Axalta Coating Systems

A X A LTA   C O AT I N G   S Y S T E M S

2015 Annual Report

“

As a global organization 
that does business in over 
130 countries, we depend 
on the people of Axalta to 
provide the foundation of 
our success.

“

Dear Shareholders,

In our first full year as a public company, Axalta 
outperformed our key business and financial metrics. 
We also delivered against the strategic objectives that 
we set for 2015. Volume increased overall by 3.9 percent 
in spite of economic slowdowns in certain markets. While 
net sales declined slightly due to the impact of foreign 
currency exchange rates, we still surpassed our goal by 
increasing Adjusted EBITDA by 3.2 percent for the full 
year. We completed our four major capital projects to 
expand production capacity, which have been executed 
on time and budget in Germany, Brazil, China, and Mexico, 
and announced additional commitments to construct 
facilities to help fuel our growth. We also successfully 
completed our first two acquisitions and increased our 
ownership in an important joint venture. 

Axalta’s Transportation Coatings segment, which includes 
Light Vehicle OEM and Commercial Vehicle end markets, 
experienced solid volume growth. Light Vehicle OEM 
operations, which supply coatings to most of the world’s 
leading automobile and light truck end-use manufacturers, 
built on an already strong global foundation. We won new 
business with launches comprised of both individual coating 
layers as well as our Harmonized Coating Technologies™ 
that provide OEMs with end-to-end coating application 
systems. We developed product formulations to support 
the expanding use of plastic and composite materials 
that are utilized to reduce vehicle weight and increase fuel 
efficiency. Commercial Vehicle end market sales grew as 
well with multiple product launches in OEM plants that 
produce commercial trucks, buses, and rail stock. To capture 
synergies across the global Transportation Coatings 
segment, we consolidated our Light Vehicle OEM and 
Commercial Vehicle end markets, along with all of Axalta’s 
operations in China, under the leadership of Steven 
Markevich serving as Executive Vice President and 
President, Transportation Coatings and Greater China. 

Our Performance Coatings segment, comprised of Refinish 
and Industrial end markets, also grew, winning new local and 
global customers across the segment’s diverse customer 
base. The Industrial Coatings end markets rely on liquid and 
powder coatings for electrical insulation, architectural, 
pipeline, corrosion protection, and a myriad of vehicle 
component and general industrial applications. New 
products included Ganicin®, a zinc-rich family of coating 
products designed to protect substrates in highly corrosive 
environments, Abcite® 585 EF powder coating formulated 
for crater-free application on glass, and in Asia-Pacific, 
Nason® Industrial products.  

Our Refinish business maintained its growth trajectory. In 
North America, new accounts were added in core markets. 
These included leading multi-shop operators (MSOs) which 
continued to consolidate single store and regional collision 
repair body shops. The acquisition of ChemSpec USA

 
broadened our reach in the U.S. economy coatings market. In 
Asia-Pacific, we extended our premium Cromax®, Spies Hecker® 
and Standox® offerings, improved customer training capabilities 
in Japan and Thailand, introduced Nason refinish products, and 
launched Audurra™ accessory products. In China, we gained new 
dealer-owned body shops and converted many existing shops 
to our proprietary waterborne systems. In Europe, Middle East 
and Africa (EMEA), we secured new body shop customers and, 
with the acquisition of Metalak Benelux B.V., strengthened our 
distribution network and customer base in both the premium 
and mainstream segments. Latin America focused on growth 
by reinforcing our premium brands in Mexico and increasing our 
ownership in Axalta Central America. We also expanded our 
economy portfolio across the region with the increased 
penetration of Imlar® coatings, as well as the introduction 
of pre-mixed CorMax® coatings and a new loyalty program 
for Cromacryl® in Colombia.  

Net sales across our segments and end markets increased 
by 5.3 percent excluding foreign currency effects. The strength 
of our global portfolio of brands and expanding customer base 
enabled us to offset the impact of slower growth or weaker 
currency markets. Axalta’s global manufacturing footprint, 
comprised of 36 production facilities on six continents, 
provided opportunities for lower priced local sourcing. Our 
growing mainstream and economy brand portfolio was 
positioned to serve more price sensitive customers. Our 
commitment to improve operational productivity – The Axalta 
Way – gained ground across the organization driving programs 
to capture growth opportunities while reducing complexity and 
increasing cost efficiency. As non-U.S. currencies stabilize and 
economies improve, we believe that the power of our diverse 
geographic footprint will be evident.

Looking ahead, 2016 brings a notable milestone for Axalta. We 
will celebrate our company’s 150th anniversary in the coatings 
industry. From our roots in Germany in 1866, we have proudly 
become an industry leader by providing innovative coating 
technologies, color formulations, and application systems to
customers around the world.  

As a global organization that does business in over 130 
countries, we depend on the people of Axalta to provide the 
foundation of our success. We have continued to expand and 
develop our talent pool. Senior and mid-level executives have 
joined our ranks, bringing years of experience as well as new 
ideas to our business. We expanded our higher education 
internship program and designed it to help identify participants 
who could be offered full-time positions after graduation. We 
launched a leadership development program for top global 
talent, and introduced an extensive training program for 
members of our sales force who are the front line ambassadors 
in a multitude of cultures and market environments working 
directly with customers. Our employees personify our company’s 
values and will enable us to thrive for the next 150 years.   

$4,362

(6.3%)

$4,087

$1,777

(4.2%)

$1,702

$2,585

(7.7%)

$2,385

2014

2015

Transportation Coatings

Performance Coatings

Consolidated Net Sales 
Total 2015 consolidated net sales were $4.1 billion, down 6.3 percent 
over 2014 caused primarily by significant currency headwinds which had 
an unfavorable impact of 11.6 percent. Transportation Coatings net sales 
were $1.7 billion, down 4.2 percent over 2014. Performance Coatings 
net sales were $2.4 billion, down 7.7 percent over 2014.  The reduction in 
Transportation Coatings and Performance Coatings net sales was due 
primarily to significant currency headwinds which had an unfavorable 
impact of 9.6 percent and 12.9 percent, respectively.

$841

3.2%

$867

$293

+12%

$328

$548

(1.6%)

$539

2014

2015

Transportation Coatings

Performance Coatings

Adjusted EBITDA 
Total Adjusted EBITDA of $867 million represented an increase of 3.2 
percent over 2014. Transportation Coatings Adjusted EBITDA was $328 
million, up 12 percent over 2014. Performance Coatings Adjusted EBITDA 
was $539 million, down 1.6 percent over 2014.

$4,362

$715

$667

(6.3%)

+0.4%

(14.1%)

$4,087

$718

$573

$1,672

(14.7%)

$1,426

$1,311

+4.7%

$1,372

2014

2015

EMEA

North America

Latin America

Asia-Pacific

Net Sales by Region 
Net sales by region were strong despite weaker economic conditions in 
emerging markets and the impact of strong currency headwinds. In 2015, 
volume grew in each region led by North America and Asia-Pacific with 
both EMEA and Latin America also performing well.

The 2015 Annual Report to Shareholders includes certain non-GAAP financial measures, including adjusted EBITDA. These 
non-GAAP financial measures should be considered only as supplemental to, and not as superior to, financial measures 
prepared in accordance with GAAP. Please refer to the Annual Report on Form 10-K included within the 2015 Annual Report 
to Shareholders for a reconciliation of the non-GAAP financial measures included herein to the most directly comparable 
financial measures prepared in accordance with GAAP. Adjusted EBITDA means earnings, before interest, taxes, depreciation,
and amortization.

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 business, industry, strategy, financing activities or actual results to differ materially. Axalta 
undertakes no obligation to update or revise any of the forward looking statements contained herein, whether as a result of 
new information, future events or otherwise.

 
 
The Year in Review

Signed joint venture 
with Shanghai Kinlita Chemical 
to produce and supply coatings 
to heavy-duty truck 
manufacturers in China

Opened first Coating 
Technology Training Center 
in collaboration with the 
Automotive Workshop 
Owners Association in 
Buenos Aires, Argentina

Opened expanded 
waterborne coatings 
manufacturing plant in 
the Jiading district of 
Shanghai, China 

Broke ground on new 
Customer Experience 
Center in Concord, NC

Announced investment 
in India to double production 
capacity and construct an 
automotive OEM coatings 
development laboratory in 
the state of Gujarat

Opened dual refinish 
and powder coatings 
Customer Training Center 
in Houston, TX

Building Resources for Customers

Manufacturing

In China, Axalta began production at its expanded 
manufacturing center in the Jiading district of Shanghai. 
The facility, which is adjacent to Axalta’s existing 
operations complex, will be dedicated to producing 
waterborne coatings. This new facility features 
advanced manufacturing technologies and integrated 
production systems engineered to reduce the 
environmental footprint of coatings manufacturing. 
The highly automated facility is designed to maximize 
the use of raw materials and accelerate manufacturing 
cycle time.

On the site of the company’s largest operations complex in 
Wuppertal, Germany, Axalta commissioned a new facility 

to increase its waterborne coatings manufacturing capacity. 
The additional facility will be dedicated to manufacturing 
coatings for light and commercial vehicle OEMs in Axalta’s 
EMEA region, as well as for Axalta’s three global refinish 
brands – Cromax®, Spies Hecker® and Standox®. 

We also announced the construction of new plants to 
better serve customers in Latin America and Asia-Pacific. 
In Argentina, construction began near Buenos Aires on a 
building for the manufacture of coatings and to serve as 
country headquarters. In India, the existing operations 
center in Savli will be expanded to double production 
capacity and house a new coatings development center.  

Commissioned the expansion of 
waterborne coating manufacturing 
capacity in Wuppertal, Germany

Sponsored the first Axalta 
“We Paint Winners” 400  
race at Pocono Raceway 

Acquired Metalak Benelux 
B.V. in Belgium

Announced plans to construct 
Axalta’s Global Innovation 
Center at The Navy Yard in 
Philadelphia, PA

Axalta acquired ChemSpec USA 
and its portfolio of brands for the 
North America refinish segment 

Announced plans to construct 
a new country headquarters 
and manufacturing center 
in Argentina

Customer Training Centers

Customer focus means supporting the customer even after 
our products have been purchased. In 2015, Axalta opened 
or expanded training centers equipped to help our customers 
improve their skills with the use our products. 

•  Axalta opened the first dual purpose training center in 

Houston, Texas to support customers of both refinish and 
powder products in the south central region of the U.S.  

• 

In Concord, North Carolina Axalta announced construction 
of a new Customer Experience Center that will include 

training facilities for refinish technicians and resources 
that can be used by all Axalta customers.  

• 

• 

In Buenos Aires, Argentina Axalta partnered with the 
local refinish industry association to create a training 
center for body shop technicians.

In Utsonomiya, Japan Axalta celebrated the opening   
of a refurbished and expanded training center.

