0
|
)
|
(10.1
|
)
|
||
Accrued pensions
|
(279.1
|
)
|
(249.1
|
)
|
||
Net amount recognized
|
$
|
(271.9
|
)
|
$
|
(258.9
|
)
|
|
Year Ended December 31,
|
|||||
|
2017
|
2016
|
||||
ABO
|
$
|
605.4
|
|
$
|
516.4
|
|
Plans with PBO in excess of plan assets:
|
|
|
||||
PBO
|
$
|
401.2
|
|
$
|
542.6
|
|
ABO
|
$
|
370.0
|
|
$
|
511.6
|
|
Fair value plan assets
|
$
|
110.1
|
|
$
|
283.4
|
|
Plans with ABO in excess of plan assets:
|
|
|
||||
PBO
|
$
|
393.3
|
|
$
|
488.2
|
|
ABO
|
$
|
364.9
|
|
$
|
461.3
|
|
Fair value plan assets
|
$
|
104.7
|
|
$
|
232.6
|
|
|
Year Ended December 31,
|
|||||
|
2017
|
2016
|
||||
Accumulated net actuarial losses
|
$
|
(46.4
|
)
|
$
|
(76.6
|
)
|
Accumulated prior service credit
|
2.6
|
|
0.9
|
|
||
Total
|
$
|
(43.8
|
)
|
$
|
(75.7
|
)
|
|
2018
|
||
Amortization of net actuarial losses
|
$
|
(1.2
|
)
|
Amortization of prior service credit
|
0.1
|
|
|
Total
|
$
|
(1.1
|
)
|
|
Year Ended December 31,
|
||||||||
|
2017
|
2016
|
2015
|
||||||
Components of net periodic benefit cost and amounts recognized in comprehensive (income) loss:
|
|
|
|
||||||
Net periodic benefit cost:
|
|
|
|
||||||
Service cost
|
$
|
9.0
|
|
$
|
10.7
|
|
$
|
12.0
|
|
Interest cost
|
13.8
|
|
15.1
|
|
16.9
|
|
|||
Expected return on plan assets
|
(15.0
|
)
|
(12.6
|
)
|
(14.6
|
)
|
|||
Amortization of actuarial loss, net
|
1.4
|
|
0.4
|
|
0.4
|
|
|||
Amortization of prior service credit
|
—
|
|
—
|
|
(0.1
|
)
|
|||
Curtailment gain
|
—
|
|
(1.1
|
)
|
—
|
|
|||
Settlement (gain) loss
|
0.2
|
|
(0.5
|
)
|
0.5
|
|
|||
Special termination benefit loss
|
1.0
|
|
0.2
|
|
—
|
|
|||
Net periodic benefit cost
|
10.4
|
|
12.2
|
|
15.1
|
|
|||
Changes in plan assets and benefit obligations recognized in other comprehensive (income) loss:
|
|
|
|
||||||
Net actuarial (gain) loss, net
|
(20.6
|
)
|
27.7
|
|
(3.4
|
)
|
|||
Amortization of actuarial loss, net
|
(1.4
|
)
|
(0.4
|
)
|
(0.4
|
)
|
|||
Prior service (credit) cost
|
(1.2
|
)
|
—
|
|
2.7
|
|
|||
Amortization of prior service credit
|
—
|
|
—
|
|
0.1
|
|
|||
Curtailment gain
|
—
|
|
1.1
|
|
—
|
|
|||
Settlement gain (loss)
|
(0.2
|
)
|
0.5
|
|
(0.5
|
)
|
|||
Other adjustments
|
(7.9
|
)
|
—
|
|
—
|
|
|||
Total (gain) loss recognized in other comprehensive (income) loss
|
(31.3
|
)
|
28.9
|
|
(1.5
|
)
|
|||
Total recognized in net periodic benefit cost and comprehensive (income) loss
|
$
|
(20.9
|
)
|
$
|
41.1
|
|
$
|
13.6
|
|
|
2017
|
2016
|
2015
|
|||
Weighted-average assumptions:
|
|
|
|
|||
Discount rate to determine benefit obligation
|
2.13
|
%
|
2.52
|
%
|
3.05
|
%
|
Discount rate to determine net cost
|
2.52
|
%
|
3.05
|
%
|
3.23
|
%
|
Rate of future compensation increases to determine benefit obligation
|
2.69
|
%
|
3.07
|
%
|
3.03
|
%
|
Rate of future compensation increases to determine net cost
|
3.07
|
%
|
3.03
|
%
|
3.57
|
%
|
Rate of return on plan assets to determine net cost
|
4.73
|
%
|
4.75
|
%
|
5.21
|
%
|
Year ended December 31,
|
Benefits
|
||
2018
|
$
|
29.7
|
|
2019
|
$
|
32.2
|
|
2020
|
$
|
32.2
|
|
2021
|
$
|
31.1
|
|
2022
|
$
|
32.1
|
|
2023—2027
|
$
|
189.0
|
|
Asset Category
|
2017
|
2016
|
Target Allocation
|
Equity securities
|
25-30%
|
30-35%
|
25-30%
|
Debt securities
|
20-25%
|
35-40%
|
20-25%
|
Real estate
|
0-5%
|
0-5%
|
0-5%
|
Other
|
45-50%
|
25-30%
|
45-50%
|
|
Fair value measurements at
|
|||||||||||
|
December 31, 2017
|
|||||||||||
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||
Asset Category:
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
3.7
|
|
$
|
3.7
|
|
$
|
—
|
|
$
|
—
|
|
U.S. equity securities
|
33.3
|
|
33.0
|
|
—
|
|
0.3
|
|
||||
Non-U.S. equity securities
|
76.4
|
|
73.4
|
|
1.2
|
|
1.8
|
|
||||
Debt securities—government issued
|
44.6
|
|
33.1
|
|
7.3
|
|
4.2
|
|
||||
Debt securities—corporate issued
|
32.8
|
|
17.2
|
|
13.1
|
|
2.5
|
|
||||
Private market securities and other
|
141.2
|
|
2.7
|
|
2.8
|
|
135.7
|
|
||||
Real estate investments
|
13.5
|
|
—
|
|
—
|
|
13.5
|
|
||||
Total
|
$
|
345.5
|
|
$
|
163.1
|
|
$
|
24.4
|
|
$
|
158.0
|
|
Debt asset backed securities at NAV
|
10.9
|
|
|
|
|
|||||||
Hedge funds at NAV
|
8.6
|
|
|
|
|
|||||||
|
$
|
365.0
|
|
|
|
|
|
Fair value measurements at
|
|||||||||||
|
December 31, 2016
|
|||||||||||
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||
Asset Category:
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
2.8
|
|
$
|
2.8
|
|
$
|
—
|
|
$
|
—
|
|
U.S. equity securities
|
30.7
|
|
30.7
|
|
—
|
|
—
|
|
||||
Non-U.S. equity securities
|
63.9
|
|
63.5
|
|
0.3
|
|
0.1
|
|
||||
Debt—government issued
