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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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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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General Industrial: coatings for a wide and diverse array of applications, including HVAC, shelving, appliances and electrical storage components, metal furniture, industrial components, sports equipment and playground equipment as well as ACE, fencing, valves and specialized coatings used for coating the interior of metal drums and packaging and coatings for the exterior of glass bottles.
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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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Architectural: exterior powder and liquid coatings typically used in the construction of extrusions for commercial structures, residential windows, doors and cladding.
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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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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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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 OEM and aftermarket industrial wood markets, including building products, cabinets, flooring and furniture.
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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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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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Original Equipment Manufacturer 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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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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require us to devote a substantial portion of our annual cash flow to the payment of interest on our indebtedness;
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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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hinder our ability to adjust rapidly to changing market conditions;
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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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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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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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restrict our ability to introduce new products or exploit business opportunities;
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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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place us at a competitive disadvantage.
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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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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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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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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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our operating and financial performance and prospects;
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our quarterly or annual earnings or those of other companies in our industry;
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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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the failure of research analysts to cover our common shares;
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strategic actions by us, our customers or our competitors, such as acquisitions, divestitures, restructurings or site closures, including asset closures, or market rumors regarding such actions;
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new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
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changes in accounting standards, policies, guidance, interpretations or principles;
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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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material litigations or government investigations;
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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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risks and uncertainties relating to the change in our leadership;
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changes in key personnel;
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sales of common shares by us or members of our management team;
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the granting of restricted common shares, stock options and other equity awards;
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volume of trading in our common shares; and
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the realization of any risks described under this “Risk Factors” section.
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a classified Board of Directors with staggered three-year terms; although on May 2, 2018, our shareholders approved the elimination of our classified board structure over a three-year transition period;
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directors only to be removed for cause;
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restrictions on the time period in which directors may be nominated; and
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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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Sacramento, CA
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Performance
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Fridley, MN
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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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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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Philadelphia, PA
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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
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8
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Latin America
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7
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EMEA
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18
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Asia Pacific
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14
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(in thousands, except per share data)
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Month
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Total Number of Shares Purchased
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Average Price Paid per Share
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Total Number of Shares Purchased as Part of Publicly Announced Programs (1)
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Approximate Dollar Value of Shares That May Yet Be Purchased Under Our Share Repurchase Agreement(1)
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October 2018
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915.0
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$
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27.60
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915.0
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$
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441,517.6
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November 2018
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|
1,797.3
|
|
|
24.97
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|
1,797.3
|
|
|
396,636.5
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December 2018
|
|
1,310.5
|
|
|
23.03
|
|
|
1,310.5
|
|
|
366,455.5
|
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Total
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|
4,022.8
|
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$
|
24.94
|
|
|
4,022.8
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$
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366,455.5
|
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|
Year Ended December 31,
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||||||||||||||||||
(In millions, except per share data)
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2018
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2017
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2016
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2015
|
|
2014
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||||||||||
Statements of Operations Data:
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Net sales
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|
$
|
4,669.7
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|
|
$
|
4,352.9
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|
|
$
|
4,068.8
|
|
|
$
|
4,083.9
|
|
|
$
|
4,356.6
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|
Other revenue
|
|
26.3
|
|
|
24.1
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|
|
23.9
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|
|
26.1
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|
|
29.8
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|||||
Total revenue
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|
4,696.0
|
|
|
4,377.0
|
|
|
4,092.7
|
|
|
4,110.0
|
|
|
4,386.4
|
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|||||
Cost of goods sold
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|
3,106.3
|
|
|
2,780.5
|
|
|
2,528.8
|
|
|
2,603.5
|
|
|
2,899.2
|
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Selling, general and administrative expenses (1)
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|
959.1
|
|
|
995.4
|
|
|
959.8
|
|
|
908.8
|
|
|
990.1
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|||||
Venezuela asset impairment and deconsolidation charge
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|
—
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|
|
70.9
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|
|
57.9
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|
|
—
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|
|
—
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Research and development expenses
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|
73.1
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|
|
65.3
|
|
|
57.7
|
|
|
51.6
|
|
|
49.5
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Amortization of acquired intangibles
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|
115.4
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|
|
101.2
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|
83.4
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|
|
80.7
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|
|
83.8
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Income from operations
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|
442.1
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|
|
363.7
|
|
|
405.1
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|
|
465.4
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|
|
363.8
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Interest expense, net
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|
159.6
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|
|
147.0
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|
|
178.2
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|
|
196.5
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|
|
217.7
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Other expense, net
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15.0
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|
|
27.1
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|
|
144.2
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|
|
111.0
|
|
|
114.4
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Income before taxes
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|
267.5
|
|
|
189.6
|
|
|
82.7
|
|
|
157.9
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|
|
31.7
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|
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Provision for income taxes
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|
54.2
|
|
|
141.9
|
|
|
38.1
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|
|
62.1
|
|
|
0.1
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Net income
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|
213.3
|
|
|
47.7
|
|
|
44.6
|
|
|
95.8
|
|
|
31.6
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|||||
Less: Net income attributable to noncontrolling interests
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|
6.2
|
|
|
11.0
|
|
|
5.8
|
|
|
4.2
|
|
|
7.3
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|
|||||
Net income attributable to controlling interests
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|
$
|
207.1
|
|
|
$
|
36.7
|
|
|
$
|
38.8
|
|
|
$
|
91.6
|
|
|
$
|
24.3
|
|
Per share data:
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Net income per share:
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||||||||||
Basic net income per share
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|
$
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0.87
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|
|
$
|
0.15
|
|
|
$
|
0.16
|
|
|
$
|
0.39
|
|
|
$
|
0.11
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|
Diluted net income per share
|
|
$
|
0.85
|
|
|
$
|
0.15
|
|
|
$
|
0.16
|
|
|
$
|
0.38
|
|
|
$
|
0.11
|
|
Basic weighted average shares outstanding
|
|
239.0
|
|
|
240.4
|
|
|
238.1
|
|
|
233.8
|
|
|
229.3
|
|
|||||
Diluted weighted average shares outstanding
|
|
242.9
|
|
|
246.1
|
|
|
244.4
|
|
|
239.7
|
|
|
230.3
|
|
|||||
|
|
|
|
|
|
|
|
|
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|
||||||||||
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating activities
|
|
$
|
496.1
|
|
|
$
|
540.0
|
|
|
$
|
559.3
|
|
|
$
|
409.8
|
|
|
$
|
251.4
|
|
Investing activities
|
|
(216.1
|
)
|
|
(689.6
|
)
|
|
(257.0
|
)
|
|
(166.2
|
)
|
|
(173.8
|
)
|
|||||
Financing activities
|
|
(341.3
|
)
|
|
367.3
|
|
|
(232.6
|
)
|
|
(84.7
|
)
|
|
(123.2
|
)
|
|||||
Depreciation and amortization
|
|
369.1
|
|
|
347.5
|
|
|
322.1
|
|
|
307.7
|
|
|
308.7
|
|
|||||
Purchases of property, plant and equipment
|
|
(143.4
|
)
|
|
(125.0
|
)
|
|
(136.2
|
)
|
|
(138.1
|
)
|
|
(188.4
|
)
|
|
|
December 31,
|
||||||||||||||||||
(In millions)
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Balance sheet data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
693.6
|
|
|
$
|
769.8
|
|
|
$
|
535.4
|
|
|
$
|
485.0
|
|
|
$
|
382.1
|
|
Working capital (2)
|
|
1,269.0
|
|
|
1,233.4
|
|
|
977.9
|
|
|
955.2
|
|
|
854.7
|
|
|||||
Total assets
|
|
6,675.7
|
|
|
6,832.2
|
|
|
5,866.2
|
|
|
5,839.8
|
|
|
6,152.4
|
|
|||||
Indebtedness
|
|
3,864.0
|
|
|
3,915.6
|
|
|
3,263.9
|
|
|
3,441.5
|
|
|
3,614.3
|
|
|||||
Total liabilities
|
|
5,365.2
|
|
|
5,424.4
|
|
|
4,619.6
|
|
|
4,706.5
|
|
|
5,046.3
|
|
|||||
Total shareholders’ equity
|
|
1,310.5
|
|
|
1,407.8
|
|
|
1,246.6
|
|
|
1,133.3
|
|
|
1,106.1
|
|
|||||
Cash dividends declared per common share
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(1)
|
Selling, general and administrative expense for the years ended December 31, 2018, 2017, 2016 and 2015 include costs primarily associated with our Axalta Way cost-savings initiatives of $82.8 million, $63.8 million, $77.6 million and $64.4 million, respectively. Selling, general and administrative expense for the year ended December 31, 2014 include costs primarily associated with transition-related and cost-savings initiatives of $127.1 million.
|
(2)
|
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;
|
•
|
reduced demand for some of our products as a result of improved safety features on vehicles, insurance company influence, new business models or new methods of travel
|
•
|
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 business 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;
|
•
|
risks associated with the United Kingdom’s withdrawal from the European Union;
|
•
|
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;
|
•
|
risks associated with changes in tax rates or regulations, including unexpected impacts of the new U.S. TCJA 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 SEC; and
|
•
|
other factors beyond our control.
|
•
|
Performance Coatings: Net sales increased 13.1% compared to 2017 driven primarily by stronger volumes in our industrial end-market, including the impacts of acquisitions, as well as increases in average selling prices across both end-markets.
|
•
|
Transportation Coatings: Net sales decreased by 2.0% compared to 2017 driven primarily by lower average selling prices within the light vehicle end-market, partially offset by increased organic sales volumes in our commercial vehicle end-market.
|
(In millions)
|
|
Year Ended December 31,
|
|
2018 vs 2017
|
|
2017 vs 2016
|
||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
% change
|
|
% change
|
||||||||
Performance Coatings
|
|
|
|
|
|
|
|
|
|
|
||||||||
Refinish
|
|
$
|
1,754.2
|
|
|
$
|
1,645.2
|
|
|
$
|
1,679.7
|
|
|
6.6
|
%
|
|
(2.1
|
)%
|
Industrial
|
|
1,271.5
|
|
|
1,029.9
|
|
|
718.8
|
|
|
23.5
|
%
|
|
43.3
|
%
|
|||
Total Net sales Performance Coatings
|
|
3,025.7
|
|
|
2,675.1
|
|
|
2,398.5
|
|
|
13.1
|
%
|
|
11.5
|
%
|
|||
Transportation Coatings
|
|
|
|
|
|
|
|
|
|
|
||||||||
Light Vehicle
|
|
1,290.2
|
|
|
1,322.8
|
|
|
1,337.7
|
|
|
(2.5
|
)%
|
|
(1.1
|
)%
|
|||
Commercial Vehicle
|
|
353.8
|
|
|
355.0
|
|
|
332.6
|
|
|
(0.3
|
)%
|
|
6.7
|
%
|
|||
Total Net sales Transportation Coatings
|
|
1,644.0
|
|
|
1,677.8
|
|
|
1,670.3
|
|
|
(2.0
|
)%
|
|
0.4
|
%
|
|||
Total Net sales
|
|
$
|
4,669.7
|
|
|
$
|
4,352.9
|
|
|
$
|
4,068.8
|
|
|
7.3
|
%
|
|
7.0
|
%
|
•
|
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 and on-site technical support services. 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; 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,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net income
|
|
$
|
213.3
|
|
|
$
|
47.7
|
|
|
$
|
44.6
|
|
Interest expense, net
|
|
159.6
|
|
|
147.0
|
|
|
178.2
|
|
|||
Provision for income taxes
|
|
54.2
|
|
|
141.9
|
|
|
38.1
|
|
|||
Depreciation and amortization
|
|
369.1
|
|
|
347.5
|
|
|
322.1
|
|
|||
EBITDA
|
|
796.2
|
|
|
684.1
|
|
|
583.0
|
|
|||
Debt extinguishment and refinancing related costs (a)
|
|
9.5
|
|
|
13.4
|
|
|
97.6
|
|
|||
Foreign exchange remeasurement losses (b)
|
|
9.2
|
|
|
7.4
|
|
|
30.6
|
|
|||
Long-term employee benefit plan adjustments (c)
|
|
(1.9
|
)
|
|
1.4
|
|
|
1.5
|
|
|||
Termination benefits and other employee related costs (d)
|
|
81.7
|
|
|
35.3
|
|
|
61.8
|
|
|||
Consulting and advisory fees (e)
|
|
—
|
|
|
(0.1
|
)
|
|
10.4
|
|
|||
Transition-related costs (f)
|
|
(0.2
|
)
|
|
7.7
|
|
|
—
|
|
|||
Offering and transactional costs (g)
|
|
1.2
|
|
|
18.4
|
|
|
6.0
|
|
|||
Stock-based compensation (h)
|
|
37.3
|
|
|
38.5
|
|
|
41.1
|
|
|||
Other adjustments (i)
|
|
5.2
|
|
|
3.6
|
|
|
5.0
|
|
|||
Dividends in respect of noncontrolling interest (j)
|
|
(1.0
|
)
|
|
(3.0
|
)
|
|
(3.0
|
)
|
|||
Deconsolidation and site closure related impacts (k)
|
|
—
|
|
|
78.5
|
|
|
68.4
|
|
|||
Adjusted EBITDA
|
|
$
|
937.2
|
|
|
$
|
885.2
|
|
|
$
|
902.4
|
|
(a)
|
During the years ended December 31, 2018, 2017 and 2016 we refinanced and restructured our term loans and senior notes, which resulted in losses of $9.5 million, $13.0 million and $88.0 million, respectively. In addition, during the years ended December 31, 2017 and 2016 we prepaid outstanding principal on our term loans, resulting in non-cash losses on extinguishment of $0.4 million and $9.6 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 and $23.5 million for the years ended December 31, 2017 and 2016, respectively.
|
|
|
(c)
|
Eliminates the non-cash, non-service components of long-term employee benefit plans.
|
|
|
(d)
|
Represents expenses and associated changes to estimates related to employee termination benefits and other employee-related costs, which includes Axalta CEO recruitment fees. Employee termination benefits are associated with Axalta Way initiatives. These amounts 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 and associated changes to estimates related to the 2017 acquisition of the Industrial Wood business that was a carve-out business from Valspar. 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.
|
|
|
(i)
|
Represents certain non-operational or non-cash gains and losses unrelated to our core business and which we do not consider indicative of ongoing operations, including indemnity losses associated with the Acquisition, gains and losses from the sale and disposal of property, plant and equipment, gains and losses from the remaining foreign currency derivative instruments and from 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 we recorded non-cash impairments at our Venezuelan subsidiary of $68.4 million associated with our operational long-lived assets and a real estate investment (See Note 21 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.
