Axalta Coating Systems Annual Report 2014

FY2014 Annual Report · Axalta Coating Systems
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2014 
Annual Report

Letter from the Chairman

“As we look 
ahead, our 
focus will be 
on productivity 
and growth, both 
for our own 
operations 
and for our 
customers.” 

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Ltd. On November 12, 2014, Axalta became a publicly traded 
company as the result of an initial public offering. That event 
was the result of a 21-month journey during which we 
became a fully independent company, building on more than 
145 years of experience in the coatings industry. This report 
provides an opportunity to share the results of our operations 
with shareholders and the many thousands of customers, 
employees and others who contributed to our 
accomplishments during the year.

Financial Highlights

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regions. Total sales were $4.36 billion and our adjusted 
EBITDA1 was $841 million, representing an increase of 
2.0 percent and 14.0 percent, respectively, over prior year 
results.

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adjusted EBITDA of $293 million, up by 0.7 percent and 33.8 
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sales were $2.59 billion with adjusted EBITDA of $548 million, 
up 2.9 percent and 5.6 percent, respectively, over prior year 
results. 

Adjusted EBITDA by Market Segment*

charts].
Net sales by region were also strong despite weaker economic 
conditions in Latin America. In North America, net sales were
$1.31 billion, an increase of 4.9 percent over 2013. Net sales 
in our Europe, Middle East and Africa region decreased by 0.5 
percent over 2013 to $1.67 billion. In Latin America (includ-
ing Mexico), net sales of $667 million fell by 5.3 percent over 
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of 10.9 percent over prior year results.

Net Sales by Market Segment*

Net Sales by Region*

* $ in millions
1Earnings before Interest, Taxes, Depreciation and Amortization   
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This report may contain certain forward-looking statements regarding Axalta and its subsidiaries. All of these statements are based on management’s expectations as well as estimates and assumptions prepared by management that, although 
they believe to be reasonable, are inherently uncertain. These statements involve risks and uncertainties, including, but not limited to, economic, competitive, governmental and technological factors outside of Axalta’s control that may cause its 
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or otherwise.

Commercial Highlights

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Our light vehicle business continued to satisfy customers 
around the globe with 30 major programs. These launches, 
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Axalta as the industry leader in providing high productivity 
coatings with reduced environmental impact in the light 
vehicle market. While expanding our customer base, we 
continued to innovate with the commercialization of our 2-Wet 
Monocoat paint system that was nominated for an Automotive 
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Our commercial vehicle business maintained its leading global 
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business with manufacturers of trucks, buses, and subway and 
high speed rail cars, each of which play an important role in the 
nation’s economic development. We also expanded the reach 
of Nason® industrial coatings with introductions in Australia and 
Indonesia. In North America, we also introduced large-scale 
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(cid:31)(cid:21)(cid:14)(cid:25)(cid:9)(cid:21)(cid:7)(cid:19)(cid:15)(cid:14)(cid:11)(cid:29)(cid:7)!(cid:26)(cid:21)(cid:7)(cid:20)(cid:29)(cid:9)(cid:9)(cid:13)(cid:11)(cid:6)

Axalta’s industrial business continued rapid globalization with 
many successful regional brands relaunched on the global 
stage. New Voltatex® wire enamels, impregnating resins and 
(cid:18)(cid:26)(cid:21)(cid:9)(cid:7)(cid:11)(cid:29)(cid:9)(cid:9)(cid:10)(cid:7)>(cid:12)(cid:21)(cid:15)(cid:14)(cid:11)(cid:29)(cid:9)(cid:11)(cid:7)(cid:20)(cid:9)(cid:21)(cid:9)(cid:7)(cid:14)(cid:15)(cid:10)(cid:21)(cid:26):(cid:30)(cid:18)(cid:9):(cid:7)(cid:10)(cid:26)(cid:7)(cid:10)(cid:29)(cid:9)(cid:7)#(cid:29)(cid:14)(cid:15)(cid:12)(cid:7)(cid:25)(cid:12)(cid:21)?(cid:9)(cid:10)(cid:6)(cid:7)
We also added new customers to a long list of those already 
(cid:30)(cid:11)(cid:14)(cid:15)%(cid:7)[(cid:26)(cid:13)(cid:10)(cid:12)(cid:10)(cid:9)"(cid:7)(cid:13)(cid:26)(cid:20)C[^#(cid:7)(cid:18)(cid:26)(cid:12)(cid:10)(cid:14)(cid:15)%(cid:11)(cid:7)(cid:10)(cid:26)(cid:7)(cid:14)(cid:15)(cid:11)(cid:30)(cid:13)(cid:12)(cid:10)(cid:9)(cid:7)(cid:25)(cid:26)(cid:10)(cid:26)(cid:21)(cid:11)(cid:7)!(cid:26)(cid:21)(cid:7)(cid:9)(cid:13)(cid:9)(cid:18)(cid:10)(cid:21)(cid:14)(cid:18)(cid:7)
vehicles. Abcite® polypropylene powder coatings and our 
Alesta®(cid:7)F(cid:13)(cid:26)8(cid:12)(cid:13)(cid:7)#(cid:26)(cid:13)(cid:26)(cid:21)(cid:7)#(cid:26)(cid:13)(cid:13)(cid:9)(cid:18)(cid:10)(cid:14)(cid:26)(cid:15)(cid:7)(cid:12)(cid:21)(cid:9)(cid:7)(cid:9)(cid:12)(cid:18)(cid:29)(cid:7)(cid:15)(cid:26)(cid:20)(cid:7)(cid:12)>(cid:12)(cid:14)(cid:13)(cid:12)8(cid:13)(cid:9)(cid:7)
%(cid:13)(cid:26)8(cid:12)(cid:13)(cid:13)’(cid:27)(cid:7)8(cid:30)(cid:14)(cid:13):(cid:14)(cid:15)%(cid:7)(cid:26)(cid:15)(cid:7)(cid:12)(cid:7)(cid:11)(cid:10)(cid:21)(cid:26)(cid:15)%(cid:7)(cid:18)(cid:30)(cid:11)(cid:10)(cid:26)(cid:25)(cid:9)(cid:21)(cid:7)8(cid:12)(cid:11)(cid:9)(cid:6)(cid:7)^(cid:30)(cid:21)(cid:7)(cid:8)(cid:12)(cid:31)CF(cid:12)(cid:21):® 
fusion bonded epoxy coating is being used on the largest 
natural gas pipeline project in Mexico. Our industrial and light 
vehicle OEM business sponsored the global repositioning of 
our well-established electrocoat products under the new brand 
(cid:15)(cid:12)(cid:25)(cid:9)(cid:7)(cid:26)!(cid:7)(cid:16)V(cid:30)(cid:12)H#(cid:7)(cid:10)(cid:26)(cid:7)(cid:11)(cid:9)(cid:21)>(cid:9)(cid:7)(cid:10)(cid:29)(cid:9)(cid:7)(cid:18)(cid:26)(cid:21)(cid:21)(cid:26)(cid:11)(cid:14)(cid:26)(cid:15)(cid:7)(cid:31)(cid:21)(cid:26)(cid:10)(cid:9)(cid:18)(cid:10)(cid:14)(cid:26)(cid:15)(cid:7)(cid:25)(cid:12)(cid:21)?(cid:9)(cid:10)(cid:6)

^(cid:30)(cid:21)(cid:7)(cid:21)(cid:9)(cid:19)(cid:15)(cid:14)(cid:11)(cid:29)(cid:7)8(cid:30)(cid:11)(cid:14)(cid:15)(cid:9)(cid:11)(cid:11)(cid:7)(cid:18)(cid:26)(cid:15)(cid:10)(cid:14)(cid:15)(cid:30)(cid:9):(cid:7)(cid:10)(cid:26)(cid:7)(cid:20)(cid:14)(cid:15)(cid:7)(cid:15)(cid:9)(cid:20)(cid:7)8(cid:26):’(cid:7)(cid:11)(cid:29)(cid:26)(cid:31)(cid:7)
customers among multi-shop, dealer owned and independent 
(cid:26)(cid:31)(cid:9)(cid:21)(cid:12)(cid:10)(cid:26)(cid:21)(cid:11)(cid:27)(cid:7)8’(cid:7)(cid:13)(cid:9)>(cid:9)(cid:21)(cid:12)%(cid:14)(cid:15)%(cid:7)(cid:10)(cid:29)(cid:9)(cid:7)(cid:11)(cid:10)(cid:21)(cid:9)(cid:15)%(cid:10)(cid:29)(cid:7)(cid:26)!(cid:7)(cid:26)(cid:30)(cid:21)(cid:7)/(cid:12)%(cid:11)(cid:29)(cid:14)(cid:31)(cid:7)(cid:31)(cid:21)(cid:9)(cid:25)(cid:14)(cid:30)(cid:25)(cid:7)
8(cid:21)(cid:12)(cid:15):(cid:11)(cid:27)(cid:7)#(cid:21)(cid:26)(cid:25)(cid:12)"®(cid:27)(cid:7)&(cid:31)(cid:14)(cid:9)(cid:11)(cid:7)X(cid:9)(cid:18)?(cid:9)(cid:21)®(cid:7)(cid:12)(cid:15):(cid:7)&(cid:10)(cid:12)(cid:15):(cid:26)"®. Across our 
premium product portfolio, we introduced the next generation 
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we saw expanded adoption of our latest generation of 
ultra-productive waterborne basecoat technology. We also 
accelerated the introduction of products, such as Duxone®, 
#(cid:29)(cid:12)(cid:13)(cid:13)(cid:9)(cid:15)%(cid:9)(cid:21)(cid:7)(cid:12)(cid:15):(cid:7)(cid:8)(cid:12)(cid:11)(cid:26)(cid:15)(cid:27)(cid:7)(cid:14)(cid:15)(cid:7)(cid:26)(cid:21):(cid:9)(cid:21)(cid:7)(cid:10)(cid:26)(cid:7)(cid:11)(cid:9)(cid:21)>(cid:9)(cid:7)(cid:18)(cid:30)(cid:11)(cid:10)(cid:26)(cid:25)(cid:9)(cid:21)(cid:11)(cid:7)(cid:14)(cid:15)(cid:7)(cid:25)(cid:26)(cid:21)(cid:9)(cid:7)
price sensitive mainstream and economy segments in a 
number of countries. Our strong product mix, coupled with 
superior application technologies, serves the full range of 
customers in both mature and emerging markets.
Behind the scenes, in our 35 manufacturing centers, Axalta’s 
environment, health and safety performance improved on an 
already strong, multi-year track record. In 2014, we achieved 

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in key metrics including manufacturing cycle time and batch 
per thousand man-hours.

Q(cid:14)(cid:15)(cid:12)(cid:13)(cid:13)’(cid:27)(cid:7)(cid:20)(cid:9)(cid:7)(cid:18)(cid:26)(cid:15)(cid:10)(cid:14)(cid:15)(cid:30)(cid:9):(cid:7)(cid:10)(cid:26)(cid:7)(cid:14)(cid:15)(cid:10)(cid:21)(cid:26):(cid:30)(cid:18)(cid:9)(cid:7)(cid:12)(cid:15):(cid:7)(cid:14)(cid:25)(cid:31)(cid:13)(cid:9)(cid:25)(cid:9)(cid:15)(cid:10)(cid:7)(cid:31)(cid:21)(cid:26)%(cid:21)(cid:12)(cid:25)(cid:11)(cid:7)
to improve overall customer satisfaction, eliminate waste and 
conserve resources.

Productivity and Growth 

As we look ahead, our focus will be on productivity and growth, 
both for our own operations and for those of our customers. 
Increased productivity will come from an aggressive new 
procurement strategy and cost management measures across 
all aspects of our business, not as a one-time event, but as our 
way of doing business every day. Axalta’s R&D organization is 
committed to fostering innovation that will provide our diverse 
customer base with next generation products and application 
(cid:10)(cid:9)(cid:18)(cid:29)(cid:15)(cid:26)(cid:13)(cid:26)%(cid:14)(cid:9)(cid:11)(cid:6)(cid:7)#(cid:26)(cid:12)(cid:10)(cid:14)(cid:15)%(cid:11)(cid:7)(cid:10)(cid:29)(cid:12)(cid:10)(cid:7)(cid:21)(cid:9)V(cid:30)(cid:14)(cid:21)(cid:9)(cid:7)!(cid:9)(cid:20)(cid:9)(cid:21)(cid:7)(cid:12)(cid:31)(cid:31)(cid:13)(cid:14)(cid:18)(cid:12)(cid:10)(cid:14)(cid:26)(cid:15)(cid:7)(cid:11)(cid:10)(cid:9)(cid:31)(cid:11)(cid:27)(cid:7)(cid:12)(cid:11)(cid:7)
well as less energy, time and space, will enable our customers 
to run their businesses more productively. We know that when 
our customers succeed, we succeed as well.

Looking ahead, we expect to build on the momentum that 
we established in 2014, demonstrating our capability to 
drive growth in both mature and emerging markets. In our 
EMEA and North America regions, we are committed to 
winning new customers, while superior service will reward 
the loyalty of those who already depend on our products. 
Our deep expertise in Latin America positions us to drive 
new business expansion in spite of the region’s potential 
(cid:9)(cid:18)(cid:26)(cid:15)(cid:26)(cid:25)(cid:14)(cid:18)(cid:7)(cid:30)(cid:15)(cid:18)(cid:9)(cid:21)(cid:10)(cid:12)(cid:14)(cid:15)(cid:10)(cid:14)(cid:9)(cid:11)(cid:6)(cid:7)(cid:16)(cid:11)(cid:14)(cid:12)(cid:7)(cid:17)(cid:12)(cid:18)(cid:14)(cid:19)(cid:18)(cid:7)(cid:25)(cid:12)(cid:21)?(cid:9)(cid:10)(cid:11)(cid:7)(cid:31)(cid:21)(cid:9)(cid:11)(cid:9)(cid:15)(cid:10)(cid:7)%(cid:21)(cid:9)(cid:12)(cid:10)(cid:7)
(cid:26)(cid:31)(cid:31)(cid:26)(cid:21)(cid:10)(cid:30)(cid:15)(cid:14)(cid:10)(cid:14)(cid:9)(cid:11)(cid:27)(cid:7)8(cid:26)(cid:10)(cid:29)(cid:7)(cid:14)(cid:15)(cid:7)#(cid:29)(cid:14)(cid:15)(cid:12)(cid:7)(cid:12)(cid:11)(cid:7)(cid:20)(cid:9)(cid:13)(cid:13)(cid:7)(cid:12)(cid:11)(cid:7)(cid:26)(cid:10)(cid:29)(cid:9)(cid:21)(cid:7)(cid:9)(cid:25)(cid:9)(cid:21)%(cid:14)(cid:15)%(cid:7)
economies in the region. Wherever we do business, 
relentless focus on innovation and quality, coupled with 
unparalleled customer-focused service, should drive our 
growth.

Our success over the past year would not have been possible 
(cid:20)(cid:14)(cid:10)(cid:29)(cid:26)(cid:30)(cid:10)(cid:7)(cid:10)(cid:29)(cid:9)(cid:7)(cid:18)(cid:26)(cid:15)(cid:19):(cid:9)(cid:15)(cid:18)(cid:9)(cid:7)(cid:12)(cid:15):(cid:7)(cid:11)(cid:30)(cid:31)(cid:31)(cid:26)(cid:21)(cid:10)(cid:7)(cid:26)!(cid:7)(cid:26)(cid:30)(cid:21)(cid:7)(cid:18)(cid:30)(cid:11)(cid:10)(cid:26)(cid:25)(cid:9)(cid:21)(cid:11)(cid:7)(cid:12)(cid:15):(cid:7)
other business partners who have fueled our growth. Our 
employees are the foundation of our success. Their passion 
for coatings and commitment to our customers enabled Axalta 
to accomplish so much in 2014 and will be key to our success 
in 2015 and beyond.

&(cid:14)(cid:15)(cid:18)(cid:9)(cid:21)(cid:9)(cid:13)’(cid:27)

#(cid:29)(cid:12)(cid:21)(cid:13)(cid:9)(cid:11)(cid:7)(cid:28)(cid:6)(cid:7)&(cid:29)(cid:12)>(cid:9)(cid:21)
#(cid:29)(cid:12)(cid:14)(cid:21)(cid:25)(cid:12)(cid:15)(cid:7)(cid:12)(cid:15):(cid:7)#(cid:29)(cid:14)(cid:9)!(cid:7)H"(cid:9)(cid:18)(cid:30)(cid:10)(cid:14)>(cid:9)(cid:7)^!(cid:19)(cid:18)(cid:9)(cid:21)

More than 145 Years of Innovation

2014
• 

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•(cid:7) @(cid:9)8(cid:21)(cid:12)(cid:15):(cid:9):(cid:7)HC#(cid:26)(cid:12)(cid:10)(cid:7)(cid:31)(cid:21)(cid:26):(cid:30)(cid:18)(cid:10)(cid:11)(cid:7)(cid:30)(cid:15):(cid:9)(cid:21)(cid:7)(cid:16)V(cid:30)(cid:12)H#(cid:7)(cid:15)(cid:12)(cid:25)(cid:9)

• 

Launched 30 paint lines for light vehicle OEM 
customers

•(cid:7) #(cid:21)(cid:26)(cid:25)(cid:12)"(cid:27)(cid:7)&(cid:31)(cid:14)(cid:9)(cid:11)(cid:7)X(cid:9)(cid:18)?(cid:9)(cid:21)(cid:7)(cid:12)(cid:15):(cid:7)&(cid:10)(cid:12)(cid:15):(cid:26)"(cid:7)(cid:20)(cid:14)(cid:15)(cid:7)(cid:25)(cid:30)(cid:13)(cid:10)(cid:14)(cid:31)(cid:13)(cid:9)(cid:7)

OEM approvals 

•(cid:7)

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technology

•(cid:7) H"(cid:10)(cid:9)(cid:15):(cid:9):(cid:7)(cid:21)(cid:9)(cid:12)(cid:18)(cid:29)(cid:7)(cid:26)!(cid:7)(cid:13)(cid:12)(cid:10)(cid:9)(cid:11)(cid:10)(cid:7)%(cid:9)(cid:15)(cid:9)(cid:21)(cid:12)(cid:10)(cid:14)(cid:26)(cid:15)(cid:7)(cid:21)(cid:9)(cid:19)(cid:15)(cid:14)(cid:11)(cid:29)(cid:7)

waterborne basecoat technology

•(cid:7)

K(cid:15)>(cid:9)(cid:11)(cid:10)(cid:9):(cid:7)(cid:14)(cid:15)(cid:7)#(cid:29)(cid:14)(cid:15)(cid:12)(cid:27)(cid:7)F(cid:9)(cid:21)(cid:25)(cid:12)(cid:15)’(cid:27)(cid:7)J(cid:21)(cid:12)Y(cid:14)(cid:13)(cid:7)(cid:12)(cid:15):(cid:7)~(cid:9)"(cid:14)(cid:18)(cid:26)

•(cid:7) F(cid:13)(cid:26)8(cid:12)(cid:13)(cid:14)Y(cid:9):(cid:7)(cid:21)(cid:9)(cid:12)(cid:18)(cid:29)(cid:7)(cid:26)!(cid:7)(cid:16)(cid:13)(cid:9)(cid:11)(cid:10)(cid:12)(cid:7)(cid:12)(cid:15):(cid:7)(cid:16)8(cid:18)(cid:14)(cid:10)(cid:9)(cid:7)(cid:31)(cid:26)(cid:20):(cid:9)(cid:21)(cid:7)

coatings and added Alesta Zero Zinc

•(cid:7)

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#(cid:129)(cid:7)(cid:9)(cid:13)(cid:9)(cid:18)(cid:10)(cid:21)(cid:14)(cid:18)(cid:12)(cid:13)(cid:7)(cid:11)(cid:10)(cid:9)(cid:9)(cid:13)(cid:7)>(cid:12)(cid:21)(cid:15)(cid:14)(cid:11)(cid:29)

•(cid:7) (cid:17)(cid:30)8(cid:13)(cid:14)(cid:11)(cid:29)(cid:9):(cid:7)(cid:19)(cid:21)(cid:11)(cid:10)(cid:7)(cid:16)"(cid:12)(cid:13)(cid:10)(cid:12)(cid:7)(cid:11)(cid:30)(cid:11)(cid:10)(cid:12)(cid:14)(cid:15)(cid:12)8(cid:14)(cid:13)(cid:14)(cid:10)’(cid:7)(cid:21)(cid:9)(cid:31)(cid:26)(cid:21)(cid:10)(cid:7)(cid:7)

2013
•  Established Axalta as an independent 
company with a new identity and values

(cid:130)(cid:7)

{(cid:12)(cid:30)(cid:15)(cid:18)(cid:29)(cid:9):(cid:7)#(cid:21)(cid:26)(cid:25)(cid:12)"(cid:7)(cid:12)(cid:11)(cid:7)%(cid:13)(cid:26)8(cid:12)(cid:13)(cid:7)/(cid:12)%(cid:11)(cid:29)(cid:14)(cid:31)(cid:7)(cid:21)(cid:9)(cid:19)(cid:15)(cid:14)(cid:11)(cid:29)(cid:7)
product family

•  Realigned organization to better serve 

customers

•  Expanded waterborne production capacity

2000 - 2012

• 

• 

• 

• 

• 

Introduced super high solids clearcoat 

Introduced high solids 3-Wet system 

K(cid:15)(cid:10)(cid:21)(cid:26):(cid:30)(cid:18)(cid:9):(cid:7)H(cid:18)(cid:26)C#(cid:26)(cid:15)(cid:18)(cid:9)(cid:31)(cid:10)

{(cid:12)(cid:30)(cid:15)(cid:18)(cid:29)(cid:9):(cid:7)#(cid:21)(cid:26)(cid:25)(cid:12)"(cid:7)(cid:17)(cid:21)(cid:26) (3rd generation 
waterborne technology)

K(cid:15)(cid:10)(cid:21)(cid:26):(cid:30)(cid:18)(cid:9):(cid:7)(cid:16)(cid:18)V(cid:30)(cid:14)(cid:21)(cid:9)(cid:7)(cid:17)(cid:13)(cid:30)(cid:11)W(cid:7)HQ|

1990 - 2000

• 

• 

Introduced wet-on-wet one pass processing 

K(cid:15)(cid:10)(cid:21)(cid:26):(cid:30)(cid:18)(cid:9):(cid:7)#(cid:21)(cid:26)(cid:25)(cid:12)"

•  (cid:16)(cid:18)V(cid:30)(cid:14)(cid:21)(cid:9):(cid:7)X(cid:9)(cid:21)8(cid:9)(cid:21)(cid:10)(cid:11)(cid:7)!(cid:21)(cid:26)(cid:25)(cid:7)X(cid:26)(cid:9)(cid:18)(cid:29)(cid:11)(cid:10)(cid:7)

•  Acquired Nason

• 

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1970 - 1990

•  Exited most architectural coatings business

• 

Introduced Imron® 

1866 - 1970

•  X(cid:9)(cid:21)8(cid:9)(cid:21)(cid:10)(cid:11)(cid:7)8(cid:9)%(cid:12)(cid:15)(cid:7)(cid:26)(cid:31)(cid:9)(cid:21)(cid:12)(cid:10)(cid:14)(cid:26)(cid:15)(cid:7)(cid:12)(cid:15):(cid:7)(cid:14)(cid:15)(cid:10)(cid:21)(cid:26):(cid:30)(cid:18)(cid:9):(cid:7)

&(cid:31)(cid:14)(cid:9)(cid:11)(cid:7)X(cid:9)(cid:18)?(cid:9)(cid:21)

•  P(cid:9)>(cid:9)(cid:13)(cid:26)(cid:31)(cid:9):(cid:7)(cid:19)(cid:21)(cid:11)(cid:10)(cid:7)(cid:25)(cid:14)"(cid:14)(cid:15)%(cid:7)(cid:25)(cid:12)(cid:18)(cid:29)(cid:14)(cid:15)(cid:9)(cid:7)(cid:10)(cid:14)(cid:15)(cid:10)(cid:14)(cid:15)%(cid:7)

system

• 

Introduced Voltatex electrical insulation 
products

2014 Investments for Growth

China

Germany

#(cid:29)(cid:14)(cid:15)(cid:12)(cid:7)(cid:29)(cid:12)(cid:11)(cid:7)(cid:9)(cid:25)(cid:9)(cid:21)%(cid:9):(cid:7)(cid:12)(cid:11)(cid:7)(cid:10)(cid:29)(cid:9)(cid:7)!(cid:12)(cid:11)(cid:10)(cid:9)(cid:11)(cid:10)(cid:7)%(cid:21)(cid:26)(cid:20)(cid:14)(cid:15)%(cid:7)(cid:25)(cid:12)(cid:21)?(cid:9)(cid:10)(cid:7)!(cid:26)(cid:21)(cid:7)
automotive and commercial vehicle coatings. Regulation 
requires that all new OEM facilities use waterborne coatings. 
To meet anticipated customer demand, Axalta broke ground 
to expand production of waterborne coatings on the campus 
of our existing manufacturing center in the Jiading District of 
&(cid:29)(cid:12)(cid:15)%(cid:29)(cid:12)(cid:14)(cid:6)(cid:7)

Axalta also renewed its partnership with local powder coating 
(cid:25)(cid:12)(cid:15)(cid:30)!(cid:12)(cid:18)(cid:10)(cid:30)(cid:21)(cid:9)(cid:21)(cid:7)X(cid:30)(cid:12)G(cid:14)(cid:12)(cid:7)(cid:10)(cid:26)(cid:7)!(cid:26)(cid:21)(cid:25)(cid:7)(cid:10)(cid:29)(cid:9)(cid:7)(cid:16)"(cid:12)(cid:13)(cid:10)(cid:12)CX(cid:30)(cid:12)G(cid:14)(cid:12)(cid:7)G(cid:26)(cid:14)(cid:15)(cid:10)(cid:7)>(cid:9)(cid:15)(cid:10)(cid:30)(cid:21)(cid:9)(cid:7)
and invested to expand production at two of the joint 
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(cid:31)(cid:26)(cid:20):(cid:9)(cid:21)(cid:7)(cid:31)(cid:21)(cid:26):(cid:30)(cid:18)(cid:10)(cid:11)(cid:7)(cid:20)(cid:14)(cid:13)(cid:13)(cid:7)8(cid:9)(cid:7)(cid:12)::(cid:9):(cid:7)(cid:10)(cid:26)(cid:7)(cid:10)(cid:29)(cid:9)(cid:7)X(cid:30)(cid:12)(cid:15)%(cid:11)(cid:29)(cid:12)(cid:15)(cid:7)(cid:26)(cid:31)(cid:9)(cid:21)(cid:12)(cid:10)(cid:14)(cid:26)(cid:15)(cid:11)(cid:7)
center to meet increased domestic demand for thermoplastic 
coatings. The Qingpu facility will add a new production 
workshop, more manufacturing lines, improved color 
matching resources and will install equipment designed to 
reduce delivery lead times. 

Brazil

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the company’s largest, providing products for OEM and 
(cid:21)(cid:9)(cid:19)(cid:15)(cid:14)(cid:11)(cid:29)(cid:7)(cid:18)(cid:30)(cid:11)(cid:10)(cid:26)(cid:25)(cid:9)(cid:21)(cid:11)(cid:7)(cid:14)(cid:15)(cid:7)(cid:10)(cid:29)(cid:9)(cid:7)H(cid:30)(cid:21)(cid:26)(cid:31)(cid:9)(cid:27)(cid:7)~(cid:14)::(cid:13)(cid:9)(cid:7)H(cid:12)(cid:11)(cid:10)(cid:7)(cid:12)(cid:15):(cid:7)(cid:16)!(cid:21)(cid:14)(cid:18)(cid:12)(cid:7)
region. To meet increasing demand for waterborne products, 
Axalta broke ground to expand production capacity for 
coatings supplied to some of the largest European light 
vehicle automotive OEMs, as well as for Axalta’s three global 
(cid:21)(cid:9)(cid:19)(cid:15)(cid:14)(cid:11)(cid:29)(cid:7)8(cid:21)(cid:12)(cid:15):(cid:11)(cid:7)C(cid:7)#(cid:21)(cid:26)(cid:25)(cid:12)"(cid:27)(cid:7)&(cid:31)(cid:14)(cid:9)(cid:11)(cid:7)X(cid:9)(cid:18)?(cid:9)(cid:21)(cid:7)(cid:12)(cid:15):(cid:7)&(cid:10)(cid:12)(cid:15):(cid:26)"(cid:6)(cid:7);(cid:29)(cid:9)(cid:7)
added production will also provide waterborne paints 
for manufacturers of commercial vehicles and industrial 
products and install a number of advanced technologies that 
will decrease waste and reduce the environmental footprint of 
our operations.

Mexico

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(cid:10)(cid:26)(cid:7)(cid:11)(cid:14)%(cid:15)(cid:14)(cid:19)(cid:18)(cid:12)(cid:15)(cid:10)(cid:13)’(cid:7)(cid:9)"(cid:31)(cid:12)(cid:15):(cid:7)(cid:20)(cid:12)(cid:10)(cid:9)(cid:21)8(cid:26)(cid:21)(cid:15)(cid:9)(cid:7)(cid:31)(cid:21)(cid:26):(cid:30)(cid:18)(cid:10)(cid:14)(cid:26)(cid:15)(cid:7)(cid:18)(cid:12)(cid:31)(cid:12)(cid:18)(cid:14)(cid:10)’(cid:7)(cid:14)(cid:15)(cid:7)
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America. The construction represents the last step in a 
three-year investment program. The additional facility will 
more than double capacity in order to meet the demands of 
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Axalta invested to expand capacity to produce resins used in 
the manufacturing of transportation coatings at its Tlalnepantla 
operations center, one of Axalta’s three manufacturing locations 
in Mexico and headquarters of the company’s businesses in 
Latin America. The resin facility will use manufacturing 
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reduce waste and further reduce the environmental footprint 
from its manufacturing operations. The need for additional 
resin production directly responds to growing customer interest 
in Axalta’s environmentally responsible coatings..

Customers and Products

Transportation Coatings for Light Vehicle OEMs

Axalta manufactures and sells market-leading coatings systems to automotive 
OEMs that produce cars and other light vehicles. Axalta coatings are found on 
layers from electrocoat and primer to basecoats and clears, each layer adding 
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the latest light weight automotive plastic, as well as high-technology metal and 
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(cid:16)(cid:15)(cid:7)(cid:12)(cid:21)(cid:21)(cid:12)’(cid:7)(cid:26)!(cid:7)X(cid:12)(cid:21)(cid:25)(cid:26)(cid:15)(cid:14)Y(cid:9):(cid:7)#(cid:26)(cid:12)(cid:10)(cid:14)(cid:15)%(cid:7);(cid:9)(cid:18)(cid:29)(cid:15)(cid:26)(cid:13)(cid:26)%(cid:14)(cid:9)(cid:11)TM offers OEMs a selection of 
installation options suited for waterborne and both traditional and high-solids 
solventborne products. Axalta’s 3-Wet concept eliminates the need for a primer 
(cid:26)>(cid:9)(cid:15)(cid:7)(cid:12)(cid:15):(cid:7)(cid:14)(cid:11)(cid:7)(cid:9)(cid:15)%(cid:14)(cid:15)(cid:9)(cid:9)(cid:21)(cid:9):(cid:7)(cid:10)(cid:26)(cid:7)(cid:21)(cid:9):(cid:30)(cid:18)(cid:9)(cid:7)(cid:9)(cid:15)(cid:9)(cid:21)%’(cid:7)(cid:30)(cid:11)(cid:9)(cid:7)(cid:12)(cid:15):(cid:7)#^2 emissions by up to 30 
percent, while improving scratch performance, color capability and productivity. 
The 2-Wet Monocoat paint system provides key advantages, including excellent 
appearance and durability without the use of a clear coat, complete UV opacity, 
and productivity gains that result from removing an application step. The Eco-
#(cid:26)(cid:15)(cid:18)(cid:9)(cid:31)(cid:10)(cid:7)(cid:11)’(cid:11)(cid:10)(cid:9)(cid:25)(cid:7)(cid:18)(cid:21)(cid:9)(cid:12)(cid:10)(cid:9)(cid:11)(cid:7)(cid:9)!(cid:19)(cid:18)(cid:14)(cid:9)(cid:15)(cid:18)(cid:14)(cid:9)(cid:11)(cid:7)8’(cid:7)(cid:18)(cid:26)(cid:25)8(cid:14)(cid:15)(cid:14)(cid:15)%(cid:7)(cid:10)(cid:29)(cid:9)(cid:7)(cid:31)(cid:21)(cid:14)(cid:25)(cid:9)(cid:21)(cid:7)(cid:12)(cid:15):(cid:7)(cid:10)(cid:29)(cid:9)(cid:7)8(cid:12)(cid:11)(cid:9)(cid:18)(cid:26)(cid:12)(cid:10)(cid:27)(cid:7)
which is then followed by a clear coat. The two-step top coating process eliminates 
a layer and baking stage, typical in the traditional painting process, and creates 
an effectively  primer-less coating system. Axalta’s low temperature systems 
increase the number of materials that can be coated, which is especially useful for 
composite and plastic substrates that may not be able to withstand traditional high- 
bake temperatures.

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(cid:9)(cid:13)(cid:9)(cid:18)(cid:10)(cid:21)(cid:26):(cid:9)(cid:31)(cid:26)(cid:11)(cid:14)(cid:10)(cid:14)(cid:26)(cid:15)(cid:7)(cid:10)(cid:9)(cid:18)(cid:29)(cid:15)(cid:26)(cid:13)(cid:26)%(cid:14)(cid:9)(cid:11)(cid:7):(cid:9)(cid:11)(cid:14)%(cid:15)(cid:9):(cid:7)(cid:10)(cid:26)(cid:7)(cid:31)(cid:21)(cid:26)>(cid:14):(cid:9)(cid:7)(cid:10)(cid:29)(cid:9)(cid:7)(cid:19)(cid:21)(cid:11)(cid:10)(cid:7)(cid:13)(cid:12)’(cid:9)(cid:21)(cid:7)(cid:26)!(cid:7)(cid:18)(cid:26)(cid:21)(cid:21)(cid:26)(cid:11)(cid:14)(cid:26)(cid:15)(cid:7)
protection and the ideal foundation for our primers, basecoats and clear coat 
(cid:19)(cid:15)(cid:14)(cid:11)(cid:29)(cid:9)(cid:11)(cid:6) 

Transportation Coatings for Commercial Vehicles

Axalta’s coatings are found on a wide range of commercial vehicles 
which the world relies on to move people and products across cities and 
around the world. Axalta coatings protect and do it with color and style. 
On wheels, Axalta’s coatings are found on medium to heavy duty trucks, 
buses, rail stock and agricultural and construction equipment, as well 
as on utility trucks of all types. On the rails, Axalta coats locomotives, 
passenger carriages, high speed trains, tramways and mass transit 
(cid:18)(cid:12)(cid:21)(cid:11)(cid:6)(cid:7)&(cid:31)(cid:26)(cid:21)(cid:10)(cid:11)(cid:7)>(cid:9)(cid:29)(cid:14)(cid:18)(cid:13)(cid:9)(cid:11)(cid:7)(cid:14)(cid:15)(cid:18)(cid:13)(cid:30):(cid:14)(cid:15)%(cid:7)(cid:25)(cid:26)(cid:10)(cid:26)(cid:21)(cid:18)’(cid:18)(cid:13)(cid:9)(cid:11)(cid:27)(cid:7)(cid:16);[(cid:11)(cid:7)(cid:12)(cid:15):(cid:7)(cid:11)(cid:15)(cid:26)(cid:20)(cid:25)(cid:26)8(cid:14)(cid:13)(cid:9)(cid:11)(cid:7)(cid:12)(cid:13)(cid:11)(cid:26)(cid:7)
8(cid:9)(cid:15)(cid:9)(cid:19)(cid:10)(cid:7)!(cid:21)(cid:26)(cid:25)(cid:7)(cid:16)"(cid:12)(cid:13)(cid:10)(cid:12)(cid:7)(cid:18)(cid:26)(cid:12)(cid:10)(cid:14)(cid:15)%(cid:11)(cid:6)(cid:7)

(cid:16)"(cid:12)(cid:13)(cid:10)(cid:12)*(cid:11)(cid:7)(cid:18)(cid:26)(cid:12)(cid:10)(cid:14)(cid:15)%(cid:11)(cid:7)(cid:12)(cid:21)(cid:9)(cid:7)(cid:30)(cid:11)(cid:9):(cid:7)8’(cid:7)^H~(cid:11)(cid:27)(cid:7)/(cid:9)(cid:9)(cid:10)(cid:11)(cid:7)(cid:12)(cid:15):(cid:7)(cid:26)(cid:10)(cid:29)(cid:9)(cid:21)(cid:11)(cid:7)(cid:14)(cid:15)(cid:7)(cid:10)(cid:29)(cid:9)(cid:7)(cid:18)(cid:26)(cid:25)(cid:25)(cid:9)(cid:21)(cid:18)(cid:14)(cid:12)(cid:13)(cid:7)
aftermarket for repair and customization. Axalta’s Imron family of products 
is recognized around the world for excellence. Other products available 
(cid:14)(cid:15)(cid:18)(cid:13)(cid:30):(cid:9)(cid:7)@(cid:14)>(cid:12)(cid:13)W(cid:27)(cid:7)H"(cid:18)(cid:9)(cid:13)W(cid:7)(cid:17)(cid:21)(cid:26)(cid:7)(cid:12)(cid:15):(cid:7)(cid:17)(cid:9)(cid:21)(cid:18)(cid:26);(cid:26)(cid:31)(cid:7) liquid coatings. All of Axalta’s 
(cid:18)(cid:26)(cid:12)(cid:10)(cid:14)(cid:15)%(cid:11)(cid:7)!(cid:26)(cid:21)(cid:7)(cid:18)(cid:26)(cid:25)(cid:25)(cid:9)(cid:21)(cid:18)(cid:14)(cid:12)(cid:13)(cid:7)>(cid:9)(cid:29)(cid:14)(cid:18)(cid:13)(cid:9)(cid:11)(cid:7)8(cid:9)(cid:15)(cid:9)(cid:19)(cid:10)(cid:7)!(cid:21)(cid:26)(cid:25)(cid:7)(cid:10)(cid:29)(cid:9)(cid:7)(cid:9)"(cid:31)(cid:9)(cid:21)(cid:10)(cid:14)(cid:11)(cid:9)(cid:7)(cid:10)(cid:29)(cid:12)(cid:10)(cid:7)(cid:18)(cid:26)(cid:25)(cid:9)(cid:11)(cid:7)
from decades of coating technology and color formulation developed 
!(cid:26)(cid:21)(cid:7)(cid:12)(cid:30)(cid:10)(cid:26)(cid:25)(cid:26)(cid:10)(cid:14)>(cid:9)(cid:7)^H~(cid:7)(cid:12)(cid:15):(cid:7)(cid:21)(cid:9)(cid:19)(cid:15)(cid:14)(cid:11)(cid:29)(cid:7)(cid:18)(cid:30)(cid:11)(cid:10)(cid:26)(cid:25)(cid:9)(cid:21)(cid:11)(cid:6)(cid:7)(cid:16)(cid:7)!(cid:30)(cid:13)(cid:13)(cid:7)(cid:13)(cid:14)(cid:15)(cid:9)(cid:7)(cid:26)!(cid:7)(cid:16)V(cid:30)(cid:12)H#(cid:7)
electrodeposition coatings prevent corrosion. 

Industrial Market Coatings

(cid:16)"(cid:12)(cid:13)(cid:10)(cid:12)*(cid:11)(cid:7)(cid:14)(cid:15):(cid:30)(cid:11)(cid:10)(cid:21)(cid:14)(cid:12)(cid:13)(cid:7)(cid:18)(cid:30)(cid:11)(cid:10)(cid:26)(cid:25)(cid:9)(cid:21)(cid:11)(cid:7)8(cid:9)(cid:15)(cid:9)(cid:19)(cid:10)(cid:7)!(cid:21)(cid:26)(cid:25)(cid:7)(cid:12)(cid:7)(cid:21)(cid:12)(cid:15)%(cid:9)(cid:7)(cid:26)!(cid:7)(cid:18)(cid:26)(cid:12)(cid:10)(cid:14)(cid:15)%(cid:11)(cid:7)
:(cid:9)(cid:11)(cid:14)%(cid:15)(cid:9):(cid:7)(cid:10)(cid:26)(cid:7)(cid:25)(cid:9)(cid:9)(cid:10)(cid:7):(cid:9)(cid:25)(cid:12)(cid:15):(cid:14)(cid:15)%(cid:7)(cid:10)(cid:9)(cid:18)(cid:29)(cid:15)(cid:14)(cid:18)(cid:12)(cid:13)(cid:7)(cid:11)(cid:31)(cid:9)(cid:18)(cid:14)(cid:19)(cid:18)(cid:12)(cid:10)(cid:14)(cid:26)(cid:15)(cid:11)(cid:7)(cid:12)(cid:18)(cid:21)(cid:26)(cid:11)(cid:11)(cid:7)(cid:12)(cid:7)
spectrum of industries. 

Axalta’s Voltatex wire enamels, core sheet varnishes and 
impregnating resins both insulate and facilitate heat transfer in 
(cid:25)(cid:26)(cid:10)(cid:26)(cid:21)(cid:11)(cid:27)(cid:7)%(cid:9)(cid:15)(cid:9)(cid:21)(cid:12)(cid:10)(cid:26)(cid:21)(cid:11)(cid:7)(cid:12)(cid:15):(cid:7)(cid:10)(cid:21)(cid:12)(cid:15)(cid:11)!(cid:26)(cid:21)(cid:25)(cid:9)(cid:21)(cid:11)(cid:27)(cid:7)(cid:10)(cid:29)(cid:9)(cid:21)(cid:9)8’(cid:7)(cid:14)(cid:15)(cid:18)(cid:21)(cid:9)(cid:12)(cid:11)(cid:14)(cid:15)%(cid:7)(cid:9)!(cid:19)(cid:18)(cid:14)(cid:9)(cid:15)(cid:18)(cid:14)(cid:9)(cid:11)(cid:7)
and saving energy. 

Manufacturers rely on more than a dozen Axalta coatings to coat 
a spectrum of automotive and industrial materials. Alesta powder 
(cid:18)(cid:26)(cid:12)(cid:10)(cid:14)(cid:15)%(cid:11)(cid:7)(cid:12)(cid:15):(cid:7)(cid:12)(cid:15)(cid:7)(cid:12)(cid:21)(cid:21)(cid:12)’(cid:7)(cid:26)!(cid:7)(cid:13)(cid:14)V(cid:30)(cid:14):(cid:7)(cid:31)(cid:21)(cid:26):(cid:30)(cid:18)(cid:10)(cid:11)(cid:7)(cid:14)(cid:15)(cid:18)(cid:13)(cid:30):(cid:14)(cid:15)%(cid:7)&(cid:10)(cid:26)(cid:13)(cid:13)(cid:12)V(cid:30)(cid:14):W(cid:27)(cid:7)
#(cid:29)(cid:9)(cid:25)(cid:26)(cid:31)(cid:29)(cid:12)(cid:15)W(cid:27)(cid:7){(cid:30)(cid:10)(cid:26)(cid:31)(cid:29)(cid:9)(cid:15)W(cid:27)(cid:7);(cid:30)!(cid:18)(cid:26)(cid:10)(cid:9)W(cid:27)(cid:7)(cid:17)(cid:9)(cid:21)(cid:18)(cid:26);(cid:26)(cid:31)® and Imron 
industrial grades are used in light and commercial vehicle OEM 
production on frames, shock absorbers, springs and brake lines. 
Other products that use Axalta coatings range from furniture, 
(cid:18)(cid:26)(cid:14)(cid:13)(cid:11)(cid:7)(cid:12)(cid:15):(cid:7):(cid:21)(cid:30)(cid:25)(cid:11)(cid:7)(cid:10)(cid:26)(cid:7)(cid:20)(cid:29)(cid:14)(cid:10)(cid:9)(cid:7)%(cid:26)(cid:26):(cid:11)(cid:7)(cid:12)(cid:15):(cid:7)(cid:26)(cid:10)(cid:29)(cid:9)(cid:21)(cid:7)(cid:12)(cid:31)(cid:31)(cid:13)(cid:14)(cid:12)(cid:15)(cid:18)(cid:9)(cid:11)(cid:6)(cid:7)(cid:16)V(cid:30)(cid:12)H#(cid:7)
electrodeposition coatings prevent corrosion on a wide range of 
industrial products. 

(cid:8)(cid:12)(cid:31)CF(cid:12)(cid:21):(cid:7)!(cid:30)(cid:11)(cid:14)(cid:26)(cid:15)(cid:7)8(cid:26)(cid:15):(cid:9):(cid:7)(cid:9)(cid:31)(cid:26)"’(cid:7)(cid:10)(cid:29)(cid:9)(cid:21)(cid:25)(cid:26)(cid:31)(cid:13)(cid:12)(cid:11)(cid:10)(cid:14)(cid:18)(cid:7)(cid:31)(cid:26)(cid:20):(cid:9)(cid:21)(cid:7)(cid:18)(cid:26)(cid:12)(cid:10)(cid:14)(cid:15)%(cid:11)(cid:7)(cid:11)(cid:9)(cid:21)>(cid:9)(cid:7)
high-stress applications providing insulation and protection for both 
internal and external use on materials, including sub-sea oil and gas 
pipelines, rebar and valves. Abcite thermoplastic coatings protect off-
shore oil rigs and other surfaces subject to harsh environments.

K(cid:15)(cid:7)(cid:10)(cid:29)(cid:9)(cid:7)(cid:12)(cid:21)(cid:18)(cid:29)(cid:14)(cid:10)(cid:9)(cid:18)(cid:10)(cid:30)(cid:21)(cid:12)(cid:13)(cid:7)(cid:12)(cid:21)(cid:9)(cid:15)(cid:12)(cid:27)(cid:7)8(cid:30)(cid:14)(cid:13):(cid:14)(cid:15)%(cid:7)(cid:18)(cid:13)(cid:12)::(cid:14)(cid:15)%(cid:7)(cid:12)(cid:15):(cid:7)(cid:19)(cid:10)(cid:10)(cid:14)(cid:15)%(cid:11)(cid:7)(cid:21)(cid:9)(cid:13)’(cid:7)(cid:26)(cid:15)(cid:7)(cid:16)(cid:13)(cid:9)(cid:11)(cid:10)(cid:12)(cid:7)
powder coatings and other liquid products to prevent corrosion and 
provide colors that contribute to the architectural intent. Various 
surface appearances that range from low to high gloss, smooth to 
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Performance Coatings for Aftermarket 
(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:8)(cid:3)(cid:9)(cid:10)(cid:11)(cid:5)(cid:6)(cid:7)(cid:12)(cid:2)(cid:9)(cid:13)

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(cid:12)(cid:15):(cid:7)(cid:18)(cid:26)(cid:25)(cid:25)(cid:9)(cid:21)(cid:18)(cid:14)(cid:12)(cid:13)(cid:7)>(cid:9)(cid:29)(cid:14)(cid:18)(cid:13)(cid:9)(cid:11)(cid:7)(cid:13)(cid:26)(cid:26)?(cid:7)(cid:13)(cid:14)?(cid:9)(cid:7)(cid:15)(cid:9)(cid:20)(cid:6)(cid:7)^(cid:30)(cid:21)(cid:7)/(cid:12)%(cid:11)(cid:29)(cid:14)(cid:31)(cid:7)
8(cid:21)(cid:12)(cid:15):(cid:7)!(cid:12)(cid:25)(cid:14)(cid:13)(cid:14)(cid:9)(cid:11)(cid:7)(cid:134)(cid:7)#(cid:21)(cid:26)(cid:25)(cid:12)"(cid:27)(cid:7)&(cid:31)(cid:14)(cid:9)(cid:11)(cid:7)X(cid:9)(cid:18)?(cid:9)(cid:21)(cid:7)(cid:12)(cid:15):(cid:7)&(cid:10)(cid:12)(cid:15):(cid:26)"(cid:7)
(cid:134)(cid:7)(cid:12)(cid:21)(cid:9)(cid:7)(cid:30)(cid:11)(cid:9):(cid:7)8’(cid:7)(cid:10)(cid:29)(cid:9)(cid:7)(cid:20)(cid:26)(cid:21)(cid:13):*(cid:11)(cid:7)(cid:13)(cid:9)(cid:12):(cid:14)(cid:15)%(cid:7)(cid:21)(cid:9)(cid:19)(cid:15)(cid:14)(cid:11)(cid:29)(cid:7)(cid:10)(cid:9)(cid:18)(cid:29)(cid:15)(cid:14)(cid:18)(cid:14)(cid:12)(cid:15)(cid:11)(cid:6)(cid:7)
Regional and local brands such as Duxone, Nason, 
#(cid:29)(cid:12)(cid:13)(cid:13)(cid:9)(cid:15)%(cid:9)(cid:21)(cid:7)(cid:12)(cid:15):(cid:7)K(cid:25)(cid:13)(cid:12)(cid:21)W(cid:7)(cid:25)(cid:9)(cid:9)(cid:10)(cid:7)(cid:12)::(cid:14)(cid:10)(cid:14)(cid:26)(cid:15)(cid:12)(cid:13)(cid:7)8(cid:26):’(cid:7)(cid:11)(cid:29)(cid:26)(cid:31)(cid:7)
preferences with expanded options for mainstream and 
economy price segments.

A perfect color match is the gold standard for body shops. 
#(cid:26)(cid:13)(cid:26)(cid:21)(cid:7)(cid:10)(cid:26)(cid:26)(cid:13)(cid:11)(cid:7)(cid:21)(cid:12)(cid:15)%(cid:14)(cid:15)%(cid:7)!(cid:21)(cid:26)(cid:25)(cid:7)!(cid:12)(cid:15)(cid:7):(cid:9)(cid:18)?(cid:11)(cid:7)(cid:10)(cid:26)(cid:7)(cid:10)(cid:29)(cid:9)(cid:7)(cid:13)(cid:12)(cid:10)(cid:9)(cid:11)(cid:10)(cid:7)(cid:16)(cid:18)V(cid:30)(cid:14)(cid:21)(cid:9)(cid:7)
HQ|(cid:7)(cid:26)(cid:31)(cid:10)(cid:14)(cid:18)(cid:7)(cid:10)(cid:9)(cid:18)(cid:29)(cid:15)(cid:26)(cid:13)(cid:26)%’(cid:7)(cid:11)(cid:31)(cid:9)(cid:18)(cid:10)(cid:21)(cid:26)(cid:31)(cid:29)(cid:26)(cid:10)(cid:26)(cid:25)(cid:9)(cid:10)(cid:9)(cid:21)(cid:11)(cid:7)(cid:12)(cid:18)(cid:18)(cid:9)(cid:13)(cid:9)(cid:21)(cid:12)(cid:10)(cid:9)(cid:7)
color match and accuracy, reducing waste and improving 
productivity in the body shop. Located on four continents, 
45 technical training centers around the world back up 
our products by providing training and technical support 
(cid:10)(cid:26)(cid:7)(cid:29)(cid:9)(cid:13)(cid:31)(cid:7)(cid:21)(cid:9)(cid:19)(cid:15)(cid:14)(cid:11)(cid:29)(cid:7)(cid:18)(cid:21)(cid:12)!(cid:10)(cid:11)(cid:25)(cid:9)(cid:15)(cid:7)(cid:29)(cid:26)(cid:15)(cid:9)(cid:7)(cid:10)(cid:29)(cid:9)(cid:14)(cid:21)(cid:7)(cid:11)?(cid:14)(cid:13)(cid:13)(cid:11)(cid:6)(cid:7)

Color Expertise

With over 1,700 patents issued or pending worldwide for coatings and application 
systems, innovation is central to Axalta’s culture. 

Axalta is an industry leader in color research and development. 
Axalta’s annual OEM color shows set the pace for its work 
around the world to provide exciting design options for 
automotive manufacturers. Whether applied to a new vehicle on 
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vehicle shine in a spectrum of colors and resist deterioration 
from climate and scratches. 

;(cid:29)(cid:9)(cid:7)(cid:15)(cid:9)(cid:20)(cid:13)’(cid:7)(cid:14)(cid:15)(cid:10)(cid:21)(cid:26):(cid:30)(cid:18)(cid:9):(cid:7)[(cid:9)(cid:21)(cid:25)(cid:9)(cid:9)(cid:21)(cid:12)W(cid:7)(cid:10)(cid:9)(cid:18)(cid:29)(cid:15)(cid:26)(cid:13)(cid:26)%’(cid:7)(cid:29)(cid:14)%(cid:29)(cid:7)(cid:18)(cid:29)(cid:21)(cid:26)(cid:25)(cid:12)(cid:7)
paint is Axalta’s latest contribution to color innovation. Deep 
dispersion chemistry provides lush colors that enhance the look 
(cid:26)!(cid:7)(cid:12)(cid:15)’(cid:7)(cid:19)(cid:15)(cid:14)(cid:11)(cid:29)(cid:6)(cid:7)Radiant Red Vermeera was selected as Axalta’s 
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(cid:135)&(cid:31)(cid:9)(cid:18)(cid:14)(cid:12)(cid:13)(cid:10)’(cid:7)HV(cid:30)(cid:14)(cid:31)(cid:25)(cid:9)(cid:15)(cid:10)(cid:7)~(cid:12)(cid:15)(cid:30)!(cid:12)(cid:18)(cid:10)(cid:30)(cid:21)(cid:9)(cid:21)(cid:11)(cid:7)(cid:16)(cid:11)(cid:11)(cid:26)(cid:18)(cid:14)(cid:12)(cid:10)(cid:14)(cid:26)(cid:15)(cid:136)(cid:7)(cid:10)(cid:21)(cid:12):(cid:9)(cid:7)(cid:11)(cid:29)(cid:26)(cid:20)(cid:6)(cid:7)

Sustainability

#(cid:26)(cid:13)(cid:26)(cid:21)(cid:7)(cid:14)(cid:11)(cid:7)(cid:26)!(cid:10)(cid:9)(cid:15)(cid:7)(cid:12)(cid:7)(cid:31)(cid:9)(cid:21)(cid:11)(cid:26)(cid:15)(cid:12)(cid:13)(cid:7)(cid:31)(cid:21)(cid:9)!(cid:9)(cid:21)(cid:9)(cid:15)(cid:18)(cid:9)(cid:27)(cid:7)8(cid:30)(cid:10)(cid:7)(cid:14)(cid:10)(cid:7)(cid:14)(cid:11)(cid:7)(cid:12)(cid:7)(cid:29)(cid:14)%(cid:29)(cid:13)’(cid:7)(cid:12)(cid:15)(cid:12)(cid:13)’(cid:10)(cid:14)(cid:18)(cid:12)(cid:13)(cid:7)
discipline in the coatings industry. Axalta has developed 
sophisticated analytical color tools for both designers and 
(cid:21)(cid:9)(cid:19)(cid:15)(cid:14)(cid:11)(cid:29)(cid:7)(cid:10)(cid:9)(cid:18)(cid:29)(cid:15)(cid:14)(cid:18)(cid:14)(cid:12)(cid:15)(cid:11)(cid:6)(cid:7)&(cid:31)(cid:9)(cid:18)(cid:10)(cid:21)(cid:12)(cid:25)(cid:12)(cid:11)(cid:10)(cid:9)(cid:21)W(cid:7)(cid:5)CP(cid:7)(cid:10)(cid:26)(cid:30)(cid:18)(cid:29)(cid:7)(cid:11)(cid:18)(cid:21)(cid:9)(cid:9)(cid:15)(cid:11)(cid:7)
enable designers to render cars in virtually any shape and color 
to visualize alternative colors and effects in different virtual 
settings. In the body shop, technicians use Axalta’s Acquire 
HQ|(cid:7)(cid:29)(cid:12)(cid:15):(cid:29)(cid:9)(cid:13):(cid:7)(cid:11)(cid:31)(cid:9)(cid:18)(cid:10)(cid:21)(cid:26)(cid:31)(cid:29)(cid:26)(cid:10)(cid:26)(cid:25)(cid:9)(cid:10)(cid:9)(cid:21)(cid:11)(cid:7)(cid:10)(cid:26)(cid:7)(cid:19)(cid:15):(cid:7)(cid:10)(cid:29)(cid:9)(cid:7)(cid:21)(cid:14)%(cid:29)(cid:10)(cid:7)(cid:18)(cid:26)(cid:13)(cid:26)(cid:21)(cid:7)
!(cid:26)(cid:21)(cid:25)(cid:30)(cid:13)(cid:12)(cid:7)(cid:10)(cid:26)(cid:7)(cid:12)(cid:18)(cid:29)(cid:14)(cid:9)>(cid:9)(cid:7)(cid:10)(cid:29)(cid:9)(cid:7)(cid:31)(cid:9)(cid:21)!(cid:9)(cid:18)(cid:10)(cid:7)(cid:25)(cid:12)(cid:10)(cid:18)(cid:29)(cid:7)(cid:14)(cid:15)(cid:7)(cid:21)(cid:9)(cid:19)(cid:15)(cid:14)(cid:11)(cid:29)(cid:7)(cid:12)(cid:31)(cid:31)(cid:13)(cid:14)(cid:18)(cid:12)(cid:10)(cid:14)(cid:26)(cid:15)(cid:11)(cid:6)(cid:7)
Axalta strives to develop and improve tools that save time and 
reduce waste in order to offer added value for customers.

Axalta’s commitment to sustainability provides a guidepost for its behavior and a lens 
through which performance is measured.

than six tons per year through improved material loading 
practices.                                                                                                                                   

Disposing of solvents used to clean equipment can have an 
undesirable environmental impact. To address this problem, 
Axalta employs solvent recovery systems at many of its 
manufacturing facilities to make it possible to reuse this solvent. 
Axalta recovered more than 3.5 tons of solvent last year.

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visit axaltacs.com/sustainability.       

Axalta recognizes that improving sustainability supports its 
customers – and its corporate strategy. Making coatings 
involves the use of raw materials, energy and water and results 
in emissions and wastes. Doing the right thing in the right way 
helps Axalta increase productivity, maintain worker safety and 
lower costs. 

Over the past year, Axalta continued to introduce leading 
edge products designed to meet customer and environmental 
needs. Axalta’s 2-Wet Monocoat paint system for car 
manufacturers makes it faster and easier to apply coatings 
by eliminating applications and drying steps. Removing these 
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steel varnish is designed to meet key environmental, health and 
safety requirements in many jurisdictions and reduce chemical 
exposure while reducing costs for customers. Alesta ZeroZinc 
powder coatings deliver superior corrosion protection with no 
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Axalta is also focused on its environmental footprint. Many of 
the company’s manufacturing operations are striving to reduce 
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Corporate Governance
Board of Directors

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

FORM 10-K

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

For the fiscal year ended December 31, 2014 
or

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

For the transition period from                      to 

.

Commission File Number: 001-36733

AXALTA COATING SYSTEMS LTD.

(Exact name of registrant as specified in its charter)

Bermuda
(State or other jurisdiction of
incorporation or organization)

2851
(Primary Standard Industrial
Classification Code Number)

98-1073028
(I.R.S. Employer
Identification No.)

Two Commerce Square
2001 Market Street
Suite 3600
Philadelphia, Pennsylvania 19103
(855) 547-1461
(Address, including zip code, and telephone number, including area code, of the registrant’s principal executive offices)

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

Common Shares, $1.00 par value

(title of class)

New York Stock Exchange

(Exchange on which registered)

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

No  

    No  

    No  

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act Yes  
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act Yes  
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.    Yes  
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File 
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such 
shorter period that the registrant was required to submit and post such files).    Yes  
Indicate by check mark if the disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained 
herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference 
in Part III of this From 10-K or any amendment to this Form 10-K. 
Indicate by check mark whether the Company is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting 
company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. 
(Check one): Large accelerated filer  
Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  
As of June 30, 2014, the last day of the registrant's most recently completed second quarter, the registrant's common stock was not publicly traded.  
The registrant's common shares, $1.00 par value per share, began trading on the New York Stock Exchange on November 12, 2014.  As of that 
date, the aggregate market value of the registrant's common stock held by non-affiliates of the registrant was approximately $1.2 billion (based on 
the closing sale price of the common stock on that date on the New York Stock Exchange).
As of February 27, 2015, there were 229,784,358 shares of the registrant’s common shares outstanding.

 Small reporting company 

Non-accelerated filer 

Accelerated filer 

    No  

    No  

DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates information by reference from the registrant's Proxy Statement for the 2015 Annual Meeting of the Shareholders.  Such proxy 
statement will be filed with the Securities and Exchange Commission within 120 days of the close of the registrant's fiscal year ended December 
31, 2014.

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Table of Contents

PART I

Business

ITEM 1.
ITEM 1A. Risk Factors
ITEM 1B. Unresolved Staff Comments
ITEM 2.
ITEM 3.
ITEM 4. Mine Safety Disclosures

Properties
Legal Proceedings

PART II

PART III

PART IV

Market for Registrant's Common Equity, Related Shareholder Matters and Issuer 
Purchases of Equity Securities
Selected Financial Data

ITEM 5.
ITEM 6.
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
ITEM 8.
Financial Statements and Supplementary Data
ITEM 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
ITEM 9A. Controls and Procedures
ITEM 9B. Other Information

ITEM 10. Directors, Executive Officers and Corporate Governance
ITEM 11. Executive Compensation

Security Ownership of Certain Beneficial Owners and Management and Related 
Shareholder Matters

ITEM 12.
ITEM 13. Certain Relationships and Related Transactions and Director Independence
ITEM 14. Principal Accountant Fees and Services

ITEM 15. Exhibits, Financial Statement Schedules

Schedule II
Signatures
Exhibit Index

2

PART I 

ITEM 1. BUSINESS

Axalta Coating Systems Ltd. ("Axalta," the "Company," "we," "our" and "us"), a Bermuda exempted company formed at the 
direction of an affiliate of The Carlyle Group L.P. ("Carlyle"), was incorporated on August 24, 2012 for the purpose of 
consummating the acquisition of DuPont Performance Coatings ("DPC"), a business formerly owned by E. I. du Pont de 
Nemours and Company ("DuPont"), including certain assets of DPC and all of the capital stock and other equity interests of 
certain entities engaged in the DPC business (the "Acquisition"). Axalta, through its wholly-owned indirect subsidiaries, 
acquired DPC on February 1, 2013.

We are a leading global manufacturer, marketer and distributor of high performance coatings systems. We generate 
approximately 90% of our revenue in markets where we hold the #1 or #2 global market position, including the #1 position in 
our core automotive refinish end-market with approximately a 25% global market share. We have a nearly 150-year heritage 
in the coatings industry and are known for manufacturing high-quality products with well-recognized brands supported by 
market-leading technology and customer service. Over the course of our history we have remained at the forefront of our 
industry by continually developing innovative coatings technologies designed to enhance the performance and appearance of 
our customers' products, while improving their productivity and profitability.