|
60.9
|
|
48.0
|
|
12.9
|
|
—
|
|
||||
Debt—corporate issued
|
38.4
|
|
31.0
|
|
5.3
|
|
2.1
|
|
||||
Private market securities and other
|
64.6
|
|
0.4
|
|
0.1
|
|
64.1
|
|
||||
Real estate investments
|
11.2
|
|
—
|
|
—
|
|
11.2
|
|
||||
Total
|
$
|
272.5
|
|
$
|
176.4
|
|
$
|
18.6
|
|
$
|
77.5
|
|
Debt asset backed securities at NAV
|
8.8
|
|
|
|
|
|||||||
Hedge funds at NAV
|
7.4
|
|
|
|
|
|||||||
|
$
|
288.7
|
|
|
|
|
|
Level 3 assets
|
|||||||||||
|
Total
|
Private
market
securities
|
Debt and equity
|
Real
estate investments
|
||||||||
Ending balance at December 31, 2015
|
$
|
74.1
|
|
$
|
63.3
|
|
$
|
2.3
|
|
$
|
8.5
|
|
Realized (loss)
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
Change in unrealized gain
|
1.3
|
|
(1.4
|
)
|
(0.1
|
)
|
2.8
|
|
||||
Purchases, sales, issues and settlements
|
2.1
|
|
2.2
|
|
—
|
|
(0.1
|
)
|
||||
Transfers in/(out) of Level 3
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
Ending balance at December 31, 2016
|
$
|
77.5
|
|
$
|
64.1
|
|
$
|
2.2
|
|
$
|
11.2
|
|
Realized (loss)
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
Change in unrealized gain
|
9.9
|
|
8.3
|
|
0.4
|
|
1.2
|
|
||||
Purchases, sales, issues and settlements
|
70.6
|
|
63.3
|
|
6.2
|
|
1.1
|
|
||||
Transfers in/(out) of Level 3
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
Ending balance at December 31, 2017
|
$
|
158.0
|
|
$
|
135.7
|
|
$
|
8.8
|
|
$
|
13.5
|
|
|
2017 Grants
|
2016 Grants
|
2015 Grants
|
|||
Expected Term
|
6.0 years
|
6.0 years
|
|
6.0 years
|
|
|
Volatility
|
21.75
|
%
|
21.63
|
%
|
22.19
|
%
|
Dividend Yield
|
—
|
|
—
|
|
—
|
|
Discount Rate
|
2.03
|
%
|
1.45
|
%
|
1.79
|
%
|
|
Awards
(in millions)
|
Weighted-
Average
Exercise
Price
|
Aggregate
Intrinsic
Value
(in millions)
|
Weighted
Average
Remaining
Contractual
Life (years)
|
|||||
Outstanding at December 31, 2016
|
9.6
|
|
$
|
14.40
|
|
|
|
||
Granted
|
0.9
|
|
$
|
29.56
|
|
|
|
||
Exercised
|
(2.2
|
)
|
$
|
11.42
|
|
|
|
||
Forfeited
|
(0.2
|
)
|
$
|
28.29
|
|
|
|
||
Outstanding at December 31, 2017
|
8.1
|
|
$
|
16.54
|
|
|
|
||
Vested and expected to vest at December 31, 2017
|
8.1
|
|
$
|
16.54
|
|
$
|
128.3
|
|
6.52
|
Exercisable at December 31, 2017
|
6.3
|
|
$
|
13.25
|
|
$
|
119.9
|
|
5.96
|
|
Awards
(in millions)
|
Weighted-Average
Fair Value
|
|||
Outstanding at December 31, 2016
|
2.3
|
|
$
|
29.18
|
|
Granted
|
0.8
|
|
$
|
30.10
|
|
Vested
|
(1.0
|
)
|
$
|
30.02
|
|
Forfeited
|
(0.2
|
)
|
$
|
27.21
|
|
Outstanding at December 31, 2017
|
1.9
|
|
$
|
29.32
|
|
|
Awards
(in millions)
|
Weighted-Average
Fair Value
|
|||
Outstanding at December 31, 2016
|
0.3
|
|
$
|
27.74
|
|
Granted
|
0.3
|
|
$
|
38.11
|
|
Vested
|
—
|
|
$
|
—
|
|
Forfeited
|
—
|
|
$
|
—
|
|
Outstanding at December 31, 2017
|
0.6
|
|
$
|
31.17
|
|
|
Year Ended December 31,
|
||||||||
|
2017
|
2016
|
2015
|
||||||
Foreign exchange losses, net
|
$
|
7.4
|
|
$
|
30.6
|
|
$
|
93.7
|
|
Impairments
|
7.6
|
|
10.5
|
|
30.6
|
|
|||
Debt extinguishment and refinancing related costs
|
13.4
|
|
97.6
|
|
2.5
|
|
|||
Other miscellaneous expense (income), net
|
(2.7
|
)
|
4.0
|
|
(15.6
|
)
|
|||
Total
|
$
|
25.7
|
|
$
|
142.7
|
|
$
|
111.2
|
|
|
Year Ended December 31, 2017
|
Year Ended December 31, 2016
|
Year Ended December 31, 2015
|
||||||||||||||||||||||||
|
Current
|
Deferred
|
Total
|
Current
|
Deferred
|
Total
|
Current
|
Deferred
|
Total
|
||||||||||||||||||
U.S. federal
|
$
|
4.6
|
|
$
|
102.8
|
|
$
|
107.4
|
|
$
|
0.9
|
|
$
|
(1.3
|
)
|
$
|
(0.4
|
)
|
$
|
—
|
|
$
|
17.8
|
|
$
|
17.8
|
|
U.S. state and local
|
1.7
|
|
0.4
|
|
2.1
|
|
3.7
|
|
8.2
|
|
11.9
|
|
3.1
|
|
8.5
|
|
11.6
|
|
|||||||||
Foreign
|
43.9
|
|
(11.5
|
)
|
32.4
|
|
49.4
|
|
(22.8
|
)
|
26.6
|
|
65.2
|
|
(32.5
|
)
|
32.7
|
|
|||||||||
Total
|
$
|
50.2
|
|
$
|
91.7
|
|
$
|
141.9
|
|
$
|
54.0
|
|
$
|
(15.9
|
)
|
$
|
38.1
|
|
$
|
68.3
|
|
$
|
(6.2
|
)
|
$
|
62.1
|
|
|
Year Ended December 31, 2017
|
Year Ended December 31, 2016
|
Year Ended December 31, 2015
|
||||||||||||
Statutory U.S. federal income tax rate
(1)
|
$
|
66.4
|
|
35.0
|
%
|
$
|
29.0
|
|
35.0
|
%
|
$
|
55.2
|
|
35.0
|
%
|
Foreign income taxed at rates other than 35%
|
(56.2
|
)
|
(29.6
|
)
|
(45.6
|
)
|
(55.1
|
)
|
(41.4
|
)
|
(26.2
|
)
|
|||
Changes in valuation allowances
|
45.3
|
|
23.9
|
|
9.6
|
|
11.6
|
|
34.4
|
|
21.8
|
|
|||
Foreign exchange gain (loss), net
|
(17.7
|
)
|
(9.3
|
)
|
3.1
|
|
3.7
|
|
(10.5
|
)
|
(6.6
|
)
|
|||
Unrecognized tax benefits
|
3.1
|
|
1.6
|
|
7.1
|
|
8.6
|
|
0.4
|
|
0.3
|
|
|||
Foreign taxes
|
4.1
|