|
|
|
Years Ended December 31,
|
|
2018 vs 2017
|
|
Years Ended December 31,
|
|
2017 vs 2016
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
||||||||||||||
Net sales
|
|
$
|
4,669.7
|
|
|
$
|
4,352.9
|
|
|
$
|
316.8
|
|
|
7.3
|
%
|
|
$
|
4,352.9
|
|
|
$
|
4,068.8
|
|
|
$
|
284.1
|
|
|
7.0
|
%
|
Volume effect
|
|
|
|
|
|
|
|
0.6
|
%
|
|
|
|
|
|
|
|
0.2
|
%
|
||||||||||||
Impact of acquisitions
|
|
|
|
|
|
|
|
|
3.5
|
%
|
|
|
|
|
|
|
|
|
7.4
|
%
|
||||||||||
Price/Mix effect
|
|
|
|
|
|
|
|
|
2.6
|
%
|
|
|
|
|
|
|
|
|
(1.0
|
)%
|
||||||||||
Exchange rate effect
|
|
|
|
|
|
|
|
|
0.6
|
%
|
|
|
|
|
|
|
|
|
0.4
|
%
|
Net sales increased due to the following:
|
n Impacts of acquisitions within our Performance Coatings segment
|
n Higher average selling prices across both end-markets within our Performance Coatings segment, partially offset by lower average selling prices in our Transportation Coatings segment
|
n Increase in organic sales volumes primarily attributable to increases in our industrial end-market, which was partially offset by declines in our refinish end-market
|
n Favorable foreign currency translation due primarily to the impacts of the strengthening Euro and Chinese Renminbi compared to the U.S. Dollar
|
Net sales increased due to the following:
|
n Impacts of acquisitions within our Performance Coatings segment
|
n Favorable foreign currency translation due primarily to the impacts of the strengthening Euro compared to the U.S. Dollar which were slightly offset by the weakening of certain currencies within Latin America and Asia against the U.S. dollar
|
n Increases in organic sales volumes in our commercial vehicle and industrial end-markets, largely offset by our refinish end-market, particularly within Latin America and North America
|
Partially offset by:
|
n Lower average selling prices across both end-markets within our Transportation Coatings segment
|
|
|
Years Ended December 31,
|
|
2018 vs 2017
|
|
Years Ended December 31,
|
|
2017 vs 2016
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
||||||||||||||
Other revenue
|
|
$
|
26.3
|
|
|
$
|
24.1
|
|
|
$
|
2.2
|
|
|
9.1
|
%
|
|
$
|
24.1
|
|
|
$
|
23.9
|
|
|
$
|
0.2
|
|
|
0.8
|
%
|
Other revenue increased due to the following:
|
n Increases in service revenues, primarily within our European light vehicle end-market, and favorable impacts of foreign currency of 2.6%, primarily related to the strengthening Euro compared to the U.S. Dollar
|
Other revenue increased due to the following:
|
n Favorable impacts of foreign currency of 1.4%, primarily related to the strengthening Euro compared to the U.S. Dollar
|
|
|
Years Ended December 31,
|
|
2018 vs 2017
|
|
Years Ended December 31,
|
|
2017 vs 2016
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
||||||||||||||
Cost of sales
|
|
$
|
3,106.3
|
|
|
$
|
2,780.5
|
|
|
$
|
325.8
|
|
|
11.7
|
%
|
|
$
|
2,780.5
|
|
|
$
|
2,528.8
|
|
|
$
|
251.7
|
|
|
10.0
|
%
|
Impact of ASU 2014-09 (1)
|
|
67.3
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
||||||||||
Cost of sales, excluding impact of ASU 2014-09
|
|
$
|
3,039.0
|
|
|
$
|
2,780.5
|
|
|
$
|
258.5
|
|
|
9.3
|
%
|
|
$
|
2,780.5
|
|
|
$
|
2,528.8
|
|
|
$
|
251.7
|
|
|
10.0
|
%
|
% of net sales, excluding impact of ASU 2014-09
|
|
65.1
|
%
|
|
63.9
|
%
|
|
|
|
|
|
63.9
|
%
|
|
62.2
|
%
|
|
|
|
|
Cost of sales, excluding the impact of ASU 2014-09, increased due to the following:
|
n Increased raw material costs across both segments
|
n Higher sales volumes, inclusive of impacts of acquisitions of 4.1%
|
n Increased incremental accelerated depreciation expense of $6.0 million, from $4.3 million during the year ended December 31, 2017 to $10.3 million in 2018
|
n Unfavorable impacts of foreign currency of 0.7%, primarily related to the strengthening Euro and Chinese Renminbi compared to the U.S. Dollar
|
Cost of sales, excluding the impacts of ASU 2014-09, as a percentage of net sales increased due to the following:
|
n Increased raw material costs which surpassed our price recapture in net sales
|
Cost of sales increased due to the following:
|
n Higher sales volumes, inclusive of impacts of acquisitions of 7.6%
|
n Increased raw material costs
|
n Unfavorable impacts of foreign currency of 0.5% primarily related to the strengthening Euro compared to the U.S. Dollar offset partially by the weakening of certain currencies within Latin America and Asia compared to the U.S. Dollar
|
Cost of sales as a percentage of net sales increased due to the following:
|
n Lower average selling prices and raw material inflation
|
|
|
Years Ended December 31,
|
|
2018 vs 2017
|
|
Years Ended December 31,
|
|
2017 vs 2016
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
||||||||||||||
SG&A
|
|
$
|
959.1
|
|
|
$
|
995.4
|
|
|
$
|
(36.3
|
)
|
|
(3.6
|
)%
|
|
$
|
995.4
|
|
|
$
|
959.8
|
|
|
$
|
35.6
|
|
|
3.7
|
%
|
Impact of ASU 2014-09 (1)
|
|
(64.0
|
)
|
|
—
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
||||||||||
SG&A, excluding impact of ASU 2014-09
|
|
$
|
1,023.1
|
|
|
$
|
995.4
|
|
|
$
|
27.7
|
|
|
2.8
|
%
|
|
$
|
995.4
|
|
|
$
|
959.8
|
|
|
$
|
35.6
|
|
|
3.7
|
%
|
% of net sales, excluding impact of ASU 2014-09
|
|
21.9
|
%
|
|
22.9
|
%
|
|
|
|
|
|
22.9
|
%
|
|
23.6
|
%
|
|
|
|
|
Selling, general and administrative expenses, excluding the impact of ASU 2014-09, increased due to the following:
|
n Axalta Way cost savings initiatives and acquisition related costs of $82.8 million, inclusive of $70.6 million of severance costs from the announced closure of our Mechelen, Belgium manufacturing facility, as compared to $63.8 million for the year ended December 31, 2017, resulting in a $19.0 million increase over the comparable period
|
n Incremental impact from our acquisitions of $5.9 million
|
n Unfavorable impacts of foreign currency of 1.0%, primarily related to the strengthening of the Euro and Chinese Renminbi against the U.S. Dollar
|
Partially offset by:
|
n Reductions in costs due to operational efficiencies associated with our cost savings initiatives
|
Selling, general and administrative expenses increased due to the following:
|
n Impacts of acquisitions of $48.6 million as well as our focus on opportunities to expand our market presence and invest in commercial capabilities
|
n Unfavorable impacts of foreign currency of 0.6%, primarily related to the strengthening of the Euro against the U.S. Dollar
|
Partially offset by:
|
n Decreases in costs associated with our Axalta Way cost savings initiatives
|
n Decreases in our costs savings initiatives and acquisition-related costs which were $63.8 million for the year ended December 31, 2017 as compared to $77.6 million of costs for the year ended December 31, 2016, resulting in an $13.8 million decrease over the comparable period
|
|
|
Years Ended December 31,
|
|
2018 vs 2017
|
|
Years Ended December 31,
|
|
2017 vs 2016
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
||||||||||||||
Venezuela asset impairment and deconsolidation charge
|
|
$
|
—
|
|
|
$
|
70.9
|
|
|
$
|
(70.9
|
)
|
|
(100.0
|
)%
|
|
$
|
70.9
|
|
|
$
|
57.9
|
|
|
$
|
13.0
|
|
|
22.5
|
%
|
|
|
Years Ended December 31,
|
|
2018 vs 2017
|
|
Years Ended December 31,
|
|
2017 vs 2016
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
||||||||||||||
Research and development expenses
|
|
$
|
73.1
|
|
|
$
|
65.3
|
|
|
$
|
7.8
|
|
|
11.9
|
%
|
|
$
|
65.3
|
|
|
$
|
57.7
|
|
|
$
|
7.6
|
|
|
13.2
|
%
|
Research and development expenses increased due to the following:
|
n Impacts of acquisitions of $5.4 million due to ongoing research and development activities at the acquired businesses
|
n Unfavorable impacts of foreign currency of 1.2%, primarily related to the strengthening of the Euro and Chinese Renminbi against the U.S. Dollar
|
Research and development expenses increased due to the following:
|
n Impacts of acquisitions of $9.1 million
|
n Unfavorable impacts of foreign currency of 1.9%, primarily related to the strengthening of the Euro and certain currencies in Latin America against the U.S. dollar
|
Partially offset by:
|
n Decreases resulting from the impacts of our cost savings initiatives
|
|
|
Years Ended December 31,
|
|
2018 vs 2017
|
|
Years Ended December 31,
|
|
2017 vs 2016
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
||||||||||||||
Amortization of acquired intangibles
|
|
$
|
115.4
|
|
|
$
|
101.2
|
|
|
$
|
14.2
|
|
|
14.0
|
%
|
|
$
|
101.2
|
|
|
$
|
83.4
|
|
|
$
|
17.8
|
|
|
21.3
|
%
|
Amortization of acquired intangibles increased due to the following:
|
n Definite-lived intangible assets from our recent acquisitions
|
n Unfavorable impacts of foreign currency of 0.2%, primarily related to the strengthening of the Euro and Chinese Renminbi against the U.S. Dollar
|
Amortization of acquired intangibles increased due to the following:
|
n Definite-lived intangible assets from our recent acquisitions
|
n Impairment related to abandoned in-process research and development intangible assets of $1.7 million
|
|
|
Years Ended December 31,
|
|
2018 vs 2017
|
|
Year Ended December 31,
|
|
2017 vs 2016
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
||||||||||||||
Interest expense, net
|
|
$
|
159.6
|
|
|
$
|
147.0
|
|
|
$
|
12.6
|
|
|
8.6
|
%
|
|
$
|
147.0
|
|
|
$
|
178.2
|
|
|
$
|
(31.2
|
)
|
|
(17.5
|
)%
|
Interest expense, net increased due to the following:
|
n Strengthening of the Euro compared to the U.S. Dollar of 4.7%
|
n Increases in average interest rates due to LIBOR increases on our variable rate debt over the comparable period and higher average principal balances resulting from the incremental indebtedness used to finance the Industrial Wood acquisition which were outstanding for only part of the year ended December 31, 2017, compared to the entire period for the year ended December 31, 2018
|
Partially offset by:
|
n Favorable impacts of our derivative instruments and our refinancings of $14.0 million
|
Interest expense, net decreased due to the following:
|
n Refinancing of our indebtedness during 2016 and 2017 which reduced the overall interest rates of our debt portfolio
|
Partially offset by:
|
n Increases resulting from the incremental indebtedness used to finance the Industrial Wood Acquisition
|
|
|
Years Ended December 31,
|
|
2018 vs 2017
|
|
Years Ended December 31,
|
|
2017 vs 2016
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
||||||||||||||
Other expense, net
|
|
$
|
15.0
|
|
|
$
|
27.1
|
|
|
$
|
(12.1
|
)
|
|
(44.6
|
)%
|
|
$
|
27.1
|
|
|
$
|
144.2
|
|
|
$
|
(117.1
|
)
|
|
(81.2
|
)%
|
Other expense, net decreased due to the following:
|
n The absence of impairments of $7.6 million for certain manufacturing facilities previously announced for closure incurred during the year ended December 31, 2017
|
n A reduction in debt extinguishment and refinancing related costs of $3.9 million with $9.5 million incurred during the year ended December 31, 2018 compared to $13.4 million incurred during the year ended December 31, 2017
|
Other expense, net decreased due to the following:
|
n Decrease in debt extinguishment and refinancing related costs incurred during the year ended December 31, 2016 which resulted in an $84.2 million decrease over the comparable period
|
n A reduction in foreign exchange losses, net from $30.6 million during the year ended December 31, 2016 to $7.4 million for the year ended December 31, 2017, resulting in a $23.2 million decrease over the comparable period, driven by our Venezuela subsidiary
|
n Decrease in impairments of $2.9 million to $7.6 million during the year ended December 31, 2017 associated with impairments related to the manufacturing facilities closures, compared to impairments of $10.5 million related to our real estate investment in Venezuela incurred during the year ended December 31, 2016.
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Income before income taxes
|
|
$
|
267.5
|
|
|
$
|
189.6
|
|
|
$
|
82.7
|
|
Provision for income taxes
|
|
54.2
|
|
|
141.9
|
|
|
38.1
|
|
|||
Statutory U.S. Federal income tax rate
|
|
21.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
|||
Effective tax rate
|
|
20.3
|
%
|
|
74.8
|
%
|
|
46.1
|
%
|
|||
Effective tax rate vs. statutory U.S. Federal income tax rate
|
|
(0.7
|
)%
|
|
39.8
|
%
|
|
11.1
|
%
|
|
|
(Favorable) Unfavorable Impact
|
||||||||||
Items impacting the effective tax rate vs. statutory U.S. federal income tax rate
|
|
2018
|
|
2017
|
|
2016
|
||||||
Earnings generated in jurisdictions where the statutory rate is lower than the U.S. Federal rate (1)
|
|
$
|
(24.8
|
)
|
|
$
|
(56.2
|
)
|
|
$
|
(45.6
|
)
|
Changes in valuation allowance
|
|
(37.5
|
)
|
|
45.3
|
|
|
9.6
|
|
|||
Foreign exchange gain (loss), net
|
|
24.7
|
|
|
(17.7
|
)
|
|
3.1
|
|
|||
Stock-based compensation excess tax benefits
|
|
(6.6
|
)
|
|
(13.1
|
)
|
|
(13.4
|
)
|
|||
Non-deductible expenses and interest
|
|
8.6
|
|
|
14.4
|
|
|
11.4
|
|
|||
Increase in unrecognized tax benefits (2)
|
|
18.9
|
|
|
3.1
|
|
|
7.1
|
|
|||
U.S. tax reform (3)
|
|
(12.5
|
)
|
|
107.8
|
|
|
—
|
|
|||
Pre-tax deconsolidation charge - Venezuelan subsidiary
|
|
—
|
|
|
24.8
|
|
|
—
|
|
|||
Pre-tax impairment charges - Venezuelan subsidiary
|
|
—
|
|
|
—
|
|
|
23.8
|
|
|
|
Years Ended December 31,
|
|
2018 vs 2017
|
|
Years Ended December 31,
|
|
2017 vs 2016
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
||||||||||||||
Net sales
|
|
$
|
3,025.7
|
|
|
$
|
2,675.1
|
|
|
$
|
350.6
|
|
|
13.1
|
%
|
|
$
|
2,675.1
|
|
|
$
|
2,398.5
|
|
|
$
|
276.6
|
|
|
11.5
|
%
|
Volume effect
|
|
|
|
|
|
|
|
1.2
|
%
|
|
|
|
|
|
|
|
(1.3
|
)%
|
||||||||||||
Impact of acquisitions
|
|
|
|
|
|
|
|
5.7
|
%
|
|
|
|
|
|
|
|
|
12.0
|
%
|
|||||||||||
Price/Mix effect
|
|
|
|
|
|
|
|
5.1
|
%
|
|
|
|
|
|
|
|
|
0.5
|
%
|
|||||||||||
Exchange rate effect