•  A new Cromax Color Center in Chiang Rai,                 

Thailand was commissioned with the support               
of a  local distributor of Cromax products.     

Acquisitions

Axalta completed acquisitions and increased ownership in a joint venture partner as part of a long-term strategic plan to expand 
market share and enter new markets. 

Metalak

ChemSpec

USA

In July, Axalta completed its first acquisition with the 
purchase of Metalak Benelux B.V. For more than 60 years, 
Metalak had been the exclusive distributor of Axalta’s Spies 
Hecker® refinish coating products sold in the Netherlands 
and in Flanders, Belgium. Formerly a privately owned 
company, Metalak maintains offices in Bornem, Belgium 
and in Tiel, Netherlands. The company will continue to 
operate under the Metalak name and remain the sales 
organization for Spies Hecker as well as for Metalak’s Plus 
Paint® products sold in the Netherlands and Belgium.  

In November, Axalta purchased ChemSpec USA, an Ohio-based 
manufacturer of coatings focused on the economy segment 
of the collision repair industry. This acquisition will allow 
Axalta to expand its understanding of and footprint in this 
important customer segment. ChemSpec products include the 
Metalux® Premium Automotive Refinish System, Hydrolux® 
Waterborne System, Metacryl® Commercial and Fleet, and 
Montana Big Sky specialty clear and primer refinish 
products that cater to the collision repair and heavy-duty 
truck markets.

Axalta Central America

Axalta increased its ownership of Axalta Coating Systems CA, a joint venture, headquartered in Guatemala. Axalta Central America 
manufactures and distributes refinish, industrial and architectural coatings throughout Central America and the Caribbean. Axalta’s 
increased position will provide greater access to markets in the region, increase opportunities for local manufacturing, and improve 
the company’s operating efficiency through the implementation of Axalta’s productivity and cost savings strategies.

Technology for Growth

Axalta’s ability to meet customer expectations for innovative coatings depends on the technologies that can be used to 
bring new products to market. In order to fulfill this commitment, the Technology organization underwent a transformation 
in 2015 designed to position its team of more than 1,300 scientists, engineers, and technologists around the world to 
create the coatings of the future while consistently monitoring and improving the performance of today’s products.  

Technology for Innovation 

Investing for Our Customers’ Success 

Axalta’s approach to meeting evolving customer expectations 
rests on three pillars: 

•  New and improved product technologies that leverage 
        proprietary materials and leading formulation capabilities    
        will provide durable coatings that deliver both the 
        aesthetics and protective benefits that customers expect. 

Process technologies will create greater operations 

• 
        efficiencies and productivity gains, which are key 
        performance parameters at all of Axalta’s manufacturing   
        centers. 

• 

Technology must follow through to the customer by 
providing superior after-sales service that includes evolving 
color formulations, application tools, line service support 
in customer plants, and face-to-face and online training 
resources designed to ensure that customers derive the 
maximum benefits from Axalta’s products.  

In 2015, Axalta announced construction of two new 
technology centers, the reorientation of existing facilities, 
and internal organizational changes to better serve 
customers. In Philadelphia, Pennsylvania, minutes away from 
both Axalta’s corporate and North America headquarters, 
the company announced plans for a new Global Innovation 
Center which will serve as the hub of a global technology 
network. Located at The Navy Yard, Philadelphia’s center for 
world class offices and research laboratories, staff at the 
Global Innovation Center will develop future generations of 
Axalta’s products, processes, and service technologies. 

In China, Axalta will open a new Asia-Pacific Technology 
Center in Shanghai to serve the entire region. The facility 
will also house a customer training center. These new 
facilities will join expanded technology centers in Wuppertal, 
Germany and in Mt. Clemens, Michigan to support customers 
in the EMEA region and the Americas, respectively. 

The Axalta Way

In 2015, Axalta introduced a new operating system across 
the entire organization known as The Axalta Way. It is built 
on a successful productivity and cost reduction program 
adopted in 2014 throughout the EMEA region. To take the 
concept global, a dedicated, senior cross-functional team 
was established with the goal of identifying projects, getting 
them underway, and monitoring progress with consistent 
benchmarks. In its initial company-wide phase, The Axalta 
Way focused on finding large scale opportunities for 
improved productivity by reducing costs and increasing 
efficiencies. Projects have ranged from maximizing 

procurement strategies and reducing manufacturing cycle 
time to introducing improved processes for bringing new 
products to market. During 2015, The Axalta Way evolved 
into a global commitment to continuous improvement across 
the entire organization. To reach the organization as a 
whole, project accomplishments and best practices began 
to be reported in a new global employee newsletter. 
The publication, named “The Axalta Way,” recognizes 
individuals  and teams of employees at all levels of the 
organization for their commitment to operational excellence 
and growth opportunities. 

Axalta emloyees in Belgium bike to raise 
money for a leading cancer charity 

Axalta employees plant trees to start the “Axalta Forest” 
in China’s Hebei province as part of a multi-year pledge                

to support the Mother River Protection Program

Corporate Social Responsibility

Axalta is committed to helping sustain the communities in 
which our employees live and work through partnerships 
and corporate social responsibility initiatives. Whenever 
possible we connect our business and fields of expertise as 
a technology-based manufacturing company to the projects 
we select. Consequently, we focus our support on projects 
related to education, sustainability, and community service.

Education - particularly the STEM disciplines of science, 
technology, engineering, and mathematics - make a 
substantial contribution to the economic growth of the 
communities in which we operate and to the future of Axalta. 
In 2015 we supported projects that benefited high school 
and university students, institutions, and events that 
developed and promoted STEM-related initiatives. 

Sustainability is central to the health of the planet 
and to our communities. Axalta’s coatings are designed 
to contribute to a sustainable world by helping our 
customers save time and energy as they apply our coatings 
and enabling the materials they coat to last longer. We 
support organizations that promote the conservation of 
natural resources and protect the environment. 

Whenever possible, Axalta works with both education and 
sustainability partners, and other selected organizations 
in or near our home towns, bringing a local focus to our 
contributions. This also enables our employees to benefit 
and to volunteer their time and talents on an ongoing basis.

f
o
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r
a
o
B

s
r
o
t
c
e
r
i
D

Wesley T. Bieligk

Gregor P. Böhm

Orlando A. Bustos

Andreas C. Kramvis

Charles W. Shaver

Gregory S. Ledford

Robert M. McLaughlin

Lori J. Ryerkerk

Martin W. Sumner

p
u
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From left to right, front row: Michael A. Cash,  Aaron D. Weis, Robert W. Bryant, Charles W. Shaver, Steven R. Markevich, Martin G. Horneck, 
and Eduardo Nardinelli. Second row: Matthias Schönberg, Michael L. Carr, Joseph F. McDougall, Nigel Budden, Dan Key, and Jorge Cossio. 
Third row: Michael F. Finn, Barry S. Snyder, Sobers Sethi, Luke Lu, and Rajeev Rao.

 
 
 
Form 10-K

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, 2015 
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, 2015, the last day of the registrant's most recently completed second fiscal quarter, the aggregate market value of the registrant's 
common stock held by non-affiliates of the registrant was approximately $5.2 billion (based on the closing sale price of the common stock on that 
date on the New York Stock Exchange).
As of February 15, 2016, there were 238,295,641 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 2016 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, 2015.

3
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(cid:2)

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

(cid: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. Based on market 
information from 2014, 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 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 36 manufacturing facilities, four technology centers, 46 customer training centers and more than 
12,800 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. See further discussion in Note 25 to our consolidated and combined financial statements 
included elsewhere in this Annual Report on Form 10-K.

Table above reflects numbers for the year ended December 31, 2015.

3

(cid:2)

Net sales for our four end-markets and four regions for the year ended December 31, 2015 are highlighted below:

Note: Latin America includes Mexico

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.

Note: Latin America includes Mexico

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.

4

(cid:2)

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. 

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 vehicle 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 more than 180,000 active color variations, using over four million 
formulations, 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.

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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 and continue to contribute to our 
success in the global refinish market.

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 46 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. Our customer retention rate levels have been and continue to be strong.

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 6% of our Performance Coatings net sales and our top ten customers accounted for less than 16% 
of our Performance Coatings net sales during the year ended December 31, 2015.

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.

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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.

Note: Latin America includes Mexico

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.

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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 Harmonized Coating TechnologiesTM, including 3-Wet, Eco-Concept and 2-Wet Monocoat, 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 six broad categories: resins, pigments, solvents, monomers, 
isocyanates and additives. Our total raw material spend represents between 45% and 55% of our cost of sales.  We purchase 
raw materials from a diverse group of suppliers, with our top ten suppliers representing approximately 33% of our 2015 
spending on raw materials. 

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Approximately 70% 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. Since 2001, our and our legacy company’s variable cost of 
sales have remained stable between 37% 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 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, 2015, we have approximately 1,300 
employees dedicated to technology development. For the years ended December 31, 2015 and 2014, our research and 
development expenses were $51.6 million and $49.5 million, respectively. We operate four 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, 2015, we had a portfolio of 613 issued patents and more than 280 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, 2015, 246 
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®, AquaEC®, AudurraTM, 
Centari®, ChallengerTM, ChemophanTM, Colornet®, Corlar®, Cromax®, Cromax Mosaic®,  DuxoneTM, Harmonized Coating 
TechnologiesTM, Imron®, Imron EliteTM, Imron ExcelProTM, LutophenTM, Nap-Gard®, Nason®, Rival®, Spies Hecker®, 
Standox®, StollaquidTM, SyntopalTM, SyroxTM, Vermeera™ and Voltatex®, which are protected under applicable intellectual 
property laws and are the property of us and 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 11 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 $204.5 million and $218.4 million for the years ended December 31, 2015 and 2014, 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, 2015, we had approximately 12,800 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.

As of December 31, 2015, 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.

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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 68% 
reduction in our Total Recordable Safety Incident rate from year-end 2003 to year-end 2015, which is nine times better than 
the 2014 U.S. chemical manufacturing industry average (0.25 versus the 2014 U.S. chemical manufacturing industry average 
of 2.3), according to the US Bureau of Labor Statistics. 

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. Our global 
manufacturing facilities have an established management system for environmental stewardship and certified under 
ISO14001. 

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 current 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.

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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, they should not 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, 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. For 
example, 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 propensity of car owners to pay for cosmetic 
repairs generally 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 other 
economies, or weakening of emerging markets, such as Brazil or Venezuela, 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. 
Further, 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.

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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 7.6% of our 2015 net sales and our largest 
distributor accounted for approximately 3.3% of our 2015 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 changes in business conditions, product requirements, 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.

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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. In rising raw material price environments, we may be unable to pass along these increased 
costs to our customers. In declining raw material price environments, customers may seek price concessions from us greater 
than any raw material cost savings we realize. If we are not able to fully offset the effects of higher raw materials costs, or if 
customers demand greater raw material price concessions than we obtain in low raw cost environments, our financial results 
could deteriorate. In addition to the risks associated with raw materials prices, 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.