|
2.2
|
|
4.5
|
|
5.4
|
|
5.8
|
|
3.7
|
|
|||
Non-deductible interest
|
9.8
|
|
5.2
|
|
6.7
|
|
8.1
|
|
4.9
|
|
3.1
|
|
|||
Non-deductible expenses
|
4.6
|
|
2.4
|
|
4.7
|
|
5.7
|
|
5.5
|
|
3.5
|
|
|||
Tax credits
|
(4.2
|
)
|
(2.2
|
)
|
(6.7
|
)
|
(8.1
|
)
|
(5.5
|
)
|
(3.5
|
)
|
|||
Excess tax benefits relating to share-based compensation
|
(13.1
|
)
|
(6.9
|
)
|
(13.4
|
)
|
(16.2
|
)
|
—
|
|
—
|
|
|||
Venezuela deconsolidation and impairment
|
(2.0
|
)
|
(1.1
|
)
|
23.8
|
|
28.8
|
|
10.7
|
|
6.8
|
|
|||
U.S. state and local taxes, net
|
1.3
|
|
0.7
|
|
7.8
|
|
9.4
|
|
8.1
|
|
5.1
|
|
|||
U.S. tax reform
(2)
|
107.8
|
|
56.9
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||
Other - net
|
(7.3
|
)
|
(4.0
|
)
|
7.5
|
|
9.2
|
|
(5.5
|
)
|
(3.7
|
)
|
|||
Total income tax provision / effective tax rate
|
$
|
141.9
|
|
74.8
|
%
|
$
|
38.1
|
|
46.1
|
%
|
$
|
62.1
|
|
39.3
|
%
|
(1)
|
The U.S. statutory rate has been used as management believes it is more meaningful to the Company.
|
(2)
|
Provisional net tax effect of the U.S. TCJA.
|
Deferred Tax Balances
|
Year Ended December 31,
|
|||||
|
2017
|
2016
|
||||
Deferred tax asset
|
|
|
||||
Tax loss, credit and interest carryforwards
|
$
|
265.3
|
|
$
|
263.7
|
|
Goodwill and intangibles
|
—
|
|
48.1
|
|
||
Compensation and employee benefits
|
86.0
|
|
92.8
|
|
||
Accruals and other reserves
|
33.9
|
|
40.0
|
|
||
Research and development capitalization
|
8.9
|
|
15.7
|
|
||
Equity investment and other securities
|
26.4
|
|
(0.7
|
)
|
||
Other
|
10.9
|
|
16.4
|
|
||
Total deferred tax assets
|
431.4
|
|
476.0
|
|
||
Less: Valuation allowance
|
(214.2
|
)
|
(135.4
|
)
|
||
Net deferred tax assets
|
217.2
|
|
340.6
|
|
||
Deferred tax liabilities
|
|
|
||||
Goodwill and intangibles
|
(15.2
|
)
|
—
|
|
||
Property, plant and equipment
|
(146.9
|
)
|
(168.4
|
)
|
||
Unremitted earnings
|
(7.4
|
)
|
(5.8
|
)
|
||
Long-term debt
|
(2.2
|
)
|
(4.2
|
)
|
||
Total deferred tax liabilities
|
(171.7
|
)
|
(178.4
|
)
|
||
Net deferred tax asset
|
$
|
45.5
|
|
$
|
162.2
|
|
Non-current assets
|
198.4
|
|
322.4
|
|
||
Non-current liability
|
(152.9
|
)
|
(160.2
|
)
|
||
Net deferred tax asset
|
$
|
45.5
|
|
$
|
162.2
|
|
|
Year Ended December 31,
|
||||||||
|
2017
|
2016
|
2015
|
||||||
Balance at January 1
|
$
|
12.3
|
|
$
|
4.7
|
|
$
|
5.3
|
|
Increases related to positions taken on items from prior years
|
1.9
|
|
—
|
|
—
|
|
|||
Decreases related to positions taken on items from prior years
|
—
|
|
(0.2
|
)
|
(0.6
|
)
|
|||
Increases related to positions taken in the current year
|
3.0
|
|
7.8
|
|
—
|
|
|||
Balance at December 31
|
$
|
17.2
|
|
$
|
12.3
|
|
$
|
4.7
|
|
|
Year Ended December 31,
|
||||||||
(In millions, except per share data)
|
2017
|
2016
|
2015
|
||||||
Net income to common shareholders
|
$
|
36.7
|
|
$
|
38.8
|
|
$
|
91.6
|
|
Basic weighted average shares outstanding
|
240.4
|
|
238.1
|
|
233.8
|
|
|||
Diluted weighted average shares outstanding
|
246.1
|
|
244.4
|
|
239.7
|
|
|||
Net income per common share:
|
|
|
|
||||||
Basic net income per share
|
$
|
0.15
|
|
$
|
0.16
|
|
$
|
0.39
|
|
Diluted net income per share
|
$
|
0.15
|
|
$
|
0.16
|
|
$
|
0.38
|
|
|
Year Ended December 31,
|
|||||
|
2017
|
2016
|
||||
Accounts receivable—trade, net
|
$
|
748.2
|
|
$
|
640.4
|
|
Notes receivable
|
29.4
|
|
68.7
|
|
||
Other
|
92.6
|
|
92.8
|
|
||
Total
|
$
|
870.2
|
|
$
|
801.9
|
|
|
Year Ended December 31,
|
|||||
|
2017
|
2016
|
||||
Finished products
|
$
|
347.5
|
|
$
|
315.2
|
|
Semi-finished products
|
95.5
|
|
87.5
|
|
||
Raw materials and supplies
|
165.6
|
|
127.0
|
|
||
Total
|
$
|
608.6
|
|
$
|
529.7
|
|
|
|
|
|
Year Ended December 31,
|
|||||
|
Useful Lives (years)
|
2017
|
2016
|
||||||
Land
|
|
|
|
$
|
87.6
|
|
$
|
85.2
|
|
Buildings and improvements
|
5
|
-
|
25
|
516.3
|
|
454.0
|
|
||
Machinery and equipment
|
3
|
-
|
25
|
1,244.0
|
|
1,087.5
|
|
||
Software
|
5
|
-
|
7
|
155.3
|
|
139.7
|
|
||
Other
|
3
|
-
|
20
|
41.7
|
|
35.6
|
|
||
Construction in progress
|
|
|
|
148.7
|
|
131.0
|
|
||
Total
|
|
|
|
2,193.6
|
|
1,933.0
|
|
||
Accumulated depreciation
|
|
|
|
(805.0
|
)
|
(617.3
|
)
|
||
Property, plant and equipment, net
|
|
|
|
$
|
1,388.6
|
|
$
|
1,315.7
|
|
|
Year Ended December 31,
|
|||||
|
2017
|
2016
|
||||
Available for sale securities
|
$
|
5.2
|
|
$
|
4.4
|
|
Deferred income taxes—non-current
|
198.4
|
|
322.4
|
|
||
Other assets
|
225.0
|
|
209.3
|
|
||
Total
|
$
|
428.6
|
|
$
|
536.1
|
|
|
Year Ended December 31,
|
|||||
|
2017
|
2016
|
||||
Compensation and other employee-related costs