|
|
|
|
|
|
|
|
1.1
|
%
|
|
|
|
|
|
|
|
|
0.3
|
%
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Adjusted EBITDA
|
|
$
|
668.3
|
|
|
$
|
564.2
|
|
|
$
|
104.1
|
|
|
18.5
|
%
|
|
$
|
564.2
|
|
|
$
|
549.7
|
|
|
$
|
14.5
|
|
|
2.6
|
%
|
Adjusted EBITDA Margin
|
|
22.1
|
%
|
|
21.1
|
%
|
|
|
|
|
|
21.1
|
%
|
|
22.9
|
%
|
|
|
|
|
Net sales increased due to the following:
|
n Benefits from acquisitions across both end-markets
|
n Organic volume increases, which were comprised of industrial end-market increases, partially offset by decreases in our refinish end-market
|
n Favorable currency translation primarily related to the strengthening of the Euro and Chinese Renminbi compared to the U.S. Dollar
|
n Higher average selling prices across all regions and end-markets
|
Adjusted EBITDA increased due to the following:
|
n Increases in sales volumes, including the impacts of our recent acquisitions
|
n Higher average selling prices across all regions and end-markets
|
n Favorable currency translation primarily related to the strengthening of the Euro and Chinese Renminbi compared to the U.S. Dollar
|
Partially offset by:
|
n Higher raw material costs across all regions and end-markets
|
Net sales increased due to the following:
|
n Sales volumes benefits from acquisitions
|
n Higher average selling prices
|
n Favorable currency translation primarily related to the strengthening of the Euro compared to the U.S. Dollar
|
Partially offset by:
|
n Organic volume decreases, which were comprised of industrial end-market increases more than offset by decreases in our refinish end-market driven by distributor working capital adjustments in North America, as well as the absence of our now deconsolidated Venezuelan operations
|
Adjusted EBITDA increased due to the following:
|
n Impacts of acquisitions
|
n Higher average selling prices
|
Partially offset by:
|
n Higher variable costs across all regions and end-markets
|
|
|
Years Ended December 31,
|
|
2018 vs 2017
|
|
Years Ended December 31,
|
|
2017 vs 2016
|
||||||||||||||||||||||
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
||||||||||||||
Net sales
|
|
$
|
1,644.0
|
|
|
$
|
1,677.8
|
|
|
$
|
(33.8
|
)
|
|
(2.0
|
)%
|
|
$
|
1,677.8
|
|
|
$
|
1,670.3
|
|
|
$
|
7.5
|
|
|
0.4
|
%
|
Volume effect
|
|
|
|
|
|
|
|
(0.4
|
)%
|
|
|
|
|
|
|
|
2.3
|
%
|
||||||||||||
Impact of acquisitions
|
|
|
|
|
|
|
|
—
|
%
|
|
|
|
|
|
|
|
0.7
|
%
|
||||||||||||
Price/Mix effect
|
|
|
|
|
|
|
|
(1.5
|
)%
|
|
|
|
|
|
|
|
(3.1
|
)%
|
||||||||||||
Exchange rate effect
|
|
|
|
|
|
|
|
(0.1
|
)%
|
|
|
|
|
|
|
|
0.5
|
%
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Adjusted EBITDA
|
|
$
|
268.9
|
|
|
$
|
321.0
|
|
|
$
|
(52.1
|
)
|
|
(16.2
|
)%
|
|
$
|
321.0
|
|
|
$
|
352.7
|
|
|
$
|
(31.7
|
)
|
|
(9.0
|
)%
|
Adjusted EBITDA Margin
|
|
16.4
|
%
|
|
19.1
|
%
|
|
|
|
|
|
19.1
|
%
|
|
21.1
|
%
|
|
|
|
|
Net sales decreased due to the following:
|
n Lower average selling prices across both end-markets, primarily driven by the light vehicle end-market in China
|
n Volume decreases primarily in our light vehicle end-market
|
Partially offset by:
|
n Increases in sales volumes in our North America and Latin America commercial vehicle end-markets
|
Adjusted EBITDA decreased due to the following:
|
n Higher raw materials costs
|
n Lower average selling prices across both end-markets, primarily driven by the light vehicle end-market in China
|
n Unfavorable impacts of currency exchange related to the weakening of certain currencies in Latin America compared to the U.S. Dollar
|
Partially offset by:
|
n Increases in sales volumes in our North America and Latin America commercial vehicle end-markets
|
Net sales increased due to the following:
|
n Increases in organic sales volumes in both end-markets
|
n Impacts of acquisitions
|
n Favorable impacts of currency exchange related to strengthening of the Euro and certain currencies in Latin America compared to the U.S. Dollar
|
Partially offset by:
|
n Lower average selling prices across both end-markets
|
Adjusted EBITDA decreased due to the following:
|
n Lower average selling prices and higher variable costs in our light vehicle end-market
|
Partially offset by:
|
n Volume growth across both end-markets
|
|
|
Year Ended December 31,
|
||||||||||
(In millions)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net cash provided by (used for):
|
|
|
|
|
|
|
||||||
Operating activities:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
213.3
|
|
|
$
|
47.7
|
|
|
$
|
44.6
|
|
Depreciation and amortization
|
|
369.1
|
|
|
347.5
|
|
|
322.1
|
|
|||
Amortization of deferred financing costs and original issue discount
|
|
8.0
|
|
|
8.0
|
|
|
17.8
|
|
|||
Debt extinguishment and refinancing related costs
|
|
9.5
|
|
|
13.4
|
|
|
97.6
|
|
|||
Deferred income taxes
|
|
6.1
|
|
|
91.7
|
|
|
(15.9
|
)
|
|||
Realized and unrealized foreign exchange losses (gains), net
|
|
17.3
|
|
|
(3.6
|
)
|
|
35.5
|
|
|||
Stock-based compensation
|
|
37.3
|
|
|
38.5
|
|
|
41.1
|
|
|||
Asset impairments
|
|
—
|
|
|
7.6
|
|
|
68.4
|
|
|||
Loss on deconsolidation of Venezuela
|
|
—
|
|
|
70.9
|
|
|
—
|
|
|||
Interest income on swaps designated as net investment hedges
|
|
(9.4
|
)
|
|
—
|
|
|
—
|
|
|||
Other non-cash, net
|
|
(0.9
|
)
|
|
4.4
|
|
|
(1.9
|
)
|
|||
Net income adjusted for non-cash items
|
|
650.3
|
|
|
626.1
|
|
|
609.3
|
|
|||
Changes in operating assets and liabilities
|
|
(154.2
|
)
|
|
(86.1
|
)
|
|
(50.0
|
)
|
|||
Operating activities
|
|
496.1
|
|
|
540.0
|
|
|
559.3
|
|
|||
Investing activities
|
|
(216.1
|
)
|
|
(689.6
|
)
|
|
(257.0
|
)
|
|||
Financing activities
|
|
(341.3
|
)
|
|
367.3
|
|
|
(232.6
|
)
|
|||
Effect of exchange rate changes on cash
|
|
(15.2
|
)
|
|
17.1
|
|
|
(19.3
|
)
|
|||
Net (decrease) increase in cash
|
|
$
|
(76.5
|
)
|
|
$
|
234.8
|
|
|
$
|
50.4
|
|
|
|
December 31,
|
||||||
(In millions)
|
|
2018
|
|
2017
|
||||
2024 Dollar Term Loans
|
|
$
|
2,411.8
|
|
|
$
|
1,960.0
|
|
2023 Euro Term Loans
|
|
—
|
|
|
472.5
|
|
||
2024 Dollar Senior Notes
|
|
500.0
|
|
|
500.0
|
|
||
2024 Euro Senior Notes
|
|
383.3
|
|
|
399.7
|
|
||
2025 Euro Senior Notes
|
|
514.9
|
|
|
536.9
|
|
||
Short-term and other borrowings
|
|
103.8
|
|
|
94.8
|
|
||
Unamortized original issue discount
|
|
(12.6
|
)
|
|
(9.1
|
)
|
||
Deferred financing costs, net
|
|
(37.2
|
)
|
|
(39.2
|
)
|
||
|
|
$
|
3,864.0
|
|
|
$
|
3,915.6
|
|
Less:
|
|
|
|
|
||||
Short term borrowings
|
|
$
|
17.9
|
|
|
$
|
12.9
|
|
Current portion of long-term borrowings
|
|
24.3
|
|
|
24.8
|
|
||
Long-term debt
|
|
$
|
3,821.8
|
|
|
$
|
3,877.9
|
|
|
Year Ended December 31,
|
|||||||||||||||||||||
|
|
2018
|
|
2017
|
||||||||||||||||||
(In millions)
|
|
Principal
|
|
Average Effective
Interest Rate
|
|
Interest
Expense
|
|
Principal
|
|
Average Effective
Interest Rate
|
|
Interest
Expense
|
||||||||||
Term Loans
|
|
$
|
2,411.8
|
|
|
3.8
|
%
|
|
$
|
91.5
|
|
|
$
|
2,432.5
|
|
|
3.5
|
%
|
|
$
|
80.0
|
|
Revolving Credit Facility
|
|
—
|
|
|
N/A
|
|
|
1.9
|
|
|
—
|
|
|
N/A
|
|
|
1.9
|
|
||||
Senior Notes
|
|
1,398.2
|
|
|
4.5
|
%
|
|
64.3
|
|
|
1,436.6
|
|
|
4.5
|
%
|
|
62.2
|
|
||||
Short-term and other borrowings
|
|
103.8
|
|
|
Various
|
|
|
1.9
|
|
|
94.8
|
|
|
Various
|
|
|
2.9
|
|
||||
Total
|
|
$
|
3,913.8
|
|
|
|
|
$
|
159.6
|
|
|
$
|
3,963.9
|
|
|
|
|
$
|
147.0
|
|
|
|
Contractual Obligations Due In:
|
||||||||||||||||||
(In millions)
|
|
Total
|
|
2019
|
|
2020-2021
|
|
2022-2023
|
|
Thereafter
|
||||||||||
Debt, including current portion (1)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Senior Secured Credit Facilities, consisting of the following:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2024 Dollar Term Loans
|
|
$
|
2,411.8
|
|
|
$
|
24.3
|
|
|
$
|
48.6
|
|
|
$
|
48.6
|
|
|
$
|
2,290.3
|
|
Senior Notes, consisting of the following:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2024 Dollar Senior Notes
|
|
500.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
500.0
|
|
|||||
2024 Euro Senior Notes
|
|
383.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
383.3
|
|
|||||
2025 Euro Senior Notes
|
|
514.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
514.9
|
|
|||||
Other borrowings
|
|
46.4
|
|
|
17.9
|
|
|
1.0
|
|
|
27.5
|
|
|
—
|
|
|||||
Interest payments (2)
|
|
908.4
|
|
|
161.2
|
|
|
318.9
|
|
|
311.4
|
|
|
116.9
|
|
|||||
Sale-leaseback financing (3)
|
|
104.6
|
|
|
5.3
|
|
|
10.8
|
|
|
11.4
|
|
|
77.1
|
|
|||||
Operating leases
|
|
116.5
|
|
|
34.6
|
|
|
40.6
|
|
|
24.7
|
|
|
16.6
|
|
|||||
Pension contributions (4)
|
|
6.7
|
|
|
6.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Purchase obligations (5)
|
|
184.0
|
|
|
104.3
|
|
|
52.0
|
|
|
17.8
|
|
|
9.9
|
|
|||||
Uncertain tax positions, including interest and penalties (6)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
5,176.6
|
|
|
$
|
354.3
|
|
|
$
|
471.9
|
|
|
$
|
441.4
|
|
|
$
|
3,909.0
|
|
(1)
|
During the year ended December 31, 2018, we repriced our 2024 Dollar Term Loans and increased the aggregate principal balance by $475.0 million, for which the proceeds were used, along with cash on the balance sheet, to extinguish the existing 2023 Euro Term Loan (see Note 17 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K). 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)
|
Interest payments are based on principal amounts of our Senior Secured Credit Facilities and New Senior Notes at December 31, 2018 including commitment fees on the unused portion of the Revolving Credit Facility. Future interest payments assume December 31, 2018 variable rates will prevail throughout all future periods and do not consider the effect of our derivative instruments. See Note 17 and Note 18 to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for disclosures of our interest rates and derivatives, respectively.
|
(3)
|
We currently have three lease arrangements that are treated as sale-leaseback financing transactions, for which we reflect the total cash rental costs to be paid over the terms of these leases within the table above.
|
(4)
|
We expect to make contributions to our defined benefit pension plans beyond 2019; 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 2019.
|
(5)
|
Purchase obligations include various commitments, including contractual commitments to acquire ownership interests in a joint venture as a result of business acquisitions completed in 2016. At December 31, 2018, we were committed to pay $27.0 million in 2019 related to the purchase of the remaining interest in a 75.5% owned joint venture. In addition, we have $9.9 million in interest rate caps which will be paid through 2021 and $30.0 million in commitments to prepay rebates to certain customers in 2019, which will be earned or repaid in future periods.
|
(6)
|
At December 31, 2018, we had approximately $40.1 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.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net sales
|
|
$
|
4,669.7
|
|
|
$
|
4,352.9
|
|
|
$
|
4,068.8
|
|
Other revenue
|
|
26.3
|
|
|
24.1
|
|
|
23.9
|
|
|||
Total revenue
|
|
4,696.0
|
|
|
4,377.0
|
|
|
4,092.7
|
|
|||
Cost of goods sold
|
|
3,106.3
|
|
|
2,780.5
|
|
|
2,528.8
|
|
|||
Selling, general and administrative expenses
|
|
959.1
|
|
|
995.4
|
|
|
959.8
|
|
|||
Venezuela asset impairment and deconsolidation charge
|
|
—
|
|
|
70.9
|
|
|
57.9
|
|
|||
Research and development expenses
|
|
73.1
|
|
|
65.3
|
|
|
57.7
|
|
|||
Amortization of acquired intangibles
|
|
115.4
|
|
|
101.2
|
|
|
83.4
|
|
|||
Income from operations
|
|
442.1
|
|
|
363.7
|
|
|
405.1
|
|
|||
Interest expense, net
|
|
159.6
|
|
|
147.0
|
|
|
178.2
|
|
|||
Other expense, net
|
|
15.0
|
|
|
27.1
|
|
|
144.2
|
|
|||
Income before income taxes
|
|
267.5
|
|
|
189.6
|
|
|
82.7
|
|
|||
Provision for income taxes
|
|
54.2
|
|
|
141.9
|
|
|
38.1
|
|
|||
Net income
|
|
213.3
|
|
|
47.7
|
|
|
44.6
|
|
|||
Less: Net income attributable to noncontrolling interests
|
|
6.2
|
|
|
11.0
|
|
|
5.8
|
|
|||
Net income attributable to controlling interests
|
|
$
|
207.1
|
|
|
$
|
36.7
|
|
|
$
|
38.8
|
|
Basic net income per share
|
|
$
|
0.87
|
|
|
$
|
0.15
|
|
|
$
|
0.16
|
|
Diluted net income per share
|
|
$
|
0.85
|
|
|
$
|
0.15
|
|
|
$
|
0.16
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net income
|
|
$
|
213.3
|
|
|
$
|
47.7
|
|
|
$
|
44.6
|
|
Other comprehensive (loss) income, before tax:
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
|
(94.1
|
)
|
|
85.6
|
|
|
(59.5
|
)
|
|||
Unrealized gain on securities
|
|
—
|
|
|
0.4
|
|
|
0.3
|
|
|||
Unrealized gain on derivatives
|
|
2.4
|
|
|
0.9
|
|
|
2.0
|
|
|||
Unrealized (loss) gain on pension and other benefit plan obligations
|
|
(6.4
|
)
|
|
31.3
|
|
|
(28.9
|
)
|
|||
Other comprehensive (loss) income, before tax
|
|
(98.1
|
)
|
|
118.2
|
|
|
(86.1
|
)
|
|||
Income tax (benefit) provision related to items of other comprehensive income
|
|
(0.3
|
)
|
|
6.6
|
|
|
(4.9
|
)
|
|||
Other comprehensive (loss) income, net of tax
|
|
(97.8
|
)
|
|
111.6
|
|
|
(81.2
|
)
|
|||
Comprehensive income (loss)
|
|
115.5
|
|
|
159.3
|
|
|
(36.6
|
)
|
|||
Less: Comprehensive income attributable to noncontrolling interests
|
|
2.7
|
|
|
13.2
|
|
|
5.7
|
|
|||
Comprehensive income (loss) attributable to controlling interests
|
|
$
|
112.8
|
|
|
$
|
146.1
|
|
|
$
|
(42.3
|
)
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
693.6
|
|
|
$
|
769.8
|
|
Restricted cash
|
|
2.8
|
|
|
3.1
|
|
||
Accounts and notes receivable, net
|
|
860.8
|
|
|
870.2
|
|
||
Inventories
|
|
613.0
|
|
|
608.6
|
|
||
Prepaid expenses and other current assets
|
|
139.4
|
|
|
63.9
|
|
||
Total current assets
|
|
$
|
2,309.6
|
|
|
$
|
2,315.6
|
|
Property, plant and equipment, net
|
|
1,298.2
|
|
|
1,388.6
|
|
||
Goodwill
|
|
1,230.8
|
|
|
1,271.2
|
|
||