Our diverse global footprint of 35 manufacturing facilities, 7 technology centers, 45 customer training centers and approximately 
12,600 employees allows us to meet the needs of customers in over 130 countries. We serve our customer base through an 
extensive sales force and technical support organization, as well as through over 4,000 independent, locally-based distributors. 
Our scale and strong local presence are critical to our success, allowing us to leverage our technology portfolio and customer 
relationships globally while meeting customer demands locally.

Our business is organized into two segments, Performance Coatings and Transportation Coatings, serving four end-markets 
globally as highlighted below:

3

Net sales for our four end-markets and four regions are highlighted below: 

SEGMENT OVERVIEW

Performance Coatings

Through our Performance Coatings segment we provide high-quality liquid and powder coatings solutions to a 
fragmented and local customer base. We are one of only a few suppliers with the technology to provide precise color 
matching and highly durable coatings systems. The end-markets within this segment are refinish and industrial.

Performance Coatings End-Markets

Refinish

Sales in the refinish end-market are driven by the number of vehicle collisions and owners’ propensity to repair their 
vehicles. Although refinish coatings typically represent only a small portion of the overall vehicle repair cost, they are 
critical to the vehicle owner’s satisfaction given their impact on appearance. As a result, body shop operators are most 
focused on coatings brands with a strong track record of performance and reliability. Body shops look for suppliers and 
brands with productivity enhancements, regulatory compliance, consistent quality, the presence of ongoing technical 
support and exact color match technologies. Color matching is a critical component of coatings supplier selection, since 
inexact matching adversely impacts vehicle appearance and can significantly impact the speed and volume of repairs at a 
given shop.

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 color matching technology provides 
Axalta-specific formulations that enable body shops to accurately match thousands of vehicle colors, regardless of vehicle 
brand, color, age or supplier of the original paint during production. It would be time consuming and costly for a new 
entrant to create such an extensive color inventory. 

4

Industrial

The industrial end-market is comprised of liquid and powder coatings used in a broad array of end-market applications. 
Within the industrial end-market, we focus on the following:

•

•

•

•

•

General Industrial: coatings for a wide and diverse array of applications, including HVAC, shelving, appliances
and electrical storage components, as well as specialized coatings used for coating the interior of metal drums
and packaging.

Electrical Insulation: coatings to insulate copper wire used in motors and transformers and coatings to insulate
sheets forming magnetic circuits of motors and transformers.

Architectural: exterior powder coatings typically used in the construction of commercial structures, residential
windows and doors, as well as liquid interior and exterior house paint.

Transportation: coatings for automotive components, chassis and wheels to protect against corrosion, provide
increased durability and impart appropriate aesthetics.

Oil & Gas: powder products to coat tanks, pipelines, valves and fittings protecting against chemicals, corrosion
and extreme temperatures in the oil & gas industry.

Demand in this end-market is driven by a wide variety of macroeconomic factors, such as growth in GDP and industrial 
production. There has also been an increase in demand for products that enhance environmental sustainability, corrosion 
resistance and productivity. These global trends are bolstered by regional and industry specific trends. Customers select 
industrial coatings based on protection, durability and appearance.

Performance Coatings Products and Brands

We offer a comprehensive range of specially-formulated waterborne and solventborne products and systems used by the 
global automotive repair industry to refinish damaged vehicles. Our refinish products and systems include a range of 
coatings layers required to match the vehicle’s color and appearance, producing an indistinguishable repair. 

We provide a system that allows body shops to match 180,000 active color variations in the global market. Our color 
science is manifested in our tints, one of the most technologically advanced parts of the refinish coatings system, which 
makes up the majority of our products in a body shop. We have a large color library and a number of well-known, long-
standing brands, including Cromax, Standox and Spies Hecker. 

Our color matching and retrieval systems allow customers to quickly match any color, preventing body shop technicians 
from having to repeat the color matching process multiple times, saving time and materials. The color matching process 
begins with a technician scanning a damaged vehicle with one of our advanced color matching tools, such as our 
AcquireRx hand-held spectrophotometer. AcquireRx will determine the unique flake and color characteristics for the 
specific vehicle. These characteristics may vary significantly, even for vehicles of the same make, model and original 
color, based on a variety of factors, including a vehicle’s age, plant at which it was assembled, weather conditions and 
operating history. AcquireRx electronically connects with our ColorNet database, which indicates to the technician the 
precise mix of tints and colors needed to recreate that specific color instance. In addition to AcquireRx, we offer our 
customers several other color matching tools, including our VINdicator database, which identifies vehicle color based on 
its vehicle identification number, and traditional color matching wheels.

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, rebar and oil & gas pipelines. Our liquid systems are used to provide insulation 
and corrosion protection for electrical conductors and components, provide chemical resistance for the interiors of metal 
packaging drums, protect automotive parts and serve as basecoats for alloy and steel wheels. Powder coatings products 
are often an environmentally responsible, lower cost alternative to liquid coatings. These coatings are typically 
electrostatically sprayed using a specialized spray gun and cured to create a uniform, high-quality finish. In the oil & gas 
industry our powder products are used to protect components from corrosion and severe conditions such as extreme 
temperatures.

Our industrial brands include Voltatex, AquaEC, Chemophan, Lutophen, Stollaquid and Syntopal for liquid coatings and 
Alesta, Nap-Gard and Abcite for powder.

5

Performance Coatings Sales, Marketing and Distribution

We leverage a large global refinish sales and technical support team to effectively serve our broad refinish customer base 
of approximately 80,000 body shops. The majority of our products are supplied by our network of over 4,000 independent 
local distributors. In select regions, such as in parts of Europe, we also sell directly to customers. Distributors maintain an 
inventory of our products to fill orders from body shops in their market and assume credit risk and responsibility for 
logistics, delivery and billing. In certain countries, we utilize importers that buy directly from us and actively market our 
products to body shops. Our relationships with our top ten distributors are longstanding, with an average relationship 
length of over 30 years.

Our large sales force manages relationships directly with our customers to drive demand for our products, which in turn 
are purchased through our distributor network. Due to the local nature of the refinish industry, our sales force operates on 
a regional/country basis to provide clients with responsive customer service and local insight. As part of their coverage 
efforts, salespeople introduce new products to body shops and provide technical support and ongoing training. We have 
established 45 customer training centers, which helps to deepen our customer relationships.

Our sales force also helps to drive shop productivity improvements and to install or upgrade body shop color matching 
and mixing equipment to improve shop profitability. Once a coating and color system is installed, a body shop almost 
exclusively uses its specific supplier’s products. The proprietary nature of a coatings supplier’s color systems, the 
substantial inventory needed to support a body shop and the body shop’s familiarity with an established brand lead to high 
levels of customer retention. Historically, our customer retention rate has been around 95%.

To effectively reach our customers in the industrial end-market we generally ship directly and leverage a dedicated sales 
force and technical service team that operates on a regional basis. We are one of only three truly global powder coatings 
producers that can satisfy the needs and specifications of a customer in multiple regions of the world, while maximizing 
productivity from the broad scale and scope of our operations.

Performance Coatings Customers

Within our Performance Coatings segment, we sell coatings to customers in more than 130 countries. No single customer 
represented more than 5% of our Performance Coatings net sales and our top ten customers accounted for less than 15% 
of our Performance Coatings net sales during the year ended December 31, 2014.

We serve a broad, fragmented customer base of approximately 80,000 body shops, including:

•

Independent Body Shops: Single location body shops that utilize premium, mainstream, or economy brands based
on the local market.

• 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.

•

Original Equipment Manufacturer ("OEM") Dealership Body Shops: High-productivity body shops, located in
OEM car dealerships, that operate like MSOs and provide premium services to customers using premium/
mainstream coatings.

Performance Coatings Competition

Our primary competitors in the refinish end-market include PPG, BASF and Akzo Nobel, but we also compete against 
regional players in local markets. Similarly, in industrial coatings, we compete against multi-national suppliers, such as 
Akzo Nobel, PPG, Valspar and BASF, and regional players in local markets. We are one of the few performance coatings 
companies that can provide the customer service, technology, color design capability and product performance necessary 
to deliver exceptional value to our customers.

6

Transportation Coatings

Through our Transportation Coatings segment, we provide advanced coating technologies to OEMs of light and 
commercial vehicles. These increasingly global customers require a high level of technical support coupled with cost-
effective, environmentally responsible coatings systems that can be applied with a high degree of precision, consistency 
and speed.

Transportation Coatings End-Markets

Light Vehicle

Demand for light vehicle products is driven by the production of light vehicles in a particular region. 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. Rigorous 
environmental and durability testing as well as obtaining engineering approvals are also key criteria used by global light 
vehicle OEMs when selecting coatings providers. Globally integrated suppliers are important because they offer products 
with consistent standards across regions and are able to deliver high-quality products in sufficient quantity while meeting 
OEM service requirements. Our global scale, differentiated technology platform and customer focus, including on-site 
support, position us to be a global partner and solutions provider to the most discerning and demanding light vehicle 
OEMs. We are one of the few coatings producers that can provide OEMs with global product specifications, standardized 
color development, compatibility with an ever-increasing number of substrates, increasingly complex colors and 
environmentally responsible coatings while continuing to simplify and reduce steps in the coatings application process.

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 ("HDT"), bus and rail) and agricultural construction equipment ("ACE"), 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. Particularly 
for HDT applications, truck owners demand a greater variety of custom colors and advanced product technologies to 
enable custom designs. Our strong market position and growth are driven by our ability to provide customers with our 
market-leading brand, Imron, as well as leveraging our global product lines, regional knowledge and service. Additionally, 
to capture further growth we are launching a new suite of products to meet our customers’ evolving needs.

Transportation Coatings Products and Brands

We develop and supply a complete coatings product line for light vehicle OEMs for the original coating of new vehicles. 
Products are designed to enhance the styling and appearance of a vehicle’s exterior while providing protection from the 
elements, extending the life of the vehicle. Widely recognized in the industry for our advanced and patented technologies, 
our products not only increase productivity and profitability for OEMs but also produce attractive and durable finishes. 
Our light vehicle coatings portfolio is one of the broadest in the industry.

7

The coatings operation is a critical component of the vehicle assembly process, requiring a high degree of precision and 
speed. The paint shop process typically includes a dip process, three application zones and three high-temperature ovens 
that cure each coating layer at temperatures ranging from 320°F to 400°F (i.e., "high bake"). Our key products consist of 
the four main coatings layers: electrocoat, primer, basecoat, and clearcoat. 

The coatings process accounts for a majority of the total energy consumed during the vehicle manufacturing process. As a 
result, we have developed consolidated systems that help our OEM customers lower costs by reducing energy 
consumption while increasing productivity. 

OEMs are also increasingly looking to reduce the weight of vehicles in response to increasing vehicle emissions and fuel 
consumption regulations. As a result, OEMs are constructing vehicle platforms using a variety of new materials in 
addition to steel and plastic, including aluminum, carbon fiber and other substrates, each of which requires specialized 
coatings formulations to create a uniform color and finish. We continue to innovate with our OEM customers in driving 
this trend, as evidenced by use of our coatings on their flagship vehicle platforms.

We also develop and supply a wide array of coatings systems for a broad range of commercial applications including 
HDT, bus, rail and ACE. These products simultaneously enhance aesthetic appearance and provide protection from the 
elements. We meet the demands of commercial vehicle customers with our extensive offering of over 70,000 different 
colors. In the HDT market, because the metal and composite components are painted simultaneously in an automatic 
process, most truck OEMs use low bake coatings to ensure that the plastic composite parts on a truck’s exterior do not 
deform during the process. Truck owners demand a wide variety of custom colors that are formulated using a combination 
of on-site mixing machines at the OEM or direct shipments of premixed high volume colors from us. Our commercial 
vehicle brands include Imron, Imron ExcelPro, Imron Elite, Centari, Rival, Corlar epoxy undercoats, and AquaEC.

Transportation Coatings Sales, Marketing and Distribution

We have full-time technical representatives stationed at OEM facilities around the world. These on-site representatives 
provide customer support, monitor the painting process and track paint demand at each assembly plant. Monitoring OEM 
line performance in real-time allows our technical support teams to help improve paint department operating efficiency 
and provide performance feedback to our formulating chemists and paint manufacturing teams. Our customer technical 
support representatives also help OEMs manage their physical inventory by forecasting facility coatings demand based on 
the customer’s build schedule.

We sell and ship products directly to light vehicle OEM customers in each of our four regions coordinated via a global 
point of contact for each customer, and assist OEMs with on-site customer support. Located in 13 countries, our 
manufacturing facilities provide a local presence that enables us to cultivate strong relationships, gain intimate customer 
knowledge, provide superior technical support to our key customers and maintain "just-in-time" product delivery 
capabilities critical to OEMs. Our local presence also allows us to quickly react to changing local dynamics, offer high-
quality products and provide excellent customer service.

In the commercial vehicle end-market, we employ a dedicated sales and technical service team to support our diverse 
customer base, including a direct sales force supporting the HDT market. We ship our coatings directly to commercial 
vehicle OEMs and provide on-site technical service representatives that play an important role by helping optimize the 
painting process and by providing responsive customer support.

Transportation Coatings Customers

We provide our products to light and commercial vehicle customers at over 200 assembly plants worldwide, including 
nine of the top ten global automotive manufacturers. We have a stable customer base with several relationships dating 
back approximately 90 years and believe we are well positioned with the fastest growing OEMs in both the developed and 
emerging markets.

Transportation Coatings Competition

We primarily compete against large multi-national suppliers such as PPG and BASF in the light and commercial vehicle 
end-markets. Additionally, we compete against certain regional players in Asia Pacific. With our state-of-the-art coatings 
solutions and local presence in key OEM markets, we are one of the few competitors in the industry that offers global 
manufacturers the combination of high-quality products, personalized, top-rate technical service and short lead-times for 
product delivery.

KEY RAW MATERIALS 

We use thousands of different raw materials, which fall into five broad categories: resins, pigments, solvents, monomers and 
additives. For the year ended December 31, 2014, our total raw material spend was approximately $1.4 billion, representing 
approximately 48% of our cost of sales.  We purchase raw materials from a diverse group of suppliers, with our top ten suppliers 
representing approximately 39% of our 2014 spending on raw materials. 

8

Approximately 80% of the raw materials we procure are derived from crude oil and natural gas. While prices for these raw 
materials fluctuate with energy prices, such fluctuations are mitigated by the fact that the majority of our raw materials are fourth 
to sixth generation derivatives of crude oil and natural gas. As a result, changes in the prices of our raw materials typically lag 
behind fluctuations in crude oil prices. Moreover, the dynamics of supply and demand play as important a role in our cost of 
raw materials as does the price of crude oil. Finally, non-petrochemical based inputs such as minerals that are used to manufacture 
coating pigments are not significantly affected by volatility in crude oil prices. 

Historically, to manage raw material volatility, we have used a combination of price increases to customers and, in limited 
circumstances,  contractual  raw  material  recovery  mechanisms.  Furthermore,  since  2001,  despite  significant  increases  and 
unprecedented volatility in oil prices, our and our legacy company’s variable cost of sales have remained stable between 38% 
and 42% of net sales. 

RESEARCH AND DEVELOPMENT

Our focus on technology has allowed us to proactively provide customers with next-generation offerings that enhance 
productivity and satisfy increasingly strict environmental regulations. Since our entry into the coatings industry nearly 150 
years ago, we believe we have consistently been at the forefront of coatings technology innovation. These innovations have 
played a fundamental role in our ability to maintain and grow our global market share as well as deliver substantial financial 
returns.

We believe that we are a technology leader well positioned to benefit from a continued industry shift to more productive, 
environmentally responsible products. Our technology development is led by a highly experienced and educated workforce 
that is focused on new product development, color development, technical customer support and improving our 
manufacturing processes. As such, our technology development covers two critical interrelated aspects for us, Research & 
Development as well as Technical Support & Development. In total, as of December 31, 2014, we have more than 1,300 
employees dedicated to technology development. For the years ended December 31, 2014 and 2013, our research and 
development expenses were $49.5 million and $40.5 million, respectively. We operate 7 technology centers throughout the 
world where we develop and align our technology investments with regional business needs.

PATENTS, LICENSES AND TRADEMARKS

As of December 31, 2014, we had a portfolio of 1,200 issued patents and more than 250 trademarks.  We actively apply for 
and obtain U.S. and foreign patents and trademarks on new products and process innovations and as of December 31, 2014, 
571 patent applications were pending throughout the world. 

Our primary purpose in obtaining patents is to protect the results of our research for use in operations and licensing. We are 
also party to a substantial number of patent licenses and other technology agreements. We have a substantial number of 
trademarks and trademark registrations in the United States and in other countries, as described below.

We own or otherwise have rights to the trademarks, service marks, copyrights and trade names used in conjunction with the 
marketing and sale of our products and services. These trademarks include Abcite®, Alesta®, AquaECTM, Centari®, 
ChallengerTM, ChemophanTM, Colornet®, Corlar®, Cromax®, Cromax MosaicTM,  DuxoneTM, Imron®, Imron EliteTM, Imron 
ExcelProTM, LutophenTM, Nap-Gard®, Nason®, Reflecsun™, RivalTM, Spies Hecker®, Standox®, StollaquidTM, SyntopalTM, 
Vermeera™, and Voltatex®, which are protected under applicable intellectual property laws and are our property and the 
property of our subsidiaries. 

Although we consider that our patents, licenses and trademarks in the aggregate constitute a valuable asset, we do not regard 
our business as being materially dependent on any single or group of related patents, licenses or trademarks.

JOINT VENTURES

We are party to 10 joint ventures, five of which are focused on the industrial end-market. We are the majority shareholder, 
exercise control, and fully consolidate all but three of our joint ventures. Our fully consolidated joint venture-related net sales 
were $218.4 million and $221.9 million for the years ended December 31, 2014 and 2013, respectively. See Part I, Item 1A, 
"Risk Factors—Risks Related to our Business—Risks Related to Other Aspects of our Business—Our joint ventures may not 
operate according to our business strategy if our joint venture partners fail to fulfill their obligations."

EMPLOYEES

As of December 31, 2014, we had approximately 12,600 employees located throughout the world consisting of sales, 
technical, manufacturing operations, supply chain and customer service personnel. This figure does not include joint venture 
employees and contractors.

9

As of December 31, 2014, approximately 64% of our employees globally were covered by organized labor agreements, 
including works councils, with fewer than 50 employees in the United States covered by organized labor agreements. We 
consider our employee relations to be excellent.

HEALTH, SAFETY AND ENVIRONMENTAL

We are subject to various laws and regulations around the world governing the protection of the environment and health and 
safety, including the discharge of pollutants to air and water and the management and disposal of hazardous substances. We 
have an excellent safety record. Our enhanced focus on health, safety and environmental improvements has resulted in a 54% 
reduction in our Total Recordable Safety Incident rate from year-end 2003 to year-end 2014, which is seven times better than 
the 2012 U.S. coatings industry average (0.35 versus a U.S. industry average of 2.44). Furthermore, all of our manufacturing 
facilities are ISO14001 certified.

We believe that all of our manufacturing and distribution facilities are operated in compliance in all material respects, with 
existing environmental requirements, including the operating permits required thereunder at our facilities. From time to time, 
we may be subject to notices of violation from environmental regulatory agencies or other claims regarding our compliance 
with environmental requirements. For example, in April 2014, the U.S. Environmental Protection Agency (the "EPA") issued 
a notice of violation regarding certain hazardous waste management requirements relating to our Front Royal, Virginia 
facility, and has proposed a penalty of $0.6 million in connection with such notice. We have responded to the EPA, disputed 
the basis upon which the EPA has alleged a violation and continue to discuss the resolution of this matter with the EPA. In 
addition, the EPA has informed us that it may issue a notice of violation in connection with the alleged failure by our Front 
Royal facility prior to the Acquisition to report certain chemical emissions data in 2009, 2010 and 2011 required to be 
reported to the EPA under federal law. We believe that we are currently in compliance with such reporting requirements and 
will work with the EPA to resolve any alleged past violations. We do not expect that either of these compliance issues will 
have a material impact on us.

In addition, many of our manufacturing sites have a long history of industrial operations, and cleanup is or may be required at 
a number of these locations. Although we are indemnified by DuPont for certain environmental liabilities and we do not 
expect outstanding cleanup obligations to have a material impact on our financial position, the ultimate cost of cleanup is 
subject to a number of variables and difficult to accurately predict. We may also incur significant additional costs as a result 
of contamination that is discovered and/or cleanup obligations that are imposed at these or other properties in the future.

WHERE YOU CAN FIND MORE INFORMATION 

Our website address is www.axaltacs.com. We post, and shareholders may access without charge, our recent filings and any 
amendments thereto of our annual reports on Form 10-K, quarterly reports on Form 10-Q and proxy statements as soon as 
reasonably practicable after such reports are filed with the Securities and Exchange Commission ("SEC"). We also post all 
financial press releases, including earnings releases, to our website. All other reports filed or furnished to the SEC on the 
SEC’s website, www.sec.gov, including reports on Form 8-K, are available via direct link on our website. Reference to our 
and the SEC’s websites herein do not incorporate by reference any information contained on those websites and such 
information should not be considered part of this Form 10-K.

10

ITEM 1A. RISK FACTORS

As a global manufacturer, marketer and distributor of high performance coatings systems, we operate in a business 
environment that includes risks. These risks are not unlike the risks we have faced in the recent past nor are they unlike risks 
faced by our competitors. If any of the events contemplated by the following discussion of risks should occur, our business, 
results of operations, financial condition and cash flows could suffer significantly. While the factors listed here are 
considered to be the more significant factors, no such list should be considered to be a complete statement of all potential 
risks and uncertainties. Unlisted factors may present significant additional obstacles which may adversely affect our 
businesses and our results of operations.

Risks Related to our Business

Risks Related to Execution of our Strategic and Operating Plans

Our business performance is impacted by economic conditions and, particularly, by conditions in the light and 
commercial vehicle end-markets. Adverse developments in the global economy, in regional economies or in the light and 
commercial vehicle end-markets could adversely affect our business, financial condition and results of operations.

The growth of our business and demand for our products is affected by changes in the health of the overall global economy, 
regional economies and, in particular, of the light and commercial vehicle end-markets. Our business is adversely affected by 
decreases in the general level of global economic activity, such as decreases in business and consumer spending, construction 
activity and industrial manufacturing. Economic developments affect businesses such as ours in a number of ways. A 
tightening of credit in financial markets could adversely affect the ability of our customers and suppliers to obtain financing 
for significant purchases and operations, could result in a decrease in or cancellation of orders for our products and services 
and could impact the ability of our customers to make payments owed to us. Similarly, a tightening of credit in financial 
markets could adversely affect our supplier base and increase the potential for one or more of our suppliers to experience 
financial distress or bankruptcy.

Our financial position, results of operations and cash flows could be materially adversely affected by difficult economic 
conditions and/or significant volatility in the capital, credit and commodities markets.

Several of the end-markets we serve are cyclical, and macroeconomic and other factors beyond our control could reduce 
demand from these end-markets for our products, materially adversely affecting our business, financial condition and results 
of operations. Weak economic conditions could depress new car sales and/or production, reducing demand for our light 
vehicle OEM coatings and limit the growth of the car parc. These factors could, in turn, cause a related decline in demand for 
our automotive refinish coatings because, as the age of a vehicle increases, the general propensity of car owners to pay for 
cosmetic repairs decreases. Also, during difficult economic times, car owners may refrain from seeking repairs for their 
damaged vehicles. Similarly, periods of reduced global economic activity could hinder global industrial output, which could 
decrease demand for our industrial and commercial coating products.

Our global business is adversely affected by decreases in the general level of economic activity, such as decreases in business 
and consumer spending, construction activity and industrial manufacturing. Disruptions in the United States, Europe or in 
other economies, or weakening of emerging markets, such as Brazil, could adversely affect our sales, profitability and/or 
liquidity.

We may be unable to successfully execute on our growth initiatives, business strategies or operating plans.

We are executing on a number of growth initiatives, strategies and operating plans designed to enhance our business. For 
example, we are undertaking certain operational improvement initiatives with respect to realigning our manufacturing 
facilities in Europe and are growing our sales force in emerging markets and end-markets where we are underrepresented. 
The anticipated benefits from these efforts are based on several assumptions that may prove to be inaccurate. Moreover, we 
may not be able to successfully complete these growth initiatives, strategies and operating plans and realize all of the 
benefits, including growth targets and cost savings, we expect to achieve or it may be more costly to do so than we anticipate. 
A variety of risks could cause us not to realize some or all of the expected benefits. These risks include, among others, delays 
in the anticipated timing of activities related to such growth initiatives, strategies and operating plans; increased difficulty and 
cost in implementing these efforts; and the incurrence of other unexpected costs associated with operating the business. 
Moreover, our continued implementation of these programs may disrupt our operations and performance. As a result, we 
cannot assure you that we will realize these benefits. If, for any reason, the benefits we realize are less than our estimates or 
the implementation of these growth initiatives, strategies and operating plans adversely affect our operations or cost more or 
take longer to effectuate than we expect, or if our assumptions prove inaccurate, our results of operations may be materially 
adversely affected.

11

Increased competition may adversely affect our business, financial condition and results of operations.

We face substantial competition from many international, national, regional and local competitors of various sizes in the 
manufacturing, distribution and sale of our coatings and related products. Some of our competitors are larger than us and 
have greater financial resources than we do. Other competitors are smaller and may be able to offer more specialized 
products. We believe that technology, product quality, product innovation, breadth of product line, technical expertise, 
distribution, service, local presence and price are the key competitive factors for our business. Competition in any of these 
areas may reduce our net sales and adversely affect our earnings or cash flow by resulting in decreased sales volumes, 
reduced prices and increased costs of manufacturing, distributing and selling our products.

Weather conditions may reduce the demand for some of our products and could have a negative effect on our business, 
financial condition and results of operations.

From time to time, weather conditions have an adverse effect on our sales of coatings and related products. For example, 
unusually mild weather during winter months may lead to fewer vehicle collisions, reducing market demand for our refinish 
coatings. Conversely, harsh weather conditions can force our customers to reduce or suspend operations, thereby reducing the 
amount of products they purchase from us. Any such reductions in customer purchases could have a material adverse effect 
on our business, financial condition and results of operations.

Improved safety features on vehicles and insurance company influence may reduce the demand for some of our products 
and could have a negative effect on our business, financial condition and results of operations.

Vehicle manufacturers continue to develop new safety features such as collision avoidance technology and self-driving 
vehicles that may reduce vehicle collisions in the future, potentially negatively impacting demand for our refinish coatings. In 
addition, insurance companies may influence vehicle owners to use body shops that do not use our products, which could 
also potentially negatively impact demand for our refinish coatings. Any resulting reduction in demand for our refinish 
coatings could have a material adverse effect on our business, financial condition and results of operations.

The loss of any of our largest customers or the consolidation of MSOs, distributors and/or body shops could adversely 
affect our business, financial condition and results of operations.

We have some customers that purchase a large amount of products from us and we are also reliant on distributors to assist us 
in selling our products. Our largest single customer accounted for approximately 7.7% of our 2014 net sales and our largest 
distributor accounted for approximately 2.8% of our 2014 net sales. Consolidation of any of our customers, including MSOs, 
distributors and body shops, could decrease our customer base and impact our results of operations if the resulting business 
chooses to use one of our competitors for the consolidated business. The loss of any of our large customers or distributors, as 
a result of consolidation or otherwise, could have a material adverse effect on our business, financial condition and results of 
operations.

We rely on our distributor network and third-party delivery services for the distribution and export of certain of our 
products. A significant disruption in these services or significant increases in prices for those services may disrupt our 
ability to export material or increase our costs.

We ship a significant portion of our products to our customers through our distributor network as well as independent third-
party delivery companies. If any of our key distributors or third-party delivery providers experiences a significant disruption 
such that our products cannot be delivered in a timely fashion or such that we incur additional shipping costs that we could 
not pass on to our customers, our costs may increase and our relationships with certain of our customers may be adversely 
affected. In addition, if our distributors or third-party delivery providers increase prices and we are not able to pass along 
these increases to customers, find comparable alternatives or adjust our delivery network, our business, financial condition 
and results of operations could be adversely affected.

We take on credit risk exposure from our customers in the ordinary course of our business.

We routinely offer customers pre-bates, loans and other financial incentives to purchase our products. These arrangements 
generally obligate the customer to purchase products from us and/or repay us for products over time. In the event that a 
customer is unwilling or unable to fulfill its obligations under these arrangements, we may incur a financial loss. In addition, 
in the ordinary course of our business, we guarantee certain of our customers’ obligations to third parties. Any default by our 
customers on their obligations could force us to make payments to the applicable creditor. It is possible that customer defaults 
on obligations owed to us and on third-party obligations that we have guaranteed could be significant, which could have a 
material adverse effect on our business, financial condition and results of operations.

12

Price increases or interruptions in the supply of raw materials could have a significant impact on our ability to grow or 
sustain earnings.

Our manufacturing processes consume significant amounts of raw materials, the costs of which are subject to worldwide 
supply and demand as well as other factors beyond our control. We use a significant amount of raw materials derived from 
crude oil and natural gas. As a result, volatile oil and gas prices can cause significant variations in our raw materials costs, 
affecting our operating results. Depending on our contractual arrangements and economic conditions, we may be unable to 
pass increased raw materials costs to our customers. If we are not able to fully offset the effects of higher raw materials costs, 
our financial results could deteriorate. In addition to the risks associated with raw materials price increases, supplier capacity 
constraints, supplier production disruptions or the unavailability of certain raw materials could result in supply imbalances 
that may have a material adverse effect on our business, financial condition and results of operations.

Failure to develop and market new products and manage product life cycles could impact our competitive position and 
have a material adverse effect on our business, financial condition and results of operations.

Our operating results are largely dependent on our development and management of our portfolio of current, new and 
developing products and services as well as our ability to bring those products and services to market. We plan to grow our 
business by focusing on developing and marketing our solutions to meet increasing demand for productivity. Our ability to 
execute this strategy and our other growth plans successfully could be adversely affected by difficulties or delays in product 
development, such as the inability to identify viable new products, successfully complete research and development, obtain 
relevant regulatory approvals, effectively manage our manufacturing process or costs, obtain intellectual property protection, 
or gain market acceptance of new products and services. Because of the lengthy and costly development process, 
technological challenges and intense competition, we cannot assure you that any of the products we are currently developing, 
or that we may develop in the future, will achieve substantial commercial success. For example, in addition to developing 
technologically advanced products, commercial success of those products will depend on customer acceptance and 
implementation of those products. A failure to develop commercially successful products or to develop additional uses for 
existing products could materially adversely affect our business, financial results or results of operations. Further, sales of our 
new products could replace sales of some of our current products, offsetting the benefit of even a successful product 
introduction.

Our business, financial condition and results of operations could be adversely impacted by business disruptions, security 
threats and security breaches.

Business disruptions, including supply disruptions, increasing costs for energy, temporary plant and/or power outages and 
information technology system and network disruptions, could harm our operations as well as the operations of our 
customers, distributors or suppliers. We face security threats and risks of security breaches to our facilities, data and 
information technology infrastructure. Although it is impossible to predict the occurrence or consequences of business 
disruptions, security threats or security breaches, they could harm our reputation, subject us to material liabilities, result in 
reduced demand for our products, make it difficult or impossible for us to deliver products to our customers or distributors or 
to receive raw materials from suppliers, and create delays and inefficiencies in our supply chain. Further, while we have 
designed and implemented controls to restrict access to our data and information technology infrastructure, it is still 
vulnerable to unauthorized access through cyber-attacks, theft and other security breaches.

Our efforts to minimize business disruptions and security breaches may fail. Such business disruptions and security breaches 
could significantly increase our cost of doing business, damage our reputation, and/or have a material adverse effect on our 
business, financial condition and results of operations.

Our ability to conduct our business might be negatively impacted if we experience difficulties with outsourcing and similar 
third-party relationships.

We outsource certain business and administrative functions and rely on third parties to perform certain services on our behalf. 
We may do so increasingly in the future. If we fail to develop and implement our outsourcing strategies, such strategies prove 
to be ineffective or fail to provide expected cost savings, or our third party providers fail to perform as anticipated, we may 
experience operational difficulties, increased costs, reputational damage and a loss of business that may have a material 
adverse effect on our business, financial condition and results of operations. By utilizing third parties to perform certain 
business and administrative functions, we may be exposed to greater risk of data security breaches. Any breach of data 
security could damage our reputation and/or result in monetary damages, which, in turn could have a material adverse effect 
on our business, financial condition and results of operations.

13

Risks Related to our Global Operations

As a global business, we are subject to risks associated with our non-U.S. operations that are not present in the United 
States.

We conduct our business on a global basis, with approximately 73% of our 2014 net sales occurring outside the United 
States. We anticipate that international sales will continue to represent a substantial portion of our net sales and that our 
strategy for continued growth and profitability will entail further international expansion, particularly in emerging markets. 
Changes in local and regional economic conditions could affect product demand in our non-U.S. operations. Specifically, our 
financial results could be affected by changes in trade, monetary and fiscal policies, laws and regulations, or other activities 
of U.S. and non-U.S. governments, agencies and similar organizations. These conditions include, but are not limited to, 
changes in a country’s or region’s social, economic or political conditions, trade regulations affecting production, pricing and 
marketing of products, local labor conditions and regulations, reduced protection of intellectual property rights in some 
countries, changes in the regulatory or legal environment, restrictions on currency exchange activities, burdensome taxes and 
tariffs and other trade barriers, as well as the imposition of economic or other trade sanctions, each of which could impact our 
ability to do business in certain jurisdictions or with certain persons. Our international operations also present risks associated 
with terrorism, political hostilities, war and other civil disturbances, the occurrence of which could lead to reduced net sales 
and profitability. Our international sales and operations are also sensitive to changes in foreign national priorities, including 
government budgets.

Our day-to-day operations outside the United States are subject to cultural and language barriers and the need to adopt 
different business practices in different geographic areas. In addition, we are required to create compensation programs, 
employment policies and other administrative programs that comply with the laws of multiple countries. We also must 
communicate and monitor standards and directives across our global operations. Our failure to successfully manage our 
geographically diverse operations could impair our ability to react quickly to changing business and market conditions and to 
enforce compliance with non-U.S. standards and procedures.

Any payment of distributions, loans or advances to and from our subsidiaries could be subject to restrictions on or taxation 
of, dividends or repatriation of earnings under applicable local law, monetary transfer restrictions, foreign currency exchange 
regulations in the jurisdictions in which our subsidiaries operate or other restrictions imposed by current or future 
agreements, including debt instruments, to which our non-U.S. subsidiaries may be a party. In particular, our operations in 
Brazil, China, India and Venezuela where we maintain local currency cash balances are subject to import authorization or 
pricing controls. Our results of operations and/or financial condition could be adversely impacted, possibly materially, if we 
are unable to successfully manage these and other risks of international operations in a volatile environment.

Currency risk may adversely affect our financial condition and cash flows.

We derive a significant portion of our net sales from outside the United States and conduct our business and incur costs in the 
local currency of most countries in which we operate. Because our financial statements are presented in U.S. dollars, we must 
translate our financial results as well as assets and liabilities into U.S. dollars for financial statement reporting purposes at 
exchange rates in effect during or at the end of each reporting period, as applicable. Therefore, increases or decreases in the 
value of the U.S. dollar against other currencies in countries where we operate will affect our results of operations and the 
value of balance sheet items denominated in foreign currencies. In particular, we are exposed to the Euro, the Brazilian real, 
the Chinese yuan and the Venezuelan bolívar. Furthermore, many of our local businesses import or buy raw materials in a 
currency other than their functional currency, which can impact the operating results for these operations if we are unable to 
mitigate the impact of the currency exchange fluctuations. We cannot accurately predict the effects of exchange rate 
fluctuations upon our future operating results because of the number of currencies involved, the variability of currency 
exposures and the potential volatility of currency exchange rates. Accordingly, fluctuations in foreign exchange rates may 
have an adverse effect on our financial condition and cash flows.

14

Terrorist acts, conflicts, wars and natural disasters may materially adversely affect our business, financial condition and 
results of operations.

As a multinational company with a large international footprint, we are subject to increased risk of damage or disruption to 
us, our employees, facilities, partners, suppliers, distributors, resellers or customers due to terrorist acts, conflicts, wars, 
adverse weather conditions, natural disasters, power outages, pandemics or other public health crises and environmental 
incidents, wherever located around the world. The potential for future terrorist attacks and natural disasters, the national and 
international responses to terrorist attacks and natural disasters or perceived threats to national security and other actual or 
potential conflicts or wars may create economic and political uncertainties. In addition, as a multinational company with 
headquarters and significant operations located in the United States, actions against or by the United States could result in a 
decrease in demand for our products, make it difficult or impossible to deliver products to our customers or to receive 
components from our suppliers, create delays and inefficiencies in our supply chain and pose risks to our employees, 
resulting in the need to impose travel restrictions. A catastrophic loss of the use of all or a portion of one of our key 
manufacturing facilities due to accident, labor issues, weather conditions, acts of war, political unrest, geopolitical risk, 
terrorist activity, natural disaster or otherwise, whether short- or long-term, and any interruption in production capability 
could require us to make substantial capital expenditures to remedy the situation, which could negatively affect our business, 
financial condition and results of operations.

Risks Related to Legal and Regulatory Compliance and Litigation

Our failure to comply with the anti-corruption laws of the United States and various international jurisdictions could 
negatively impact our reputation and results of operations.

Doing business on a global basis requires us to comply with the laws and regulations of the U.S. government and those of 
various international and sub-national jurisdictions, and our failure to successfully comply with these rules and regulations 
may expose us to liabilities. These laws and regulations apply to companies, individual directors, officers, employees and 
agents, and may restrict our operations, trade practices, investment decisions and partnering activities. In particular, our 
international operations are subject to U.S. and foreign anti-corruption laws and regulations, such as the U.S. Foreign Corrupt 
Practices Act (the "FCPA"), the United Kingdom Bribery Act 2010 (the "Bribery Act") as well as anti-corruption laws of the 
various jurisdictions in which we operate. The FCPA, the Bribery Act and other laws prohibit us and our officers, directors, 
employees and agents acting on our behalf from corruptly offering, promising, authorizing or providing anything of value to 
foreign officials for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining 
favorable treatment. As part of our business, we deal with state-owned business enterprises, the employees and 
representatives of which may be considered foreign officials for purposes of the FCPA or the Bribery Act. We are subject to 
the jurisdiction of various governments and regulatory agencies outside of the United States, which may bring our personnel 
into contact with foreign officials responsible for issuing or renewing permits, licenses or approvals or for enforcing other 
governmental regulations. In addition, some of the international locations in which we operate lack a developed legal system 
and have elevated levels of corruption. Our global operations expose us to the risk of violating, or being accused of violating, 
the foregoing or other anti-corruption laws. Such violations could be punishable by criminal fines, imprisonment, civil 
penalties, disgorgement of profits, injunctions and exclusion from government contracts, as well as other remedial measures. 
Investigations of alleged violations can be very expensive, disruptive, and damaging to our reputation. Although we have 
implemented anti-corruption policies and procedures and rolled-out training since becoming an independent company, there 
can be no guarantee that these policies, procedures, and training will effectively prevent violations by our employees or 
representatives in the future. Additionally, we face a risk that our distributors and other business partners may violate the 
FCPA, the Bribery Act or similar laws or regulations. Such violations could expose us to FCPA and Bribery Act liability and/
or our reputation may potentially be harmed by their violations and resulting sanctions and fines.

Our international operations require us to comply with anti-terrorism laws and regulations and applicable trade 
embargoes.

We are subject to trade and economic sanctions laws and other restrictions on international trade. The U.S. and other 
governments and their agencies impose sanctions and embargoes on certain countries, their governments and designated 
parties. In the United States, the economic and trade sanctions programs are principally administered and enforced by the 
U.S. Treasury Department’s Office of Foreign Assets Control. If we fail to comply with these laws, we could be subject to 
civil or criminal penalties, other remedial measures and legal expenses, which could adversely affect our business, financial 
condition and results of operations. Although we have implemented trade-related policies and procedures and rolled-out 
training since becoming an independent company, we cannot assure you that such policies will effectively prevent violations 
in the future, particularly as the scope of certain laws may be unclear and may be subject to changing interpretations.

15

We cannot predict the nature, scope or effect of future regulatory requirements to which our international sales and 
manufacturing operations might be subject or the manner in which existing laws might be administered or interpreted. Future 
regulations could limit the countries in which some of our products may be manufactured or sold, or could restrict our access 
to, or increase the cost of obtaining, products from foreign sources. The occurrence of any of the foregoing could have a 
material adverse effect on our business, financial condition and results of operations.

We are subject to complex and evolving data privacy laws.

Our business is subject to complex and evolving U.S. and foreign laws and regulations regarding privacy, data protection and 
other matters. We could be liable for loss or misuse of our customers’ personal information and/or our employee’s personally-
identifiable information if we fail to prevent or mitigate such misuse or breach. Although we have developed systems and 
processes that are designed to protect customer and employee information and prevent misuse of such information and other 
security breaches, failure to prevent or mitigate such misuse or breaches may affect our reputation and operating results 
negatively and may require significant management time and attention.

As a result of our current and past operations and/or products, including operations and/or products related to our 
businesses prior to the Acquisition, we could incur significant environmental liabilities and costs.

We are subject to various laws and regulations around the world governing the protection of environment and health and 
safety, including the discharge of pollutants to air and water and the management and disposal of hazardous substances. 
These laws and regulations not only govern our current operations and products, but also impose potential liability on us for 
our or our predecessors’ past operations. We could incur fines, penalties and other sanctions as a result of violations of such 
laws and regulations. In addition, as a result of our operations and/or products, including our past operations and/or products 
related to our businesses prior to the Acquisition, we could incur substantial costs, including costs relating to remediation and 
restoration activities and third-party claims for property damage or personal injury. The ultimate costs under environmental 
laws and the timing of these costs are difficult to accurately predict. Our accruals for costs and liabilities at sites where 
contamination is being investigated or remediated may not be adequate because the estimates on which the accruals are based 
depend on a number of factors including the nature of the matter, the complexity of the site, site geology, the nature and 
extent of contamination, the type of remedy, the outcome of discussions with regulatory agencies and, at multi-party sites, 
other Potentially Responsible Parties ("PRPs") and the number and financial viability of other PRPs. Additional 
contamination may also be identified, and/or additional cleanup obligations may be incurred, at these or other sites in the 
future. For example, periodic monitoring or investigation activities are ongoing at a number of our sites where contaminants 
have been detected or are suspected, and we may incur additional costs if more active or extensive remediation is required. In 
addition, in connection with the Acquisition, DuPont has, subject to certain exceptions and exclusions, agreed to indemnify 
us for certain liabilities relating to environmental remediation obligations and certain claims relating to the exposure to 
hazardous substances and products manufactured prior to our separation from DuPont. We could incur material additional 
costs if DuPont fails to meet its obligations, if the indemnification proves insufficient or if we otherwise are unable to recover 
costs associated with such liabilities. The costs of our current operations complying with complex environmental laws and 
regulations, as well as internal voluntary programs, are significant and will continue to be so for the foreseeable future as 
environmental regulations become more stringent. These laws and regulations also change frequently, and we may incur 
additional costs complying with stricter environmental requirements that are promulgated in the future. Concerns over global 
climate change as well as more frequent and severe weather events have also promoted a number of legal and regulatory 
measures as well as social initiatives intended to reduce greenhouse gas and other carbon emissions. We cannot predict the 
impact that changing climate conditions or more frequent and severe weather events, if any, will have on our business, results 
of operations or financial condition. Moreover, we cannot predict how legal, regulatory and social responses to concerns 
about global climate change will impact our business.

As a producer of coatings, we transport certain materials that are inherently hazardous due to their toxic nature.

In our business, we handle and transport hazardous materials. If mishandled or released into the environment, these materials 
could cause substantial property damage or personal injuries resulting in significant legal claims against us. In addition, 
evolving regulations concerning the handling and transportation of certain materials could result in increased future capital or 
operating costs.

16

Our results of operations could be adversely affected by litigation.

We face risks arising from various litigation matters that have been asserted against us or that may be asserted against us in 
the future, including, but not limited to, claims for product liability, patent and trademark infringement, antitrust, warranty, 
contract and claims for third party property damage or personal injury. For instance, we have noted a nationwide trend in 
purported class actions against chemical manufacturers generally seeking relief such as medical monitoring, property 
damages, off-site remediation and punitive damages arising from alleged environmental torts without claiming present 
personal injuries. We have also noted a trend in public and private nuisance suits being filed on behalf of states, counties, 
cities and utilities alleging harm to the general public. In addition, various factors or developments can lead to changes in 
current estimates of liabilities such as a final adverse judgment, significant settlement or changes in applicable law. A future 
adverse ruling or unfavorable development could result in future charges that could have a material adverse effect on us. An 
adverse outcome in any one or more of these matters could be material to our business, financial condition and results of 
operations. In particular, product liability claims, regardless of their merits, could be costly, divert management’s attention 
and adversely affect our reputation and demand for our products.

Risks Related to Human Resources

We may not be able to recruit and retain the experienced and skilled personnel we need to compete.

Our future success depends on our ability to attract, retain, develop and motivate highly skilled personnel. We must have 
talented personnel to succeed and competition for senior management in our industry is intense. Our ability to meet our 
performance goals depends upon the personal efforts and abilities of the principal members of our senior management who 
provide strategic direction, develop our business, manage our operations and maintain a cohesive and stable work 
environment. We cannot assure you that we will retain or successfully recruit senior executives, or that their services will 
remain available to us.

We rely on qualified managers and skilled employees, such as scientists, with technical and manufacturing industry 
experience in order to operate our business successfully. From time to time, there may be a shortage of skilled labor, which 
may make it more difficult and expensive for us to attract and retain qualified employees. If we are unable to attract and 
retain sufficient numbers of qualified individuals or our costs to do so increase significantly, our operations could be 
materially adversely affected.

If we are required to make unexpected payments to any pension plans applicable to our employees, our financial 
condition may be adversely affected.

We have defined benefit pension plans in which many of our current and former employees outside the United States 
participate or have participated. Many of these plans are underfunded or unfunded and the liabilities in relation to these plans 
will need to be satisfied as they mature from our operating reserves. In jurisdictions where the defined benefit pension plans 
are intended to be funded with assets in a trust or other funding vehicle, the liabilities exceed the corresponding assets in 
many of the plans. Various factors, such as changes in actuarial estimates and assumptions (including as to life expectancy, 
discount rates and rate of return on assets) as well as actual return on assets, can increase the expenses and liabilities of the 
defined benefit pension plans. The assets and liabilities of the plans must be valued from time to time under applicable 
funding rules and as a result we may be required to increase the cash payments we make in relation to these defined benefit 
pension plans.

Our financial condition and results of operations may be adversely affected to the extent that we are required to make any 
additional payments to any relevant defined benefit pension plans in excess of the amounts assumed in our current 
projections and assumptions or report higher pension plan expenses under relevant accounting rules.

We are subject to work stoppages, union negotiations, labor disputes and other matters associated with our labor force, 
which may adversely impact our operations and cause us to incur incremental costs.

Many of our employees globally are in unions or otherwise covered by labor agreements, including works councils. As of 
December 31, 2014, approximately 0.5% of our U.S. workforce was unionized and approximately 64% of our workforce 
outside the United States was unionized or otherwise covered by labor agreements. Consequently, we may be subject to 
potential union campaigns, work stoppages, union negotiations and other potential labor disputes. Additionally, negotiations 
with unions or works councils in connection with existing labor agreements may result in significant increases in our cost of 
labor, divert management’s attention away from operating our business or break down and result in the disruption of our 
operations. The occurrence of any of the preceding outcomes could impair our ability to manufacture our products and result 
in increased costs and/or decreased operating results. Further, we may be impacted by work stoppages at our suppliers or 
customers that are beyond our control.

17

Risks Related to Intellectual Property

Our inability to protect and enforce our intellectual property rights could adversely affect our financial results.

Intellectual property rights both in the United States and in foreign countries, including patents, trade secrets, confidential 
information, trademarks and trade names are important to our business and will be critical to our ability to grow and succeed 
in the future. We make strategic decisions on whether to apply for intellectual property protection and what kind of protection 
to pursue based on a cost benefit analysis. While we endeavor to protect our intellectual property rights in certain 
jurisdictions in which our products are produced or used and in jurisdictions into which our products are imported, the 
decision to file for intellectual property protection is made on a case-by-case basis. Because of the differences in foreign 
trademark, patent and other laws concerning proprietary rights, our intellectual property rights may not receive the same 
degree of protection in foreign countries as they would in the United States. Our failure to obtain or maintain adequate 
protection of our intellectual property rights for any reason could have a material adverse effect on our business, financial 
condition and results of operations.

We have applied for patent protection relating to certain existing and proposed products, processes and services in certain 
jurisdictions. While we generally consider applying for patents in those countries where we intend to make, have made, use, 
or sell patented products, we may not accurately assess all of the countries where patent protection will ultimately be 
desirable. If we fail to timely file a patent application in any such country, we may be precluded from doing so at a later date. 
Furthermore, we cannot assure you that our pending patent applications will not be challenged by third parties or that such 
applications will eventually be issued by the applicable patent offices as patents. We also cannot assure that the patents issued 
as a result of our foreign patent applications will have the same scope of coverage as our U.S. patents. It is possible that only 
a limited number of the pending patent applications will result in issued patents, which may have a materially adverse effect 
on our business and results of operations.

The patents we own could be challenged, invalidated or circumvented by others and may not be of sufficient scope or 
strength to provide us with any meaningful protection or commercial advantage. Furthermore, our existing patents are subject 
to challenges from third parties that may result in invalidations and will all eventually expire, after which we will not be able 
to prevent our competitors from using our previously patented technologies, which could materially adversely affect our 
competitive advantage stemming from those products and technologies. We also cannot assure that competitors will not 
infringe our patents, or that we will have adequate resources to enforce our patents.

We also rely on unpatented proprietary technology. It is possible that others will independently develop the same or similar 
technology or otherwise obtain access to our unpatented technology. To protect our trade secrets and other proprietary 
information, we require certain employees, consultants, advisors and collaborators to enter into confidentiality agreements as 
we deem appropriate. We cannot assure that we will be able to enter into these confidentiality agreements or that these 
agreements will provide meaningful protection for our trade secrets, know-how or other proprietary information in the event 
of any unauthorized use, misappropriation or disclosure of such trade secrets, know-how or other proprietary information. If 
we are unable to maintain the proprietary nature of our technologies, we could be materially adversely affected.

We rely on our trademarks, trade names and brand names to distinguish our products from the products of our competitors, 
and have registered or applied to register many of these trademarks. We cannot assure that our trademark applications will be 
approved. Third parties may also oppose our trademark applications, or otherwise challenge our use of the trademarks. In the 
event that our trademarks are successfully challenged, we could be forced to rebrand our products, which could result in loss 
of brand recognition, and could require us to devote resources to advertising and marketing new brands. Further, we cannot 
assure that competitors will not infringe our trademarks, or that we will have adequate resources to enforce our trademarks. 
We also license third parties to use our trademarks. In an effort to preserve our trademark rights, we enter into license 
agreements with these third parties that govern the use of our trademarks and contain limitations on their use. Although we 
make efforts to police the use of our trademarks by our licensees, we cannot assure that these efforts will be sufficient to 
ensure that our licensees abide by the terms of their licenses. In the event that our licensees fail to do so, our trademark rights 
could be diluted.

If we are sued for infringing intellectual property rights of third parties, it may be costly and time consuming, and an 
unfavorable outcome in any litigation could harm our business.

We cannot assure that our activities will not, unintentionally or otherwise, infringe on the patents, trademarks or other 
intellectual property rights owned by others. We may spend significant time and effort and incur significant litigation costs if 
we are required to defend ourselves against intellectual property rights claims brought against us, regardless of whether the 
claims have merit. If we are found to have infringed on the patents, trademarks or other intellectual property rights of others, 
we may be subject to substantial claims for damages, which could materially impact our cash flow, business, financial 
condition and results of operations. We may also be required to cease development, use or sale of the relevant products or 
processes, or we may be required to obtain a license on the disputed rights, which may not be available on commercially 
reasonable terms, if at all.

18

Risks Related to Other Aspects of our Business

We may engage in acquisitions and divestitures, and may encounter difficulties integrating acquired businesses with, or 
disposing of divested businesses from, our current operations and, as a result, we may not realize the anticipated benefits 
of these acquisitions and divestitures.

We may seek to grow through strategic acquisitions, joint ventures or other arrangements. Our due diligence reviews in these 
transactions may not identify all of the material issues necessary to accurately estimate the cost or potential loss 
contingencies with respect to a particular transaction, including potential exposure to regulatory sanctions resulting from a 
counterparty’s previous activities. We may incur unanticipated costs or expenses, including post-closing asset impairment 
charges, expenses associated with eliminating duplicate facilities, litigation and other liabilities. We may also face regulatory 
scrutiny as a result of perceived concentration in certain markets, which could cause additional delay or prevent us from 
completing certain acquisitions that would be beneficial to our business. We may also encounter difficulties in integrating 
acquisitions with our operations, applying our internal controls processes to these acquisitions or in managing strategic 
investments. Additionally, we may not achieve the benefits we anticipate when we first enter into a transaction in the amount 
or time frame anticipated. Any of the foregoing could adversely affect our business and results of operations. In addition, 
accounting requirements relating to business combinations, including the requirement to expense certain acquisition costs as 
incurred, may cause us to experience greater earnings volatility and generally lower earnings during periods in which we 
acquire new businesses. Furthermore, we may make strategic divestitures from time to time. These divestitures may result in 
continued financial involvement in the divested businesses, such as through indemnities, guarantees or other financial 
arrangements. These arrangements could result in financial obligations imposed upon us and could affect our future financial 
condition and results of operations.

Our joint ventures may not operate according to our business strategy if our joint venture partners fail to fulfill their 
obligations.

As part of our business, we have entered into certain joint venture arrangements, and may enter into additional joint venture 
arrangements in the future. The nature of a joint venture requires us to share control over significant decisions with 
unaffiliated third parties. Since we may not exercise control over our current or future joint ventures, we may not be able to 
require our joint ventures to take actions that we believe are necessary to implement our business strategy. Additionally, 
differences in views among joint venture participants may result in delayed decisions or failures to agree on major issues. If 
these differences cause the joint ventures to deviate from our business strategy, our results of operations could be materially 
adversely affected.

The insurance we maintain may not fully cover all potential exposures.

Our product liability, property, business interruption and casualty insurance coverages may not cover all risks associated with 
the operation of our business and may not be sufficient to offset the costs of any losses, lost sales or increased costs 
experienced during business interruptions. For some risks, we elect not to obtain insurance. As a result of market conditions, 
premiums and deductibles for certain insurance policies can increase substantially and, in some instances, certain insurance 
policies may become unavailable or available only for reduced amounts of coverage. As a result, we may not be able to renew 
our insurance policies or procure other desirable insurance on commercially reasonable terms, if at all. Losses and liabilities 
from uninsured or underinsured events and delay in the payment of insurance proceeds could have a material adverse effect 
on our business, financial condition and results of operations.

We may need to recognize impairment charges related to goodwill, identifiable intangible assets and fixed assets. 

Under the acquisition method of accounting, the net assets acquired were recorded at fair value as of the date of the 
Acquisition, with any excess purchase price allocated to goodwill. The Acquisition resulted in significant balances of 
goodwill and identifiable intangible assets. We are required to test goodwill and any other intangible asset with an indefinite 
life for possible impairment on the same date each year, unless conditions exist that would require a more frequent 
evaluation. We are also required to evaluate amortizable intangible assets and fixed assets for impairment if there are 
indicators of a possible impairment.

There is significant judgment required in the analysis of a potential impairment of goodwill, identified intangible assets and 
fixed assets. If, as a result of a general economic slowdown, deterioration in one or more of the markets in which we operate 
or impairment in our financial performance and/or future outlook, the estimated fair value of our long-lived assets decreases, 
we may determine that one or more of our long-lived assets is impaired. An impairment charge would be determined based 
on the estimated fair value of the assets and any such impairment charge could have a material adverse effect on our results of 
operations and financial position.

19

We recently completed the transition of our IT systems. If we experience any issues related to the recent transition, it may 
have a material adverse effect on our results of operations.

We recently completed the transition of IT systems from DuPont to our own platform, including the establishment of a global 
IT support team. There are inherent risks associated with transitioning and changing these types of systems, and while we 
completed the transition in October 2014, if there are any issues surrounding this recent transition, it could result in a 
potential disruption of our business and substantial unplanned costs, which could have a material adverse effect on our 
business, financial condition or results of operations.

Our Predecessor financial information may not be comparable to the Successor financial information.

Our Predecessor financial information may not reflect what our results of operations and cash flows would have been had we 
been a separate, standalone entity during those periods and may not be indicative of what our results of operations and cash 
flows will be in the future. As a result, you have limited information on which to evaluate our business. This is primarily 
because:

•

•

•

•

Our Predecessor combined financial information has been derived from the financial statements and accounting
records of DuPont and reflects assumptions made by DuPont. Those assumptions and allocations may be different
from the comparable expenses we would have incurred as a standalone company;

Certain general corporate expenses were historically allocated to the Predecessor period by DuPont that, while
reasonable, may not be indicative of the actual expenses that would have been incurred had we been operating as a
standalone company, nor are they indicative of the costs that will be incurred in the future as a standalone company;

Our working capital requirements historically were satisfied as part of DuPont’s corporate-wide cash management
policies. Since becoming a standalone company, we no longer rely on DuPont for working capital. In connection
with the Acquisition, we incurred a large amount of indebtedness and will therefore assume significant debt service
costs. As a result, our cost of debt and capitalization is significantly different from that reflected in the Predecessor
financial information; and

Following the Acquisition, we have experienced increases in our costs, including the cost to establish an appropriate
accounting and reporting system, debt service obligations, providing healthcare and other costs of being a standalone
company.

See Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and Note 8 to 
the consolidated and combined financial statements included elsewhere in this Annual Report.

DuPont’s potential breach of its obligations in connection with the Acquisition, including failure to comply with its 
indemnification obligations, may materially affect our business and operating results.

Although the Acquisition closed on February 1, 2013, DuPont still has performance obligations to us, such as transferring 
pension assets, and fulfilling indemnification requirements. We could incur material additional costs if DuPont fails to meet 
its obligations or if we otherwise are unable to recover costs associated with such liabilities.

If we are treated as a financial institution under FATCA, withholding tax may be imposed on payments on our common 
shares.

Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the "Code"), and applicable Treasury 
Regulations commonly referred to as "FATCA" generally impose 30% withholding on certain "withholdable payments" and, 
in the future, may impose such withholding on "foreign passthru payments" made by a "foreign financial institution" (each as 
defined in the Code) that has entered into an agreement with the U.S. Internal Revenue Service to perform certain diligence 
and reporting obligations with respect to the foreign financial institution’s U.S.-owned accounts. The applicable Treasury 
Regulations treat an entity as a "financial institution" if it is a holding company formed in connection with or availed of by a 
private equity fund or other similar investment vehicle established with an investment strategy of investing, reinvesting, or 
trading in financial assets. The United States has entered into an intergovernmental agreement (an "IGA") with Bermuda, 
which modifies the FATCA withholding regime described above, although the U.S. Internal Revenue Service and Bermuda 
tax authorities have not yet provided final guidance regarding compliance with the Bermuda IGA. It is not clear whether we 
would be treated as a financial institution subject to the diligence, reporting and withholding obligations under FATCA or the 
Bermuda IGA. Furthermore, it is not yet clear how the Bermuda IGA will address foreign passthru payments. Prospective 
investors should consult their tax advisors regarding the potential impact of FATCA, the Bermudan IGA and any non-U.S. 
legislation implementing FATCA, on their investment in our common shares.

20

We may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax 
consequences to U.S. Holders of our common shares.

Based on the composition of our income, assets and operations, we do not expect to be treated as a passive foreign 
investment company ("PFIC") for U.S. federal income tax purposes for the current taxable year or in the foreseeable future. 
However, the application of the PFIC rules is subject to uncertainty in several respects and we cannot assure that the U.S. 
Internal Revenue Service will not take a contrary position. Furthermore, this is a factual determination that must be made 
annually after the close of each taxable year. If we are a PFIC for any taxable year during which a U.S. person holds our 
common shares, certain adverse U.S. federal income tax consequences could apply to such U.S. person. 

Risks Related to our Indebtedness

Our substantial indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our 
ability to react to changes in the economy and our industry, expose us to interest rate risk to the extent of our variable rate 
debt and prevent us from meeting our obligations with respect to our indebtedness.

As of December 31, 2014, we had approximately $3.7 billion of indebtedness on a consolidated basis, including 
$750.0 million of our Dollar Senior Notes (as defined herein), $305.3 million of our Euro Senior Notes (as defined herein), 
$2,165.5 million of the Dollar Term Loan Facility (as defined herein) and $481.0 million of the Euro Term Loan Facility (as 
defined herein). In addition, we had no outstanding borrowings under our Revolving Credit Facility (as defined herein) and 
approximately $384.5 million in borrowing capacity available under our Revolving Credit Facility, after giving effect to 
$15.5 million of outstanding letters of credit. As of December 31, 2014, we were in compliance with all of the covenants 
under our outstanding debt instruments.

Our substantial indebtedness could have important consequences. For example, it could:

•

•

•

•

•

•

limit our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions,
general corporate purposes or other purposes;

require us to devote a substantial portion of our annual cash flow to the payment of interest on our indebtedness;

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;

hinder our ability to adjust rapidly to changing market conditions;

limit our ability to secure adequate bank financing in the future with reasonable terms and conditions or at all; and

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.

We are more leveraged than some of our competitors, which could adversely affect our business plans. A relatively greater 
portion of our cash flow is used to service debt and other financial obligations. This reduces the funds we have available for 
working capital, capital expenditures, acquisitions and other purposes and, given current credit constriction, may make it 
more difficult for us to make borrowings in the future. Similarly, our relatively greater leverage increases our vulnerability to, 
and limits our flexibility in planning for, adverse economic and industry conditions and creates other competitive 
disadvantages compared with other companies with relatively less leverage.

In addition, the indentures governing the Senior Notes (as defined herein) and the agreements governing our Senior Secured 
Credit Facilities (as defined herein) contain affirmative and negative covenants that limit our and certain of our subsidiaries’ 
ability to engage in activities that may be in our long-term best interests. Our failure to comply with those covenants could 
result in an event of default that, if not cured or waived, could result in the acceleration of all of our debts.

To service all of our indebtedness, we will require a significant amount of cash and our ability to generate cash depends 
on many factors beyond our control.