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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 70% of our 2015 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, including our 
Venezuelan 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 operations in Venezuela continue to be subject to the risks associated with the volatility in economic conditions caused 
by the weakening of the Venezuelan bolivar and general uncertainty in the political environment. From December 2014 
through June 2015, we had utilized Venezuela’s Complementary System of Foreign Currency Administration (“SICAD I”) to 
translate our Venezuelan subsidiary’s financial statements into U.S. dollars. Because of the continued challenging economic 
conditions in Venezuela, at June 30, 2015 we re-evaluated the exchange rate used for our Venezuelan subsidiary’s operations, 
including the impact on our non-U.S. dollar denominated monetary and non-monetary assets and liabilities. As a result, we 
determined that the equity of our Venezuelan subsidiary would be realized through a dividend utilizing the Marginal Foreign 
Exchange System (“SIMADI”) exchange mechanism due to the current illiquidity of SICAD I. Accordingly, as of June 30, 
2015, we changed our foreign exchange rate to SIMADI and continue to use this foreign exchange rate through December 31, 
2015, which currently approximates 199.5 Venezuelan bolivars to 1.0 U.S. dollar. The SIMADI rate compares to the SICAD I 
rate of 12.0 Venezuelan bolivars to 1.0 U.S. dollar. 

Any further volatility in economic conditions in Venezuela caused by general uncertainty in the political environment, change 
in the currency exchange mechanisms or fluctuation of the SIMADI rate, which may vary in the future, could adversely affect 
our financial position resulting in a potential impairment or devaluation of our assets and liabilities. These events could result 
in a material unfavorable impact to our results of operations and financial condition, both for any period in which we 
determine to remeasure using another rate and on a going forward basis following any such remeasurement. See further 
discussion in Note 27 to our consolidated and combined financial statements included elsewhere in this Annual Report on 
Form 10-K.

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.

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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, the Venezuelan bolívar and the Russian ruble. For example, unfavorable movement in the Euro negatively 
impacted our results of operations in the second half of 2014 and throughout 2015, and the decline of the Euro could affect 
future periods. 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.

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 introduced 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.

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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 introduced 
training since becoming an independent company, we cannot assure you that such policies, procedures and training will 
effectively prevent violations in the future, particularly as the scope of certain laws may be unclear and may be subject to 
changing interpretations.

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 the 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.

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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.

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 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.

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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, 2015, 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.

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 you 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 you 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 you 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 you 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 you 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 you 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.

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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 you 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.

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 timeframe 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. Acquisitions and divestitures may also require us to devote significant internal resources 
and could divert management's attention away from operating our business.

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.

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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.

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 on Form 10-K.

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, including 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.

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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” may impose 30% withholding on “foreign passthru payments” made by a 
“foreign financial institution” (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. Such withholding on “foreign passthru payments” will apply from January 1, 2019 at the earliest. 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 term “foreign passthru payment” is currently not defined. The United States 
has entered into an intergovernmental agreement (an “IGA”) with Bermuda, which modifies the FATCA withholding regime 
described above. 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.

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 market price of our common shares and 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 you 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, 2015, we had approximately $3.4 billion of indebtedness on a consolidated basis, including 
$750.0 million of our Dollar Senior Notes (as defined herein), $274.4 million of our Euro Senior Notes (as defined herein), 
$2,042.5 million of the Dollar Term Loan facility (as defined herein) and $428.0 million of the Euro Term Loan facility (as 
defined herein). In addition, as of December 31, 2015, we had approximately $375.1 million in borrowing capacity available 
under our Revolving Credit Facility, after giving effect to $24.9 million of outstanding letters of credit. As of December 31, 
2015, we were in compliance with all of the covenants under our outstanding debt instruments.

Our substantial indebtedness could have important consequences to you. 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 borrow 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.

21

(cid:2)

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.

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, 2015, we had $375.1 million of 
additional borrowing capacity under our Revolving Credit Facility, after giving effect to $24.9 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—Financial Condition."

22

(cid:2)

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.

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.

23

(cid:2)

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.

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.

24

(cid:2)

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, Berkshire Hathaway Inc. affiliate ("Berkshire") 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.

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. 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.

25

(cid:2)

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. 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 have increased our legal and financial compliance costs and have made 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 continue to comply with these requirements, 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 no longer a controlled company, and we may have difficulties complying with NYSE rules relating to the 
composition of our Board of Directors.

Our common shares are listed on the NYSE. Prior to April 2015, we were a controlled company under NYSE rules, meaning 
that we were not subject to a number of corporate governance rules relating to the composition of our Board of Directors and 
certain committees. Following the sales of common shares by Carlyle in April 2015, we are no longer a controlled company. 
Under NYSE rules, we are permitted to phase into compliance with certain corporate governance requirements from which 
we were previously exempt, including:

•

•

•

•

the requirement that a majority of the Board of Directors consist of independent directors;

the requirement that we 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 we 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 the nominating and corporate governance and
compensation committees.

We intend to comply with these NYSE rules. However, we may not be able to attract and retain the number of independent 
directors needed to comply with NYSE rules during the phase-in period for compliance.

26

(cid:2)

Carlyle will continue to have the ability to significantly influence our decisions, and their interests in our business may be 
different from yours.

As of December 31, 2015, Carlyle owned 29.6% of our common shares and continues to exercise significant influence over 
our affairs. Pursuant to a principal stockholders agreement, a majority of our Board of Directors has been designated by 
Carlyle. See Part III, Item 13, “Certain Relationships and Related Transactions and Director Independence” As a result, 
Carlyle and its designees to our Board of Directors currently have the ability to control: the appointment of our management, 
any determination to enter into a merger, sales of substantially all or all of our assets and other extraordinary transactions and 
any amendments to our memorandum of association or bye-laws. Pursuant to our principal stockholders agreement, Carlyle 
continues to have the ability to designate a majority of our directors until it owns less than 25% of our outstanding common 
shares and, as a result, until such time, Carlyle will exercise significant influence over 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. 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.

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 offerings. We may also issue additional common 
shares or convertible debt securities. As of February 15, 2016, we had 1,000,000,000 common shares authorized and 
238,295,641 common shares outstanding. 

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 that may occur pursuant to the registration rights of Carlyle and/or Berkshire, sales by 
members of management and shares that may be 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 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.

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(cid:2)

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;

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.  

28

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ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Our corporate headquarters is located in Philadelphia, PA. Our extensive geographic footprint is comprised of 36 
manufacturing facilities (including nine manufacturing sites operated by our joint ventures), four major technology centers 
and 46 customer training centers supporting our global operations. The table below presents summary information regarding 
our facilities as of December 31, 2015.

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
Orrville, 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

29

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

  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

(cid:2)

Type of Facility/Country

Location

Segment

Joint Venture Partner-Owned
Manufacturing Facilities
China
Japan

South Africa

Russia

Technology Centers
China
Germany
United States of America

Customer Training Centers

  Wuhan
  Amagasaki
  Chiba
  Durban
  Port Elizabeth
  Moscow

  Shanghai
  Wuppertal
  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; Transportation
  Performance; Transportation

  Number of Facilities
  11
  8
  19
  8

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.

30

(cid:2)

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" and 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, 2015 were as follows:

Quarter Ended
First Quarter (March 31)
Second Quarter (June 30)
Third Quarter (September 30)
Fourth Quarter (December 31)1

2015

2014

High

Low

High

Low

$

29.64 $
36.50
33.63
30.02

24.74
27.20
23.94
25.01 $

N/A
N/A
N/A
27.50 $

N/A
N/A
N/A
19.50

1Fourth Quarter 2014 includes November 12, 2014 through December 31, 2014.

As of February 15, 2016, 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

None.

31

(cid:2)

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.

$130

$125

$120

$115

$110

$105

$100

$95

$90

November 12, 2014

December 31, 2014

December 31, 2015

Axalta

S&P 500 Chemicals

S&P 500

32

(cid:2)

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 and 2011 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, 2015, 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.

The historical results of operations and cash flow data for the years ended December 31, 2015, 2014 and 2013 and the 
historical balance sheet data as of December 31, 2015 and 2014 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. The historical 
balance sheet data as of December 31, 2013 presented below was derived from our Successor audited financial statements 
and the related notes thereto included in the 2014 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 and 2011 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. 

33

(cid:2)

Our historical financial data and that of the Predecessor 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)
Statements 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

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:

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,

2015

2014

2013

2013

2012

2011

$

4,087.2 $

4,361.7 $

3,951.1 $

326.2 $

4,219.4 $

4,281.5

26.1

4,113.3

2,597.3

914.8

51.6

80.7

—

468.9

196.5

—

111.2

161.2

63.3

97.9

4.2

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

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

—

—

409.3

322.6

—

—

16.3

393.0

145.2

247.8

4.5

0.2

—

20.2

302.2

120.7

181.5

2.1

93.7 $

27.4 $

(224.9) $

7.9 $

243.3 $

179.4

0.40 $

0.39 $

233.8

239.7

0.12 $

0.12 $

229.3

230.3

(0.97)

(0.97)

228.3

228.3

$

$

$

$

399.6 $

251.4 $

376.8 $

(37.7) $

388.8 $

(164.3)

(74.5)

307.7

(138.1)

(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)

236.2

(116.6)

(125.1)

108.7

(82.7)

34

(cid:2)

(In millions)
Balance sheet data:
Cash and cash equivalents
Working capital (3)
Total assets
Indebtedness
Total liabilities
Total shareholders’ equity/combined equity

Successor

December 31,

Predecessor

December 31,

2015

2014

2013

2012

2011

$

485.0 $

1,035.7
5,854.2
3,441.5
4,713.0
1,141.2

382.1 $
926.2
6,170.7
3,614.3
5,058.7
1,112.0

459.3 $
952.2
6,638.3
3,822.1
5,426.5
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

(1)

In the Successor years ended December 31, 2015 and 2013, cost of goods sold included the impacts of $1.2 million and $103.7
million, respectively, attributable to the increases in inventory value resulting from the fair value adjustments associated with our
acquisition accounting for inventories.

(2) Selling, general and administrative expense included transition-related and cost-savings initiatives of $64.4 million, $127.1 million
and $231.5 million for the Successor years ended December 31, 2015, 2014 and 2013, respectively. Additionally, during the
Predecessor year 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.

35

(cid:2)

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 
of 1933, as amended ("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;

volatility in the capital, credit and commodities markets;

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;

our reliance on our distributor network and third-party delivery services for the distribution and export of certain of our
products;

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;

36

(cid:2)

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

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;

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

the risk of impairment charges related to goodwill, identifiable intangible assets and fixed assets;

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

For information regarding the basis of presentation of our financial statements for our Successor and Predecessor periods, 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.