Identifiable intangibles, net
|
|
1,348.0
|
|
|
1,428.2
|
|
||
Other assets
|
|
489.1
|
|
|
428.6
|
|
||
Total assets
|
|
$
|
6,675.7
|
|
|
$
|
6,832.2
|
|
Liabilities, Shareholders’ Equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
522.8
|
|
|
$
|
554.9
|
|
Current portion of borrowings
|
|
42.2
|
|
|
37.7
|
|
||
Other accrued liabilities
|
|
475.6
|
|
|
489.6
|
|
||
Total current liabilities
|
|
$
|
1,040.6
|
|
|
$
|
1,082.2
|
|
Long-term borrowings
|
|
3,821.8
|
|
|
3,877.9
|
|
||
Accrued pensions
|
|
261.9
|
|
|
279.1
|
|
||
Deferred income taxes
|
|
140.8
|
|
|
152.9
|
|
||
Other liabilities
|
|
100.1
|
|
|
32.3
|
|
||
Total liabilities
|
|
$
|
5,365.2
|
|
|
$
|
5,424.4
|
|
Commitments and contingent liabilities (Note 6)
|
|
|
|
|
||||
Shareholders’ equity
|
|
|
|
|
||||
Common shares, $1.00 par, 1,000.0 shares authorized, 246.7 and 243.9 shares issued at December 31, 2018 and 2017, respectively
|
|
$
|
245.3
|
|
|
$
|
242.4
|
|
Capital in excess of par
|
|
1,409.5
|
|
|
1,354.5
|
|
||
Retained earnings (Accumulated deficit)
|
|
198.6
|
|
|
(21.4
|
)
|
||
Treasury shares, at cost, 11.1 and 2.0 shares at December 31, 2018 and 2017, respectively
|
|
(312.2
|
)
|
|
(58.4
|
)
|
||
Accumulated other comprehensive loss
|
|
(336.1
|
)
|
|
(241.0
|
)
|
||
Total Axalta shareholders’ equity
|
|
$
|
1,205.1
|
|
|
$
|
1,276.1
|
|
Noncontrolling interests
|
|
105.4
|
|
|
131.7
|
|
||
Total shareholders’ equity
|
|
$
|
1,310.5
|
|
|
$
|
1,407.8
|
|
Total liabilities and shareholders’ equity
|
|
$
|
6,675.7
|
|
|
$
|
6,832.2
|
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Number of Shares
|
|
Par/Stated Value
|
|
Capital In
Excess Of
Par
|
|
Retained earnings (Accumulated deficit)
|
|
Treasury Shares, at cost
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Non-controlling
Interests
|
|
Total
|
|||||||||||||||
Balance December 31, 2015
|
237.9
|
|
|
$
|
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 loss 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
|
|
|||||||
Shares issued under compensation plans
|
2.6
|
|
|
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
|
240.5
|
|
|
$
|
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
|
|
|||||||
Shares issued under compensation plans
|
3.4
|
|
|
3.1
|
|
|
21.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24.8
|
|
|||||||
Treasury share repurchases
|
(2.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(58.4
|
)
|
|
—
|
|
|
—
|
|
|
(58.4
|
)
|
|||||||
Dividends declared to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.0
|
)
|
|
(3.0
|
)
|
|||||||
Balance December 31, 2017
|
241.9
|
|
|
$
|
242.4
|
|
|
$
|
1,354.5
|
|
|
$
|
(21.4
|
)
|
|
$
|
(58.4
|
)
|
|
$
|
(241.0
|
)
|
|
$
|
131.7
|
|
|
$
|
1,407.8
|
|
Comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
207.1
|
|
|
—
|
|
|
—
|
|
|
6.2
|
|
|
213.3
|
|
|||||||
Net realized and unrealized gain on derivatives, net of tax of $1.1 million
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
|
—
|
|
|
1.3
|
|
|||||||
Long-term employee benefit plans, net of tax benefit of $1.4 million
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.0
|
)
|
|
—
|
|
|
(5.0
|
)
|
|||||||
Foreign currency translation, net of tax of $0.0 million
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(90.6
|
)
|
|
(3.5
|
)
|
|
(94.1
|
)
|
|||||||
Total comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
207.1
|
|
|
—
|
|
|
(94.3
|
)
|
|
2.7
|
|
|
115.5
|
|
|||||||
Cumulative effect of an accounting change
|
—
|
|
|
—
|
|
|
—
|
|
|
12.9
|
|
|
—
|
|
|
(0.8
|
)
|
|
0.1
|
|
|
12.2
|
|
|||||||
Recognition of stock-based compensation
|
—
|
|
|
—
|
|
|
37.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37.3
|
|
|||||||
Shares issued under compensation plans
|
2.8
|
|
|
2.9
|
|
|
14.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17.7
|
|
|||||||
Noncontrolling interests of acquired subsidiaries
|
—
|
|
|
—
|
|
|
2.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28.1
|
)
|
|
(25.2
|
)
|
|||||||
Treasury share repurchases
|
(9.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(253.8
|
)
|
|
—
|
|
|
—
|
|
|
(253.8
|
)
|
|||||||
Dividends declared to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.0
|
)
|
|
(1.0
|
)
|
|||||||
Balance December 31, 2018
|
235.6
|
|
|
$
|
245.3
|
|
|
$
|
1,409.5
|
|
|
$
|
198.6
|
|
|
$
|
(312.2
|
)
|
|
$
|
(336.1
|
)
|
|
$
|
105.4
|
|
|
$
|
1,310.5
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Operating activities:
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
213.3
|
|
|
$
|
47.7
|
|
|
$
|
44.6
|
|
Adjustment to reconcile net income to cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
369.1
|
|
|
347.5
|
|
|
322.1
|
|
|||
Amortization of deferred financing costs and original issue discount
|
|
8.0
|
|
|
8.0
|
|
|
17.8
|
|
|||
Debt extinguishment and refinancing related costs
|
|
9.5
|
|
|
13.4
|
|
|
97.6
|
|
|||
Deferred income taxes
|
|
6.1
|
|
|
91.7
|
|
|
(15.9
|
)
|
|||
Realized and unrealized foreign exchange losses (gains), net
|
|
17.3
|
|
|
(3.6
|
)
|
|
35.5
|
|
|||
Stock-based compensation
|
|
37.3
|
|
|
38.5
|
|
|
41.1
|
|
|||
Asset impairments
|
|
—
|
|
|
7.6
|
|
|
68.4
|
|
|||
Loss on deconsolidation of Venezuela
|
|
—
|
|
|
70.9
|
|
|
—
|
|
|||
Interest income on swaps designated as net investment hedges
|
|
(9.4
|
)
|
|
—
|
|
|
—
|
|
|||
Other non-cash, net
|
|
(0.9
|
)
|
|
4.4
|
|
|
(1.9
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||||||
Trade accounts and notes receivable
|
|
(22.3
|
)
|
|
(15.2
|
)
|
|
(67.8
|
)
|
|||
Inventories
|
|
(48.1
|
)
|
|
(19.9
|
)
|
|
(1.7
|
)
|
|||
Prepaid expenses and other assets
|
|
(157.3
|
)
|
|
(84.9
|
)
|
|
(64.5
|
)
|
|||
Accounts payable
|
|
49.5
|
|
|
39.8
|
|
|
32.3
|
|
|||
Other accrued liabilities
|
|
(8.4
|
)
|
|
6.7
|
|
|
58.7
|
|
|||
Other liabilities
|
|
32.4
|
|
|
(12.6
|
)
|
|
(7.0
|
)
|
|||
Cash provided by operating activities
|
|
$
|
496.1
|
|
|
$
|
540.0
|
|
|
$
|
559.3
|
|
Investing activities:
|
|
|
|
|
|
|
||||||
Acquisitions, net of cash acquired
|
|
$
|
(82.8
|
)
|
|
$
|
(564.4
|
)
|
|
$
|
(114.8
|
)
|
Investment in non-controlling interest
|
|
(26.9
|
)
|
|
—
|
|
|
—
|
|
|||
Purchase of property, plant and equipment
|
|
(143.4
|
)
|
|
(125.0
|
)
|
|
(136.2
|
)
|
|||
Interest proceeds on swaps designated as net investment hedges
|
|
9.4
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from settlement of swaps designated as net investment hedges
|
|
22.5
|
|
|
—
|
|
|
—
|
|
|||
Other investing activities, net
|
|
5.1
|
|
|
(0.2
|
)
|
|
(6.0
|
)
|
|||
Cash used for investing activities
|
|
$
|
(216.1
|
)
|
|
$
|
(689.6
|
)
|
|
$
|
(257.0
|
)
|
Financing activities:
|
|
|
|
|
|
|
||||||
Proceeds from long-term borrowings
|
|
468.9
|
|
|
483.6
|
|
|
1,604.3
|
|
|||
Payments on short-term borrowings
|
|
(44.7
|
)
|
|
(14.1
|
)
|
|
(8.6
|
)
|
|||
Payments on long-term borrowings
|
|
(511.3
|
)
|
|
(50.0
|
)
|
|
(1,755.7
|
)
|
|||
Financing-related costs
|
|
(10.8
|
)
|
|
(10.4
|
)
|
|
(86.3
|
)
|
|||
Dividends paid to noncontrolling interests
|
|
(1.0
|
)
|
|
(3.0
|
)
|
|
(3.0
|
)
|
|||
Purchase of treasury stock
|
|
(253.8
|
)
|
|
(58.4
|
)
|
|
—
|
|
|||
Proceeds from option exercises
|
|
17.4
|
|
|
24.8
|
|
|
16.7
|
|
|||
Deferred acquisition-related consideration
|
|
(6.0
|
)
|
|
(5.2
|
)
|
|
—
|
|
|||
Cash (used for) provided by financing activities
|
|
$
|
(341.3
|
)
|
|
$
|
367.3
|
|
|
$
|
(232.6
|
)
|
(Decrease) increase in cash and cash equivalents
|
|
$
|
(61.3
|
)
|
|
$
|
217.7
|
|
|
$
|
69.7
|
|
Effect of exchange rate changes on cash
|
|
(15.2
|
)
|
|
17.1
|
|
|
(19.3
|
)
|
|||
Cash at beginning of period
|
|
$
|
772.9
|
|
|
$
|
538.1
|
|
|
$
|
487.7
|
|
Cash at end of period
|
|
$
|
696.4
|
|
|
$
|
772.9
|
|
|
$
|
538.1
|
|
|
|
|
|
|
|
|
||||||
Cash at end of period reconciliation:
|
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
|
$
|
693.6
|
|
|
$
|
769.8
|
|
|
$
|
535.4
|
|
Restricted cash
|
|
2.8
|
|
|
3.1
|
|
|
2.7
|
|
|||
Cash at end of period
|
|
$
|
696.4
|
|
|
$
|
772.9
|
|
|
$
|
538.1
|
|
|
|
|
|
|
|
|
||||||
Supplemental cash flow information:
|
|
|
|
|
|
|
||||||
Cash paid during the year for:
|
|
|
|
|
|
|
||||||
Interest, net of amounts capitalized
|
|
$
|
152.4
|
|
|
$
|
130.1
|
|
|
$
|
169.4
|
|
Income taxes, net of refunds
|
|
57.4
|
|
|
61.7
|
|
|
39.2
|
|
|||
Non-cash investing activities:
|
|
|
|
|
|
|
|
|
||||
Accrued capital expenditures
|
|
$
|
10.1
|
|
|
$
|
30.2
|
|
|
$
|
28.7
|
|
•
|
raw materials,
|
•
|
direct labor, and
|
•
|
manufacturing and indirect overhead.
|
|
|
December 31, 2017
|
|
Adjustments due to ASU 2014-09
|
|
January 1, 2018
|
||||||
Assets
|
|
|
|
|
|
|
||||||
Inventories
|
|
$
|
608.6
|
|
|
$
|
(22.7
|
)
|
|
$
|
585.9
|
|
Prepaid expenses and other current assets (1)
|
|
63.9
|
|
|
41.7
|
|
|
105.6
|
|
|||
Other assets (2)
|
|
428.6
|
|
|
(1.9
|
)
|
|
426.7
|
|
|||
|
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
|
||||||
Other accrued liabilities (3)
|
|
$
|
489.6
|
|
|
$
|
1.9
|
|
|
$
|
491.5
|
|
Deferred income taxes
|
|
152.9
|
|
|
3.0
|
|
|
155.9
|
|
|||
|
|
|
|
|
|
|
||||||
Equity
|
|
|
|
|
|
|
||||||
Retained earnings (Accumulated deficit)
|
|
$
|
(21.4
|
)
|
|
$
|
12.1
|
|
|
$
|
(9.3
|
)
|
Noncontrolling interests
|
|
131.7
|
|
|
0.1
|
|
|
131.8
|
|
(1)
|
Includes the impact to contract assets resulting from the modified retrospective adoption of the new revenue standard.
|
(2)
|
Includes the impact to deferred income taxes resulting from the modified retrospective adoption of the new revenue standard.
|
(3)
|
Includes the impact of estimated variable consideration on certain arrangements in our refinish end-market.
|
ASU
|
|
|
|
Effective Date
|
2017-12
|
|
Derivatives and Hedging
|
|
January 1, 2018
|
2017-09
|
|
Compensation—Stock Compensation
|
|
January 1, 2018
|
2017-04
|
|
Simplifying the Test for Goodwill Impairment
|
|
January 1, 2018
|
2017-01
|
|
Clarifying the Definition of a Business
|
|
January 1, 2018
|
2016-15
|
|
Statement of Cash Flows
|
|
January 1, 2018
|
|
|
For the year ended December 31, 2018
|
||||||||||
|
|
As reported
|
|
Prior to ASU 2014-09
|
|
Increases / (Decreases)
|
||||||
Net sales
|
|
$
|
4,669.7
|
|
|
$
|
4,662.6
|
|
|
$
|
7.1
|
|
Cost of goods sold
|
|
3,106.3
|
|
|
3,039.0
|
|
|
67.3
|
|
|||
Selling, general and administrative expenses
|
|
959.1
|
|
|
1,023.1
|
|
|
(64.0
|
)
|
|||
Provision for income taxes
|
|
54.2
|
|
|
53.2
|
|
|
1.0
|
|
|||
Net income
|
|
$
|
213.3
|
|
|
$
|
210.5
|
|
|
$
|
2.8
|
|
Less: Net income attributable to noncontrolling interests
|
|
6.2
|
|
|
6.1
|
|
|
0.1
|
|
|||
Net income attributable to controlling interests
|
|
$
|
207.1
|
|
|
$
|
204.4
|
|
|
$
|
2.7
|
|
|
|
At December 31, 2018
|
||||||||||
|
|
As reported
|
|
Prior to ASU 2014-09
|
|
Increases / (Decreases)
|
||||||
Assets
|
|
|
|
|
|
|
||||||
Inventories
|
|
$
|
613.0
|
|
|
$
|
638.0
|
|
|
$
|
(25.0
|
)
|
Prepaid expenses and other current assets
|
|
139.4
|
|
|
92.2
|
|
|
47.2
|
|
|||
Other assets
|
|
489.1
|
|
|
491.7
|
|
|
(2.6
|
)
|
|||
|
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
|
||||||
Other accrued liabilities
|
|
$
|
475.6
|
|
|
$
|
473.7
|
|
|
$
|
1.9
|
|
Deferred income taxes
|
|
140.8
|
|
|
137.5
|
|
|
3.3
|
|
|||
|
|
|
|
|
|
|
||||||
Equity
|
|
|
|
|
|
|
||||||
Retained earnings
|
|
$
|
198.6
|
|
|
$
|
183.8
|
|
|
$
|
14.8
|
|
Accumulated other comprehensive loss
|
|
(336.1
|
)
|
|
(335.5
|
)
|
|
(0.6
|
)
|
|||
Noncontrolling interests
|
|
105.4
|
|
|
105.2
|
|
|
0.2
|
|
•
|
Refinish - We develop, market and supply a complete portfolio of innovative coatings systems and color matching technologies to facilitate faster automotive collision repairs relative to competing technologies. Our refinish products and systems include a range of coatings layers required to match the vehicle’s color and appearance, producing a repair surface indistinguishable from the adjacent surface.
|
•
|
Industrial - The industrial end-market is comprised of liquid and powder coatings used in a broad array of end-market applications. We are also a leading global developer, manufacturer and supplier of functional and decorative liquid and powder coatings for a large number of diversified applications in the industrial end-market. We provide a full portfolio of products for applications including architectural cladding and fittings, automotive coatings, general industrial, job coaters, electrical insulation coatings, HVAC, appliances, industrial wood, coil, rebar and oil & gas pipelines.
|
•
|
Light Vehicle - Light vehicle OEMs select coatings providers on the basis of their global ability to deliver advanced technological solutions that improve exterior appearance and durability and provide long-term corrosion protection. Customers also look for suppliers that can enhance process efficiency to reduce overall manufacturing costs and provide on-site technical support.
|
•
|
Commercial Vehicle - Sales in the commercial vehicle end-market are generated from a variety of applications including non-automotive transportation (e.g., heavy duty truck, bus and rail) and Agricultural, Construction and Earthmoving, as well as related markets such as trailers, recreational vehicles and personal sport vehicles. This end-market is primarily driven by global commercial vehicle production, which is influenced by overall economic activity, government infrastructure spending, equipment replacement cycles and evolving environmental standards. Commercial vehicle OEMs select coatings providers on the basis of their ability to consistently deliver advanced technological solutions that improve exterior appearance, protection and durability and provide extensive color libraries and matching capabilities at the lowest total cost-in-use, while meeting stringent environmental requirements.