Our operations are conducted through our subsidiaries and our ability to make cash payments on our indebtedness will 
depend on the earnings and the distribution of funds from our subsidiaries. None of our subsidiaries, however, is obligated to 
make funds available to us for payment on our indebtedness.  Further, the terms of the instruments governing our 
indebtedness significantly restrict our subsidiaries from paying dividends and otherwise transferring assets to us. Our ability 
to make cash payments on and refinance our debt obligations, to fund planned capital expenditures and to meet other cash 
requirements will depend on our financial condition and operating performance, which are subject to prevailing economic 
and competitive conditions and to financial, business, legislative, regulatory and other factors beyond our control. We might 
not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if 
any, and interest on our indebtedness.

21

Our business may not generate sufficient cash flow from operations and future borrowings may not be available under our 
Senior Secured Credit Facilities in an amount sufficient to enable us to pay our indebtedness, or to fund our other liquidity 
needs, including planned capital expenditures. In such circumstances, we may need to refinance all or a portion of our 
indebtedness on or before maturity. We may not be able to refinance any of our indebtedness on commercially reasonable 
terms or at all. If we cannot service our indebtedness, we may have to take actions such as selling assets, seeking additional 
equity or reducing or delaying capital expenditures, strategic acquisitions, investments and alliances. Such actions, if 
necessary, may not be effected on commercially reasonable terms or at all. The instruments governing our indebtedness 
restrict our ability to sell assets and our use of the proceeds from such sales, and we may not be able to consummate those 
dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due.

If we are unable to generate sufficient cash flow or are otherwise unable to obtain funds necessary to meet required payments 
of principal, premium, if any, and interest on our indebtedness, or if we otherwise fail to comply with the various covenants 
in the instruments governing our indebtedness, we could be in default under the terms of the agreements governing such 
indebtedness. In the event of such default, the holders of such indebtedness could elect to declare all the funds borrowed 
thereunder to be due and payable, together with accrued and unpaid interest, the lenders under our Revolving Credit Facility 
could elect to terminate their commitments thereunder, cease making further loans and institute foreclosure proceedings 
against our assets, and we could be forced into bankruptcy or liquidation. If our operating performance declines, we may in 
the future need to obtain waivers from the required lenders under the credit agreement governing our Senior Secured Credit 
Facilities to avoid being in default. If we breach our covenants under our Senior Secured Credit Facilities or we are in default 
thereunder and seek a waiver, we may not be able to obtain a waiver from the required lenders. If this occurs, we would be in 
default under the credit agreement governing our Senior Secured Credit Facilities, the lenders could exercise their rights, as 
described above, and we could be forced into bankruptcy or liquidation.

Despite our current level of indebtedness and restrictive covenants, we and our subsidiaries may incur additional 
indebtedness or we may pay dividends in the future. This could further exacerbate the risks associated with our 
substantial financial leverage.

We and our subsidiaries may incur significant additional indebtedness under the agreements governing our indebtedness. 
Although the indentures governing the Senior Notes and the credit agreement governing our Senior Secured Credit Facilities 
contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of thresholds, 
qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be 
substantial. Additionally, these restrictions also will not prevent us from incurring obligations that, although preferential to 
our common shares in terms of payment, do not constitute indebtedness. As of December 31, 2014, we had $384.5 million of 
additional borrowing capacity under our Revolving Credit Facility, after giving effect to $15.5 million of outstanding letters 
of credit.

In addition, if new debt is added to our and/or our subsidiaries’ debt levels, the related risks that we now face as a result of 
our leverage would intensify. See Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results 
of Operations—Liquidity and Capital Resources—Indebtedness."

We are dependent upon our lenders for financing to execute our business strategy and meet our liquidity needs. If our 
lenders are unable or unwilling to fund borrowings under their credit commitments or we are unable to borrow, it could 
negatively impact our business.

We are dependent upon our lenders for financing to execute our business strategy and meet our liquidity needs. If our lenders 
are unable to fund borrowings under their credit commitments or we are unable to borrow from them for any reason, our 
business could be negatively impacted. During periods of volatile credit markets, there is risk that any lenders, even those 
with strong balance sheets and sound lending practices, could fail or refuse to honor their legal commitments and obligations 
under existing credit commitments, including, but not limited to, extending credit up to the maximum permitted by a credit 
facility, allowing access to additional credit features and otherwise accessing capital and/or honoring loan commitments. If 
our lenders are unable or unwilling to fund borrowings under their revolving credit commitments or we are unable to borrow 
from them, it could be difficult in such environments to obtain sufficient liquidity to meet our operational needs.

Our ability to obtain additional capital on commercially reasonable terms may be limited.

Although we believe our cash and cash equivalents, together with cash we expect to generate from operations and unused 
capacity available under our Revolving Credit Facility, provide adequate resources to fund ongoing operating requirements, 
we may need to seek additional financing to compete effectively.

22

If we are unable to obtain capital on commercially reasonable terms, it could:

•

•

•

•

reduce funds available to us for purposes such as working capital, capital expenditures, research and development,
strategic acquisitions and other general corporate purposes;

restrict our ability to introduce new products or exploit business opportunities;

increase our vulnerability to economic downturns and competitive pressures in the markets in which we operate; and

place us at a competitive disadvantage.

Difficult and volatile conditions in the capital, credit and commodities markets and in the overall economy could have a 
material adverse effect on our financial position, results of operations and cash flows.

Difficult global economic conditions, including concerns about sovereign debt and significant volatility in the capital, credit 
and commodities markets, could have a material adverse effect on our financial position, results of operations and cash flows. 
These global economic factors, combined with low levels of business and consumer confidence and high levels of 
unemployment, have precipitated a slow recovery from the global recession and concern about a return to recessionary 
conditions. The difficult conditions in these markets and the overall economy affect our business in a number of ways. For 
example:

•

•

•

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;

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;

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, and in such case, there can be no assurance that we can
obtain such waivers at a reasonable cost, if at all;

• 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

• 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.

In general, downturns in economic conditions can cause fluctuations in demand for our and our customers’ products, product 
prices, volumes and margins. Future economic conditions may not be favorable to our industry and future growth in demand 
for our products, if any, may not be sufficient to alleviate any existing or future conditions of excess industry capacity. A 
decline in the demand for our products or a shift to lower-margin products due to deteriorating economic conditions could 
have a material adverse effect on our financial condition and results of operations and could also result in impairments of 
certain of our assets. We do not know if market conditions or the state of the overall economy will continue to improve in the 
near future. We cannot provide assurance that a continuation of current economic conditions or a further economic downturn 
in one or more of the geographic regions in which we sell our products would not have a material adverse effect on our 
business, financial condition and results of operations.

Our debt obligations may limit our flexibility in managing our business.

The indentures governing our Senior Notes and the credit agreement governing our Senior Secured Credit Facilities require 
us to comply with a number of customary financial and other covenants, such as maintaining leverage ratios in certain 
situations and maintaining insurance coverage. See Part II, Item 7, "Management’s Discussion and Analysis of Financial 
Condition and Results of Operations—Liquidity and Capital Resources—Financial Condition." These covenants may limit 
our flexibility in our operations, and breaches of these covenants could result in defaults under the instruments governing the 
applicable indebtedness even if we had satisfied our payment obligations. If we were to default on the indentures governing 
our Senior Notes, the credit agreement governing our Senior Secured Credit Facilities or other debt instruments, our financial 
condition and liquidity would be adversely affected.

23

Risks Related to Ownership of our Common Shares

Axalta Coating Systems Ltd. is a holding company with no operations of its own. Because our operations are conducted 
almost entirely through our subsidiaries and joint ventures, we are largely dependent on our receipt of distributions and 
dividends or other payments from our subsidiaries and joint ventures for cash to fund all of our operations and expenses, 
including to make future dividend payments, if any.

Our operations are conducted almost entirely through our subsidiaries and our ability to generate cash to meet our debt 
service obligations or to make future dividend payments, if any, is highly dependent on the earnings and the receipt of funds 
from our subsidiaries in the form of dividends, loans or advances and through repayment of loans or advances from us. 
Payments to us by our subsidiaries and joint ventures will be contingent upon our subsidiaries’ or joint ventures’ earnings and 
other business considerations and may be subject to statutory or contractual restrictions. We do not currently expect to declare 
or pay dividends on our common shares for the foreseeable future; however, to the extent that we determine in the future to 
pay dividends on our common shares, the credit agreement governing our Senior Secured Credit Facilities and the indentures 
governing the Senior Notes significantly restrict the ability of our subsidiaries to pay dividends or otherwise transfer assets to 
us. In addition, Bermuda law imposes requirements that may restrict our ability to pay dividends to holders of our common 
shares. In addition, there may be significant tax and other legal restrictions on the ability of foreign subsidiaries or joint 
ventures to remit money to us.

The price of our common shares may fluctuate significantly, and you could lose all or part of your investment.

Volatility in the market price of our common shares may prevent you from being able to sell your common shares at or above 
the price you paid for your common shares. The market price of our common shares could fluctuate significantly for various 
reasons, including:

•

•

•

•

•

•

•

•

•

our operating and financial performance and prospects;

our quarterly or annual earnings or those of other companies in our industry;

the public’s reaction to our press releases, our other public announcements and our filings with the SEC;

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;

the failure of research analysts to cover our common shares;

strategic actions by us, our customers or our competitors, such as acquisitions or restructurings;

new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

changes in accounting standards, policies, guidance, interpretations or principles;

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;

• material litigations or government investigations;

•

•

•

•

•

•

•

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;

changes in key personnel;

sales of common shares by us, Carlyle or members of our management team;

termination or expiration of lock-up agreements with our management team and principal shareholders;

the granting of restricted common shares, stock options and other equity awards;

volume of trading in our common shares; and

the realization of any risks described under this "Risk Factors" section.

In addition, over the past several years, the stock markets have experienced significant price and volume fluctuations. This 
volatility has had a significant impact on the market price of securities issued by many companies, including companies in 
our industry. The changes frequently appear to occur without regard to the operating performance of the affected companies. 
Hence, the price of our common shares could fluctuate based upon factors that have little or nothing to do with our company, 
and these fluctuations could materially reduce our share price and cause you to lose all or part of your investment. Further, in 
the past, market fluctuations and price declines in a company’s stock have led to securities class action litigations. If such a 
suit were to arise, it could have a substantial cost and divert our resources regardless of the outcome.

24

If we fail to maintain proper and effective internal controls over financial reporting, our ability to produce accurate and 
timely financial statements could be impaired and investors’ views of us could be harmed.

The Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") requires, among other things, that we maintain effective internal 
control over financial reporting and disclosure controls and procedures. One key aspect of the Sarbanes-Oxley Act is that we 
must perform system and process evaluation and testing of our internal control over financial reporting to allow management 
and our independent registered public accounting firm to report on the effectiveness of our internal control over financial 
reporting, as required by Section 404 of the Sarbanes-Oxley Act, with auditor attestation of the effectiveness of our internal 
controls, beginning with our annual report on Form 10-K for the fiscal year ending December 31, 2015. If we are not able to 
comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting 
firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the 
market price of our common shares could decline and we could be subject to sanctions or investigations by the NYSE, the 
SEC or other regulatory authorities, which would require additional financial and management resources.

Our ability to successfully implement our business plan and comply with the Sarbanes-Oxley Act requires us to be able to 
prepare timely and accurate financial statements, among other requirements. Any delay in the implementation of, or 
disruption in the transition to, new or enhanced systems, procedures or controls, may cause our operations to suffer and we 
may be unable to conclude that our internal control over financial reporting is effective and to obtain an unqualified report on 
internal controls from our auditors. Moreover, we cannot be certain that these measures would ensure that we implement and 
maintain adequate controls over our financial processes and reporting in the future. Even if we were to conclude, and our 
independent registered public accounting firm were to concur, that our internal control over financial reporting provided 
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external 
purposes in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"), 
because of its inherent limitations, internal control over financial reporting may not prevent or detect fraud or misstatements. 
This, in turn, could have an adverse impact on the market price for our common shares, and could adversely affect our ability 
to access the capital markets.

We have incurred and will continue to incur increased costs as a result of operating as a publicly traded company, and our 
management will be required to devote substantial time to new compliance initiatives.

As a publicly traded company, we have incurred and will continue to incur additional legal, accounting and other expenses 
that we did not previously incur. Although we are currently unable to estimate these costs with any degree of certainty, they 
may be material in amount. In addition, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer 
Protection Act and the rules of the SEC and the NYSE, impose various requirements on public companies. Our management 
and other personnel devote a substantial amount of time to these compliance initiatives as well as investor relations. 
Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities 
more time-consuming and costly. For example, these rules and regulations make it more difficult and more expensive for us 
to obtain director and officer liability insurance, and we have incurred additional costs to maintain such coverage.

Furthermore, if we are not able to comply with these requirements in a timely manner, the market price of our common 
shares could decline and we could be subject to potential delisting by the NYSE and review by the NYSE, the SEC, or other 
regulatory authorities, which would require the expenditure by us of additional financial and management resources and 
could harm our business and the market price of our common shares.

We are controlled by Carlyle, whose interests in our business may be different than yours.

As of December 31, 2014, Carlyle owned 74.12% of our common shares and is able to control our affairs in all cases. 
Pursuant to a principal stockholders agreement, a majority of our Board of Directors has been designated by Carlyle.  As a 
result, Carlyle or its respective designees to our Board of Directors have the ability to control the appointment of our 
management, the entering into of mergers, sales of substantially all or all of our assets and other extraordinary transactions 
and influence amendments to our memorandum of association and bye-laws. So long as Carlyle continues to own a majority 
of our common shares, they will have the ability to control the vote in any election of directors and will have the ability to 
prevent any transaction that requires shareholder approval regardless of whether other shareholders believe the transaction is 
in our best interests. Additionally, pursuant to our principal stockholders agreement, Carlyle will continue to have the ability 
to designate a majority of our directors until it owns less than 25% of the outstanding common shares. In any of these 
matters, the interests of Carlyle may differ from or conflict with your interests. Moreover, this concentration of share 
ownership may also adversely affect the trading price for our common shares to the extent investors perceive disadvantages 
in owning shares of a company with a controlling shareholder. In addition, Carlyle is in the business of making investments 
in companies and may, from time to time, acquire interests in businesses that directly or indirectly compete with our business, 
as well as businesses that are our significant existing or potential suppliers or customers. Carlyle may acquire or seek to 
acquire assets that we seek to acquire and, as a result, those acquisition opportunities may not be available to us or may be 
more expensive for us to pursue.

25

We do not intend to pay dividends on our common shares and, consequently, your ability to achieve a return on your 
investment will depend on appreciation in the price of our common shares.

We do not intend to declare and pay dividends on our common shares for the foreseeable future. We currently intend to invest 
our future earnings, if any, to fund our growth and potentially reduce our indebtedness. Therefore, you are not likely to 
receive any dividends on your common shares for the foreseeable future and the success of an investment in our common 
shares will depend upon any future appreciation in their value. There is no guarantee that our common shares will appreciate 
in value or even maintain the price at which our shareholders have purchased their shares. The payment of future dividends, 
however, will be at the discretion of our Board of Directors and will depend on, among other things, our earnings, financial 
condition, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of 
dividends and other considerations that our Board of Directors deems relevant. The credit agreement governing our Senior 
Secured Credit Facilities and the indentures governing the Senior Notes also effectively limit our ability to pay dividends. As 
a consequence of these limitations and restrictions, we may not be able to make, or may have to reduce or eliminate, the 
payment of dividends on our common shares.

Future sales of our common shares in the public market could lower our share price, and any additional capital raised by 
us through the sale of equity or convertible debt securities may dilute your ownership in us and may adversely affect the 
market price of our common shares.

We and our shareholders may sell additional common shares in subsequent public offerings. We may also issue additional 
common shares or convertible debt securities to finance future acquisitions. We have 1,000,000,000 common shares 
authorized and as of February 27, 2015, 229,784,358 common shares outstanding. 171,452,380 of our common shares, or 
74.61% of our total outstanding common shares are restricted from immediate resale under the lock-up agreements between 
our executive officers, directors and certain of our current shareholders and the underwriters that participated in our initial 
public offering ("IPO"). However, these shares will become available for sale following the expiration of the lock-up 
agreements, which, without the prior consent of the representatives of the underwriters, is May 11, 2015, subject to 
compliance with the applicable requirements under Rule 144 of the Securities Act of 1933, as amended (the "Securities Act").

We cannot predict the size of future issuances or sales of our common shares or the effect, if any, that future issuances and 
sales of our common shares will have on the market price of our common shares. Sales of substantial amounts of our 
common shares (including sales pursuant to Carlyle’s registration rights, sales by members of management and shares issued 
in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market 
prices for our common shares. See Part III, Item 13, "Certain Relationships and Related Transactions and Director 
Independence."

We are a "controlled company" within the meaning of the rules of the NYSE and, as a result, qualify for, and rely on, 
exemptions from certain corporate governance requirements. Our shareholders do not have the same protections afforded 
to shareholders of companies that are subject to such requirements.

For so long as Carlyle collectively owns a majority in voting power of our outstanding common shares, we will continue to 
be a "controlled company" within the meaning of the corporate governance standards of the NYSE. Under these rules, a 
company of which more than 50% of the voting power is held by an individual, group or another company is a "controlled 
company" and may elect not to comply with certain corporate governance requirements, including:

•

•

•

•

the requirement that a majority of such company’s board of directors consist of independent directors;

the requirement that such company have a nominating and corporate governance committee that is composed
entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities;

the requirement that such company have a compensation committee that is composed entirely of independent
directors with a written charter addressing the committee’s purpose and responsibilities; and

the requirement for an annual performance evaluation of such company’s nominating and corporate governance
committee and compensation committee.

We currently utilize, and intend to continue to utilize, these exemptions for so long as we continue to qualify as a "controlled 
company." While exempt, we will not have a majority of independent directors and our nominating and corporate governance 
and compensation committees will not consist entirely of independent directors and such committees will not be subject to 
annual performance evaluations. Accordingly, our shareholders do not have the same protections afforded to shareholders of 
companies that are subject to all of the corporate governance requirements of the NYSE.

Upon the sale of a sufficient number of shares by Carlyle, we will no longer be a controlled company, and we may have 
difficulties complying with NYSE rules relating to the composition of our board of directors listed above.

26

We intend to comply with these NYSE rules if we cease to be a controlled company.  However, there can be no assurance that 
we will be able to attract and retain the number of independent directors needed to comply with NYSE rules during the 
phase-in period for compliance.

We are a Bermuda company and it may be difficult for you to enforce judgments against us or our directors and executive 
officers.

We are a Bermuda exempted company. As a result, the rights of our shareholders are governed by Bermuda law and our 
memorandum of association and bye-laws. The rights of shareholders under Bermuda law may differ from the rights of 
shareholders of companies incorporated in another jurisdiction, and a substantial portion of our assets are located outside the 
United States. As a result, it may be difficult for investors to effect service of process on those persons in the United States or 
to enforce in the United States judgments obtained in U.S. courts against us or those persons based on the civil liability 
provisions of the U.S. securities laws. It is doubtful whether courts in Bermuda will enforce judgments obtained in other 
jurisdictions, including the United States, against us or our directors or officers under the securities laws of those jurisdictions 
or entertain actions in Bermuda against us or our directors or officers under the securities laws of other jurisdictions.

Bermuda law differs from the laws in effect in the United States and may afford less protection to our shareholders.

We are organized under the laws of Bermuda. As a result, our corporate affairs are governed by the Companies Act 1981 (the 
"Companies Act"), which differs in some material respects from laws typically applicable to U.S. corporations and 
shareholders, including the provisions relating to interested directors, amalgamations, mergers and acquisitions, takeovers, 
shareholder lawsuits and indemnification of directors. Generally, the duties of directors and officers of a Bermuda company 
are owed to the company only. Shareholders of Bermuda companies typically do not have rights to take action against 
directors or officers of the company and may only do so in limited circumstances. Shareholder class actions are not available 
under Bermuda law. The circumstances in which shareholder derivative actions may be available under Bermuda law are 
substantially more proscribed and less clear than they would be to shareholders of U.S. corporations. The Bermuda courts, 
however, would ordinarily be expected to permit a shareholder to commence an action in the name of a company to remedy a 
wrong to the company where the act complained of is alleged to be beyond the corporate power of the company or illegal, or 
would result in the violation of the company’s memorandum of association or bye-laws. Furthermore, consideration would be 
given by a Bermuda court to acts that are alleged to constitute a fraud against the minority shareholders or, for instance, 
where an act requires the approval of a greater percentage of the company’s shareholders than those who actually approved it.

When the affairs of a company are being conducted in a manner that is oppressive or prejudicial to the interests of some 
shareholders, one or more shareholders may apply to the Supreme Court of Bermuda, which may make such order as it sees 
fit, including an order regulating the conduct of the company’s affairs in the future or ordering the purchase of the shares of 
any shareholders by other shareholders or by the company. Additionally, under our bye-laws and as permitted by Bermuda 
law, each shareholder has waived any claim or right of action against our directors or officers for any action taken by 
directors or officers in the performance of their duties, except for actions involving fraud or dishonesty. In addition, the rights 
of our shareholders and the fiduciary responsibilities of our directors under Bermuda law are not as clearly established as 
under statutes or judicial precedent in existence in jurisdictions in the United States, particularly the State of Delaware. 
Therefore, our shareholders may have more difficulty protecting their interests than would shareholders of a corporation 
incorporated in a jurisdiction within the United States.

We have anti-takeover provisions in our bye-laws that may discourage a change of control.

Our bye-laws contain provisions that could make it more difficult for a third party to acquire us without the consent of our 
Board of Directors. These provisions provide for:

•

•

•

•

a classified Board of Directors with staggered three-year terms;

directors only to be removed for cause once the number of common shares owned by Carlyle ceases to be more than
50%;

restrictions on the time period in which directors may be nominated; and

our Board of Directors to determine the powers, preferences and rights of our preference shares and to issue the
preference shares without shareholder approval.

These anti-takeover defenses could discourage, delay or prevent a transaction involving a change in control of our company 
and may prevent our shareholders from receiving the benefit from any premium to the market price of our common shares 
offered by a bidder in a takeover context. Even in the absence of a takeover attempt, the existence of these provisions may 
adversely affect the prevailing market price of our common shares if the provisions are viewed as discouraging takeover 
attempts in the future. These provisions could also discourage proxy contests, make it more difficult for you and other 
shareholders to elect directors of your choosing and cause us to take corporate actions other than those you desire.  

27

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Our extensive geographic footprint is comprised of 35 manufacturing facilities (including 9 manufacturing sites operated by 
our joint ventures), 7 major technology centers and 45 customer training centers supporting our global operations. The table 
below presents summary information regarding our facilities as of December 31, 2014.

Type of Facility/Country

Location

Segment

Manufacturing Facilities
North America
Canada
United States of America

Latin America
Brazil
Mexico

Venezuela

EMEA
Austria
Belgium
France
Germany

Sweden
Switzerland
Turkey
United Kingdom

Asia Pacific
Australia
China

India
Malaysia

Joint Venture Owned Manufacturing      
Facilities
China

Colombia
Indonesia
Taiwan
Guatemala

  Ajax
  Front Royal, VA
  Ft. Madison, IA
  Houston, TX
  Hilliard, OH
  Mt. Clemens, MI
  Toledo, OH

  Guarulhos
  Monterrey
  Ocoyoacac
  Tlalnepantla
  Valencia

  Guntramsdorf
  Mechelen
  Montbrison
  Wuppertal
  Landshut
  Vastervik
  Bulle
  Gebze
  Darlington

  Riverstone
  Changchun
  Jiading
  Savli
  Kuala Lumpur

  Chengdu
  Dongguan
  Huangshan
  Qingpu
  Shangdong
  Cartagena de Indias
  Cikarang
  Taipei
  Amatitlan

28

  Transportation
  Performance; Transportation
  Performance; Transportation
  Performance
  Performance
  Performance; Transportation
  Performance; Transportation

  Performance; Transportation
  Performance
  Performance; Transportation
  Performance; Transportation
  Performance; Transportation

  Performance; Transportation
  Performance; Transportation
  Performance
  Performance; Transportation
  Performance
  Performance
  Performance
  Performance; Transportation
  Performance

  Performance; Transportation
  Performance; Transportation
  Performance; Transportation
  Performance; Transportation
  Performance

  Performance
  Performance
  Performance
  Performance
  Performance
  Performance
  Performance
  Transportation
  Performance

Type of Facility/Country

Location

Segment

Joint Venture Partner-Owned
Manufacturing Facilities
China
Japan

South Africa

Russia

Technology Centers
Belgium
China
France
Germany
Mexico
United States of America

Customer Training Centers

  Wuhan
  Amagasaki
  Chiba
  Durban
  Port Elizabeth
  Moscow

  Mechelen
  Shanghai
  Montbrison
  Wuppertal
  Mexico City
  Mt. Clemens, MI
  Wilmington, DE

  Location by Region
  North America
  Latin America
  EMEA
  Asia Pacific

  Performance
  Transportation
  Transportation
  Transportation
  Transportation
  Transportation

  Performance; Transportation
  Performance; Transportation
  Performance
  Performance; Transportation
  Performance; Transportation
  Performance; Transportation
  Performance; Transportation

  Number of Facilities
  10
  7
  15
  13

ITEM 3. LEGAL PROCEEDINGS

We are from time to time party to legal proceedings that arise in the ordinary course of business. We are not involved in any 
litigation other than that which has arisen in the ordinary course of business. We do not expect that any currently pending 
lawsuits will have a material effect on us. See Part I, Item 1A, "Risk Factors—Risks Related to our Business—Risks Related 
to Legal and Regulatory Compliance and Litigation—Our results of operations could be adversely affected by litigation" and 
Part I, Item 1A, "Risk Factors—Risks Related to our Business—Risks Related to Other Aspects of our Business—DuPont’s 
potential breach of its obligations in connection with the Acquisition, including failure to comply with its indemnification 
obligations, may materially affect our business and operating results."

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

29

PART II 

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS 
AND ISSUER PURCHASES OF EQUITY SECURITIES

Share Price and Dividends

Our common shares are traded on the New York Stock Exchange ("NYSE") under the symbol "AXTA". Our common shares 
first began trading on the NYSE on November 12, 2014. The high and low sales prices for our common shares from 
November 12, 2014 through December 31, 2014 were $27.50 and $19.50, respectively.

As of February 27, 2015, there were approximately 30 holders of record of our common shares. Since our incorporation in 
August 2012, we have not paid dividends on our common shares, and we do not currently intend to pay dividends in the 
foreseeable future. Instead, we intend to reinvest earnings in our business. The declaration and payment of any dividends in 
the future will be determined by our board of directors, in its discretion, and will depend on a number of factors, including 
our earnings, capital requirements, overall financial condition and contractual restrictions, including covenants in the 
agreements governing our Senior Notes and Senior Secured Credit Facilities, which may limit our ability to pay dividends.

Recent Sales of Unregistered Securities

From August 24, 2012 through December 31, 2014, we have granted to our officers and employees options to purchase an 
aggregate of 17,821,350 of our common shares with per share exercise prices equal to $5.92, $7.21, $8.88 and $11.84 under 
our equity incentive plans. 

From August 24, 2012 through December 31, 2014, certain of our officers and employees have exercised options granted 
under our equity incentive plans to purchase a total of 363,248 of our common shares for an aggregate purchase price of 
approximately $3 million. From August 24, 2012 through December 31, 2014, certain of our officers and directors have 
purchased an aggregate of 1,604,382 of our common shares at an aggregate purchase price of approximately $10 million.

Quarterly Stock Market Price

Quarter Ended
Fourth Quarter (November 12, 2014 - December 31, 2014)

Low

High
$27.50 $19.50

30

Stock Performance 

The line graph illustrated below compares the cumulative total shareholder value return of our common shares since the 
initial public offering with the cumulative total returns of an overall stock market index, the Standard & Poor's (Composite 
500 Index ("S&P 500"), and our peer group index, Standard & Poor's 500 Chemicals Index ("S&P 500 Chemicals"). This 
graph assumes an investment of $100 in our common shares and each index (with all dividends reinvested) on November 12, 
2014.  

31

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth selected historical consolidated and combined financial data and other information of Axalta. 
As a result of the Acquisition, we applied acquisition accounting whereby the purchase price paid was allocated to the 
acquired assets and liabilities at fair value. The financial reporting periods presented are as follows:

•

•

The years ended December 31, 2012, 2011 and 2010 and the period from January 1, 2013 through January 31, 2013
("Predecessor" periods) reflect the combined results of operations of the DPC business.

The years ended December 31, 2014 and 2013 ("Successor" periods) reflect the consolidated results of operations of
Axalta, which include the effects of acquisition accounting commencing on the acquisition date of February 1, 2013
and the effects of the refinancing of our Senior Secured Credit Facilities that was consummated on February 3, 2014.

The historical results of operations and cash flow data for the years ended December 31, 2014 and 2013 and the historical 
balance sheet data as of December 31, 2014 and 2013 presented below were derived from our Successor audited financial 
statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K. As of and for the Successor 
period of August 24, 2012 (inception date) through December 31, 2012, the Successor had no operations or activity prior to 
the Acquisition, other than merger and acquisition costs of $29.0 million, which consisted primarily of investment banking, 
legal and other professional advisory services costs. The historical combined financial data for the years ended December 31, 
2012, 2011 and 2010 as well as the period January 1, 2013 through January 31, 2013 have been derived from the Predecessor 
audited combined financial statements and the related notes thereto for the DPC business. 

32

Our historical financial data and that of the DPC business are not necessarily indicative of our future performance, nor does 
such data reflect what our financial position and results of operations would have been had we operated as an independent 
company during the periods shown.

(In millions, except per share data)
Statement of Operations Data:

Net sales

Other revenue

Total revenue

Cost of goods sold (1)
Selling, general and administrative expenses (2)
Research and development expenses

Amortization of acquired intangibles

Merger and acquisition related expenses

Operating income

Interest expense, net

Bridge financing commitment fees

Other expense, net

Income (loss) before taxes

Provision (benefit) for income taxes

Net income (loss)

Less: Net income attributable to
noncontrolling interests

Net income (loss) attributable to
controlling interests

Per share data:

Net Income (loss) per share:

Basic

Diluted

Basic weighted average shares outstanding

Diluted weighted average shares outstanding

Other Financial Data:

Cash flows from:

Operating activities

Investing activities

Financing activities

Depreciation and amortization

Capital expenditures

Successor

Predecessor

Year Ended December 31,

Period from 
January 1
through
January 31,

Year Ended December 31,

2014

2013

2013

2012

2011

2010

$

4,361.7 $

3,951.1 $

326.2 $

4,219.4 $

4,281.5 $

3,802.0

29.8

4,391.5

2,897.2

991.5

49.5

83.8

—

369.5

217.7

—

115.0

36.8

2.1

34.7

7.3

35.7

3,986.8

2,772.8

1,040.6

40.5

79.9

28.1

24.9

215.1

25.0

48.5

(263.7)

(44.8)

(218.9)

6.0

1.1

327.3

232.2

70.8

3.7

—

—

20.6

—

—

5.0

15.6

7.1

8.5

0.6

37.4

4,256.8

2,932.6

873.4

41.5

—

—

34.3

4,315.8

3,074.5

869.1

49.6

—

—

27.8

3,829.8

2,676.0

827.6

52.4

—

—

409.3

322.6

273.8

—

—

16.3

393.0

145.2

247.8

0.2

—

20.2

302.2

120.7

181.5

1.1

—

0.6

272.1

99.1

173.0

4.5

2.1

4.9

27.4 $

(224.9) $

7.9 $

243.3 $

179.4 $

168.1

0.12 $

0.12 $

229.3

230.3

(0.97)

(0.97)

228.3

228.3

$

$

$

$

251.4 $

376.8 $

(37.7) $

388.8 $

236.2 $

(178.5)

(123.2)

308.7

(188.4)

(5,011.2)

5,098.1

300.7

(107.3)

(8.3)

43.0

9.9

(2.4)

(88.2)

(290.6)

110.7

(73.2)

(116.6)

(125.1)

108.7

(82.7)

203.2

(77.3)

(125.0)

111.2

(80.2)

33

(In millions)
Balance sheet data:
Cash and cash equivalents
Working capital (3)
Total assets
Debt, net of discount
Total liabilities
Total shareholders’ equity/combined equity

Successor

Predecessor

Year Ended December 31,

Year Ended December 31,

2014

2013

2012

2011

2010

$

382.1 $
926.2
6,252.8
3,696.4
5,140.8
1,112.0

459.3 $
952.2
6,737.1
3,920.9
5,525.3
1,211.8

28.7 $
605.2
2,878.6
0.2
1,181.6
1,697.0

18.8 $
640.0
2,833.6
0.9
1,028.5
1,805.1

21.9
604.4
2,823.8
0.8
1,059.1
1,764.7

(1)  In the Successor year ended December 31, 2013, cost of goods sold included the impact of $103.7 million attributable to the 

increase in inventory value resulting from the fair value adjustment associated with our acquisition accounting for inventories.

(2)  Selling, general and administrative expense included transition-related expenses of $127.1 million and $231.5 million for the 

Successor years ended December 31, 2014 and 2013, respectively. Additionally, during the Predecessor period ended December 
31, 2012, $0.7 million in employee separation and asset related costs were recorded.

(3)  Working capital is defined as current assets less current liabilities.

34

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF 
OPERATIONS

The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may 
differ materially from those discussed in the forward looking statements as a result of various factors, including, without 
limitation, those set forth under Part I, Item 1A, "Risk Factors," and other matters included elsewhere in this Annual Report 
on Form 10-K. The following discussion and analysis of our financial condition and results of operations should be read in 
conjunction with our consolidated and combined financial statements and the notes thereto included elsewhere in this Annual 
Report on Form 10-K, as well as the information presented under Part II, Item 6, "Selected Financial Data" of this Annual 
Report on Form 10-K.

FORWARD-LOOKING STATEMENTS

Many statements made in this Annual Report on Form 10-K that are not statements of historical fact, including statements 
about our beliefs and expectations, are "forward-looking statements" within the meaning of Section 27A of the Securities Act 
and should be evaluated as such. Forward-looking statements include information concerning possible or assumed future 
results of operations, including descriptions of our business plan and strategies. These statements often include words such as 
"anticipate," "expect," "suggests," "plan," "believe," "intend," "estimates," "targets," "projects," "should," "could," "would," 
"may," "will," "forecast," and other similar expressions. We base these forward-looking statements or projections on our 
current expectations, plans and assumptions that we have made in light of our experience in the industry, as well as our 
perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate 
under the circumstances and at such time. As you read and consider this Annual Report on Form 10-K, you should understand 
that these statements are not guarantees of performance or results. The forward-looking statements and projections are subject 
to and involve risks, uncertainties and assumptions and you should not place undue reliance on these forward-looking 
statements or projections. Although we believe that these forward-looking statements and projections are based on reasonable 
assumptions at the time they are made, you should be aware that many factors could affect our actual financial results or 
results of operations and could cause actual results to differ materially from those expressed in the forward-looking 
statements and projections. Factors that may materially affect such forward-looking statements and projections include:

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

adverse developments in economic conditions and, particularly, in conditions in the automotive and transportation
industries;

our inability to successfully execute on our growth strategy;

risks associated with our non-U.S. operations;

currency-related risks;

increased competition;

risks of the loss of any of our significant customers or the consolidation of MSOs, distributors and/or body shops;

price increases or interruptions in our supply of raw materials;

failure to develop and market new products and manage product life cycles;

litigation and other commitments and contingencies;

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;

unexpected liabilities under any pension plans applicable to our employees;

risk that the insurance we maintain may not fully cover all potential exposures;

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;

business disruptions, security threats and security breaches;

our ability to protect and enforce intellectual property rights;

intellectual property infringement suits against us by third parties;

our substantial indebtedness;

our ability to obtain additional capital on commercially reasonable terms may be limited;

our ability to realize the anticipated benefits of any acquisitions and divestitures;

35

•

•

•

•

•

•

•

•

•

•

•

•

our joint ventures’ ability to operate according to our business strategy should our joint venture partners fail to fulfill their
obligations;

ability to recruit and retain the experienced and skilled personnel we need to compete;

work stoppages, union negotiations, labor disputes and other matters associated with our labor force;

terrorist acts, conflicts, wars and natural disasters that may materially adversely affect our business, financial condition
and results of operations;

transporting certain materials that are inherently hazardous due to their toxic nature;

weather conditions that may temporarily reduce the demand for some of our products;

reduced demand for some of our products as a result of improved safety features on vehicles and insurance company
influence;

the amount of the costs, fees, expenses and charges related to being a public company;

any statements of belief and any statements of assumptions underlying any of the foregoing;

Carlyle’s ability to control our common shares;

other factors disclosed in this Annual Report on Form 10-K; and

other factors beyond our control.

These cautionary statements should not be construed by you to be exhaustive and are made only as of the date of this Annual 
Report on Form 10-K. We undertake no obligation to update or revise any forward-looking statements, whether as a result of 
new information, future events or otherwise.

BASIS OF PRESENTATION

Axalta's consolidated financial statements as of December 31, 2014 and 2013, and for the years ended December 31, 2014 
and 2013 and the period from August 24, 2012 through December 31, 2012, included elsewhere in this Annual Report on 
Form 10-K, represent those of the Successor.  The consolidated financial statements of Axalta were prepared using the 
acquisition method of accounting.  Under the acquisition method of accounting, tangible and identifiable intangible assets 
acquired and liabilities assumed are recorded at their respective fair market values as of the date of the acquisition, with any 
purchase price in excess of the net assets acquired recorded as goodwill.  Because Axalta was formed on August 24, 2012 for 
the purpose of consummating the Acquisition, it has no financial statements as of or for periods ended prior to that date.  
Prior to the Acquisition, Axalta generated no revenue and only incurred merger and acquisition related costs and debt 
financing costs in anticipation of the Acquisition.  

The combined financial statements of DPC for the period from January 1, 2013 through January 31, 2013 and for the year 
ended December 31, 2012, included elsewhere in this Annual Report on Form 10-K, represent those of the Predecessor.  As a 
result of the application of acquisition accounting as of the date of the Acquisition, the financial statements for the Successor 
periods and the Predecessor periods are presented on a different basis and, therefore, may not be comparable.

During the Predecessor periods, DPC operated either as a reportable segment or part of a reportable segment within DuPont, 
consequently, standalone financial statements were not historically prepared for DPC.  The accompanying combined financial 
statements of DPC have been prepared from DuPont’s historical accounting records and are presented on a standalone basis 
as if the operations had been conducted independently from DuPont.  In this context, prior to pre-acquisition structuring that 
occurred in 2012, no direct ownership relationship existed among all of the various legal entities comprising DPC. 
Accordingly, DuPont and its subsidiaries’ net investment in these operations is shown in lieu of shareholders' equity in the 
Predecessor combined financial statements.  The Predecessor combined financial statements include the historical operations 
and assets and liabilities of the legal entities that are considered to comprise the DPC business.  For more information on the 
financial statements for our Successor period and Predecessor period, see Note 2 to the consolidated and combined financial 
statements included elsewhere in this Annual Report on Form 10-K.

In addition to the historical analysis of results of operations, we have prepared unaudited supplemental pro forma results of 
operations for the year ended December 31, 2013, derived from our audited financial statements for the year ended 
December 31, 2013 and the audited financial statements for the DPC business for the period from January 1, 2013 through 
January 31, 2013, each of which are included elsewhere in this Annual Report on Form 10-K, as if the Acquisition and related 
Financing had occurred on January 1, 2013. The pro forma analysis is prepared and presented to aid in explaining the results 
of operations. The pro forma discussion follows the historical analysis of results of operations.

36

OVERVIEW 

We are a leading global manufacturer, marketer and distributor of high performance coatings systems. We have a nearly 150-
year heritage in the coatings industry and are known for manufacturing high-quality products with well-recognized brands 
supported by market-leading technology and customer service. Our diverse global footprint of 35 manufacturing facilities, 7 
technology centers, 45 customer training centers and approximately 12,600 employees allows us to meet the needs of 
customers in over 130 countries. We serve our customer base through an extensive sales force and technical support 
organization, as well as through over 4,000 independent, locally based distributors. 

We operate our business in two segments, Performance Coatings and Transportation Coatings. Our segments are based on the 
type and concentration of customers served, service requirements, methods of distribution and major product lines.

Through our Performance Coatings segment we provide high-quality liquid and powder coatings solutions to a fragmented 
and local customer base. We are one of only a few suppliers with the technology to provide precise color matching and highly 
durable coatings systems. The end-markets within this segment are refinish and industrial.

Through our Transportation Coatings segment we provide advanced coating technologies to OEMs of light and commercial 
vehicles. These increasingly global customers require a high level of technical support coupled with cost-effective, 
environmentally responsible coatings systems that can be applied with a high degree of precision, consistency and speed. The 
end-markets within this segment are light vehicle and commercial vehicle.

On November 11, 2014, we priced our initial public offering (the "Offering", or the "IPO"), in which certain selling 
shareholders affiliated with Carlyle sold 57,500,000 common shares at a price of $19.50 per share. We received no proceeds 
from the Offering.

BUSINESS HIGHLIGHTS AND TRENDS

From 2012 to 2014, we managed the transition of ownership and operational separation resulting from the planned divestiture 
of our business by DuPont and ultimately the Acquisition, including significant changes to our senior leadership team. During 
this time period, our Adjusted EBITDA grew at a 21% CAGR primarily as the result of several strategic initiatives focused 
on margin improvement. In addition to regular price increases in our refinish end-market, these initiatives included selective 
price increases in other end-markets, reducing sales with lower margin customers and productivity improvements, which 
collectively drove Adjusted EBITDA growth in both of our segments.

From 2012 to 2014, our net sales remained flat with net sales growth in our Transportation Coatings segment offset by net 
sales declines in our Performance Coatings segment. Net sales in our Transportation Coatings segment grew at a 1% CAGR, 
driven by increases in both our light and commercial vehicle end-markets, primarily as a result of increased vehicle 
production in North America and Asia Pacific and improvements in average selling price driven by new product and color 
introductions. Net sales in our Performance Coatings segment decreased at a 2% CAGR over the same period as a result of 
lower volumes in both our refinish and industrial end-markets in developed markets. In EMEA, volumes declined as a result 
of a difficult economic environment. In North America, our lack of participation in the MSO market prior to the Acquisition 
had a negative impact on our volumes as MSO body shops increased the number of vehicles serviced at the expense of 
independent body shop customers. These factors in developed markets were partially offset by continued refinish net sales 
growth in the emerging markets.

With 13 of our 17 most senior managers joining our company since the Acquisition, 2014 was the first full fiscal year of 
results under our current senior management team. Our net sales increased 2% for the year ended December 31, 2014 
compared to the pro forma year ended December 31, 2013 (see "Unaudited Pro Forma Consolidated and Combined Financial 
Information"), driven by 3% growth in our Performance Coatings segment and 1% growth in our Transportation Coatings 
segment, with growth in both segments across all regions except Latin America. Excluding Latin America, where difficult 
economic conditions contributed to weaker demand and unfavorable currency translation, our net sales grew 3% for the year 
ended December 31, 2014 compared to the pro forma year ended December 31, 2013. The following trends have impacted 
our segment and end-market sales performance in 2014:

•

•

Performance Coatings: Improving economic conditions in Europe, our recent wins with growing MSO
customers in North America and continued growth in Asia Pacific drove higher volumes.

Transportation Coatings: Significant growth in Asia Pacific driven by increases in light vehicle production
combined with increased North American commercial truck production builds were largely offset by
significantly lower light vehicle volumes in Latin America.

37

Since the Acquisition, we have implemented numerous initiatives to reduce our fixed and variable costs that have improved 
our Adjusted EBITDA margin in 2014 compared to the pro forma prior year. Examples include transitioning our IT systems 
to more cost-effective solutions that better meet our needs as an independent company, developing a global procurement 
organization to reduce procurement costs and investing in a European manufacturing re-alignment to position the region for 
profitable growth. These initiatives are contributing to our financial results and we believe they will continue to drive 
profitability improvements over the next several years.

Our business serves four end-markets globally as follows:

 (In millions)

Successor

Pro Forma

Predecessor

Performance Coatings

Refinish

Industrial

Total Net sales Performance Coatings
Transportation Coatings

Light Vehicle

Commercial Vehicle

Total Net sales Transportation Coatings

Total Net sales

Acquisition Accounting

Year Ended December 31,

2014 vs 2013

2013 vs 2012

2014

2013

2012

% change

% change

$

1,850.8 $

1,799.4 $

1,759.3

734.2

2,585.0

1,384.5

392.2

1,776.7

712.7

2,512.1

1,403.1

362.1

1,765.2

$

4,361.7 $

4,277.3 $

720.2

2,479.5

1,390.6

349.3

1,739.9

4,219.4

2.9 %

3.0 %

2.9 %

(1.3)%

8.3 %

0.7 %

2.0 %

2.3 %

(1.0)%

1.3 %

0.9 %

3.7 %

1.5 %

1.4 %

We allocated the purchase price paid to acquire the DPC business to the acquired assets and liabilities assumed based on their 
respective estimated fair value as of the acquisition date. The application of acquisition accounting resulted in an increase in 
amortization and depreciation expense relating to our acquired intangible assets and property, plant and equipment. In 
addition to the increase in the net carrying value of property, plant and equipment, we revised the remaining depreciable lives 
of property, plant and equipment to reflect the estimated remaining useful lives for purposes of calculating periodic 
depreciation expense. We adjusted the carrying values of the joint ventures to reflect their estimated fair values at the date of 
purchase. We adjusted the value of inventory to its estimated fair value, which increased the costs recognized upon the sale of 
this acquired inventory. We also provided for deferred income taxes for the future tax consequences of acquisition date basis 
differences between the carrying amounts of assets and liabilities utilized for financial reporting purposes and the respective 
amounts used for income tax purposes. The excess of the purchase price over the estimated fair value of assets and liabilities 
was assigned to goodwill, which is not amortized for accounting purposes but is subject to testing for impairment at least 
annually. See Note 5 to our consolidated and combined financial statements included elsewhere in this Annual Report on 
Form 10-K for further discussion on the Acquisition.

Factors Affecting Our Operating Results

The following discussion sets forth certain components of our statements of operations as well as factors that impact those 
items.

Net sales

We generate revenue from the sale of our products across all major geographic areas. Our net sales include total sales less 
estimates for returns and price allowances. Price allowances include discounts for prompt payment as well as volume-based 
incentives. Our overall net sales are generally impacted by the following factors:

•

•

•

•

•

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;

38

•

•

our ability to successfully develop and launch new products and applications; and

fluctuations in foreign exchange rates.

While the factors described above impact net sales in each of our operating segments, the impact of these factors on our 
operating segments can differ, as described below. For more information about risks relating to our business, see Part I, Item 
1A, "Risk Factors—Risks Related to our Business."

Other revenue

Other revenue consists primarily of consulting and other service revenue and royalty income.

Cost of goods sold ("cost of sales")

Our cost of sales consists principally of the following:

•

•

•

•

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 for employees involved in our manufacturing
operations. These costs generally increase on an aggregate basis as production volumes increase and may decline as
a percent of net sales as a result of economies of scale associated with higher production volumes.

Depreciation Expense. Property, plant and equipment are stated at cost and depreciated or amortized on a straight-
line basis over their estimated useful lives. Property, plant and equipment acquired through the Acquisition were
recorded at their estimated fair value on the acquisition date resulting in a new cost basis for accounting purposes.

Other. Our remaining cost of sales consists of freight costs, warehousing expenses, purchasing costs, costs
associated with closing or idling of production facilities, functional costs supporting manufacturing, product claims
and other general manufacturing expenses, such as expenses for utilities and energy consumption.

The main factors that influence our cost of goods sold as a percentage of net sales include:

•

•

•

•

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.

Selling, general and administrative expenses

Our selling, general and administrative expense consists of all expenditures incurred in connection with the sales and 
marketing of our products, as well as administrative overhead costs, including:

•

•

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 selling, general and administrative expense as a percentage of net sales have historically been impacted by a 
number of factors, including:

•

•

•

•

•

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.

39

Research and development expenses

Research and development expense represents costs incurred to develop new products, services, processes and technologies 
or to generate improvements to existing products or processes.

Interest expense, net

Interest expense, net consists primarily of interest expense on institutional borrowings and other financing obligations and 
changes in fair value of interest rate derivative instruments, net of capitalized interest expense. Interest expense, net also 
includes the amortization of debt issuance costs and debt discounts associated with our Senior Secured Credit Facilities and 
Senior Notes. See Note 22 to the consolidated and combined financial statements included elsewhere in this Annual Report 
on Form 10-K.

Other expense, net

Other expense, net represents costs incurred, net of income, on various non-operational items including management 
expenses to Carlyle as well as foreign exchange gains and losses.

Provision for income taxes

We and our subsidiaries are subject to income tax in the various jurisdictions in which we operate. While the extent of our 
future tax liability is uncertain, the impact of acquisition accounting for the Acquisition and for future acquisitions, changes 
to the debt and equity capitalization of our subsidiaries, and the realignment of the functions performed and risks assumed by 
the various subsidiaries are among the factors that will determine the future book and taxable income of the respective 
subsidiary and the Company as a whole. For the Predecessor periods, DPC did not file separate tax returns in the majority of 
its jurisdictions as it was included in the tax returns of DuPont entities within the respective tax jurisdictions. The income tax 
provision for the Predecessor periods was calculated using a separate return basis as if DPC was a separate taxpayer.

NON-GAAP FINANCIAL MEASURES

Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA

To supplement our financial information presented in accordance with U.S. GAAP, we use the following additional non-
GAAP financial measures to clarify and enhance an understanding of past performance: EBITDA and Adjusted EBITDA. We 
believe that the presentation of these financial measures enhances an investor’s understanding of our financial performance. 
We further believe that these financial measures are useful financial metrics to assess our operating performance from period-
to-period by excluding certain items that we believe are not representative of our core business. We use certain of these 
financial measures for business planning purposes and in measuring our performance relative to that of our competitors. We 
utilize Adjusted EBITDA as the primary measure of segment performance.

EBITDA consists of net income (loss) before interest, taxes, depreciation and amortization. Adjusted EBITDA consists of 
EBITDA adjusted for (i) non-operating income or expense, (ii) the impact of certain non-cash, nonrecurring or other items 
that are included in net income and EBITDA that we do not consider indicative of our ongoing operating performance and 
(iii) certain unusual or nonrecurring items impacting results in a particular period. We believe that making such adjustments 
provides investors meaningful information to understand our operating results and ability to analyze financial and business 
trends on a period-to-period basis.

We believe these financial measures are commonly used by investors to evaluate our performance and that of our 
competitors. However, our use of the terms EBITDA and Adjusted EBITDA may vary from that of others in our industry. 
These financial measures should not be considered as alternatives to operating income (loss), net income (loss), earnings per 
share or any other performance measures derived in accordance with U.S. GAAP as measures of operating performance.

EBITDA and Adjusted EBITDA have important limitations as analytical tools and you should not consider them in isolation 
or as substitutes for analysis of our results as reported under U.S. GAAP. Some of these limitations are:

•

EBITDA and Adjusted EBITDA:

•

do not reflect the significant interest expense on our debt, including the Senior Secured Credit Facilities and the
Senior Notes;

40

•

•

eliminate the impact of income taxes on our results of operations; and

contain certain estimates for periods prior to the Acquisition of standalone costs;

•

•

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.

We compensate for these limitations by using EBITDA and Adjusted EBITDA along with other comparative tools, together 
with U.S. GAAP measurements, to assist in the evaluation of operating performance. Such U.S. GAAP measurements include 
operating income (loss), net income (loss), earnings per share and other performance measures.

In evaluating these financial measures, you should be aware that in the future we may incur expenses similar to those 
eliminated in this presentation. Our presentation of EBITDA and Adjusted EBITDA should not be construed as an inference 
that our future results will be unaffected by unusual or nonrecurring items.

The following table reconciles the EBITDA and Adjusted EBITDA calculations discussed above to net income (loss) for the 
periods presented:

(In millions)
Net income (loss)

Interest expense, net

Provision (benefit) for income taxes

Depreciation and amortization

EBITDA
Inventory step up (a)
Merger and acquisition related costs (b)
Financing costs and extinguishment (c)
Foreign exchange remeasurement losses (d)
Long-term employee benefit plan adjustments (e)
Termination benefits and other employee related costs (f)
Consulting and advisory fees (g)
Transition-related costs (h)
IPO-related costs (i)
Other adjustments (j)
Dividends in respect of noncontrolling interest (k)
Management fee expense (l)
Adjusted EBITDA

Successor

Predecessor

Pro Forma

Year Ended
December 31,

2014

2013

Period from 
January 1
through
January 31,
2013 (1)

Year Ended
December 31,
2012 (1)

Year Ended
December 31,
2013 (1)

$

34.7 $ (218.9) $
217.7

2.1

308.7

563.2

—

—

6.1

81.2
(0.6)
18.4

36.3

101.8

22.3
10.8
(2.2)
3.2

215.1
(44.8)
300.7

252.1

103.7

28.1

25.0

48.9

9.5

147.5

54.7

29.3

—
2.3
(5.2)
3.1

8.5 $

247.8 $

—

7.1

9.9

25.5

—

—

—

4.5

2.3

0.3

—

—

—
0.1

—

—

—

145.2

110.7

503.7

—

—

—

17.7

36.9

8.6

—

—

—
12.6
(1.9)
—

(106.8)
234.8
(1.3)
327.3

454.0

—

—

—

34.0

11.8

147.8

54.7

29.3

—
2.4
(5.2)
3.1

$

840.5 $

699.0 $

32.7 $

577.6 $

731.9

(1)  The Adjusted EBITDA information for the Predecessor period January 1, 2013 through January 31, 2013, the Predecessor year 

ended December 31, 2012, and the pro forma year ended December 31, 2013 excludes net benefits of $5.7 million, $84.2 million 
and $5.7 million, respectively, which are comprised of (1) the add-back of corporate allocations from DuPont to DPC for the usage 
of DuPont’s facilities, functions and services; costs for administrative functions and services performed on behalf of DPC by 
centralized staff groups within DuPont; a portion of DuPont’s general corporate expenses; and certain pension and other long-term 
employee benefit costs, in each case because we believe these costs are not indicative of costs we would have incurred as a 
standalone company, net of (2) estimated standalone costs based on a corporate function resource analysis that included a 
standalone executive office, the costs associated with supporting a standalone information technology infrastructure, corporate 
functions such as legal, finance, treasury, procurement and human resources and certain costs related to facilities management. 
This resource analysis included anticipated headcount and the associated overhead costs of running these functions effectively as a 
standalone company of our size and complexity.

(a)  During the Successor year ended December 31, 2013, we recorded a non-cash fair value adjustment associated with our acquisition 

accounting for inventories. These amounts increased cost of goods sold by $103.7 million.

41

(b)  In connection with the Acquisition, we incurred $28.1 million of merger and acquisition costs during the Successor year ended 
December 31, 2013. These costs consisted primarily of investment banking, legal and other professional advisory services costs.

(c)  On August 30, 2012, we signed a debt commitment letter which included the Bridge Facility (as defined herein). Upon the issuance 

of the Senior Notes and the entry into the Senior Secured Credit Facilities, the commitments under the Bridge Facility terminated. 
Commitment fees related to the Bridge Facility of $21.0 million and associated fees of $4.0 million were expensed upon the 
termination of the Bridge Facility. In connection with the amendment to the Senior Secured Credit Facilities in February 2014, we 
recognized $3.1 million of costs during the year ended December 31, 2014. In addition to the credit facility amendment, we also 
incurred a $3.0 million loss on extinguishment of debt recognized during the Successor year ended December 31, 2014, which 
resulted directly from the pro-rata write off of unamortized deferred financing costs and original issue discounts associated with 
the pay-down of $100.0 million of principal on the New Dollar Term Loan  (discussed further at Note 22 to the consolidated and 
combined financial statements included elsewhere in this Annual Report on Form 10-K).

(d)  Eliminates foreign exchange gains and losses resulting from the remeasurement of assets and liabilities denominated in foreign 

currencies, including a $19.4 million loss related to the Acquisition date settlement of a foreign currency contract used to hedge the 
variability of Euro-based financing.

(e)  For the Successor periods ended December 31, 2014 and 2013, eliminates the non-service cost components of employee benefit 
costs. Additionally, we deducted a pension curtailment gain of $7.3 million recorded during the Successor year ended December 
31, 2014. For the Predecessor period January 1, 2013 through January 31, 2013 and the Predecessor year ended December 31, 
2012, eliminates (1) all U.S. pension and other long-term employee benefit costs that were not assumed as part of the Acquisition 
and (2) the non-service cost component of the pension and other long-term employee benefit costs.

(f)  Represents expenses primarily related to employee termination benefits, including our initiative to improve the overall cost 

structure within the European region, and other employee-related costs. Termination benefits include the costs associated with our 
headcount initiatives for establishment of new roles and elimination of old roles and other costs associated with cost saving 
opportunities that were related to our transition to a standalone entity.

(g)  Represents fees paid to consultants, advisors, and other third-party professional organizations for professional services rendered in 

conjunction with the transition from DuPont to a standalone entity.

(h)  Represents charges associated with the transition from DuPont to a standalone entity, including branding and marketing, 

information technology related costs, and facility transition costs.

(i)  Represents costs associated with the IPO, including a $13.4 million pre-tax charge associated with the termination of the 

management agreement with Carlyle Investment Management, L.L.C., an affiliate of Carlyle, upon the completion of the IPO. See 
note (l) below.

(j)  Represents costs for certain unusual or non-operational (gains) and losses and the non-cash impact of natural gas and currency 
hedge losses allocated to DPC by DuPont, stock-based compensation, asset impairments, equity investee dividends, indemnity 
(income) losses associated with the Acquisition, gains resulting from amendments to long-term benefit plans and loss (gain) on 
sale and disposal of property, plant and equipment.

(k)  Represents the payment of dividends to our joint venture partners by our consolidated entities that are not wholly owned.

(l)  Pursuant to Axalta’s management agreement with Carlyle Investment Management, L.L.C., for management and financial advisory 
services and oversight provided to Axalta and its subsidiaries, Axalta was required to pay an annual management fee of $3.0 
million and out-of-pocket expenses. This agreement terminated upon completion of the IPO.

42

RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the information contained in the accompanying financial 
statements and related notes included elsewhere in this Annual Report on Form 10-K. Our historical results of operations set 
forth below may not necessarily reflect what would have occurred if we had been a separate standalone entity prior to the 
Acquisition or what will occur in the future.

Successor year ended December 31, 2014 compared to Successor year ended December 31, 2013, Predecessor period 
January 1, 2013 through January 31, 2013, and the Pro Forma year ended December 31, 2013

The following table was derived from the Successor’s consolidated statements of operations for the years ended December 
31, 2014 and 2013 and from the Predecessor’s combined statement of operations for the period from January 1, 2013 through 
January 31, 2013 included elsewhere in this Annual Report on Form 10-K. It should be noted that the results of operations for 
the Successor year ended December 31, 2013 only include the results of DPC from the date of the Acquisition. Prior to the 
Acquisition, Axalta generated no revenue and only incurred merger and acquisition related costs and debt financing costs in 
anticipation of the Acquisition. We have also presented pro forma financial results for the year ended December 31, 2013 as if 
the Acquisition and the related Financing had occurred on January 1, 2013. We believe this information, and the related 
comparisons, provide a more meaningful comparison for the years presented.

Successor

Predecessor

Pro Forma

Year
Ended
December 31,

Period from
January 1,
2013 through
January 31,

Year
Ended
December 31,

(In millions)
Net sales

Other revenue

Total revenue

Cost of goods sold

Selling, general and administrative expenses

Research and development expenses

Amortization of acquired intangibles

Merger and acquisition related expenses

Income from operations

Interest expense, net

Bridge financing commitment fees

Other expense, net

Income (loss) before income taxes

Provision (benefit) for income taxes

Net income (loss)

Less: Net income attributable to noncontrolling interests

2014
4,361.7 $

2013
3,951.1 $

$

2013

326.2 $

29.8

4,391.5

2,897.2

991.5

49.5

83.8

—

369.5

217.7

—

115.0

36.8

2.1

34.7

7.3

35.7

3,986.8

2,772.8

1,040.6

40.5

79.9

28.1

24.9

215.1

25.0

48.5
(263.7)
(44.8)
(218.9)
6.0
(224.9) $

1.1

327.3

232.2

70.8

3.7

—

—

20.6

—

—

5.0

15.6

7.1

8.5

0.6

7.9 $

2013
4,277.3

36.8

4,314.1

2,909.0

1,113.6

44.2

86.5

—

160.8

234.8

—

34.1
(108.1)
(1.3)
(106.8)
6.6
(113.4)

Net income (loss) attributable to controlling interests

$

27.4 $

Net sales

Historical: Net sales were $4,361.7 million for the Successor year ended December 31, 2014 compared to net sales of 
$3,951.1 million for the Successor year ended December 31, 2013 and $326.2 million for the Predecessor period January 1, 
2013 through January 31, 2013. Our net sales growth in the Successor year ended December 31, 2014 compared to the 
Successor year ended December 31, 2013 and Predecessor period January 1, 2013 through January 31, 2013 was primarily 
driven by higher average selling prices in all regions, which contributed to net sales growth of 2.8%. In addition, volumes 
contributed 1.2% to net sales growth on stronger performance within North America and Asia, offset slightly by continued 
weakness in Latin America. This net sales growth was partially offset by the unfavorable impacts of currency exchange, 
which contributed to an approximately 2.0% reduction in net sales due to the impact of weakening currencies in certain 
jurisdictions within Latin America, Asia, and North America. 

43

Pro Forma: Net sales increased $84.4 million, or 2.0%, to $4,361.7 million for the Successor year ended December 31, 2014, 
as compared to net sales of $4,277.3 million for the Pro Forma year ended December 31, 2013. Our net sales growth in the 
Successor year ended December 31, 2014 was primarily driven by higher average selling prices in all regions, which 
contributed to net sales growth of 2.8%. In addition, volumes contributed 1.2% to net sales growth on stronger performance 
within North America and Asia, offset slightly by continued weakness in Latin America. This net sales growth was partially 
offset by the unfavorable impacts of currency exchange, which contributed to an approximately 2.0% reduction in net sales 
due to the impact of weakening currencies in certain jurisdictions within Latin America, Asia, and North America.

Other revenue

Historical: Other revenue was $29.8 million for the Successor year ended December 31, 2014 as compared to $35.7 million 
for the Successor year ended December 31, 2013 and $1.1 million for the Predecessor period January 1, 2013 through 
January 31, 2013. The decrease primarily related to a decrease in service revenue within our Light Vehicle end market. The 
impacts of currency exchange did not have a material impact on the comparable periods.

Pro Forma: Other revenue was $29.8 million for the Successor year ended December 31, 2014 as compared to $36.8 million 
for the Pro Forma year ended December 31, 2013. The decrease primarily related to a decrease in service revenue within our 
Light Vehicle end-market. The impacts of currency exchange did not have a material impact on the comparable periods.