|
$
|
153.3
|
|
$
|
145.8
|
|
Current portion of long-term employee benefit plans
|
12.0
|
|
10.1
|
|
||
Restructuring
|
71.5
|
|
66.1
|
|
||
Discounts, rebates, and warranties
|
138.8
|
|
119.8
|
|
||
Income taxes payable
|
22.2
|
|
23.3
|
|
||
Derivative liabilities
|
3.3
|
|
1.3
|
|
||
Other
|
88.5
|
|
73.6
|
|
||
Total
|
$
|
489.6
|
|
$
|
440.0
|
|
|
Year Ended December 31,
|
|||||
|
2017
|
2016
|
||||
2024 Dollar Term Loans
|
$
|
1,960.0
|
|
$
|
—
|
|
2023 Dollar Term Loans
|
—
|
|
1,545.0
|
|
||
2023 Euro Term Loans
|
472.5
|
|
417.6
|
|
||
2024 Dollar Senior Notes
|
500.0
|
|
500.0
|
|
||
2024 Euro Senior Notes
|
399.7
|
|
349.7
|
|
||
2025 Euro Senior Notes
|
536.9
|
|
469.8
|
|
||
Short-term and other borrowings
|
94.8
|
|
39.8
|
|
||
Unamortized original issue discount
|
(9.1
|
)
|
(10.0
|
)
|
||
Unamortized deferred financing costs
|
(39.2
|
)
|
(48.0
|
)
|
||
|
$
|
3,915.6
|
|
$
|
3,263.9
|
|
Less:
|
|
|
||||
Short-term borrowings
|
$
|
12.9
|
|
$
|
8.3
|
|
Current portion of long-term borrowings
|
24.8
|
|
19.6
|
|
||
Long-term debt
|
$
|
3,877.9
|
|
$
|
3,236.0
|
|
Period
|
2024 Dollar Notes Percentage
|
|
2019
|
103.656
|
%
|
2020
|
102.438
|
%
|
2021
|
101.219
|
%
|
2022 and thereafter
|
100.000
|
%
|
Period
|
2024 Euro Notes Percentage
|
|
2019
|
103.188
|
%
|
2020
|
102.125
|
%
|
2021
|
101.063
|
%
|
2022 and thereafter
|
100.000
|
%
|
Period
|
2025 Euro Notes Percentage
|
|
2019
|
102.813
|
%
|
2020
|
101.875
|
%
|
2021
|
100.938
|
%
|
2022 and thereafter
|
100.000
|
%
|
2018
|
$
|
40.5
|
|
2019
|
26.5
|
|
|
2020
|
25.7
|
|
|
2021
|
25.7
|
|
|
2022
|
52.4
|
|
|
Thereafter
|
3,778.6
|
|
|
|
$
|
3,949.4
|
|
|
Year Ended December 31,
|
|||||
|
2017
|
2016
|
||||
Prepaid and other assets:
|
|
|
||||
Interest rate swaps
|
$
|
—
|
|
$
|
0.1
|
|
Other assets:
|
|
|
||||
Interest rate caps
|
$
|
1.2
|
|
$
|
—
|
|
Total assets
|
$
|
1.2
|
|
$
|
0.1
|
|
Other accrued liabilities:
|
|
|
||||
Interest rate swaps
|
$
|
—
|
|
$
|
0.8
|
|
Interest rate caps
|
2.6
|
|
—
|
|
||
Total liabilities
|
$
|
2.6
|
|
$
|
0.8
|
|
Derivatives in Cash Flow Hedging
Relationships in 2017:
|
Amount of
Loss
Recognized
in OCI on
Derivatives
(Effective
Portion)
|
Location of Loss Reclassified from
Accumulated OCI into Income (Effective Portion)
|
Amount of
(Gain) Loss Reclassified
from
Accumulated
OCI to
Income
(Effective
Portion)
|
Location of
(Gain) Loss
Recognized in Income on
Derivatives (Ineffective Portion)
|
Amount of
(Gain) Loss
Recognized
in Income on
Derivatives
(Ineffective
Portion)
|
||||||
Interest rate contracts
|
$
|
1.8
|
|
Interest expense, net
|
$
|
(0.4
|
)
|
Interest expense, net
|
$
|
(2.3
|
)
|
Derivatives in Cash Flow Hedging Relationships in 2016:
|
Amount of
Loss Recognized in OCI on Derivatives (Effective Portion) |
Location of Loss Reclassified from
Accumulated OCI into Income (Effective Portion) |
Amount of
(Gain) Loss Reclassified from Accumulated OCI to Income (Effective Portion) |
Location of
(Gain) Loss Recognized in Income on Derivatives (Ineffective Portion) |
Amount of
(Gain) Loss Recognized in Income on Derivatives (Ineffective Portion) |
||||||
Interest rate contracts
|
$
|
2.0
|
|
Interest expense, net
|
$
|
5.9
|
|
Interest expense, net
|
$
|
1.2
|
|
Derivatives in Cash Flow Hedging Relationships in 2015:
|
Amount of
Loss Recognized in OCI on Derivatives (Effective Portion) |
Location of Loss Reclassified from
Accumulated OCI into Income (Effective Portion) |
Amount of
(Gain) Loss Reclassified from Accumulated OCI to Income (Effective Portion) |
Location of
(Gain) Loss Recognized in Income on Derivatives (Ineffective Portion) |
Amount of
(Gain) Loss Recognized in Income on Derivatives (Ineffective Portion) |
||||||
Interest rate contracts
|
$
|
5.5
|
|
Interest expense, net
|
$
|
6.5
|
|
Interest expense, net
|
$
|
0.4
|
|
|
Year Ended December 31,
|
|||||
|
2017
|
2016
|
||||
Prepaid and other assets:
|
|
|
||||
Foreign currency contracts
|
$
|
—
|
|
$
|
0.1
|
|
Total assets
|
$
|
—
|
|
$
|
0.1
|
|
Other accrued liabilities:
|
|
|
||||
Foreign currency contracts
|
$
|
0.7
|
|
$
|
0.5
|
|
Total liabilities:
|
0.7
|
|
0.5
|
|
Derivatives Not Designated as
Hedging Instruments under
ASC 815
|
Location of (Gain) Loss
Recognized in Income on
Derivatives
|
Year Ended December 31, 2017
|
Year Ended December 31, 2016
|
Year Ended December 31, 2015
|
||||||
Foreign currency forward contracts
|
Other expense, net
|
$
|
11.2
|
|
$
|
4.3
|
|
$
|
(5.6
|
)
|
Interest rate cap
|
Interest expense, net
|
0.6
|
|
—
|
|
0.1
|
|
|||