|
|
|
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 current assets
|
|
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, 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
|
|
Goodwill from acquisitions
|
|
2.9
|
|
|
—
|
|
|
2.9
|
|
|||
Purchase accounting adjustments
|
|
(0.2
|
)
|
|
—
|
|
|
(0.2
|
)
|
|||
Foreign currency translation
|
|
(40.4
|
)
|
|
(2.7
|
)
|
|
(43.1
|
)
|
|||
December 31, 2018
|
|
$
|
1,151.5
|
|
|
$
|
79.3
|
|
|
$
|
1,230.8
|
|
December 31, 2018
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
|
Weighted average
amortization periods (years)
|
||||||
Technology
|
|
$
|
545.7
|
|
|
$
|
(260.7
|
)
|
|
$
|
285.0
|
|
|
10.4
|
Trademarks—indefinite-lived
|
|
269.0
|
|
|
—
|
|
|
269.0
|
|
|
Indefinite
|
|||
Trademarks—definite-lived
|
|
100.6
|
|
|
(24.0
|
)
|
|
76.6
|
|
|
15.8
|
|||
Customer relationships
|
|
929.9
|
|
|
(222.9
|
)
|
|
707.0
|
|
|
19.1
|
|||
Other
|
|
15.7
|
|
|
(5.3
|
)
|
|
10.4
|
|
|
5.1
|
|||
Total
|
|
$
|
1,860.9
|
|
|
$
|
(512.9
|
)
|
|
$
|
1,348.0
|
|
|
|
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
|
|
|
|
2019
|
|
$
|
114.2
|
|
2020
|
|
$
|
113.9
|
|
2021
|
|
$
|
113.3
|
|
2022
|
|
$
|
111.1
|
|
2023
|
|
$
|
71.3
|
|
Balance at January 1, 2016
|
|
$
|
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
|
|
Expense recorded
|
|
79.8
|
|
|
Payments made
|
|
(46.4
|
)
|
|
Foreign currency translation
|
|
(2.2
|
)
|
|
Balance at December 31, 2018
|
|
$
|
102.7
|
|
|
|
Sale-leaseback obligations
|
||
2019
|
|
$
|
5.3
|
|
2020
|
|
5.4
|
|
|
2021
|
|
5.4
|
|
|
2022
|
|
5.7
|
|
|
2023
|
|
5.7
|
|
|
Thereafter
|
|
77.1
|
|
|
Total minimum payments
|
|
$
|
104.6
|
|
|
|
Operating
Leases
|
||
2019
|
|
$
|
34.6
|
|
2020
|
|
23.5
|
|
|
2021
|
|
17.1
|
|
|
2022
|
|
13.2
|
|
|
2023
|
|
11.5
|
|
|
Thereafter
|
|
16.6
|
|
|
Total minimum payments
|
|
$
|
116.5
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Change in benefit obligation:
|
|
|
|
|
||||
Projected benefit obligation at beginning of year
|
|
$
|
636.9
|
|
|
$
|
547.6
|
|
Service cost
|
|
8.8
|
|
|
9.0
|
|
||
Interest cost
|
|
13.1
|
|
|
13.8
|
|
||
Participant contributions
|
|
1.3
|
|
|
1.3
|
|
||
Actuarial gains, net
|
|
(3.3
|
)
|
|
(13.8
|
)
|
||
Plan curtailments, settlements and special termination benefits
|
|
(19.4
|
)
|
|
(12.9
|
)
|
||
Benefits paid
|
|
(25.6
|
)
|
|
(23.3
|
)
|
||
Business combinations and other adjustments
|
|
0.7
|
|
|
51.2
|
|
||
Foreign currency translation
|
|
(28.8
|
)
|
|
64.0
|
|
||
Projected benefit obligation at end of year
|
|
$
|
583.7
|
|
|
$
|
636.9
|
|
Change in plan assets:
|
|
|
|
|
||||
Fair value of plan assets at beginning of year
|
|
$
|
365.0
|
|
|
$
|
288.7
|
|
Actual return on plan assets
|
|
(1.4
|
)
|
|
22.2
|
|
||
Employer contributions
|
|
24.6
|
|
|
27.4
|
|
||
Participant contributions
|
|
1.3
|
|
|
1.3
|
|
||
Benefits paid
|
|
(25.6
|
)
|
|
(23.3
|
)
|
||
Settlements
|
|
(12.5
|
)
|
|
(13.9
|
)
|
||
Business combinations and other adjustments
|
|
(0.1
|
)
|
|
32.4
|
|
||
Foreign currency translation
|
|
(19.0
|
)
|
|
30.2
|
|
||
Fair value of plan assets at end of year
|
|
$
|
332.3
|
|
|
$
|
365.0
|
|
Funded status, net
|
|
$
|
(251.4
|
)
|
|
$
|
(271.9
|
)
|
Amounts recognized in the consolidated balance sheets consist of:
|
|
|
|
|
||||
Other assets
|
|
$
|
22.0
|
|
|
$
|
19.2
|
|
Other accrued liabilities
|
|
(11.5
|
)
|
|
(12.0
|
)
|
||
Accrued pensions
|
|
(261.9
|
)
|
|
(279.1
|
)
|
||
Net amount recognized
|
|
$
|
(251.4
|
)
|
|
$
|
(271.9
|
)
|
|
|
Year Ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
ABO
|
|
$
|
559.9
|
|
|
$
|
605.4
|
|
Plans with PBO in excess of plan assets:
|
|
|
|
|
||||
PBO
|
|
$
|
375.6
|
|
|
$
|
401.2
|
|
ABO
|
|
$
|
352.0
|
|
|
$
|
370.0
|
|
Fair value plan assets
|
|
$
|
102.2
|
|
|
$
|
110.1
|
|
Plans with ABO in excess of plan assets:
|
|
|
|
|
||||
PBO
|
|
$
|
370.2
|
|
|
$
|
393.3
|
|
ABO
|
|
$
|
349.1
|
|
|
$
|
364.9
|
|
Fair value plan assets
|
|
$
|
99.3
|
|
|
$
|
104.7
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Accumulated net actuarial losses
|
|
$
|
(51.8
|
)
|
|
$
|
(46.4
|
)
|
Accumulated prior service credit
|
|
1.6
|
|
|
2.6
|
|
||
Total
|
|
$
|
(50.2
|
)
|
|
$
|
(43.8
|
)
|
|
|
2019
|
||
Amortization of net actuarial losses, net
|
|
$
|
(2.0
|
)
|
Amortization of prior service credit, net
|
|
0.1
|
|
|
Total
|
|
$
|
(1.9
|
)
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Components of net periodic benefit cost and amounts recognized in comprehensive (income) loss:
|
|
|
|
|
|
|
||||||
Net periodic benefit cost:
|
|
|
|
|
|
|
||||||
Service cost
|
|
$
|
8.8
|
|
|
$
|
9.0
|
|
|
$
|
10.7
|
|
Interest cost
|
|
13.1
|
|
|
13.8
|
|
|
15.1
|
|
|||
Expected return on plan assets
|
|
(16.1
|
)
|
|
(15.0
|
)
|
|
(12.6
|
)
|
|||
Amortization of actuarial loss, net
|
|
1.3
|
|
|
1.4
|
|
|
0.4
|
|
|||
Amortization of prior service credit
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|||
Curtailment gain
|
|
(0.7
|
)
|
|
—
|
|
|
(1.1
|
)
|
|||
Settlement (gain) loss
|
|
0.6
|
|
|
0.2
|
|
|
(0.5
|
)
|
|||
Special termination benefit loss
|
|
—
|
|
|
1.0
|
|
|
0.2
|
|
|||
Net periodic benefit cost
|
|
$
|
6.9
|
|
|
$
|
10.4
|
|
|
$
|
12.2
|
|
Changes in plan assets and benefit obligations recognized in other comprehensive (income) loss:
|
|
|
|
|
|
|
||||||
Net actuarial (gain) loss, net
|
|
$
|
6.7
|
|
|
$
|
(20.6
|
)
|
|
$
|
27.7
|
|
Amortization of actuarial loss, net
|
|
(1.3
|
)
|
|
(1.4
|
)
|
|
(0.4
|
)
|
|||
Prior service (credit) cost
|
|
0.8
|
|
|
(1.2
|
)
|
|
—
|
|
|||
Amortization of prior service credit
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|||
Curtailment gain
|
|
0.7
|
|
|
—
|
|
|
1.1
|
|
|||
Settlement gain (loss)
|
|
(0.6
|
)
|
|
(0.2
|
)
|
|
0.5
|
|
|||
Other adjustments
|
|
—
|
|
|
(7.9
|
)
|
|
—
|
|
|||
Total (gain) loss recognized in other comprehensive (income) loss
|
|
$
|
6.4
|
|
|
$
|
(31.3
|
)
|
|
$
|
28.9
|
|
Total recognized in net periodic benefit cost and comprehensive (income) loss
|
|
$
|
13.3
|
|
|
$
|
(20.9
|
)
|
|
$
|
41.1
|
|
|
|
2018
|
|
2017
|
|
2016
|
|||
Weighted-average assumptions:
|
|
|
|
|
|
|
|||
Discount rate to determine benefit obligation
|
|
2.27
|
%
|
|
2.13
|
%
|
|
2.52
|
%
|
Discount rate to determine net cost
|
|
2.13
|
%
|
|
2.52
|
%
|
|
3.05
|
%
|
Rate of future compensation increases to determine benefit obligation
|
|
2.68
|
%
|
|
2.69
|
%
|
|
3.07
|
%
|
Rate of future compensation increases to determine net cost
|
|
2.69
|
%
|
|
3.07
|
%
|
|
3.03
|
%
|
Rate of return on plan assets to determine net cost
|
|
4.47
|
%
|
|
4.73
|
%
|
|
4.75
|
%
|
Year ended December 31,
|
|
Benefits
|
||
2019
|
|
$
|
28.5
|
|
2020
|
|
$
|
31.2
|
|
2021
|
|
$
|
29.8
|
|
2022
|
|
$
|
30.8
|
|
2023
|
|
$
|
30.7
|
|
2024—2028
|
|
$
|
184.4
|
|
Asset Category
|
|
2018
|
|
2017
|
|
Target Allocation
|
Equity securities
|
|
15-20%
|
|
25-30%
|
|
15-20%
|
Debt securities
|
|
25-30%
|
|
20-25%
|
|
25-30%
|
Real estate
|
|
0-5%
|
|
0-5%
|
|
0-5%
|
Other
|
|
45-50%
|
|
45-50%
|
|
45-50%
|
|
|
Fair value measurements at
|
||||||||||||||
|
|
12/31/2018
|
||||||||||||||
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Asset Category:
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
$
|
4.5
|
|
|
$
|
4.4
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
U.S. equity securities
|
|
23.7
|
|
|
23.4
|
|
|
—
|
|
|
0.3
|
|
||||
Non-U.S. equity securities
|
|
42.9
|
|
|
39.9
|
|
|
1.0
|
|
|
2.0
|
|
||||
Debt securities—government issued
|
|
70.9
|
|
|
41.1
|
|
|
23.3
|
|
|
6.5
|
|
||||
Debt securities—corporate issued
|
|
29.1
|
|
|
19.7
|
|
|
7.0
|
|
|
2.4
|
|
||||
Private market securities and other
|
|
129.6
|
|
|
1.2
|
|
|
1.5
|
|
|
126.9
|
|
||||
Real estate investments
|
|
13.6
|
|
|
—
|
|
|
—
|
|
|
13.6
|
|
||||
Total
|
|
$
|
314.3
|
|
|
$
|
129.7
|
|
|
$
|
32.9
|
|
|
$
|
151.7
|
|
Debt asset backed securities at NAV
|
|
11.0
|
|
|
|
|
|
|
|
|||||||
Hedge funds at NAV
|
|
8.5
|
|
|
|
|
|
|
|
|||||||
Pension trust liability
|
|
(1.5
|
)
|
|
|
|
|
|
|
|||||||
|
|
$
|
332.3
|
|
|
|
|
|
|
|
|
|
Fair value measurements at
|
||||||||||||||
|
|
12/31/2017
|
||||||||||||||
|
|
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—government issued
|
|
44.6
|
|
|
33.1
|
|
|
7.3
|
|
|
4.2
|
|
||||
Debt—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
|
|
|
|
|
|
|
|
|
|
Level 3 assets
|
||||||||||||||
|
|
Total
|
|
Private
market
securities
|
|
Debt and equity
|
|
Real
estate investments
|
||||||||
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
|
|
Realized (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Change in unrealized gain
|
|
(4.2
|
)
|
|
(4.4
|
)
|
|
(0.2
|
)
|
|
0.4
|
|
||||
Purchases, sales, issues and settlements
|
|
(2.1
|
)
|
|
(4.4
|
)
|
|
2.6
|
|
|
(0.3
|
)
|
||||
Transfers in/(out) of Level 3
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Ending balance at December 31, 2018
|
|
$
|
151.7
|
|
|
$
|
126.9
|
|
|
$
|
11.2
|
|
|
$
|
13.6
|
|
|
|
2018 Grants
|
|
2017 Grants
|
|
2016 Grants
|
|||
Expected Term
|
|
6.0 years
|
|
|
6.0 years
|
|
|
6.0 years
|
|
Volatility
|
|
20.27
|
%
|
|
21.75
|
%
|
|
21.63
|
%
|
Dividend Yield
|
|
—
|
|
|
—
|
|
|
—
|
|
Discount Rate
|
|
2.66
|
%
|
|
2.03
|
%
|
|
1.45
|
%
|
|
|
Awards
(in millions)
|
|
Weighted-
Average
Exercise
Price
|
|
Aggregate
Intrinsic
Value
(in millions)
|
|
Weighted
Average
Remaining
Contractual
Life (years)
|
|||||
Outstanding at December 31, 2017
|
|
8.1
|
|
|
$
|
16.54
|
|
|
|
|
|
||
Granted
|
|
1.1
|
|
|
$
|
29.74
|
|
|
|
|
|
||
Exercised
|
|
(1.7
|
)
|
|
$
|
10.52
|
|
|
|
|
|
||
Forfeited
|
|
(0.3
|
)
|
|
$
|
29.59
|
|
|
|
|
|
||
Outstanding at December 31, 2018
|
|
7.2
|
|
|
$
|
19.32
|
|
|
|
|
|
||
Vested and expected to vest at December 31, 2018
|
|
7.2
|
|
|
$
|
19.32
|
|
|
$
|
48.0
|
|
|
5.76
|
Exercisable at December 31, 2018
|
|
5.6
|
|
|
$
|
16.80
|
|
|
$
|
48.0
|
|
|
5.08
|
|
|
Awards
(in millions)
|
|
Weighted-Average
Fair Value
|
|||
Outstanding at December 31, 2017
|
|
1.9
|
|
|
$
|
29.32
|
|
Granted
|
|
1.1
|
|
|
$
|
29.61
|
|
Vested
|
|
(1.2
|
)
|
|
$
|
29.84
|
|
Forfeited
|
|
(0.2
|
)
|
|
$
|
29.33
|
|
Outstanding at December 31, 2018
|
|
1.6
|
|
|
$
|
29.12
|
|
|
|
Awards
(in millions)
|
|
Weighted-Average
Fair Value
|
|||
Outstanding at December 31, 2017
|
|
0.6
|
|
|
$
|
31.17
|
|
Granted
|
|
0.3
|
|
|
$
|
33.81
|
|
Vested
|
|
—
|
|
|
$
|
—
|
|
Forfeited
|
|
(0.1
|
)
|
|
$
|
33.65
|
|
Outstanding at December 31, 2018
|
|
0.8
|
|
|
$
|
31.82
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Foreign exchange losses, net
|
|
$
|
9.2
|
|
|
$
|
7.4
|
|
|
$
|
30.6
|
|
Impairments
|
|
—
|
|
|
7.6
|
|
|
10.5
|
|
|||
Debt extinguishment and refinancing related costs
|
|
9.5
|
|
|
13.4
|
|
|
97.6
|
|
|||
Other miscellaneous (income) expense, net
|
|
(3.7
|
)
|
|
(1.3
|
)
|
|
5.5
|
|
|||
Total
|
|
$
|
15.0
|
|
|
$
|
27.1
|
|
|
$
|
144.2
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Domestic
|
|
$
|
194.8
|
|
|
$
|
41.8
|
|
|
$
|
27.9
|
|
Foreign
|
|
72.7
|
|
|
147.8
|
|
|
54.8
|
|
|||
Total
|
|
$
|
267.5
|
|
|
$
|
189.6
|
|
|
$
|
82.7
|
|
|
|
Year Ended December 31, 2018
|
|
Year Ended December 31, 2017
|
|
Year Ended December 31, 2016
|
||||||||||||||||||||||||||||||
|
|
Current
|
|
Deferred
|
|
Total
|
|
Current
|
|
Deferred
|
|
Total
|
|
Current
|
|
Deferred
|
|
Total
|
||||||||||||||||||
U.S. federal
|
|
$
|
7.2
|
|
|
$
|
6.8
|
|
|
$
|
14.0
|
|
|
$
|
4.6
|
|
|
$
|
102.8
|
|
|
$
|
107.4
|
|
|
$
|
0.9
|
|
|
$
|
(1.3
|
)
|
|
$
|
(0.4
|
)
|
U.S. state and local
|
|
2.7
|
|
|
12.8
|
|
|
15.5
|
|
|
1.7
|
|
|
0.4
|
|
|
2.1
|
|
|
3.7
|
|
|
8.2
|
|
|
11.9
|
|
|||||||||
Foreign
|
|
38.2
|
|
|
(13.5
|
)
|
|
24.7
|
|
|
43.9
|
|
|
(11.5
|
)
|
|
32.4
|
|
|
49.4
|
|
|
(22.8
|
)
|
|
26.6
|
|
|||||||||
Total
|
|
$
|
48.1
|
|
|
$
|
6.1
|
|
|
$
|
54.2
|
|
|
$
|
50.2
|
|
|
$
|
91.7
|
|
|
$
|
141.9
|
|
|
$
|
54.0
|
|
|
$
|
(15.9
|
)
|
|
$
|
38.1
|
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
Statutory U.S. federal income tax rate (1)
|
|
$
|
56.2
|
|
|
21.0
|
%
|
|
$
|
66.4
|
|
|
35.0
|
%
|
|
$
|
29.0
|
|
|
35.0
|
%
|
Foreign income taxed at rates other than U.S. statutory rate
|
|
(24.8
|
)
|
|
(9.3
|
)
|
|
(56.2
|
)
|
|
(29.6
|
)
|
|
(45.6
|
)
|
|
(55.1
|
)
|
|||
Changes in valuation allowances
|
|
(37.5
|
)
|
|
(14.0
|
)
|
|
45.3
|
|
|
23.9
|
|
|
9.6
|
|
|
11.6
|
|
|||
Foreign exchange gain (loss), net
|
|
24.7
|
|
|
9.2
|
|
|
(17.7
|
)
|
|
(9.3
|
)
|
|
3.1
|
|
|
3.7
|
|
|||
Unrecognized tax benefits
|
|
18.9
|
|
|
7.1
|
|
|
3.1
|
|
|
1.6
|
|
|
7.1
|
|
|
8.6
|
|
|||
Foreign taxes
|
|
6.7
|
|
|
2.5
|
|
|
4.1
|
|
|
2.2
|
|
|
4.5
|
|
|
5.4
|
|
|||
Non-deductible interest
|
|
4.8
|
|
|
1.8
|
|
|
9.8
|
|
|
5.2
|
|
|
6.7
|
|
|
8.1
|
|
|||
Non-deductible expenses
|
|
3.8
|
|
|
1.4
|
|
|
4.6
|
|
|
2.4
|
|
|
4.7
|
|
|
5.7
|
|
|||
Tax credits
|
|
(6.6
|
)
|
|
(2.4
|
)
|
|
(4.2
|
)
|
|
(2.2
|
)
|
|
(6.7
|
)
|
|
(8.1
|
)
|
|||
Excess tax benefits relating to stock-based compensation
|
|
(6.6
|
)
|
|
(2.4
|
)
|
|
(13.1
|
)
|
|
(6.9
|
)
|
|
(13.4
|
)
|
|
(16.2
|
)
|
|||
U.S. tax reform (2)
|
|
(12.5
|
)
|
|
(4.7
|
)
|
|
107.8
|
|
|
56.8
|
|
|
—
|
|
|
—
|
|
|||
Venezuela deconsolidation and impairment
|
|
—
|
|
|
—
|
|
|
(2.0
|
)
|
|
(1.0
|
)
|
|
23.8
|
|
|
28.8
|
|
|||
U.S. state and local taxes, net
|
|
1.8
|
|
|
0.7
|
|
|
1.3
|
|
|
0.7
|
|
|
7.8
|
|
|
9.4
|
|
|||
Other - net (3)
|
|
25.3
|
|
|
9.4
|
|
|
(7.3
|
)
|
|
(4.0
|
)
|
|
7.5
|
|
|
9.2
|
|
|||
Total income tax provision / effective tax rate
|
|
$
|
54.2
|
|
|
20.3
|
%
|
|
$
|
141.9
|
|
|
74.8
|
%
|
|
$
|
38.1
|
|
|
46.1
|
%
|
(1)
|
The U.S. statutory rate has been used as management believes it is more meaningful to the Company.