Cost of sales

Historical: Cost of sales was $2,897.2 million for the Successor year ended December 31, 2014 compared to $2,772.8 million 
for the Successor year ended December 31, 2013 and $232.2 million for the Predecessor period January 1, 2013 through 
January 31, 2013. Cost of sales was lower during the Successor year ended December 31, 2013 compared to the Successor 
year ended December 31, 2014 but higher when combined with the Predecessor period January 1, 2013 through January 31, 
2013, primarily as a result of increased costs of goods of $103.7 million related to fair value adjustments to inventory in 
conjunction with the Acquisition. Offsetting the increased costs in 2013 related to fair value adjustments to inventory is the 
absence of $7.9 million of incremental depreciation resulting from the fair value adjustments to property, plant and equipment 
in conjunction with the Acquisition, which did not impact historical depreciation for the Predecessor period from January 1, 
2013 through January 31, 2013. The remaining change in cost of sales in 2014 was driven by lower raw material costs offset 
by higher volumes. The favorable impact of raw material prices across both our Performance Coatings and Transportation 
Coatings segments contributed to an approximately 2.0% impact on cost of sales as a percentage of net sales. Favorable 
impacts of currency exchange contributed to an additional 1.0% decrease in cost of sales as a percentage of net sales, 
primarily due to the impact of weakening currencies in certain jurisdictions within Latin America, Asia, and North America 
compared to the U.S. dollar. 

Pro Forma: Cost of sales decreased $11.8 million, or 0.4%, to $2,897.2 million for the Successor year ended December 31, 
2014 as compared to $2,909.0 million for the Pro Forma year ended December 31, 2013. The Pro Forma year ended 
December 31, 2013 is adjusted to reflect increased depreciation and the exclusion of increased costs of goods, each related to 
the Acquisition. As a percentage of net sales, cost of sales decreased from 68.0% to 66.4%. This decrease was driven by 
lower raw material costs, partially resulting from our purchasing initiatives, as well as product mix. The favorable impact of 
raw material prices impacted both our Performance Coatings and Transportation Coatings segments. Favorable impacts of 
currency exchange contributed to an additional 1.0% decrease in cost of sales as a percentage of net sales, primarily due to 
the impact of weakening currencies in certain jurisdictions within Latin America, Asia and North America compared to the 
U.S. dollar.

Selling, general and administrative expenses

Historical: Selling, general and administrative expenses were $991.5 million for the Successor year ended December 31, 
2014 compared to $1,040.6 million for the Successor year ended December 31, 2013 and $70.8 million for the Predecessor 
period January 1, 2013 through January 31, 2013. During the Successor year ended December 31, 2014, we incurred $127.1 
million of transition-related expenses, primarily related to our transition to a standalone company, compared to $231.5 
million of transition-related expenses for the Successor year ended December 31, 2013. This resulted in a $104.4 million 
decrease over the comparable periods. These decreases were offset slightly by increased selling and administrative costs, as 
we focused on opportunities to expand our market presence. In addition, the favorable impacts of currency exchange during 
the Successor year ended December 31, 2014 contributed to a 1.1% decrease in selling, general and administrative expenses, 
primarily due to the impact of weakening currencies in certain jurisdictions within Latin America, Asia, and North America 
compared to the U.S. dollar.

44

Pro Forma: Selling, general and administrative expenses decreased $122.1 million, or 11.0%, to $991.5 million for the 
Successor year ended December 31, 2014, as compared to $1,113.6 million for the Pro Forma year ended December 31, 
2013. During the Successor year ended December 31, 2014, we incurred $127.1 million of transition-related expenses, 
primarily related to our transition to a standalone company, compared to $231.8 million of transition-related expenses for the 
Pro Forma year ended December 31, 2013. This resulted in a $104.7 million decrease over the comparable period. 
Contributing to the decrease in comparable periods was a reduction in U.S. pension expense and lower actual costs for our 
operating structure as a standalone entity during the Successor year ended December 31, 2014. These decreases were offset 
slightly by increased selling and administrative costs, as we focused on opportunities to expand our market presence.  In 
addition, the favorable impacts of currency exchange during the Successor year ended December 31, 2014 contributed to a 
1.1% decrease in selling, general and administrative expenses, primarily due to the impact of weakening currencies in certain 
jurisdictions within Latin America, Asia, and North America compared to the U.S. dollar.

Research and development expenses

Historical: Research and development expenses were $49.5 million for the Successor year ended December 31, 2014 
compared to $40.5 million for the Successor year ended December 31, 2013 and $3.7 million for the Predecessor period 
January 1, 2013 through January 31, 2013. These increases were driven by additional spend as we focus on developing new 
and existing products in the market. The impacts of currency exchange did not have a material impact on the comparable 
periods.

Pro Forma: Research and development expenses increased by $5.3 million, or 12.0%, to $49.5 million for the Successor year 
ended December 31, 2014 compared to $44.2 million for the Pro Forma year ended December 31, 2013. These increases 
were driven by additional spend as we focus on developing new and existing products in the market. The impacts of currency 
exchange did not have a material impact on the comparable periods.

Amortization of acquired intangibles

Historical: Amortization of acquired intangibles was $83.8 million for the Successor year ended December 31, 2014 
compared to $79.9 million for the Successor year ended December 31, 2013 and $0.0 million for the Predecessor period 
January 1, 2013 through January 31, 2013. Amortization of acquired intangibles for the Successor year ended December 31, 
2013 included a loss of $3.2 million associated with abandoned in-process research and development projects, all of which 
were recorded at fair value as part of the Acquisition. There was $0.1 million of comparable costs recorded during the year 
ended December 31, 2014. Excluding the impact of the $3.2 million loss, the increase during the Successor year ended 
December 31, 2014 included the impact of twelve months of amortization expense associated with purchase accounting while 
the Successor year ended December 31, 2013 included eleven months due to the timing of the Acquisition. The impacts of 
currency exchange did not have a material impact on the comparable periods.

Pro Forma: Amortization of acquired intangibles for the Successor year ended December 31, 2014 was $83.8 million and 
$86.5 million for the Pro Forma year ended December 31, 2013. Amortization of acquired intangibles for the Pro Forma year 
ended December 31, 2013 included a loss of $3.2 million associated with abandoned in-process research and development 
projects, all of which were recorded at fair value as part of the Acquisition. There was $0.1 million of comparable costs 
recorded during the year ended December 31, 2014. The impacts of currency exchange did not have a material impact on the 
comparable periods.

Merger and acquisition related expenses

Historical: In connection with the Acquisition, we incurred $28.1 million of merger and acquisition costs during the 
Successor year ended December 31, 2013. These costs consisted primarily of investment banking, legal and other 
professional advisory services costs. There were no comparable costs for the Successor year ended December 31, 2014.

Pro Forma: The Pro Forma year ended December 31, 2013 has been adjusted to remove the impact of these Acquisition 
related costs. There were no costs for the Successor year ended December 31, 2014.

45

Interest expense, net

Historical: Interest expense, net for the Successor year ended December 31, 2014 of $217.7 million represented a full twelve 
months of interest costs, including the Refinancing of our Term Loans in February of 2014. Interest expense, net for the 
Successor year ended December 31, 2013 of $215.1 million represented interest expense incurred during the period 
associated with our original debt financing for the Acquisition. The increase in 2014 primarily relates to the Successor year 
ended December 31, 2014 including twelve months of interest expense while the comparable 2013 periods included eleven 
months due to the timing of the Acquisition. Further contributing to the increase in interest expense were losses incurred on 
interest rate derivatives for $10.2 million during the Successor year ended December 31, 2014, compared to gains of $0.2 
million during the comparable period. These increases were offset by the reduction in interest rates due to the Refinancing in 
February 2014 of our Senior Credit Facility combined with an additional step-down in interest rates on our term loans in 
August of 2014. Further offsetting the increases were slight increases in capitalized interest during the Successor year ended 
December 31, 2014. The impacts of currency exchange did not have a material impact on the comparable periods.

Pro Forma: Interest expense, net was $217.7 million for the Successor year ended December 31, 2014 and $234.8 million for 
the Pro Forma year ended December 31, 2013.  The Pro Forma amounts reflect the effects of the Financing as if the 
transaction had occurred on January 1, 2013, which resulted in an additional $19.7 million in interest for the Pro Forma year 
ended December 31, 2013. The decrease in the Successor year ended December 31, 2014 compared to the Pro Forma year 
ended December 31, 2013 primarily relates to the reduction in interest rates due to the Refinancing in February 2014 of our 
Senior Credit Facility combined with an additional step-down in interest rates on our term loans in August of 2014. Further 
contributing to the decrease in comparable periods was an increase in capitalized interest during the Successor year ended 
December 31, 2014. Offsetting these decreases were losses incurred on interest rate derivative instruments of $10.2 million 
for the Successor year ended December 31, 2014 compared with gains of $0.2 million during the Pro Forma year ended 
December 31, 2013. The impacts of currency exchange did not have a material impact on the comparable periods.

Bridge financing commitment fees

Historical: On August 30, 2012, we signed a debt commitment letter, which was subsequently amended and restated, that 
included a bridge facility comprised of $1,100.0 million of unsecured U.S. bridge loans and the Euro equivalent of $300.0 
million of secured Euro bridge loans (the "Bridge Facility"), which was to be utilized to partially fund the Acquisition in the 
event that permanent financing was not obtained. Upon the issuance of the Senior Notes and the entry into the Senior Secured 
Credit Facilities, the commitments under the Bridge Facility terminated. Commitment fees related to the Bridge Facility of 
$21.0 million and associated legal and other professional advisory services costs of $4.0 million were expensed upon the 
termination during the Successor year ended December 31, 2013. There were no such costs incurred for the Successor year 
ended December 31, 2014.

Pro Forma: The Pro Forma year ended December 31, 2013 has been adjusted to remove the impact of these fees. There were 
no costs for the Successor year ended December 31, 2014.

Other expense, net

Historical: Other expense, net was $115.0 million for the Successor year ended December 31, 2014 compared to $48.5 
million for the Successor year ended December 31, 2013 and $5.0 million of expense for the Predecessor period January 1, 
2013 through January 31, 2013. Foreign exchange losses, net, were $81.2 million during the Successor year ended December 
31, 2014 as compared to foreign exchange losses of $48.9 million and $4.5 million for the year ended December 31, 2013 
and the predecessor period ended January 31, 2013, respectively. Net foreign exchange losses for the year ended December 
31, 2014 consisted of $202.1 million in remeasurement losses primarily related to intercompany transactions denominated in 
currencies different from the functional currency of the relevant subsidiary, partially offset by $103.9 million in gains on our 
Euro borrowings and $17.0 million in gains related to our Venezuelan operations. 

During 2014, we changed the exchange rate we use for remeasuring our Venezuelan subsidiaries’ non-U.S. Dollar 
denominated monetary assets and liabilities to the rate determined by an auction process conducted by Venezuela’s 
Complementary System of Foreign Currency Administration (SICAD I), which increased to 12.0 to 1 compared to the 
historical indexed rate of 6.3 to 1 at December 31, 2013. The devaluation resulted in net gains of $17.0 million for the 
Successor year ended December 31, 2014 due to our Venezuelan operations being in a net monetary liability position.

Contributing to expense in the Successor year ended December 31, 2013 was the adverse impact of $19.4 million of expense 
incurred related to the Acquisition date settlement of a foreign currency hedge contract used to hedge the variability of the 
U.S. dollar equivalent of the original borrowings under the Euro Term Loan and Euro Senior Notes. 

Excluding the impact of the $19.4 million expense at the Acquisition date, foreign exchange losses of $29.5 million for the 
Successor year ended December 31, 2013 were attributable to $9.4 million in remeasurement losses primarily related to 
intercompany transactions denominated in currencies different from the functional currency of the relevant subsidiary and 
$14.6 million in remeasurement losses from the remeasurement of the Euro Senior Notes and Euro Term Loan into U.S. 
Dollars.

46

Further contributing to the increase in other expense for the Successor year ended December 31, 2014 were $16.6 million in 
management fees, which included a $13.4 million fee associated with the Carlyle management agreement which terminated 
with the effectiveness of the IPO.  Additionally, during the Successor year ended December 31, 2014, we incurred debt 
modification fees and losses on extinguishment of debt of $3.1 million and $3.0 million, respectively. Lastly, the Successor 
year ended December 31, 2014 was impacted by the release of an indemnity receivable that had been recorded in conjunction 
with our tax indemnities from the Acquisition. This resulted in $17.8 million of expense during the Successor year ended 
December 31, 2014, relating to an uncertain tax position that was reversed during the Successor year ended December 31, 
2014.

Pro Forma: Other expense, net was $115.0 million for the Successor year ended December 31, 2014 as compared to $34.1 
million for the Pro Forma year ended December 31, 2013, representing a change of $80.9 million, or 237.2%. The Pro Forma 
year ended December 31, 2013 excludes the impact of $19.4 million of costs incurred related to the Acquisition date 
settlement of a foreign currency hedge contract used to hedge the variability of the U.S. dollar equivalent of the original 
borrowings under the Euro Term Loan and Euro Senior Notes. Net foreign exchange losses of $81.2 million were recorded 
for the Successor year ended December 31, 2014, as compared to exchange losses of $34.0 million for the Pro Forma year 
ended December 31, 2013.  Net foreign exchange losses for the year ended December 31, 2014 consisted of $202.1 million in 
translation losses primarily related to intercompany transactions denominated in currencies different from the functional 
currency of the relevant subsidiary, partially offset by $103.9 million in gains on our Euro borrowings and $17.0 million in 
gains related to our Venezuelan operations.

During 2014, we changed the exchange rate we use for remeasuring our Venezuelan subsidiaries’ non-U.S. Dollar 
denominated monetary assets and liabilities to the rate determined by an auction process conducted by Venezuela’s 
Complementary System of Foreign Currency Administration (SICAD I), which increased to 12.0 to 1 compared to the 
historical indexed rate of 6.3 to 1 at December 31, 2013. The devaluation resulted in net gains of $17.0 million for the 
Successor year ended December 31, 2014 due to our Venezuelan operations being in a net monetary liability position.

Further contributing to the increase in other expense for the Successor year ended December 31, 2014 were $16.6 million in 
management fees, which included a $13.4 million fee associated with the Carlyle management agreement which terminated 
with the effectiveness of the IPO.  Additionally, during the Successor year ended December 31, 2014 we incurred debt 
modification fees and losses on extinguishment of debt of $3.1 million and $3.0 million, respectively. Lastly, the Successor 
year ended December 31, 2014 was impacted by the release of an indemnity receivable that had been recorded in conjunction 
with our tax indemnities from the Acquisition. This resulted in $17.8 million of expense during the Successor year ended 
December 31, 2014, relating to an uncertain tax position that was reversed during the Successor year ended December 31, 
2014.

Provision (benefit) for income taxes

Historical: We recorded a provision for income taxes of $2.1 million for the Successor year ended December 31, 2014, which 
represents a 5.7% effective tax rate in relation to the income before income taxes of $36.8 million. The effective tax rate for 
the Successor year ended December 31, 2014 differs from the U.S. Federal statutory rate by 29.3%, which is the result of 
various items that impacted the rate both favorably and unfavorably. We recorded favorable adjustments for earnings in 
jurisdictions where the statutory rate is lower than the U.S. Federal rate of $46.7 million and unrecognized tax benefit 
adjustments primarily related to acquisition tax matters of $44.0 million. These adjustments were partially offset by the 
impact of pre-tax losses attributable to jurisdictions where a tax benefit is not expected to be realized of $44.4 million and 
non-deductible expenses and interest of $29.6 million.

We recorded a benefit for income taxes of $44.8 million for the Successor year ended December 31, 2013, which represents a 
17.0% effective tax rate in relation to the loss before income taxes of $263.7 million. The effective tax rate for the Successor 
year ended December 31, 2013 differs from the U.S. Federal statutory rate by 18.0%. This difference is primarily due to 
unfavorable adjustments for the impact of pre-tax losses attributable to jurisdictions where a tax benefit is not expected to be 
realized of $55.0 million, unrecognized tax benefits primarily related to acquisition tax matters of $35.1 million, and non-
deductible expenses of $25.8 million. These adjustments were partially offset by the benefit of earnings in jurisdictions where 
the statutory tax rate was lower than the U.S. Federal statutory rate of $36.6 million and capital losses of $46.7 million. 

We recorded a provision for income taxes of $7.1 million for the Predecessor period ended January 31, 2013 which represents 
a 45.6% effective tax rate in relation to the income before taxes of $15.6 million. 

Pro Forma: We recorded a benefit for income taxes of $1.3 million for the Pro Forma year ended December 31, 2013, which 
represents a 1.2% effective tax rate in relation to the pro forma loss before income taxes of $108.1 million. The variance in 
the pro forma effective tax rate from the historical effective tax rate, described in the corresponding historical discussion 
above, was primarily due to the application of statutory income tax rates to the cumulative pro forma adjustments.

47

Successor year ended December 31, 2013, Pro Forma year ended December 31, 2013 and Predecessor period 
January 1, 2013 through January 31, 2013 compared to Successor period August 24, 2012 through December 31, 2012 
and the Predecessor year ended December 31, 2012

The following table was derived from the Successor’s consolidated statements of operations for the year ended December 31, 
2013 and for the period from August 24, 2012 through December 31, 2012 and from the Predecessor’s combined statements 
of operations for the period from January 1, 2013 through January 31, 2013 and for the year ended December 31, 2012 
included elsewhere in this Annual Report on Form 10-K. It should be noted that the results of operations for the Successor 
year ended December 31, 2013 only include the results of DPC from the date of the Acquisition. Prior to the Acquisition, 
Axalta generated no revenue and only incurred merger and acquisition related costs and debt financing costs in anticipation 
of the Acquisition. We have also presented pro forma financial results for the year ended December 31, 2013 as if the 
Acquisition and the Financing had occurred on January 1, 2013. We believe this information, and the related comparisons, 
provide a more meaningful comparison for the years presented.

(In millions)
Net sales

Other revenue

Total revenue

Cost of goods sold

Selling, general and administrative expenses

Research and development expenses

Amortization of acquired intangibles

Merger and acquisition related expenses

Income (loss) from operations

Interest expense, net

Bridge financing commitment fees

Other expense, net

Income (loss) before income taxes

Provision (benefit) for income taxes

Net income (loss)

Successor

Predecessor

Pro Forma

Year Ended
December 31,

Period from
August 24
through
December 31,

Period from 
January 1
through
January 31,

Year Ended
December 31,

Year Ended
December 31,

2013
3,951.1 $

$

2012

2013

— $

326.2 $

2012
4,219.4 $

2013
4,277.3

35.7
3,986.8

2,772.8

1,040.6

40.5

79.9

28.1

24.9

215.1

25.0

48.5
(263.7)
(44.8)
(218.9)

—
—

—

—

—

—

29.0
(29.0)
—

—

—
(29.0)
—
(29.0)

1.1
327.3

232.2

70.8

3.7

—

—

20.6

—

—

5.0

15.6

7.1

8.5

0.6

37.4
4,256.8

2,932.6

873.4

41.5

—

—

409.3

—

—

16.3

393.0

145.2

247.8

4.5

36.8
4,314.1

2,909.0

1,113.6

44.2

86.5

—

160.8

234.8

—

34.1
(108.1)
(1.3)
(106.8)

6.6

Less: Net income attributable to noncontrolling

interests

Net income (loss) attributable to controlling

6.0

—

interests

Net sales

$

(224.9) $

(29.0) $

7.9 $

243.3 $

(113.4)

Historical: Net sales were $3,951.1 million and $326.2 million for the Successor year ended December 31, 2013 and the 
Predecessor period January 1, 2013 through January 31, 2013, respectively, as compared to net sales of $4,219.4 million for 
the Predecessor year ended December 31, 2012. Higher average selling prices across all regions contributed to net sales 
growth of 6.3% in the Successor year ended December 31, 2013. This growth was partially offset by volume declines during 
the period, which reduced net sales by 3.5%, primarily as a result of a weak economic environment in Latin America. 
Additionally, the unfavorable impacts of currency exchange contributed to a 1.4% reduction in net sales, primarily due to the 
weakening of foreign currency exchange rates within the Latin America region compared to the U.S. dollar.

Pro Forma: Net sales increased $57.9 million, or 1.4%, to $4,277.3 million for the Pro Forma year ended December 31, 
2013, as compared to net sales of $4,219.4 million for the Predecessor year ended December 31, 2012. Higher average selling 
prices contributed to net sales growth of 6.3%. This growth was partially offset by volume declines during the period, which 
reduced net sales by 3.5%, primarily as a result of a weak economic environment in Latin America. Additionally, the 
unfavorable impacts of currency exchange contributed to a 1.4% reduction in net sales, primarily due to the weakening of 
foreign currency exchange rates within the Latin America region compared to the U.S. dollar.

48

Other revenue

Historical: Other revenue was $35.7 million and $1.1 million for the Successor year ended December 31, 2013 and the 
Predecessor period January 1, 2013 through January 31, 2013, respectively, as compared to other revenue of $37.4 million for 
the Predecessor year ended December 31, 2012. The impacts of currency exchange did not have a material impact on the 
comparable periods.

Pro Forma: Other revenue remained largely consistent at $36.8 million for the Pro Forma year ended December 31, 2013, as 
compared to other revenue of $37.4 million for the Predecessor year ended December 31, 2012. The impacts of currency 
exchange did not have a material impact on the comparable periods.

Cost of sales

Historical: Cost of sales was $2,772.8 million and $232.2 million for the Successor year ended December 31, 2013 and the 
Predecessor period January 1, 2013 through January 31, 2013, respectively, as compared to cost of sales of $2,932.6 million 
for the Predecessor year ended December 31, 2012. Cost of sales for the Successor year ended December 31, 2013 reflected 
increased depreciation expense of $73.4 million resulting from the fair value adjustments to property, plant and equipment in 
conjunction with the Acquisition. Cost of sales was also negatively impacted in 2013 by increased costs of goods of $103.7 
million resulting from the fair value adjustments to inventory in conjunction with the Acquisition. Included in the Predecessor 
year ended December 31, 2012 was a $19.1 million benefit due to the last-in-first-out "LIFO" method of inventory 
accounting. In addition to the impacts from purchase accounting, cost of sales was also favorably impacted by the reduction 
in costs incurred in the Successor period operating structure versus those previously allocated by DuPont during the 
Predecessor year ended December 31, 2012. This includes the impacts of the defined benefit pension obligations for U.S. 
employees in connection with the Acquisition, which resulted in a net reduction in U.S. employee fringe costs compared to 
the Predecessor year ended December 31, 2012. The remaining decrease was primarily due to lower raw material costs across 
most regions and product lines as well as impacts from foreign currency exchange rates. The favorable impact of raw 
material prices across both our Performance Coatings and Transportation Coatings segments contributed to an approximately 
0.3% impact on cost of sales as a percentage of net sales. Favorable impacts of currency exchange contributed to a 0.4% 
decrease in cost of goods sold, primarily due to the weakening of foreign currency exchange rates within the Latin America 
region compared to the U.S. dollar.

Pro Forma: Cost of sales decreased $23.6 million, or 0.8%, to $2,909.0 million for the Pro Forma year ended December 31, 
2013 as compared to $2,932.6 million for the Predecessor year ended December 31, 2012. The Pro Forma year ended 
December 31, 2013 was adjusted to include the impact of $7.9 million of increased depreciation for the Predecessor period 
January 1, 2013 through January 31, 2013 and to exclude $103.7 million of increased costs of goods related to the 
Acquisition. As a percentage of net sales, cost of sales decreased from 69.5% to 68.0%. This decrease was primarily due to 
lower raw material costs across most regions and product lines. The favorable impact of raw material prices across both our 
Performance Coatings and Transportation Coatings segments contributed to an approximately 0.3% impact on cost of sales as 
a percentage of net sales. Cost of sales was also favorably impacted by the reduction in costs incurred in our current operating 
structure versus those previously allocated by DuPont during the Predecessor year ended December 31, 2012. Further, we did 
not assume defined benefit pension obligations for U.S. employees in connection with the Acquisition, which resulted in a net 
reduction in U.S. employee fringe costs compared to the Predecessor year ended December 31, 2012. These decreases were 
slightly offset by the $19.1 million benefit included in the Predecessor year ended December 31, 2012 due to the LIFO 
method of inventory accounting, as well as the impact in the Successor year ended December 31, 2013 of increased 
depreciation expense of $81.3 million resulting from the fair value adjustments to property, plant and equipment in 
conjunction with the Acquisition. Favorable impacts of currency exchange contributed to a 0.4% decrease in cost of goods 
sold, primarily due to the weakening of foreign currency exchange rates within the Latin America region compared to the 
U.S. dollar.

Selling, general and administrative expenses

Historical: Selling, general and administrative expenses were $1,040.6 million and $70.8 million for the Successor year 
ended December 31, 2013 and the Predecessor period January 1, 2013 through January 31, 2013, respectively, as compared to 
selling, general and administrative expenses of $873.4 million for the Predecessor year ended December 31, 2012. The 
increase in 2013 was primarily the result of $231.5 million of transition-related expenses we incurred during the Successor 
year ended December 31, 2013, primarily due to 2013 termination benefits and other employee related costs of 
$147.5 million and consulting and advisory costs of $54.7 million related to our initial separation and transition to a 
standalone company. Selling, general and administrative expenses were also adversely impacted by increased depreciation 
expense of approximately $23.1 million resulting from the fair value adjustments to non-manufacturing assets in conjunction 
with the Acquisition. Favorable impacts of currency exchange, primarily due to the weakening of foreign currency exchange 
rates within the Latin America region compared to the U.S. dollar, contributed to an approximately 1.0% decrease in selling, 
general and administrative expenses. These increases were offset slightly by a reduction in U.S. pension expense and lower 
actual costs for our operating structure as a standalone entity.

49

Pro Forma: Selling, general and administrative expenses increased $240.2 million, or 27.5%, to $1,113.6 million for the Pro 
Forma year ended December 31, 2013, as compared to $873.4 million for the Predecessor year ended December 31, 2012. 
The Pro Forma year ended December 31, 2013 is adjusted to reflect the increased depreciation expense resulting from the fair 
value adjustments to non-manufacturing assets in conjunction with the Acquisition. This increase was primarily driven by the 
$231.8 million of transition-related costs incurred during the Pro Forma year ended December 31, 2013, primarily due to 
2013 termination benefits and other employee related costs of $147.8 million, and consulting and advisory costs of $54.7 
million related to our transition to a standalone company. Additionally, we incurred $25.3 million in additional depreciation 
expense associated with fair value adjustments to non-manufacturing assets in conjunction with the Acquisition. Favorable 
impacts of currency exchange, primarily due to the weakening of foreign currency exchange rates within the Latin America 
region compared to the U.S. dollar, contributed to an approximately 1.0% decrease in selling, general and administrative 
expenses. These increases were offset slightly by approximately $16.9 million reduction in U.S. pension expense and lower 
actual costs for our operating structure as a standalone entity.

Research and development expenses

Historical: Research and development expense was $40.5 million and $3.7 million for the Successor year ended 
December 31, 2013 and the Predecessor period January 1, 2013 through January 31, 2013, respectively, as compared to 
research and development expense of $41.5 million for the Predecessor year ended December 31, 2012. Research and 
development expense compared to the Predecessor year ended December 31, 2012 increased due to focused spending on 
growth projects. This increase was partially offset by a decrease in allocations of costs of $2.1 million for the Successor year 
ended December 31, 2013 compared to the Predecessor year ended December 31, 2012, representing costs associated with 
the DuPont Corporate research and development activities in 2012. In addition, favorable impacts of currency exchange 
contributed to a 0.7% decrease in research and development expense, primarily due to the weakening of foreign currency 
exchange rates within the Latin America region compared to the U.S. dollar.

Pro Forma: Research and development expense increased $2.7 million, or 6.5%, for the Pro Forma year ended December 31, 
2013 to $44.2 million compared to $41.5 million for the Predecessor year ended December 31, 2012. Research and 
development expense for the Pro Forma year ended December 31, 2013 increased due to focused spending on growth 
projects. This increase was partially offset by a decrease in allocations of costs of $2.1 million for the Pro Forma year ended 
December 31, 2013 compared to the Predecessor year ended December 31, 2012 representing costs associated with the 
DuPont Corporate research and development activities in 2012. Favorable impacts of currency exchange contributed to a 
0.7% decrease in research and development expense, primarily due to the weakening of foreign currency exchange rates 
within the Latin America region compared to the U.S. dollar.

Amortization of acquired intangibles

Historical: Amortization of acquired intangibles was $79.9 million for the Successor year ended December 31, 2013. 
Amortization of acquired intangibles in the Successor year ended December 31, 2013 includes a loss of $3.2 million 
associated with abandoned acquired in-process research and development projects, all of which was related to the 
Acquisition. There were no comparable costs recorded in the Predecessor period January 1, 2013 through January 31, 2013 
and the Predecessor year ended December 31, 2012.

Pro Forma: Amortization of acquired intangibles was $86.5 million for the Pro Forma year ended December 31, 2013. 
Amortization expense for the Pro Forma year ended December 31, 2013 has been adjusted to reflect amortization expense for 
January 2013. There were no comparable costs recorded in the Predecessor year ended December 31, 2012. The impacts of 
currency exchange did not have a material impact on the comparable periods.

Merger and acquisition related costs

Historical: In connection with the Acquisition, we incurred $28.1 million and $29.0 million of merger and acquisition costs 
during the Successor year ended December 31, 2013 and the Successor period August 24, 2012 through December 31, 2012, 
respectively. These costs consisted primarily of investment banking, legal and other professional advisory services costs. 
There were no such costs associated with the Predecessor period January 1, 2013 through January 31, 2013 or the 
Predecessor year ended December 31, 2012. The impacts of currency exchange did not have a material impact on the 
comparable periods.

Pro Forma: The Pro Forma year ended December 31, 2013 has been adjusted to remove the impact of these Acquisition 
related costs. There were no comparable costs recorded in the Predecessor year ended December 31, 2012.

Interest expense, net

Historical: Interest expense, net was $215.1 million for the Successor year ended December 31, 2013. There was no interest 
expense for the Predecessor year ended December 31, 2012 or the Predecessor period January 1, 2013 through January 31, 
2013. The increase in interest expense, net was due to interest costs associated with the debt financing for the Acquisition and 
the liquidity requirements of a standalone entity.

50

Pro Forma: Interest expense, net for the Pro Forma year ended December 31, 2013 of $234.8 million has been adjusted to 
reflect interest expense for January 2013, which resulted in an additional $19.7 million in interest for the Pro Forma year 
ended December 31, 2013. There was no interest expense for the Predecessor year ended December 31, 2012.

Bridge financing commitment fees

Historical: Commitment fees related to the Bridge Facility of $21.0 million and associated legal and other professional 
advisory services costs of $4.0 million were expensed upon termination of the Bridge Facility during the Successor period 
ended December 31, 2013. There were no such costs associated with the Predecessor period January 1, 2013 through 
January 31, 2013 and the Predecessor year ended December 31, 2012.

Pro Forma: The Pro Forma year ended December 31, 2013 has been adjusted to remove the impact of these fees. There were 
no comparable costs recorded in the Predecessor year ended December 31, 2012.

Other expense, net

Historical: Other expense, net was $48.5 million and $5.0 million for the Successor year ended December 31, 2013 and for 
the Predecessor period January 1, 2013 through January 31, 2013, respectively, as compared to $16.3 million for the 
Predecessor year ended December 31, 2012. Other expense, net during the Successor year ended December 31, 2013 
primarily consists of net foreign exchange losses from intercompany transactions denominated in currencies different from 
the functional currency of the subsidiary involved in the transaction. In addition, the increase partially resulted from a $19.4 
million loss related to the Acquisition date settlement of a foreign currency hedge contract used to hedge the variability of the 
U.S. dollar equivalent of the original borrowings under the Euro Term Loan and Euro Senior Notes, and the impact of the 
strengthening Euro against our Euro Borrowings.

Pro Forma: Other expense, net increased $17.8 million, or 109.2%, for the Pro Forma year ended December 31, 2013 to 
$34.1 million compared to $16.3 million for the Predecessor year ended December 31, 2012. The Pro Forma year ended 
December 31, 2013 excludes the impact of $19.4 million of a loss related to the Acquisition date settlement of a foreign 
currency hedge contract used to hedge the variability of the U.S. dollar equivalent of the original borrowings under the Euro 
Term Loan and Euro Senior Notes. Net foreign exchange losses of $34.0 million were recorded for the Pro Forma year ended 
December 31, 2013, as compared to a loss of $17.7 million for the Predecessor year ended December 31, 2012.

During the Pro Forma year ended December 31, 2013, we incurred net unrealized foreign exchange losses of $9.4 million on 
the remeasurement of intercompany loans. In addition, we incurred unrealized foreign exchange losses of $14.6 million 
related to the remeasurement of the Euro Senior Notes and Euro Term Loan into U.S. dollars. The remaining foreign 
exchange losses primarily related to the remeasurement of other assets and liabilities denominated in currencies other than the 
functional currency of the affected subsidiaries.

Provision (benefit) for income taxes

Historical: We recorded a benefit for income taxes of $44.8 million for the Successor year ended December 31, 2013, which 
represents a 17.0% effective tax rate in relation to the loss before income taxes of $263.7 million. The effective tax rate for 
the Successor year ended December 31, 2013 differs from the U.S. Federal statutory rate by 18.0%. This difference is 
primarily due to unfavorable adjustments for the impact of pre-tax losses attributable to jurisdictions where a tax benefit is 
not expected to be realized of $55.0 million, unrecognized tax benefits primarily related to acquisition tax matters of $35.1 
million, and non-deductible expenses of $25.8 million. These adjustments were partially offset by the benefit of earnings in 
jurisdictions where the statutory tax rate was lower than the U.S. Federal statutory rate of $36.6 million and capital losses of 
$46.7 million. 

We recorded a provision for income taxes of $145.2 million for the Predecessor year ended December 31, 2012 which 
represents a 37.0% effective tax rate in relation to the income before taxes of $393.0 million. The effective tax rate for the 
Predecessor year ended December 31, 2012 differs from the U.S. federal statutory rate by 2.0%. This difference is primarily 
due to the unfavorable impact of pre-tax losses attributable to jurisdictions where a tax benefit is not expected to be realized 
of $9.8 million, as well as a $4.7 million impact related to non-deductible net foreign exchange losses. This is offset by the 
benefit of earnings in jurisdictions where the statutory tax rate was lower than the U.S. Federal statutory rate of $10.9 million.

Pro Forma: We recorded a benefit for income taxes of $1.3 million for the Pro Forma year ended December 31, 2013, which 
represents a 1.2% effective tax rate in relation to the pro forma loss before income taxes of $108.1 million. The variance in 
the pro forma effective tax rate from the historical effective tax rate, described in the corresponding historical discussion 
above, was primarily due to the application of statutory income tax rates to the cumulative pro forma adjustments.

51

SEGMENT RESULTS

Successor year ended December 31, 2014 compared to the Successor year ended December 31, 2013 and 
Predecessor period January 1, 2013 through January 31, 2013, and Successor year ended December 31, 2014 
compared to the Pro Forma year ended December 31, 2013

The following table presents net sales by segment and segment Adjusted EBITDA for the following periods:

(In millions)
Net Sales

Performance Coatings

Transportation Coatings

Total

Segment Adjusted EBITDA(1)
Performance Coatings

Transportation Coatings

Total

Successor

Year Ended
December 31,

2014

2013

Predecessor

Period from 
January 1
through
January 31,

2013

Pro Forma

Year Ended
December 31,

2013

$

$

$

$

2,585.0 $

1,776.7

4,361.7 $

547.6 $

292.9

840.5 $

2,325.3 $

1,625.8

3,951.1 $

500.2 $

198.8

699.0 $

186.8 $

139.4

326.2 $

15.0 $

17.7

32.7 $

2,512.1

1,765.2

4,277.3

518.7

218.9

737.6

(1)   For information about Adjusted EBITDA, including the manner in which it is calculated and a reconciliation from our net 

income (loss) to Adjusted EBITDA see Part II, Item 7, "Non-GAAP Financial Measures".  The Segment Adjusted EBITDA 
information for the Pro Forma year ended December 31, 2013 includes (a) the add-back of corporate allocations from DuPont 
to DPC for the usage of DuPont’s facilities, functions and services; costs for administrative functions and services performed 
on behalf of DPC by centralized staff groups within DuPont; a portion of DuPont’s general corporate expenses; and certain 
pension and other long-term employee benefit costs net of (b) estimated standalone costs based on a corporate function 
resource analysis that included a standalone executive office, the costs associated with supporting a standalone information 
technology infrastructure, corporate functions such as legal, finance, treasury, procurement and human resources and certain 
costs related to facilities management. This resource analysis included anticipated headcount and the associated overhead costs 
of running these functions effectively as a standalone company of our size and complexity. This resulted in a net benefit of 
$5.7 million for the Predecessor period January 1, 2013 through January 31, 2013. 

Performance Coatings Segment

Historical: Net sales were $2,585.0 million for the Successor year ended December 31, 2014 compared to net sales of 
$2,325.3 million for the Successor year ended December 31, 2013 and $186.8 million for the Predecessor period 
January 1, 2013 through January 31, 2013. The increase in net sales in the Successor year ended December 31, 2014 was 
primarily driven by volume growth, which contributed to a net sales increase of 3.1%, as well as higher average selling 
prices, which contributed to a net sales increase of 1.9%. Net sales growth was partially offset by the unfavorable impacts 
of currency exchange, which contributed to an approximately 2.1% reduction in net sales resulting primarily from the 
impacts of weakening currencies in certain jurisdictions within Latin America and Asia.

Adjusted EBITDA was $547.6 million for the Successor year ended December 31, 2014 compared to Adjusted EBITDA 
of $500.2 million for the Successor year ended December 31, 2013 and $15.0 million for the Predecessor period 
January 1, 2013 through January 31, 2013. The increase in Adjusted EBITDA in the Successor year ended December 31, 
2014 was driven by higher volumes and higher average selling price as well as lower raw material input costs slightly 
offset by higher operating costs. In addition, the absence of the Predecessor corporate allocated costs in January 2013 
contributed an approximate $3.4 million benefit.

Pro Forma: Net sales increased $72.9 million, or 2.9%, to $2,585.0 million for the Successor year ended December 31, 
2014, as compared to net sales of $2,512.1 million for the Pro Forma year ended December 31, 2013. The increase in net 
sales in the Successor year ended December 31, 2014 was primarily driven by volume growth, which contributed to a net 
sales increase of 3.1%, as well as higher average selling prices, which contributed to a net sales increase of 1.9%. Net 
sales growth was partially offset by the unfavorable impacts of currency exchange, which contributed to an approximately 
2.1% reduction in net sales resulting primarily from the impacts of weakening currencies in certain jurisdictions within 
Latin America and Asia.

52

Adjusted EBITDA increased $28.9 million, or 5.6%, to $547.6 million for the Successor year ended December 31, 2014 
as compared to $518.7 million for the Pro Forma year ended December 31, 2013. As a percentage of net sales, Adjusted 
EBITDA increased to 21.2% from 20.6%. The increase was driven by higher volumes and higher average selling price as 
well as lower raw material input costs offset slightly by higher operating costs. 

Transportation Coatings Segment

Historical: Net sales were $1,776.7 million for the Successor year ended December 31, 2014 compared to net sales of 
$1,625.8 million for the Successor year ended December 31, 2013 and $139.4 million for the Predecessor period 
January 1, 2013 through January 31, 2013. The increase in net sales in the Successor year ended December 31, 2014 was 
primarily driven by higher average selling prices, which contributed to net sales growth of 4.0%. This increase was 
partially offset by volume declines, primarily concentrated in the Latin America region, which contributed to a net sales 
decline of 1.4%. Unfavorable currency exchange rates also contributed to a reduction to net sales of 1.9% resulting 
primarily from the impacts of weakening currencies in certain jurisdictions primarily within Latin America.

Adjusted EBITDA was $292.9 million for the Successor year ended December 31, 2014 compared to Adjusted EBITDA 
of $198.8 million for the Successor year ended December 31, 2013 and $17.7 million for the Predecessor period 
January 1, 2013 through January 31, 2013. The increase in Adjusted EBITDA in the Successor year ended December 31, 
2014 was driven by higher average selling prices as well as lower fixed manufacturing costs, partially resulting from our 
operational improvement initiatives. In addition, the absence of the Predecessor corporate allocated costs contributed an 
approximate $2.3 million benefit.

Pro Forma: Net sales increased $11.5 million, or 0.7%, to $1,776.7 million for the year ended December 31, 2014, as 
compared to net sales of $1,765.2 million for the Pro Forma year ended December 31, 2013. The increase in net sales for 
the year ended December 31, 2014 as compared to the Pro Forma year ended December 31, 2013 was primarily driven by 
higher average selling prices, which contributed to net sales growth of 4.0%. This increase was partially offset by 
declining volumes primarily concentrated in the Latin America region, which contributed to a net sales decline of 1.4%. 
Unfavorable currency exchange rates also contributed to a reduction to net sales of 1.9% resulting primarily from the 
impacts of weakening currencies in certain jurisdictions primarily within Latin America.

Adjusted EBITDA increased $74.0 million, or 33.8%, to $292.9 million for the year ended December 31, 2014 as 
compared to $218.9 million for the Pro Forma year ended December 31, 2013. As a percentage of net sales, Adjusted 
EBITDA increased to 16.5% from 12.4%. This increase was driven by higher average selling prices as well as lower fixed 
manufacturing costs, partially resulting from our operational improvement initiatives.

53

Successor year ended December 31, 2013, Pro Forma year ended December 31, 2013 and Predecessor period 
January 1, 2013 through January 31, 2013 compared to the Predecessor year ended December 31, 2012

The following table presents net sales by segment and segment Adjusted EBITDA for the following periods:

(In millions)
Net Sales

Performance Coatings
Transportation Coatings

Total

Segment Adjusted EBITDA(1)
Performance Coatings
Transportation Coatings

Total

Successor

Predecessor

Pro Forma

Year Ended
December 31,

Period from 
January 1
through
January 31,

Year Ended
December 31,

Year Ended
December 31,

2013

2013

2012

2013

$

$

$

$

2,325.3 $
1,625.8
3,951.1 $

186.8 $
139.4
326.2 $

2,479.5 $
1,739.9
4,219.4 $

2,512.1
1,765.2
4,277.3

500.2 $
198.8
699.0 $

15.0 $
17.7
32.7 $

426.0 $
151.6
577.6 $

518.7
218.9
737.6

(1)  The Segment Adjusted EBITDA information for the Pro Forma year ended December 31, 2013 includes (a) the add-back of 

corporate allocations from DuPont to DPC for the usage of DuPont’s facilities, functions and services; costs for administrative 
functions and services performed on behalf of DPC by centralized staff groups within DuPont; a portion of DuPont’s general 
corporate expenses; and certain pension and other long-term employee benefit costs net of (b) estimated standalone costs based on 
a corporate function resource analysis that included a standalone executive office, the costs associated with supporting a standalone 
information technology infrastructure, corporate functions such as legal, finance, treasury, procurement and human resources and 
certain costs related to facilities management. This resource analysis included anticipated headcount and the associated overhead 
costs of running these functions effectively as a standalone company of our size and complexity. This resulted in a net benefit of 
$5.7 million for the Predecessor period January 1, 2013 through January 31, 2013.  The Predecessor year ended December 31, 
2012 does not include $84.2 million in net benefits related to these costs.

Performance Coatings Segment

Historical: Net sales were $2,325.3 million and $186.8 million for the Successor year ended December 31, 2013 and the 
Predecessor period January 1, 2013 through January 31, 2013, respectively, as compared to net sales of $2,479.5 million for 
the Predecessor year ended December 31, 2012. Net sales growth for the Predecessor period January 1, 2013 through January 
31, 2013 and the Successor year ended December 31, 2013 was primarily driven by higher average selling prices, which 
contributed to net sales growth of 5.9%. These increases were offset by lower volumes, which decreased net sales by 3.4%. 
Weakening foreign currency exchange rates compared to the U.S. dollar primarily related to certain currencies within the 
Latin America region also had a negative impact on sales of 1.2%.

Adjusted EBITDA was $500.2 million and $15.0 million for the Successor year ended December 31, 2013 and the 
Predecessor period January 1, 2013 through January 31, 2013, respectively, compared to Adjusted EBITDA of $426.0 million 
for the Predecessor year ended December 31, 2012. This increase was driven primarily by the absence of $77.6 million in the 
Predecessor year ended December 31, 2012 related to the add-back of corporate allocations from DuPont to DPC for 
estimated standalone entity benefits. The remaining increase was driven by lower raw material input costs and fixed 
manufacturing costs, partially resulting from our purchasing and operational improvement initiatives and price increases. 
These factors were slightly offset by the negative impact of weakening foreign currency exchange rates compared to the U.S. 
dollar, which were primarily related to certain currencies within the Latin America region, and contributed to a reduction in 
Adjusted EBITDA.

Pro Forma: Net sales increased $32.6 million, or 1.3%, to $2,512.1 million for the Pro Forma year ended December 31, 
2013, as compared to net sales of $2,479.5 million for the Predecessor year ended December 31, 2012. Net sales growth was 
primarily driven by higher average selling prices, which contributed to net sales growth of 5.9%. These increases were offset 
by lower volumes, which decreased net sales by 3.4%. Weakening foreign currency exchange rates compared to the U.S. 
dollar primarily related to certain currencies within the Latin America region also had a negative impact on sales of 1.2%.

54

Adjusted EBITDA increased $92.7 million, or 21.8%, to $518.7 million for the Pro Forma year ended December 31, 2013 as 
compared to $426.0 million for the Predecessor year ended December 31, 2012. As a percentage of net sales, Adjusted 
EBITDA increased to 20.6% from 17.2%. This increase was driven by lower raw material input costs and fixed 
manufacturing costs, partially resulting from our purchasing and operational improvement initiatives and price increases. 
These factors were slightly offset by the negative impact of weakening foreign currency exchange rates compared to the U.S. 
dollar, which were primarily related to certain currencies within the Latin America region, and contributed to a reduction in 
Adjusted EBITDA.

Transportation Coatings Segment

Historical: Net sales were $1,625.8 million and $139.4 million for the Successor year ended December 31, 2013 and the 
Predecessor period January 1, 2013 through January 31, 2013, respectively, as compared to net sales of $1,739.9 million for 
the Predecessor year ended December 31, 2012. Net sales growth for the Predecessor period January 1, 2013 through January 
31, 2013 and the Successor year ended December 31, 2013 was primarily driven by higher average selling prices, which 
contributed to a 6.8% net sales growth. Lower sales volumes contributed to a net sales decline of 3.7%, and the negative 
currency impact from weakening foreign currency exchange rates compared to the U.S. dollar primarily related to certain 
currencies within the Latin America region contributed to a net sales decline of 1.6%.

Adjusted EBITDA was $198.8 million and $17.7 million for the Successor year ended December 31, 2013 and the 
Predecessor period January 1, 2013 through January 31, 2013, respectively, compared to Adjusted EBITDA of $151.6 million 
for the Predecessor year ended December 31, 2012. The increase in Adjusted EBITDA from the Predecessor year ended 
December 31, 2012 was primarily driven by selective price increases as well as the absence of $6.6 million related to the add-
back of corporate allocations from DuPont to DPC for estimated standalone entity benefits. Additionally, unfavorable 
currency exchange rates, which were primarily concentrated in the Latin America region, slightly offset these increases, and 
contributed to a reduction in Adjusted EBITDA.

Pro Forma: Net sales increased $25.3 million, or 1.5%, to $1,765.2 million for the Pro Forma year ended December 31, 
2013, as compared to net sales of $1,739.9 million for the Predecessor year ended December 31, 2012. Net sales growth was 
primarily driven by higher average selling prices, which contributed to a 6.8% net sales growth. Lower sales volumes 
contributed to a net sales decline of 3.7%, and the negative currency impact from weakening foreign currency exchange rates 
compared to the U.S. dollar primarily related to certain currencies within the Latin America region contributed to a net sales 
decline of 1.6%.

Pro Forma: Adjusted EBITDA increased $67.3 million, or 44.4%, to $218.9 million for the Pro Forma year ended 
December 31, 2013 as compared to $151.6 million for the Predecessor year ended December 31, 2012. As a percentage of net 
sales, Adjusted EBITDA increased to 12.4% from 8.7%, driven primarily by selective price increases. Unfavorable currency 
exchange rates, which were primarily concentrated in the Latin America region, slightly offset these increases, and 
contributed to a reduction in Adjusted EBITDA.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity are cash on hand, cash flow from operations and available borrowing capacity under our 
Senior Secured Credit Facilities. 

At December 31, 2014, availability under the Revolving Credit Facility was $384.5 million, net of the letters of credit issued 
which reduced the availability under the Revolving Credit Facility by $15.5 million. All such availability may be utilized 
without violating any covenants under the credit agreement governing such facility or the indentures governing the Dollar 
Senior Notes and the Euro Senior Notes. At December 31, 2014, our available borrowing capacity under other lines of credit 
in certain non-U.S. jurisdictions totaled $20.0 million. 

We or our affiliates, at any time and from time to time, may purchase the Dollar Senior Notes, the Euro Senior Notes or other 
indebtedness.  Any such purchases may be made through the open market or privately negotiated transactions with third 
parties or pursuant to one or more tender or exchange offers or otherwise, upon such terms and at such prices, as well as with 
such consideration, as we, or any of our affiliates, may determine.

55

Cash Flows

Successor years ended December 31, 2014 and 2013 as well as the Successor period from August 24 through December 
31, 2012 and Predecessor year ended December 31, 2012 and Predecessor period from January 1 through January 31, 
2013.

Successor

Predecessor

Year Ended
December 31,

Period from 
August 24
through
December 31,

Period from 
January 1
through
January 31,

Year Ended
December 
31,

2014

2013

2012

2013

2012

$

34.7 $

308.7
(38.2)

21.0

—
75.1

—
(11.2)
390.1
(138.7)
251.4
(178.5)
(123.2)
(26.9)

(218.9) $
300.7
(120.8)

18.4

103.7
48.9

25.0

20.6

177.6

199.2

376.8
(5,011.2)
5,098.1
(4.4)

(29.0) $
—

—

—

—
—

—

—
(29.0)
29.0

—

—

—

—

8.5 $

9.9

9.1

—

—
4.5

—
(3.9)
28.1
(65.8)
(37.7)
(8.3)
43.0

—

247.8

110.7

9.1

—

—
—

—

7.6

375.2

13.6

388.8
(88.2)
(290.6)
(0.1)

$

(77.2) $

459.3 $

— $

(3.0) $

9.9

(In millions)
Net cash provided by (used in):

Operating activities:

Net income (loss)

Depreciation and amortization

Deferred income taxes

Amortization of financing costs and original

issue discount

Fair value of acquired inventory sold
Foreign exchange losses

Bridge financing commitment fees

Other non-cash items

Net income (loss) adjusted for non-cash items

Changes in operating assets and liabilities

Operating activities

Investing activities

Financing activities

Effect of exchange rate changes on cash

Net increase (decrease) in cash and cash

equivalents

Year Ended December 31, 2014 (Successor)

Net Cash Provided by Operating Activities

Net cash provided by operating activities for the year ended December 31, 2014 was $251.4 million. Net income before 
deducting depreciation, amortization and other non-cash items generated cash of $390.1 million. This was partially offset by 
net increases in working capital of $138.7 million. The most significant drivers in working capital were increases in 
receivables, inventory and other assets of $119.0 million due primarily to increased net sales and inventory builds to support 
ongoing operational demands compared to the year ended December 31, 2013, as well as, reductions of other accrued 
liabilities of $54.8 million primarily related to the payment of nonrecurring transition-related costs, including restructuring 
costs, partially offset by a $53.6 million increase in accounts payable. 

Net Cash Used for Investing Activities

Net cash used for investing activities for the year ended December 31, 2014 was $178.5 million. This use was driven 
primarily by purchases of property, plant and equipment of $188.4 million, the purchase of increased ownership in a majority 
owned joint venture of $6.5 million and an increase of $4.7 million in restricted cash, partially offset by $21.3 million of 
proceeds from sales of assets. Purchases of property, plant and equipment includes approximately $74.8 million associated 
with our transition-related capital projects including our information technology systems and finalization of our transition of 
our global office relocations. 

56

Net Cash Used for Financing Activities

Net cash used for financing activities for the year ended December 31, 2014 was $123.2 million. The change was primarily 
driven by repayments of term loans of $121.1 million. These payments were comprised of a $100.0 million prepayment on 
our Dollar Term Loan made during the year ended December 31, 2014, along with $21.1 million of quarterly principal 
repayments as required under the Credit Agreement. In addition, we repaid short-term borrowings of $33.8 million partially 
offset by proceeds received from short-term borrowing during the period of $30.7 million. During the year ended 
December 31, 2014, we paid $3.0 million in fees related to the amendment of the Senior Secured Credit Facilities.

We received $2.5 million through the sale of common shares during the year ended December 31, 2014. We also received 
$3.0 million related to the exercise of stock options.

Dividends paid to noncontrolling interests totaled $2.2 million for the year ended December 31, 2014.

Year ended December 31, 2013 (Successor)

Net Cash Provided by Operating Activities

Cash provided by operating activities was $376.8 million for the Successor year ended December 31, 2013. The cash flow 
from operations was the result of cash flows generated by operating earnings and reductions in net working capital, partially 
offset by merger and acquisition related costs and transition costs associated with our separation from DuPont. An increase in 
trade and notes receivable was due largely to higher sales levels during the Successor year ended December 31, 2013 resulted 
in an outflow of cash of $6.4 million. A decrease in inventories resulted in a generation of cash of $33.9 million. The decrease 
in inventories was primarily the result of the continued focus on working capital levels relative to demand and lower raw 
material costs. An increase in accounts payable favorably impacted cash flow from operations by $67.1 million. The increase 
in accounts payable was due in part to the separation from DuPont in February 2013, which resulted in the establishment of 
new credit terms with our new vendors as a standalone company, including certain raw materials contracts with DuPont, 
which were historically related party purchases in the Predecessor period. Prior to the Acquisition, transactions between 
DuPont and DPC were deemed to be settled immediately through the parent company net investment. Further contributing to 
the cash flows provided by operating activities was an increase in accrued liabilities of $193.1 million related to the timing of 
cash payments for annual employee performance related benefits, which were paid by DuPont for the 2012 performance 
period. The remaining increases in accrued liabilities had no impact on cash flows from operations, including severance-
related liabilities and transition-related expenses, which had been accrued as of December 31, 2013 and had an offsetting 
impact within Net income (loss). Offsetting this operating activity was cash used in operating activities related to the 
restructuring activities during the year ended December 31, 2013, for which $23.7 million of payments were made.

Net Cash Used for Investing Activities

During the Successor year ended December 31, 2013, we acquired DPC for a purchase price of $4,907.3 million. Cash 
acquired was $79.7 million, which resulted in a net cash outflow of $4,827.6 million to acquire DPC.

During the Successor year ended December 31, 2013, we entered into a foreign currency contract to hedge the variability of 
the U.S. dollar equivalent of the original borrowings under the Euro Term Loan and the proceeds from the issuance of Euro 
Senior Notes. Net cash used to settle the derivative instrument was $19.4 million. Additionally, we purchased a 
€300.0 million 1.5% interest rate cap on our Euro Term Loan for a premium of $3.1 million.

Purchases of property, plant and equipment during the Successor year ending December 31, 2013, were $107.3 million, 
which included transition costs related to our transition to a standalone entity, which included costs to transition off of the 
DuPont information technology systems. In addition to the transition costs, we incurred costs for several growth and 
improvement initiatives including the waterborne projects in Jiading, China and Front Royal, Virginia.

During the Successor year ended December 31, 2013, we also invested $54.5 million for a real estate property.

Net Cash Provided by Financing Activities

As part of the Acquisition, on February 1, 2013 Carlyle made the Equity Contribution of $1,350.0 million. Further, there were 
additional equity contributions of $5.4 million during the Successor year ended December 31, 2013.

Borrowings during the Successor year ended December 31, 2013 included $2,817.3 million of proceeds from borrowings 
under our Senior Secured Credit Facilities, net of original issue discount of $25.7 million, and the issuance of our Senior 
Notes in the amount of $1,089.4 million. We paid $126.0 million of deferred financing costs associated with issuing the 
Dollar Senior Notes and Euro Senior Notes and entering into the Senior Secured Credit Facilities and $25.0 million of 
commitment fees related to the Bridge Facility. Other short-term borrowings during the Successor year ended December 31, 
2013 also included short-term borrowings of $38.8 million.

During the Successor year ended December 31, 2013, we made our required quarterly amortization payments on the Dollar 
Term Loan and Euro Term Loan totaling $21.3 million, as well as payments of $25.3 million on short-term borrowings.

57

During the Successor year ended December 31, 2013, dividends paid to noncontrolling interests totaled $5.2 million.

January 1, 2013 through January 31, 2013 (Predecessor)

Net Cash Used for Operating Activities

Net cash used for operating activities for the Predecessor period from January 1, 2013 through January 31, 2013 was $37.7 
million. Net income, before deducting depreciation and amortization and other non-cash items, generated cash of $28.1 
million.

An increase in inventories resulted in a use of cash of $19.3 million. Decreases in other accrued liabilities and accounts 
payable resulted in a use of cash of $43.8 million and $29.9 million, respectively. The decrease in other current liabilities was 
primarily due to reductions in compensation and other employee-related cost liabilities related to payment of annual incentive 
compensation, a reduction in the liabilities for discounts, rebates and warranties related to payments under annual rebate 
programs and a reduction in our foreign currency contracts derivatives liability. The reduction in accounts payable was 
primarily related to timing of vendor payments. Partially offsetting these items was a decrease in trade accounts and notes 
receivable which provided cash of $25.8 million. All other operating assets and liabilities netted to a $1.4 million generation 
of cash.

Net Cash Used for Investing Activities

During the Predecessor period from January 1, 2013 through January 31, 2013, net cash used for investing activities was $8.3 
million. Purchases of property, plant and equipment and intangible assets were $2.4 million and $6.3 million, respectively, 
during the Predecessor period January 1, 2013 through January 31, 2013.

Net Cash Provided by Financing Activities

During the Predecessor period from January 1, 2013 through January 31, 2013, net cash provided by financing activities was 
$43.0 million which mainly represents the net cash used by operating activities and net cash used in investing activities 
discussed above as a result of DuPont’s centralized cash management system.

Year ended December 31, 2012 (Predecessor)

Net Cash Provided by Operating Activities

Cash provided by operating activities was $388.8 million for the Predecessor year ended December 31, 2012. Cash provided 
by net income adjusted for other non-cash income statement items totaled $375.2 million for the Predecessor year ended 
December 31, 2012. Cash provided by operating assets and liabilities totaled $13.6 million for the year ended December 31, 
2012. Increases in accounts payable and other current liabilities, of $54.9 million and $36.4 million, respectively, primarily 
related to increased employee incentive compensation and transition related liabilities, were partially offset by increases in 
trade accounts and notes receivable of $58.9 million and decreases in other liabilities of $25.9 million. 

Net Cash Used for Investing Activities

Cash used for investing activities for the Predecessor year ended December 31, 2012 was $88.2 million. This was primarily 
driven by $73.2 million in purchases of property, plant, and equipment and $21.6 million in purchases of intangibles. 

Net Cash Used for Financing Activities

Cash used for financing activities for the Predecessor year ended December 31, 2012 was $290.6 million which mainly 
represents the net cash provided by operating activities less net cash used in investing activities discussed above as a result of 
DuPont’s centralized cash management system, as well as DuPont incurring costs on behalf of DPC. 

Financial Condition

We had cash and cash equivalents at December 31, 2014 and 2013 of $382.1 million and $459.3 million, respectively. Of 
these balances, $264.2 million and $385.2 million were maintained in non-U.S. jurisdictions as of December 31, 2014 and 
2013, respectively. We believe our organizational structure allows us the necessary flexibility to move funds throughout our 
subsidiaries to meet our operational working capital needs.

Our primary sources of liquidity are cash on hand, cash flow from operations and available borrowing capacity under our 
Revolving Credit Facility. Based on our forecasts, we believe that cash flow from operations, available cash on hand and 
available borrowing capacity under our Senior Secured Credit Facilities and existing lines of credit will be adequate to 
service debt, fund the transition-related costs, meet liquidity needs and fund necessary capital expenditures for the next 
twelve months.

58

Our ability to make scheduled payments of principal or interest on, or to refinance, our indebtedness or to fund working 
capital requirements, capital expenditures and other current obligations will depend on our ability to generate cash from 
operations. Such cash generation is subject to general economic, financial, competitive, legislative, regulatory and other 
factors that are beyond our control.

If required, our ability to raise additional financing and our borrowing costs may be impacted by short and long-term debt 
ratings assigned by independent rating agencies, which are based, in significant part, on our performance as measured by 
certain credit metrics such as interest coverage and leverage ratios. Our highly leveraged nature may limit our ability to 
procure additional financing in the future.

The following table details our borrowings outstanding at the periods indicated:

(In millions)
Dollar Term Loan
Euro Term Loan
Dollar Senior Notes
Euro Senior Notes
Short-term borrowings
Other
Unamortized original issue discount

Less:

Short term borrowings
Current portion of long-term borrowings

Long-term debt

Year Ended December 31,

2014

2013

2,165.5 $
481.0
750.0
305.3
12.2
0.7
(18.3)
3,696.4

12.2
27.9
3,656.3 $

2,282.8
547.7
750.0
344.9
18.2
—
(22.7)
3,920.9

18.2
28.5
3,874.2

$

$

Our indebtedness, including the Senior Secured Credit Facilities and Senior Notes, are more fully described in Note 22 to the 
consolidated and combined financial statements included elsewhere in this Annual Report on Form 10-K.

Our liquidity requirements are significant due to the highly leveraged nature of our company as well as our working capital 
requirements. At December 31, 2014 and 2013, there were no borrowings under the Revolving Credit Facility with total 
availability under the Revolving Credit Facility of $384.5 million and $379.3 million, respectively, all of which may be 
borrowed by us without violating any covenants under the credit agreement governing such facility or the indentures 
governing the Dollar Senior Notes and the Euro Senior Notes. 