|
|
$
|
11.8
|
|
$
|
4.3
|
|
$
|
(5.5
|
)
|
|
Year Ended December 31,
|
||||||||
|
2017
|
2016
|
2015
|
||||||
Performance Coatings
|
|
|
|
||||||
Refinish
|
$
|
1,645.2
|
|
$
|
1,679.7
|
|
$
|
1,698.7
|
|
Industrial
|
1,029.9
|
|
718.8
|
|
683.1
|
|
|||
Total Net sales Performance Coatings
|
2,675.1
|
|
2,398.5
|
|
2,381.8
|
|
|||
Transportation Coatings
|
|
|
|
||||||
Light Vehicle
|
1,322.8
|
|
1,337.7
|
|
1,310.6
|
|
|||
Commercial Vehicle
|
355.0
|
|
332.6
|
|
391.5
|
|
|||
Total Net sales Transportation Coatings
|
1,677.8
|
|
1,670.3
|
|
1,702.1
|
|
|||
Total Net sales
|
$
|
4,352.9
|
|
$
|
4,068.8
|
|
$
|
4,083.9
|
|
|
Performance
Coatings
|
Transportation
Coatings
|
Total
|
||||||
For the Year ended December 31, 2017
|
|
|
|
||||||
Net sales
(1)
|
$
|
2,675.1
|
|
$
|
1,677.8
|
|
$
|
4,352.9
|
|
Equity in earnings in unconsolidated affiliates
|
0.3
|
|
0.7
|
|
1.0
|
|
|||
Adjusted EBITDA
(2)
|
564.2
|
|
321.0
|
|
885.2
|
|
|||
Investment in unconsolidated affiliates
|
2.9
|
|
12.6
|
|
15.5
|
|
|
Performance
Coatings
|
Transportation
Coatings
|
Total
|
||||||
For the Year ended December 31, 2016
|
|
|
|
||||||
Net sales
(1)
|
$
|
2,398.5
|
|
$
|
1,670.3
|
|
$
|
4,068.8
|
|
Equity in earnings (losses) in unconsolidated affiliates
|
(0.2
|
)
|
0.4
|
|
0.2
|
|
|||
Adjusted EBITDA
(2)
|
549.7
|
|
352.7
|
|
902.4
|
|
|||
Investment in unconsolidated affiliates
|
2.5
|
|
11.1
|
|
13.6
|
|
|
Performance
Coatings
|
Transportation
Coatings
|
Total
|
||||||
For the Year ended December 31, 2015
|
|
|
|
||||||
Net sales
(1)
|
$
|
2,381.8
|
|
$
|
1,702.1
|
|
$
|
4,083.9
|
|
Equity in earnings in unconsolidated affiliates
|
0.6
|
|
0.6
|
|
1.2
|
|
|||
Adjusted EBITDA
(2)
|
535.8
|
|
328.1
|
|
863.9
|
|
|||
Investment in unconsolidated affiliates
|
4.0
|
|
8.4
|
|
12.4
|
|
(1)
|
The Company has
no
intercompany sales between segments.
|
(2)
|
The primary measure of segment operating performance is Adjusted EBITDA, which is defined as net income before interest, taxes, depreciation and amortization and select other items impacting operating results. These other items impacting operating results are items that management has concluded are (i) non-cash items included within net income, (ii) items the Company does not believe are indicative of ongoing operating performance or (iii) nonrecurring, unusual or infrequent items that have not occurred within the last two years or we believe are not reasonably likely to recur within the next two years. Adjusted EBITDA is a key metric that is used by management to evaluate business performance in comparison to budgets, forecasts and prior year financial results, providing a measure that management believes reflects the Company’s core operating performance, which represents EBITDA adjusted for the select items referred to above. Reconciliation of Adjusted EBITDA to income before income taxes follows:
|
|
Year Ended December 31,
|
||||||||
|
2017
|
2016
|
2015
|
||||||
Income before income taxes
|
$
|
189.6
|
|
$
|
82.7
|
|
$
|
157.9
|
|
Interest expense, net
|
147.0
|
|
178.2
|
|
196.5
|
|
|||
Depreciation and amortization
|
347.5
|
|
322.1
|
|
307.7
|
|
|||
EBITDA
|
684.1
|
|
583.0
|
|
662.1
|
|
|||
Debt extinguishment and refinancing related costs (a)
|
13.4
|
|
97.6
|
|
2.5
|
|
|||
Foreign exchange remeasurement losses (b)
|
7.4
|
|
30.6
|
|
93.7
|
|
|||
Long-term employee benefit plan adjustments (c)
|
1.4
|
|
1.5
|
|
(0.3
|
)
|
|||
Termination benefits and other employee related costs (d)
|
35.3
|
|
61.8
|
|
36.6
|
|
|||
Consulting and advisory fees (e)
|
(0.1
|
)
|
10.4
|
|
23.9
|
|
|||
Transition-related costs (f)
|
7.7
|
|
—
|
|
(3.4
|
)
|
|||
Offering and transactional costs (g)
|
18.4
|
|
6.0
|
|
(1.5
|
)
|
|||
Stock-based compensation (h)
|
38.5
|
|
41.1
|
|
30.2
|
|
|||
Other adjustments (i)
|
3.6
|
|
5.0
|
|
(5.8
|
)
|
|||
Dividends in respect of noncontrolling interest (j)
|
(3.0
|
)
|
(3.0
|
)
|
(4.7
|
)
|
|||
Deconsolidation impacts and impairments (k)
|
78.5
|
|
68.4
|
|
30.6
|
|
|||
Adjusted EBITDA
|
$
|
885.2
|
|
$
|
902.4
|
|
$
|
863.9
|
|
(a)
|
During the years ended December 31, 2017 and 2016 we refinanced our indebtedness, resulting in losses of
$13.0 million
and
$88.0 million
, respectively. In addition, during the years ended December 31, 2017, 2016 and 2015 we prepaid outstanding principal on our term loans, resulting in non-cash losses on extinguishment of
$0.4 million
,
$9.6 million
and
$2.5 million
, respectively. We do not consider these items to be indicative of our ongoing operating performance.