|
(2)
|
Tax effect of the U.S. TCJA recorded under SAB 118.
|
(3)
|
In 2018, the Company recorded a tax charge of $17.6 million related to the remeasurement of net deferred tax assets in Netherlands due to the corporate tax rate reduction enacted into law, which is fully offset by a tax benefit of $17.6 million for the decrease to the valuation allowance.
|
|
|
Year Ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Deferred tax asset
|
|
|
|
|
||||
Tax loss, credit and interest carryforwards
|
|
$
|
238.5
|
|
|
$
|
265.3
|
|
Compensation and employee benefits
|
|
80.1
|
|
|
86.0
|
|
||
Accruals and other reserves
|
|
25.5
|
|
|
33.9
|
|
||
Research and development capitalization
|
|
7.7
|
|
|
8.9
|
|
||
Equity investment and other securities
|
|
20.1
|
|
|
26.4
|
|
||
Other
|
|
3.0
|
|
|
10.9
|
|
||
Total deferred tax assets
|
|
$
|
374.9
|
|
|
431.4
|
|
|
Less: valuation allowance
|
|
(159.0
|
)
|
|
$
|
(214.2
|
)
|
|
Total deferred tax assets, net of valuation allowance
|
|
$
|
215.9
|
|
|
$
|
217.2
|
|
Deferred tax liabilities
|
|
|
|
|
||||
Goodwill and intangibles
|
|
(17.4
|
)
|
|
(15.2
|
)
|
||
Property, plant and equipment
|
|
(144.7
|
)
|
|
(146.9
|
)
|
||
Unremitted earnings
|
|
(7.4
|
)
|
|
(7.4
|
)
|
||
Long-term debt
|
|
(2.4
|
)
|
|
(2.2
|
)
|
||
Total deferred tax liabilities
|
|
$
|
(171.9
|
)
|
|
$
|
(171.7
|
)
|
Net deferred tax asset
|
|
$
|
44.0
|
|
|
$
|
45.5
|
|
|
|
|
|
|
||||
Non-current assets
|
|
184.8
|
|
|
198.4
|
|
||
Non-current liability
|
|
(140.8
|
)
|
|
(152.9
|
)
|
||
Net deferred tax asset
|
|
$
|
44.0
|
|
|
$
|
45.5
|
|
Tax loss, tax credit and interest carryforwards
|
|
Year Ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Tax loss carryforwards (tax effected) (1)
|
|
|
|
|
||||
Expire within 10 years
|
|
$
|
53.3
|
|
|
$
|
92.3
|
|
Expire after 10 years or indefinite carryforward
|
|
121.6
|
|
|
124.0
|
|
||
Tax credit carryforwards
|
|
|
|
|
||||
Expire within 10 years
|
|
17.3
|
|
|
20.5
|
|
||
Expire after 10 years or indefinite carryforward
|
|
20.9
|
|
|
16.1
|
|
||
Interest carryforwards
|
|
|
|
|
||||
Expire within 10 years
|
|
2.2
|
|
|
—
|
|
||
Expire after 10 years or indefinite carryforward
|
|
23.2
|
|
|
12.4
|
|
||
Total tax loss, tax credit and interest carryforwards
|
|
$
|
238.5
|
|
|
265.3
|
|
(1)
|
Net of unrecognized tax benefits
|
Valuation allowance
|
|
Year Ended December 31,
|
||||
|
|
2018
|
|
2017
|
||
Non-U.S.
|
|
133.8
|
|
|
188.1
|
|
U.S.
|
|
25.2
|
|
|
26.1
|
|
Total valuation allowance
|
|
159.0
|
|
|
214.2
|
|
|
|
Year Ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Total gross unrecognized tax benefits at January 1
|
|
$17.2
|
|
$12.3
|
|
$4.7
|
|||
Increases related to positions taken on items from prior years
|
|
3.4
|
|
|
1.9
|
|
|
—
|
|
Decreases related to positions taken on items from prior years
|
|
(1.8
|
)
|
|
—
|
|
|
(0.2
|
)
|
Increases related to positions taken in the current year (1)
|
|
18.2
|
|
|
3.0
|
|
|
7.8
|
|
Total gross unrecognized tax benefits at December 31
|
|
$37.0
|
|
$17.2
|
|
$12.3
|
|||
Total accrual for interest and penalties associated with unrecognized tax benefits (2)
|
|
3.1
|
|
|
1.2
|
|
|
1.1
|
|
Total gross unrecognized tax benefits at December 31, including interest and penalties
|
|
$40.1
|
|
$18.4
|
|
$13.4
|
|||
|
|
|
|
|
|
|
|||
Total unrecognized tax benefits that, if recognized, would impact the effective tax rate
|
|
25.2
|
|
|
9.7
|
|
|
8.5
|
|
Interest and penalties included as components of the "Provision (benefit) for income taxes"
|
|
1.9
|
|
|
0.1
|
|
|
0.3
|
|
(1)
|
Of the $18.2 million 2018 increase related to positions taken in the current year, $10.6 million is the unrecognized tax benefit related to the announced closure of our manufacturing facility at our Mechelen, Belgium site.
|
(2)
|
Accrued interest and penalties are included within the related tax liability line in the balance sheet.
|
|
|
Year Ended December 31,
|
||||||||||
(In millions, except per share data)
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net income to common shareholders
|
|
$
|
207.1
|
|
|
$
|
36.7
|
|
|
$
|
38.8
|
|
Basic weighted average shares outstanding
|
|
239.0
|
|
|
240.4
|
|
|
238.1
|
|
|||
Diluted weighted average shares outstanding
|
|
242.9
|
|
|
246.1
|
|
|
244.4
|
|
|||
Net income per common share:
|
|
|
|
|
|
|
||||||
Basic net income per share
|
|
$
|
0.87
|
|
|
$
|
0.15
|
|
|
$
|
0.16
|
|
Diluted net income per share
|
|
$
|
0.85
|
|
|
$
|
0.15
|
|
|
$
|
0.16
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Accounts receivable—trade, net (1)
|
|
$
|
739.9
|
|
|
$
|
748.2
|
|
Notes receivable
|
|
36.1
|
|
|
29.4
|
|
||
Other
|
|
84.8
|
|
|
92.6
|
|
||
Total
|
|
$
|
860.8
|
|
|
$
|
870.2
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Finished products
|
|
$
|
334.0
|
|
|
$
|
347.5
|
|
Semi-finished products
|
|
108.0
|
|
|
95.5
|
|
||
Raw materials
|
|
149.9
|
|
|
144.8
|
|
||
Stores and supplies
|
|
21.1
|
|
|
20.8
|
|
||
Total
|
|
$
|
613.0
|
|
|
$
|
608.6
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||
|
|
Useful Lives (years)
|
|
2018
|
|
2017
|
||||||
Land
|
|
|
|
|
|
$
|
85.7
|
|
|
$
|
87.6
|
|
Buildings and improvements
|
|
5
|
-
|
25
|
|
522.4
|
|
|
516.3
|
|
||
Machinery and equipment
|
|
3
|
-
|
25
|
|
1,333.2
|
|
|
1,244.0
|
|
||
Software
|
|
5
|
-
|
7
|
|
159.5
|
|
|
155.3
|
|
||
Other
|
|
3
|
-
|
20
|
|
45.7
|
|
|
41.7
|
|
||
Construction in progress
|
|
|
|
|
|
72.3
|
|
|
148.7
|
|
||
Total
|
|
|
|
|
|
$
|
2,218.8
|
|
|
$
|
2,193.6
|
|
Accumulated depreciation
|
|
|
|
|
|
(920.6
|
)
|
|
(805.0
|
)
|
||
Property, plant and equipment, net
|
|
|
|
|
|
$
|
1,298.2
|
|
|
$
|
1,388.6
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Available for sale securities
|
|
$
|
1.7
|
|
|
$
|
5.2
|
|
Deferred income taxes—non-current
|
|
184.8
|
|
|
198.4
|
|
||
Business incentive plan assets
|
|
190.8
|
|
|
173.0
|
|
||
Other assets (1)
|
|
111.8
|
|
|
52.0
|
|
||
Total
|
|
$
|
489.1
|
|
|
$
|
428.6
|
|
(1)
|
Include other upfront incentives made in conjunction with long-term customer commitments of $49.8 million and zero at December 31, 2018 and 2017, respectively, which will be repaid in future periods.
|
|
|
Year Ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Accounts Payable
|
|
|
|
|
||||
Trade payables
|
|
$
|
477.8
|
|
|
$
|
510.7
|
|
Non-income taxes
|
|
21.4
|
|
|
27.0
|
|
||
Other
|
|
23.6
|
|
|
17.2
|
|
||
Total
|
|
$
|
522.8
|
|
|
$
|
554.9
|
|
|
|
|
|
|
||||
Other Accrued Liabilities
|
|
|
|
|
||||
Compensation and other employee-related costs
|
|
$
|
163.2
|
|
|
$
|
153.3
|
|
Restructuring
|
|
60.3
|
|
|
71.5
|
|
||
Discounts, rebates, and warranties
|
|
157.8
|
|
|
138.8
|
|
||
Income taxes payable
|
|
15.2
|
|
|
22.2
|
|
||
Other
|
|
79.1
|
|
|
103.8
|
|
||
Total
|
|
$
|
475.6
|
|
|
$
|
489.6
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
2024 Dollar Term Loans
|
|
$
|
2,411.8
|
|
|
$
|
1,960.0
|
|
2023 Euro Term Loans
|
|
—
|
|
|
472.5
|
|
||
2024 Dollar Senior Notes
|
|
500.0
|
|
|
500.0
|
|
||
2024 Euro Senior Notes
|
|
383.3
|
|
|
399.7
|
|
||
2025 Euro Senior Notes
|
|
514.9
|
|
|
536.9
|
|
||
Short-term and other borrowings
|
|
103.8
|
|
|
94.8
|
|
||
Unamortized original issue discount
|
|
(12.6
|
)
|
|
(9.1
|
)
|
||
Unamortized deferred financing costs
|
|
(37.2
|
)
|
|
(39.2
|
)
|
||
|
|
$
|
3,864.0
|
|
|
$
|
3,915.6
|
|
Less:
|
|
|
|
|
||||
Short-term borrowings
|
|
$
|
17.9
|
|
|
$
|
12.9
|
|
Current portion of long-term borrowings
|
|
24.3
|
|
|
24.8
|
|
||
Long-term debt
|
|
$
|
3,821.8
|
|
|
$
|
3,877.9
|
|
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
|
%
|
2019
|
|
$
|
42.2
|
|
2020
|
|
26.0
|
|
|
2021
|
|
25.3
|
|
|
2022
|
|
52.7
|
|
|
2023
|
|
25.4
|
|
|
Thereafter
|
|
3,722.2
|
|
|
|
|
$
|
3,893.8
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Prepaid expenses and other current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest rate caps (1)
|
|
$
|
—
|
|
|
$
|
4.5
|
|
|
$
|
—
|
|
|
$
|
4.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Cross-currency swaps (2)
|
|
—
|
|
|
14.1
|
|
|
—
|
|
|
14.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Foreign currency forward contracts(3)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Other assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest rate caps (1)
|
|
—
|
|
|
1.4
|
|
|
—
|
|
|
1.4
|
|
|
—
|
|
|
1.2
|
|
|
—
|
|
|
1.2
|
|
||||||||
Interest rate swaps (1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Cross-currency swaps (2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Investment in equity securities
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|
4.3
|
|
|
—
|
|
|
—
|
|
|
4.3
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Other accrued liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest rate caps (1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.6
|
|
|
—
|
|
|
2.6
|
|
||||||||
Foreign currency forward contracts(3)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|
—
|
|
|
0.7
|
|
||||||||
Other liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest rate swaps (1)
|
|
—
|
|
|
2.9
|
|
|
—
|
|
|
2.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Cross-currency swaps (2)
|
|
—
|
|
|
8.8
|
|
|
—
|
|
|
8.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Contingent consideration
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8.9
|
|
|
8.9
|
|
||||||||
Long-term borrowings: (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
2024 Dollar Senior Notes
|
|
—
|
|
|
474.9
|
|
|
—
|
|
|
474.9
|
|
|
—
|
|
|
524.4
|
|
|
—
|
|
|
524.4
|
|
||||||||
2024 Euro Senior Notes
|
|
—
|
|
|
381.1
|
|
|
—
|
|
|
381.1
|
|
|
—
|
|
|
427.7
|
|
|
—
|
|
|
427.7
|
|
||||||||
2025 Euro Senior Notes
|
|
—
|
|
|
497.5
|
|
|
—
|
|
|
497.5
|
|
|
—
|
|
|
571.8
|
|
|
—
|
|
|
571.8
|
|
||||||||
2024 Dollar Term Loans
|
|
—
|
|
|
2,276.1
|
|
|
—
|
|
|
2,276.1
|
|
|
—
|
|
|
1,967.4
|
|
|
—
|
|
|
1,967.4
|
|
||||||||
2023 Euro Term Loans
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
475.5
|
|
|
—
|
|
|
475.5
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Accumulated other comprehensive (loss) income:
|
|
|
|
|
||||
Interest rate caps (cash flow hedges)
|
|
$
|
(3.4
|
)
|
|
$
|
2.0
|
|
Interest rate swaps (cash flow hedges)
|
|
3.0
|
|
|
—
|
|
||
Cross-currency swaps (net investment hedges)
|
|
(27.7
|
)
|
|
—
|
|
||
Total accumulated other comprehensive (loss) income
|
|
$
|
(28.1
|
)
|
|
$
|
2.0
|
|
|
|
|
|
For the Year Ended December 31,
|
||||||||||||||||||||||
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||||||||||||||
Derivatives in Cash Flow and Net Investment Hedges
|
|
Location of (Gain) Loss Recognized in Income on Derivatives
|
|
Net Amount of (Gain) Loss Recognized in OCI on Derivatives
|
|
Amount of (Gain) Loss Recognized in Income
|
|
Net Amount of (Gain) Loss Recognized in OCI on Derivatives
|
|
Amount of (Gain) Loss Recognized in Income
|
|
Net Amount of (Gain) Loss Recognized in OCI on Derivatives
|
|
Amount of (Gain) Loss Recognized in Income
|
||||||||||||
Interest rate caps
|
|
Interest expense, net
|
|
$
|
(7.3
|
)
|
|
$
|
(1.9
|
)
|
|
$
|
1.8
|
|
|
$
|
(2.7
|
)
|
|
$
|
2.0
|
|
|
$
|
7.1
|
|
Interest rate swaps
|
|
Interest expense, net
|
|
4.3
|
|
|
1.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Cross-currency swaps
|
|
Interest expense, net
|
|
(37.1
|
)
|
|
(9.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Derivatives Not Designated as
Hedging Instruments under
ASC 815
|
|
Location of (Gain) Loss
Recognized in Income on
Derivatives
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||||
Foreign currency forward contracts
|
|
Other expense, net
|
|
$
|
(7.9
|
)
|
|
$
|
11.2
|
|
|
$
|
4.3
|
|
Interest rate cap
|
|
Interest expense, net
|
|
—
|
|
|
0.6
|
|
|
—
|
|
|||
|
|
|
|
$
|
(7.9
|
)
|
|
$
|
11.8
|
|
|
$
|
4.3
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Performance Coatings
|
|
|
|
|
|
|
||||||
Refinish
|
|
$
|
1,754.2
|
|
|
$
|
1,645.2
|
|
|
$
|
1,679.7
|
|
Industrial
|
|
1,271.5
|
|
|
1,029.9
|
|
|
718.8
|
|
|||
Total Net sales Performance Coatings
|
|
$
|
3,025.7
|
|
|
$
|
2,675.1
|
|
|
$
|
2,398.5
|
|
Transportation Coatings
|
|
|
|
|
|
|
||||||
Light Vehicle
|
|
$
|
1,290.2
|
|
|
$
|
1,322.8
|
|
|
$
|
1,337.7
|
|
Commercial Vehicle
|
|
353.8
|
|
|
355.0
|
|
|
332.6
|
|
|||
Total Net sales Transportation Coatings
|
|
$
|
1,644.0
|
|
|
$
|
1,677.8
|
|
|
$
|
1,670.3
|
|
Total Net sales
|
|
$
|
4,669.7
|
|
|
$
|
4,352.9
|
|
|
$
|
4,068.8
|
|
|
|
Performance
Coatings
|
|
Transportation
Coatings
|
|
Total
|
||||||
For the Year ended December 31, 2018
|
|
|
|
|
|
|
||||||
Net sales (1)
|
|
$
|
3,025.7
|
|
|
$
|
1,644.0
|
|
|
$
|
4,669.7
|
|
Equity in earnings in unconsolidated affiliates
|
|
0.4
|
|
|
(0.1
|
)
|
|
0.3
|
|
|||
Adjusted EBITDA (2)
|
|
668.3
|
|
|
268.9
|
|
|
937.2
|
|
|||
Investment in unconsolidated affiliates
|
|
2.7
|
|
|
12.7
|
|
|
15.4
|
|
|
|
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 (losses) 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 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
|
|
(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,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Income before income taxes
|
|
$
|
267.5
|
|
|
$
|
189.6
|
|
|
$
|
82.7
|
|
Interest expense, net
|
|
159.6
|
|
|
147.0
|
|
|
178.2
|
|
|||
Depreciation and amortization
|
|
369.1
|
|
|
347.5
|
|
|
322.1
|
|
|||
EBITDA
|
|
$
|
796.2
|
|
|
$
|
684.1
|
|
|
$
|
583.0
|
|
Debt extinguishment and refinancing related costs (a)
|
|
9.5
|
|
|
13.4
|
|
|
97.6
|
|
|||
Foreign exchange remeasurement losses (b)
|
|
9.2
|
|
|
7.4
|
|
|
30.6
|
|
|||
Long-term employee benefit plan adjustments (c)
|
|
(1.9
|
)
|
|
1.4
|
|
|
1.5
|
|
|||
Termination benefits and other employee related costs (d)
|
|
81.7
|
|
|
35.3
|
|
|
61.8
|
|
|||
Consulting and advisory fees (e)
|
|
—
|
|
|
(0.1
|
)
|
|
10.4
|
|
|||
Transition-related costs (f)
|
|
(0.2
|
)
|
|
7.7
|
|
|
—
|
|
|||
Offering and transactional costs (g)
|
|
1.2
|
|
|
18.4
|
|
|
6.0
|
|
|||
Stock-based compensation (h)
|
|
37.3
|
|
|
38.5
|
|
|
41.1
|
|
|||
Other adjustments (i)
|
|
5.2
|
|
|
3.6
|
|
|
5.0
|
|
|||
Dividends in respect of noncontrolling interest (j)
|
|
(1.0
|
)
|
|
(3.0
|
)
|
|
(3.0
|
)
|
|||
Deconsolidation and site closure related impacts (k)
|
|
—
|
|
|
78.5
|
|
|
68.4
|
|
|||
Adjusted EBITDA
|
|
$
|
937.2
|
|
|
$
|
885.2
|
|
|
$
|
902.4
|
|
(a)
|
During the years ended December 31, 2018, 2017 and 2016 we refinanced and restructured our term loans and senior notes, which resulted in losses of $9.5 million, $13.0 million and $88.0 million, respectively. In addition, during the years ended December 31, 2017 and 2016 we prepaid outstanding principal on our term loans, resulting in non-cash losses on extinguishment of $0.4 million and $9.6 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 and $23.5 million for the years ended December 31, 2017 and 2016, respectively.