OVERVIEW 

We are a leading global manufacturer, marketer and distributor of high performance coatings systems. We have a 150-year 
heritage in the coatings industry and are known for manufacturing high-quality products with well-recognized brands 
supported by market-leading technologies and customer service. Our diverse global footprint of 36 manufacturing facilities, 
four technology centers, 46 customer training centers and approximately 12,800 employees allows us to meet the needs of 
customers in over 130 countries. We serve our customers 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.

37

(cid:2)

In November 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.

In April 2015, we completed a secondary offering (the "Secondary Offering") in which Carlyle sold an aggregate 
of 46,000,000 common shares at a price of $28.00 per share. In addition, Carlyle also sold 20,000,000 common shares in a 
private placement to an affiliate of Berkshire Hathaway Inc. (together with the Secondary Offering, the "April 2015 
Secondary Offerings") for $28.00 per share. Following the April 2015 Secondary Offerings, Carlyle ceased to control a 
majority of our common shares.

In August 2015, we completed a secondary offering (together with the IPO and the April 2015 Secondary Offerings, the 
"Carlyle Offerings") in which Carlyle sold an aggregate of 34,500,000 common shares at a public offering price of $29.75 per 
share. We did not receive any proceeds from the sale of common shares in any of the Carlyle Offerings.

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 
2015, we continued to focus on our productivity initiatives, capacity expansions, and operational excellence. Since 2012, our 
Adjusted EBITDA has grown at a 15% 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 increased at a 2% CAGR with net sales growth in both our Transportation Coatings segment 
and our Performance Coatings segment. Net sales in our Transportation Coatings segment grew at a 1% CAGR, driven by 
consistent net sales in our light vehicle end-market and increasing sales in our commercial vehicle end-market, 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 increased at a 2% CAGR over the 
same period as a result of higher average selling prices, partially offset by lower volumes in both our refinish and industrial 
end-markets in developed markets as well as unfavorable impacts of currency exchange. 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.

Our net sales decreased approximately 6.3% for the year ended December 31, 2015 compared to the year ended 
December 31, 2014, primarily due to a decline of approximately 11.6% from unfavorable currency translation. Excluding the 
impact of currency translation, our net sales increased approximately 5.3% as a result of an increase in net sales volumes in 
all regions and increases in average selling prices primarily in Latin America. The following trends have impacted our 
segment and end-market sales performance for the year ended December 31, 2015:

•

•

Performance Coatings: Net sales excluding currency translation increased approximately 5.2% driven by
increases in average selling price within our refinish end-market, particularly in Latin America, and increased
volumes in both our refinish and industrial end-markets.

Transportation Coatings: Net sales excluding currency translation increased approximately 5.4% driven
primarily by volume growth in both our light vehicle and commercial vehicle end-markets from new business
wins and increased vehicle builds, particularly in North America and Asia Pacific.

Since the Acquisition, we have implemented numerous initiatives to reduce our fixed and variable costs that have improved 
our Adjusted EBITDA margin. 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. Additionally in 2015, we 
commenced a new "Axalta Way" initiative which focuses on commercial alignment and cost reduction. These initiatives are 
contributing to our financial results and we believe they will continue to drive profitability improvements over the next 
several years. 

38

(cid:2)

Our business serves four end-markets globally as follows:

 (In millions)

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

Successor

Pro Forma

Year Ended December 31,

2015 vs 2014

2014 vs 2013

2015

2014

2013

% change

% change

$

1,702.0 $

1,850.8 $

1,799.4

683.1

734.2

712.7

2,385.1

2,585.0

2,512.1

1,310.6

1,384.5

1,403.1

391.5

392.2

362.1

1,702.1

1,776.7

1,765.2

$

4,087.2 $

4,361.7 $

4,277.3

(8.0)%

(7.0)%

(7.7)%

(5.3)%

(0.2)%

(4.2)%

(6.3)%

2.9 %

3.0 %

2.9 %

(1.3)%

8.3 %

0.7 %

2.0 %

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;

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."

39

(cid:2)

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.

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.

40

(cid:2)

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. 

Other expense, net

Other expense, net represents costs incurred, net of income, on various non-operational items including historical 
management expenses to Carlyle, indemnity gains and losses associated with the Acquisition, as well as foreign exchange 
gains and losses and impairment losses on assets that are not part of our core operational activities.

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 period, 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 period 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 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, non-recurring 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 non-recurring 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 income (loss) before income taxes, net income (loss), 
earnings (loss) 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;

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.

41

(cid:2)

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 
income (loss) before income taxes, net income (loss), earnings (loss) 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 non-recurring items.

The following table reconciles net income (loss) to the EBITDA and Adjusted EBITDA measures discussed above 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 fees and debt 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)
Offering related costs (i)
Stock-based compensation (j)
Other adjustments (k)
Dividends in respect of noncontrolling interest (l)
Management fee expense (m)
Asset impairment (n)
Adjusted EBITDA

Successor

Predecessor

Pro Forma

Year Ended December 31,

2015

2014

2013

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

Year Ended
December 31,
2013 (1)

$

97.9 $

34.7 $

196.5

63.3

307.7

665.4

1.2

—

2.5

93.7
(0.3)
36.6

24.7
(3.4)
3.1

30.2
(12.4)
(4.7)
—

30.6

217.7

2.1

308.7

563.2

—

—

6.1

81.2
(0.6)
18.4

36.3

101.8

22.3

8.0
2.8
(2.2)
3.2

—

(218.9) $
215.1
(44.8)
300.7

252.1

103.7

28.1

25.0

48.9

9.5

147.5

54.7

29.3

—

7.4
(5.1)
(5.2)
3.1

—

8.5 $

—

7.1

9.9

25.5

—

—

—

4.5

2.3

0.3

—

—

—

0.1
—

—

—

—

(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

—

$

867.2 $

840.5 $

699.0 $

32.7 $

731.9

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

ended December 31, 2013 excludes the net benefit of $5.7 million, which is 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 years ended December 31, 2015 and 2013, we recorded non-cash fair value inventory adjustments associated

with our acquisitions.  These adjustments increased cost of goods sold by $1.2 million and $103.7 million, respectively.

(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.

42

(cid:2)

(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. In addition to the credit facility amendment, we also incurred $2.5 million and $3.0 million of
losses on extinguishment of debt during the Successor years ended December 31, 2015 and 2014, respectively, which resulted
directly from the pro-rata write offs of unamortized deferred financing costs and original issue discounts associated with the
separate pay-downs of $100.0 million of principal on the New Dollar Term Loan in each year (See 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, 2015, 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, 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 and other employee-related costs, including our initiative
to improve the overall cost structure within the European region. 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 in 2013 and 2014 and our Axalta Way cost-savings initiatives
in 2015.

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

incurred during 2015 primarily relate to our Axalta Way cost-savings initiatives. Amounts incurred during 2013 and 2014 relate to
services rendered in conjunction with our 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 offering of our common shares in the Carlyle Offerings during 2015 and 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 during 2014. See note (m) below.

(j) Represents costs associated with stock-based compensation, including $8.2 million of expense during 2015 attributable to the

accelerated vesting of all issued and outstanding stock options issued under the Axalta Coating Systems Bermuda Co., Ltd 2013
Equity Incentive Plan (the "2013 Plan") as a result of Carlyle's interest falling below 50% and triggering a liquidity event.

(k) Represents costs for certain unusual or non-operational (gains) and losses, including a $5.4 million gain resulting from the
acquisition of a controlling interest in our previously held equity method investee during 2015, equity investee dividends,
indemnity losses (gains) associated with the Acquisition, losses (gains) on sale and disposal of property, plant and equipment, and
losses (gains) on foreign currency derivative instruments.

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

(m) 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.

(n) As a result of the currency devaluation in Venezuela, we evaluated the carrying values of our long-lived assets for impairment and

recorded an impairment charge relating to a real estate investment of $30.6 million during 2015 (See Note 27 to the consolidated
and combined financial statements included elsewhere in this Annual Report on Form 10-K).

43

(cid:2)

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.

Year ended December 31, 2015 compared to year ended December 31, 2014

The following table was derived from the consolidated statements of operations for the years ended December 31, 2015 and 
2014 included elsewhere in this Annual Report on Form 10-K. 

(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

Income from operations

Interest expense, net

Other expense, net

Income before income taxes

Provision for income taxes

Net income

Less: Net income attributable to noncontrolling interests

Net income attributable to controlling interests

Net sales

Year Ended December 31,

2015

2014

$

4,087.2 $

4,361.7

26.1

4,113.3

2,597.3

914.8

51.6

80.7

468.9

196.5

111.2

161.2

63.3

97.9

4.2

$

93.7 $

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

27.4

Net sales decreased $274.5 million, or 6.3%, to $4,087.2 million for the year ended December 31, 2015 compared to net sales 
of $4,361.7 million for the year ended December 31, 2014. Our net sales decrease for the year ended December 31, 2015 
compared to the year ended December 31, 2014 was primarily attributable to unfavorable impacts of currency translation, 
which reduced net sales by 11.6% due mainly to the weakening Euro and certain currencies within Latin America and Asia 
compared to the U.S. dollar. This net sales decline was partially offset by increases in volumes across all regions, which 
contributed to net sales growth of 3.9%. Higher average selling prices, primarily in Latin America, also contributed to an 
increase of 1.4%.

Other revenue

Other revenue decreased $3.7 million, or 12.4%, to $26.1 million for the year ended December 31, 2015 as compared to 
$29.8 million for the year ended December 31, 2014. This decrease in other revenue was primarily related to the impacts of 
weakening currencies against the U.S. dollar, which caused a decrease of $5.1 million, or 17.3%.

Cost of sales

Cost of sales decreased $299.9 million, or 10.4%, to $2,597.3 million for the year ended December 31, 2015 compared to 
$2,897.2 million for the year ended December 31, 2014. The decrease for the year ended December 31, 2015 compared to 
the year ended December 31, 2014 resulted primarily from a 9.4% decrease associated with currency exchange due to the 
impact of the weakening Euro and certain currencies within Latin America and Asia. The decrease from currency translation 
was slightly offset by higher volumes of 3.9%, as well as the impacts of stock-based compensation resulting primarily from 
the impact of the accelerated vesting of all outstanding stock options issued under the 2013 Plan. Cost of sales as a 
percentage of net sales decreased from 66.4% for the year ended December 31, 2014 to 63.5% for the year ended 
December 31, 2015 primarily as a result of reductions associated with our cost-savings initiatives as well as lower raw 
material prices.