|
(b)
|
Eliminates foreign exchange gains and losses resulting from the remeasurement of assets and liabilities denominated in foreign currencies, net of the impacts of our foreign currency instruments used to hedge our balance sheet exposures. Exchange effects attributable to the remeasurement of our Venezuelan subsidiary represented losses of
$1.8 million
,
$23.5 million
,
$51.5 million
for the years ended December 31, 2017, 2016 and 2015, respectively.
|
(c)
|
Eliminates the non-cash, non-service components of long-term employee benefit costs.
|
(d)
|
Represents expenses primarily related to employee termination benefits and other employee-related costs associated with our Axalta Way initiatives, which are not considered indicative of our ongoing operating performance.
|
(e)
|
Represents fees paid to consultants, and associated true-ups to estimates, for professional services primarily related to our Axalta Way initiatives, which are not considered indicative of our ongoing operating performance.
|
(f)
|
Represents integration costs related to the 2017 acquisition of the Industrial Wood business that was a carve-out business from Valspar and changes in estimates associated with the transition from DuPont to a standalone entity, including certain Acquisition indemnities. We do not consider these items to be indicative of our ongoing operating performance.
|
(g)
|
Represents acquisition-related expenses, including changes in the fair value of contingent consideration, as well as
$10.0 million
of costs associated with contemplated merger activities during the three months ended December 31, 2017 and costs associated with the 2016 secondary offerings of our common shares by Carlyle, all of which are not considered indicative of our ongoing operating performance.
|
(h)
|
Represents non-cash costs associated with stock-based compensation, including
$8.2 million
of expense during the year ended December 31, 2015 attributable to the accelerated vesting of all issued and outstanding stock options issued under the 2013 Plan. This acceleration was the result of the Change in Control that occurred in conjunction with Carlyle's ownership interest falling below 50% and triggering a liquidity event.
|
(i)
|
Represents costs for certain non-operational or non-cash (gains) and losses unrelated to our core business and which we do not consider indicative of our ongoing operations, including equity investee dividends, indemnity losses (gains) associated with the Acquisition, losses (gains) on sale and disposal of property, plant and equipment, losses (gains) on the remaining foreign currency derivative instruments, Carlyle management fees incurred prior to the Change in Control and non-cash fair value inventory adjustments associated with our business combinations.
|
(j)
|
Represents the payment of dividends to our joint venture partners by our consolidated entities that are not 100% owned, which are reflected to show the cash operating performance of these entities on Axalta's financial statements.
|
(k)
|
During the year ended December 31, 2017, we recorded a loss in conjunction with the deconsolidation of our Venezuelan subsidiary of
$70.9 million
. During the year ended December 31, 2016 and 2015, we recorded non-cash impairments at our Venezuelan subsidiary of
$68.4 million
and
$30.6 million
, respectively, associated with our operational long-lived assets and a real estate investment (See Note 25). Additionally, during the year ended December 31, 2017, we recorded non-cash impairment charges related to certain manufacturing facilities previously announced for closure of
$7.6 million
. We do not consider these to be indicative of our ongoing operating performance.
|
|
Year Ended December 31,
|
||||||||
|
2017
|
2016
|
2015
|
||||||
North America
|
$
|
1,607.7
|
|
$
|
1,426.7
|
|
$
|
1,368.6
|
|
EMEA
|
1,538.3
|
|
1,455.3
|
|
1,425.3
|
|
|||
Asia Pacific
|
748.1
|
|
723.9
|
|
717.4
|
|
|||
Latin America
|
458.8
|
|
462.9
|
|
572.6
|
|
|||
Total
(a)
|
4,352.9
|
|
4,068.8
|
|
4,083.9
|
|
(a)
|
Net Sales are attributed to countries based on location of the customer. Sales to external customers in China represented approximately
12%
,
13%
and
13%
of the total for the years ended
December 31, 2017
,
2016
and
2015
, respectively. Sales to external customers in Germany represented approximately
8%
,
9%
and
9%
of the total for the years ended
December 31, 2017
,
2016
and
2015
, respectively. Mexico represented
6%
of the total for the years ended
December 31, 2017
,
2016
and
2015
. Canada, which is included in the North America region, represents approximately
4%
,
4%
and
3%
of total net sales for the year ended
December 31, 2017
,
2016
and
2015
, respectively.
|
(b)
|
Long-lived assets consist of property, plant and equipment, net. Germany long-lived assets amounted to approximately
$279.0 million
and
$262.2 million
in the years ended
December 31, 2017
and
2016
, respectively. China long-lived assets amounted to
$217.2 million
and
$204.0 million
in the years ended
December 31, 2017
and
2016
, respectively. Brazil long-lived assets amounted to approximately
$78.6 million
and
$94.9 million
in the years ended
December 31, 2017
and
2016
, respectively. Canada long-lived assets, which are included in the North America region, amounted to approximately
$25.8 million
and
20.0 million
in the years ended
December 31, 2017
and
2016
, respectively.