|
|
|
(c)
|
Eliminates the non-cash, non-service components of long-term employee benefit plans.
|
|
|
(d)
|
Represents expenses and associated changes to estimates related to employee termination benefits and other employee-related costs, which includes Axalta CEO recruitment fees. Employee termination benefits are associated with Axalta Way initiatives. These amounts 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 and associated changes to estimates related to the 2017 acquisition of the Industrial Wood business that was a carve-out business from Valspar. 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.
|
|
|
(i)
|
Represents certain non-operational or non-cash gains and losses unrelated to our core business and which we do not consider indicative of ongoing operations, including indemnity losses associated with the Acquisition, gains and losses from the sale and disposal of property, plant and equipment, gains and losses from the remaining foreign currency derivative instruments and from 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 we recorded non-cash impairments at our Venezuelan subsidiary of $68.4 million associated with our operational long-lived assets and a real estate investment (See Note 21). 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,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
North America
|
|
$
|
1,783.6
|
|
|
$
|
1,607.7
|
|
|
$
|
1,426.7
|
|
EMEA
|
|
1,658.1
|
|
|
1,538.3
|
|
|
1,455.3
|
|
|||
Asia Pacific
|
|
758.2
|
|
|
748.1
|
|
|
723.9
|
|
|||
Latin America (a)
|
|
469.8
|
|
|
458.8
|
|
|
462.9
|
|
|||
Total (b)
|
|
$
|
4,669.7
|
|
|
$
|
4,352.9
|
|
|
$
|
4,068.8
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
North America
|
|
$
|
477.4
|
|
|
$
|
457.9
|
|
EMEA
|
|
439.1
|
|
|
507.4
|
|
||
Asia Pacific
|
|
246.1
|
|
|
258.9
|
|
||
Latin America (a)
|
|
135.6
|
|
|
164.4
|
|
||
Total (c)
|
|
$
|
1,298.2
|
|
|
$
|
1,388.6
|
|
(a)
|
Includes Mexico
|
(b)
|
Net Sales are attributed to countries based on location of the customer. Sales to external customers in China represented approximately 11%, 12% and 13% of the total for the years ended December 31, 2018, 2017 and 2016, respectively. Sales to external customers in Germany represented approximately 8%, 8% and 9% of the total for the years ended December 31, 2018, 2017 and 2016, respectively. Mexico represented 6% of the total for the years ended December 31, 2018, 2017 and 2016. Canada, which is included in the North America region, represents approximately 4% of total net sales for the years ended December 31, 2018, 2017 and 2016, respectively.
|
(c)
|
Long-lived assets consist of property, plant and equipment, net. Germany long-lived assets amounted to approximately $243.6 million and $279.0 million in the years ended December 31, 2018 and 2017, respectively. China long-lived assets amounted to $203.8 million and $217.2 million in the years ended December 31, 2018 and 2017, respectively. Brazil long-lived assets amounted to approximately $58.0 million and $78.6 million in the years ended December 31, 2018 and 2017, respectively. Canada long-lived assets, which are included in the North America region, amounted to approximately $25.1 million and 25.8 million in the years ended December 31, 2018 and 2017, respectively.
|
|
|
Unrealized
Currency
Translation
Adjustments
|
|
Pension Plan
Adjustments
|
|
Unrealized
Gain on
Securities
|
|
Unrealized
Gain (Loss) on
Derivatives
|
|
Accumulated
Other
Comprehensive
Loss
|
||||||||||
Balance, December 31, 2017
|
|
$
|
(208.8
|
)
|
|
$
|
(31.4
|
)
|
|
$
|
0.8
|
|
|
$
|
(1.6
|
)
|
|
$
|
(241.0
|
)
|
Cumulative effect of an accounting change
|
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
|
—
|
|
|
(0.8
|
)
|
|||||
Balance at January 1, 2018
|
|
$
|
(208.8
|
)
|
|
$
|
(31.4
|
)
|
|
$
|
—
|
|
|
$
|
(1.6
|
)
|
|
$
|
(241.8
|
)
|
Current year deferrals to AOCI
|
|
(90.6
|
)
|
|
(5.8
|
)
|
|
—
|
|
|
1.7
|
|
|
(94.7
|
)
|
|||||
Reclassifications from AOCI to Net income
|
|
—
|
|
|
0.8
|
|
|
—
|
|
|
(0.4
|
)
|
|
0.4
|
|
|||||
Net Change
|
|
$
|
(90.6
|
)
|
|
$
|
(5.0
|
)
|
|
$
|
—
|
|
|
$
|
1.3
|
|
|
$
|
(94.3
|
)
|
Balance, December 31, 2018
|
|
$
|
(299.4
|
)
|
|
$
|
(36.4
|
)
|
|
$
|
—
|
|
|
$
|
(0.3
|
)
|
|
$
|
(336.1
|
)
|
|
|
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
|
)
|
2018
|
|
March 31
|
|
June 30
|
|
September 30(1)
|
|
December 31
|
|
Full Year
|
||||||||||
Total revenue
|
|
$
|
1,172.0
|
|
|
$
|
1,212.2
|
|
|
$
|
1,146.0
|
|
|
$
|
1,165.8
|
|
|
$
|
4,696.0
|
|
Cost of goods sold
|
|
776.0
|
|
|
793.8
|
|
|
759.1
|
|
|
777.4
|
|
|
3,106.3
|
|
|||||
Income from operations
|
|
120.0
|
|
|
146.5
|
|
|
47.8
|
|
|
127.8
|
|
|
442.1
|
|
|||||
Net income (loss)
|
|
71.0
|
|
|
77.1
|
|
|
(11.6
|
)
|
|
76.8
|
|
|
213.3
|
|
|||||
Net income (loss) attributable to controlling interests
|
|
69.9
|
|
|
74.9
|
|
|
(13.1
|
)
|
|
75.4
|
|
|
207.1
|
|
|||||
Basic net income (loss) per share
|
|
$
|
0.29
|
|
|
$
|
0.31
|
|
|
$
|
(0.05
|
)
|
|
$
|
0.32
|
|
|
$
|
0.87
|
|
Diluted net income (loss) per share
|
|
$
|
0.28
|
|
|
$
|
0.31
|
|
|
$
|
(0.05
|
)
|
|
$
|
0.32
|
|
|
$
|
0.85
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
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
|
|
641.4
|
|
|
690.0
|
|
|
702.5
|
|
|
746.6
|
|
|
2,780.5
|
|
|||||
Income from operations
|
|
110.4
|
|
|
47.5
|
|
|
103.9
|
|
|
101.9
|
|
|
363.7
|
|
|||||
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
|
|
Name
|
|
Age*
|
|
Position
|
Robert W. Bryant
|
|
50
|
|
Chief Executive Officer and President
|
Steven R. Markevich
|
|
59
|
|
Executive Vice President and President, Transportation Coatings and Greater China
|
Joseph F. McDougall
|
|
48
|
|
Executive Vice President and President, Global Refinish and EMEA
|
Michael A. Cash
|
|
57
|
|
Senior Vice President and President, Industrial Coatings
|
Sean M. Lannon
|
|
40
|
|
Senior Vice President and Chief Financial Officer
|
(in millions)
|
|
Balance at Beginning of Year
|
|
Additions
|
|
Deductions (1)
|
|
Balance at End of Year
|
||||||
2018
|
|
$
|
15.9
|
|
|
2.3
|
|
|
(2.8
|
)
|
|
$
|
15.4
|
|
2017
|
|
$
|
13.7
|
|
|
3.5
|
|
|
(1.3
|
)
|
|
$
|
15.9
|
|
2016
|
|
$
|
10.7
|
|
|
3.4
|
|
|
(0.4
|
)
|
|
$
|
13.7
|
|
(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
|
||||||
2018
|
|
$
|
214.2
|
|
|
11.9
|
|
|
(67.1
|
)
|
|
$
|
159.0
|
|
2017
|
|
$
|
135.4
|
|
|
78.8
|
|
|
—
|
|
|
$
|
214.2
|
|
2016
|
|
$
|
127.8
|
|
|
9.6
|
|
|
(2.0
|
)
|
|
$
|
135.4
|
|
(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*
|
|
|
|
3.3*
|
|
|
|
4.1*
|
|
|
|
4.2*
|
|
|
|
4.3*
|
|
|
|
4.4*
|
|
|
|
4.5*
|
|
|
|
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*
|
|
|
|
10.48*
|
|
|
|
10.49*
|
|
|
|
10.50*
|
|
|
|
10.51*
|
|
|
|
10.52*
|
|
|
|
10.53*
|
|
|
|
10.54*
|
|
|
|
10.55*
|
|
|
|
10.56*
|
|
|
|
10.57*
|
|
|
|
10.58*
|
|
|
|
10.59*
|
|
|
|
10.60*
|
|
|
|
10.61*
|
|
|
|
10.62*
|
|
|
|
10.63*
|
|
|
|
10.64*
|
|
|
|
10.65*
|
|
|
|
10.66*
|
|
|
|
10.67*
|
|
|
|
10.68*
|
|
|
|
10.69*
|
|
|
|
10.70*
|
|
|
|
10.71*
|
|
|
|
10.72*
|
|
|
|
10.73
|
|
|
|
10.74
|
|
|
|
21.1
|
|
|
|
23.1
|
|
|
|
31.1
|
|
|
|
31.2
|
|
|
|
32.1††
|
|
|
|
32.2††
|
|
|
|
101†
|
INS - XBRL Instance Document. The document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document
|
|
|
101†
|
SCH - XBRL Taxonomy Extension Schema Document
|
|
|
101†
|
CAL - XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101†
|
DEF - XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
101†
|
LAB - XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101†
|
PRE - XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
*
|
Previously filed.
|
|
|
†
|
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/ Robert W. Bryant
|
|
|
Robert W. Bryant
|
|
|
Chief Executive Officer and President
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Robert W. Bryant
|
|
Chief Executive Officer and President
|
|
February 26, 2019
|
Robert W. Bryant
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Sean M. Lannon
|
|
Executive Vice President and Chief Financial Officer
|
|
February 26, 2019
|
Sean M. Lannon
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Charles W. Shaver
|
|
Chairman of the Board
|
|
February 26, 2019
|
Charles W. Shaver
|
|
|
|
|
|
|
|
|
|
/s/ Mark Garrett
|
|
Director
|
|
February 26, 2019
|
Mark Garrett
|
|
|
|
|
|
|
|
|
|
/s/ Deborah J. Kissire
|
|
Director
|
|
February 26, 2019
|
Deborah J. Kissire
|
|
|
|
|
|
|
|
|
|
/s/ Andreas C. Kramvis
|
|
Director
|
|
February 26, 2019
|
Andreas C. Kramvis
|
|
|
|
|
|
|
|
|
|
/s/ Elizabeth C. Lempres
|
|
Director
|
|
February 26, 2019
|
Elizabeth C. Lempres
|
|
|
|
|
|
|
|
|
|
/s/ Robert M. McLaughlin
|
|
Director
|
|
February 26, 2019
|
Robert M. McLaughlin
|
|
|
|
|
|
|
|
|
|
/s/ Lori J. Ryerkerk
|
|
Director
|
|
February 26, 2019
|
Lori J. Ryerkerk
|
|
|
|
|
|
|
|
|
|
/s/ Samuel L. Smolik
|
|
Director
|
|
February 26, 2019
|
Samuel L. Smolik
|
|
|
|
|
|
|
|
|
|
1.
|
Consultant. Axalta agrees to retain Consultant as an independent contractor in connection with the conduct of its business, and Consultant accepts such position, on the terms and conditions provided herein.
|
2.
|
Term. The term of this Agreement (the “Term”) begins on the Resignation Date and, unless earlier terminated, ends on May 31, 2019 (the “Expiration Date”).
|
1.
|
Performance. Consultant covenants and agrees to provide professional consulting services to Axalta at such times and places as the parties, acting reasonably, mutually agree to, such services to include all of the services, and limitations thereon, described on Exhibit A hereto (“Services”). In connection with providing the Services, Consultant shall be allowed to retain his Axalta-provided computer and telecommunications equipment, access to Axalta’s corporate headquarters, access to Axalta e-mail and data, and access to Axalta professional administrative services, each as reasonably necessary for him to effectively fulfill his obligations under this Agreement.
|
2.
|
Fees.
|
3.
|
Equity Awards. As additional consideration of the Services to be provided by Consultant hereunder:
|
4.
|
Annual Bonus. Axalta shall pay to Consultant a pro-rated annual bonus equal to 337/365 (92.33%) of the 2018 annual bonus that Consultant would have earned had Consultant’s employment not terminated, based on Axalta’s actual performance for the full year and Consultant’s individual performance through the Resignation Date which individual performance shall be determined by Axalta’s Chief Executive Officer, and paid at the same time the 2018 annual bonuses are paid to Axalta’s executives.
|
5.
|
Duties. Consultant hereby covenants and agrees that his duties and responsibilities will include (i) the Services set forth on Exhibit A, (ii) at all times representing Axalta in a professional manner and in accordance with the terms of this Agreement, and (iii) at all times complying with any and all applicable laws and regulations, as well as any local Axalta facility security, access and other policies and procedures.
|
6.
|
Confidentiality. Each party shall maintain in confidence any confidential information disclosed by the other party, including any trade secrets, proprietary information, and the terms and conditions of this Agreement (collectively, “Confidential Information”), and each party shall treat the other’s Confidential Information as if it were its own confidential information. In addition, neither party shall provide the Confidential Information disclosed hereunder to any third party nor use such Confidential Information for any purpose other than to conduct business as contemplated hereunder. This Section 8 shall survive any expiration or termination of this Agreement.
|
7.
|
Proprietary Rights. In addition, all work, work in progress, finished or unfinished work, data, property, inventions, improvements, designs, trade secrets or any other tangible or intangible results prepared, produced, arising from, relating to, or developed in connection with the Services rendered by Consultant to Axalta, or involving the use of Axalta’s time, materials or facilities (collectively, “Works”) shall be deemed to be “works made for hire” within the meaning of U.S. Copyright Act of 1976, as amended, and shall be the sole and exclusive property of Axalta and shall be Axalta’s Confidential Information. Consultant agrees to execute any documents as may be requested by Axalta, in a form satisfactory to Axalta, evidencing, vesting and protecting Axalta’s sole title and right of ownership in the Works. The covenants contained in this Section 9 shall run in favor of Axalta, its successors, assigns, subsidiaries and affiliates, and shall survive the expiration or earlier termination of this Agreement.