The following tables detail our borrowings outstanding and the associated interest expense, including amortization of debt 
issuance costs and debt discounts, and average effective interest rates for such borrowings for the Successor years ended 
December 31, 2014 and 2013, respectively:

(In millions)
Term Loans
Revolving Credit Facility
Senior Notes
Short-term and Other borrowings
Total

(In millions)
Term Loans
Revolving Credit Facility
Senior Notes
Short-term borrowings
Total

Year Ended December 31, 2014

Principal

Average Effective
Interest Rate

Interest
Expense

2,628.2
—
1,055.3
12.9
3,696.4

N/A

4.7% $

7.3%

Various

$

127.6
4.7
78.6
1.4
212.3

Year Ended December 31, 2013

Principal

Average Effective
Interest Rate

Interest
Expense

2,807.8
—
1,094.9
18.2
3,920.9

N/A

5.6% $

7.5%

Various

$

139.0
4.5
71.8
1.4
216.7

$

$

$

$

59

Contractual Obligations

The following table summarizes our contractual obligations at December 31, 2014:

(In millions)
Debt, including current portion (1)

Senior Secured Credit Facilities, consisting of

the following:

Term Loan Facilities:

Dollar Term Loan

Euro Term Loan

Senior Notes, consisting of the following:

Dollar Senior Notes

Euro Senior Notes

Other borrowings
Interest payments (1)
Operating Leases
Pension contributions (2)
Purchase obligations

Contractual Obligations Due In:

Total

2015

2016-2017

2018-2019

Thereafter

$

2,165.5 $

23.0 $

46.0 $

46.0 $

2,050.5

481.0

750.0

305.3

12.9

998.6

208.6

16.5

36.9

4.9

—

—

12.2

176.3

50.6

16.5

11.7

9.8

—

—

—

349.7

63.1

—

18.5

9.8

—

—

0.7

341.3

47.2

—

6.7

—

456.5

750.0

305.3

—

131.3

47.7

—

—

—

Uncertain tax positions, including interest and 

penalties (3)

—

—

—

Total

$

4,975.3 $

295.2 $

487.1 $

451.7 $

3,741.3

(1)  Amounts assume that the Senior Secured Credit Facilities and Senior Notes are repaid upon maturity, and the Revolving Credit 

Facility remains undrawn, which may or may not reflect future events. Future interest payments include commitment fees on the 
unused portion of the Revolving Credit Facility, and reflect the interest payments on our Dollar Term Loan, Euro Term Loan and 
the Senior Notes. Future interest payments assume December 31, 2014 interest rates will prevail throughout all future periods. 
Actual interest payments and repayment amounts may change.

(2)  We expect to make contributions to our defined benefit pension plans beyond 2015; 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 2015.

(3)  As of December 31, 2014, we had approximately $5.6 million of uncertain tax positions, including interest and penalties that could 
result in potential payments. Due to the high degree of uncertainty regards 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.

Scheduled Maturities

Below is a schedule of required future repayments of all borrowings outstanding at December 31, 2014 (Successor).

(In millions)
2015
2016
2017
2018
2019
Thereafter
Total

$

$

40.1
27.9
27.9
28.6
27.9
3,562.3
3,714.7

Off Balance Sheet Arrangements

In connection with the Acquisition, we assumed certain obligations under which we directly guarantee various debt 
obligations under agreements with third parties related to equity affiliates, customers and suppliers. At December 31, 2014 
and 2013 (Successor) we had directly guaranteed $2.2 million and $1.6 million of such obligations, respectively. These 
represent the maximum potential amount of future (undiscounted) payments that we could be required to make under the 
guarantees in the event of default by the guaranteed parties. No amounts were accrued at December 31, 2014 and 2013.

No other off balance sheet arrangements existed as of December 31, 2014 or 2013.

60

Recent Accounting Guidance

See Note 4 "Recent Accounting Guidance" to the consolidated and combined financial statements included elsewhere in this 
Annual Report on Form 10-K for a summary of recent accounting guidance. 

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of results of operations and financial condition are based upon our financial statements. These 
financial statements have been prepared in accordance with U.S. GAAP unless otherwise noted. The preparation of these 
financial statements requires us to make estimates and judgments that affect the amounts reported in the financial statements. 
We base our estimates and judgments on historical experiences and assumptions believed to be reasonable under the 
circumstances and re-evaluate them on an ongoing basis. Actual results could differ from our estimates under different 
assumptions or conditions. Our significant accounting policies, which may be affected by our estimates and assumptions, are 
more fully described in Note 3 to the consolidated and combined financial statements included elsewhere in this Annual 
Report.

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about 
matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been 
used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the 
financial statements. Management believes the following critical accounting policies reflect its most significant estimates and 
assumptions used in the preparation of the financial statements.

Accounting for Business Combinations

We account for business combinations under the acquisition method of accounting. This method requires the recording of 
acquired assets, including separately identifiable intangible assets, and assumed liabilities at their acquisition date fair values. 
The excess of the purchase price over the fair value of assets acquired and liabilities assumed is recorded as goodwill. 
Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the 
use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, 
discount rates, royalty rates, asset lives and market multiples, among other items.

The fair values of intangible assets were estimated using an income approach, either the excess earnings method (customer 
relationships) or the relief from royalty method (technology and trademarks). Under the excess earnings method, an 
intangible asset’s fair value is equal to the present value of the incremental after-tax cash flows attributable solely to the 
intangible asset over its remaining useful life. Under the relief from royalty method, fair value is measured by estimating 
future revenue associated with the intangible asset over its useful life and applying a royalty rate to the revenue estimate. 
These intangible assets enable us to secure markets for our products, develop new products to meet the evolving business 
needs and competitively produce our existing products.

The fair value of real properties acquired was based on the consideration of their highest and best use in the market. The fair 
values of property, plant, and equipment, other than real properties, were based on the consideration that unless otherwise 
identified, they will continue to be used "as is" and as part of the ongoing business. In contemplation of the in-use premise 
and the nature of the assets, the fair value was developed primarily using a cost approach. The determination of the fair value 
of assets acquired and liabilities assumed involves assessing factors such as the expected future cash flows associated with 
individual assets and liabilities and appropriate discount rates at the date of the acquisition.

The fair value of the noncontrolling interests, related to acquired joint ventures, were estimated by applying an income 
approach. This fair value measurement is based on significant inputs that are not observable in the market and thus represents 
a fair value measurement categorized within Level 3 of the fair value hierarchy. Key assumptions included a discount rate, a 
terminal value based on a range of long-term sustainable growth rates and adjustments because of the lack of control that 
market participants would consider when measuring the fair value of the noncontrolling interests.

The results of operations for businesses acquired are included in the financial statements from the date of the acquisition.

See Note 5 to the consolidated and combined financial statements included elsewhere in this Annual Report on Form 10-K 
for further detail on the Acquisition and related accounting.

Asset Impairments

Factors that could result in future impairment charges, among others, include changes in worldwide economic conditions, 
changes in technology, changes in competitive conditions and customer preferences, and fluctuations in foreign currency 
exchange rates. These risk factors are discussed in Part I, Item 1A, "Risk Factors," included elsewhere in this Annual Report 
on Form 10-K.

61

Goodwill

As discussed in Note 3, "Summary of Significant Accounting Policies," under Item 8 of this Form 10-K, the Company tests 
goodwill and identifiable intangible assets with indefinite lives for impairment at least annually. Intangibles are tested for 
impairment using a quantitative impairment model. We test goodwill for impairment by either performing a qualitative 
evaluation or a two-step quantitative test. The qualitative evaluation is an assessment of factors, including reporting unit 
specific operating results and cost factors, as well as industry, market and general economic conditions, to determine whether 
it is more likely than not that the fair values of a reporting unit is less than its carrying amount, including goodwill. We may 
elect to bypass this qualitative assessment for some or all of our reporting units and perform a two-step quantitative test. Fair 
values under the quantitative test are estimated using a combination of discounted projected future earnings or cash flow 
methods and multiples of earnings in estimating a reporting unit’s fair value. 

For the 2014 impairment tests, we utilized both the qualitative and quantitative methods to assess impairment. None of our 
goodwill was impaired based on the results of the testing. 

The inputs utilized in the analyses are classified as Level 3 inputs within the fair value hierarchy as defined in ASC 820, Fair 
Value Measurement. The process of evaluating the potential impairment of goodwill is subjective because it requires the use 
of estimates and assumptions as to our future cash flows, discount rates commensurate with the risks involved in the assets, 
future economic and market conditions, as well as other key assumptions. We believe that the amounts recorded in the 
financial statements related to goodwill are based on the best estimates and judgments of the appropriate Axalta management, 
although actual outcomes could differ from our estimates. 

Goodwill is allocated to, and evaluated for impairment at, the reporting unit level, which is defined as an operating segment 
or one level below an operating segment. We have two operating segments - Performance Coatings and Transportation 
Coatings - that also serve as our reportable segments. We have goodwill allocated to eight reporting units. At December 31, 
2014, our $1,001.1 million in total goodwill is allocated to reportable segments as follows: $933.6 million in Performance 
Coatings and $67.5 million in Transportation Coatings.

Other intangible assets

We conducted our 2014 annual indefinite-lived intangible assets impairment assessment as of October 1, 2014 and plan to 
update this assessment annually each October, unless conditions arise that would require a more frequent evaluation. In 
assessing the recoverability of indefinite-lived intangible assets, projections regarding estimated discounted future cash flows 
and other factors are made to determine if impairment has occurred. If we conclude that there has been impairment, we will 
write down the carrying value of the asset to its fair value. Each year, we evaluate those intangible assets with indefinite lives 
to determine whether events and circumstances continue to support the indefinite useful lives. When testing indefinite-lived 
intangible assets for impairment, we have the option to first assess qualitative factors to determine whether the existence of 
events or circumstances leads to a determination that it is more likely than not (more than 50%) that the fair value of an 
indefinite-lived intangible asset is less than its carrying amount. Such qualitative factors may include the following:

• macroeconomic conditions;

•

•

•

•

industry and market considerations;

cost factors;

overall financial performance; and

other relevant entity-specific events.

Based on the results of our annual impairment review conducted in October 2014, management concluded that the fair value 
exceeded carrying value and no impairments existed.

Definite-lived intangible assets, such as technology, trademarks, customer relationships and non-compete agreements are 
amortized over their estimated useful lives, generally for periods ranging from 4 to 20 years. The reasonableness of the useful 
lives of these assets is continually evaluated. Once these assets are fully amortized, they are removed from the balance sheet.

The in-process research and development projects we acquired are considered indefinite-lived intangible assets until the 
abandonment or completion of the associated research and development efforts. Upon completion of the research and 
development process, the carrying values of acquired in process research and development projects are reclassified as 
definite-lived assets and are amortized over their useful lives. If the project is abandoned, we record the write-off as a loss in 
the statement of operations. During the years ended December 31, 2014 and 2013, we abandoned certain projects with 
carrying amounts of $0.1 million and $3.2 million, respectively, and recorded losses associated with these projects, which are 
included as components of amortization of acquired intangibles in the consolidated statements of operations.

62

Long-Lived Assets

Long-lived assets, which includes property, plant and equipment, and definite-lived intangible assets, are assessed for 
impairment whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. 
The impairment testing involves comparing the carrying amount of the asset to the forecasted undiscounted future cash flows 
generated by that asset. In the event the carrying amount of the asset exceeds the undiscounted future cash flows generated by 
that asset and the carrying amount is not considered recoverable, an impairment exists. An impairment loss is measured as the 
excess of the asset’s carrying amount over its fair value. An impairment loss is recognized in the statement of operations in 
the period that the impairment occurs.

Stock-Based Compensation

Successor periods

During 2013, we granted approximately 4.1 million, 5.7 million and 6.4 million non-qualified service-based stock options to 
certain employees with strike prices of $5.92, $8.88 and $11.84 (per share), respectively.

During 2014, we granted 1.6 million non-qualified service-based stock options to certain employees with strike prices of 
$5.92, $7.21, $8.88 and $11.84 per share. Options generally vest over a 5-year period, and vesting of a portion of the options 
could accelerate in the event of a change in control or certain other events. Option life cannot exceed ten years.

For the years ended December 31, 2014 and 2013, we recorded compensation expense of $8.0 million and $7.4 million, 
respectively. Compensation expense related to service-based non-qualified stock options is equivalent to the grant-date fair 
value of the awards determined under the Black-Scholes option pricing model and is being recognized as compensation 
expense over the service period utilizing graded vesting. At the grant date, we estimated a forfeiture rate of zero due to the 
limited history and expectations of forfeitures.

The fair value of options granted in 2013 ranged from $0.95 per share to $2.01 per share. The fair value of options granted in 
2014 ranged from $1.51 per share to $3.01 per share. Principal weighted average assumptions used in applying the Black-
Scholes model were as follows:

Key Assumptions
Expected Term
Volatility
Dividend Yield
Discount Rate

2014 Grants

2013 Grants

7.81 years
28.28%
—%
2.21%

7.81 years
28.61%
—%
2.13%

To estimate the expected stock option term for the $5.92 and $7.21 stock options referred to above, we used the simplified 
method, as the options were granted at fair value and we were a privately-held company at the grant date and had no exercise 
history. Based upon this simplified method, the $5.92 and $7.21 per share stock options have an expected term of 6.5 years. 
The strike price for the $8.88 and $11.84 per share tranches of options exceeded the fair value at the grant date, which 
required the use of an estimate of an implicitly longer holding period, resulting in the term of 8.25 years.

Because we were a privately-held company with no trading history at the time of these grants, expected volatility was 
estimated using trading data derived from publicly held peer group companies over the expected term of the options. We do 
not anticipate paying cash dividends in the foreseeable future and, therefore, use an expected dividend yield of zero. The 
discount rate was derived from the U.S. Treasury yield curve.

During 2013, we sold 1.3 million common shares to certain employees at fair value for $7.4 million in proceeds. Because we 
were not publicly traded on the grant date, the market value of the stock for the 2013 stock awards was estimated based upon 
the Acquisition price as there were no significant changes in operations since the closing date of February 1, 2013. During 
2014, we sold 0.3 million common shares at fair value for $2.5 million in proceeds. 

For the 2014 stock awards, we estimated the per share fair value of our common shares using a contemporaneous valuation 
consistent with the American Institute of Certified Public Accountants Practice Aid, "Valuation of Privately-Held Company 
Equity Securities Issued as Compensation" (the "Practice Aid"). In conducting this valuation, we considered all objective and 
subjective factors that we believed to be relevant, including our best estimate of our business condition, prospects and 
operating performance. Within this contemporaneous valuation, a range of factors, assumptions and methodologies were 
used. The significant factors included:

•

•

•

the fact that we were a private company with illiquid securities;

our historical operating results;

our discounted future cash flows, based on our projected operating results;

63

•

•

valuations of comparable public companies; and

the risk involved in the investment, as related to earnings stability, capital structure, competition and market
potential.

For the contemporaneous valuation of our common shares, management estimated, as of the issuance date, our enterprise 
value on a continuing operations basis, using the income and market approaches, as described in the Practice Aid. The 
income approach utilized the discounted cash flow ("DCF") methodology based on our financial forecasts and projections, as 
detailed below. The market approach utilized the Guideline Public Company and Guideline Transactions methods, as detailed 
below.

For the DCF methodology, we prepared annual projections of future cash flows through 2018. Beyond 2018, projected cash 
flows through the terminal year were projected at long-term sustainable growth rates consistent with long-term inflationary 
and industry expectations. Our projections of future cash flows were based on our estimated net debt-free cash flows and 
were discounted to the valuation date using a weighted-average cost of capital estimated based on market participant 
assumptions.

For the Guideline Public Company and Guideline Transactions methods, we identified a group of comparable public 
companies and recent transactions within the chemicals industry. For the comparable companies, we estimated market 
multiples based on trading prices and trailing 12 months EBITDA. These multiples were then applied to our trailing 12 
months EBITDA. When selecting comparable companies, consideration was given to industry similarity, their specific 
products offered, financial data availability and capital structure.

For the comparable transactions, we estimated market multiples based on prices paid for the related transactions and trailing 
12 months EBITDA. These multiples were then applied to our trailing 12 months EBITDA. The results of the market 
approaches corroborated the fair value determined using the income approach.

Awards issued subsequent to our IPO have been, and will continue to be, valued based on the market price of the shares on 
the date of the grant.   

See Note 11 to the consolidated and combined financial statements included elsewhere in this Annual Report on Form 10-K 
for further detail on stock based compensation. 

Predecessor periods

DuPont maintained certain stock-based compensation plans for the benefit of certain of its officers, directors and employees, 
including, prior to the Acquisition, certain DPC employees. DPC recognized stock-based compensation within the 
consolidated and combined statement of operations based upon fair values. Total stock-based compensation expense included 
in the consolidated and combined statement of operations was $0.1 million and $0.5 million for the Predecessor period 
January 1, 2013 through January 31, 2013 and the Predecessor year ended December 31, 2012, respectively.

Retirement Benefits

Successor periods

In connection with the Acquisition, we assumed certain defined benefit pension plan and other long-term employee benefit 
plan obligations and acquired certain related plan assets for both current and former employees of our subsidiaries.

The defined benefit pension plans for our subsidiaries represent single-employer plans. ASC 805, Business Combinations, 
requires recognition of a pension asset or liability of a single-employer defined benefit pension plan in connection with 
recording assets and liabilities of a business combination accounted for as a purchase. A pension liability is recorded for the 
excess of the projected benefit obligation over the fair value of the plan assets. The projected benefit obligation and the fair 
value of plan assets were remeasured at the acquisition date using current discount rates and assumptions. The amount 
recorded for the pension asset or liability in a purchase transaction essentially represents a "fresh start" approach. 
Accordingly, our subsequent net periodic pension cost does not include amortization of any prior service cost/credit, net gain 
or loss, or transition amount that existed prior to the date of the Acquisition.

The defined benefit obligations for remaining current employees of non-U.S. subsidiaries assumed by us were carved out of 
defined benefit pension plans retained by DuPont. We have created new defined benefit pension plans and are in the process 
of finalizing the creation of new defined benefit pension plans for all affected participants. The Acquisition Agreement 
requires DuPont to transfer assets generally in the form of cash, insurance contracts or marketable securities from DuPont’s 
defined benefit pension plans to our defined benefit pension plans. As of December 31, 2014, DuPont had completed the 
asset transfers for all plans except the plan covering the Company’s Canadian employees. The Canadian plan assets continue 
to be invested and managed by DuPont until the required regulatory approvals are received at which time the assets will be 
transferred to a newly created trust.

64

For multiemployer plans, ASC 805, Business Combinations, requires an obligation to the plan for a portion of its unfunded 
benefit obligations to be established at the acquisition date when withdrawal from the multiemployer plan is probable. As 
withdrawal from the DuPont defined benefit pension plan and related transfer of plan assets were required pursuant to the 
Acquisition Agreement, an estimate of the unfunded benefit obligations was recorded as of the closing date of the Acquisition 
for certain foreign benefit plans. The plan assets have been or will be directly transferred to the pension trust. Accordingly, 
assumed defined benefit obligations were presented net of the estimate of the plan assets to be transferred by DuPont.

The amounts recognized in the audited financial statements related to pension and other long-term employee benefits are 
determined from actuarial valuations. Inherent in these valuations are assumptions including expected return on plan assets, 
discount rates at which liabilities could have been settled, rate of increase in future compensations levels, mortality rates and 
health care costs trend rates. These assumptions are updated annually and are disclosed in Note 10 to the consolidated and 
combined financial statements included elsewhere in this Annual Report on Form 10-K. In accordance with U.S. GAAP, 
actual results that differed from the assumptions are accumulated and amortized over future periods and therefore, affect 
expense recognized and obligations recorded in future periods.

The discount rate is determined as of each measurement date based on a review of yield rates associated with long-term, 
high-quality corporate bonds. The calculation separately discounts benefit payments using the spot rates from a long-term, 
high-quality corporate bond yield curve.

The estimated impact of a 100 basis point increase of the discount rate to the net periodic benefit cost for 2015 would result 
in an increase of $0.4 million, while the impact of a 100 basis point decrease of the discount rate would result in an increase 
of approximately $0.9 million. The estimated impact of a 100 basis point increase of the expected return on asset assumption 
on the net periodic benefit cost for 2015 would result in a decrease of approximately $2.1 million, while the impact of a 100 
basis point decrease would result in an increase of $2.1 million.

Predecessor periods

Certain of DPC’s employees participated in defined benefit pension and other long-term employee benefit plans accounted 
for in accordance with the guidance for defined benefit pension and other long-term employee benefit plans in accordance 
with ASC 715, Compensation—Retirement Benefits. Certain DPC employees were previously covered under DuPont and 
DuPont subsidiaries’ sponsored plans, which were accounted for in accordance with accounting guidance in ASC 715. The 
majority of pension and other long-term employee benefit expenses during the Predecessor periods were specifically 
identified by employee. In addition, a portion of expense was allocated in shared entities and reported with cost of goods 
sold, selling, general and administrative expenses and research and development expenses in the Predecessor consolidated 
and combined statements of operations. For the U.S. pension plan and other defined benefit plans (the U.S. plans), DuPont 
considered DPC employees to be part of a multiemployer plan of DuPont. The expense related to the current and former 
employees of DPC is included in the Predecessor consolidated and combined financial statements. Non U.S. pensions and 
other long-term employee benefit plans (the non-U.S. plans) were accounted for as single employer plans where DPC 
recorded assets, liabilities and expenses related to the current DPC workforce.

Income taxes

Successor periods

The provision for income taxes was determined using the asset and liability approach of accounting for income taxes. Under 
this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets 
and liabilities are recovered or paid. The provision for income taxes represents income taxes paid or payable for the current 
year plus the change in deferred taxes during the period. Deferred taxes result from differences between the financial and tax 
basis of our assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted. Valuation 
allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. 
Deferred tax assets and liabilities are measured using enacted tax rates applicable in the years in which they are expected to 
be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax law is recognized in income in the 
period that includes the enactment date.

At December 31, 2014, we had a net deferred tax asset balance of $99.0 million, after valuation allowances of $101.9 million. 
At December 31, 2013, we had a net deferred tax asset balance of $16.0 million, after valuation allowances of $63.4 million. 
In evaluating the ability to realize deferred tax assets, the Company relies on, in order of increasing subjectivity, taxable 
income in prior carryback years, the future reversals of existing taxable temporary differences, tax planning strategies and 
forecasted taxable income using historical and projected future operating results.

We provide for income and foreign withholding taxes, where applicable, on unremitted earnings of all subsidiaries and 
related companies to the extent that such earnings are not deemed to be permanently invested. At December 31, 2014 and 
2013 deferred income taxes of approximately $8.5 million and $15.9 million have been provided on such subsidiary earnings, 
respectively.

65

The breadth of our operations and the global complexity of tax regulations require assessments of uncertainties and 
judgments in estimating taxes we will ultimately pay. The final taxes paid are dependent upon many factors, including 
negotiations with taxing authorities in various jurisdictions, outcomes of tax litigation and resolution of disputes arising from 
federal, state and international tax audits in the normal course of business. A liability for unrecognized tax benefits is 
recorded when management concludes that the likelihood of sustaining such positions upon examination by taxing authorities 
is less than "more likely than not." Interest and penalties accrued related to unrecognized tax benefits are included in the 
provision for income taxes. At December 31, 2014 and 2013, the Company had gross unrecognized tax benefits for both 
domestic and foreign operations of $5.3 million and $38.9 million, respectively.

See Note 14 to the consolidated and combined financial statements included elsewhere in this Annual Report on Form 10-K 
for further detail on our accounting for income taxes.

Predecessor periods

During the Predecessor periods, we attributed current and deferred income taxes of DuPont to the DPC standalone financial 
statements in a manner that is systematic, rational and consistent with the asset and liability method prescribed by ASC 740, 
Income Taxes. Accordingly, our income tax provision was prepared following the "Separate Return Method." The separate 
return method applies ASC 740 to the standalone financial statements of each member of the consolidated group as if the 
group member were a separate taxpayer and a standalone enterprise. As a result, we may not have included in the separate 
consolidated and combined financial statements of the Predecessor actual tax transactions included in the consolidated 
financial statements of DuPont. Similarly, the tax treatment of certain items reflected in the separate Predecessor consolidated 
and combined financial statements may not be reflected in the consolidated financial statements and tax returns of DuPont; 
therefore, such items as alternative minimum tax, net operating losses, credit carryforwards and valuation allowances may 
exist in the standalone financial statements that may or may not exist in DuPont’s consolidated financial statements.

The provision for income taxes was determined using the asset and liability approach of accounting for income taxes. Under 
this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets 
and liabilities are recovered or paid. The provision for income taxes represents income taxes paid or payable for the current 
year plus the change in deferred taxes during the period. Deferred taxes result from differences between the financial and tax 
basis of our assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted. Valuation 
allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. 
Income tax related penalties are included in the provision for income taxes.

In general, the taxable income (loss) of our various entities was included in DuPont’s consolidated tax returns, where 
applicable in jurisdictions around the world. As such, we have not historically prepared separate income tax returns for many 
of our entities. Consequently, income taxes currently payable for these entities are deemed to have been remitted to DuPont, 
in cash, in the period the liability arose and income taxes currently receivable are deemed to have been received from DuPont 
in the period that we would have recognized a refund had we been a separate taxpayer.

Prior to the presale structuring that occurred in the latter part of 2012, no direct ownership relationships existed among all our 
various legal entities. Consequently, no provision has been made for income taxes on unremitted earnings of subsidiaries and 
affiliates. Four new Dutch holding companies were created in 2012 to hold a significant portion of the DPC operations in 
Latin America, EMEA and Asia. No provision was made for income taxes on unremitted earnings of subsidiaries and 
affiliates due to the indirect ownership structure (for entities not owned by the new Dutch holding companies) and because 
earnings of the direct subsidiaries of the new Dutch holding companies were deemed to be indefinitely invested.

Derivatives and Hedging

For derivatives designated as cash flow hedges, if any, we measure hedge effectiveness by formally assessing, at least 
quarterly, the probable high correlation of the expected future cash flows of the hedged item and the derivative hedging 
instrument. The ineffective portions of the hedges are recorded in the consolidated statement of operations in the current 
period. If the hedging relationship ceases to be highly effective or it becomes probable that an expected transaction will no 
longer occur, future gains or losses on the derivative instrument are recorded in the statement of operations.

We account for interest rate swaps related to our existing long-term borrowings as cash flow hedges. The fair values of the 
derivatives are classified as current and noncurrent in the balance sheet based upon the maturity of the underlying derivative. 
As of December 31, 2014 and 2013, theses balances are classified as noncurrent in the consolidated balance sheet. The 
effective portions of the changes in the fair values of these derivatives are recorded in other comprehensive income and are 
reclassified to interest expense in the period in which earnings are impacted by the hedged items or in the period that the 
transaction no longer qualifies as a cash flow hedge. The ineffective portions of the changes in fair values of the derivatives 
are recorded in interest expense in the period ineffectiveness is determined.

If no hedging relationship is designated, derivatives are marked to market through the statement of operations. Cash flows 
from derivatives are recognized in the statement of cash flows in a manner consistent with the underlying transactions.

66

See Note 24 to the consolidated and combined financial statements included elsewhere in this Annual Report on Form 10-K 
for further detail on our derivatives and hedging instruments.

Foreign Currency Translation

Successor periods

Our reporting currency is the U.S. dollar. As a result of the Acquisition, we reevaluated our functional currency accounting 
conclusions. Due primarily to our new legal entity organization structure, global cash management and raw material sourcing 
strategies, we determined that the functional currency of certain subsidiaries operating outside of the United States is the 
local currency of the respective subsidiaries. Assets and liabilities of these operations are translated into U.S. dollars at end-
of-period exchange rates; income and expenses are translated using the average exchange rates for the reporting period. 
Resulting cumulative translation adjustments are recorded as a component of shareholders’ equity in the consolidated balance 
sheet.

Gains and losses from transactions denominated in foreign currencies other than an entities’ functional currency are included 
in the consolidated statement of operations in Other expense, net.

Predecessor periods

For the Predecessor period, our reporting currency was the U.S. dollar.  DuPont management determined that the U.S. dollar 
was the functional currency of DPC’s legal entities and this functional currency was appropriate for the DPC organizational 
legal entity structure and the economic environment in which DPC operated during the period covered by the Predecessor 
combined financial statements. For these legal entities, foreign currency denominated asset and liability amounts were 
remeasured into U.S. dollars at the end-of-period exchange rates. Nonmonetary assets, such as inventories, prepaid expenses, 
fixed assets and intangible assets were remeasured in U.S. dollars at historical exchange rates. Foreign currency denominated 
income and expense elements were remeasured into U.S. dollars at average exchange rates in effect during the year, except 
for expenses related to nonmonetary assets, which were remeasured at historical exchange rates.

Gains and losses from transactions denominated in foreign currencies other than an entities’ functional currency are included 
in the combined statement of operations in Other expense, net.

Allowance for doubtful accounts

We maintain an allowance for doubtful accounts that reduces receivables to amounts that are expected to be collected. In 
estimating the allowance, management considers factors such as current overall geographic and industry-specific economic 
conditions, statutory requirements, accounts receivable turnover, historical and anticipated customer performance, historical 
experience with write-offs as a standalone company and the level of past-due amounts. Changes in these conditions may 
result in additional allowances. After all attempts to collect a receivable have failed and local legal requirements are met, the 
receivable is written off against the allowance.

Contingencies

Contingencies, by their nature, relate to uncertainties that require management to exercise judgment both in assessing the 
likelihood that a liability has been incurred as well as in estimating the amount of potential loss. The most important 
contingencies impacting our financial statements are those related to environmental remediation, pending or threatened 
litigation against the Company and the resolution of matters related to open tax years.

Environmental remediation costs are accrued when it is probable that a liability has been incurred and the amount can be 
reasonably estimated. Estimates of environmental reserves require evaluating government regulation, available technology, 
site-specific information and remediation alternatives. We accrue an amount equal to our best estimate of the costs to 
remediate based upon the available information. The extent of environmental impacts may not be fully known and the 
processes and costs of remediation may change as new information is obtained or technology for remediation is improved. 
Our process for estimating the expected cost for remediation considers the information available, technology that can be 
utilized and estimates of the extent of environmental damage. Adjustments to our estimates are made periodically as 
additional information received as remediation progresses.

We are subject to legal proceedings and claims arising out of our business operations. We routinely assess the likelihood of 
any adverse outcomes to these matters, as well as ranges of probable losses. A determination of the amount of the reserves 
required, if any, for these contingencies is made after analysis of each known claim. We have an active risk management 
program consisting of numerous insurance policies secured from many carriers. These policies often provide coverage that is 
intended to minimize the financial impact, if any, of the legal proceedings. The required reserves may change in the future 
due to new developments in each matter.

For more information on these matters, see Note 9 and Note 14 to the consolidated and combined financial statements 
included elsewhere in this Annual Report on Form 10-K.

67

UNAUDITED PRO FORMA CONSOLIDATED AND COMBINED FINANCIAL INFORMATION

The unaudited pro forma consolidated and combined financial information for year ended December 31, 2013 below was 
derived from our audited financial statements for the year ended December 31, 2013 and the related notes thereto and the 
audited financial statements for the DPC business for the period from January 1, 2013 through January 31, 2013 and the 
related notes thereto, each of which are included elsewhere in this Annual Report on Form 10-K.

On February 1, 2013, we consummated the Acquisition and acquired the DPC business from DuPont for $4,907.3 million 
plus transaction expenses. The purchase price paid was allocated to the acquired assets and liabilities at fair value. The 
purchase price for the Acquisition was funded by (i) an equity contribution of $1,350.0 million, (ii) proceeds from a $2,300.0 
million Dollar Term Loan facility and a €400.0 million Euro Term Loan facility and (iii) proceeds from the issuance of 
$750.0 million in senior unsecured notes and €250.0 million in senior secured notes.

The financing to fund the purchase price for the Acquisition is referred to herein as the "Financing."

Our unaudited pro forma consolidated and combined statements of operations are presented for the year ended December 31, 
2013, assuming: 

•

•

the Acquisition was completed on January 1, 2013;

the Financing was completed on January 1, 2013.

As the Acquisition and the Financing transactions are reflected in the historical consolidated balance sheet at December 31, 
2013 included elsewhere in this Annual Report in Form 10-K, our unaudited pro forma consolidated and combined 
statements of operations only reflect the Acquisition and Financing transactions in the pro forma consolidated and combined 
statement of operations for the year ended December 31, 2013. Historically, the DPC businesses were managed and operated 
in the normal course of business with other affiliates of DuPont. Accordingly, certain shared costs were allocated to DPC and 
reflected as expenses in the standalone Predecessor combined financial statements. DuPont had historically provided various 
services to the DPC business, including cash management, utilities and facilities management, information technology, 
finance/accounting, tax, legal, human resources, site services, data processing, security, payroll, employee benefit 
administration, insurance administration and telecommunications. The cost of these services were allocated to the 
Predecessor in the combined financial statements using various allocation methods. See Note 8 to the consolidated and 
combined financial statements included elsewhere in this Annual Report on Form 10-K for information regarding the 
historical allocations for the period from January 1, 2013 through January 31, 2013.

The unaudited pro forma information set forth below is based upon available information and assumptions that we believe are 
reasonable. The unaudited pro forma information is for illustrative and informational purposes only and is not intended to 
represent or be indicative of what our financial condition or results of operations would have been had the above transactions 
occurred on the dates indicated. The unaudited pro forma information also should not be considered representative of our 
future financial condition or results of operations. We believe that the unaudited pro forma information provides investors 
with meaningful information to understand our operating results and ability to analyze financial and business trends on a 
period-to-period basis.  This unaudited pro forma information should not be considered alternatives to our financial 
information prepared in accordance with U. S. GAAP. 

You should read the information contained in this table in conjunction with Part II, Item 7, "Management’s Discussion and 
Analysis of Financial Condition and Results of Operations" and the consolidated and combined financial statements and the 
related notes thereto included elsewhere in this Annual Report on Form 10-K.

68

Unaudited Pro Forma Consolidated and Combined Statement of Operations

For the Year Ended December 31, 2013

(In millions, except per share data)

Successor

Predecessor

Year Ended
December 31,
2013

Period from 
January 1
through
January 31,
2013

Adjustments
for
Acquisition

Adjustments
for
Financing

$

3,951.1 $

326.2 $

Net sales

Other revenue

Total revenue

Cost of goods sold

Selling, general and administrative expenses

Research and development expenses

Amortization of acquired intangibles

Merger and acquisition related expenses

Income from operations

Interest expense, net

Bridge financing commitment fees

Other expense, net

Income (loss) before income taxes

Provision (benefit) for income taxes

Net income (loss)

Less: Net income attributable to noncontrolling

interests

Net income (loss) attributable to controlling

interests

Per share data:

Earnings (loss) per share:

Basic and diluted

Weighted average shares outstanding:

Basic and diluted

$

$

—

—

—

—

—

—

—

—

—
19.7 (e)
(25.0) (f)
—

5.3
0.1 (g)
5.2

—

5.2

Pro forma

$

4,277.3

36.8

4,314.1

2,909.0

1,113.6

44.2

86.5

—

160.8

234.8

—

34.1

(108.1)

(1.3)

(106.8)

6.6

(113.4)

(0.50)

228.3

$

$

35.7

3,986.8

2,772.8

1,040.6

40.5

79.9

28.1

24.9

215.1

25.0

48.5

(263.7)

(44.8)

(218.9)

6.0

1.1

327.3

232.2

70.8

3.7

—

—

20.6

—

—

5.0

15.6

7.1

8.5

0.6

$

—

—

—
(96.0) (a)
2.2 (a)
—
6.6 (b)
(28.1) (c)
115.3

—

—
(19.4) (d)
134.7
36.3 (g)
98.4

—

(224.9) $

7.9 $

98.4

$

(0.97)

228.3

69

Notes To Unaudited Pro Forma Consolidated and Combined Statement of Operations

The Acquisition

(a) Represents the net pro forma adjustment to cost of sales resulting from the application of acquisition accounting (in 
millions):

Total increase in depreciation (1)
Impact to cost of sales for conforming Predecessor periods to weighted average cost flow assumption (2)
Impact to cost of sales for inventory step-up related to the Acquisition (3)
Decrease applicable to cost of goods sold

Year ended
December 31, 2013
7.9
$
(0.2)
(103.7)
(96.0)

$

(1)  Represents incremental depreciation applicable to purchase price allocation to tangible assets. The allocation of incremental 

depreciation expense is based on Axalta’s historical classification.

Assumed allocation of purchase price to fair value of property, plant and equipment (in millions):

Description:
Property, plant and equipment

Less: Aggregated historical depreciation

Reflected in:
Cost of goods sold

Selling, general and administrative expenses

Acquisition Date
Fair Value

Estimated
useful life

$

1,705.9

Various

Estimated annual  
depreciation and
amortization

Year ended 
December 31, 
2013

$

$

$

$

208.2
(198.1)
10.1

7.9

2.2

10.1

(2)  Represents the effect of reversing the impact of the LIFO cost flow assumption on the Predecessor periods to conform with 

Successor’s weighted average cost flow assumption

(3)  Represents the effect of the increase in inventory stepped-up to fair value as a result of the application of acquisition accounting.

(b) Represents incremental amortization applicable to purchase price allocation to intangible assets. The allocation of 
incremental amortization expense is based on Axalta’s historical classification.

Assumed allocation of purchase price to fair value of amortizable intangibles (in millions):

Description:
Technology

Trademarks

Customer relationships

Non-compete

Less: Aggregated historical amortization (1)

DuPont 
Performance 
Coatings
Acquisition

Weighted average
estimated useful life
(years)

Estimated annual depreciation 
and amortization
Year ended December 31, 2013

$

403.0

41.7

764.3

1.5

10 $

14.8

19.4

4

$

40.3

2.8

39.8

0.4
(76.7)
6.6

(1)  Exclusive of the $3.2 million associated with abandoned acquired in process research and development projects.

70

 
Notes To Unaudited Pro Forma Consolidated and Combined Statement of Operations

(c) Represents the net adjustment to remove one-time non-recurring expenses related to the Acquisition (in millions):

Decrease in acquisition-related transaction expenses

Year ended
December 31, 2013

$

(28.1)

(d)  Represents the adjustment to remove the non-recurring loss on foreign currency contract directly related to the Acquisition 

(in millions):

Acquisition related loss on foreign currency contract to hedge Euro denominated financing

Year ended
December 31, 2013

$

(19.4)

The Financing

(e)  Represents the pro forma adjustments to interest expense applicable to the Financing, as follows (in millions):

Borrowings under Term Loans (1)
Borrowings under Senior Notes (2)
Revolver unused availability fee (3)
Amortization of deferred financing fees and original issue discount (4)
Total pro forma interest expense
Less: Aggregated historical interest expense

Year ended December
31, 2013

$

$

$

11.4
6.3
0.2
1.8
19.7
—
19.7

(1)  Based on the terms of the Financing at the Acquisition date, reflects pro forma interest expense based on $2.3 billion of 
borrowings under Dollar Term Loans at an assumed minimal base rate of 1.25% plus an applicable margin of 3.50% and 
€400 million of borrowings under Euro Term Loans at an assumed minimal base rate of 1.25% plus an applicable margin of 
4.00%. A 0.125% increase or decrease in the interest rate on the Term Loan facility would increase or decrease our annual 
interest expense by $0.3 million.

(2)  Reflects pro forma interest expense based on $750 million Dollar Senior Notes at 7.375% and €250 million Euro Senior 

Notes (approximately $331.9 million) at 5.75%.

(3)  Based on unused availability of $400.0 million under the Revolving Credit Facility with an unused facility charge of 

0.5% per annum.

(4)  Reflects the non-cash amortization of deferred financing fees and original issue discount related to the Financing over the 

term of the related facility.

(f)  Represents pro forma adjustment to remove bridge loan commitment fees

Removal of bridge loan commitment fee

Year ended
December 31, 2013

$

(25.0)

71

 
Notes To Unaudited Pro Forma Consolidated and Combined Statement of Operations

The Transactions

(g)  Represents pro forma adjustments to the tax provision as a result of the Acquisition and the Financing (in millions)

Year ended December 31, 2013
The Acquisition
Pro forma adjustment (a), depreciation
Pro forma adjustment (a), LIFO to weighted average
Pro forma adjustment (a), inventory step-up
Pro forma adjustment (b), amortization of intangibles
Pro forma adjustment (c), acquisition related expenses
Pro forma adjustment (d), foreign currency contract
Pro forma adjustment to income tax provision
The Financing
Pro forma adjustment (e), interest expense
Pro forma adjustment (f), bridge loan commitment fees
Pro forma adjustment to income tax provision

Weighted
average
statutory
income
tax rate

Pro forma
adjustment

Year ended
December 31,
2013

$

$

10.1
(0.2)
(103.7)
6.6
(28.1)
(19.4)

33.0% (3)
33.2% (3)
33.2% (3)
23.4% (1)
23.1% (1)
—% (4)

19.7
(25.0)

15.3% (2)
12.4% (2)

$

$

$

$

(3.3)
0.1
34.5
(1.5)
6.5
—
36.3

(3.0)
3.1
0.1

(1)  Reflects our weighted average statutory tax rate consisting primarily of the following jurisdictions and related rates:

Jurisdiction
United States
Luxembourg (a)
Germany

Statutory Rate

38.5%
—%
32.5%

(a)  Represents our effective tax rate due to prior and expected continued net operating losses.

(2)  Reflects our weighted average statutory tax rate consisting primarily of the following jurisdictions and related rates:

Jurisdiction
United States
Netherlands (a)

Statutory Rate

38.5%
—%

(a)  Represents our effective tax rate due to prior and expected continued net operating losses.

(3)  Reflects our weighted average statutory tax rate consisting primarily of the following jurisdictions and related rates:

Jurisdiction
United States
Brazil
Germany

Statutory Rate

38.5%
34.0%
32.5%

(4)  Reflects our Netherlands effective tax rate due to prior and expected continued net operating losses.

72

 
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to changes in interest rates and foreign currency exchange rates since we finance certain operations through 
fixed and variable rate debt instruments and denominate our transactions in a variety of foreign currencies. We are also 
exposed to changes in the prices of certain commodities that we use in production. Changes in these rates and commodity 
prices may have an impact on future cash flow and earnings.

We manage these risks through normal operating and financing activities and, when deemed appropriate, through the use of 
derivative financial instruments. We do not enter into derivative financial instruments for trading or speculative purposes.

By using derivative instruments, we are subject to credit and market risk. The fair market value of the derivative instruments 
is determined by using valuation models whose inputs are derived using market observable inputs, including interest rate 
yield curves, as well as foreign exchange and commodity spot and forward rates, and reflects the asset or liability position as 
of the end of each reporting period. When the fair value of a derivative contract is positive, the counterparty owes us, thus 
creating a receivable risk for us. We are exposed to counterparty credit risk in the event of non-performance by counterparties 
to our derivative agreements. We minimize counterparty credit (or repayment) risk by entering into transactions with major 
financial institutions of investment grade credit rating.

Our exposure to market risk is not hedged in a manner that completely eliminates the effects of changing market conditions 
on earnings or cash flow.

Interest rate risk 

We are subject to interest rate market risk in connection with our borrowings. A one-eighth percent change in the applicable 
interest rate for borrowings under the Senior Secured Credit Facilities (assuming the Revolving Credit Facility is undrawn 
and to the extent that the Eurocurrency Rate (as defined in the credit agreement governing the Senior Secured Credit 
Facilities) is in excess of the floor rate of the Senior Secured Credit Facilities) would have an annual impact of a benefit of 
approximately $3.0 million on cash interest expense considering the impact of our hedging positions currently in place.

We selectively use derivative instruments to reduce market risk associated with changes in interest rates. The use of 
derivatives is intended for hedging purposes only and we do not enter into derivative instruments for speculative purposes. 

During the Successor year ended December 31, 2013, we entered into five interest rate swaps with notional amounts totaling 
$1,173.0 million to hedge interest rate exposures related to our variable rate borrowings under the Senior Secured Credit 
Facilities. The interest rate swaps qualified and were designated as cash flow hedges.  The interest rate swaps are in place 
through September 2017.  In addition to interest rate swaps, we purchased a €300.0 million 1.5% interest rate cap on our 
Euro Term Loan that matures on September 29, 2017. The interest rate cap is not designated as a hedging instrument. As 
such, the changes in fair value of the interest rate cap are recorded in interest expense in the current period.

As discussed in Note 22 to the consolidated and combined financial statements included elsewhere in this Annual Report on 
Form 10-K, we took additional measures to reduce our cost of borrowing by entering into an amendment to the Senior 
Secured Credit Facilities as of February 3, 2014. The re-pricing enacted pursuant to the amendment reduces the margin 
applicable to our cost of borrowing on our Dollar Term Loan from 3.5% to 3.0% for Eurocurrency Rate Loans and from 2.5% 
to 2.0% for Base Rate Loans and our cost of borrowing under the Euro Term Loan facility from 4.0% to 3.25%. The 
amendment provides for an additional reduction of these rates by 25 basis points if the Total Net Leverage Ratio is less than 
or equal to 4.50:1.00. In addition, the LIBOR floor on each term loan was reduced from 1.25% to 1.00% and the base rate 
floor on the Dollar Term Loan facility was reduced from 2.25% to 2.0%.

Foreign exchange rates risk 

We are exposed to foreign currency risk by virtue of our international operations. The majority of our net sales for the 
Successor years ended December 31, 2014 and 2013, the Predecessor year ended December 31, 2012 and the Predecessor 
period from January 1, 2013 to January 31, 2013 were from operations/sales outside the United States.

In the majority of our jurisdictions, we earn revenue and incur costs in the local currency of such jurisdiction. We incur 
significant revenues and incur significant costs in foreign currencies including the Euro, Mexican peso, Brazilian real, the 
Chinese yuan/renminbi and the Venezuelan bolívar. As a result, movements in exchange rates could cause our revenues and 
expenses to materially fluctuate, impacting our future profitability and cash flows. Our purchases of raw materials in Latin 
America, EMEA and Asia Pacific and future business operations and opportunities, including the continued expansion of our 
business outside North America, may further increase the risk that cash flows resulting from these activities may be adversely 
affected by changes in currency exchange rates. If and when appropriate, we intend to manage these risks through foreign 
currency hedges and/or by utilizing local currency funding of these expansions. We do not intend to hold financial 
instruments for trading or speculative purposes.

73

Our Euro Senior Notes and the Euro Term Loan are denominated in Euro. As a result, movements in the Euro exchange rate 
in relation to the U.S. dollar could cause the amount of Euro Senior Notes and Euro Term Loan borrowings to fluctuate, 
impacting our future profitability and cash flows.

Additionally, in order to fund the purchase price for certain assets of DPC and the capital stock and other equity interests of 
certain non-U.S. entities, a combination of equity contributions and intercompany loans were utilized to capitalize certain 
non-U.S. subsidiaries. In certain instances, the intercompany loans are denominated in currencies other than the functional 
currency of the affected subsidiaries. Where intercompany loans are not a component of permanently invested capital of the 
affected subsidiaries, increases or decreases in the value of the subsidiaries’ functional currency against other currencies will 
affect our results of operations.

Commodity price risk 

We are subject to changes in our cost of sales caused by movements in underlying commodity prices (primarily oil and 
natural gas). Approximately 50% of our cost of sales is represented by raw materials. A substantial portion of the purchased 
raw materials include monomers, pigments, resins and solvents. Our price fluctuations generally follow industry indices. We 
historically have not entered into long-term purchase contracts related to the purchase of raw materials. If and when 
appropriate, we intend to manage these risks using purchase contracts with our suppliers.

Treasury policy

Our treasury policy seeks to ensure that adequate financial resources are available for the development of our businesses 
while managing our currency and interest rate risks. Our policy is to not engage in speculative transactions. Our policies with 
respect to the major areas of our treasury activity are set forth above.

74

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Axalta Coating Systems Ltd.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of 
comprehensive income (loss), of changes in shareholders’ equity and of cash flows present fairly, in all material respects, the 
financial position of Axalta Coating Systems Ltd. and its subsidiaries (Successor) at December 31, 2014 and 2013, and the 
results of their operations and their cash flows for the years ended December 31, 2014 and 2013 and for the period from 
August 24, 2012 to December 31, 2012 in conformity with accounting principles generally accepted in the United States of 
America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) 
presents fairly, in all material respects, the information set forth therein when read in conjunction with the related 
consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the 
Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement 
schedule based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting 
Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance 
about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and 
significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our 
audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP
Philadelphia, PA
March 13, 2015

75

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Axalta Coating Systems Ltd.

In our opinion, the accompanying combined statements of operations, of comprehensive income (loss), of changes in 
DuPont’s net investment in DuPont Performance Coatings and of cash flows present fairly, in all material respects, the results 
of operations and of cash flows of DuPont Performance Coatings (Predecessor), a business formerly owned by E. I. du Pont 
de Nemours and Company, for the period from January 1, 2013 through January 31, 2013, and for the year ended December 
31, 2012 in conformity with accounting principles generally accepted in the United States of America. In addition, in our 
opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material 
respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These 
financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility 
is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our 
audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards 
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of 
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 
financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating 
the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP
Philadelphia, PA
March 31, 2014, except for Note 25 to the combined financial statements, as to which the date is August 20, 2014

76

AXALTA COATING SYSTEMS LTD.
Consolidated (Successor) and DuPont Performance Coatings Combined (Predecessor)
Statements of Operations
(In millions, except per share data)

Successor

Predecessor

Year Ended December 31,

Period from
August 24,
2012
through
December 31,

Period from
January 1,
2013
through
January 31,

Year Ended
December 31,

2014

$ 4,361.7 $

2013
3,951.1 $

2012

2013

— $

326.2 $

29.8

4,391.5

2,897.2

991.5

49.5

83.8
—

369.5

217.7

—

115.0

36.8

2.1

34.7

7.3

35.7

3,986.8

2,772.8

1,040.6

40.5

79.9
28.1

24.9

215.1

25.0

48.5
(263.7)
(44.8)
(218.9)

—

—

—

—

—

—
29.0
(29.0)
—

—

—
(29.0)
—
(29.0)

6.0

—

1.1

327.3

232.2

70.8

3.7

—
—

20.6

—

—

5.0

15.6

7.1

8.5

0.6

2012
4,219.4

37.4

4,256.8

2,932.6

873.4

41.5

—
—

409.3

—

—

16.3

393.0

145.2

247.8

4.5

$

$

$

27.4 $

0.12 $

0.12 $

229.3

230.3

(224.9) $
(0.97) $
(0.97) $
228.3

228.3

(29.0) $
—

—

—

—

7.9 $

243.3

Net sales

Other revenue

Total revenue

Cost of goods sold

Selling, general and administrative expenses

Research and development expenses

Amortization of acquired intangibles
Merger and acquisition related expenses

Income (loss) from operations

Interest expense, net

Bridge financing commitment fees

Other expense, net

Income (loss) before income taxes

Provision (benefit) for income taxes

Net income (loss)

Less: Net income attributable to noncontrolling

interests

Net income (loss) attributable to controlling

interests

Basic net income (loss) per share

Diluted net income (loss) per share

Basic weighted average shares outstanding

Diluted weighted average shares outstanding

The accompanying notes are an integral part of these financial statements.

77

AXALTA COATING SYSTEMS LTD.
Consolidated (Successor) and DuPont Performance Coatings Combined (Predecessor)
Statements of Comprehensive Income (Loss)
(In millions)

Net income (loss)

Other comprehensive income (loss), before tax:

Foreign currency translation adjustments

Unrealized gain (loss) on securities

Unrealized gain (loss) on derivatives

Unrealized gain (loss) on pension and other

benefit plan obligations

Other comprehensive income (loss), before tax

Income tax benefit (provision) related to items of

other comprehensive income

Other comprehensive income (loss), net of tax

Comprehensive income (loss)

Less: Comprehensive income attributable to

noncontrolling interests

Comprehensive income (loss) attributable to

controlling interests

Successor

Predecessor

Year Ended December 31,

Period from
August 24,
2012
through
December 31,

Period from
January 1,
2013
through
January 31,

Year Ended
December 31,

2014

$

34.7 $

2013
(218.9) $

2012

2013

2012

(29.0) $

8.5 $

247.8

(101.1)
0.7
(4.6)

(55.6)
(160.6)

18.6
(142.0)
(107.3)

24.3
(0.9)
5.0

11.0

39.4

(5.4)
34.0
(184.9)

—

—

—

—

—

—

—
(29.0)

2.6

6.0

—

—

0.2

—

1.1

1.3

(0.4)
0.9

9.4

0.6

—

0.3

—

(99.6)
(99.3)

34.7
(64.6)
183.2

4.5

$

(109.9) $

(190.9) $

(29.0) $

8.8 $

178.7

The accompanying notes are an integral part of these financial statements.

78

AXALTA COATING SYSTEMS LTD.
Consolidated Balance Sheets
(In millions, except per share data)

Assets
Current assets:

Cash and cash equivalents

Restricted cash

Accounts and notes receivable, net

Inventories

Prepaid expenses and other

Deferred income taxes

Total current assets

Property, plant and equipment, net

Goodwill

Identifiable intangibles, net

Deferred financing costs, net

Other assets

Total assets

Liabilities, Shareholders’ Equity
Current liabilities:

Accounts payable

Current portion of borrowings

Deferred income taxes

Other accrued liabilities

Total current liabilities

Long-term borrowings

Accrued pensions and other long-term employee benefits

Deferred income taxes

Other liabilities

Total liabilities

Commitments and contingent liabilities (Note 9)

Shareholders’ equity

Common shares, $1.00 par, 1,000.0 shares authorized, 229.8 shares issued and

outstanding at December 31, 2014; 1,000.0 shares authorized, 229.1 shares issued
and outstanding at December 31, 2013

Capital in excess of par

Accumulated deficit

Accumulated other comprehensive income (loss)

Total Axalta shareholders’ equity

Noncontrolling interests

Total shareholders’ equity

Total liabilities and shareholders’ equity

Successor

December 31,

2014

2013

$

382.1 $

459.3

4.7

820.4

538.3

62.9

64.5

1,872.9

1,514.1
1,001.1

1,300.0

91.0

473.7

—

865.9

550.2

50.2

30.0

1,955.6

1,622.6
1,113.6

1,439.6

110.6

495.1

$

6,252.8 $

6,737.1

$

494.5 $

478.5

40.1

7.3

404.8

946.7

3,656.3

306.4

208.2

23.2

46.7

5.5

472.7

1,003.4

3,874.2

313.2

280.4

54.1

5,140.8

5,525.3

229.8

1,144.7
(226.5)
(103.3)
1,044.7

67.3

229.1

1,133.7
(253.9)
34.0

1,142.9

68.9

1,112.0

1,211.8

$

6,252.8 $

6,737.1

The accompanying notes are an integral part of these financial statements.

79

AXALTA COATING SYSTEMS LTD.
Consolidated Statement of Changes in Shareholders’ Equity (Successor) and Combined Statement of Changes in DuPont’s Net 
Investment in DuPont Performance Coatings (Predecessor) 
(In millions)

Predecessor
Balance January 1, 2012

Comprehensive income:

Net income

Net unrealized gain on securities, net of tax of $0.1

Long-term employee benefit plans, net of tax of $34.8

Total comprehensive income (loss)

Net transfers to DuPont

Deconsolidation of joint venture

Balance December 31, 2012

Comprehensive income:

Net income

Net unrealized gain on securities, net of tax of $0.0

Long-term employee benefit plans, net of tax of $0.4

Total comprehensive income

Net transfers from DuPont

Dividends declared to noncontrolling interests

Balance January 31, 2013

DuPont’s Net
Investment
in DuPont
Performance
Coatings

Accumulated
Other
Comprehensive
Income (Loss)

Noncontrolling
Interests

Total

$

1,846.7 $

(76.3) $

34.8 $

1,805.2

243.3

—

—

243.3
(283.8)
(1.9)
1,804.3 $

$

7.9

—

—

7.9

43.0

—

$

1,855.2 $

—

0.2
(64.8)
(64.6)
—

—
(140.9) $

—

0.2

0.7

0.9

—

—
(140.0) $

4.5

—

—

4.5
(3.9)
(1.8)
33.6 $

0.6

—

—

0.6

247.8

0.2
(64.8)
183.2
(287.7)
(3.7)
1,697.0

8.5

0.2

0.7

9.4

—
(1.5)
32.7 $

43.0
(1.5)
1,747.9

The accompanying notes are an integral part of these financial statements.

80

AXALTA COATING SYSTEMS LTD.
Consolidated Statement of Changes in Shareholders’ Equity (Successor) and Combined Statement of Changes in DuPont’s Net 
Investment in DuPont Performance Coatings (Predecessor) 
(In millions)

Successor

Common
Shares

Capital In
Excess Of
Par

Accumulated
Deficit

Accumulated
Other
Comprehensive
Income

Noncontrolling
Interests

Total

Successor

Balance August 24, 2012

Comprehensive income (loss):

Net income loss

Total comprehensive loss

Balance December 31, 2012

Comprehensive income (loss):

Net income (loss)

Net unrealized loss on securities, net of tax of

$0.0

Net realized and unrealized gain on
derivatives, net of tax of $1.9

Long-term employee benefit plans, net of tax

of $3.5

Foreign currency translation

Total comprehensive income (loss)

Equity contributions

Recognition of stock-based compensation

$

$

— $

— $

— $

—

—

—

—

(29.0)

(29.0)

— $

— $

(29.0) $

—

—

—

—

—

—

0.1

—

—

—

—

—

—

—

1,355.3

7.4

(224.9)

—

—

—

—

(224.9)

—

—

—

—

—

— $

—

—

— $

—

(0.9)

3.1

7.5

24.3

34.0

—

—

—

—

—

— $

—

—

—

— $

6.0

—

—

—

—

6.0

—

—

—

66.7

(3.8)

(29.0)

(29.0)

(29.0)

(218.9)

(0.9)

3.1

7.5

24.3

(184.9)

1,355.4

7.4

—

66.7

(3.8)

Capitalization of capital in excess of par

229.0

(229.0)

Noncontrolling interests of acquired subsidiaries

Dividends declared to noncontrolling interests

—

—

—

—

Balance December 31, 2013

Comprehensive income (loss):

Net income

Net unrealized gain on securities, net of tax

of $0.0

Net realized and unrealized loss on
derivatives, net of tax of $1.7

Long-term employee benefit plans, net of tax

of $16.9

Foreign currency translation

Total comprehensive income (loss)

Equity contributions

Recognition of stock-based compensation

Exercises of stock options

Noncontrolling interests of acquired subsidiaries

Dividends declared to noncontrolling interests

$

229.1 $

1,133.7 $

(253.9) $

34.0 $

68.9 $

1,211.8

—

—

—

—

—

—

0.3

—

0.4

—

—

—

—

—

—

—

—

2.2

8.0

2.6

(1.8)

—

27.4

—

—

—

—

27.4

—

—

—

—

—

—

0.7

(2.9)

(38.7)

(96.4)

(137.3)

—

—

—

—

—

7.3

—

—

—

(4.7)

2.6

—

—

—

(2.0)

(2.2)

34.7

0.7

(2.9)

(38.7)

(101.1)

(107.3)

2.5

8.0

3.0

(3.8)

(2.2)

Balance December 31, 2014

$

229.8 $

1,144.7 $

(226.5) $

(103.3) $

67.3 $

1,112.0

The accompanying notes are an integral part of these financial statements.

81

AXALTA COATING SYSTEMS LTD.
Consolidated (Successor) and DuPont Performance Coatings Combined (Predecessor) Statements of Cash Flows
(In millions)

Operating activities:
Net income (loss)
Adjustment to reconcile net income (loss) to cash provided by operating activities:

Successor

Predecessor

Year Ended December 31,

Period from
August 24,
2012
through
December 31,

Period from January 1,
2013
through
January 31,

Year Ended
December 31,

2014

2013

2012

2013

2012

$

34.7 $

(218.9) $

(29.0) $

8.5 $

247.8

Depreciation and amortization
Amortization of financing costs and original issue discount
Loss on extinguishment and modification of debt
Fair value step up of acquired inventory sold
Bridge financing commitment fees
Deferred income taxes
Realized and unrealized foreign exchange losses, net
Stock-based compensation
Other non-cash, net
Decrease (increase) in operating assets and liabilities:

Trade accounts and notes receivable
Inventories
Prepaid expenses and other assets
Accounts payable
Other accrued liabilities
Other liabilities

Cash provided by (used for) operating activities

Investing activities:

Acquisition of DuPont Performance Coatings (net of cash acquired)
Purchase of property, plant and equipment
Investment in real estate property
Purchase of interest rate cap
Settlement of foreign currency contract
Restricted cash
Purchase of intangibles
Purchase of investment in affiliate
Proceeds from sale of assets

Cash used for investing activities

Financing activities:

Proceeds from long-term borrowings
Proceeds from short-term borrowings
Payments on short-term borrowings
Payments on long-term debt
Payments of deferred financing costs
Bridge financing commitment fees
Dividends paid to noncontrolling interests
Debt modification fees
Equity contribution
Cash received from exercises of stock options
Net transfer (to) from DuPont

Cash provided by (used for) financing activities
Increase (decrease) in cash and cash equivalents

Effect of exchange rate changes on cash
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Supplemental cash flow information

Cash paid during the year for:

Interest, net of amounts capitalized
Income taxes, net of refunds

308.7

21.0

6.1

—

—

(38.2)

75.1

8.0

(25.3)

(40.2)

(24.7)

(54.1)

53.6

(54.8)

(18.5)

251.4

—

(188.4)

—

—

—

(4.7)

(0.2)

(6.5)

21.3

300.7

18.4

—

103.7

25.0

(120.8)

48.9

7.4

13.2

(6.4)

33.9

(90.9)

67.1

193.1

2.4

376.8

(4,827.6)

(107.3)

(54.5)

(3.1)

(19.4)

—

—

—

0.7

(178.5)

(5,011.2)

0.7

30.7

(33.8)

(121.1)

—

—

(2.2)

(3.0)

2.5

3.0

—

(123.2)

(50.3)

(26.9)

459.3

3,906.7

38.8

(25.3)

(21.3)

(126.0)

(25.0)

(5.2)

—

1,355.4

—

—

5,098.1

463.7

(4.4)

—

—

—

—

—

—

—

—

—

—

—

—

—

—

29.0

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

9.9

—

—

—

—

9.1

4.5

—

(3.9)

25.8

(19.3)

3.1

(29.9)

(43.8)

(1.7)

(37.7)

—

(2.4)

—

—

—

—

(6.3)

(1.2)

1.6

(8.3)

—

—

—

—

—

—

—

—

—

—

43.0

43.0

(3.0)

—

28.7

382.1 $

459.3 $

— $

25.7 $

110.7

—

—

—

—

9.1

—

—

7.6

(58.9)

5.7

1.4

54.9

36.4

(25.9)

388.8

—

(73.2)

—

—

—

—

(21.6)

0.1

6.5

(88.2)

—

—

(0.7)

—

—

—

—

—

—

—

(289.9)

(290.6)

10.0

(0.1)

18.8

28.7

192.0 $

57.0 $

171.9 $

83.1 $

— $

— $

— $

13.3 $

—

15.9

$

$

$

The accompanying notes are an integral part of these financial statements.

82

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

(1)   GENERAL AND DESCRIPTION OF THE BUSINESS

Axalta Coating Systems Ltd. ("Axalta," the "Company," "we," "our" and "us"), a Bermuda exempted company limited by 
shares formed at the direction of The Carlyle Group L.P. ("Carlyle"), was incorporated on August 24, 2012 for the purpose 
of consummating the acquisition of DuPont Performance Coatings ("DPC"), a business formerly owned by E. I. du Pont 
de Nemours and Company ("DuPont"), including certain assets of DPC and all of the capital stock and other equity 
interests of certain entities engaged in the DPC business (the "Acquisition"). Axalta, through its wholly-owned indirect 
subsidiaries, acquired DPC on February 1, 2013.