|
|
Unrealized
Currency
Translation
Adjustments
|
Pension Plan
Adjustments
|
Unrealized
Gain on
Securities
|
Unrealized
Gain (Loss) on
Derivatives
|
Accumulated
Other
Comprehensive
Loss
|
||||||||||
Balance, December 31, 2016
|
$
|
(292.2
|
)
|
$
|
(56.6
|
)
|
$
|
0.4
|
|
$
|
(2.0
|
)
|
$
|
(350.4
|
)
|
Current year deferrals to AOCI
|
83.4
|
|
17.1
|
|
0.4
|
|
(1.6
|
)
|
99.3
|
|
|||||
Reclassifications from AOCI to Net income
|
—
|
|
8.1
|
|
—
|
|
2.0
|
|
10.1
|
|
|||||
Net Change
|
83.4
|
|
25.2
|
|
0.4
|
|
0.4
|
|
109.4
|
|
|||||
Balance, December 31, 2017
|
$
|
(208.8
|
)
|
$
|
(31.4
|
)
|
$
|
0.8
|
|
$
|
(1.6
|
)
|
$
|
(241.0
|
)
|
|
Unrealized
Currency
Translation
Adjustments
|
Pension Plan
Adjustments |
Unrealized
Gain on
Securities
|
Unrealized
Gain (Loss) on Derivatives |
Accumulated
Other
Comprehensive
Loss
|
||||||||||
Balance, December 31, 2015
|
$
|
(232.8
|
)
|
$
|
(33.4
|
)
|
$
|
0.1
|
|
$
|
(3.2
|
)
|
$
|
(269.3
|
)
|
Current year deferrals to AOCI
|
(59.4
|
)
|
(22.3
|
)
|
0.3
|
|
(2.5
|
)
|
(83.9
|
)
|
|||||
Reclassifications from AOCI to Net income
|
—
|
|
(0.9
|
)
|
—
|
|
3.7
|
|
2.8
|
|
|||||
Net Change
|
(59.4
|
)
|
(23.2
|
)
|
0.3
|
|
1.2
|
|
(81.1
|
)
|
|||||
Balance, December 31, 2016
|
$
|
(292.2
|
)
|
$
|
(56.6
|
)
|
$
|
0.4
|
|
$
|
(2.0
|
)
|
$
|
(350.4
|
)
|
|
Unrealized
Currency
Translation
Adjustments
|
Pension and
Other
Long-term
Employee
Benefit
Adjustments
|
Unrealized
Gain (Loss) on Securities |
Unrealized
Gain (Loss) on
Derivatives
|
Accumulated
Other
Comprehensive
Loss
|
||||||||||
Balance, December 31, 2014
|
$
|
(72.1
|
)
|
$
|
(31.2
|
)
|
$
|
(0.2
|
)
|
$
|
0.2
|
|
$
|
(103.3
|
)
|
Current year deferrals to AOCI
|
(160.7
|
)
|
(4.3
|
)
|
0.3
|
|
0.6
|
|
(164.1
|
)
|
|||||
Reclassifications from AOCI to Net income
|
—
|
|
2.1
|
|
—
|
|
(4.0
|
)
|
(1.9
|
)
|
|||||
Net Change
|
(160.7
|
)
|
(2.2
|
)
|
0.3
|
|
(3.4
|
)
|
(166.0
|
)
|
|||||
Balance, December 31, 2015
|
$
|
(232.8
|
)
|
$
|
(33.4
|
)
|
$
|
0.1
|
|
$
|
(3.2
|
)
|
$
|
(269.3
|
)
|
2017
|
March 31
|
June 30
(2)
|
September 30
|
December 31
(3)
|
Full Year
|
||||||||||
Total revenue
|
$
|
1,013.7
|
|
$
|
1,094.6
|
|
$
|
1,096.3
|
|
$
|
1,172.4
|
|
$
|
4,377.0
|
|
Cost of goods sold
|
641.1
|
|
690.0
|
|
702.5
|
|
746.0
|
|
2,779.6
|
|
|||||
Net income (loss)
|
65.9
|
|
(18.9
|
)
|
56.3
|
|
(55.6
|
)
|
47.7
|
|
|||||
Net income (loss) attributable to controlling interests
|
64.1
|
|
(20.8
|
)
|
54.9
|
|
(61.5
|
)
|
36.7
|
|
|||||
Basic net income (loss) per share
|
0.27
|
|
(0.09
|
)
|
0.23
|
|
(0.26
|
)
|
0.15
|
|
|||||
Diluted net income (loss) per share
|
0.26
|
|
(0.09
|
)
|
0.22
|
|
(0.26
|
)
|
0.15
|
|
|||||
|
|
|
|
|
|
||||||||||
2016
(1)
|
March 31
|
June 30
(2)
|
September 30
|
December 31
(4)
|
Full Year
|
||||||||||
Total revenue
|
$
|
963.2
|
|
$
|
1,070.6
|
|
$
|
1,026.3
|
|
$
|
1,032.6
|
|
$
|
4,092.7
|
|
Cost of goods sold
|
606.4
|
|
649.0
|
|
630.4
|
|
641.8
|
|
2,527.6
|
|
|||||
Net income (loss)
|
32.8
|
|
52.3
|
|
(5.4
|
)
|
(35.1
|
)
|
44.6
|
|
|||||
Net income (loss) attributable to controlling interests
|
31.9
|
|
50.7
|
|
(6.6
|
)
|
(37.2
|
)
|
38.8
|
|
|||||
Basic net income (loss) per share
|
0.13
|
|
0.21
|
|
(0.03
|
)
|
(0.16
|
)
|
0.16
|
|
|||||
Diluted net income (loss) per share
|
0.13
|
|
0.21
|
|
(0.03
|
)
|
(0.16
|
)
|
0.16
|
|
|||||
|
|
|
|
|
|
(in millions)
|
Balance at Beginning of Year
|
Additions
|
Deductions
(1)
|
Balance at End of Year
|
||||||
2017
|
$
|
13.7
|
|
3.5
|
|
(1.3
|
)
|
$
|
15.9
|
|
2016
|
10.7
|
|
3.4
|
|
(0.4
|
)
|
13.7
|
|
||
2015
|
$
|
9.9
|
|
4.9
|
|
(4.1
|
)
|
$
|
10.7
|
|
(1)
|
Deductions include uncollectible accounts written off and foreign currency translation impact.
|
(in millions)
|
Balance at Beginning of Year
|
Additions
(1)
|
Deductions
(1)
|
Balance at End of Year
|
||||||
2017
|
$
|
135.4
|
|
78.8
|
|
—
|
|
$
|
214.2
|
|
2016
|
127.8
|
|
9.6
|
|
(2.0
|
)
|
135.4
|
|
||
2015
|
$
|
101.9
|
|
34.4
|
|
(8.5
|
)
|
$
|
127.8
|
|
(1)
|
Additions and deductions include charges to goodwill and foreign currency translation impact.