|
8.
|
Notices. The parties agree that all notices under this Agreement will be in writing and will be either delivered personally to a party, transmitted by facsimile transmission or sent by registered mail or reputable courier to, with respect to Consultant, the address set forth below the signature lines below, and with respect to Axalta, to the its principal place of business, or such other addresses as may be furnished by either party to the other from time to time.
|
9.
|
Termination. This Agreement may be terminated by Axalta immediately for cause in the event of (i) any material breach of this Agreement by Consultant, which is not cured, if curable, by Consultant within thirty (30) days of written notice of such breach, or (ii) the gross negligence or willful misconduct by Consultant which causes material injury to the reputation of Axalta or material financial harm to Axalta or its affiliates. This Agreement may be terminated by Consultant at any time upon reasonable written notice to Axalta. In the event Axalta terminates this Agreement for cause or Consultant terminates this Agreement, Consultant shall only be entitled to receive any fees earned hereunder as of the effective date of such termination.
|
10.
|
Indemnification. Axalta shall indemnify, defend and hold harmless Consultant, from and against all claims and losses, to the extent such claims arise out of or relate to Consultant’s performing his obligations under this Agreement. Axalta’s obligations under this Section 12 shall not apply to the extent such loss is the direct or indirect result of (x) the gross negligence or willful misconduct of Consultant, (y) the failure of Consultant to perform under, or his breach of, this Agreement or other written instructions from Axalta, or (z) the failure of Consultant to comply with any applicable governmental requirement. Consultant will provide Axalta with all reasonable information and assistance to settle or defend the claim, and Axalta shall not, without the approval of Consultant, consent to the entry of any judgment or effect any settlement of any pending or threatened proceeding without the
|
11.
|
Limitation of Liability. EXCEPT FOR CLAIMS ARISING OUT OF (i) INDEMNIFICATION OBLIGATIONS HEREUNDER, (ii) VIOLATION OF CONFIDENTIALITY OBLIGATIONS UNDER THIS AGREEMENT, OR (iii) THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR FRAUD OF A PARTY, UNDER NO CIRCUMSTANCES SHALL A PARTY BE LIABLE TO THE OTHER PARTY (y) FOR ANY PUNITIVE, EXEMPLARY OR OTHER SPECIAL DAMAGES ARISING UNDER OR RELATING TO THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR (z) FOR ANY INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING LOSS OF USE, INCOME, PROFITS OR ANTICIPATED PROFITS, BUSINESS OR BUSINESS OPPORTUNITY, SAVINGS, DATA, OR BUSINESS REPUTATION) ARISING UNDER OR RELATING TO THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, REGARDLESS OF WHETHER SUCH DAMAGES ARE BASED IN CONTRACT, TORT, NEGLIGENCE OR ANY OTHER THEORY, AND REGARDLESS OF WHETHER SUCH PARTY HAS BEEN ADVISED OF, KNEW OF, OR SHOULD HAVE KNOWN OF THE POSSIBILITY OF SUCH DAMAGES. THIS SECTION 13 SHALL SURVIVE ANY TERMINATION OR EXPIRATION OF THIS AGREEMENT FOR ANY REASON.
|
12.
|
Independent Contractor. Consultant is retained only for the purposes and to the extent set forth in this Agreement, and his relationship to Axalta shall be that of an independent contractor. As such, Consultant shall be solely responsible for all necessary withholding of appropriate federal income tax, state income tax, and social security taxes. Consultant will not be eligible for any employee benefits from Axalta and is not an agent or authorized representative of Axalta.
|
13.
|
Entire Agreement / Amendments. This Agreement contains all of the terms and conditions agreed upon by the parties hereto with reference to the subject matter hereof; provided that for the avoidance of doubt (i) the provisions of that certain Second Amended and Restated Executive Restrictive Covenant and Severance Agreement, dated as of February 20, 2018, by and between Axalta, Axalta Coating Systems, LLC and Consultant (the “Restrictive Covenant Agreement”) applicable to the period following termination of employment shall remain in full force and effect, (ii) that certain Indemnification and Advancement Agreement, dated as of May 2, 2018, by and between Axalta and Consultant shall remain in full force and effect, and (iii) all of Consultant’s Axalta equity award agreements, except as specifically set forth in Section 5 hereof, shall each remain in full force and effect. This Agreement may not be modified or amended except by a written instrument executed by both parties.
|
14.
|
Successor and Assigns. The rights of Axalta under this Agreement may, without the consent of Consultant, be assigned by Axalta, in its sole and unfettered discretion, to any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly, acquires all or substantially all of the assets or business of Axalta. Axalta will require any successor (whether direct or indirect, by purchase, merger or otherwise) to all or substantially all of the business or assets of Axalta expressly to assume and to agree to perform this Agreement in the same manner and to the same extent that Axalta would be required to perform it if no such succession had taken place. The failure of any such successor to so assume this Agreement shall constitute a material breach of this Agreement by Axalta. As used in this Agreement, Axalta shall mean Axalta as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law or otherwise. Consultant shall not be entitled to assign any of his rights or obligations under this Agreement. This Agreement shall inure to the benefit of and be enforceable by Consultant’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
|
15.
|
Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument.
|
16.
|
Waiver / Severability. No waiver of any breach or default hereunder shall be deemed a waiver of subsequent breach or default of the same, similar or related nature. No waiver shall be binding unless in writing and signed by the person making the waiver. In the event any clause or portion of this Agreement shall be held invalid by any court, it is understood and agreed that such invalid clause or portion thereof shall have no effect upon the validity of other portions of this Agreement.
|
17.
|
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania (without regard to its conflicts of law principles).
|
18.
|
Agreement to Arbitrate. The parties acknowledge and agree that Paragraph 9 of the Restrictive Covenant Agreement governing settlement of controversies, claims or disputes by binding arbitration shall remain in full force and effect and shall apply with respect to any controversies, claims or disputes arising under or with respect to this Agreement.
|
1.
|
Consultant. Axalta agrees to retain Consultant as an independent contractor in connection with the conduct of its business, and Consultant accepts such position, on the terms and conditions provided herein.
|
2.
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Term. The term of this Agreement (the “Term”) begins on the Resignation Date and, unless earlier terminated, ends on May 31, 2019 (the “Expiration Date”).
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3.
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Performance. Consultant covenants and agrees to provide professional consulting services to Axalta at such times and places as the parties, acting reasonably, mutually agree to, such services to include all of the services, and limitations thereon, described on Exhibit A hereto (“Services”). In connection with providing the Services, Consultant shall be allowed to retain his Axalta-provided computer and telecommunications equipment, access to Axalta’s corporate headquarters, access to Axalta e-mail and data, and access to Axalta professional administrative services, each as reasonably necessary for him to effectively fulfill his obligations under this Agreement.
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4.
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Fees.
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5.
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Equity Awards. As additional consideration of the Services to be provided by Consultant hereunder:
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6.
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Annual Bonus. Axalta shall pay to Consultant a pro-rated annual bonus equal to 337/365 (92.33%) of the 2018 annual bonus that Consultant would have earned had Consultant’s employment not terminated, based on Axalta’s actual performance for the full year and Consultant’s individual performance through the Resignation Date which individual performance shall be determined by Axalta’s Chief Executive Officer, and paid at the same time the 2018 annual bonuses are paid to Axalta’s executives.
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7.
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Duties. Consultant hereby covenants and agrees that his duties and responsibilities will include (i) the Services set forth on Exhibit A, (ii) at all times representing Axalta in a professional manner and in accordance with the terms of this Agreement, and (iii) at all times complying with any and all applicable laws and regulations, as well as any local Axalta facility security, access and other policies and procedures.
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8.
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Confidentiality. Each party shall maintain in confidence any confidential information disclosed by the other party, including any trade secrets, proprietary information, and the terms and conditions of this Agreement (collectively, “Confidential Information”), and each party shall treat the other’s Confidential Information as if it were its own confidential information. In addition, neither party shall provide the Confidential Information disclosed hereunder to any third party nor use such Confidential Information for any purpose other than to conduct business as contemplated hereunder. This Section 8 shall survive any expiration or termination of this Agreement.
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9.
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Proprietary Rights. In addition, all work, work in progress, finished or unfinished work, data, property, inventions, improvements, designs, trade secrets or any other tangible or intangible results prepared, produced, arising from, relating to, or developed in connection with the Services rendered by Consultant to Axalta, or involving the use of Axalta’s time, materials or facilities (collectively, “Works”) shall be deemed to be “works made for hire” within the meaning of U.S. Copyright Act of 1976, as amended, and shall be the sole and exclusive property of Axalta and shall be Axalta’s Confidential Information. Consultant agrees to execute any documents as may be requested by Axalta, in a form satisfactory to Axalta, evidencing, vesting and protecting Axalta’s sole title and right of ownership in the Works. The covenants contained in this Section 9 shall run in favor of Axalta, its successors, assigns, subsidiaries and affiliates, and shall survive the expiration or earlier termination of this Agreement.
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10.
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Notices. The parties agree that all notices under this Agreement will be in writing and will be either delivered personally to a party, transmitted by facsimile transmission or sent by registered mail or reputable courier to, with respect to Consultant, the address set forth below the signature lines below, and with respect to Axalta, to the its principal place of business, or such other addresses as may be furnished by either party to the other from time to time.
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11.
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Termination. This Agreement may be terminated by Axalta immediately for cause in the event of (i) any material breach of this Agreement by Consultant, which is not cured, if curable, by Consultant within thirty (30) days of written notice of such breach, or (ii) the gross negligence or willful misconduct by Consultant which causes material injury to the reputation of Axalta or material financial harm to Axalta or its affiliates. This Agreement may be terminated by Consultant at any time upon reasonable written notice to Axalta. In the event Axalta terminates this Agreement for cause or Consultant terminates this Agreement, Consultant shall only be entitled to receive any fees earned hereunder as of the effective date of such termination.
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12.
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Indemnification. Axalta shall indemnify, defend and hold harmless Consultant, from and against all claims and losses, to the extent such claims arise out of or relate to Consultant’s performing his obligations under this Agreement. Axalta’s obligations under this Section 12 shall not apply to the extent such loss is the direct or indirect result of (x) the gross negligence or willful misconduct of Consultant, (y) the failure of Consultant to perform under, or his breach of, this Agreement or other written instructions from Axalta, or (z) the failure of Consultant to comply with any applicable governmental requirement. Consultant will provide Axalta with all reasonable information and assistance to settle or defend the claim, and Axalta shall not, without the approval of Consultant, consent to the entry of any judgment or effect any settlement of any pending or threatened proceeding without the consent of Consultant. This Section 12 shall survive any termination or expiration of this Agreement for any reason.
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13.
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Limitation of Liability. EXCEPT FOR CLAIMS ARISING OUT OF (i) INDEMNIFICATION OBLIGATIONS HEREUNDER, (ii) VIOLATION OF CONFIDENTIALITY OBLIGATIONS UNDER THIS AGREEMENT, OR (iii) THE GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR FRAUD OF A PARTY, UNDER NO CIRCUMSTANCES SHALL A PARTY BE LIABLE TO THE OTHER PARTY (y) FOR ANY PUNITIVE, EXEMPLARY OR OTHER SPECIAL DAMAGES ARISING UNDER OR RELATING TO THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR (z) FOR ANY INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING LOSS OF USE, INCOME, PROFITS OR ANTICIPATED PROFITS, BUSINESS OR BUSINESS OPPORTUNITY, SAVINGS, DATA, OR BUSINESS REPUTATION) ARISING UNDER OR RELATING TO THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, REGARDLESS OF WHETHER SUCH DAMAGES ARE BASED IN CONTRACT, TORT, NEGLIGENCE OR ANY OTHER THEORY, AND REGARDLESS OF WHETHER SUCH PARTY HAS BEEN ADVISED OF, KNEW OF, OR SHOULD HAVE KNOWN OF THE POSSIBILITY OF SUCH DAMAGES. THIS SECTION 13 SHALL SURVIVE ANY TERMINATION OR EXPIRATION OF THIS AGREEMENT FOR ANY REASON.
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14.
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Independent Contractor. Consultant is retained only for the purposes and to the extent set forth in this Agreement, and his relationship to Axalta shall be that of an independent contractor. As such, Consultant shall be solely responsible for all necessary withholding of appropriate federal income tax, state income tax, and social security taxes. Consultant will not be eligible for any employee benefits from Axalta and is not an agent or authorized representative of Axalta.
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15.
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Entire Agreement / Amendments. This Agreement contains all of the terms and conditions agreed upon by the parties hereto with reference to the subject matter hereof; provided that for the avoidance of doubt (i) the provisions of that certain Second Amended and Restated Executive Restrictive Covenant and Severance Agreement, dated as of February 20, 2018, by and between Axalta, Axalta Coating Systems, LLC and Consultant (the “Restrictive Covenant Agreement”) applicable to the period following termination of employment shall remain in full force and effect, (ii) that certain Indemnification and Advancement Agreement, dated as of May 2, 2018, by and between Axalta and Consultant shall remain in full force and effect, and (iii) all of Consultant’s Axalta equity award agreements, except as specifically set forth in Section 5 hereof, shall each remain in full force and effect. This Agreement may not be modified or amended except by a written instrument executed by both parties.
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16.
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Successor and Assigns. The rights of Axalta under this Agreement may, without the consent of Consultant, be assigned by Axalta, in its sole and unfettered discretion, to any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly, acquires all or substantially all of the assets or business of Axalta. Axalta will require any successor (whether direct or indirect, by purchase, merger or otherwise) to all or substantially all of the business or assets of Axalta expressly to assume and to agree to perform this Agreement in the same manner and to the same extent that Axalta would be required to perform it if no such succession had taken place. The failure of any such successor to so assume this Agreement shall constitute a material breach of this Agreement by Axalta. As used in this Agreement, Axalta shall mean Axalta as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law or otherwise. Consultant shall not be entitled to assign any of his rights or obligations under this Agreement. This Agreement shall inure to the benefit of and be enforceable by Consultant’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
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17.
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Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument.
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18.
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Waiver / Severability. No waiver of any breach or default hereunder shall be deemed a waiver of subsequent breach or default of the same, similar or related nature. No waiver shall be binding unless in writing and signed by the person making the waiver. In the event any clause or portion of this Agreement shall be held invalid by any court, it is understood and agreed that such invalid clause or portion thereof shall have no effect upon the validity of other portions of this Agreement.
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19.
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Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania (without regard to its conflicts of law principles).
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20.
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Agreement to Arbitrate. The parties acknowledge and agree that Paragraph 9 of the Restrictive Covenant Agreement governing settlement of controversies, claims or disputes by binding arbitration shall remain in full force and effect and shall apply with respect to any controversies, claims or disputes arising under or with respect to this Agreement.
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Axalta Coating Systems Belgium BVBA
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Belgium
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Axalta Coating Systems Deutschland Holding GmbH & Co. KG
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Germany
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Axalta Coating Systems Dutch Holding A B.V.
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Netherlands
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Axalta Coating Systems Dutch Holding B B.V.
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Netherlands
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Axalta Coating Systems Finance 1 S.a.r.l.
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Luxembourg
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Axalta Coating Systems Germany GmbH & Co. KG
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Germany
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Axalta Coating Systems GmbH
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Switzerland
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Axalta Coating Systems International Holding GmbH
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Switzerland
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Axalta Coating Systems Luxembourg Holding 2 S.a.r.l.
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Luxembourg
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Axalta Coating Systems Luxembourg Holding S.a.r.l.
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Luxembourg
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Axalta Coating Systems Luxembourg Top S.a.r.l.
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Luxembourg
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Axalta Coating Systems U.S. Holdings, Inc.
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Delaware (USA)
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Axalta Coating Systems U.S. Inc.
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Delaware (USA)
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Axalta Coating Systems U.S.A., LLC
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Delaware (USA)
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Axalta Coating Systems UK Holding Ltd.
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United Kingdom
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Axalta Coating Systems, LLC
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Delaware (USA)
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Coatings Foreign IP Co. LLC
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Delaware (USA)
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1.
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I have reviewed this annual report on Form 10-K of Axalta Coating Systems Ltd.;
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2.
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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.
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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.
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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:
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(a)
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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)
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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;
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(c)
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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
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(d)
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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):
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(a)
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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)
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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/ Robert W. Bryant
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Name:
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Robert W. Bryant
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Title:
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Chief Executive Officer and President
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1.
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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.
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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.
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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:
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(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)
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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;
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(c)
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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
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(d)
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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):
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(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)
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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/ Sean M. Lannon
|
Name:
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Sean M. Lannon
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Title:
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Senior Vice President and Chief Financial Officer
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(1)
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The Annual Report on Form 10-K of the Company for the annual period ended December 31, 2018 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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By:
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/s/ Robert W. Bryant
|
Name:
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Robert W. Bryant
|
Title:
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Chief Executive Officer and President
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(1)
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The Annual Report on Form 10-K of the Company for the annual period ended December 31, 2018 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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By:
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/s/ Sean M. Lannon
|
Name:
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Sean M. Lannon
|
Title:
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Senior Vice President and Chief Financial Officer
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