44

(cid:2)

Selling, general and administrative expenses

Selling, general and administrative expenses decreased $76.7 million, or 7.7%, to $914.8 million for the year ended 
December 31, 2015 compared to $991.5 million for the year ended December 31, 2014. Selling, general and administrative 
expenses for the year ended December 31, 2015 included $64.4 million of costs related to our 2015 cost-savings initiatives as 
compared to $127.1 million of costs for the year ended December 31, 2014 associated with our transition-related activities 
and cost-savings initiatives, resulting in a decrease of $62.7 million over the comparable period. In addition, favorable 
impacts of currency exchange during the year ended December 31, 2015 contributed to an approximately 10.4% reduction in 
selling, general and administrative expenses due to the weakening Euro and certain currencies within Latin America 
compared to the U.S. dollar. Offsetting the decrease over comparable periods was an increase in selling expense associated 
with increased sales volumes as well as an increase of $14.2 million in stock-based compensation for the year ended 
December 31, 2015, resulting primarily from the impact of the accelerated vesting of all outstanding stock options issued 
under the 2013 Plan. Further offsetting the decrease compared to the year ended December 31, 2014 was the absence of $14.3 
million in gains for the amendments of benefit plans, as well as an increase in spending in 2015 as we focused on 
opportunities to expand our market presence.

Research and development expenses

Research and development expenses increased $2.1 million, or 4.2%, to $51.6 million for the year ended December 31, 2015 
compared to $49.5 million for the year ended December 31, 2014. This increase was driven by additional spending as we 
focus on developing new and existing coatings products. The impacts of currency exchange did not have a material impact on 
the comparable periods.

Amortization of acquired intangibles

Amortization of acquired intangibles decreased $3.1 million, or 3.7%, to $80.7 million for the year ended December 31, 2015 
compared to $83.8 million for the year ended December 31, 2014. This decrease was a result of the impact of currency 
exchange primarily as a result of the weakening Euro compared to the U.S. dollar.

Interest expense, net

Interest expense, net decreased $21.2 million, or 9.7%, to $196.5 million for the year ended December 31, 2015 compared to 
$217.7 million for the year ended December 31, 2014. Interest expense, net for the year ended December 31, 2015 reflects a 
full year of interest expense after refinancing our Term Loans in February of 2014 resulting in a benefit of $2.1 million 
compared to 2014. Additionally, the year ended December 31, 2015 included a full year of the impact of the 25 basis point 
step-down in interest rates on our Term Loans resulting from a reduction in our leverage ratio, as well as reductions in 
principal balances throughout 2014 and 2015. Further contributing to the decrease in interest expense over the comparable 
periods was a decrease of $3.3 million in losses on an interest rate cap on our Euro Term Loan as well as the impacts of the 
weakening Euro against the U.S. dollar on our Euro borrowings.

Other expense, net

Other expense, net decreased $3.8 million, or 3.3%, to $111.2 million for the year ended December 31, 2015 compared 
to $115.0 million for the year ended December 31, 2014. This net decrease was the result of various positive and negative 
drivers. There were net decreases of $18.8 million and $16.6 million as compared to 2014 relating to Acquisition indemnity 
provisions and management fee expenses, respectively. For the year ended December 31, 2014, there was a $17.8 million loss 
compared to a $1.0 million gain for the year ended December 31, 2015 resulting from changes in indemnity provisions. 
Management fee expenses of $16.6 million for the year ended December 31, 2014, including the termination fee of the 
management agreement, upon the consummation of our IPO did not recur in 2015. 

In addition, during the year ended December 31, 2015 there were $5.6 million in gains on derivative instruments associated 
with our foreign currency contracts compared to $1.4 million in losses during the year ended December 31, 2014, resulting in 
a $7.0 million decrease. In addition to this decrease, we recognized a gain of $5.4 million for the year ended December 31, 
2015 resulting from the remeasurement of our previously held interest in an equity method investee upon the acquisition of a 
controlling interest whereas no similar gain was recognized during the year ended December 31, 2014, thereby resulting in a 
decrease in other expense, net for the comparable periods. 

During the year ended December 31, 2015 our Venezuelan subsidiary was impacted by a significant devaluation of its 
currency translation rates. This devaluation resulted in an impairment charge of $30.6 million for the year ended 
December 31, 2015 based on our evaluation of the carrying value associated with our real estate investment. 

45

(cid:2)

Exchange losses were $93.7 million during the year ended December 31, 2015 as compared to exchange losses of $81.2 
million for the year ended December 31, 2014, resulting in an increase in expense of $12.5 million. This increase was 
primarily driven by the devaluation of our Venezuelan subsidiary's net monetary assets and liabilities resulting in an increase 
of $70.2 million over the comparable period. Furthering this increase in expense, was a $24.5 million decrease in gains on 
our Euro denominated borrowings over the comparable period. The offsetting decrease of $82.2 million was related to the 
remeasurement of intercompany transactions denominated in currencies different from the functional currency of the relevant 
subsidiary.

Provision for income taxes

We recorded a provision for income taxes of $63.3 million for the year ended December 31, 2015, which represents a 39.3% 
effective tax rate in relation to the income before income taxes of $161.2 million. The effective tax rate for the year ended 
December 31, 2015 differs from the U.S. Federal statutory rate by 4.3%, which is the result of various items that impacted the 
rate both favorably and unfavorably. We recorded a favorable adjustment for earnings in jurisdictions where the statutory rate 
is lower than the U.S. Federal rate of $41.4 million. This adjustment was offset by the pre-tax impairment charge in 
Venezuela of $30.6 million which had an unfavorable $10.7 million impact on the effective rate as it was nondeductible, the 
unfavorable impact of pre-tax losses attributable to jurisdictions where a tax benefit is not expected to be realized of $34.4 
million, and the impact of non-deductible expenses and interest of $10.4 million.

We recorded a provision for income taxes of $2.1 million for the 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 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 unfavorable 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.

46

(cid:2)

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.

(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

Successor

Predecessor

Pro Forma

Year Ended December 31,

Period from 
January 1
through
January 31,

Year Ended
December 31,

2014

2013

2013

2013

$

4,361.7 $

3,951.1 $

326.2 $

4,277.3

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 $

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.

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.

47

(cid:2)

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.

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.

48

(cid:2)

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 costs

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.

Interest expense, net

Historical: Interest expense, net for the Successor year ended December 31, 2014 of $217.7 million represented a full year 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.

49

(cid:2)

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.

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.

50

(cid:2)

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 income 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.

51

(cid:2)

SEGMENT RESULTS

Year ended December 31, 2015 compared to the year ended December 31, 2014

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

Performance Coatings

Transportation Coatings

Total

Performance Coatings Segment

Year Ended December 31,

2015

2014

$

$

$

$

2,385.1 $

1,702.1

4,087.2 $

539.1 $

328.1

867.2 $

2,585.0

1,776.7

4,361.7

547.6

292.9

840.5

Net sales decreased $199.9 million, or 7.7%, to $2,385.1 million for the year ended December 31, 2015 compared to net 
sales of $2,585.0 million for the year ended December 31, 2014. The decrease in net sales for the year ended 
December 31, 2015 was primarily a result of unfavorable impacts of currency exchange across all regions, which 
contributed approximately 12.9% to the reduction in net sales. The negative currency exchange impacts were primarily 
related to the weakening Euro and certain currencies within Latin America compared to the U.S. dollar. The decrease in 
net sales was partially offset by increases in average selling price, primarily in Latin America, which contributed to an 
increase of 2.4%. Further offsetting this decrease was an increase in volume across all regions, which contributed to a net 
sales increase of 2.8%.

Adjusted EBITDA decreased $8.5 million, or 1.6%, to $539.1 million for the year ended December 31, 2015 compared to 
Adjusted EBITDA of $547.6 million for the year ended December 31, 2014. The decrease in Adjusted EBITDA for the 
year ended December 31, 2015 was primarily driven by unfavorable impacts of currency exchange across all regions, due 
mainly to the weakening Euro and certain currencies within Latin America compared to the U.S. dollar. This decrease was 
partially offset by higher average selling prices primarily within Latin America. Further offsetting the decline were 
increases driven by higher volumes and lower variable costs. Additionally, dividends from our consolidated joint ventures 
to our noncontrolling partners negatively impacted Adjusted EBITDA by $3.1 million for the year ended December 31, 
2015 as compared to $0.1 million for the year ended December 31, 2014.

Transportation Coatings Segment

Net sales decreased $74.6 million, or 4.2%, to $1,702.1 million for the year ended December 31, 2015 compared to net 
sales of $1,776.7 million for the year ended December 31, 2014. The decrease in net sales for the year ended 
December 31, 2015 was primarily driven by unfavorable impacts of currency exchange across all regions, which 
contributed to an approximately 9.6% reduction in net sales resulting primarily from the impacts of the weakening Euro 
and certain currencies within Latin America compared to the U.S. dollar. Further contributing to the decline in net sales 
was a 0.2% decrease in average selling prices primarily within North America, Europe and Asia. The decrease in net sales 
was partially offset by volume increases primarily within North America and Asia, which contributed to a net sales 
increase of 5.6%.

Adjusted EBITDA increased $35.2 million, or 12.0%, to $328.1 million for the year ended December 31, 2015 compared 
to Adjusted EBITDA of $292.9 million for the year ended December 31, 2014. The increase in Adjusted EBITDA for the 
year ended December 31, 2015 was primarily driven by higher volumes and lower variable costs. This increase was 
partially offset by unfavorable impacts of the weakening Euro and certain currencies within Latin America compared to 
the U.S. dollar.

52

(cid:2)

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

Predecessor

Pro Forma

Year Ended December 31,

Period from 
January 1
through
January 31,

Year Ended
December 31,

2014

2013

2013

2013

$

$

$

$

2,585.0 $
1,776.7
4,361.7 $

2,325.3 $
1,625.8
3,951.1 $

547.6 $
292.9
840.5 $

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.

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.

53

(cid:2)

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.

54

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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, 2015, availability under the Revolving Credit Facility was $375.1 million, net of $24.9 million of letters of 
credit outstanding. 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, 
2015, we also had $1.9 million in outstanding borrowings under other lines of credit. Our remaining available borrowing 
capacity under other lines of credit in certain non-U.S. jurisdictions totaled $3.1 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. Such repurchases or exchanges, if any, will depend on 
prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved 
may be material.

Cash Flows

Successor years ended December 31, 2015, 2014 and 2013 and Predecessor period from January 1 through January 31, 
2013.

Successor

Year Ended December 31,

Predecessor

Period from 
January 1
through
January 31,

2015

2014

2013

2013

$

97.9 $

34.7 $

307.7
(5.0)
20.6

1.2

93.7

—

30.2

30.6

13.8

590.7
(191.1)
399.6
(164.3)
(74.5)
(57.9)
102.9 $

308.7
(38.2)
21.0

—

75.1

—

8.0

—
(19.2)
390.1
(138.7)
251.4
(178.5)
(123.2)
(26.9)
(77.2) $

(218.9) $
300.7
(120.8)
18.4

103.7

48.9

25.0

7.4

—

13.2

177.6
199.2

376.8
(5,011.2)
5,098.1
(4.4)
459.3 $

8.5

9.9

9.1

—

—

4.5

—

—

—
(3.9)
28.1
(65.8)
(37.7)
(8.3)
43.0

—
(3.0)

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

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

Stock-based compensation

Asset impairment

Other non-cash items

Net income 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

$

55

(cid:2)

Year Ended December 31, 2015 (Successor)

Net Cash Provided by Operating Activities

Net cash provided by operating activities for the year ended December 31, 2015 was $399.6 million. Net income before 
deducting depreciation, amortization and other non-cash items generated cash of $590.7 million. This was partially offset by 
net increases in operating assets and liabilities of $191.1 million. The most significant drivers in working capital were 
increases in accounts receivables and other assets of $126.7 million due primarily to the mix of credit terms which drove an 
increase in days sales outstanding and increased inventory builds of $35.2 million to support ongoing operational demands. 
Cash flows associated with accounts payable and other liabilities of $29.1 million related to payments of normal operating 
activities incurred in 2014 and paid during 2015.