The Acquisition

Axalta is a holding company with no business operations or assets other than cash, cash equivalents, certain indemnity 
receivables from DuPont and 100% of the ownership interest of Axalta Coating Systems Dutch Co. Top Coöperatief U.A., 
which itself is a holding company with no operations or assets other than 100% of the capital stock of Axalta Coating 
Systems Dutch Holdings A B.V. ("Dutch A B.V."), which itself is a holding company with no operations or assets other 
than 100% of the capital stock of Axalta Coating Systems Dutch Holdings B B.V. ("Dutch B B.V."). Dutch B B.V., 
together with its indirect wholly-owned subsidiary, Axalta Coating Systems U.S. Holdings, Inc. ("Axalta US Holdings"), 
are co-borrowers under the Senior Secured Credit Facilities and co-issuers of the Senior Notes (each as defined below). 
Our global operations are conducted by indirect wholly-owned subsidiaries and indirect majority-owned subsidiaries.

The purchase price for the Acquisition was funded by (i) an equity contribution of $1,350.0 million into the Company by 
affiliates of Carlyle (the "Equity Contribution"), (ii) proceeds from borrowings under senior secured credit facilities (the 
"Senior Secured Credit Facilities") consisting of a $2,300.0 million Dollar Term Loan facility and a €400.0 million Euro 
Term Loan facility both of which are due February 1, 2020 and (iii) proceeds from the issuance of $750.0 million 
aggregate principal amount of 7.375% senior unsecured notes due 2021 and the issuance of €250.0 million aggregate 
principal amount of 5.750% senior secured notes due 2021 (collectively the "Senior Notes"). The Senior Secured Credit 
Facilities and the Senior Notes are more fully described in Note 22.

Initial Public Offering

On November 14, 2014, the Company completed its initial public offering ("IPO"). In the IPO, certain of the Company’s 
shareholders sold an aggregate of 50,000,000 common shares at a public offering price of $19.50 per share. The 
underwriters also exercised their over-allotment option and purchased an additional 7,500,000 common shares. The 
Company did not receive any proceeds from the sale of common shares in the IPO.

The Business

Axalta is a leading global manufacturer, marketer and distributor of innovative high performance coatings products 
primarily serving the transportation industry. Products are offered in four key end-markets including the refinish 
automotive aftermarket, industrial, light vehicle or automotive original equipment manufacturers ("OEM") market, and 
commercial vehicle market. These products include high performance liquid and powder coatings for motor vehicles 
OEMs, the motor vehicle aftermarket, and general industrial applications, such as coatings for heavy equipment, pipes, 
appliances and electrical insulation. Aftermarket coatings products are marketed using the Standox, Spies Hecker, Cromax 
and Nason brand names. Standox, Spies Hecker and Cromax are focused on the high-end motor vehicle aftermarkets, 
while Nason is primarily focused on economy coating applications.

Axalta is globally operated with manufacturing facilities, sales centers, administrative offices and warehouses located 
throughout the world. Axalta’s operations are primarily located in the United States, Canada, Brazil, Mexico, Austria, 
Belgium, Germany, France, the United Kingdom and China.

(2)   BASIS OF PRESENTATION OF THE CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

The accompanying consolidated balance sheets of Axalta at December 31, 2014 and 2013 and the related consolidated 
statements of operations, consolidated statements of comprehensive income, consolidated statements of cash flows and of 
changes in shareholders' equity for the years ended December 31, 2014 and 2013 and for the period from August 24, 2012 
through December 31, 2012 are labeled as "Successor". The Successor financial statements as of and for the years ended 
December 31, 2014 and 2013 were prepared reflecting acquisition accounting resulting from the Acquisition. The 
consolidated financial statements for the Successor include the accounts of Axalta and its subsidiaries, and entities in 
which a controlling interest is maintained.

83

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

The accompanying combined balance sheet of DPC as of December 31, 2012 and the related combined statements of 
operations and statements of comprehensive income for the period from January 1, 2013 through January 31, 2013 and for 
the year ended December 31, 2012 and consolidated statements of cash flows and of changes in parent company net 
investment for the period from January 1, 2013 through January 31, 2013 and for the year ended December 31, 2012 do 
not include adjustments or transactions attributable to the Acquisition, and are labeled as "Predecessor". As a result of the 
application of acquisition accounting as of the closing date of the Acquisition, the financial statements for the Successor 
periods and the Predecessor periods are presented on a different basis and are, therefore, not comparable.

During the Predecessor periods, DPC operated either as a reportable segment or part of a reportable segment within 
DuPont; consequently, standalone financial statements were not historically prepared for DPC. The accompanying 
combined financial statements of DPC have been prepared from DuPont’s historical accounting records and are presented 
on a standalone basis as if the operations had been conducted independently from DuPont. In this context, prior to presale 
structuring activities occurring in the latter part of 2012, no direct ownership relationship existed among all of the various 
legal entities comprising DPC. Accordingly, DuPont and its subsidiaries’ net investment in these operations is shown in 
lieu of shareholders’ equity in the Predecessor combined financial statements. The Predecessor combined financial 
statements include the historical operations, assets and liabilities of the legal entities that are considered to comprise the 
DPC business.

DPC comprised certain standalone legal entities for which discrete financial information was available, as well as portions 
of legal entities for which discrete financial information was not available (shared entities). Discrete financial information 
was not available for DPC within shared entities as DuPont did not record every transaction at the DPC level, but rather at 
the DuPont corporate level. For shared entities for which discrete financial information was not available, allocation 
methodologies were applied to certain accounts to allocate amounts to DPC as discussed in Note 8.

The Predecessor combined statements of operations include all revenues and costs directly attributable to DPC, including 
costs for facilities, functions and services used by DPC. Costs for certain functions and services performed by centralized 
DuPont organizations were directly charged to DPC based on usage or other allocations methods. The results of 
operations also include allocations of (i) costs for administrative functions and services performed on behalf of DPC by 
centralized staff groups within DuPont, (ii) DuPont’s general corporate expenses, and (iii) certain pension and other 
postretirement benefit costs. As more fully described in Note 14 current and deferred income taxes and related tax 
expense were determined on the standalone results of the DPC operations in each country as if it were a separate taxpayer 
(i.e., following the separate return methodology).

All charges and allocations of cost for facilities, functions and services performed by DuPont organizations were deemed 
paid by DPC to DuPont, in cash, in the period in which the costs were recorded in the Predecessor combined statement of 
operations. Allocations to DPC of current income taxes payable were deemed to have been remitted, in cash, to DuPont in 
the period the related tax expense was recorded. Allocations of current income taxes receivable were deemed to have been 
remitted to DPC, in cash, by DuPont in the period in which the receivable applies only to the extent that a refund of such 
taxes could have been recognized by DPC on a standalone basis under the law of the relevant taxing jurisdiction.

DuPont used a centralized approach to cash management and financing its operations. Accordingly, cash, cash 
equivalents, debt and interest expense were not allocated to DPC in the Predecessor combined financial statements. 
Transactions between DPC and DuPont were accounted for through the parent company net investment. DPC purchased 
materials and services from, and sold materials and services to, DuPont operations not included in the defined scope of 
DPC. Transactions between DuPont and DPC were deemed to be settled immediately through the parent company net 
investment. Cash, cash equivalents, debt and interest expense in the Predecessor combined balance sheet and statement of 
operations represent cash, cash equivalents, debt and interest expense held locally by certain of DPC’s majority owned 
joint ventures. DuPont’s current and long-term debt was not pushed down to the Predecessor combined financial 
statements because it was not specifically identifiable to DPC.

All of the allocations and estimates in the Predecessor combined financial statements were based on assumptions that 
management of DuPont and DPC believed were reasonable. However, the Predecessor combined financial statements 
included herein may not be indicative of the financial position, results of operations and cash flows of the Company in the 
future or if DPC had been a separate, standalone entity during the Predecessor periods presented.

Certain of our joint ventures are accounted for on a one-month lag basis, the effect of which is not material.

84

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

(3)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements of Axalta and its subsidiaries and the combined financial statements of DPC have 
been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). In 
the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair 
presentation of the financial statements have been included.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that 
affect the reported amounts of assets and liabilities at the closing date of the Acquisition and the date of the financial 
statements and the reported amounts of sales and expenses during the period. The estimates and assumptions include, but 
are not limited to, receivable and inventory valuations, fixed asset valuations, valuations of goodwill and identifiable 
intangible assets, including analysis of impairment, valuations of long-term employee benefit obligations, income taxes, 
environmental matters, litigation, stock-based compensation, restructuring, and allocations of costs. Our estimates are 
based on historical experience, facts and circumstances available at the time and various other assumptions that are 
believed to be reasonable. Actual results could differ materially from those estimates.

Accounting for Business Combinations

We account for business combinations under the acquisition method of accounting. This method requires the recording of 
acquired assets, including separately identifiable intangible assets and assumed liabilities at their acquisition date fair 
values. The method records any excess purchase price over the fair value of acquired net assets as goodwill.

The determination of the fair value of assets acquired, liabilities assumed, and noncontrolling interests involves 
assessments of factors such as the expected future cash flows associated with individual assets and liabilities and 
appropriate discount rates at the closing date of the Acquisition. When necessary, we consult with external advisors to 
help determine fair value. For non-observable market values, we determine fair value using acceptable valuation 
principles (e.g., multiple excess earnings, relief from royalty and cost methods).

We included the results of operations from the acquisition date in the financial statements for all businesses acquired.

Principles of Consolidation and Combination

The consolidated financial statements of the Successor ("the Successor statements") include the accounts of Axalta and its 
subsidiaries, and entities in which a controlling interest is maintained. For those consolidated subsidiaries in which the 
Company’s ownership is less than 100%, the outside shareholders’ interests are shown as noncontrolling 
interests. Investments in companies in which Axalta, directly or indirectly, owns 20% to 50% of the voting stock and has 
the ability to exercise significant influence over operating and financial policies of the investee are accounted for using the 
equity method of accounting. As a result, Axalta’s share of the earnings or losses of such equity affiliates is included in the 
accompanying consolidated statement of operations and our share of these companies’ stockholders’ equity is included in 
the accompanying consolidated balance sheet.

The combined financial statements for the Predecessor ("the Predecessor statements") include the combined assets, 
liabilities, revenues, and expenses of DPC.

We eliminated all intercompany accounts and transactions in the preparation of the accompanying consolidated and 
combined financial statements.

On September 4, 2012, the three partners of the DPC majority-owned DuPont Powder Coatings Saudi Company Ltd. 
("DPC Saudi"), a non-US joint venture, signed a new shareholder resolution agreement requiring all partners to 
unanimously agree to all financial decisions and payments of the business. As a result, DPC concluded that consolidating 
DPC Saudi was no longer appropriate due to a lack of financial control in the operations of the business. Consequently, 
DPC deconsolidated the joint venture, and accounted for it under the equity method of accounting in the Predecessor 
statements. This joint venture investment in DPC Saudi was not an asset acquired from DuPont in the Acquisition. The 
deconsolidation of DPC Saudi resulted in a loss of $1.0 million for the year ended December 31, 2012, which was 
recorded in Selling, general and administrative expenses in the combined statement of operations.

85

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

Revenue Recognition

We recognize revenue after completing the earnings process. We recognize revenue for product sales when we ship 
products to the customer in accordance with the terms of the agreement, when there is persuasive evidence of the 
arrangement, title and risk of loss have been transferred, collectability is reasonably assured and pricing is fixed or 
determinable.

For a majority of our product sales, title transfers at the shipping point and delivery is considered complete. For certain 
OEM customers, revenue is recognized at the time the customer applies our coatings to its vehicles, as this represents the 
point in time that risk of loss has been transferred and delivery is considered complete.

We accrue for sales returns and other allowances based on our historical experience.

We incur up-front costs in order to obtain contracts with certain customers. During the Successor periods, we capitalized 
these up-front costs as a component of Other assets. During the Predecessor periods, we capitalized costs as a component 
of Identifiable intangibles, net. We amortize the related amounts over the estimated life of the contract as a reduction of 
net sales.

We include the amounts billed to customers for shipping and handling fees in net sales and costs incurred for the delivery 
of goods as cost of goods sold in the statement of operations.

Recognition for licensing and royalty income occurs in accordance with agreed upon terms, when performance 
obligations are satisfied, the amount is fixed or determinable, and collectability is reasonably assured.

Other Revenue

Other revenue includes various elements of income resulting from the normal operation of our business. Other revenue 
includes, but is not limited to, income for services provided to customers and royalty income.

Cash and Cash Equivalents

Cash equivalents represent highly liquid investments with maturities of three months or less from time of purchase. They 
are carried at cost plus accrued interest, which approximates fair value because of the short-term maturity of these 
instruments. Cash balances may exceed government insured limits in certain jurisdictions. 

Fair Value Measurements

GAAP defines a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The 
hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 
measurements) and the lowest priority to unobservable inputs (Level 3 measurements). A financial instrument’s level 
within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The following valuation techniques are used to measure fair value for assets and liabilities:

Level 1—Quoted market prices in active markets for identical assets or liabilities;

Level 2—Significant other observable inputs (e.g., quoted prices for similar items in active markets, quoted prices for 
identical or similar items in markets that are not active, inputs other than quoted prices that are observable such as interest 
rate and yield curves, and market-corroborated inputs); and

Level 3—Unobservable inputs for the asset or liability, which are valued based on management’s estimates of 
assumptions that market participants would use in pricing the asset or liability.

Derivatives and Hedging

The Company from time to time utilizes derivatives to manage exposures to currency exchange rates and interest rate risk. 
The fair values of all derivatives are recognized as assets or liabilities at the balance sheet date. Changes in the fair value 
of these instruments are reported in income or Accumulated other comprehensive income ("AOCI"), depending on the use 
of the derivative and whether it qualifies for hedge accounting treatment and is designated as such.

Gains and losses on derivatives that qualify and are designated as cash flow hedging instruments are recorded in AOCI, to 
the extent the hedges are effective, until the underlying transactions are recognized in income. 

86

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

Gains and losses on derivatives qualifying and designated as fair value hedging instruments, as well as the offsetting 
losses and gains on the hedged items, are reported in income in the same accounting period. Derivatives not designated as 
hedging instruments are marked-to-market at the end of each accounting period with the results included in income.

Cash flows from derivatives are recognized in the consolidated and combined statements of cash flows in a manner 
consistent with the underlying transactions.

Receivables and Allowance for Doubtful Accounts

Receivables are recognized net of an allowance for doubtful accounts receivable. The allowance for doubtful accounts 
receivable reflects the best estimate of losses inherent in the accounts receivable portfolio determined on the basis of 
historical experience, specific allowances for known troubled accounts and other available evidence. Accounts receivable 
are written down or off when a portion or all of such account receivable is determined to be uncollectible.

Inventories

Inventories of the Successor are valued at the lower of cost or market with cost being determined on the weighted average 
cost method. Elements of cost in inventories include:

•

•

raw materials,

direct labor, and

• manufacturing overhead

Stores and supplies are valued at the lower of cost or market; cost is generally determined by the weighted average cost 
method. Inventories deemed to have costs greater than their respective market values are reduced to net realizable value 
with a loss recorded in income in the period recognized. 

Inventories of the Predecessor were valued at the lower of cost or market with cost determined by the last-in, first-out 
("LIFO") method.

Property, Plant and Equipment

Successor periods

Property, plant and equipment of the Successor acquired in the Acquisition were recorded at fair value as of the 
acquisition date and are depreciated using the straight-line method. Subsequent additions to property, plant and 
equipment, including the fair value of any asset retirement obligations upon initial recognition of the liability, are recorded 
at cost and are depreciated using the straight-line method.  

Software included in property, plant and equipment represents the costs of software developed or obtained for internal 
use. Software costs are amortized on a straight-line basis over their estimated useful lives. Upgrades and enhancements 
are capitalized if they result in added functionality, which enables the software to perform tasks it was previously 
incapable of performing. Software maintenance and training costs are expensed in the period in which they are incurred.

Property, plant and equipment acquired in the Acquisition are depreciated over their estimated remaining useful lives. The 
weighted average estimated remaining useful lives of property, plant and equipment acquired in connection with the 
Acquisition was approximately 11 years. Subsequent additions are either amortized or depreciated on a straight-line basis 
over a range of estimated useful lives.  See Note 18 for a range of estimated useful lives used for each property, plant and 
equipment class.

Predecessor periods

Property, plant and equipment of the Predecessor were carried at cost and were depreciated using the straight-line method. 
Property, plant and equipment placed in service prior to 1995 were depreciated using the sum-of-the-years’ digits method 
or other substantially similar methods. Substantially all Predecessor buildings and equipment were depreciated over useful 
lives ranging from 15 to 25 years.

87

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

Goodwill and Other Identifiable Intangible Assets

Goodwill represents the excess of purchase price over the fair values of underlying net assets acquired in an acquisition. 
Goodwill and indefinite-lived intangible assets are tested for impairment on an annual basis as of October 1; however, 
these tests are performed more frequently if events or changes in circumstances indicate that the asset may be impaired. 
The fair value methodology is based on prices of similar assets or other valuation methodologies including discounted 
cash flow techniques.

When testing goodwill and indefinite-lived intangible assets for impairment, we first have an option to assess qualitative 
factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than 
not (more than 50%) that an impairment exists. Such qualitative factors may include the following: macroeconomic 
conditions; industry and market considerations; cost factors; overall financial performance; and other relevant entity-
specific events. In the event the qualitative assessment indicates that an impairment is more likely than not, we would be 
required to perform a quantitative impairment test, otherwise no further analysis is required.

Under the quantitative goodwill impairment test, the evaluation of impairment involves comparing the current fair value 
of each reporting unit to its carrying value, including goodwill. If the carrying amount of a reporting unit, including 
goodwill, exceeds the estimated fair value, then individual assets (including identifiable intangible assets) and liabilities of 
the reporting unit are estimated at fair value. The excess of the estimated fair value of the reporting unit over the estimated 
fair value of its net assets would establish the implied value of goodwill. The excess of the recorded amount of goodwill 
over the implied value is then charged to earnings as an impairment loss.

Definite-lived intangible assets, such as technology, trademarks, customer relationships and non-compete agreements are 
amortized over their estimated useful lives, generally for periods ranging from four to 20 years. The reasonableness of the 
useful lives of these assets is regularly evaluated. Once these assets are fully amortized, they are removed from the 
balance sheet. We evaluate these assets for impairment whenever events or changes in circumstances indicate that the 
carrying amount of these assets might not be recoverable.

Impairment of Long-Lived Assets

The carrying value of long-lived assets to be held and used is evaluated when events or changes in circumstances indicate 
the carrying value may not be recoverable. The carrying value of a long-lived asset is considered impaired when the total 
projected undiscounted cash flows from the asset are less than its carrying value. In that event, a loss is recognized based 
on the amount by which the carrying value exceeds the fair value of the long-lived asset. The fair value methodology used 
is an estimate of fair market value and is based on prices of similar assets or other valuation methodologies including 
present value techniques. Long-lived assets to be disposed of other than by sale are classified as held for use until their 
disposal. Long-lived assets to be disposed of by sale are classified as held for sale and are reported at the lower of 
carrying amount or fair market value less cost to sell. Depreciation is discontinued for long-lived assets classified as held 
for sale.

Research and Development

Research and development costs incurred in the normal course of business consist primarily of employee-related costs and 
are expensed as incurred. In process research and development projects acquired in a business combination are recorded 
as intangible assets at their fair value as of the acquisition date. Subsequent costs related to acquired in process research 
and development projects are expensed as incurred. Research and development intangible assets are considered indefinite-
lived until the abandonment or completion of the associated research and development efforts. These indefinite-lived 
intangible assets are tested for impairment consistent with the impairment testing performed on other indefinite-lived 
intangible assets discussed above. Upon completion of the research and development process, the carrying value of 
acquired in process research and development projects is reclassified as a finite-lived asset and is amortized over its useful 
life.

Environmental Liabilities and Expenditures

Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of 
the liability can be reasonably estimated. Accrued environmental liabilities are not discounted. Claims for recovery from 
third parties, if any, are reflected separately as an asset. We record recoveries at the earlier of when the gain is probable or 
realized. For the periods ending December 31, 2014, 2013 and 2012, and January 1, 2013 through January 31, 2013, we 
have not recognized any assets or income associated with recoveries from third parties.

88

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

Costs related to environmental remediation are charged to expense in the period incurred. Other environmental costs are 
also charged to expense in the period incurred, unless they increase the value of the property or reduce or prevent 
contamination from future operations, in which case, they are capitalized and depreciated.

Litigation

We accrue for liabilities related to litigation matters when available information indicates that the liability is probable and 
the amount can be reasonably estimated. Legal costs such as outside counsel fees and expenses are charged to expense in 
the period incurred.

Income Taxes

Successor periods

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the 
financial statement carrying amounts of assets and liabilities and their respective tax basis. Deferred tax assets are also 
recognized for operating losses and tax credit carry forwards. Valuation allowances are recorded to reduce deferred tax 
assets when it is more likely than not that a tax benefit will not be realized. Deferred tax assets and liabilities are measured 
using enacted tax rates applicable in the years in which they are expected to be recovered or settled. The effect on deferred 
tax assets and liabilities of a change in tax law is recognized in income in the period that includes the enactment date.

Where we do not intend to indefinitely reinvest earnings of our foreign subsidiaries, we provide for income taxes and 
foreign withholding taxes, where applicable, on undistributed earnings. We do not provide for income taxes on 
undistributed earnings of our foreign subsidiaries that are intended to be indefinitely reinvested.

We recognize the benefit of an income tax position only if it is "more likely than not" that the tax position will be 
sustained. The tax benefits recognized are measured based on the largest benefit that has a greater than 50% likelihood of 
being realized. Additionally, we recognize interest and penalties accrued related to unrecognized tax benefits as a 
component of provision for income taxes. The current portion of unrecognized tax benefits is included in "Income taxes 
payable" and the long-term portion is included in the long-term income tax payable in the consolidated balance sheets.

Predecessor periods

For all Predecessor periods presented, although DPC was included in the consolidated income tax return of DuPont, 
DPC’s income taxes are computed and reported under the "separate return method." Use of the separate return method 
may result in differences when the sum of the amounts allocated to standalone tax provisions are compared with amounts 
presented in combined financial statements. In that event, related deferred tax assets and liabilities could be significantly 
different from those presented herein for the Predecessor periods. Certain tax attributes, e.g., net operating loss 
carryforwards, which were reflected in the DuPont consolidated financial statements may or may not exist at the 
standalone DPC level.

Foreign Currency Translation

Successor periods

The reporting currency is the U.S. dollar. In most cases, our non-U.S. based subsidiaries use their local currency as the 
functional currency for their respective business operations. Assets and liabilities of these operations are translated into 
U.S. dollars at end-of-period exchange rates; income and expenses are translated using the average exchange rates for the 
reporting period. Resulting cumulative translation adjustments are recorded as a component of shareholders’ equity in the 
consolidated balance sheet in Accumulated other comprehensive income (loss).

Gains and losses from transactions denominated in currencies other than the functional currencies are included in the 
consolidated statement of operations in Other expense, net.

89

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

Predecessor periods

The reporting currency is the U.S. dollar. For the Predecessor period, DuPont management determined that the U.S. dollar 
was the functional currency of DPC’s legal entities and this functional currency was appropriate for the economic 
environment in which DPC operated during the period covered by the Predecessor combined financial statements. For 
these legal entities, foreign currency denominated asset and liability amounts were remeasured into U.S. dollars at the 
end-of-period exchange rates. Nonmonetary assets, such as inventories, prepaid expenses, fixed assets and intangible 
assets were remeasured into U.S. dollars at historical exchange rates. Foreign currency denominated income and expense 
elements were remeasured into U.S. dollars at average exchange rates in effect during the year, except for expenses 
related to nonmonetary assets, which were remeasured at historical exchange rates.

Employee Benefits

Successor periods

In connection with the Acquisition, we assumed certain defined benefit plan obligations and related plan assets for current 
employees of non-U.S. subsidiaries and certain defined benefit plan obligations and plan assets of former employees of 
subsidiaries. All defined pension plan obligations for current and former employees in the United States were retained by 
DuPont.

Defined benefit plans specify an amount of pension benefit that an employee will receive upon retirement, usually 
dependent on factors such as age, years of service and compensation. The net obligation in respect of defined benefit plans 
is calculated separately for each plan by estimating the amount of the future benefits that employees have earned in return 
for their service in the current and prior periods. These benefits are then discounted to determine the present value of the 
obligations and are then adjusted for the impact of any unamortized prior service costs. As required by ASC 805, Business 
Combinations, all unamortized prior service costs and actuarial gains (losses) existing at the closing date of the 
Acquisition were eliminated in the determination of the fair value of the pension funded status at acquisition. The net 
obligation is then determined with reference to the fair value of the plan assets (if any). The discount rate used is the yield 
on bonds that are denominated in the currency in which the benefits will be paid and that have maturity dates 
approximating the terms of the obligations. The calculations are performed by qualified actuaries using the projected unit 
credit method.

Predecessor periods

Certain of DPC’s employees participated in defined benefit pension and other long-term employee benefit plans (the 
Plans) accounted for in accordance with ASC 715, Compensation—Retirement Benefits. Certain DPC employees were 
previously covered under DuPont and DuPont subsidiaries’ sponsored plans which were accounted for in accordance with 
accounting guidance in ASC 715. The majority of pension and other long-term employee expenses during the Predecessor 
periods were specifically identified by employee. In addition, a portion of expenses was allocated in shared entities and 
reported within costs of goods sold, selling, general and administrative and research and development expenses in the 
combined statements of operations. For the U.S. pension plan and other long-term employee benefit plans (the U.S. 
plans), DuPont considered DPC employees to be part of a multiemployer plan of DuPont. The expense related to the 
current and former employees of DPC is included in the Predecessor combined financial statements. Non-U.S. pensions 
and other long-term employee benefit plans (the non-U.S. plans) were accounted for as single employer plans where DPC 
recorded assets, liabilities and expenses related to the current DPC workforce.

Stock-Based Compensation

Successor periods

Our stock-based compensation for the Successor period, comprised of Axalta stock options, is measured at fair value on 
the grant date or date of modification, as applicable. We recognize compensation expense on a graded-vesting attribution 
basis over the requisite service period.

Predecessor periods

DuPont maintained certain stock compensation plans for the benefit of certain of its officers, directors and employees, 
including DPC’s employees in the Predecessor periods. DPC accounted for all share-based payments to employees, 
including grants of stock options, based upon their fair values.

90

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

For additional information on our stock-based compensation plan, see Note 11.

Earnings per Common Share

Basic earnings per common share is computed by dividing net income attributable to Axalta’s common shareholders by 
the weighted average number of shares outstanding during the period. Diluted earnings per common share is computed by 
dividing net income attributable to Axalta’s common shareholders by the weighted average number of shares outstanding 
during the period increased by the number of additional shares that would have been outstanding related to potentially 
dilutive securities; anti-dilutive securities are excluded from the calculation. These potentially dilutive securities are 
calculated under the treasury stock method and consist of stock options.

(4)  RECENT ACCOUNTING GUIDANCE

Recently Adopted Accounting Guidance

In April 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 
2014-08, "Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity", which amended 
the guidance for reporting discontinued operations and disposals of components of an entity. The amended guidance 
requires that a disposal representing a strategic shift that has (or will have) a major effect on an entity’s financial results or 
a business activity classified as held for sale should be reported as discontinued operations. The amendments also expand 
the disclosure requirements for discontinued operations and add new disclosures for individually significant dispositions 
that do not qualify as discontinued operations. The amendments are effective prospectively for fiscal years, and interim 
reporting periods within those years, beginning after December 15, 2014 and early adoption is permitted. We have 
adopted this guidance as of December 31, 2014.

In February 2013, the FASB issued ASU 2013-02, "Comprehensive Income (Topic 220): Reporting of Amounts 
Reclassified Out of Accumulated Other Comprehensive Income," issuing changes to the reporting of amounts reclassified 
out of accumulated other comprehensive income. These changes require an entity to report the effect of significant 
reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount 
being reclassified is required to be reclassified in its entirety to net income. For other amounts that are not required to be 
reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other 
disclosures that provide additional detail about those amounts. These requirements are to be applied to each component of 
accumulated other comprehensive income. This guidance is effective prospectively for annual reporting periods beginning 
on or after January 1, 2014, and the interim periods within those annual periods. We have included the additional 
disclosures requirements within Note 26.

Accounting Guidance Issued But Not Yet Adopted

In May 2014, the FASB issued ASU 2014-09 (Accounting Standard Codification 606), "Revenue from Contracts with 
Customers", which sets forth the guidance that an entity should use related to revenue recognition. This ASU is effective 
for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is not 
permitted. We are in the process of assessing the impact the adoption of this ASU will have on our financial position, 
results of operations and cash flows.

(5)  ACQUISITIONS AND DIVESTITURES

Acquisition of DuPont Performance Coatings

On August 30, 2012, we entered into a purchase agreement with DuPont whereby, Axalta acquired from DuPont and its 
affiliates certain assets of DPC and all of the capital stock and other equity interests of certain entities engaged in the DPC 
business (the "Acquisition Agreement") pursuant to which we acquired the assets and legal entities of DPC from DuPont 
for a purchase price of $4,925.9 million plus or minus a working capital adjustment and pension adjustment. Axalta and 
DuPont finalized the working capital and pension adjustments to the purchase price which resulted in a reduction to the 
purchase price of $18.6 million to $4,907.3 million.

We accounted for the Acquisition as a business combination in accordance with ASC 805, Business Combinations, using 
the acquisition method of accounting. At December 31, 2013, the amounts presented for the Acquisition were finalized.

91

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

The following table summarizes the fair values of the net assets acquired as of the February 1, 2013 Acquisition date 
adjusted for measurement period adjustments:

Cash and cash equivalents
Accounts and notes receivable—trade
Inventories
Prepaid expenses and other
Property, plant and equipment
Identifiable intangibles
Other assets—noncurrent
Accounts payable
Other accrued liabilities
Other liabilities
Deferred income taxes
Noncontrolling interests
Net assets acquired before goodwill on acquisition
Goodwill on acquisition
Net assets acquired

February 1, 2013
(As Initially
Reported)

Measurement
Period
Adjustments

February 1, 2013
(As Adjusted)

$

$

79.7 $

855.8
673.0
8.2
1,707.7
1,539.3
98.8
(409.1)
(232.0)
(331.1)
(312.9)
(66.7)
3,610.7
1,315.2
4,925.9 $

— $

22.7
3.0
(1.3)
(1.8)
(19.0)
19.1
(6.9)
7.5
(35.3)
223.2
—
211.2
(229.8)
(18.6) $

79.7
878.5
676.0
6.9
1,705.9
1,520.3
117.9
(416.0)
(224.5)
(366.4)
(89.7)
(66.7)
3,821.9
1,085.4
4,907.3

The measurement period adjustments reflect new information obtained about facts and circumstances that existed at the 
closing date of the Acquisition, primarily related to indemnification assets, inventories, other miscellaneous current assets 
and liabilities, property, plant and equipment, intangible assets, and the related deferred income taxes. No measurement 
period adjustments had a material impact on the statement of operations or cash flows requiring retrospective application.

Goodwill was recognized for the Acquisition as the excess of the purchase price over the net identifiable assets 
recognized. The Goodwill is primarily attributed to our assembled workforce, corporate and operational synergies and the 
going concern value of the anticipated future economic benefits associated with DPC being operated as a standalone 
entity. The goodwill recognized at December 31, 2014 that is expected to be deductible for income tax purposes is $708.0 
million.

The fair values of intangible assets were estimated using either the income approach, the excess earnings method 
(customer relationships) or the relief from royalty method (technology and trademarks). Under the excess earnings 
method, an intangible asset’s fair value is equal to the present value of the incremental after-tax cash flows attributable 
solely to the intangible asset over its remaining useful life. Under the relief from royalty method, fair value is measured by 
estimating future revenue associated with the intangible asset over its useful life and applying a royalty rate to the revenue 
estimate. These intangible assets enable us to develop new products to meet the evolving business needs as well as 
competitively produce our existing products.

The fair value of real properties acquired was based on the consideration of their highest and best use in the market. The 
fair values of property, plant, and equipment, other than real properties, were based on the consideration that unless 
otherwise identified, they will continue to be used "as is" and as part of the ongoing business. In contemplation of the in-
use premise and the nature of the assets, the fair value was developed primarily using a cost approach. The determination 
of the fair value of assets acquired and liabilities assumed involves assessing factors such as the expected future cash 
flows associated with individual assets and liabilities and appropriate discount rates at the date of the acquisition.

The fair value of the noncontrolling interests, related to acquired joint ventures, were estimated by applying an income 
approach. This fair value measurement is based on significant inputs that are not observable in the market and thus 
represents a fair value measurement categorized within Level 3 of the fair value hierarchy. Key assumptions included a 
discount rate, a terminal value based on a range of long-term sustainable growth rates and adjustments because of the lack 
of control that market participants would consider when measuring the fair value of the noncontrolling interests.

92

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

The Company was formed on August 24, 2012 for the purpose of consummating the Acquisition of DPC and, 
consequently has no financial statements as of and for periods prior to that date. Prior to the Acquisition, we generated no 
revenue and incurred no expenses other than merger and acquisition costs and debt financing costs in anticipation of the 
Acquisition. We incurred merger and acquisition related costs of $29.0 million which were expensed during the Successor 
period August 24, 2012 through December 31, 2012 and incurred debt financing costs of $4.6 million which were 
recorded as Other assets and Other accrued liabilities as of December 31, 2012 (Successor). The $33.6 million of merger 
and acquisition related costs and debt financing costs incurred were accrued as a component of Other accrued liabilities at 
December 31, 2012 (Successor). The amounts were paid at closing of the Acquisition with proceeds from the borrowings 
under the Senior Secured Credit Facilities.

The following unaudited supplemental pro forma information presents the financial results as if the acquisition of DPC 
had occurred at January 1, 2012. This supplemental pro forma information has been prepared for comparative purposes 
and does not purport to be indicative of what would have occurred had the acquisition been made at January 1, 2012, nor 
is it indicative of any future results.

 (in millions, except per share data)
Net sales
Net loss
Net loss attributable to controlling interests
Earnings per share (Basic and Diluted)

Year Ended December 31,

2013

2012

$
$
$
$

4,277.3 $
(87.1) $
(93.7) $
(0.41) $

4,219.4
(270.1)
(274.6)
—

The 2013 supplemental pro forma net loss was adjusted to exclude $53.1 million ($43.5 million, net of pro forma income 
tax impact) of acquisition-related costs incurred in 2013 and $123.1 million ($88.6 million, net of pro forma income tax 
impact) of non-recurring expense consisting primarily of $103.7 million related to the fair market value adjustment to 
acquisition-date inventory. The 2012 supplemental pro forma net loss was adjusted to include these charges.

Dispositions

In September 2014, we completed the sale of a business within the Performance Coatings reportable segment, which 
primarily included technology that had been developed as an integrated software solution for the collision repair supply 
chain market.

The sale resulted in the receipt of $17.5 million during the year ended December 31, 2014. As a result, we recognized a 
pre-tax gain on sale of $1.2 million ($0.7 million after tax) recorded within Other expense, net for the year ended 
December 31, 2014.

93

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

(6)  GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS

Goodwill

The following table shows changes in the carrying amount of goodwill for the Successor years ended December 31, 2014 
and 2013 by reportable segment:

At January 1, 2013
Goodwill resulting from Acquisition
Foreign currency translation
At December 31, 2013
Purchase accounting adjustments
Divestitures
Foreign currency translation
December 31, 2014

Performance
Coatings

Transportation
Coatings

Total

$

$

$

— $

1,012.5
26.3
1,038.8 $
5.7
(4.7)
(106.2)
933.6 $

— $

72.9
1.9
74.8 $
0.4
—
(7.7)
67.5 $

—
1,085.4
28.2
1,113.6
6.1
(4.7)
(113.9)
1,001.1

During the Successor year ended December 31, 2014, we identified and recorded purchase accounting adjustments of $6.1 
million related to corrections subsequent to the end of the purchase accounting measurement period.  

The following table shows changes in the carrying amount of goodwill for the Predecessor year ended December 31, 2012 
and the Predecessor period from January 1, 2013 to January 31, 2013 by reportable segment:

At January 1, 2012
Foreign currency translation
December 31, 2012
Foreign currency translation
January 31, 2013

Performance
Coatings

Transportation
Coatings

Total

$

$

$

517.9 $
—
517.9 $
—
517.9 $

70.9 $
—
70.9 $
—
70.9 $

588.8
—
588.8
—
588.8

94

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

Identifiable Intangible Assets

The following table summarizes the gross carrying amounts and accumulated amortization of identifiable intangible assets 
by major class:

December 31, 2014
Technology
Trademarks - indefinite-lived
Trademarks - definite-lived
Customer relationships
Non-compete agreements
Total

December 31, 2013
Technology
Trademarks—indefinite-lived
Trademarks—definite-lived
Customer relationships
Non-compete agreements
Total

Gross Carrying
Amount

Accumulated
Amortization

Net Book
Value

Weighted average
amortization periods 
(years)

411.8 $
284.4
41.8
713.9
2.0
1,453.9 $

(76.3) $
—
(5.5)
(71.3)
(0.8)
(153.9) $

335.5
284.4
36.3
642.6
1.2
1,300.0

10.0
Indefinite
14.8
19.4
4.6

Gross Carrying
Amount

Accumulated
Amortization

Net Book
Value

Weighted average
amortization periods 
(years)

425.2 $
284.4
41.7
761.9
1.5
1,514.7 $

(37.3) $
—
(2.6)
(34.9)
(0.3)
(75.1) $

387.9
284.4
39.1
727.0
1.2
1,439.6

10.0
 Indefinite
14.8
19.4
4.0

$

$

$

$

Activity related to in process research and development projects for the successor years ended December 31, 2013 and 
2014:

In Process Research and Development
Balance at February 1, 2013
Completed
Abandoned
Balance at December 31, 2013
Completed
Abandoned
Balance at December 31, 2014

Activity

25.4
(6.5)
(3.2)
15.7
(10.4)
(0.1)
5.2

$

$

$

In the Successor years ended December 31, 2014 and 2013, amortization expense for acquired intangibles was $83.8 
million and $79.9 million, respectively. Amortization expense for the years ended December 31, 2014 and 2013 included 
losses of $0.1 million and $3.2 million, respectively, associated with abandoned acquired in process research and 
development projects, all of which was related to the Acquisition.

Amortization expense for the Predecessor period from January 1, 2013 through January 31, 2013 and the Predecessor year 
ended December 31, 2012 was $2.6 million and $25.7 million, respectively, which were primarily reported as a reduction 
in net sales.

95

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

The estimated amortization expense related to the fair value of acquired intangible assets for each of the succeeding five 
years is:

2015
2016
2017
2018
2019

(7)  RESTRUCTURING

Successor Periods

$
$
$
$
$

81.6
81.6
81.1
81.0
81.0

In accordance with the applicable guidance for Nonretirement Postemployment Benefits, we accounted for termination 
benefits and recognized liabilities when the loss was considered probable that employees were entitled to benefits and the 
amounts could be reasonably estimated.

Since the Acquisition date, we have incurred costs associated with involuntary termination benefits associated with 
corporate-related initiatives associated with our transition and cost-saving opportunities related to the separation from 
DuPont. During the Successor years ended December 31, 2014 and 2013 we incurred restructuring costs of $8.5 million 
and $120.7 million, respectively. These amounts are recorded within selling, general, and administrative expenses in the 
consolidated statements of operations. The payments associated with these actions are expected to be completed by 
December 2015.

The following tables summarize the activities related to the restructuring reserves, recorded within other accrued 
liabilities, and expenses for the Successor years ended December 31, 2013 and 2014:

Balance at February 1, 2013 (At acquisition date)
Expense recorded
Payments
Foreign currency translation
Balance at December 31, 2013

Balance at December 31, 2013
Expense Recorded
Payments Made
Foreign Currency Changes
Balance at December 31, 2014

Predecessor Periods

2013 Activity
0.5
$
120.7
(23.7)
0.9
98.4

$

2014 Activity
98.4
$
8.5
(51.6)
(6.8)
48.5

$

There was no expense recorded during the Predecessor periods January 1, 2013 through January 31, 2013 associated with 
restructuring. At December 31, 2012 of the Predecessor period, total liabilities relating to restructuring activities were $2.1 
million. For the Predecessor year ended December 31, 2012 there were reductions in expense resulting from changes in 
estimates of $0.3 million.  

96

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

(8)  RELATIONSHIP WITH DUPONT

Predecessor Periods

Historically, the DPC businesses were managed and operated in the normal course of business with other affiliates of 
DuPont. Accordingly, certain shared costs were allocated to DPC and reflected as expenses in the standalone Predecessor 
combined financial statements. Management of DuPont considered the allocation methodologies used to be reasonable 
and appropriate reflections of the historical DuPont expenses attributable to DPC for purposes of the standalone combined 
financial statements of DPC; however, the expenses reflected in the Predecessor combined financial statements may not 
be indicative of the actual expenses that would have been incurred during the periods presented if DPC had operated as a 
separate, standalone entity. In addition, the expenses reflected in the Predecessor combined financial statements may not 
be indicative of related expenses that will be incurred in the future by us.

Cash Management and Financing

Except for its joint ventures, DPC participated in DuPont’s centralized cash management and financing programs. 
Disbursements were made through centralized accounts payable systems which were operated by DuPont, while cash 
receipts were transferred to centralized accounts maintained by DuPont. As cash was disbursed and received by DuPont, it 
was accounted for by DPC through the parent company net investment. All short and long-term debt requirements of the 
DPC business were financed by DuPont and financing decisions for wholly owned subsidiaries and majority owned joint 
ventures were determined by DuPont’s central treasury operations.

Allocated Corporate Costs

The Predecessor combined financial statements include significant transactions with DuPont involving leveraged 
functional services (such as information systems, accounting, other financial services, purchasing and legal) and general 
corporate expenses that were provided to DPC by centralized DuPont organizations. Throughout the Predecessor periods 
covered by the combined financial statements of DPC, the costs of these leveraged functions and services were directly 
charged or allocated to DPC using methods management believes were reasonable. The methods for directly charging 
specifically identifiable functions and services to DPC included negotiated usage rates and dedicated employee 
assignments. The method for allocating shared leveraged functional services to DPC was based on proportionate formulas 
involving controllable fixed costs and in certain instances was allocated to DPC based on demand. Controllable fixed 
costs are fixed costs less depreciation and amortization and nonrecurring transactions. The methods for allocating general 
corporate expenses to DPC were based on revenue. However, the expenses reflected in the Predecessor combined 
financial statements may not be indicative of the actual expenses that would have been incurred during the periods 
presented if DPC had operated as a separate, standalone entity.

The allocated leveraged functional service expenses and general corporate expenses included in cost of goods sold, 
selling, general, and administrative expenses and research and development expenses in the Predecessor combined 
statement of operations were as follows:

Predecessor

Period from 
January 1, 2013 
through
January 31, 2013

Year Ended
December 31, 2012
224.7
21.6
2.2
248.5

14.2 $
1.4
0.1
15.7 $

Cost of goods sold
Selling, general, and administrative expenses
Research and development expenses
Total

$

$

97

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

Allocated leveraged functional service expenses and general corporate expenses are recorded in the Predecessor combined 
statement of operations as follows:

Leveraged functional services
General corporate expenses
Total

Shared Sites

Predecessor

Period from
January 1, 2013
through January 31,
2013

$

$

14.2 $
1.5
15.7 $

Year Ended
December 31, 2012
226.4
22.1
248.5

DPC conducted manufacturing operations at 35 plant sites globally. DPC shared three of these plant sites with other non-
DPC DuPont manufacturing operations. Additionally, DPC shared warehouse, sales centers, office space, and research and 
development facilities with other DuPont businesses. In general, the property, plant, and equipment primarily or 
exclusively used by DPC for these shared locations are included in the Predecessor combined balance sheet.

The full historical cost, accumulated depreciation and depreciation expense for assets at shared manufacturing plant sites 
and other facilities where DPC was the primary or exclusive user of the assets have been included in the Predecessor 
combined balance sheet and statement of operations. Accordingly, when the use of a DPC primary asset was shared with a 
non-DPC DuPont business (manufacturing or otherwise), the cost for the non-DPC usage was deemed to have been 
charged to the non-DPC business. The amounts credited to cost of goods sold in the Predecessor combined statement of 
operations for the use of a DPC primary asset by non-DPC businesses, were less than $0.3 million for the Predecessor 
period from January 1, 2013 through January 31, 2013 and $1.0 million for the Predecessor year ended December 31, 
2012.

At shared manufacturing plant sites and other facilities where DPC was not the primary or exclusive user of the assets, the 
assets were excluded from the Predecessor combined balance sheet. Accordingly, where DPC used these shared assets, 
DPC was deemed to have been charged a cost for its usage of these shared assets by the other DuPont businesses. The 
amounts charged to the cost of goods sold in the Predecessor combined statement of operations for the DPC usage of the 
shared assets were less than $0.2 million for the Predecessor period from January 1, 2013 through January 31, 2013 and 
$0.4 million for the Predecessor year ended December 31, 2012.

Purchases from and Sales to Other DuPont Businesses

Throughout the Predecessor periods covered by the Predecessor combined financial statements, DPC purchased materials 
(Titanium Dioxide and DuPont Sontara® maintenance wipes) from DuPont and its non-DPC businesses.

Purchases include the following amounts:

Predecessor

DPC purchases of products from other DuPont businesses

$

Period from
January 1, 2013
through January 31,
2013

Year Ended
December 31, 2012
91.7

7.9 $

There were no material sales to other DuPont businesses during the periods covered by the Predecessor combined 
financial statements.

98

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

(9)  COMMITMENTS AND CONTINGENCIES

Guarantees

In connection with the Acquisition, we assumed certain guarantee obligations which directly guarantee various debt 
obligations under agreements with third parties related to the following: equity affiliates, customers, suppliers and other 
affiliated companies.

At December 31, 2014 and 2013, we had directly guaranteed $2.2 million and $1.6 million of such obligations, 
respectively. These guarantees represent the maximum potential amount of future (undiscounted) payments that we could 
be required to make under the guarantees in the event of default by the guaranteed parties. No amounts were accrued at 
December 31, 2014 and 2013.

Product Warranty

We warrant that our products meet standard specifications. Our product warranty liability at December 31, 2014 and 2013 
was $0.5 million and $0.6 million, respectively. Estimates for warranty costs are based on historical claims experience.

Operating Lease Commitments

We use various leased facilities and equipment in our operations. The terms for these leased assets vary depending on the 
lease agreement. Net rental expense under operating leases were $61.6 million and $50.0 million for the Successor years 
ended December 31, 2014 and 2013, respectively. Net rental expense under operating leases was $4.6 million and $43.6 
million for the Predecessor period from January 1, 2013 through January 31, 2013 and the Predecessor year ended 
December 31, 2012, respectively.

At December 31, 2014, future minimum payments under non-cancelable operating leases were as follows over each of the 
next five years and thereafter:

2015
2016
2017
2018
2019
Thereafter
Total minimum payments

Other

Operating
Leases

50.6
35.5
27.6
24.5
22.7
47.7
208.6

$

$

We are subject to various pending lawsuits and other claims including civil, regulatory, and environmental matters. 
Certain of these lawsuits and other claims may impact us. These litigation matters may involve indemnification 
obligations by third parties and/or insurance coverage covering all or part of any potential damage awards against DuPont 
and/or us. All of the above matters are subject to many uncertainties and, accordingly, we cannot determine the ultimate 
outcome of the lawsuits at this time.

The potential effects, if any, on the consolidated financial statements of Axalta will be recorded in the period in which 
these matters are probable and estimable, and such effects, could be material.

In addition to the aforementioned matters, we are party to various legal proceedings in the ordinary course of business. 
Although the ultimate resolution of these various proceedings cannot be determined at this time, management does not 
believe that such proceedings, individually or in the aggregate, will have a material adverse effect on the consolidated 
financial statements of Axalta.

99

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

(10)  LONG-TERM EMPLOYEE BENEFITS

Defined Benefit Pension and Other Long-Term Employee Benefits Plans

Successor period

Defined Benefit Pensions

In connection with the Acquisition, we assumed certain defined benefit plan obligations for both current and former 
employees of our non-U.S. subsidiaries. All defined benefit pension plan obligations for current and former employees in 
the U.S. were retained by DuPont.

The defined benefit obligations for remaining current employees of non-U.S. subsidiaries assumed by Axalta were carved 
out of defined benefit pension plans retained by DuPont, where required. We have created new defined benefit pension 
plans for all effected participants. The Acquisition Agreement required DuPont to transfer assets generally in the form of 
cash, insurance contracts or marketable securities from DuPont’s funded defined benefit pension plans to our defined 
benefit pension plans within 180 days of the closing date of the Acquisition. The determination of asset transfers has been 
completed at December 31, 2014 for all plans except the plan covering our Canadian employees.

During the Predecessor period, DuPont had accounted for the benefit obligations of all the defined benefit plans as though 
the employees were participants in a multiemployer plan in the Predecessor period. For multiemployer plans, ASC 805, 
Business Combinations, requires an obligation to the plan for a portion of its unfunded benefit obligations to be 
established at the acquisition date when withdrawal from the multiemployer plan is probable. As withdrawal from the 
DuPont defined benefit pension plan and related transfer of plan assets was required pursuant to the Acquisition 
Agreement, an estimate of the unfunded benefit obligations was recorded as of the Acquisition date. The plan assets have 
been or will be directly transferred to the pension trust. Accordingly, assumed defined benefit obligations are presented 
net of the plan assets transferred, or to be transferred in the case of Canada, by DuPont.

Other Long-Term Employee Benefits

We also assumed in connection with the Acquisition certain long-term employee health care and life insurance benefits for 
certain eligible employees in Canada and Brazil. These programs require retiree contributions based on retiree-selected 
coverage levels for certain retirees.

Predecessor period

DuPont offered various long-term benefits to its employees. DuPont offered U.S. plans that were shared amongst its 
businesses. In these cases, the costs, assets, and liabilities of participating employees in these plans are reflected in the 
Predecessor combined financial statements as though DPC participated in a multiemployer plan. The total cost of the plan 
was determined by actuarial valuation and the business received an allocation of the cost of the plan based upon several 
factors, including a percentage of salaries, headcount and fixed costs.

For the non-U.S. plans, the Predecessor combined financial statements have been prepared as though the DPC employees 
who participated in the non-U.S. plans were considered separate plans. As such a portion of DuPont’s liabilities, assets 
and expenses are included in the Predecessor combined financial statements. Pension asset allocation for funded plans 
outside of the U.S. was based on either predominant local country calculation, or in other cases, by relative benefit 
obligation of the standalone DPC plan.

Defined Benefit Pensions

DuPont had both funded and unfunded noncontributory defined benefit pension plans covering a majority of the 
U.S. employees hired before January 1, 2007, including U.S. employees of DPC. The benefits under these plans were 
based primarily on years of service and employees’ pay near retirement. DuPont’s funding policy was consistent with the 
funding requirements of federal laws and regulations.

Pension coverage for employees of DuPont’s non-U.S. subsidiaries was provided, to the extent deemed appropriate, 
through separate plans. Obligations under such plans were funded by depositing funds with trustees, covered by insurance 
contracts, or were unfunded.

100

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

Other Long-Term Employee Benefits

DuPont and its Canadian and Brazilian subsidiaries provided medical, dental and life insurance benefits to pensioners and 
survivors, and disability and life insurance protection to employees. The associated plans for retiree benefits were 
unfunded and the cost of the approved claims was paid from DuPont funds. Essentially all of the cost and liabilities for 
these retiree benefit plans were attributable to DuPont’s U.S. plans. The retiree medical plan was contributory with 
pensioners and survivors’ contributions adjusted annually to achieve a 50/50 target sharing of cost increases between 
DuPont and pensioners and survivors. In addition, limits were applied to DuPont’s portion of the retiree medical cost 
coverage. U.S. employees hired after December 31, 2006 were not eligible to participate in the postretirement medical, 
dental and life insurance plans.

Employee life insurance and disability benefit plans were insured in many countries. However, primarily in the U.S., such 
plans were generally self-insured or were fully experience rated. Expenses for self-insured and fully experience rated 
plans are reflected in the Predecessor combined financial statements.

Participation in the U.S. Plans

DPC participated in DuPont’s U.S. plans as though they were participants in a multiemployer plan with the other 
businesses of DuPont. The following table presents pension expense allocated by DuPont to DPC for DuPont’s significant 
plans in which DPC participated.

Plan Name
DuPont Pension and Retirement Plan
All Other Plans

Predecessor

January 1,
2013
through
January 31,
2013

Year Ended
December 31,
2012

4.2 $
0.7 $

40.6
16.7

EIN/
Pension Number

51-0014090/001 $
$

101

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

Obligations and Funded Status

The measurement date used to determine defined benefit and other long-term employee benefit obligations was 
December 31. The following table sets forth the changes to the projected benefit obligations ("PBO") and plan assets for 
the Successor year ended December 31, 2014 and 2013 and the funded status and amounts recognized in the 
accompanying consolidated balance sheets at December 31, 2014 and 2013 for the Company’s defined benefit pension 
and other long-term benefit plans:

Obligations and Funded Status
Change in benefit obligation:

Projected benefit obligation at beginning of year
Fair value of assumed obligation at Acquisition date
Service cost
Interest cost
Participant contributions
Actuarial losses (gains)—net
Plan curtailments and settlements
Benefits paid
Amendments
Currency translation adjustment
Projected benefit obligation at end of year
Change in plan assets:

Fair value of plan assets at beginning of year
Fair value of plan assets at Acquisition date
Actual return on plan assets
Employer contributions
Participant contributions
Benefits paid
Settlements
Currency translation adjustment
Fair value of plan assets at end of year
Funded status, net

Amounts recognized in the consolidated balance sheets consist of:

Other assets
Other accrued liabilities
Accrued pension and other long-term employee benefits

Net amount recognized

Defined Benefits

Successor

Other Long-Term Employee
Benefits

Successor

Year Ended December 31,

Year Ended December 31,

2014

2013

2014

2013

$

$

$

$

603.0 $
—
15.4
22.9
1.0
85.8
(16.3)
(30.1)
(4.3)
(64.3)
613.1

281.3
—
26.5
40.9
1.0
(30.1)
(2.7)
(22.4)
294.5
(318.6) $

0.1 $

(12.4)
(306.3)
(318.6) $

— $

579.5
17.0
21.2
1.0
(5.8)
(1.4)
(20.7)
(0.4)
12.6
603.0

—
250.7
16.0
28.6
1.0
(20.7)
(0.6)
6.3
281.3
(321.7) $

0.2 $

(13.3)
(308.6)
(321.7) $

4.6 $
—
0.1
0.1
—
1.1
—
—
(5.7)
(0.1)
0.1

—
—
—
—
—
—
—
—
—
(0.1) $

— $
—
(0.1)
(0.1) $

—
5.2
0.2
0.2
—
(0.7)
—
—
—
(0.3)
4.6

—
—
—
—
—
—
—
—
—
(4.6)

—
—
(4.6)
(4.6)

The PBO is the actuarial present value of benefits attributable to employee service rendered to date, including the effects 
of estimated future pay increases. The accumulated benefit obligation ("ABO") is the actuarial present value of benefits 
attributable to employee service rendered to date, but does not include the effects of estimated future pay increases.

102

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

The following table reflects the ABO for all defined benefit pension plans as of December 31, 2014 and 2013. Further, the 
table reflects the aggregate PBO, ABO and fair value of plan assets for pension plans with PBO in excess of plan assets 
and for pension plans with ABO in excess of plan assets.

ABO
Plans with PBO in excess of plan assets:

PBO
ABO
Fair value plan assets

Plans with ABO in excess of plan assets:

PBO
ABO
Fair value plan assets

Successor

Year Ended December 31,

2014

2013

559.4 $

541.5

606.2 $
553.2 $
287.5 $

602.0 $
550.9 $
285.1 $

595.7
534.9
273.8

537.8
488.9
227.2

$

$
$
$

$
$
$

The pretax amounts not yet reflected in net periodic benefit cost and included in Accumulated other comprehensive 
income (loss) include the following:

Defined Benefits:

Accumulated net actuarial gains (losses)
Accumulated prior service (cost) credit

Total

Other Long-Term Employee Benefits:

Accumulated net actuarial gains (losses)
Accumulated prior service (cost) credit

Total

Successor

Year Ended December 31,

2014

2013

(52.6) $
4.3
(48.3) $

Successor

Year Ended December 31,

2014

2013

(0.4) $
4.1
3.7 $

10.0
0.4
10.4

0.6
—
0.6

$

$

$

$

The accumulated actuarial gains (losses), net for pensions and other long-term employee benefits relate primarily to 
differences between the actual net periodic expense and the expected net periodic expense resulting from differences in 
the significant assumptions, including primarily return on assets, discount rates and healthcare trends, used in these 
estimates.

The estimated pre-tax amounts that are expected to be amortized from Accumulated other comprehensive income (loss) 
into net periodic benefit cost during 2015 for the defined benefit plans and other long-term employee benefit plans is as 
follows:

2015

Amortization of net actuarial gains (losses)
Amortization of prior service (cost) credit

Total

$

$

103

Defined Benefits

Other Long-Term
Employee Benefits
—
4.1
4.1

(1.1) $
0.3
(0.8) $

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

Components of Net Periodic Benefit Cost

The following table sets forth the components of net periodic benefit costs for the Successor years ended December 31, 
2014 and 2013 and the Predecessor year ended December 31, 2012. 

Pension Benefits

Successor

Predecessor

Year Ended December 31,

Period from
August 24,
2012
through
December 31,

Period from
January 1,
2013
through
January 31,

Year Ended
December 31,

2014

2013

2012

2013

2012

Components of net periodic benefit cost and amounts
recognized in other comprehensive (income) loss:

Net periodic benefit (credit) cost:

Service cost

Interest cost

Expected return on plan assets

Amortization of actuarial (gain) loss, net

Amortization of prior service cost

Curtailment gain

Settlement loss

Net periodic benefit cost

Changes in plan assets and benefit obligations

recognized in other comprehensive (income) loss:

Net actuarial (gain) loss, net

Amortization of actuarial gain (loss), net

Prior service benefit

Amortization of prior service cost

Curtailment gain

Settlement loss

Net translation adjustment

Total (gain) loss recognized in other

comprehensive income

Total recognized in net periodic benefit cost
and other comprehensive (income) loss

$

15.4 $

17.0 $

— $

1.6 $

22.9
(14.8)
(0.3)
—
(7.3)
0.1

16.0

60.6

0.3
(4.3)
—

7.3
(0.1)
(4.9)

21.2
(11.9)
—

—

—

—

26.3

(10.6)
—
(0.4)
—

—

—

0.6

58.9

(10.4)

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

1.8
(1.9)
1.1

—

—

—

2.6

—
(1.1)
—

—

—

—

—

14.8

22.0
(18.4)
5.2

0.2

—

3.9

27.7

112.7
(5.2)
(0.3)
(0.2)
—
(3.9)
—

(1.1)

103.1

$

74.9 $

15.9 $

— $

1.5 $

130.8

104

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

Other Long-Term Employee Benefits

Successor

Predecessor

Year Ended December 31,

Period from
August 24,
2012
through
December 31,

Period from
January 1,
2013
through
January 31,

Year Ended
December 31,

2014

2013

2012

2013

2012

$

0.1 $

0.2 $

— $

— $

0.1

0.1
(1.4)
(1.1)

(4.6)
(0.1)
—

1.4

—

(3.3)

0.2

—

—

0.4

(0.7)
—

—

—

0.1

(0.6)

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

$

(4.4) $

(0.2) $

— $

— $

0.3

0.5

—

0.2

1.0

2.7

—
(5.9)
(0.2)
—

(3.4)

(2.4)

Components of net periodic benefit cost and amounts
recognized in other comprehensive (income) loss:

Net periodic benefit credit cost:

Service cost

Interest cost

Amortization of actuarial loss, net

Amortization of prior service cost (benefit)

Net periodic benefit cost

Changes in plan assets and benefit obligations

recognized in other comprehensive (income) loss:

Net actuarial (gain) loss

Amortization of actuarial gain (loss)

Prior service benefit

Amortization of prior service benefit (cost)

Net translation adjustment

Total (gain) loss recognized in other

comprehensive income

Total recognized in net periodic benefit cost

and other comprehensive income

Significant Events

During the Successor year ended December 31, 2014, we recorded a curtailment gain of $7.3 million within Selling, 
general and administrative expenses due to an amendment to one of our pension plans. In addition, amendments to our 
long-term employee benefit plans resulted in increases to Accumulated other comprehensive income of $12.0 million at 
December 31, 2014. These amounts will continue to be recognized in earnings over the remaining future service periods 
of active participants.

105

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

Assumptions

We used the following assumptions in determining the benefit obligations and net periodic benefit cost:

Defined benefits
Weighted-average assumptions:
Discount rate to determine benefit obligations
Discount rate to determine net cost
Rate of future compensation increases to determine benefit obligation
Rate of future compensation increases to determine net cost
Rate of return on plan assets to determine net cost

Other Long-Term Employee benefits
Weighted-average assumptions:

Discount rate to determine benefit obligations

Discount rate to determine net cost

Rate of future compensation increases to determine benefit obligations

Rate of future compensation increases to determine net cost

Successor

Predecessor

2014

2013

2012

3.23%
4.11%
3.57%
3.52%
5.23%

4.11%
4.15%
3.52%
3.69%
5.22%

3.38%
4.73%
3.16%
3.33%
7.71%

Successor

Predecessor

2014

2013

2012

1.50%

4.80%

—

—

4.80%

4.20%

—

—

4.86%

7.28%

3.00%

4.00%

The discount rates used reflect the expected future cash flow based on plan provisions, participant data as of the closing 
date of the Acquisition and the currencies in which the expected future cash flows will occur. For the majority of our 
defined benefit pension obligations, we utilize prevailing long-term high quality corporate bond indices applicable to the 
respective country at the measurement date. In countries where established corporate bond markets do not exist, we utilize 
other index movement and duration analysis to determine discount rates. The long-term rate of return on plan assets 
assumptions reflect economic assumptions applicable to each country and assumptions related to the preliminary 
assessments regarding the type of investments to be held by the respective plans.

Estimated future benefit payments

The following reflects the total benefit payments expected to be paid for defined benefits:

Year ended December 31,
2015
2016
2017
2018
2019
2020—2024

Benefits

34.8
27.1
29.8
31.0
37.6
180.3

$
$
$
$
$
$

106

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

The following reflects the total benefit payments expected to be paid for other long-term employee benefits:

Year ended December 31,
2015
2016
2017
2018
2019
2020—2024

Plan Assets

Benefits

—
0.1
—
—
—
—

$
$
$
$
$
$

As discussed above, the defined benefit pension plans for the subsidiaries in Austria, the United Kingdom and Germany 
represent single-employer plans and the related plan assets are invested within separate trusts. The defined benefit plan 
obligations for remaining current employees of non-U.S. subsidiaries assumed by us were carved out of the defined 
benefit pension plans retained by DuPont. At December 31, 2014, DuPont had completed the asset transfers for all funded 
plans except the plan covering our Canadian employees. The Canadian plan assets continue to be invested and managed 
by DuPont until the required regulatory approvals are received at which time the assets will be transferred to a newly 
created trust.