|
EXHIBIT NO.
|
DESCRIPTION OF EXHIBITS
|
|
|
2.1*
|
|
|
|
2.2*
|
|
|
|
3.1*
|
|
|
|
3.2*
|
|
|
|
4.1*
|
|
|
|
4.2*
|
|
|
|
4.3*
|
|
|
|
10.1*
|
|
|
|
10.2*
|
|
|
|
10.3*
|
|
|
|
10.4*
|
|
|
|
10.5*
|
|
|
|
10.6*
|
|
|
|
10.7*
|
|
|
|
10.8*
|
|
|
|
10.9*
|
|
|
|
10.10*
|
|
|
|
10.11*
|
|
|
|
10.12*
|
|
|
|
10.13*
|
|
|
|
10.14*
|
|
|
|
10.15*
|
|
|
|
10.16*
|
|
|
|
10.17*
|
|
|
|
10.18*
|
|
|
|
10.19*
|
|
|
|
10.20*
|
|
|
|
10.21*
|
|
|
|
10.22*
|
|
|
|
10.23*
|
|
|
|
10.24*
|
|
|
|
10.25*
|
|
|
|
10.26*
|
|
|
|
10.27*
|
|
|
|
10.28*
|
|
|
|
10.29*
|
|
|
|
10.30*
|
|
|
|
10.31*
|
|
|
|
10.32*
|
|
|
|
10.33*
|
|
|
|
10.34*
|
|
|
|
10.35*
|
|
|
|
10.36*
|
|
|
|
10.37*
|
|
|
|
10.38*
|
|
|
|
10.39*
|
|
|
|
10.40*
|
|
|
|
10.41*
|
|
|
|
10.42*
|
|
|
|
10.43*
|
|
|
|
10.44*
|
|
|
|
10.45*
|
|
|
|
10.46*
|
|
|
|
10.47*
|
|
|
|
†
|
In accordance with Rule 406T of Regulation S-T, the information in these exhibits is furnished and deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Exchange Act of 1934, and otherwise is not subject to liability under these sections.
|
|
|
††
|
In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 33-8238 and 34-47986, Final Rule: Management’s Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Form 10-K and will not be deemed "filed" for purposes of section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.
|
AXALTA COATING SYSTEMS LTD.
|
||
|
|
|
By:
|
|
/s/ Charles W. Shaver
|
|
|
Charles W. Shaver
|
|
|
Chairman of the Board and Chief
Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/s/ Charles W. Shaver
|
|
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
|
|
February 22, 2018
|
Charles W. Shaver
|
|
|
|
|
|
|
|
||
/s/ Robert W. Bryant
|
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
|
|
February 22, 2018
|
Robert W. Bryant
|
|
|
|
|
|
|
|
||
/s/ Sean M. Lannon
|
|
Vice President, Corporate Finance and Global Controller
(Principal Accounting Officer)
|
|
February 22, 2018
|
Sean M. Lannon
|
|
|
|
|
|
|
|
||
/s/ Mark Garrett
|
|
Director
|
|
February 22, 2018
|
Mark Garrett
|
|
|
|
|
|
|
|
|
|
/s/ Deborah J. Kissire
|
|
Director
|
|
February 22, 2018
|
Deborah J. Kissire
|
|
|
|
|
|
|
|
|
|
/s/ Andreas C. Kramvis
|
|
Director
|
|
February 22, 2018
|
Andreas C. Kramvis
|
|
|
|
|
|
|
|
|
|
/s/ Elizabeth C. Lempres
|
|
Director
|
|
February 22, 2018
|
Elizabeth C. Lempres
|
|
|
|
|
|
|
|
||
/s/ Robert M. McLaughlin
|
|
Director
|
|
February 22, 2018
|
Robert M. McLaughlin
|
|
|
|
|
|
|
|
||
/s/ Lori J. Ryerkerk
|
|
Director
|
|
February 22, 2018
|
Lori J. Ryerkerk
|
|
|
|
|
|
|
|
||
/s/ Samuel L. Smolik
|
|
Director
|
|
February 22, 2018
|
Samuel L. Smolik
|
|
|
|
|
|
|
|
|
|
Axalta Coating Systems Belgium BVBA
|
Belgium
|
Axalta Coating Systems Bermuda Co., Ltd.
|
Bermuda
|
Axalta Coating Systems Deutschland Holding GmbH & Co. KG
|
Germany
|
Axalta Coating Systems Dutch Holding A B.V.
|
Netherlands
|
Axalta Coating Systems Dutch Holding B B.V.
|
Netherlands
|
Axalta Coating Systems Finance 1 S.a.r.l.
|
Luxembourg
|
Axalta Coating Systems Finance 2 S.a.r.l.
|
Luxembourg
|
Axalta Coating Systems Germany GmbH & Co. KG
|
Germany
|
Axalta Coating Systems Ireland Limited
|
Ireland
|
Axalta Coating Systems Luxembourg Holding 2 S.a.r.l.
|
Luxembourg
|
Axalta Coating Systems Luxembourg Holding S.a.r.l.
|
Luxembourg
|
Axalta Coating Systems Luxembourg Top S.a.r.l.
|
Luxembourg
|
Axalta Coating Systems U.S. Holdings, Inc.
|
Delaware (USA)
|
Axalta Coating Systems U.S. Inc.
|
Delaware (USA)
|
Axalta Coating Systems UK Holding Ltd.
|
United Kingdom
|
Axalta Coating Systems, LLC
|
Delaware (USA)
|
1.
|
I have reviewed this annual report on Form 10-K of Axalta Coating Systems Ltd.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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By:
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/s/ Charles W. Shaver
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Name:
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Charles W. Shaver
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Title:
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Chairman of the Board and Chief Executive Officer
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1.
|
I have reviewed this annual report on Form 10-K of Axalta Coating Systems Ltd.;
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2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By:
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/s/ Robert W. Bryant
|
Name:
|
Robert W. Bryant
|
Title:
|
Executive Vice President and Chief Financial Officer
|
(1)
|
The Annual Report on Form 10-K of the Company for the annual period ended December 31, 2017 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
By:
|
/s/ Charles W. Shaver
|
Name:
|
Charles W. Shaver
|
Title:
|
Chairman of the Board and Chief Executive Officer
|
(1)
|
The Annual Report on Form 10-K of the Company for the annual period ended December 31, 2017 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
By:
|
/s/ Robert W. Bryant
|
Name:
|
Robert W. Bryant
|
Title:
|
Executive Vice President and Chief Financial Officer
|