Net Cash Used for Investing Activities

Net cash used for investing activities for the year ended December 31, 2015 was $164.3 million. This use was primarily 
driven by purchases of property, plant and equipment of $138.1 million and acquisitions of $29.6 million (net of cash 
received), partially offset by a decrease of $1.9 million in restricted cash. 

Net Cash Used for Financing Activities

Net cash used for financing activities for the year ended December 31, 2015 was $74.5 million. The change was primarily 
driven by repayment of term loans of $127.3 million. These payments were comprised of a $100.0 million prepayment on our 
Dollar Term Loan made during the year ended December 31, 2015, along with $27.3 million of quarterly principal 
repayments as required under the Credit Agreement. In addition to these payments, we also paid dividends to non-controlling 
interests of $4.7 million. Offsetting these payments were cash received from stock option exercises and their associated tax 
benefits for $72.6 million, and proceeds received from short-term borrowings during the period of $2.0 million.

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 operating assets and liabilities 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 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.

Net Cash Provided by 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.

56

(cid:2)

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.

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.

57

(cid:2)

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.

Financial Condition

We had cash and cash equivalents at December 31, 2015 and 2014 of $485.0 million and $382.1 million, respectively. Of 
these balances, $372.6 million and $264.2 million were maintained in non-U.S. jurisdictions as of December 31, 2015 and 
2014, 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 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. See Part I, Item 1A, 
“Risk Factors-Risks Related to our Indebtedness-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 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 
and cost-savings initiatives, meet liquidity needs and fund necessary capital expenditures for the next twelve months.

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.

58

(cid:2)

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 and other borrowings
Unamortized original issue discount
Deferred financing costs, net

Less:

Short term borrowings
Current portion of long-term borrowings

Long-term debt

Year Ended December 31,

2015

2014

2,042.5 $
428.0
750.0
274.4
26.5
(14.0)
(65.9)
3,441.5

22.7
27.4
3,391.4 $

2,165.5
481.0
750.0
305.3
12.9
(18.3)
(82.1)
3,614.3

12.2
27.9
3,574.2

$

$

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, 2015 and 2014, there were no borrowings under the Revolving Credit Facility with total 
availability under the Revolving Credit Facility of $375.1 million and $384.5 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, 2015 and 2014, 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 and other borrowings
Total

Year Ended December 31, 2015

Principal

Average Effective
Interest Rate

Interest
Expense

2,470.5
—
1,024.4
26.5
3,521.4

N/A

4.6% $

7.4%

Various

$

112.7
3.9
75.4
1.2
193.2

Year Ended December 31, 2014

Principal

Average Effective
Interest Rate

Interest
Expense

2,646.5
—
1,055.3
12.9
3,714.7

N/A

5.2% $

7.5%

Various

$

127.6
4.7
78.6
1.4
212.3

$

$

$

$

59

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Contractual Obligations

The following table summarizes our contractual obligations at December 31, 2015:

(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 (1)
Interest payments (1)
Operating leases (2)
Pension contributions (3)
Purchase obligations

Uncertain tax positions, including interest and 

penalties (4)

Total

Contractual Obligations Due In:

Total

2016

2017-2018

2019-2020

Thereafter

$

2,042.5 $

23.0 $

46.0 $

1,973.5 $

428.0

750.0

274.4

14.5

789.2

169.8
17.2

68.4

—

4.4

—

—

10.8

168.0

39.0
17.2

25.9

—

8.8

—

—

2.9

330.4

51.1
—

38.9

—

414.8

—

—

0.4

241.4

35.9
—

3.6

—

—

—

750.0

274.4

0.4

49.4

43.8
—

—

—

$

4,554.0 $

288.3 $

478.1 $

2,669.6 $

1,118.0

(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. Other borrowings excludes debt associated with a built-to-
suit lease arrangement discussed further in the following note. 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, 2015 interest rates will prevail throughout all future periods. Actual
interest payments and repayment amounts may change.

(2) During the year ended December 31, 2015, we entered into two built-to-suit lease arrangements, commencing after December 31,
2015, which collectively require $98.2 million to be paid over a twenty year period. Due to the uncertainty regarding future timing
of cash flows associated with these leases, which are dependent on the construction completion dates, we are unable to reasonably
estimate the years in which the lease payments will be made.

(3) We expect to make contributions to our defined benefit pension plans beyond 2016; 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 2016.

(4) As of December 31, 2015, we had approximately $5.4 million of uncertain tax positions, including interest and penalties that could
result in potential payments. Due to the high degree of uncertainty regarding future timing of cash flows associated with these
liabilities, we are unable to estimate the years in which settlement will occur with the respective taxing authorities.

Scheduled Maturities

Below is a schedule of required future repayments of all borrowings outstanding at December 31, 2015.

(In millions)
2016
2017
2018
2019
2020
Thereafter
Total

60

$

$

38.1
29.5
28.1
27.6
2,361.2
1,024.9
3,509.4

(cid:2)

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. As of December 31, 2015 
and 2014 these off balance sheet arrangements were not material to our consolidated and combined financial statements 
included elsewhere in this Annual Report on Form 10-K. 

No amounts were accrued at December 31, 2015 and 2014.

Recent Accounting Guidance

See Note 4 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.

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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.

Goodwill and indefinite-lived intangible assets

As discussed in Note 3 to the consolidated and combined financial statements included elsewhere in this Annual Report on 
Form 10-K, the Company tests goodwill and identifiable intangible assets with indefinite lives for impairment at least 
annually as of October 1st. We test goodwill and indefinite-lived intangible assets for impairment by performing a qualitative 
evaluation. The qualitative evaluation is an assessment of factors, including reporting unit or asset specific operating results 
and cost factors, as well as industry, market and macroeconomic conditions, to determine whether it is more likely than not 
(more than 50%) that the fair values of a reporting unit or asset is less than the respective carrying amounts, including 
goodwill when testing goodwill for impairment. 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. We 
may elect to bypass this qualitative assessment for some or all of our reporting units and indefinite-lived intangible assets 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, that are based on projections of the amounts and timing of future revenue and 
cash flows, and multiples of earnings in estimating fair value. 

For the 2015 impairment tests of our goodwill and indefinite-lived intangible assets, management concluded that the carrying 
values equaled or exceeded the respective fair values and no impairments existed.

The inputs utilized in a quantitative analysis 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 and indefinite-lived intangible 
assets 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 and indefinite-lived intangible assets 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 four reporting units. At December 31, 
2015, our $928.2 million in total goodwill is allocated to reportable segments as follows: $866.1 million in Performance 
Coatings and $62.1 million in Transportation Coatings.

Other intangible assets

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, 2015 and 2014, we abandoned certain projects with 
carrying amounts of $0.1 million and $0.1 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.

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.

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We evaluated the impacts to our Venezuelan operations caused by the volatility of the economic conditions in Venezuela 
including the weakening of the Venezuelan bolivar and general uncertainty in the political environment.  At December 31, 
2015, we concluded an impairment indicator existed and performed a formal recovery test on our long-lived assets.  The 
Company utilized forecasted undiscounted cash flows associated with our Venezuelan operations.  Our key assumptions 
utilized historical performance, our ability to utilize price increases to offset inflation as well as demand expectations for 
2016 and beyond. Further, our operations are partially dependent on raw material supplies from Axalta subsidiaries to 
continue to meet our anticipated demand.  We concluded the carrying amount was recoverable as of December 31, 2015.  We 
intend to monitor the ability of our Venezuelan subsidiary to effectively operate through maintaining our significant market 
share and continuing to successfully implement and sustain price increases in periods of change in exchange rates and 
inflation. The outcome of future changes in economic and political conditions could have a material impact on (1) our ability 
to accurately predict the impacts of future sustained price increases, (2) timing of changes to inflation or exchange rates and 
(3) impacts on liquidity and demand from our customers. Changes in any of these assumptions may result in reductions to the
estimated future cash flows of our Venezuelan subsidiary resulting in the potential impairment to the carrying amount of the
long-lived assets. Such impairment charges could materially impact our results of operations in future periods.

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. These options were granted under the 2013 Plan and generally vested over a 5-year period. Vesting of the options 
granted under the 2013 Plan accelerated during 2015 as a result of the April Secondary Offerings made by Carlyle which 
reduced Carlyle's interest in Axalta to below 50%, triggering a liquidity event (the "Liquidity Event") as defined in the 2013 
Plan. Options have lives of no more than ten years. 

In 2015, we granted 1.3 million non-qualified, service-based stock options to certain employees and directors under the 
Axalta Coating Systems Ltd. 2014 Incentive Award Plan (the "2014 Plan") with strike prices between $25.34 and $34.80 per 
share. Options granted vest ratably over three years and have a life of no more than ten years. In 2015, we also granted 0.9 
million shares of restricted stock awards and 0.8 million restricted stock units at fair values between $25.34 and $34.80 with 
vesting periods over three years. The vesting of restricted stock and restricted stock unit awards granted to certain members 
of management may be accelerated in the event of the award recipient's termination of service under certain circumstances.

For the years ended December 31, 2015 and 2014, we recorded compensation expense of $30.2 million and $8.0 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. Compensation expense related to the restricted stock awards and 
restricted stock units is equal to the grant-date fair value of the awards determined by the share price on the date of the grant 
and the number of shares issued. The related expense is being recognized as compensation expense over the service period.  
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 from 2013 through 2015 and the respective principal weighted average assumptions used in 
applying the Black-Scholes model were as follows:

Key Assumptions
Expected Term
Volatility
Dividend Yield
Discount Rate
Fair Value of Options Per Share

2015 Grants

2014 Grants

2013 Grants

6.00 years
22.19%
—%
1.79%

7.81 years
28.61%
—%
2.13%
$6.27 - $8.88 $1.51 - $3.01 $0.95 - $2.01

7.81 years
28.28%
—%
2.21%

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 strike price equaled the grant date fair value, we were a privately-held company at the grant date and 
we 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.

63

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During 2013, we sold 1.3 million common shares to certain employees at fair value for $7.4 million. Because we were not 
publicly traded on the purchase dates, the fair value of the stock for the 2013 stock purchases 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. 