Equity securities include varying market capitalization levels. U.S. equity investments are primarily large-cap companies. 
Fixed income investments include corporate issued, government issued and asset backed securities. Corporate debt 
investments include a range of credit risk and industry diversification. Other investments include real estate and private 
market securities such as insurance contracts, interests in private equity, and venture capital partnerships.

Fair value calculations may not be indicative of net realizable value or reflective of future fair values. Furthermore, 
although we believe the valuation methods are appropriate and consistent with other market participants, the use of 
different methodologies or assumptions to determine the fair value of certain financial instruments could result in a 
different fair value measurement at the reporting date.

The Company’s investment strategy in pension plan assets is to generate earnings over an extended time to help fund the 
cost of benefits while maintaining an adequate level of diversification for a prudent level of risk. The table below 
summarizes the weighted average target pension plan asset allocation at December 31 for all Axalta defined benefit plans. 

Asset Category
Equity securities
Debt securities
Real estate
Other

2014

2013

Target Allocation

35-40%
35-40%
0-1%
20-25%

35-40%
35-40%
0-1%
20-25%

35-40%
35-40%
0-1%
20-25%

107

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

The table below presents the fair values of the defined benefit pension plan assets by level within the fair value hierarchy, 
as described in Note 3, at December 31, 2014 and 2013, respectively.

Asset Category:

Cash and cash equivalents
U.S. equity securities
Non-U.S. equity securities
Debt—government issued
Debt—corporate issued
Hedge Funds
Private market securities
Real estate

Pension trust receivables

Total

Asset Category:

Cash and cash equivalents
U.S. equity securities
Non-U.S. equity securities
Debt—government issued
Debt—corporate issued
Hedge Funds
Private market securities
Real estate

Pension trust receivables

Total

Fair value measurements at
December 31, 2014

Total

Level 1

Level 2

Level 3

4.4 $

16.1
78.7
36.3
53.0
0.1
0.1
—
188.7 $

— $
—
0.4
0.6
—
0.1
0.1
—
1.2 $

4.4 $

16.1
79.2
36.9
55.3
0.2
63.2
0.4
255.7 $
38.8
294.5

Fair value measurements at
December 31, 2013

Total

Level 1

Level 2

Level 3

6.7 $

13.2
70.8
34.4
49.3
0.2
—
—
174.6 $

— $
0.4
0.5
—
2.9
0.2
0.2
—
4.2 $

6.7 $

13.6
71.3
34.4
52.2
0.4
59.5
0.3
238.4 $
42.9
281.3

—
—
0.1
—
2.3
—
63.0
0.4
65.8

—
—
—
—
—
—
59.3
0.3
59.6

$

$

$

$

108

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

 Level 3 assets are primarily insurance contracts pledged on behalf of employees with benefits in certain countries, 
ownership interests in investment partnerships, trusts that own private market securities, and real estate. The tables below 
present a roll forward of activity for these assets for the years ended December 31, 2014 and 2013. 

Ending balance at December 31, 2012
Realized (loss)
Change in unrealized gain
Purchases, sales, issues and settlements
Transfers in/(out) of Level 3
Ending balance at December 31, 2013
Realized (loss)
Change in unrealized gain
Purchases, sales, issues and settlements
Transfers in/(out) of Level 3
Ending balance at December 31, 2014

Assumptions and Sensitivities

Level 3 assets

Total

Private
market
securities

Debt and
Equity

Real
estate

$

$

$

12.2 $
(0.1)
0.2
45.6
1.7
59.6 $
—
0.2
6.0
—
65.8 $

10.5 $
—
0.2
46.9
1.7
59.3 $
—
—
3.7
—
63.0 $

— $
—
—
—
—
— $
—
—
2.4
—
2.4 $

1.7
(0.1)
—
(1.3)
—
0.3
—
0.2
(0.1)
—
0.4

The discount rate is determined as of each measurement date, based on a review of yield rates associated with long-term, 
high-quality corporate bonds. The calculation separately discounts benefit payments using the spot rates from a long-term, 
high-quality corporate bond yield curve.

The long-term rate of return assumption represents the expected average rate of earnings on the funds invested to provide 
for the benefits included in the benefit obligations. The long-term rate of return assumption is determined based on a 
number of factors, including historical market index returns, the anticipated long-term asset allocation of the plans, 
historical plan return data, plan expenses and the potential to outperform market index returns. The expected long-term 
rate of return on assets was 5.23% for 2014. For 2015, the expected long-term rate of return is 5.21%.

A significant factor used in estimating future per capita cost of covered healthcare benefits for our retirees and us is the 
healthcare cost trend rate assumption. The rate used at December 31, 2014 was 5.00% and is assumed to remain at that 
level thereafter. Increasing the assumed healthcare cost trend rates by one percentage point would result in additional 
annual costs of approximately $0.1 million. Decreasing the assumed health care cost trend rates by one percentage point 
would result in a decrease of approximately $0.1 million in annual costs. There is no effect on other long-term employee 
benefit obligations at December 31, 2014 of a one percentage point increase or decrease in assumed health care cost trend 
rates. 

Anticipated Contributions to Defined Benefit Plan

For funded pension plans, our funding policy is to fund amounts for pension plans sufficient to meet minimum 
requirements set forth in applicable benefit laws and local tax laws. Based on the same assumptions used to measure our 
benefit obligations at December 31, 2014 we expect to contribute $16.5 million to our defined benefit plans during 2015. 
No contributions to our other long-term employee benefit plans are expected during 2015. No plan assets are expected to 
be returned to the Company in 2015.

Defined Contribution Plans

The Company sponsors defined contribution plans in both its US and non-US subsidiaries, under which salaried and 
certain hourly employees may defer a portion of their compensation. Eligible participants may contribute to the plan up to 
the allowable amount as determined by the plan of their regular compensation before taxes. All contributions and 
Company matches are invested at the direction of the employee. Company matching contributions vest immediately and 
aggregated $35.9 million for the Successor year ended December 31, 2014.

109

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

(11)  STOCK-BASED COMPENSATION

Successor period

During the years ended December 31, 2014 and 2013, we recognized $8.0 million and $7.4 million, respectively, in stock-
based compensation expense which was allocated to costs of goods sold, selling, general and administrative expenses, and 
research and development expenses.  We, with respect to stock-based compensation, recognized a tax benefit of $2.8 
million and $2.6 million for the years ended December 31, 2014 and 2013, respectively. 

Description of Equity Incentive Plan

In 2013, Axalta’s Board of Directors approved the Axalta Coating Systems Bermuda Co., Ltd. 2013 Equity Incentive Plan 
(the "2013 Plan") which reserved an aggregate of 19,839,143 common shares of the Company for issuance to employees, 
directors and consultants. The 2013 Plan provides for the issuance of stock options, restricted stock or other stock-based 
awards. Options and restricted shares granted pursuant to the equity incentive plan must be authorized by the Board of 
Directors of Axalta or a designated committee thereof. 

In 2014, Axalta's Board of Directors approved the Axalta Coating Systems Ltd. 2014 Incentive Award Plan (the "2014" 
Plan) which reserved an aggregate 11,830,000 shares of common stock of the Company for issuance to employees, 
directors and consultants.  The 2014 Plan provides for the issuance of stock options, restricted stock or other stock-based 
awards. Options and restricted shares granted pursuant to the equity incentive plan must be authorized by the Board of 
Directors of Axalta or a designated committee thereof. No awards have been granted under the 2014 Plan.

The terms of the options may vary with each grant and are determined by the Compensation Committee within the 
guidelines of the equity incentive plan. Options currently vest over 4.4 to 5 years, and vesting of a portion of the options 
could accelerate in the event of certain changes in control. Option life cannot exceed ten years. In 2013, we granted 
approximately 4.1 million, 5.7 million and 6.4 million in non-qualified stock options to certain employees with strike 
prices of $5.92, $8.88 and $11.84 (per share), respectively. During 2014, we granted 1.6 million non-qualified service-
based stock options to certain employees and directors with strike prices of $5.92, $7.21, $8.88 and $11.84 per share. 

Stock Options

The Black-Scholes option pricing model was used to estimate fair values of the options as of the date of the grant. The 
weighted average fair value of options granted in 2014 and 2013 was $1.92 and $1.38 per share, respectively. Principal 
weighted average assumptions used in applying the Black-Scholes model were as follows:

Expected Term

Volatility

Dividend Yield

Discount Rate

2014 Grants

2013 Grants

7.81 years

7.81 years

28.28%

—

2.21%

28.61%

—

2.13%

For the 2014 stock awards, we estimated the per share fair value of our common stock using a contemporaneous valuation 
consistent with the American Institute of Certified Public Accountants Practice Aid, "Valuation of Privately-Held 
Company Equity Securities Issued as Compensation" (the "Practice Aid"). In conducting this valuation, we considered all 
objective and subjective factors that we believed to be relevant, including our best estimate of our business condition, 
prospects and operating performance. Within this contemporaneous valuation, a range of factors, assumptions and 
methodologies were used. The significant factors included:

•

•

•

•

•

the fact that we were a private company with illiquid securities;

our historical operating results;

our discounted future cash flows, based on our projected operating results;

valuations of comparable public companies; and

the risk involved in the investment, as related to earnings stability, capital structure, competition and market
potential.

110

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

For the contemporaneous valuation of our common stock, management estimated, as of the issuance date, our enterprise 
value on a continuing operations basis, using the income and market approaches, as described in the Practice Aid. The 
income approach utilized the discounted cash flow ("DCF") methodology based on our financial forecasts and projections, 
as detailed below. The market approach utilized the Guideline Public Company and Guideline Transactions methods, as 
detailed below.

For the DCF methodology, we prepared annual projections of future cash flows through 2018. Beyond 2018, projected 
cash flows through the terminal year were projected at long-term sustainable growth rates consistent with long-term 
inflationary and industry expectations. Our projections of future cash flows were based on our estimated net debt-free 
cash flows and were discounted to the valuation date using a weighted-average cost of capital estimated based on market 
participant assumptions.

For the Guideline Public Company and Guideline Transactions methods, we identified a group of comparable public 
companies and recent transactions within the chemicals industry. For the comparable companies, we estimated market 
multiples based on trading prices and trailing 12 months EBITDA. These multiples were then applied to our trailing 12 
months EBITDA. When selecting comparable companies, consideration was given to industry similarity, their specific 
products offered, financial data availability and capital structure.

For the comparable transactions, we estimated market multiples based on prices paid for the related transactions and 
trailing 12 months EBITDA. These multiples were then applied to our trailing 12 months EBITDA. The results of the 
market approaches corroborated the fair value determined using the income approach.

For the 2013 grants, the market value of the stock was estimated based upon the Acquisition transaction since the 
Company was not publicly traded at that time and there had been no significant changes in operations since the closing 
date of February 1, 2013.

To estimate the expected stock option term for the $5.92 and $7.21 stock options referred to above, we used the simplified 
method as the options were granted at fair value and Axalta, a privately-held company, had no exercise history. Based 
upon this simplified method the $5.92 and $7.21 per share stock options have an expected term of 6.5 years. The strike 
price for the $8.88 per share and $11.84 per share tranches of options exceeded fair value at the grant date which required 
the use of an estimate of an implicitly longer holding period, resulting in the term of 8.25 years.

We do not anticipate paying cash dividends in the foreseeable future and, therefore, use an expected dividend yield of 
zero. Volatility for outstanding grants is based upon the peer group since the Company was privately-held at the date of 
grant.  The discount rate was derived from the U.S. Treasury yield curve.

The exercise price and market value per share amounts presented above were as of the date the stock options were 
granted.

A summary of stock option award activity as of December 31, 2014 and changes during the year then ended, is presented 
below:

Awards
(millions)

Weighted-
Average
Exercise
Price

Aggregate
Intrinsic
Value
 (millions)

Weighted
Average
Remaining
Contractual
Life (years)

Outstanding at January 1, 2014

Granted

Exercised

Forfeited

Outstanding at December 31, 2014

Vested and expected to vest at December 31, 2014

Exercisable at December 31, 2014

16.2 $

1.6 $
(0.4) $
(0.3) $
17.1 $

17.1 $

2.9 $

9.32

9.62

8.03

9.32

9.38

9.38 $

9.49 $

284.5

47.6

8.58

8.44

111

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

Cash received by the company upon exercise of options in 2014 was $3.0 million. The tax benefit related to these 
exercises is immaterial. The Company may settle option exercises by issuing new shares, treasury shares or shares 
purchased on the open market. The intrinsic value of options exercised in 2014 was not material.  

The fair value of shares vested during 2014 and 2013 was $4.5 million and $0.0 million, respectively.

Compensation cost is recorded net of forfeitures. The forfeiture rate assumption is the estimated annual rate at which 
unvested awards are expected to be forfeited during the vesting period. Periodically, management will assess whether it is 
necessary to adjust the estimated rate to reflect changes in actual forfeitures or changes in expectations. At December 31, 
2014 and 2013, the Company has estimated its annual forfeiture rate at 0% due to its limited history and expectations of 
forfeitures.

At December 31, 2014, there was $9.7 million of unrecognized compensation cost relating to outstanding unvested stock 
options expected to be recognized over the weighted average period of 3.4 years.  Compensation expense is recognized 
for the fair values of the stock options over the requisite service period of the awards using the graded-vesting attribution 
method.

Predecessor periods

DuPont maintained certain stock-based compensation plans for the benefit of certain of its officers, directors’ and 
employees, including, prior to the Acquisition, certain DPC employees. DPC recognized stock-based compensation within 
the combined statement of operations based upon fair values. The fair value of awards granted totaled $2.0 million for the 
Predecessor year ended December 31, 2012.

Total stock-based compensation expense included in the combined statement of operations was $0.1 million and $0.5 
million for the Predecessor period from January 1, 2013 through January 31, 2013 and the Predecessor year ended 
December 31, 2012, respectively.

(12)  RELATED PARTY TRANSACTIONS

Carlyle Group L.P. and its affiliates ("Carlyle")

We entered into a consulting agreement with Carlyle Investment Management L.L.C. ("Carlyle Investment"), an affiliate 
of Carlyle pursuant to which Carlyle Investment provides certain consulting services to Axalta. Under this agreement, 
subject to certain conditions, we were required to pay an annual consulting fee to Carlyle Investment of $3.0 million 
payable in equal quarterly installments and reimburse Carlyle Investment for out-pocket expenses incurred in providing 
the consulting services. During the Successor year ended December 31, 2014, we recorded expense of $3.2 million in 
regular monthly management fees and out of pocket costs as well as a $13.4 million pre-tax charge related to the 
termination of the agreement upon completion of the IPO. 

During the Successor year ended December 31, 2013, we recorded expense of $3.1 million related to this consulting 
agreement. In addition, Carlyle Investment received a one-time fee of $35.0 million upon effectiveness of the Acquisition 
for services rendered in connection with the Acquisition and related acquisition financing. Of this amount, $21.0 million 
was recorded as merger and acquisition expenses in the Successor year ended December 31, 2013, and $14.0 million was 
recorded as a component of deferred financing costs, which is amortized to interest expense.

Service King Collision Repair

Service King Collision Repair, a portfolio company of funds affiliated with Carlyle, has purchased products from our 
distributors in the past and may continue to do so in the future. During the third quarter 2014, Carlyle sold their majority 
interest in Service King Collision Repair, thus making the entity no longer a related party. Related party sales prior to this 
transaction were $4.0 million and $2.0 million for the Successor years ended December 31, 2014 and 2013, respectively. 
During the Predecessor period from January 1, 2013 through January 31, 2013 sales to Service King Collision Repair 
were immaterial.

112

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

Other

A director of the Company is the Chairman and Chief Executive Officer of an international management consulting firm 
focused on the automotive and industrial sectors. In connection with the Acquisition, we incurred consulting fees and 
expenses from the consulting firm of approximately $2.1 million, of which $0.1 million was incurred in the Successor 
year ended December 31, 2013 and the remainder was incurred in the Successor period from August 24, 2012 through 
December 31, 2012. As part of the compensation for the consulting services, we granted the consulting firm a stock option 
award to purchase up to 352,143 of our common shares which had a fair value of approximately $0.5 million.

(13)  OTHER EXPENSE, NET

Exchange losses, net

Management fees and expenses
Other

Total

Successor

Predecessor

Year Ended December 31,

Period from
August 24,
2012 through
December 31,

Period from
January 1, 2013
through
January 31,

Year Ended
December 31,

2014

2013

2012

2013

2012

$

81.2 $

16.6
17.2

$

115.0 $

48.9 $

3.1
(3.5)
48.5 $

— $

—
—

— $

4.5 $

—
0.5

5.0 $

17.7

—
(1.4)
16.3

Our net foreign exchange losses for the year ended December 31, 2014 and 2013 consisted of remeasurement losses 
primarily related to intercompany transactions denominated in currencies different from the functional currency of the 
relevant subsidiary partially offset by gains on our Euro borrowings and our Venezuela operations, as discussed below. 

Based on changes to the Venezuelan currency exchange rate mechanisms in 2014 and our participation in Venezuela’s 
Complementary System of Foreign Currency Administration (SICAD I) auction process during the year ended 
December 31, 2014, we changed the exchange rate we used to remeasure our Venezuelan subsidiary’s financial statements 
into U.S. dollars. The exchange rate was determined by such auction process, which was 12.0 to 1 as of December 31, 
2014 compared to the historical indexed rate of 6.3 to 1. We determined that the exchange rate of 12.0 to 1 was 
appropriate given trends in the SICAD 1 auction process. Further, we also believe the equity of our Venezuelan subsidiary 
would be realized through a dividend utilizing the auction process through SICAD I. The devaluations of the exchange 
rates resulted in net gains of $17.0 million for the year ended December 31, 2014 primarily due to our Venezuelan 
operations being in a net monetary liability position.

In February 2015, the Venezuelan government enacted additional changes to its foreign exchange regime. The changes 
maintain a three-tiered system, including the Official Rate determined by CENCOEX, which remains at 6.3 to 1, and the 
SICAD I auction market which continued to trade at 12.0 to 1. The SICAD II market has been eliminated and a new, 
alternative currency market, the Marginal Foreign Exchange System ("SIMADI"), has been created with a floating 
exchange rate generally based on supply and demand. An initial exchange rate for the SIMADI market was established at 
approximately 170.0 to 1.

At December 31, 2014, our Venezuelan subsidiary was in a net monetary liability position of $9.1 million and had non-
U.S. Dollar denominated net non-monetary assets of $150.9 million. We continue to assess the impact, if any, of these 
changes as the government of Venezuela issues regulations to implement them, but at this time it is unclear based on the 
current governmental policies, when considered with the foreign exchange process and other circumstances in Venezuela, 
whether these events will have any financial impact on the operations of our Venezuelan subsidiary.

113

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

(14)  INCOME TAXES

Domestic and Foreign Components of Income (Loss) Before Income Taxes

Successor

Predecessor

Year Ended December 31,

Period from
August 24,
2012 through
December 31,

2014

2013

2012

Period from
January 1, 20
13
through
January 31,
2013

Year Ended
December 31,

2012

Domestic

Foreign

Total

$

$

(8.8) $

(153.8) $

— $

45.6

(109.9)

(29.0)

36.8 $

(263.7) $

(29.0) $

(1.5) $
17.1

15.6 $

82.8

310.2

393.0

Provision (Benefit) for Income Taxes

Successor

Year Ended December 31, 2014

Year Ended December 31, 2013

Period from August 24,
2012 through December 31, 2012

Current  

Deferred  

Total  

Current  

Deferred  

Total  

Current  

Deferred  

Total  

— $
2.0
38.3
40.3 $

(2.1) $
(2.9)
(33.2)
(38.2) $

(2.1) $
(0.9)
5.1
2.1 $

— $
2.3
73.7
76.0 $ (120.8) $

(43.7) $
(2.5)
(74.6)

(43.7) $
(0.2)
(0.9)
(44.8) $

— $
—
—
— $

— $
—
—
— $

—
—
—
—

Predecessor

Period from January 1,2013 through January 31, 2013

Year Ended December 31, 2012

Current

Deferred

Total

Current

Deferred

Total

(8.8) $
0.1
6.7
(2.0) $

7.0 $
(0.2)
2.3
9.1 $

(1.8) $
(0.1)
9.0
7.1 $

30.9 $
6.6
98.6
136.1 $

(4.5) $
(0.4)
14.0
9.1 $

26.4
6.2
112.6
145.2

U.S. Federal
State
Foreign
Total

U.S. Federal
State
Foreign
Total

$

$

$

$

114

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

Reconciliation to US Statutory Rate

Successor

Predecessor

Year Ended
December 31, 2014

Year Ended
December 31, 2013

Period from
August 24,
2012 through
December 31,
2012

Period from
January 1
2013 through
January 31,
2013

Year Ended
December 31,
2012

$

12.9

35.0% $ (92.3)

35.0% $ (10.1)

35.0% $

5.5

35.0% $ 137.6

35.0%

(46.7)

(127.0)

(36.6)

13.9

10.1

(35.0)

44.4

120.9

8.7

23.7

(44.0)

(119.7)

(0.3)

(0.8)

15.4

14.2

41.9

38.6

(3.6)

(9.8)

—

1.1

—

2.9

55.0

8.7

35.1

8.3

6.4

19.4

(1.0)

(46.7)

(1.1)

(20.9)

(3.3)

(13.2)

(3.2)

(2.4)

(7.4)

0.4

17.7

0.4

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

1.0

1.4

0.5

—

—

—

—

—

—

6.6

8.9

3.1

—

—

—

—

—

—

(10.9)

(2.8)

9.8

4.7

—

—

—

—

—

—

2.5

1.2

—

—

—

—

—

—

(1.3)

(8.0)

4.0

1.1

$

2.1

5.7% $ (44.8)

17.0% $ —

— $

7.1

45.6% $ 145.2

37.0%

Statutory U.S. federal income 

tax / rate(1)

Foreign income taxed at rates

other than 35%

Changes in valuation

allowances

Foreign exchange (gain) loss
Unrecognized tax benefits(2)
Withholding taxes, net

Non-deductible interest

Non-deductible expenses

Tax credits
Capital loss(3)
Other - net

Total income tax (benefit)/

effective tax rate

(1)  The U.S. statutory rate has been used as management believes it is more meaningful to the Company.

(2)  Within this amount, the Company released and recorded an unrecognized tax benefit of $21.1 million related to non-deductible 
interest and debt acquisition costs in 2014 and 2013. These adjustments were fully offset by changes in the valuation allowance. 

(3)  In 2013, the Company recognized a tax benefit of $46.7 million related to a capital loss, which is fully offset by a $46.7 million 

increase to the valuation allowance.

115

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

Deferred Tax Balances

Deferred tax asset

Tax loss and credit carryforwards
Goodwill and intangibles
Compensation & employee benefits
Accruals & other reserves
Interest expense
Total deferred tax assets
Less: Valuation allowance
Net, deferred tax assets
Deferred tax liabilities

Inventory
Property, Plant & Equipment
Accounts Receivable & Other Assets
Equity Investment & Other Securities
Unremitted earnings
Long-Term Debt
Total deferred tax liabilities
Net deferred tax asset/(liability)

Current asset
Current liability
Non-current assets
Non-current liability
Net deferred tax asset

Successor

Year Ended December 31,

2014

2013

$

$

$

$

185.6 $
90.8
92.4
58.0
13.4
440.2
(101.9)
338.3

(3.0)
(215.0)
(2.5)
(2.2)
(8.5)
(8.1)
(239.3)

99.0 $

64.5 $
(7.3)
250.0
(208.2)

99.0 $

111.7
89.4
79.1
40.5
8.6
329.3
(63.4)
265.9

(1.3)
(218.5)
(8.4)
(5.8)
(15.9)
—
(249.9)
16.0

30.0
(5.5)
271.9
(280.4)
16.0

At December 31, 2014, the Company had $118.3 million of net operating and capital loss carryforwards (tax effected) in 
certain non-U.S. jurisdictions, net of uncertain tax positions. Of these, $78.2 million have indefinite carryforward periods, 
and the remaining $40.1 million are subject to expiration between the years 2019 through 2026. In the U.S., there were 
approximately $53.2 million of federal net operating loss carryforwards (tax effected) subject to expiration in years 
beyond 2032, and $2.5 million of state net operating loss carryforwards (tax effected) subject to expiration between the 
years 2018 and 2034. Tax credit carryforwards at December 31, 2014 amounted to $11.6 million, of which $0.6 million is 
subject to expiration in 2016. The remaining tax credit carryforwards expire between the years 2018 and 2034.

At December 31, 2013, the Company had $83.1 million of net operating and capital loss carryforwards (tax effected) in 
certain non-U.S. jurisdictions, net of uncertain tax positions. Of these, $53.2 million have indefinite carryforward periods, 
and the remaining $29.9 million are subject to expiration between the years 2018 through 2023. In the U.S., there were 
approximately $24.3 million of federal net operating loss carryforwards (tax effected) subject to expirations in years 
beyond 2032, and $0.6 million of state net operating loss carryforwards (tax effected) subject to expiration between the 
years 2019 and 2034. Tax credit carryforwards at December 31, 2013, amounted to $3.7 million, which are subject to 
expiration between the years 2023 through 2033.

The Company had valuation allowances that primarily related to the realization of recorded tax benefits on tax loss 
carryforwards from operations in Austria, Luxembourg, Netherlands and the United Kingdom at December 31, 2014 and 
2013 of $101.9 million and $63.4 million, respectively.

116

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

The Company has determined that the unremitted earnings of our subsidiaries will not be permanently reinvested, and 
accordingly, has provided a deferred tax liability at December 31, 2014 and 2013 of $8.5 million and $15.9 million, 
respectively. The Company has included in the current income tax provision a total benefit of $4.7 million, of which $1.5 
million relates to subsidiary earnings and $3.2 million relates to the benefit of reduced withholding tax rates on prior year 
earnings.

Total Gross Unrecognized Tax Benefits

Successor

Predecessor

Year Ended December 31,

Period from
January 1
2013 through
January 31,

Period from
January 1
2013 through
January 31,

Year Ended
December 31,

Balance at January 1

Increases related to acquisition

Increases related to positions taken on items from

prior years

Decreases related to positions taken on items from

prior years

Increases related to positions taken in the current year

Settlement of uncertain tax positions with tax

authorities

Decreases due to expiration of statutes of limitations

2014

2013

2013

2013

2012

$

38.9 $

— $

— $

— $

—

—

(33.6)
—

—

—

11.3

—

—

27.6

—

—

—

—

—

—

—

—

—

—

—

—

—

—

Balance at December 31

$

5.3 $

38.9 $

— $

— $

At December 31, 2014, the total amount of gross unrecognized tax benefits was $5.3 million ($38.9 million at 
December 31, 2013), of which $5.3 million would impact the effective tax rate, if recognized ($17.8 million at 
December 31, 2013).

—

—

—

—

—

—

—

—

Interest and penalties associated with gross unrecognized tax benefits are included as components of the "Provision 
(benefit) for income taxes," and totaled $6.8 million in 2014 and a charge of $7.4 million in 2013.  Accrued interest and 
penalties are included within the related tax liability line in the balance sheet. The Company’s accrual for interest and 
penalties at December 31, 2014 and 2013 was $0.3 million and $7.1 million, respectively.

During 2014, resolution on two separate tax matters resulted in the adjustment of gross unrecognized tax benefits. In April 
2014, documentation was secured to support tax deductions related to pre-acquisition activities. Additionally, in 
December 2014, the Company received affirmative guidance with respect to the treatment of certain 2013 charges. As a 
result, the Company believes it is more likely than not to sustain the position and adjusted the unrecognized tax benefits 
related to these matters, resulting in a tax benefit of $31.0 million (offset by an unfavorable change in the valuation 
allowance of $21.1 million).  

The Company is subject to income tax in approximately 40 jurisdictions outside the U.S. The Company’s significant 
operations outside the U.S. are located in Belgium, China, Germany, Mexico, and United Kingdom. The statute of 
limitations varies by jurisdiction with 2006 being the oldest tax year still open in the material jurisdictions. The Company 
is currently under audit in certain jurisdictions for tax years under responsibility of the predecessor, as well as tax periods 
under the Company's ownership. Pursuant to the acquisition agreement, all tax liabilities related to tax years prior to 2013 
acquisition will be indemnified by DuPont.

As of December 31, 2014 and 2013, we had gross unrecognized tax benefits of $5.6 million and $46.1 million, 
respectively, including interest and penalties. 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.

117

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

(15)  EARNINGS PER COMMON SHARE

Basic earnings per common share excludes the dilutive impact of potentially dilutive securities and is computed by 
dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per 
common share includes the effect of potential dilution from the exercise of outstanding stock options. Potentially dilutive 
securities have been excluded in the weighted average number of common shares used for the calculation of earnings per 
share in periods of net loss because the effect of such securities would be anti-dilutive. A reconciliation of the Company’s 
basic and diluted earnings per common share is as follows (in millions, except earnings per share):

(In millions, except per share data)
Net income (loss) attributable to Axalta

Pre-Acquisition net loss attributable to Axalta
Net income (loss) to common shareholders (1)
Basic and diluted weighted average shares outstanding (1)
Diluted weighted average shares outstanding

Earnings per Common Share:

Basic net income (loss) per share

Diluted net income (loss) per share

Successor

Year Ended December 31,

Period from
August 24, 2012
through
December 31,
2012

2014

2013

2012

$

$

$

$

27.4 $

—

27.4 $

229.3

230.3

(224.9) $
(3.9)
(221.0) $
228.3

228.3

0.12 $

0.12 $

(0.97) $
(0.97) $

(29.0)
(29.0)
—

—

—

—

—

(1)  As of February 1, 2013, the date of the Acquisition, the Company received the initial Equity Contribution of $1,350.0 million. 
Accordingly, the net loss to common shareholders and the weighted average shares outstanding calculation is based on the 
period from February 1, 2013 to December 31, 2013.

The number of anti-dilutive shares (stock options) that have been excluded in the computation of diluted earnings per 
share for the Successor years ended December 31, 2014 and 2013 were 7.2 million and 16.3 million, respectively. There 
were no anti-dilutive shares for the Successor period ending December 31, 2012.

Basic and diluted weighted average shares outstanding have been adjusted to reflect the Company’s 100,000 for 1 stock 
split which occurred in July 2013, and the Company’s 1.69 for 1 stock split which occurred in October 2014.

(16)  ACCOUNTS AND NOTES RECEIVABLE, NET

Accounts receivable—trade, net

Notes receivable

Other

Total

Successor

Year Ended December 31,

2014

2013

$

$

638.3 $

45.5

136.6

820.4 $

637.5

44.7

183.7

865.9

Accounts and notes receivable are carried at amounts that approximate fair value. Accounts receivable—trade, net are net 
of allowances of $9.9 million and $6.5 million at December 31, 2014 and 2013, respectively. Bad debt expense was $5.1 
million and $5.4 million for the Successor years ended December 31, 2014 and 2013, respectively, $0.2 million for the 
Predecessor period from January 1, 2013 through January 31, 2013 and $5.0 million for the Predecessor year ended 
December 31, 2012.

118

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

(17)  INVENTORIES

Finished products

Semi-finished products

Raw materials and supplies

Total

Successor

Year Ended December 31,

2014

2013

$

$

323.7 $

81.3

133.3

538.3 $

329.3

90.2

130.7

550.2

Stores and supplies inventories of $20.9 million and $21.2 million at December 31, 2014 and December 31, 2013 were 
valued under the weighted average cost method. 

(18) PROPERTY, PLANT AND EQUIPMENT, NET

Depreciation expense amounted to $176.6 million and $174.3 million for the Successor years ended December 31, 2014 
and 2013, respectively. Depreciation expense amounted to $7.2 million for the Predecessor period from January 1, 2013 
through January 31, 2013 and $82.9 million for the Predecessor year ended December 31, 2012.

Land
Buildings and improvements
Machinery and equipment
Software
Other
Construction in progress

Total

Accumulated depreciation

Property, plant, and equipment, net

(19)  OTHER ASSETS

Available for sale securities
Deferred income taxes—non-current
Other
Total

Successor

Year Ended December 31,

Useful Lives (years)

2014

2013

5
3
5
3

-
-
-
-

25
25
7
20

$

$

$

$

90.5 $
418.4
1,060.1
122.1
29.1
138.0
1,858.2
(344.1)
1,514.1 $

99.9
430.7
1,087.0
42.4
26.3
119.9
1,806.2
(183.6)
1,622.6

Successor

Year Ended December 31,

2014

2013

4.5 $

250.0
219.2
473.7 $

4.9
271.9
218.3
495.1

119

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

(20)  ACCOUNTS PAYABLE

Trade payables
Non-income taxes
Other
Total

(21)  OTHER ACCRUED LIABILITIES

Compensation and other employee-related costs
Current portion of long-term employee benefit plans
Restructuring
Discounts, rebates, and warranties
Income taxes payable
Derivative liabilities
Other
Total

(22)  BORROWINGS

Borrowings are summarized as follows:

Dollar Term Loan
Euro Term Loan
Dollar Senior Notes
Euro Senior Notes
Short-term borrowings
Other borrowings
Unamortized original issue discount

Less:

Short term borrowings
Current portion of long-term borrowings

Long-term debt

120

Successor

Year Ended December 31,

2014

2013

463.6 $
21.4
9.5
494.5 $

428.8
40.5
9.2
478.5

Successor

Year Ended December 31,

2014

2013

153.0 $
12.4
48.5
68.6
20.8
1.5
100.0
404.8 $

168.0
13.3
98.4
65.0
25.1
1.2
101.7
472.7

Successor

Year Ended December 31,

2014
2,165.5 $
481.0
750.0
305.3
12.2
0.7
(18.3)
3,696.4 $

2013
2,282.8
547.7
750.0
344.9
18.2
—
(22.7)
3,920.9

12.2 $
27.9
3,656.3 $

18.2
28.5
3,874.2

$

$

$

$

$

$

$

$

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

(a)  Senior Secured Credit Facilities, as amended

On February 3, 2014, Axalta Coating Systems Dutch B B.V. ("Dutch B B.V."), as "Dutch Borrower", and its indirect 
wholly-owned subsidiary, Axalta Coating Systems U.S. Holdings Inc. ("Axalta US Holdings"), as "US Borrower", 
executed the second amendment to the Senior Secured Credit Facilities (the "Amendment"). The Amendment 
(i) converted all of the outstanding Dollar Term Loans ($2,282.8 million) into a new class of term loans (the "New Dollar 
Term Loans"), and (ii) converted all of the outstanding Euro Term Loans (€397.0 million) into a new class of term loans 
(the "New Euro Term Loans"). The New Dollar Term Loans are subject to a floor of 1.00%, plus an applicable rate after 
the Amendment Effective Date. The applicable rate for such New Dollar Term Loans is 3.00% per annum for 
Eurocurrency Rate Loans as defined in the credit agreement governing the Senior Secured Credit Facilities and 2.00% per 
annum for Base Rate Loans as defined in the credit agreement governing the Senior Secured Credit Facilities. The 
applicable rate for both Eurocurrency Rate Loans as well as Base Rate Loans is subject to a further 25 basis point 
reduction if the Total Net Leverage Ratio as defined in the credit agreement governing the Senior Secured Credit Facilities 
is less than or equal to 4.50:1.00. The New Euro Term Loans are also subject to a floor of 1.00%, plus an applicable rate 
after the Amendment Effective Date. The applicable rate for such New Euro Term Loans is 3.25% per annum for 
Eurocurrency Rate Loans. New Euro Term Loans may not be Base Rate Loans. The applicable rate is subject to a further 
25 basis point reduction if the Total Net Leverage Ratio is less than or equal to 4.50:1.00. During the third quarter 2014, 
our Total Net Leverage Ratio was confirmed to be less than 4.50:1.00. Concurrently, the applicable rates were changed to 
2.75% for the New Dollar Term Loans and 3.00% for the New Euro Term Loans through December 31, 2014. 

The Senior Secured Credit Facilities are secured by substantially all assets of Axalta Coating Systems Dutch A B. V. 
("Dutch A B.V.") and the guarantors. The Dollar Term Loan and Euro Term Loan mature on February 1, 2020 and the 
Revolving Credit Facility matures on February 1, 2018. Principal is paid quarterly on both the Dollar Term Loan and the 
Euro Term Loan based on 1% per annum of the original principal amount with the unpaid balance due at maturity.

Interest is payable quarterly on both the New Dollar Term Loan and the New Euro Term Loan. Prior to the Amendment, 
interest on the Dollar Term Loan was subject to a floor of 1.25% for Eurocurrency Rate Loans plus an applicable rate of 
3.50%. For Base Rate Loans, the interest was subject to a floor of the greater of the federal funds rate plus 0.50%, the 
Prime Lending Rate, an Adjusted Eurocurrency Rate, or 2.25% plus an applicable rate of 2.50%. Interest on the Euro 
Term Loan, a Eurocurrency Loan, was subject to a floor of 1.25% plus an applicable rate of 4.00%.

Under the Senior Secured Credit Facilities, interest on any outstanding borrowings under the Revolving Credit Facility is 
subject to a floor of 1.00% for Eurocurrency Rate Loans plus an applicable rate of 3.50% (subject to an additional step-
down to 3.25%). For Base Rate Loans, the interest is subject to a floor of the greater of the federal funds rate plus 0.50%, 
the Prime Lending Rate, an Adjusted Eurocurrency Rate, or 2.00% plus an applicable rate of 2.50% (subject to an 
additional step-down to 2.25%).

Under circumstances described in the Credit Agreement, the Company may increase available revolving or term facility 
borrowings up to $400.0 million plus an additional amount subject to the Company not exceeding a maximum first lien 
leverage ratio described in the Credit Agreement.

Any indebtedness under the Senior Secured Credit Facilities may be voluntarily prepaid in whole or in part, in minimum 
amounts, subject to the make-whole provisions set forth in the Credit Agreement. Such indebtedness is subject to 
mandatory prepayments amounting to the proceeds of asset sales over $25.0 million annually, proceeds from certain debt 
issuances not otherwise permitted under the Credit Agreement and 50% (subject to a step-down to 25.0% or 0% if the 
First Lien Leverage Ratio falls below 4.25:1 or 3.50:1, respectively) of Excess Cash Flow.

During the year ended December 31, 2014, we voluntarily repaid $100.0 million of the outstanding New Dollar Term 
Loan. Concurrent with this action, we recorded a pre-tax loss on extinguishment of $3.0 million, consisting of the write-
off of $2.2 million and $0.8 million of unamortized deferred financing costs and original issue discounts, respectively.

We are subject to customary negative covenants as well as a financial covenant which is a maximum First Lien Leverage 
Ratio. This financial covenant is applicable only when greater than 25% of the Revolving Credit Facility (including letters 
of credit not cash collateralized to at least 103%) is outstanding at the end of the fiscal quarter.

Deferred financing costs of $92.9 million and original issue discounts of $25.7 million were incurred at the inception of 
the Senior Secured Credit Facilities. These amounts are amortized as interest expense over the life of the Senior Secured 
Credit Facilities.

121

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

Amortization expense related to deferred financing costs, net for years ended December 31, 2014 and 2013 were $13.3 
million and $11.7 million, respectively. 

Amortization expense related to original issue discounts for the years ended December 31, 2014 and 2013 were $3.6 
million and $3.0 million, respectively.

At December 31, 2014 and 2013 there were no borrowings under the Revolving Credit Facility. At December 31, 2014 
and 2013, letters of credit issued under the Revolving Credit Facility totaled $15.5 million and $20.7 million, respectively, 
which reduced the availability under the Revolving Credit Facility. Availability under the Revolving Credit Facility was 
$384.5 million and $379.3 million at December 31, 2014 and 2013, respectively.

(b)  Significant Terms of the Senior Notes

On February 1, 2013, Dutch B B.V., as "Dutch Issuer", and Axalta US Holdings, as "US Issuer", (collectively the 
"Issuers") issued $750.0 million aggregate principal amount of 7.375% senior unsecured notes due 2021 (the "Dollar 
Senior Notes") and related guarantees thereof. Additionally, Dutch B B.V. issued €250.0 million aggregate principal 
amount of 5.750% senior secured notes due 2021 (the "Euro Senior Notes") and related guarantees thereof. Cash fees 
related to the issuance of the Senior Notes were $33.1 million, are recorded within deferred financing costs, net and are 
amortized as interest expense over the life of the Notes. At December 31, 2014 and 2013, the remaining unamortized 
balances were $25.3 million and $29.4 million, respectively. The expense related to the amortization of the deferred 
financing costs for the Successor year ended December 31, 2014 and 2013, were $4.1 million and $3.7 million, 
respectively. 

The Senior Notes are unconditionally guaranteed on a senior basis by certain of the Issuers’ subsidiaries.

The indentures governing the Senior Notes contain covenants that restrict the ability of the Issuers and their subsidiaries 
to, among other things, incur additional debt, make certain payments including payment of dividends or repurchase equity 
interest of the Issuers, make loans or acquisitions or capital contributions and certain investments, incur certain liens, sell 
assets, merge or consolidate or liquidate other entities, and enter into transactions with affiliates.

(i) Euro Senior Notes

The Euro Senior Notes were sold at par and are due February 1, 2021. The Euro Senior Notes bear interest at 5.750% 
payable semi-annually on February 1 and August 1. Cash fees related to the issuance of the Euro Senior Notes were $10.2 
million, and are recorded within "Deferred financing costs, net" and are amortized into interest expense over the life of the 
Senior Notes. At December 31, 2014 and 2013, the remaining unamortized balances were $7.7 million and $9.0 million, 
respectively.

On or after February 1, 2016, we have the option to redeem all or part of the Euro Senior Notes at the following 
redemption prices (expressed as percentages of principal amount):

Period
2016
2017
2018
2019
2020 and thereafter

Euro Notes
Percentage

104.313%
102.875%
101.438%
100.000%
100.000%

Notwithstanding the foregoing, at any time and from time to time prior to February 1, 2016, we may at our option redeem 
in the aggregate up to 40% of the original aggregate principal amount of the Euro Senior Notes with the net cash proceeds 
of one or more Equity Offerings (as defined in the indenture governing the Euro Senior Notes), at a redemption price of 
105.750% plus accrued and unpaid interest, if any, to the redemption date.

In addition, we have the option to redeem up to 10% of the Euro Senior Notes during any 12-month period from issue 
date until February 1, 2016 at a redemption price of 103.0%, plus accrued and unpaid interest, if any, to the redemption 
date.

122

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

Upon the occurrence of certain events constituting a change of control, holders of the Euro Senior Notes have the right to 
require us to repurchase all or any part of the Euro Senior Notes at a purchase price equal to 101% of the principal amount 
plus accrued and unpaid interest, if any, to the repurchase date.

The indebtedness evidenced by the Euro Senior Notes and related guarantees is secured on a first-lien basis by the same 
assets that secure the obligations under the Senior Secured Credit Facilities, subject to permitted liens and applicable local 
law limitations, is senior in right of payment to all future subordinated indebtedness of the Issuers, is equal in right of 
payment to all existing and future senior indebtedness of the Issuers and is effectively senior to any unsecured 
indebtedness of the Issuers, including the Dollar Senior Notes, to the extent of the value securing the Euro Senior Notes.

(ii) Dollar Senior Notes

The Dollar Senior Notes were sold at par and are due May 1, 2021. The Dollar Senior Notes bear interest at 7.375% 
payable semi-annually on February 1 and August 1. Cash fees related to the issuance of the Dollar Senior Notes were 
$22.9 million, are recorded within "Deferred financing costs, net" and are amortized as interest expense over the life of 
the Senior Notes. At December 31, 2014 and 2013, the remaining unamortized balances were $17.6 million and $20.4 
million, respectively.

On or after February 1, 2016, we have the option to redeem all or part of the Dollar Senior Notes at the following 
redemption prices (expressed as percentages of principal amount)

Period
2016
2017
2018
2019
2020 and thereafter

Dollar Notes
Percentage

105.531%
103.688%
101.844%
100.000%
100.000%

Notwithstanding the foregoing, at any time and from time to time prior to February 1, 2016, we may at our option redeem 
in the aggregate up to 40% of the original aggregate principal amount of the Dollar Senior Notes with the net cash 
proceeds of one or more Equity Offerings (as defined in the indenture governing the Dollar Senior Notes), at a redemption 
price of 107.375% plus accrued and unpaid interest, if any, to the redemption date.

Upon the occurrence of certain events constituting a change of control, holders of the Dollar Senior Notes have the right 
to require us to repurchase all or any part of the Dollar Senior Notes at a purchase price equal to 101% of the principal 
amount plus accrued and unpaid interest, if any, to the repurchase date.

The indebtedness evidenced by the Dollar Senior Notes is senior unsecured indebtedness of the Issuers, is senior in right 
of payment to all future subordinated indebtedness of the Issuers and is equal in right of payment to all existing and future 
senior indebtedness of the Issuers. The Dollar Senior Notes are effectively subordinated to any secured indebtedness of 
the Issuers (including indebtedness of the Issuers outstanding under the Senior Secured Credit Facilities and the Euro 
Senior Notes) to the extent of the value of the assets securing such indebtedness.

(c)   Short-term borrowings

On September 12, 2013, we entered into short-term borrowings in the amount of $27.8 million to partially fund the 
acquisition of a real estate investment property which closed in October 2013. The short-term borrowings associated with 
this acquisition were paid in full upon reaching maturity during the three months ended September 30, 2014. Other 
miscellaneous short-term borrowings had outstanding balances of $12.2 million and $0.4 million at December 31, 2014 
and 2013, respectively.

123

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

(d)   Bridge financing commitment fees

On August 30, 2012, we signed a debt commitment letter, which was subsequently amended and restated, that included a 
bridge facility comprised of $1,100.0 million of unsecured U.S. bridge loans and a $300.0 million of secured bridge loans 
(the "Bridge Facility"), which was to be utilized to partially fund the Acquisition in the event that permanent financing 
was not obtained. Drawings under the Bridge Facility were subject to certain conditions. Upon the issuance of the Senior 
Notes and the entry into the Senior Secured Credit Facilities, the commitments under the Bridge Facility terminated. 
Commitment fees related to the Bridge Facility of $21.0 million and associated fees of $4.0 million were expensed upon 
the termination of the Bridge Facility during the year ended December 31, 2013.

(e)   Future repayments

Below is a schedule of required future repayments of all borrowings outstanding at December 31, 2014.

2015
2016
2017
2018
2019
Thereafter

$

$

40.1
27.9
27.9
28.6
27.9
3,562.3
3,714.7

(23)  FAIR VALUE ACCOUNTING

(a)  Assets measured at fair value on a nonrecurring basis

During the Successor years ended December 31, 2014 and December 31, 2013 we recorded impairment losses of $0.1 
million and $3.2 million, respectively, associated with the abandonment of certain in process research and development 
projects acquired in the Acquisition. During the Predecessor period from January 1, 2013 through January 31, 2013 no 
assets were adjusted to their fair values on a nonrecurring basis. See Note 3 for further discussion of recording the fair 
values of the indefinite-lived in-process research and development intangible assets acquired in the Acquisition, and the 
subsequent testing of these assets for impairment.  

(b)  Fair value of financial instruments

Available for sale securities - The fair values of available for sale securities at December 31, 2014 and 2013 were $4.5 
million and $4.9 million, respectively. The fair value was based upon either Level 1 inputs when the securities are actively 
traded with quoted market prices or Level 2 when the securities are not frequently traded.

Long-term borrowings - The fair values of the Dollar Senior Notes and Euro Senior Notes at December 31, 2014 were 
$795.0 million and $320.5 million, respectively. The fair values at December 31, 2013 were $798.8 million and $362.1 
million, respectively. The estimated fair values of these notes are based on recent trades, as reported by a third party 
pricing service. Due to the infrequency of trades of the Dollar Senior Notes and the Euro Senior Notes, these inputs are 
considered to be Level 2 inputs.

The fair values of the Dollar Term Loan and the Euro Term Loan at December 31, 2014 were $2,100.5 million and $478.0 
million, respectively. The fair values at December 31, 2013 were $2,297.1 million and $552.5 million, respectively. The 
estimated fair values of the Dollar Term Loan and the Euro Term Loan are based on recent trades, as reported by a third 
party pricing service. Due to the infrequency of trades of the Dollar Term Loan and the Euro Term Loan, these inputs are 
considered to be Level 2 inputs.

124

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

(24)  DERIVATIVE FINANCIAL INSTRUMENTS

We selectively use derivative instruments to reduce market risk associated with changes in foreign currency exchange 
rates and interest rates. The use of derivatives is intended for hedging purposes only and we do not enter into derivative 
instruments for speculative purposes. A description of each type of derivative used to manage risk is included in the 
following paragraphs.

During the Successor year ended December 31, 2013, we entered into a foreign currency contract to hedge the variability 
of the US dollar equivalent of the original borrowings under the Euro Term Loan and the proceeds from the issuance of 
the Euro Senior Notes. Changes in the fair value of this instrument were recorded in current period earnings and were 
presented in Other expense, net as a component of Exchange (gains) losses. Losses related to the settlement of this 
contract recognized during the Successor year ended December 31, 2013 totaled $19.4 million. Cash flows resulting from 
the settlement of the derivative instrument on February 1, 2013 are reported as investing activities.

During the Successor year ended December 31, 2013, we entered into five interest rate swaps with notional amounts 
totaling $1,173.0 million to hedge interest rate exposures related to variable rate borrowings under the Senior Secured 
Credit Facilities. The interest rate swaps are in place until September 29, 2017. The interest rate swaps qualify and are 
designated as effective cash flow hedges.

The following table presents the location and fair values using Level 2 inputs of derivative instruments that qualify and 
have been designated as cash flow hedges included in our consolidated and combined balance sheet:

Foreign currency contracts

Other assets:

Interest rate swaps

Total assets

Other liabilities:

Interest rate swaps

Total liabilities

Successor

Year Ended December 31,

2014

2013

— $

—

5.9

5.9 $

1.5 $

1.5 $

10.5

10.5

1.2

1.2

$

$

$

$

The following table presents the location and fair values using Level 2 inputs of derivative instruments that have not been 
designated as hedges included in our consolidated and combined balance sheet:

Foreign currency contracts

Other assets:

Interest rate cap

Total assets

Other liabilities:

Foreign currency contracts

Total liabilities

Successor

Year Ended December 31,

2014

2013

$

$

$

$

— $

0.1

0.1 $

— $

— $

—

3.4

3.4

—

—

For derivative instruments that qualify and are designated as cash flow hedges, the effective portion of the gain or loss on 
the derivative is reported as a component of "Accumulated other comprehensive loss" and reclassified into earnings in the 
same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative 
representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are 
recognized in current earnings.

125

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

The following table sets forth the locations and amounts recognized during the Successor years ended December 31, 2014 
and 2013, respectively, for these cash flow hedges.

Derivatives in Cash Flow Hedging
Relationships in 2014:

Amount of
(Gain) Loss
Recognized
in OCI on
Derivatives
(Effective
Portion)

Interest rate contracts

$

4.6

Derivatives in Cash Flow Hedging
Relationships in 2013:

Amount of
(Gain) Loss
Recognized
in OCI on
Derivatives
(Effective
Portion)

Interest rate contracts

$

(5.0)

Location of (Gain) 
Loss Reclassified 
from 
Accumulated 
OCI into Income 
(Effective Portion)
Interest
expense, net

Location of (Gain) 
Loss Reclassified 
from 
Accumulated 
OCI into Income 
(Effective Portion)
Interest
expense, net

$

$

Amount of
(Gain) Loss
Reclassified
from
Accumulated
OCI to
Income
(Effective
Portion)

Location of 
(Gains) Losses 
Recognized in 
Income on 
Derivatives 
(Ineffective 
Portion)

Amount of
(Gain) Loss
Recognized
in Income on
Derivatives
(Ineffective
Portion)

Interest
expense, net

6.5

$

0.3

Amount of
(Gain) Loss
Reclassified
from
Accumulated
OCI to
Income
(Effective
Portion)

Location of 
(Gains) Losses 
Recognized in 
Income on 
Derivatives 
(Ineffective 
Portion)

Amount of
(Gain) Loss
Recognized
in Income on
Derivatives
(Ineffective
Portion)

Interest
expense, net

4.4

$

(4.3)

Also during the Successor year ended December 31, 2013, we purchased a €300.0 million 1.5% interest rate cap on our 
Euro Term Loan that is in place until September 29, 2017. We paid a premium of $3.1 million for the interest rate cap. The 
interest rate cap was not designated as a hedge and the changes in the fair value of the derivative instrument are recorded 
in current period earnings and are included in interest expense.

DPC, through DuPont, entered into contractual arrangements (derivatives) to reduce its exposure to foreign currency risk. 
The foreign currency derivative program was utilized for financial risk management and consisted of forward contracts. 
The derivative instruments were not designated as hedging instruments. Changes in the fair value of the derivative 
instruments were recorded in current period earnings and were presented in Other expense, net as a component of 
exchange (gains) losses.

Fair value gains and losses of derivative contracts, as determined using Level 2 inputs, that do not qualify for hedge 
accounting treatment are recorded in income as follows:

Derivatives Not Designated 
as
Hedging Instruments under
ASC 815

Foreign currency

forward contract

Location of (Gain) Loss
Recognized in Income on
Derivatives
Other expense, net as a component of

Exchange (gains) losses

Interest rate cap

Interest expense, net

Successor

Predecessor

Year Ended
December 31,
2014

Year Ended
December 31,
2013

Period from
January 1, 2013
through
January 31,
2013

Year Ended
December 31,
2012

$

$

1.4 $

3.4

4.8 $

20.9 $
(0.3)
20.6 $

2.0 $

—

2.0 $

3.9

—

3.9

(25)  SEGMENTS

The Company identifies an operating segment as a component: (i) that engages in business activities from which it may 
earn revenues and incur expenses; (ii) whose operating results are regularly reviewed by the Chief Operating Decision 
Maker (CODM) to make decisions about resources to be allocated to the segment and assess its performance; and (iii) that 
has available discrete financial information.

126

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

We have two operating segments: Performance Coatings and Transportation Coatings. The CODM reviews financial 
information at the operating segment level to allocate resources and to assess the operating results and financial 
performance for each operating segment. Our CODM is identified as the Chief Executive Officer because he has final 
authority over performance assessment and resource allocation decisions. Our segments are based on the type and 
concentration of customers served, service requirements, methods of distribution and major product lines.

Through our Performance Coatings segment we provide high-quality liquid and powder coatings solutions to a 
fragmented and local customer base. We are one of only a few suppliers with the technology to provide precise color 
matching and highly durable coatings systems. The end-markets within this segment are refinish and industrial.

Through our Transportation Coatings segment we provide advanced coating technologies to OEMs of light and 
commercial vehicles. These increasingly global customers require a high level of technical support coupled with cost-
effective, environmentally responsible coatings systems that can be applied with a high degree of precision, consistency 
and speed.

Our business serves four end-markets globally as follows: 

Performance Coatings

Refinish

Industrial

Total Net sales Performance Coatings
Transportation Coatings

Light Vehicle

Commercial Vehicle

Total Net sales Transportation Coatings

Total Net sales

Successor

Predecessor

Year Ended December 31,

January 1
through
January 31,

Year Ended
December 31,

2014

2013

2013

2012

$

1,850.8 $

1,670.0 $

129.4 $

1,759.3

734.2

2,585.0

1,384.5

392.2

1,776.7

655.3

2,325.3

1,291.5

334.3

1,625.8

57.4

186.8

111.6

27.8

139.4

720.2

2,479.5

1,390.6

349.3

1,739.9

$

4,361.7 $

3,951.1 $

326.2 $

4,219.4

Segment information for the Predecessor period has been recast to conform to the Successor segment presentation.

127

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

Asset information is not reviewed or included with our internal management reporting. Therefore, the Company has not 
disclosed asset information for each reportable segment.

For the Year ended December 31, 2014
Net sales (1)
Equity in earnings in unconsolidated affiliates
Adjusted EBITDA (2)
Investment in unconsolidated affiliates

For the Year ended December 31, 2013
Net sales (1)
Equity in earnings in unconsolidated affiliates
Adjusted EBITDA (2)
Investment in unconsolidated affiliates

January 1 through January 31, 2013
Net sales (1)
Equity in earnings (losses) in unconsolidated affiliates
Adjusted EBITDA (2)
Investment in unconsolidated affiliates

For the Year ended December 31, 2012
Net sales (1)
Equity in earnings in unconsolidated affiliates
Adjusted EBITDA (2)
Investment in unconsolidated affiliates

(1)  The Company has no intercompany sales.

Successor

Performance
Coatings

Transportation
Coatings

Total

$

2,585.0 $
(1.2)
547.6

7.2

1,776.7 $
(0.2)
292.9

7.1

4,361.7
(1.4)
840.5

14.3

Successor

Performance
Coatings

Transportation
Coatings

Total

$

2,325.3 $

1,625.8 $

3,951.1

1.8

500.2

7.7

0.3

198.8

8.1

2.1

699.0

15.8

Predecessor

Performance
Coatings

Transportation
Coatings

Total

$

186.8 $

—

15.0

2.0

139.4 $
(0.3)
17.7

6.7

326.2
(0.3)
32.7

8.7

Predecessor

Performance
Coatings

Transportation
Coatings

Total

$

2,479.5 $
—
426.0
0.8

1,739.9 $
0.6
151.6
7.1

4,219.4
0.6
577.6
7.9

(2)  The primary measure of segment operating performance is Adjusted EBITDA, which is defined as net income (loss) before 

interest, taxes, depreciation and amortization and other unusual items impacting operating results. 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. 
Reconciliation of Adjusted EBITDA to income (loss) before income taxes follows:

128

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

Adjusted EBITDA
Inventory step-up (a)
Merger and acquisition related costs (b)
Financing fees (c)
Foreign exchange remeasurement losses (d)
Long-term employee benefit plan adjustments (e)
Termination benefits and other employee related 

costs (f)

Consulting and advisory fees (g)
Transition-related costs (h)
IPO-related costs (i)
Other adjustments (j)
Dividends in respect of noncontrolling interest (k)
Management fee expense (l)
EBITDA

Interest expense, net

Depreciation and amortization

Income before income taxes

Successor

Predecessor

Year Ended December 31,

August 24
through
December 31,

January 1
through
January 31,

Year ended
December 31,

2014

2013

2012

2013

2012

$

840.5 $

—

—
(6.1)
(81.2)
0.6

(18.4)
(36.3)
(101.8)
(22.3)
(10.8)
2.2
(3.2)
563.2

217.7

308.7

$

36.8 $

699.0 $
(103.7)
(28.1)
(25.0)
(48.9)
(9.5)

(147.5)
(54.7)
(29.3)
—
(2.3)
5.2
(3.1)
252.1

215.1

300.7
(263.7) $

— $

32.7 $

577.6

—
(29.0)
—

—

—

—

—

—

—
—

—

—
(29.0)
—

—
(29.0) $

—

—

—
(4.5)
(2.3)

(0.3)
—

—

—
(0.1)
—

—

25.5

—

9.9

15.6 $

—

—

—
(17.7)
(36.9)

(8.6)
—

—

—
(12.6)
1.9

—

503.7

—

110.7

393.0

(a)  During the Successor year ended December 31, 2013, we recorded a non-cash fair value adjustment associated with our 

acquisition accounting for inventories. These amounts increased cost of goods sold by $103.7 million.

(b)  In connection with the Acquisition, we incurred $28.1 million and $29.0 million of merger and acquisition costs during the 

Successor years ended December 31, 2013 and December 31, 2012, respectively. These costs consisted primarily of investment 
banking, legal and other professional advisory services costs.

(c)  On August 30, 2012, we signed a debt commitment letter, which included the Bridge Facility. Upon the issuance of the Senior 

Notes and the entry into the Senior Secured Credit Facilities, the commitments under the Bridge Facility terminated. 
Commitment fees related to the Bridge Facility of $21.0 million and associated fees of $4.0 million were expensed upon the 
payment and termination of the Bridge Facility. In connection with the amendment to the Senior Secured Credit Facilities in 
February 2014, we recognized $3.1 million of costs during the Successor year ended December 31, 2014. In addition to the 
credit facility amendment, we also incurred a $3.0 million loss on extinguishment of debt recognized during the Successor year 
ended December 31, 2014, which resulted directly from the pro-rata write off of unamortized deferred financing costs and 
original issue discounts associated with the pay-down of $100.0 million of principal on the New Dollar Term Loan (discussed 
further at Note 22 to the consolidated and combined financial statements included elsewhere in this Annual Report on Form 10-
K).

(d)  Eliminates foreign exchange gains and losses resulting from the remeasurement of assets and liabilities denominated in foreign 
currencies, including a $19.4 million loss related to the acquisition date settlement of a foreign currency contract used to hedge 
the variability of Euro-based financing.

(e)  For the Successor years ended December 31, 2014 and 2013, eliminates the non-service cost components of employee benefit 

costs. Additionally, we deducted a pension curtailment gain of $7.3 million recorded during the Successor year ended 
December 31, 2014. For the Predecessor period January 1, 2013 through January 31, 2013 and the Predecessor year ended 
December 31, 2012 eliminates (1) all U.S. pension and other long-term employee benefit costs that were not assumed as part of 
the Acquisition and (2) the non-service cost component of the pension and other long-term employee benefit costs for the 
foreign pension plans that were assumed as part of the Acquisition.

129

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

(f)  Represents expenses primarily related to employee termination benefits, including our initiative to improve the overall cost 

structure within the European region, and other employee-related costs. Termination benefits include the costs associated with 
our headcount initiatives for establishment of new roles and elimination of old roles and other costs associated with cost saving 
opportunities that were related to our transition to a standalone entity.

(g)  Represents fees paid to consultants, advisors, and other third-party professional organizations for professional services 

rendered in conjunction with the transition from DuPont to a standalone entity.

(h)  Represents charges associated with the transition from DuPont to a standalone entity, including branding and marketing, 

information technology related costs, and facility transition costs.

(i)  Represents costs associated with the IPO, including a $13.4 million pre-tax charge associated with the termination of the 

management agreement with Carlyle Investment Management, L.L.C., an affiliate of Carlyle, upon the completion of the IPO.

(j)  Represent costs for certain unusual or non-operational losses and the non-cash impact of natural gas and currency hedge losses 
allocated to DPC by DuPont, stock-based compensation, asset impairments, equity investee dividends, indemnity income 
associated with the Transaction, and loss (gain) on sale and disposal of property, plant and equipment.

(k)  Represents the payment of dividends to our joint venture partners by our consolidated entities that are not wholly owned.

(l)  Pursuant to Axalta’s management agreement with Carlyle Investment Management, L.L.C., for management and financial 

advisory services and oversight provided to Axalta and its subsidiaries, Axalta was required to pay an annual management fee 
of $3.0 million and out-of-pocket expenses. 