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 the 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.

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 period

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 for the Predecessor period January 1, 2013 
through January 31, 2013.

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.

64

(cid:2)

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 for all affected 
participants.

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 directly transferred to the pension trust. Accordingly, assumed 
defined benefit obligations were presented net of the plan assets 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 2016 would result 
in an increase of $1.0 million, while the impact of a 100 basis point decrease of the discount rate would result in an increase 
of approximately $0.4 million. The estimated impact of a 100 basis point increase of the expected return on asset assumption 
on the net periodic benefit cost for 2016 would result in a decrease of approximately $2.0 million, while the impact of a 100 
basis point decrease would result in an increase of $2.0 million.

Predecessor period

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 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 period 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.

65

(cid:2)

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, 2015, we had a net deferred tax asset balance of $124.6 million, after valuation allowances of $127.8 
million. At December 31, 2014, we had a net deferred tax asset balance of $99.0 million, after valuation allowances of $101.9 
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, 2015 and 
2014 deferred income taxes of approximately $6.3 million and $8.5 million have been provided on such subsidiary earnings, 
respectively.

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, 2015 and 2014, the Company had gross unrecognized tax benefits for both 
domestic and foreign operations of $4.7 million and $5.3 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 period

During the Predecessor period, 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.

66

(cid:2)

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, 2015 and 2014, these 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.

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 period

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.

67

(cid:2)

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.

68

(cid:2)

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 in the 2014 Annual Report on 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.

69

(cid:2)

Net sales

Other revenue

Total revenue

Cost of goods sold

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 $

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

70

(cid:2) 

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 period 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 period 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.

71

(cid:2) 

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)

72

(cid:2) 

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.

73

(cid:2)

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to changes in interest rates and foreign currency exchange rates because 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 reduced 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 exchange risk by virtue of the translation of our international operations from local 
currencies into the U.S. dollar. The majority of our net sales for the Successor years ended December 31, 2015, 2014 and 
2013 and the Predecessor period from January 1, 2013 to January 31, 2013 were from operations outside the United States. 
At December 31, 2015 and 2014, the accumulated other comprehensive loss account on the consolidated balance sheets 
included a cumulative translation loss of $164.2 million and $101.1 million, respectively. A hypothetical 10% increase in the 
value of the US dollar relative to all foreign currencies would have increased the cumulative translation loss by $30.0 million. 
This sensitivity analysis is inherently limited as it assumes that rates of multiple foreign currencies are moving in the same 
direction relative to the value of the U.S. dollar.

Uncertainty in the global market conditions has resulted in, and may continue to cause, significant volatility in foreign 
currency exchange rates which could increase these risks, especially in Latin America, which has historically been subject to 
considerable foreign currency exchange rate volatility, especially in Venezuela. See further discussion in Note 27 to the 
consolidated and combined financial statements included elsewhere in this Annual Report on Form 10-K.

74

(cid:2)

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.

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.

75

(cid:2)

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 as of December 31, 2015 and 2014 and the related 
consolidated statements of operations, of comprehensive income (loss), of changes in shareholders’ equity and of cash flows 
for each of the three years in the period ended December 31, 2015 present fairly, in all material respects, the financial 
position of Axalta Coating Systems Ltd. and its subsidiaries (Successor) at December 31, 2015 and 2014, and the results of 
their operations and their cash flows for each of the three years in the period ended December 31, 2015 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) for each of the three years in the period ended December 31, 2015 
presents fairly, in all material respects, the information set forth therein when read in conjunction with the related 
consolidated financial statements.  Also in our opinion, the Company maintained, in all material respects, effective internal 
control over financial reporting as of December 31, 2015, based on criteria established in Internal Control - Integrated 
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  The 
Company's management is responsible for these financial statements, and financial statement schedule, for maintaining 
effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial 
reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 9A.  Our 
responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company's 
internal control over financial reporting based on our audits (which was an integrated audit in 2015). 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 audits to obtain reasonable assurance about whether the financial statements are free of 
material misstatement and whether effective internal control over financial reporting was maintained in all material respects.  
Our audits of the financial statements included 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.  Our audit of internal control over financial reporting included 
obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and 
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.  Our audits also 
included performing such other procedures as we considered necessary in the circumstances. We believe that our audits 
provide a reasonable basis for our opinions.

As discussed in Note 4 to the consolidated financial statements, the Company changed the manner in which it classifies debt 
issuance costs in 2015.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the 
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally 
accepted accounting principles.  A company’s internal control over financial reporting includes those policies and procedures 
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and 
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to 
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and 
expenditures of the company are being made only in accordance with authorizations of management and directors of the 
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or 
disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, 
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate 
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 29, 2016

76

(cid:2)

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 for the period from January 1, 2013 through 
January 31, 2013 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 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) for the period 
from January 1, 2013 through January 31, 2013 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 audit. We conducted our audit 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 audit provides a reasonable basis for our opinion.

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

77

(cid:2)

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

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

Basic net income (loss) per share

Diluted net income (loss) per share

Basic weighted average shares outstanding

Diluted weighted average shares outstanding

Successor

Year Ended December 31,

Predecessor

Period from
January 1,
2013
through
January 31,

2015

2014

2013

2013

$

4,087.2 $

4,361.7 $

3,951.1 $

26.1

4,113.3

2,597.3

914.8

51.6

80.7

—

468.9

196.5

—

111.2

161.2

63.3

97.9

4.2

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

$

$

$

93.7 $

0.40 $

0.39 $

233.8

239.7

27.4 $

0.12 $

0.12 $

229.3

230.3

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) $
(0.97)
(0.97)
228.3

228.3

326.2

1.1

327.3

232.2

70.8

3.7

—

—

20.6

—

—

5.0

15.6

7.1

8.5

0.6

7.9

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

78

(cid:2)

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

Successor

Year Ended December 31,

Predecessor

Period from
January 1,
2013
through
January 31,

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)

2015

2014

2013

2013

$

97.9 $

34.7 $

(218.9) $

(164.3)
0.3
(5.5)

(2.2)
(171.7)

2.1
(169.6)
(71.7)

(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)

Less: Comprehensive income attributable to noncontrolling

interests

Comprehensive income (loss) attributable to controlling interests

$

0.6
(72.3) $

2.6
(109.9) $

6.0
(190.9) $

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

8.5

—

0.2

—

1.1

1.3

(0.4)
0.9

9.4

0.6

8.8

79

(cid:2)

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

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, 237.9 and 229.8 shares issued

and outstanding at December 31, 2015 and 2014, respectively

Capital in excess of par

Accumulated deficit

Accumulated other comprehensive loss

Total Axalta shareholders’ equity

Noncontrolling interests

Total shareholders’ equity

Total liabilities and shareholders’ equity

December 31,

2015

2014

$

485.0 $

2.7

765.8

530.7

63.6

69.5

1,917.3

1,382.9

928.2

1,191.6

434.2

382.1

4.7

820.4

538.3

62.9

64.5

1,872.9

1,514.1

1,001.1

1,300.0

482.6

$

5,854.2 $

6,170.7

$

454.7 $

494.5

50.1

6.6

370.2

881.6

40.1

7.3

404.8

946.7

3,391.4

3,574.2

252.3

165.5

22.2

306.4

208.2

23.2

4,713.0

5,058.7

237.0

1,238.8
(132.8)
(269.3)
1,073.7

67.5

229.8

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

67.3

1,141.2

1,112.0

$

5,854.2 $

6,170.7

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

80

(cid:2)

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 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

$

1,804.3 $

(140.9) $

33.6 $

1,697.0

7.9

—

—

7.9

43.0

—

$

1,855.2 $

—

0.2

0.7

0.9

—

—
(140.0) $

0.6

—

—

0.6

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.

81

(cid:2)

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

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

Capitalization of capital in excess of par

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

Balance December 31, 2014

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 $2.1

Long-term employee benefit plans, net of tax of

$0.0

Foreign currency translation

Total comprehensive income (loss)

Recognition of stock-based compensation

Exercises of stock options

Noncontrolling interests of acquired subsidiaries

Dividends declared to noncontrolling interests

Common
Shares

Capital In
Excess Of
Par

Accumulated
Deficit

Accumulated
Other
Comprehensive
Income

Noncontrolling
Interests

Total

$

— $

— $

(29.0) $

— $

— $

(29.0)

—

—

—

—

—

—

0.1

—

229.0

—

—

—

—

—

—

—

—

1,355.3

7.4

(229.0)

—

—

(224.9)

—

—

—

—

(224.9)

—

—

—

—

—

—

(0.9)

3.1

7.5

24.3

34.0

—

—

—

—

—

6.0

—

—

—

—

6.0

—

—

—

66.7

(3.8)

(218.9)

(0.9)

3.1

7.5

24.3

(184.9)

1,355.4

7.4

—

66.7

(3.8)

$

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)

$

229.8 $

1,144.7 $

(226.5) $

(103.3) $

67.3 $

1,112.0

—

—

—

—

—

—

—

7.2

—

—

—

—

—

—

—

—

30.2

63.9

—

—

93.7

—

—

—

—

93.7

—

—

—

—

—

0.3

(3.4)

(2.2)

(160.7)

(166.0)

—

—

—

—

4.2

—

—

—

(3.6)

0.6

—

—

4.3

(4.7)

97.9

0.3

(3.4)

(2.2)

(164.3)

(71.7)

30.2

71.1

4.3

(4.7)

Balance December 31, 2015

$

237.0 $

1,238.8 $

(132.8) $

(269.3) $

67.5 $

1,141.2

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

82

(cid:2)

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

Successor

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

Year Ended December 31,

2015

2014

2013

$

97.9 $

34.7 $

(218.9) $

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
Asset impairment
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:

Business acquisitions (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
Proceeds from sale of a business
Other investing

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
Equity contribution
Proceeds from option exercises and associated tax benefits
Net transfer from DuPont
Other financing activities

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

Non-cash investing activities:

Accrued capital expenditures

307.7
20.6
2.5
1.2
—
(5.0)
93.7
30.2
30.6
11.3

(61.1)
(35.2)
(65.6)
(6.7)
(0.1)
(22.4)
399.6

(29.6)

(138.1)
—
—
—
1.9
—
1.5
(164.3)

—
2.0
(16.9)
(127.3)
—
—
(4.7)
—
72.6
—
(0.2)
(74.5)
160.8
(57.9)
382.1
485.0 $

172.5 $
52.4 $

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)
17.5
(2.9)
(178.5)

0.7
30.7
(33.8)
(121.1)
—
—
(2.2)
2.5
3.0
—
(3.0)
(123.2)
(50.3)
(26.9)
459.3
382.1 $

192.0 $
57.0 $

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
(5,011.2)

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)
—
459.3 $

171.9 $
83.1 $

33.8 $

29.4 $

35.5 $

$

$
$

$

Predecessor

Period from 
January 1,
2013
through
January 31,

2013

8.5

9.9
—
—
—
—
9.1
4.5
—
—
(3.9)

25.8
(19.3)
3.1
(29.9)
(43.8)
(1.7)
(37.7)

—

(2.4)
—
—
—
—
—
(5.9)
(8.3)

—
—
—
—
—
—
—
—
—
43.0
—
43.0
(3.0)
—
28.7
25.7

—
13.3

5.5

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

83

(cid:2)

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.