Segment information for the Predecessor periods has been recast to conform to the Successor segment presentation.

130

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

Geographic Area Information:

The information within the following tables provides disaggregated information related to our net sales and long-lived 
assets.

Net sales by region were as follows:

Successor

Predecessor

Year Ended
December
31,

Year Ended
December
31,

Period from
August 24
through
December 31,

Period from
January 1
through
January 31,

Year Ended
December 31,

2014

2013

2012

2013

$ 1,307.8 $ 1,165.4 $

1,672.0
715.0
666.9

1,540.4
593.7
651.6

$ 4,361.7 $ 3,951.1 $

— $
—
—
—
— $

81.6 $
141.0
51.7
51.9
326.2 $

2012
1,238.6
1,675.4
595.0
710.4
4,219.4

North America
EMEA
Asia Pacific
Latin America
Total (a)

Net long-lived assets by region were as follows:

North America

EMEA

Asia Pacific

Latin America
Total (b)

Successor

December 31,
2014

December 31,
2013

$

481.4 $

542.0

234.3

256.4

483.8

623.5

218.1

297.2

$

1,514.1 $

1,622.6

(a)  Net Sales are attributed to countries based on location of the customer. Sales to external customers in China represented 

approximately 11% and 10% of the total for the Successor years ended December 31, 2014 and 2013, respectively, as well as 
11% for the Predecessor period ended January 31, 2013 and 8% in the Predecessor year ended December 31, 2012. Sales to 
external customers in Germany represented approximately 10% and 10% of the total for the Successor years ended 
December 31, 2014 and 2013, respectively, as well as 11% for the Predecessor period ended January 31, 2013 and 16% in the 
Predecessor year ended December 31, 2012. Canada, which is included in the North America region, represents approximately 
3% of total sales in all periods.

(b)  Long-lived assets consist of property, plant and equipment, net. Germany long-lived assets amounted to approximately $302.8 
million and $348.1 million in the years ended December 31, 2014 and 2013, respectively. China long-lived assets amounted to 
$189.4 million and $167.5 million in the years ended December 31, 2014 and 2013, respectively. 

(26)  ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Unrealized
Currency
Translation
Adjustments

Pension and
Other
Long-term
Employee
Benefit
Adjustments

Unrealized
Gain (Loss) on
Securities

Unrealized
Gain (Losses) on
Derivatives

Accumulated
Other
Comprehensive
Income

Successor Balance, December 31, 2013 $
Current year deferrals to AOCI

Reclassifications from AOCI to Net

income

Net Change
Successor Balance, December 31, 2014 $

24.3 $

(96.4)

—

(96.4)

(72.1) $

131

7.5 $

(29.7)

(9.0)
(38.7)
(31.2) $

(0.9) $
0.7

—

0.7
(0.2) $

3.1 $

3.6

(6.5)
(2.9)
0.2 $

34.0
(121.8)

(15.5)
(137.3)
(103.3)

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

Included within reclassifications from AOCI to Net income for the Successor year ended December 31, 2014 was $7.3 
million of curtailment gains related to an amendment to one of our pension plans.

The income tax related to the changes in pension and other long-term employee benefits for the year ended December 31, 
2014 was $16.9 million. The cumulative income tax impact related to the adjustments for pension and other long-term 
employee benefits at December 31, 2014 was a benefit of $13.4 million compared to the cumulative income tax expense 
at December 31, 2013 of $3.5 million. The income tax related to the change in the unrealized gain on derivatives for the 
year ended December 31, 2014 was $1.7 million. The cumulative income tax expense related to the adjustments for 
unrealized gain on derivatives at December 31, 2014 and 2013 were $0.2 million and $1.9 million, respectively. 

Successor Balance, December 31, 2012 $
Current year deferrals to AOCI

Reclassifications from AOCI to Net

income
Net Change
Successor Balance, December 31, 2013 $

Unrealized
Currency
Translation
Adjustments

Pension and
Other
Long-term
Employee
Benefit
Adjustments

— $

— $

24.3

—

24.3

7.5

—

7.5

24.3 $

7.5 $

Unrealized
Loss on
Securities

Unrealized
Gain  (Loss) on
Derivatives

Accumulated
Other
Comprehensive
Income

— $

(0.9)

—
(0.9)
(0.9) $

— $

7.5

(4.4)
3.1

3.1 $

—

38.4

(4.4)
34.0

34.0

The income tax related to the changes in pension and other long-term employee benefits for the Successor year ended 
December 31, 2013 was $3.5 million. The cumulative income tax expense related to the adjustment for pension and other 
long-term employee benefits at December 31, 2013 was $3.5 million. The income tax related to the change in the 
unrealized gain on derivatives for the Successor year ended December 31, 2013 was $1.9 million. The cumulative income 
tax expense related to the adjustment for unrealized gain on derivatives at December 31, 2013 was $1.9 million.

Unrealized
Currency
Translation
Adjustments

Pension and
Other
Long-term
Employee
Benefit
Adjustments

Unrealized
loss on
securities

Unrealized
Gain (Loss) on
Derivatives

Accumulated
Other
Comprehensive
Income

Predecessor Balance, December 31,

2012

Current year deferrals to AOCI

Reclassifications from AOCI to Net

income

Net Change
Predecessor Balance, January 31, 2013 $

$

— $

—

—

—
— $

(142.3) $
0.7

—

0.7
(141.6) $

1.4 $

— $

0.2

—

0.2
1.6 $

—

—

—
— $

(140.9)
0.9

—

0.9
(140.0)

The income tax related to the changes in pension and other long-term employee benefits for the Predecessor one month 
ended January 31, 2013 was $0.4 million. The cumulative income tax benefit related to the adjustment for pension and 
other long-term employee benefits at January 31, 2013 was $76.3 million. The income tax related to the change in the 
unrealized gain on derivatives for the Predecessor one month ended January 31, 2013 was $0.0 million. The cumulative 
income tax expense related to the adjustment for unrealized gain on derivatives at January 31, 2013 was $0.0 million. The 
income tax related to the change in the unrealized loss on securities for the Predecessor one month ended January 31, 
2013 was $0.0 million. The cumulative income expense cost related to the adjustment for unrealized loss on securities at 
January 31, 2013 was $0.9 million.

132

Notes to Consolidated (Successor) and Combined (Predecessor)
Financial Statements
(In millions, unless otherwise noted)

(27)  QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The following is a summary of the quarterly results of operations for the Successor years ended December 31, 2014 and 
2013, respectively (in millions, except per share data):

2014
Total revenue

Cost of goods sold

Net income (loss)

Net income (loss) attributable to

controlling interests

Basic net income (loss) per share

Diluted net income (loss) per share

2013
Total revenue

Cost of goods sold

Net income (loss)

Net income (loss) attributable to

controlling interests

Basic net income (loss) per share

Diluted net income (loss) per share

March 31

June 30(b)

September 30(b) December 31(c)

Full Year

$

1,054.4 $

1,134.3 $

1,115.8 $

1,087.0 $

4,391.5

703.5

(3.7)

(4.3)

(0.02)

(0.02)

742.5

55.8

53.8

0.23

0.23

728.1
(18.3)

(19.9)
(0.09)
(0.09)

723.1

0.9

(2.2)
(0.01)
(0.01)

2,897.2

34.7

27.4

0.12

0.12

March 31(a)

June 30(a)

September 30

December 31

Full Year

$

675.1 $

1,122.2 $

1,082.8 $

1,106.7 $

3,986.8

539.1

(156.5)

(157.8)

(0.67)

(0.67)

788.5
(21.8)

(22.8)
(0.10)
(0.10)

739.1

6.4

5.0

0.02

0.02

706.1
(47.0)

(49.3)
(0.22)
(0.22)

2,772.8
(218.9)

(224.9)
(0.97)
(0.97)

(a)  The Company recorded $72.6 million and $31.1 million of non-cash inventory adjustments associated with the fair value adjustment associated 

with our acquisition during the three months ended March 31, 2013 and June 30, 2013, respectively.

(b)  The Company recorded gains of $7.7 million and $7.3 million related to amendments to benefit plans during the three months ended June 30, 

2014 and September 30, 2014, respectively.

(c)  During the three-months ended December 31, 2014, the Company recorded a $13.4 million pre-tax charge associated with the termination of the 
management agreement with Carlyle Investment Management, L.L.C., upon the completion of the IPO and a cumulative net benefit of $3.8 
million ($0.4 million for the full year) associated with the correction of an error originating in prior periods. The Company concluded the error 
was not material to the current or previously reported periods.

Reclassification and revisions  

During the quarter ended September 30, 2014, the Company identified errors in the determination of the effective interest 
rate amortization for the Deferred Financing Costs and Original Issue Discounts that were incurred in 2013. The 
correction of these items impacted the consolidated balance sheet at December 31, 2013, and the consolidated statements 
of operations, and statements of comprehensive income (loss) for the year ended December 31, 2013. The Company 
assessed the applicable guidance and concluded that these errors were not material to the Company’s consolidated 
financial statements for the aforementioned prior periods; however, the Company did conclude that correcting these prior 
misstatements would be significant to the three and nine-month periods ended September 30, 2014 consolidated statement 
of operations. The correction had an impact of  $3.0 million, $5.1 million, $1.4 million and $2.0 million on Net income 
(loss) and Net income (loss) attributable to controlling interests in the first, second, third and fourth quarter of 2013, 
respectively.  The correction had an impact of $2.8 million and $2.5 million on Net income (loss) and Net income (loss) 
attributable to controlling interests in the first and second quarters of 2014, respectively.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL 
DISCLOSURE

None.

133

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

Based on their evaluation as of the end of the period covered by this Form 10-K, the Company’s principal executive officer 
and principal financial officer have concluded that the Company’s disclosure controls and procedures (as defined in Rules 
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")) are effective to ensure that 
information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, 
processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and 
forms and to ensure that information required to be disclosed by the Company in the reports that it files or submits under the 
Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and 
principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the quarter ended 
December 31, 2014 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control 
over financial reporting.

Management report on internal control over financial reporting

This annual report does not include a report of management’s assessment regarding internal control over financial reporting 
or an attestation report of the Company’s registered public accounting firm due to a transition period established by rules of 
the Securities and Exchange Commission for newly public companies.

ITEM 9B. OTHER INFORMATION

None.

134

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information about the Company’s directors required by Item 10 and not otherwise set forth below is contained under the 
caption "Proposal No. 1: Election of Directors" in Axalta’s definitive Proxy Statement for the 2015 Annual Meeting of 
Members (the "Proxy Statement") which the Company anticipates filing with the Securities and Exchange Commission, 
pursuant to Regulation 14A, not later than 120 days after the end of the Company’s fiscal year, and is incorporated herein by 
reference.

The executive officers of the Company are elected by the Board of Directors. The information required by this item 
concerning the Company’s executive officers is incorporated by reference herein from Part I of the Proxy Statement under the 
caption "Executive Officers." 

Information regarding the Company’s Audit Committee, code of ethics, and compliance with Section 16(a) of the Exchange 
Act is included in the Proxy Statement under the captions "Corporate Governance Matters and Committees of the Board of 
Directors - Board Committees - Audit Committee", "Corporate Governance Matters and Committees of the Board of 
Directors - Policies on Corporate Governance", and "Section 16(a) Beneficial Ownership Reporting Compliance", 
respectively and is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

The information required by Item 11 is contained in the Proxy Statement under the captions "Compensation Discussion and 
Analysis", "Potential Payments upon Termination or Change-in-Control", "Compensation Committee Interlocks and Insider 
Participation", and "Compensation Committee Report" and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND 

RELATED SHAREHOLDER MATTERS

The information required by Item 12 is contained in the Proxy Statement under the captions "Security Ownership of Certain 
Beneficial Owners and Management" and "Equity Compensation Plan Information" and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

The information required by Item 13 is contained in the Proxy Statement under the captions "Director Independence" and 
"Certain Relationships and Related Transactions" and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by Item 14 is contained in the Proxy Statement under the captions "Proposal No. 4: Ratification of 
the Appointment of the Independent Registered Public Accounting Firm" and "Independent Registered Public Accounting 
Firm" and is incorporated herein by reference.

135

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)(1)    The Company's 2014 Consolidated (Successor) and DuPont Performance Coatings Combined (Predecessor) 
Financial Statements and Reports of Independent Registered Public Accounting Firm are included in Part II, Item 8 of this 
Annual Report on Form 10-K.

(a)(2)    Consolidated Financial Statement Schedule for the Successor years ended December 31, 2014 and 2013 and the 
Predecessor period January 1, 2013 through January 31, 2013 and the Predecessor year ended December 31, 2012.

The following Consolidated Financial Statement Schedule should be read in conjunction with the previously referenced 
financial statements:

Schedule II Valuation and Qualifying Accounts

(a)(3)  Exhibits - See the Exhibit Index for the exhibits filed with this Annual Report on Form 10-K or incorporated by 
reference.  

136

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS 

Allowance for Doubtful Accounts for the Successor and Predecessor years ended December 31, and the Predecessor period 
from January 1, 2013 to January 31, 2013:

(in millions)
Successor
2014
2013
Predecessor
January 1 through January 31, 2013
2012

Balance at
Beginning of
Year

Charged to
Expenses

Deductions(1)

Balance at End
of Year

$

$

6.5 $
—

29.6 $
31.4

5.1 $
5.4

0.2 $
5.0

1.7 $
(1.1)

(1.1) $
6.8

9.9
6.5

30.9
29.6

(1)  Deductions include uncollectible accounts written off and foreign currency translation impact.

137

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this 
report to be signed on its behalf by the undersigned thereunto duly authorized on March 13, 2015.

SIGNATURES

AXALTA COATING SYSTEMS LTD.

By:

  /s/ Charles W. Shaver

Charles W. Shaver
Chairman of the Board and Chief
Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its 
behalf by the undersigned duly authorized. 

Signature

Title

Date

/s/ Charles W. Shaver
Charles W. Shaver

/s/ Robert W. Bryant
Robert W. Bryant

/s/ Sean M. Lannon
Sean M. Lannon

/s/ Orlando A. Bustos
Orlando A. Bustos

/s/ Robert M. McLaughlin
Robert M. McLaughlin

/s/ Andreas C. Kramvis
Andreas C. Kramvis

/s/ Martin W. Sumner
Martin W. Sumner

/s/ Wesley T. Bieligk
Wesley T. Bieligk

/s/ Gregor P. Böhm
Gregor P. Böhm

/s/ Allan M. Holt
Allan M. Holt

/s/ Gregory S. Ledford
Gregory S. Ledford

March 13, 2015

March 13, 2015

March 13, 2015

March 13, 2015

March 13, 2015

March 13, 2015

March 13, 2015

March 13, 2015

March 13, 2015

March 13, 2015

March 13, 2015

Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)

Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

Vice President and Global Controller
(Principal Accounting Officer)

Director

Director

Director

Director

Director

Director

Director

Director

138

  
 
EXHIBIT INDEX

EXHIBIT 
NO.

  2.1*

  2.2*

  3.1*

  3.2*

  4.1*

  4.2*

  4.3*

  4.4*

  4.5*

  4.6*

  4.7*

DESCRIPTION OF EXHIBITS

Purchase Agreement, dated as of August 30, 2012, by and between E. I. du Pont de Nemours and Company
and Flash Bermuda Co. Ltd. (n/k/a Axalta Coating Systems Ltd.) (incorporated by reference to Exhibit 2.1 to
the Registrant's Registration Statement on Form S-1 (File No. 333-198271) originally filed with the SEC on
August 20, 2014)

Amendment to Purchase Agreement, dated as of January 31, 2013, by and between E. I. du Pont de Nemours
and Company and Flash Bermuda Co. Ltd. (n/k/a Axalta Coating Systems Ltd.) (incorporated by reference
to Exhibit 2.2 to the Registrant's Registration Statement on Form S-1 (File No. 333-198271), originally filed
with the SEC on August 20, 2014)

Amended Memorandum of Association of Axalta Coating Systems Ltd. (incorporated by reference to
Exhibit 3.1 of Amendment No. 2 to the Registrant's Registration Statement on Form S-1 (File No.
333-198271), filed with the SEC on October 14, 2014)

Amended and Restated Bye-laws of Axalta Coating Systems Ltd. (incorporated by reference to Exhibit 3.1
to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-36733), filed with the SEC on November
11, 2014)

Indenture governing the 7.375% Senior Notes due 2021, dated February 1, 2013 (the "Dollar Senior Notes
Indenture"), among U.S. Coatings Acquisition Inc. (n/k/a Axalta Coating Systems U.S. Holdings, Inc.) and
Flash Dutch 2 B.V. (n/k/a Axalta Coating Systems Dutch Holding B B.V.) as Issuers, the Guarantors named
therein and Wilmington Trust, National Association, as Trustee (incorporated by reference to Exhibit 4.2 to
the Registrant's Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on
August 20, 2014)

Form of 7.375% Senior Note due 2021 (incorporated by reference to Exhibit 4.2 to the Registrant's
Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on August 20,
2014)

First Supplemental Indenture to the Dollar Senior Notes Indenture, dated April 26, 2013, among U.S.
Coatings Acquisition Inc. (n/k/a Axalta Coating Systems U.S. Holdings, Inc.) and Flash Dutch 2 B.V. (n/k/a
Axalta Coating Systems Dutch Holding B B.V.), as Issuers, the Guarantors named therein and Wilmington
Trust, National Association, as Trustee (incorporated by reference to Exhibit 4.3 to the Registrant's
Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on August 20,
2014)

First Supplemental Indenture to the Dollar Senior Notes Indenture, dated May 10, 2013, among U.S.
Coatings Acquisition Inc. (n/k/a Axalta Coating Systems U.S. Holdings, Inc.) and Flash Dutch 2 B.V. (n/k/a
Axalta Coating Systems Dutch Holding B B.V.), as Issuers, the Guarantors named therein and Wilmington
Trust, National Association, as Trustee (incorporated by reference to Exhibit 4.4 to the Registrant's
Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on August 20,
2014)

Third Supplemental Indenture to the Dollar Senior Notes Indenture, dated July 18, 2013, among U.S.
Coatings Acquisition Inc. (n/k/a Axalta Coating Systems U.S. Holdings, Inc.) and Flash Dutch 2 B.V. (n/k/a
Axalta Coating Systems Dutch Holding B B.V.), as Issuers, the Guarantors named therein and Wilmington
Trust, National Association, as Trustee (incorporated by reference to Exhibit 4.5 to the Registrant's
Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on August 20,
2014)

Fourth Supplemental Indenture to the Dollar Senior Notes Indenture, dated July 29, 2013, among U.S.
Coatings Acquisition Inc. (n/k/a Axalta Coating Systems U.S. Holdings, Inc.) and Flash Dutch 2 B.V. (n/k/a
Axalta Coating Systems Dutch Holding B B.V.), as Issuers, the Guarantors named therein and Wilmington
Trust, National Association, as Trustee (incorporated by reference to Exhibit 4.6 to the Registrant's
Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on August 20,
2014)

Fifth Supplemental Indenture to the Dollar Senior Notes Indenture, dated September 17, 2013, among U.S.
Coatings Acquisition Inc. (n/k/a Axalta Coating Systems U.S. Holdings, Inc.) and Flash Dutch 2 B.V. (n/k/a
Axalta Coating Systems Dutch Holding B B.V.), as Issuers, the Guarantors named therein and Wilmington
Trust, National Association, as Trustee (incorporated by reference to Exhibit 4.7 to the Registrant’s
Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on August 20,
2014)

139

  4.8*

  4.9*

4.10*

4.11*

4.12*

4.13*

4.14*

4.15*

4.16*

4.17*

Sixth Supplemental Indenture to the Dollar Senior Notes Indenture dated September 18, 2013, among U.S.
Coatings Acquisition Inc. (n/k/a Axalta Coating Systems U.S. Holdings, Inc.) and Flash Dutch 2 B.V. (n/k/a
Axalta Coating Systems Dutch Holding B B.V.), as Issuers, the Guarantors named therein and Wilmington
Trust, National Association, as Trustee (incorporated by reference to Exhibit 4.8 to the Registrant's
Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on August 20,
2014)

Seventh Supplemental Indenture to the Dollar Senior Notes Indenture, dated December 27, 2013, among
U.S. Coatings Acquisition Inc. (n/k/a Axalta Coating Systems U.S. Holdings, Inc.) and Flash Dutch 2 B.V.
(n/k/a Axalta Coating Systems Dutch Holding B B.V.), as Issuers, the Guarantors named therein and
Wilmington Trust, National Association, as Trustee (incorporated by reference to Exhibit 4.9 to the
Registrant's Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on
August 20, 2014)

Eighth Supplemental Indenture to the Dollar Senior Notes Indenture, dated July 1, 2014, among U.S.
Coatings Acquisition Inc. (n/k/a Axalta Coating Systems U.S. Holdings, Inc.) and Flash Dutch 2 B.V. (n/k/a
Axalta Coating Systems Dutch Holding B B.V.), as Issuers, the Guarantors named therein and Wilmington
Trust, National Association, as Trustee (incorporated by reference to Exhibit 4.10 to the Registrant's
Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on August 20,
2014)

Indenture governing the 5.750% Senior Secured Notes due 2021, dated February 1, 2013 (the "Euro Senior
Notes Indenture"), among U.S. Coatings Acquisition Inc. (n/k/a Axalta Coating Systems U.S. Holdings, Inc.)
and Flash Dutch 2 B.V. (n/k/a Axalta Coating Systems Dutch Holding B B.V.) as Issuers, the Guarantors
named therein, Wilmington Trust, National Association, as Trustee and Collateral Agent, Citigroup Global
Markets Deutschland AG, as registrar, and Citibank B.A. London Branch, as Paying Agent and
Authenticating Agent (incorporated by reference to Exhibit 4.11 to the Registrant's Registration Statement on
Form S-1 (File No. 333-198271), originally filed with the SEC on August 20, 2014)

Form of 5.750% Senior Secured Note due 2021 (incorporated by reference to Exhibit 4.11 to the Registrant's
Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on August 20,
2014)

First Supplemental Indenture to the Euro Senior Notes Indenture, dated April 26, 2013, among U.S. Coatings
Acquisition Inc. (n/k/a Axalta Coating Systems U.S. Holdings, Inc.) and Flash Dutch 2 B.V. (n/k/a Axalta
Coating Systems Dutch Holding B B.V.), as Issuers, the Guarantors named therein and Wilmington Trust,
National Association, as Trustee and Collateral Agent (incorporated by reference to Exhibit 4.13 to the
Registrant's Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on
August 20, 2014)

First Supplemental Indenture to the Euro Senior Notes Indenture, dated May 10, 2013, among U.S. Coatings
Acquisition Inc. (n/k/a Axalta Coating Systems U.S. Holdings, Inc.) and Flash Dutch 2 B.V. (n/k/a Axalta
Coating Systems Dutch Holding B B.V.), as Issuers, the Guarantors named therein and Wilmington Trust,
National Association, as Trustee and Collateral Agent (incorporated by reference to Exhibit 4.14 to the
Registrant's Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on
August 20, 2014)

Third Supplemental Indenture to the Euro Senior Notes Indenture, dated July 18, 2013, among U.S. Coatings
Acquisition Inc. (n/k/a Axalta Coating Systems U.S. Holdings, Inc.) and Flash Dutch 2 B.V. (n/k/a Axalta
Coating Systems Dutch Holding B B.V.), as Issuers, the Guarantors named therein and Wilmington Trust,
National Association, as Trustee and Collateral Agent (incorporated by reference to Exhibit 4.15 to the
Registrant's Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on
August 20, 2014)

Fourth Supplemental Indenture to the Euro Senior Notes Indenture, dated July 29, 2013, among U.S.
Coatings Acquisition Inc. (n/k/a Axalta Coating Systems U.S. Holdings, Inc.) and Flash Dutch 2 B.V. (n/k/a
Axalta Coating Systems Dutch Holding B B.V.), as Issuers, the Guarantors named therein and Wilmington
Trust, National Association, as Trustee and Collateral Agent (incorporated by reference to Exhibit 4.16 to the
Registrant's Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on
August 20, 2014)

Fifth Supplemental Indenture to the Euro Senior Notes Indenture, dated September 17, 2013, among U.S.
Coatings Acquisition Inc. (n/k/a Axalta Coating Systems U.S. Holdings, Inc.) and Flash Dutch 2 B.V. (n/k/a
Axalta Coating Systems Dutch Holding B B.V.), as Issuers, the Guarantors named therein and Wilmington
Trust, National Association, as Trustee and Collateral Agent (incorporated by reference to Exhibit 4.17 to the
Registrant's Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on
August 20, 2014)

140

4.18*

4.19*

4.20*

4.21*

10.1*

10.2*

10.3*

10.4*

10.5*

10.6*

10.7*

10.8*

Sixth Supplemental Indenture to the Euro Senior Notes Indenture, dated September 18, 2013, among U.S.
Coatings Acquisition Inc. (n/k/a Axalta Coating Systems U.S. Holdings, Inc.) and Flash Dutch 2 B.V. (n/k/a
Axalta Coating Systems Dutch Holding B B.V.), as Issuers, the Guarantors named therein and Wilmington
Trust, National Association, as Trustee and Collateral Agent (incorporated by reference to Exhibit 4.18 to the
Registrant's Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on
August 20, 2014)

Seventh Supplemental Indenture to the Euro Senior Notes Indenture, dated December 27, 2013, among U.S.
Coatings Acquisition Inc. (n/k/a Axalta Coating Systems U.S. Holdings, Inc.) and Flash Dutch 2 B.V. (n/k/a
Axalta Coating Systems Dutch Holding B B.V.), as Issuers, the Guarantors named therein and Wilmington
Trust, National Association, as Trustee and Collateral Agent (incorporated by reference to Exhibit 4.19 to the
Registrant's Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on
August 20, 2014)

Eighth Supplemental Indenture to the Euro Senior Notes Indenture, dated July 1, 2014, among U.S. Coatings
Acquisition Inc. (n/k/a Axalta Coating Systems U.S. Holdings, Inc.) and Flash Dutch 2 B.V. (n/k/a Axalta
Coating Systems Dutch Holding B B.V.), as Issuers, the Guarantors named therein and Wilmington Trust,
National Association, as Trustee and Collateral Agent (incorporated by reference to Exhibit 4.20 to the
Registrant's Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on
August 20, 2014)

Specimen Common Share Certificate (incorporated by reference to Exhibit 4.21 of Amendment No. 3 to the
Registrant's Registration Statement on Form S-1 (File No. 333-198271), filed with the SEC on October 30,
2014.)

Credit Agreement, dated as of February 1, 2013 (the "Credit Agreement"), among Flash Dutch 2 B.V. (n/k/a
Axalta Coating Systems Dutch Holding B B.V.) and U.S. Coatings Acquisition Inc. (n/k/a Axalta Coating
Systems U.S. Holdings, Inc.), as Borrowers, Flash Dutch 1 B.V. (n/k/a Axalta Coating Systems Dutch
Holding A B.V.) as Holdings, Coatings Co. U.S. Inc. (n/k/a Axalta Coating Systems U.S., Inc.), as U.S.
Holdings, Barclays Bank PLC as Administrative Agent, Collateral Agent, Swing Line Lender and L/C Issuer,
and the other Lenders party thereto (incorporated by reference to Exhibit 10.1 to the Registrant's Registration
Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on August 20, 2014)

Amendment No. 1 Agreement, to the Credit Agreement, dated as of May 24, 2013, among Flash Dutch 2
B.V. (n/k/a Axalta Coating Systems Dutch Holding B B.V.) as Dutch Borrower, Axalta Coating Systems U.S.
Holdings, Inc. as U.S. Borrower and Barclays Bank PLC, as Administrative Agent (incorporated by
reference to Exhibit 10.2 to the Registrant's Registration Statement on Form S-1 (File No. 333-198271),
originally filed with the SEC on August 20, 2014)

Second Amendment to Credit Agreement, dated as of February 3, 2014, by and among Axalta Coating
Systems Dutch Holding B B.V. (the "Dutch Borrower"), and Axalta Coating Systems U.S. Holdings, Inc.
(the "U.S. Borrower" and together with the Dutch Borrower, collectively, the "Borrowers"), Axalta Coating
Systems U.S., Inc. (f/k/a Coatings Co. U.S. Inc.) ("U.S. Holdings"), Axalta Coating Systems Dutch Holding
A B.V. ("Holdings"), and Barclays Bank PLC, as administrative agent (in such capacity, the "Administrative
Agent"), as collateral agent (in such capacity, the "Collateral Agent"), and as designated 2014 Specified
Refinancing Term Lender (in such capacity, the "Designated 2014 Specified Refinancing Term Lender")
(incorporated by reference to Exhibit 10.3 to the Registrant's Registration Statement on Form S-1 (File No.
333-198271), originally filed with the SEC on August 20, 2014)

Security Agreement, dated February 1, 2013, among the Grantors referred to therein and Barclays Bank
PLC, as Collateral Agent (incorporated by reference to Exhibit 10.4 to the Registrant’s Registration
Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on August 20, 2014)

Security Agreement, dated February 1, 2013, among the Grantors referred to therein and Wilmington Trust,
National Association, as Collateral Agent (incorporated by reference to Exhibit 10.5 to the Registrant’s
Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on August 20,
2014)

Intellectual Property Security Agreement, dated February 1, 2013, between U.S. Coatings IP Co. LLC (n/k/a
Axalta Coating Systems USA IP Co. LLC) and Barclays Bank PLC, as collateral agent (incorporated by
reference to Exhibit 10.6 to the Registrant’s Registration Statement on Form S-1 (File No. 333-198271),
originally filed with the SEC on August 20, 2014)

Intellectual Property Security Agreement, dated February 1, 2013, between the U.S. Coatings IP Co. LLC (n/
k/a Axalta Coating Systems USA IP Co. LLC) and Wilmington Trust, National Association, as collateral
agent (incorporated by reference to Exhibit 10.7 to the Registrant’s Registration Statement on Form S-1 (File
No. 333-198271), originally filed with the SEC on August 20, 2014)

Subsidiary Guaranty, dated as of February 1, 2013, among the Guarantors named therein, the Additional
Guarantors referred to therein and Barclays bank PLC as Administrative Agent (incorporated by reference to
Exhibit 10.8 to the Registrant’s Registration Statement on Form S-1 (File No. 333-198271), originally filed
with the SEC on August 20, 2014)

141

10.9*

10.10*

10.11*

10.12*

10.13*

10.14*

10.15*

10.16*

10.17*

10.18*

10.19*

Holdings Guaranty, dated as of February 1, 2013, between Flash Dutch 1 B.V. (n/k/a Axalta Coating Systems
Dutch Holding A B.V.) and Barclays Bank PLC as Administrative Agent (incorporated by reference to
Exhibit 10.9 to the Registrant’s Registration Statement on Form S-1 (File No. 333-198271), originally filed
with the SEC on August 20, 2014)

First Lien Intercreditor Agreement, dated as of February 1, 2013, among Barclays Bank PLC as Bank
Collateral Agent under the Credit Agreement, and as Notes Foreign Collateral Agent under the Indenture,
Wilmington Trust, National Association, as Notes Collateral Agent under the Indenture, each Grantor party
thereto and each Additional Agent from time to time party thereto (incorporated by reference to Exhibit
10.10 to the Registrant’s Registration Statement on Form S-1 (File No. 333-198271), originally filed with
the SEC on August 20, 2014)

Share Pledge Agreement in respect of shares in DuPont Performance Coatings Belgium BVBA (n/k/a Axalta
Coating Systems Belgium BVBA), dated 1 February 2013, between Coatings Co (UK) Limited (n/k/a Axalta
Coating Systems UK Holding Limited), Teodur B.V. and Barclays Bank PLC, as collateral agent
(incorporated by reference to Exhibit 10.11 to the Registrant’s Registration Statement on Form S-1 (File No.
333-198271), originally filed with the SEC on August 20, 2014)

Share Pledge Agreement in respect of shares in DuPont Performance Coatings Belgium BVBA (n/k/a Axalta
Coating Systems Belgium BVBA), dated 1 February 2013, between Coatings Co (UK) Limited (n/k/a Axalta
Coating Systems UK Holding Limited), Teodur B.V. and Wilmington Trust, National Association, as
collateral agent (incorporated by reference to Exhibit 10.12 to the Registrant’s Registration Statement on
Form S-1 (File No. 333-198271), originally filed with the SEC on August 20, 2014)

Bank Accounts Pledge Agreement, entered into September 17, 2013, among Axalta Coating Systems Brasil
Ltda., Wilmington Trust, National Association, as Notes Collateral Agent, and Barclays Bank PLC, as
Collateral Agent (incorporated by reference to Exhibit 10.13 to the Registrant’s Registration Statement on
Form S-1 (File No. 333-198271), originally filed with the SEC on August 20, 2014)

Quota Pledge Agreement, entered into September 17, 2013, among Brazil Coatings Co. Participações Ltda.,
Axalta Coating Systems Dutch Holding 2 B.V., Barclays Bank PLC, as Collateral Agent, and Wilmington
Trust, National Association, as Notes Collateral Agent (incorporated by reference to Exhibit 10.14 to the
Registrant’s Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on
August 20, 2014)

Security Agreement, dated as of May 10, 2013, between Axalta Coating Systems Canada Company (f/k/a
DuPont Performance Coatings Canada Company), Flash Lux Co S.à r.l. (n/k/a Axalta Coating Systems
Luxembourg Holding S.à r.l.), the additional grantors from time to time party thereto, and Barclays Bank
PLC, as collateral agent for the secured parties (incorporated by reference to Exhibit 10.15 to the
Registrant’s Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on
August 20, 2014)

Security Agreement, dated as of May 10, 2013, between Axalta Coating Systems Canada Company (f/k/a
DuPont Performance Coatings Canada Company), Flash Lux Co S.à r.l. (n/k/a Axalta Coating Systems
Luxembourg Holding S.à r.l.), the additional grantors from time to time party thereto, and Wilmington Trust,
National Association, as collateral agent for the secured parties (incorporated by reference to Exhibit 10.16
to the Registrant’s Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC
on August 20, 2014)

Securities Account Pledge Agreement in relation to the shares issued by France Coatings Co. (n/k/a Axalta
Coating Systems France Holding SAS), dated 26 April 2013, between Flash Lux Co S.à r.l. (n/k/a Axalta
Coating Systems Luxembourg Holding S.à r.l.), Barclays Bank PLC, as notes foreign collateral agent, and
France Coatings Co. (n/k/a Axalta Coating Systems France Holding SAS) (incorporated by reference to
Exhibit 10.17 to the Registrant’s Registration Statement on Form S-1 (File No. 333-198271), originally filed
with the SEC on August 20, 2014)

Pledge of Receivables Agreement, dated 26 April 2013, between Lux FinCo Coatings S.à r.l. (n/k/a Axalta
Coating Systems Finance 1 S.à r.l.) and Barclays Bank PLC, as notes foreign collateral agent (incorporated
by reference to Exhibit 10.18 to the Registrant’s Registration Statement on Form S-1 (File No. 333-198271),
originally filed with the SEC on August 20, 2014)

Securities Account Pledge Agreement in relation to the shares issued by DuPont Performance Coatings
France SAS (n/k/a Axalta Coating Systems France SAS), dated 26 April 2013, between France Coatings Co.
(n/k/a Axalta Coating Systems France Holding SAS), Barclays Bank PLC, as notes foreign collateral agent,
and DuPont Performance Coatings France SAS (n/k/a Axalta Coating Systems France SAS) (incorporated by
reference to Exhibit 10.19 to the Registrant’s Registration Statement on Form S-1 (File No. 333-198271),
originally filed with the SEC on August 20, 2014)

142

10.20*

10.21*

10.22*

10.23*

10.24*

10.25*

10.26*

10.27*

10.28*

10.29*

10.30*

10.31*

Account Pledge Agreement, made on 29 July 2013, between Axalta Coating Systems Verwaltungs GmbH (f/
k/a Flash German Co. GmbH), Axalta Coating Systems Deutschland Holding GmbH & Co. KG (f/k/a
Germany Coatings GmbH & Co. KG), Axalta Coating Systems Beteiligungs GmbH (f/k/a Germany
Coatings Co GmbH), Standox GmbH, Spies Hecker GmbH, Axalta Coating Systems Germany GmbH (f/k/a
DuPont Performance Coatings GmbH), Barclays Bank PLC, as collateral agent under the Credit Agreement,
and Wilmington Trust, National Association, as notes collateral agent under the EUR Notes Indenture
(incorporated by reference to Exhibit 10.20 to the Registrant’s Registration Statement on Form S-1 (File No.
333-198271), originally filed with the SEC on August 20, 2014)

Global Assignment Agreement, made on 29 July 2013, between Axalta Coating Systems Deutschland
Holding GmbH & Co. KG (f/k/a Germany Coatings GmbH & Co. KG) and Barclays Bank PLC, as
collateral agent and collateral sub-agent (incorporated by reference to Exhibit 10.21 to the Registrant’s
Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on August 20,
2014)

Global Assignment Agreement, made on 29 July 2013, between Axalta Coating Systems Beteiligungs GmbH
(f/k/a Germany Coatings Co GmbH) and Barclays Bank PLC, as collateral agent and collateral sub-agent
(incorporated by reference to Exhibit 10.22 to the Registrant’s Registration Statement on Form S-1 (File No.
333-198271), originally filed with the SEC on August 20, 2014)

Global Assignment Agreement, made on 29 July 2013, between Axalta Coating Systems Germany GmbH (f/
k/a DuPont Performance Coatings GmbH) and Barclays Bank PLC, as collateral agent and collateral sub-
agent (incorporated by reference to Exhibit 10.23 to the Registrant’s Registration Statement on Form S-1
(File No. 333-198271), originally filed with the SEC on August 20, 2014)

Global Assignment Agreement, made on 29 July 2013, between Spies Hecker GmbH and Barclays Bank
PLC, as collateral agent and collateral sub-agent (incorporated by reference to Exhibit 10.24 to the
Registrant’s Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on
August 20, 2014)

Global Assignment Agreement, made on 29 July 2013, between Standox GmbH and Barclays Bank PLC, as
collateral agent and collateral sub-agent (incorporated by reference to Exhibit 10.25 to the Registrant’s
Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on August 20,
2014)

Partnership Interest Pledge Agreement, made on 29 July 2013, between Axalta Coating Systems
Luxembourg Holding 2 S.à r.l. (f/k/a Luxembourg Coatings S.à r.l.), Axalta Coating Systems Verwaltungs
GmbH (f/k/a Flash German Co. GmbH), Barclays Bank PLC, as collateral agent under the Credit
Agreement, and Wilmington Trust, National Association, as notes collateral agent under the EUR Notes
Indenture (incorporated by reference to Exhibit 10.26 to the Registrant’s Registration Statement on Form S-1
(File No. 333-198271), originally filed with the SEC on August 20, 2014)

Share Pledge Agreement, made on 24 July 2013, between Axalta Coating Systems Beteiligungs GmbH (f/k/a
Germany Coatings Co GmbH), Barclays Bank PLC, as collateral agent under the Credit Agreement, and
Wilmington Trust, National Association, as notes collateral agent under the EUR Notes Indenture
(incorporated by reference to Exhibit 10.27 to the Registrant’s Registration Statement on Form S-1 (File No.
333-198271), originally filed with the SEC on August 20, 2014)

Security Purpose Agreement, made on 29 July 2013, between Axalta Coating Systems Germany GmbH (f/k/
a DuPont Performance Coatings GmbH) and Barclays Bank PLC, as collateral agent and collateral sub-agent
(incorporated by reference to Exhibit 10.28 to the Registrant’s Registration Statement on Form S-1 (File No.
333-198271), originally filed with the SEC on August 20, 2014)

Security Transfer Agreement, made on 29 July 2013, between Axalta Coating Systems Germany GmbH (f/k/
a DuPont Performance Coatings GmbH) and Barclays Bank PLC, as collateral agent and collateral sub-agent
(incorporated by reference to Exhibit 10.29 to the Registrant’s Registration Statement on Form S-1 (File No.
333-198271), originally filed with the SEC on August 20, 2014)

Global Assignment Agreement, made on 1 July 2014, between Axalta Coating Systems Logistik Germany
GmbH & Co. KG and Barclays Bank PLC, as collateral agent and collateral sub-agent (incorporated by
reference to Exhibit 10.30 to the Registrant’s Registration Statement on Form S-1 (File No. 333-198271),
originally filed with the SEC on August 20, 2014)

Partnership Interest Pledge Agreement, made on 1 July 2014, between Axalta Coating Systems Germany
GmbH, Axalta Coating Systems Verwaltungs GmbH (f/k/a Flash German Co. GmbH), Barclays Bank PLC,
as collateral agent under the Credit Agreement, and Wilmington Trust, National Association as collateral
agent under the EUR Note Indenture (incorporated by reference to Exhibit 10.31 to the Registrant’s
Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on August 20,
2014)

143

10.32*

10.33*

10.34*

10.35*

10.36*

10.37*

10.38*

10.39*

10.40*

10.41*

10.42*

Account Pledge Agreement, made on 1 July 2014, between Axalta Coating Systems Logistik Germany
GmbH & Co. KG, Barclays Bank PLC, as collateral agent under the Credit Agreement, and Wilmington
Trust, National Association, as collateral agent under the EUR Notes Indenture (incorporated by reference to
Exhibit 10.32 to the Registrant’s Registration Statement on Form S-1 (File No. 333-198271), originally filed
with the SEC on August 20, 2014)

Security Transfer Agreement, made on 1 July 2014, between Axalta Coating Systems Logistik Germany
GmbH & Co. KG and Barclays Bank PLC, as collateral agent and collateral sub-agent (incorporated by
reference to Exhibit 10.33 to the Registrant’s Registration Statement on Form S-1 (File No. 333-198271),
originally filed with the SEC on August 20, 2014)

Pledge Agreement without Transfer of Possession, dated September 18, 2013, between Axalta Coating
Systems México, S. de R.L. de C.V. (f/k/a/ DuPont Performance Coatings México, S. de R.L. de C.V.) and
Barclays Bank PLC, as collateral agent (incorporated by reference to Exhibit 10.34 to the Registrant’s
Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on August 20,
2014)

Pledge Agreement without Transfer of Possession, dated September 18, 2013, between Axalta Coating
Systems Servicios México, S. de R.L. de C.V. (f/k/a/ DuPont Performance Coatings Servicios México, S. de
R.L. de C.V.) and Barclays Bank PLC, as collateral agent (incorporated by reference to Exhibit 10.35 to the
Registrant’s Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on
August 20, 2014)

Equity Interest Pledge Agreement, dated September 18, 2013, among Axalta Coating Systems LA Holding II
B.V. (f/k/a DuPont Performance Coatings LA Holding II B.V.), Axalta Coating Systems México, S. de R.L.
de C.V. (f/k/a/ DuPont Performance Coatings México, S. de R.L. de C.V.), Axalta Coating Systems Servicios
México, S. de R.L. de C.V. (f/k/a/ DuPont Performance Coatings Servicios México, S. de R.L. de C.V.) and
Barclays Bank PLC, as collateral agent (incorporated by reference to Exhibit 10.36 to the Registrant’s
Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on August 20,
2014)

Equity Interest Pledge Agreement, dated September 18, 2013, among Axalta Coating Systems LA Holding II
B.V. (f/k/a DuPont Performance Coatings LA Holding II B.V.), Axalta Coating Systems Servicios México, S.
de R.L. de C.V. (f/k/a/ DuPont Performance Coatings Servicios México, S. de R.L. de C.V.), Axalta Coating
Systems México, S. de R.L. de C.V. (f/k/a/ DuPont Performance Coatings México, S. de R.L. de C.V.) and
Barclays Bank PLC, as collateral agent (incorporated by reference to Exhibit 10.37 to the Registrant’s
Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on August 20,
2014)

Share Pledge Agreement, dated September 18, 2013, between Axalta Powder Coating Systems USA, Inc. (f/
k/a DuPont Powder Coatings USA, Inc.), Axalta Powder Coating Systems México, S.A. de C.V. (f/k/a
DuPont Powder Coatings de México, S.A. de C.V.) and Barclays Bank PLC, as collateral agent
(incorporated by reference to Exhibit 10.38 to the Registrant’s Registration Statement on Form S-1 (File No.
333-198271), originally filed with the SEC on August 20, 2014)

Debenture, dated 1 February 2013, by Coatings Co (UK) Limited (n/k/a Axalta Coating Systems UK
Holding Limited), DuPont Performance Coatings (U.K.) Limited (n/k/a Axalta Coating Systems UK
Limited), and DuPont Powder Coatings UK Limited (n/k/a Axalta Powder Coating Systems UK Limited), in
favour of Wilmington Trust, National Association, as collateral agent appointed pursuant to the Secured
Notes Indenture (incorporated by reference to Exhibit 10.39 to the Registrant’s Registration Statement on
Form S-1 (File No. 333-198271), originally filed with the SEC on August 20, 2014)

Debenture, dated 1 February 2013, by Coatings Co (UK) Limited (n/k/a Axalta Coating Systems UK
Holding Limited), DuPont Performance Coatings (U.K.) Limited (n/k/a Axalta Coating Systems UK
Limited), and DuPont Powder Coatings UK Limited (n/k/a Axalta Powder Coating Systems UK Limited), in
favour of Barclays Bank PLC, as collateral agent appointed pursuant to the Credit Agreement (incorporated
by reference to Exhibit 10.40 to the Registrant’s Registration Statement on Form S-1 (File No. 333-198271),
originally filed with the SEC on August 20, 2014)

Security Over Shares Agreement, dated 1 February 2013, between Flash Lux Co S.à r.l. (n/k/a Axalta
Coating Systems Luxembourg Holding S.à r.l.) and Wilmington Trust, National Association, as collateral
agent appointed pursuant to the Secured Notes Indenture (incorporated by reference to Exhibit 10.41 to the
Registrant’s Registration Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on
August 20, 2014)

Security Over Shares Agreement, dated 1 February 2013, between Flash Lux Co S.à r.l. (n/k/a Axalta
Coating Systems Luxembourg Holding S.à r.l.) and Barclays Bank PLC, as collateral agent appointed
pursuant to the Credit Agreement (incorporated by reference to Exhibit 10.42 to the Registrant’s Registration
Statement on Form S-1 (File No. 333-198271), originally filed with the SEC on August 20, 2014)

144

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*

Debenture, dated 25 March 2014, by Axalta Coating Systems U.K. (2) Limited in favour of Wilmington
Trust, National Association, as collateral agent under the Secured Notes Indenture (incorporated by reference
to Exhibit 10.43 to the Registrant’s Registration Statement on Form S-1 (File No. 333-198271), originally
filed with the SEC on August 20, 2014)

Debenture, dated 25 March 2014, by Axalta Coating Systems U.K. (2) Limited in favour of Barclays Bank
PLC, as collateral agent appointed pursuant to the Credit Agreement (incorporated by reference to Exhibit
10.44 to the Registrant’s Registration Statement on Form S-1 (File No. 333-198271), originally filed with
the SEC on August 20, 2014)

Security Over Shares Agreement, dated 25 March 2014, between Axalta Coating Systems Belgium BVBA
and Wilmington Trust, National Association, as collateral agent appointed pursuant to the Secured Notes
Indenture (incorporated by reference to Exhibit 10.45 to the Registrant’s Registration Statement on Form S-1
(File No. 333-198271), originally filed with the SEC on August 20, 2014)

Security Over Shares Agreement, dated 25 March 2014, between Axalta Coating Systems Belgium BVBA
and Barclays Bank PLC, as collateral agent appointed pursuant to the Credit Agreement (incorporated by
reference to Exhibit 10.46 to the Registrant’s Registration Statement on Form S-1 (File No. 333-198271),
originally filed with the SEC on August 20, 2014)

Amended and Restated Stockholders Agreement, dated July 31, 2013, among Axalta Coating Systems 
Bermuda Co., Ltd. (n/k/a Axalta Coating Systems Ltd.), the Initial Carlyle Stockholders and the 
Management Stockholders party thereto (incorporated by reference to Exhibit 10.47 of Amendment No. 2 to 
the Registrant’s Registration Statement on Form S-1 (File No. 333-198271), filed with the SEC on October 
14, 2014)

Form of Indemnification Agreement (incorporated by reference to Exhibit 10.48 of Amendment No. 3 to the
Registrant’s Registration Statement on Form S-1 (File No. 333-198271), filed with the SEC on October 30,
2014)

Employment Agreement between Charles W. Shaver and Coatings Co. U.S. Inc., dated October 26, 2012
(incorporated by reference to Exhibit 10.49 of Amendment No. 2 to the Registrant’s Registration Statement
on Form S-1 (File No. 333-198271), filed with the SEC on October 14, 2014)

Employment Agreement between Robert W. Bryant and Coatings Co. U.S. Inc., dated January 12, 2013
(incorporated by reference to Exhibit 10.50 of Amendment No. 2 to the Registrant’s Registration Statement
on Form S-1 (File No. 333-198271), filed with the SEC on October 14, 2014)

Employment Agreement between Steven R. Markevich and Coatings Co. U.S. Inc., dated May 2, 2013
(incorporated by reference to Exhibit 10.51 of Amendment No. 2 to the Registrant’s Registration Statement
on Form S-1 (File No. 333-198271), filed with the SEC on October 14, 2014)

Employment Agreement between Joseph F. McDougall and Coatings Co. U.S. Inc., dated May 1, 2013
(incorporated by reference to Exhibit 10.52 of Amendment No. 2 to the Registrant’s Registration Statement
on Form S-1 (File No. 333-198271), filed with the SEC on October 14, 2014)

Employment Agreement between Michael Finn and Coatings Co. U.S. Inc., dated March 26, 2013
(incorporated by reference to Exhibit 10.53 of Amendment No. 2 to the Registrant’s Registration Statement
on Form S-1 (File No. 333-198271), filed with the SEC on October 14, 2014)

Axalta Coating Systems Bermuda Co., Ltd. 2013 Equity Incentive Plan (incorporated by reference to Exhibit
10.54 of Amendment No. 2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-198271),
filed with the SEC on October 14, 2014)

Form of Stock Option Agreement under the Axalta Coating Systems Bermuda Co., Ltd. 2013 Equity
Incentive Plan (incorporated by reference to Exhibit 10.55 of Amendment No. 2 to the Registrant’s
Registration Statement on Form S-1 (File No. 333-198271), filed with the SEC on October 14, 2014)

Axalta Coating Systems Ltd. 2014 Equity Incentive Plan (incorporated by reference to Exhibit 10.56 of
Amendment No. 3 to the Registrant’s Registration Statement on Form S-1 (File No. 333-198271), filed with
the SEC on October 30, 2014)

Form of Stock Option Agreement under the Axalta Coating Systems Ltd. 2014 Equity Incentive Plan
(incorporated by reference to Exhibit 10.57 of Amendment No. 3 to the Registrant’s Registration Statement
on Form S-1 (File No. 333-198271), filed with the SEC on October 30, 2014)

Form of Restricted Stock Agreement under the Axalta Coating Systems Ltd. 2014 Equity Incentive Plan
(incorporated by reference to Exhibit 10.58 of Amendment No. 3 to the Registrant’s Registration Statement
on Form S-1 (File No. 333-198271), filed with the SEC on October 30, 2014)

145

10.59*

10.60*

10.61*

10.62

21.1*

23.2

24.1

31.1

31.2

32.1††

32.2††

101†

101†

101†

101†

101†

101†

*

†

††

Form of Restricted Stock Unit Agreement under the Axalta Coating Systems Ltd. 2014 Equity Incentive Plan
(incorporated by reference to Exhibit 10.59 of Amendment No. 3 to the Registrant’s Registration Statement
on Form S-1 (File No. 333-198271), filed with the SEC on October 30, 2014)

Axalta Coating Systems LLC Retirement Savings Restoration Plan (incorporated by reference to Exhibit
10.60 of Amendment No. 2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-198271),
filed with the SEC on October 14, 2014)

Axalta Coating Systems, LLC Nonqualified Deferred Compensation Plan (incorporated by reference to
Exhibit 10.61 of Amendment No. 2 to the Registrant’s Registration Statement on Form S-1 (File No.
333-198271), filed with the SEC on October 14, 2014)

Principal Stockholders Agreement by and among Axalta Coating Systems Ltd. and the Carlyle Stockholders,
dated November 14, 2014

List of Subsidiaries (incorporated by reference to Exhibit 21.1 of Amendment No. 3 to the Registrant’s
Registration Statement on Form S-1 (File No. 333-198271), filed with the SEC on October 30, 2014)

Consent of PricewaterhouseCoopers LLP

Powers of Attorney (included in the signature pages to this Annual Report on Form 10-K)

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002

INS - XBRL Instance Document

SCH - XBRL Taxonomy Extension Schema Document

CAL - XBRL Taxonomy Extension Calculation Linkbase Document

DEF - XBRL Taxonomy Extension Definition Linkbase Document

LAB - XBRL Taxonomy Extension Label Linkbase Document

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.

146

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Corporate Information

Board of Directors

Management Group

Charles W. Shaver
(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:4)(cid:8)(cid:9)(cid:4)(cid:8)(cid:10)(cid:9)(cid:2)(cid:3)(cid:5)(cid:11)(cid:12)(cid:9)(cid:13)(cid:14)(cid:11)(cid:15)(cid:16)(cid:17)(cid:5)(cid:18)(cid:11)(cid:9)(cid:19)(cid:12)(cid:20)(cid:15)(cid:11)(cid:6)

Wesley T. Bieligk
Principal
The Carlyle Group

Gregor P. Böhm 
Managing Director and Co-head of the 
Europe Buyout advisory group
The Carlyle Group 

Orlando A. Bustos
(cid:2)(cid:3)(cid:4)(cid:5)(cid:6)(cid:7)(cid:4)(cid:8)(cid:9)(cid:4)(cid:8)(cid:10)(cid:9)(cid:2)(cid:3)(cid:5)(cid:11)(cid:12)(cid:9)(cid:13)(cid:14)(cid:11)(cid:15)(cid:16)(cid:17)(cid:5)(cid:18)(cid:11)(cid:9)(cid:19)(cid:12)(cid:20)(cid:15)(cid:11)(cid:6)
OHorizons Global, Inc.

Charles W. Shaver
Chairman and 
(cid:2)(cid:3)(cid:5)(cid:11)(cid:12)(cid:9)(cid:13)(cid:14)(cid:11)(cid:15)(cid:16)(cid:17)(cid:5)(cid:18)(cid:11)(cid:9)(cid:19)(cid:12)(cid:20)(cid:15)(cid:11)(cid:6)

Robert W. Bryant
Executive Vice President and
(cid:2)(cid:3)(cid:5)(cid:11)(cid:12)(cid:9)(cid:21)(cid:5)(cid:8)(cid:4)(cid:8)(cid:15)(cid:5)(cid:4)(cid:22)(cid:9)(cid:19)(cid:12)(cid:20)(cid:15)(cid:11)(cid:6)

Nigel Budden
Vice President
North America Region

Luke Lu
Vice President and
President, China

Steven R. Markevich
Senior Vice President and 
President, OEM Coatings

Joseph F. McDougall
Senior Vice President and
(cid:2)(cid:3)(cid:5)(cid:11)(cid:12)(cid:9)(cid:29)(cid:16)(cid:7)(cid:4)(cid:8)(cid:9)(cid:30)(cid:11)(cid:28)(cid:26)(cid:16)(cid:6)(cid:15)(cid:11)(cid:28)(cid:9)(cid:19)(cid:12)(cid:20)(cid:15)(cid:11)(cid:6)

Michael A. Cash
Senior Vice President and
President, Industrial Coatings 

Eduardo Nardinelli
Vice President and
President, Brazil

Allan M. Holt
Managing Director and Co-Head of the U.S. 
Buyout group 
The Carlyle Group 

Jorge Cossio
President
Latin America Region

Rajeev S. Rao
Vice President
Strategy and Business Development

Andreas S. Kramvis
Vice Chairman
Honeywell International Inc.

Gregory S. Ledford
Managing Director and Head of Industrial 
and Transportation Team
The Carlyle Group

Robert M. McLaughlin
Senior Vice President and Chief Financial 
(cid:19)(cid:12)(cid:20)(cid:15)(cid:11)(cid:6)(cid:9)
Airgas, Inc. 

Martin W. Sumner
Managing Director
The Carlyle Group

Michael F. Finn 
Senior Vice President,
General Counsel and Secretary

Adrian Schrobiltgen
(cid:31)(cid:5)(cid:15)(cid:11)(cid:9)(cid:25)(cid:6)(cid:11)(cid:28)(cid:5)(cid:10)(cid:11)(cid:8)(cid:17)(cid:9)(cid:30)(cid:11)(cid:20)(cid:8)(cid:5)(cid:28)(cid:3)(cid:9)!"(cid:28)(cid:17)(cid:11)(cid:7)(cid:28)
Europe, Middle East and Africa Region

Otmar Hauck
(cid:2)(cid:3)(cid:5)(cid:11)(cid:12)(cid:9)(cid:19)(cid:23)(cid:11)(cid:6)(cid:4)(cid:17)(cid:5)(cid:8)(cid:24)(cid:9)(cid:19)(cid:12)(cid:20)(cid:15)(cid:11)(cid:6)
Europe, Middle East and Africa Region

Sobers Sethi
Vice President, South and
East Asia Region 

Martin G. Horneck
Senior Vice President and
(cid:2)(cid:3)(cid:5)(cid:11)(cid:12)(cid:9)(cid:25)(cid:6)(cid:26)(cid:15)(cid:16)(cid:6)(cid:11)(cid:7)(cid:11)(cid:8)(cid:17)(cid:9)(cid:4)(cid:8)(cid:10)(cid:9)(cid:27)(cid:26)(cid:24)(cid:5)(cid:28)(cid:17)(cid:5)(cid:15)(cid:28)(cid:9)(cid:19)(cid:12)(cid:20)(cid:15)(cid:11)(cid:6)

Barry S. Snyder
Senior Vice President and 
(cid:2)(cid:3)(cid:5)(cid:11)(cid:12)(cid:9)#(cid:11)(cid:15)(cid:3)(cid:8)(cid:26)(cid:22)(cid:26)(cid:24)"(cid:9)(cid:19)(cid:12)(cid:20)(cid:15)(cid:11)(cid:6)

Peter Hurd
Senior Vice President
Operations and Supply Chain

Aaron D. Weis
Vice President and
(cid:2)(cid:3)(cid:5)(cid:11)(cid:12)(cid:9)$(cid:8)(cid:12)(cid:26)(cid:6)(cid:7)(cid:4)(cid:17)(cid:5)(cid:26)(cid:8)(cid:9)(cid:19)(cid:12)(cid:20)(cid:15)(cid:11)(cid:6)

Common Shares

Transfer Agent & Register

Independent Auditors

The common shares of the Axalta 
#(cid:26)(cid:12)(cid:10)(cid:14)(cid:15)%(cid:7)&’(cid:11)(cid:10)(cid:9)(cid:25)(cid:11)(cid:7){(cid:10):(cid:6)(cid:27)(cid:7)(cid:10)(cid:21)(cid:12):(cid:9)(cid:11)(cid:7)(cid:26)(cid:15)(cid:7)(cid:10)(cid:29)(cid:9)(cid:7)
(cid:8)(cid:9)(cid:20)(cid:7)}(cid:26)(cid:21)?(cid:7)&(cid:10)(cid:26)(cid:18)?(cid:7)H"(cid:18)(cid:29)(cid:12)(cid:15)%(cid:9)(cid:7)(cid:30)(cid:15):(cid:9)(cid:21)(cid:7)(cid:10)(cid:29)(cid:9)(cid:7)
(cid:11)’(cid:25)8(cid:26)(cid:13)(cid:7)(cid:16)|;(cid:16)(cid:6)

(cid:16)(cid:25)(cid:9)(cid:21)(cid:14)(cid:18)(cid:12)(cid:15)(cid:7)&(cid:10)(cid:26)(cid:18)?(cid:7);(cid:21)(cid:12)(cid:15)(cid:11)!(cid:9)(cid:21)(cid:7)(cid:141)(cid:7);(cid:21)(cid:30)(cid:11)(cid:10)(cid:7)
#(cid:26)(cid:25)(cid:31)(cid:12)(cid:15)’(cid:27)(cid:7){{#
^(cid:31)(cid:9)(cid:21)(cid:12)(cid:10)(cid:14)(cid:26)(cid:15)(cid:7)#(cid:9)(cid:15)(cid:10)(cid:9)(cid:21)
6201 15th Avenue
Brooklyn, New York 11219
866-307-3862
info@amstock.com

(cid:17)(cid:21)(cid:14)(cid:18)(cid:9)(cid:20)(cid:12)(cid:10)(cid:9)(cid:21)(cid:29)(cid:26)(cid:30)(cid:11)(cid:9)#(cid:26)(cid:26)(cid:31)(cid:9)(cid:21)(cid:11)(cid:7){{(cid:17)
(cid:2)(cid:3)(cid:3)(cid:4)(cid:7)~(cid:12)(cid:21)?(cid:9)(cid:10)(cid:7)&(cid:10)(cid:21)(cid:9)(cid:9)(cid:10)
&(cid:30)(cid:14)(cid:10)(cid:9)(cid:7)(cid:4)(cid:23)(cid:3)(cid:3)
Philadelphia, PA
19103

 
Global

Regional & National

Global Headquarters

Axalta Coating Systems 
Suite 3600 
2001 Market Street 
Philadelphia, PA 19103 
USA

+1 855 547 1461 
info-Global@axaltacs.com

North America

Europe, Middle East, Africa

Axalta Coating Systems, LLC.  
50 Applied Card Way 
Glen Mills, PA 19342 
USA

+1 610 358 2228 
info-NA@axaltacs.com 

Axalta Coating Systems Deutschland Holding 
GmbH & Co. KG 
Horbeller Straße 15 
D-50858 Köln Germany 

+49 02234 6019 4610  
info-EMEA@axaltacs.com 

Latin America (excl. Brazil)

Brazil

Axalta Coating Systems Mexico S de RL de CV 
Av. Industria Electrica No. 10 
Col. Industrial Barrientos 
Tlalnepantla de Baz, Edo. de Mex. 
C.P. 54015

+52 55 5366 5300  
info-LA@axaltacs.com 

Axalta Coating Systems Brazil LTDA 
Av. Lindomar Gomes de Oliveira 463 
Cumbica-Guarulhos-SP 
CEP: 07220-900

+55 11 0800 0 1 9 40 30 
info-Brazil@axaltacs.com

Asia Paciﬁc (excl. China)

China

Axalta Coating Systems Singapore Holding 
Pte Ltd. 
1 Harbor Front Place 
#11-01 Harbor Front Tower One 
Singapore 098633

+65 6586 3927  
info-AP@axaltacs.com 

Axalta Coating Systems Shanghai Holding  
Co. Ltd.  
Floor 19, Building 1, Sandhill Plaza 
No.2290 Zu Chongzhi Road 
Pudong New District  
Shanghai 201203  
China

+86 21 6020 3594  
info-China@axaltacs.com

©2015. Axalta Coating Systems. All rights reserved.