Axalta is a holding company with no business operations or assets other than primarily cash and cash equivalents and
100% of the ownership interest of Axalta Coating Systems Luxembourg Top S.à r.l. (formerly 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.

We are a leading global manufacturer, marketer and distributor of high performance coatings products primarily serving 
the transportation industry. We have an approximately 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. 

The Acquisition

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 ("Dollar Term Loan") and a 
€400.0 million Euro Term Loan facility ("Euro Term Loan"), 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.

The Carlyle Offerings

In November 2014, we priced our initial public offering (the "Offering", or the "IPO") in which certain selling 
shareholders affiliated with The Carlyle Group L.P. and its affiliates ("Carlyle") sold 57,500,000 common shares at a price 
of $19.50 per share.

In April 2015, we completed a secondary offering (the "Secondary Offering") in which Carlyle sold an aggregate of 
46,000,000 common shares at a price of $28.00 per share. In addition, Carlyle sold 20,000,000 common shares in a 
private placement to an affiliate of Berkshire Hathaway Inc. (together with the Secondary Offering, the "April 2015 
Secondary Offerings") for $28.00 per share. Following the April 2015 Secondary Offerings, Carlyle ceased to control a 
majority of our common shares.

In August 2015, we completed a secondary offering (together with the IPO and the April 2015 Secondary Offerings, the 
"Carlyle Offerings") in which Carlyle sold an aggregate of 34,500,000 common shares at a public offering price 
of $29.75 per share. 

We did not receive any proceeds from the sale of common shares in any of the Carlyle Offerings.

84

(cid:2)

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

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

The accompanying consolidated balance sheets of Axalta at December 31, 2015 and 2014 and the related consolidated
statements of operations, consolidated statements of comprehensive income, consolidated statements of cash flows and
consolidated statements of changes in shareholders' equity for the years ended December 31, 2015, 2014 and 2013 are
labeled as "Successor". The Successor financial statements for the year ended December 31, 2013 were prepared
reflecting acquisition accounting resulting from the Acquisition. 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. The consolidated
financial statements for the Successor include the accounts of Axalta and its subsidiaries, and entities in which a
controlling interest is maintained.

The accompanying DPC combined statements of operations and statements of comprehensive income for the period from
January 1, 2013 through January 31, 2013 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 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 period are
presented on a different basis and are, therefore, not comparable.

During the Predecessor period, 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 activities occurring in the period from January 1, 2013 through January 31, 2013, 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 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.

85

(cid:2)

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

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 results of operations and cash flows of the Company in the future or if DPC 
had been a separate, standalone entity during the Predecessor period presented.

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

(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 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 and combined statements of operations and our share of these companies’ stockholders’ 
equity is included in the accompanying consolidated balance sheet.

86

(cid:2)

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

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.

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. 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.

87

(cid:2)

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

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. 

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. The change in valuation of inventories by the Successor did not have a material impact on the 
consolidated and combined financial statements.

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 period

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.

88

(cid:2)

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 Successor years ending December 31, 2015, 2014 and 2013 as well as the Predecessor period from 
January 1, 2013 through January 31, 2013, we have not recognized income associated with recoveries from third parties.

89

(cid:2)

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 accompanying consolidated 
balance sheets.

Predecessor period

For the Predecessor period 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 period. 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 
accompanying 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.

90

(cid:2)

Predecessor period

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

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 period

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 
period 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, restricted stock awards and 
restricted stock units, are 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 period

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

91

(cid:2)

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, restricted stock awards and restricted stock units.

(4) RECENT ACCOUNTING GUIDANCE

Recently Adopted Accounting Guidance

In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")
2015-03, "Simplifying the Presentation of Debt Issuance Costs," which requires debt issuance costs to be presented in the
balance sheet as a direct deduction from the associated debt liability. The standard is effective for financial statements
issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years, and should be
applied on a retrospective basis. Further clarifying this standard, ASU 2015-15, "Presentation and Subsequent
Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements" was released in August 2015
indicating that the SEC staff would not object to an entity deferring and presenting costs related to revolving debt
arrangements as an asset. We elected to early adopt this standard during the current year, resulting in impacts to the
balance sheets at December 31, 2015 and 2014 of decreases to other assets and long-term borrowings of $65.9 million and
$82.1 million, respectively.

Accounting Guidance Issued But Not Yet Adopted

In November 2015, the FASB issued ASU 2015-17, "Balance Sheet Classification of Deferred Taxes," which requires that
all deferred tax assets and liabilities be classified as non-current on the balance sheet. The standard is effective for fiscal
years beginning after December 15, 2016, with early adoption permitted. We intend to early adopt this standard beginning
in the first quarter of 2016. The impacts to the accompanying consolidated balance sheet at December 31, 2015 had we
elected to early adopt this standard during the current year would have resulted in corresponding reclassifications from
current assets and liabilities to non-current assets and liabilities of $62.9 million.  The impacts to the accompanying
consolidated balance sheet at December 31, 2014 would have resulted in corresponding reclassifications from current
assets and liabilities to non-current assets and liabilities of $57.2 million.

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 standard was
originally effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. In
August 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers: Deferral of the Effective Date,"
which delayed the effective date of the new revenue accounting standard to fiscal years beginning after December 15,
2017, and interim periods within those fiscal years. Companies will be allowed to early adopt the guidance as of the
original effective date. Early adoption is not permitted prior to this date. We are in the process of assessing the impact the
adoption of this ASU will have on our statements of 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") pursuant to which we acquired the assets and legal entities of DPC from DuPont for a final
purchase price of $4,907.3 million.

Axalta was formed for the purpose of consummating the Acquisition of DPC. 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.

92

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

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
Net loss 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 expense consisting primarily of $103.7 million related to the fair market value adjustment to acquisition-date 
inventory.

Divestitures

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.

(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, 2015
and 2014 by reportable segment:

At December 31, 2013
Acquisition-related adjustments
Divestitures
Foreign currency translation
At December 31, 2014
Acquisition-related adjustments
Foreign currency translation
December 31, 2015

Performance
Coatings

Transportation
Coatings

Total

$

$

$

1,038.8 $
5.7
(4.7)
(106.2)
933.6 $
17.2
(84.7)
866.1 $

74.8 $
0.4
—
(7.7)
67.5 $
0.7
(6.1)
62.1 $

1,113.6
6.1
(4.7)
(113.9)
1,001.1
17.9
(90.8)
928.2

In March 2015, we purchased an additional 25% interest in a previously held equity method investment. See Note 13 for 
additional information. In July 2015, we purchased all of the outstanding capital stock of a coatings distribution business 
with operations in the Netherlands and Belgium. In November 2015, we purchased the assets of a coatings manufacturer 
with operations in the United States. These acquisitions were not material, individually or in the aggregate, to our 
consolidated financial statements. 

93

(cid:2)

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, 2015
Technology
Trademarks - indefinite-lived
Trademarks - definite-lived
Customer relationships
Non-compete agreements
Total

December 31, 2014
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)

413.0 $
284.4
45.2
676.1
1.9
1,420.6 $

(117.2) $
—
(8.5)
(102.1)
(1.2)
(229.0) $

295.8
284.4
36.7
574.0
0.7
1,191.6

10.0
Indefinite
14.7
19.3
4.6

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

$

$

$

$

Activity related to in process research and development projects for the years ended December 31, 2014 and 2015:

In Process Research and Development
Balance at December 31, 2013
Completed
Abandoned
Balance at December 31, 2014
Completed
Abandoned
Balance at December 31, 2015

Activity

15.7
(10.4)
(0.1)
5.2
(3.5)
(0.1)
1.6

$

$

$

In the Successor years ended December 31, 2015, 2014 and 2013, amortization expense for acquired intangibles was 
$80.7 million, $83.8 million, and $79.9 million respectively. Amortization expense for the Successor years ended 
December 31, 2015, 2014 and 2013 included losses of $0.1 million, $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 was $2.6 million, which 
was primarily reported as a reduction in net sales.

The estimated amortization expense related to the identifiable intangible assets for each of the succeeding five years is:

2016
2017
2018
2019
2020

$
$
$
$
$

80.2
79.9
79.8
79.8
79.8

94

(cid:2)

(7) RESTRUCTURING

Successor Periods

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

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 as well as our Fit For Growth and Axalta Way initiatives. During the Successor years ended December 31, 2015,
2014 and 2013 we incurred restructuring costs of $31.9 million, $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 within 12 to 18 months from the balance sheet
date.

The following table summarizes the activity related to the restructuring reserves, recorded within other accrued liabilities,
and expenses for the Successor years ended December 31, 2013, 2014 and 2015:

Balance at February 1, 2013
Expense recorded
Payments made
Foreign currency translation
Balance at December 31, 2013
Expense recorded
Payments made
Foreign currency translation
Balance at December 31, 2014
Expense recorded
Payments made
Foreign currency translation
Balance at December 31, 2015

Predecessor Period

$

$

$

$

0.5
120.7
(23.7)
0.9
98.4
8.5
(51.6)
(6.8)
48.5
31.9
(33.8)
(5.3)
41.3

There was no expense recorded during the Predecessor period from January 1, 2013 through January 31, 2013 associated 
with restructuring. 

(8) RELATIONSHIP WITH DUPONT

Predecessor Period

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.

95

(cid:2)

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

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 period 
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 non-recurring 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:

Cost of goods sold
Selling, general, and administrative expenses
Research and development expenses
Total

Predecessor

Period from 
January 1, 2013 
through
January 31, 2013

$

$

14.2
1.4
0.1
15.7

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

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.

96

(cid:2)

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

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.

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.

Purchases from and Sales to Other DuPont Businesses

During the Predecessor period, DPC purchased materials (Titanium Dioxide and DuPont Sontara® maintenance wipes) 
from DuPont and its non-DPC businesses.

Purchases include the following amounts:

DPC purchases of products from other DuPont businesses

Predecessor

Period from
January 1, 2013
through January 31,
2013

$

7.9

There were no material sales to other DuPont businesses during the period covered by the Predecessor combined financial 
statements.

(9) COMMITMENTS AND CONTINGENCIES

Guarantees

In connection with the Acquisition, we assumed certain obligations which directly guarantee various debt obligations
under agreements with third parties related to the following: equity affiliates, customers, suppliers and other affiliated
companies. No amounts were accrued at December 31, 2015 and 2014.

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 $48.2 million, $61.6 million and $50.0 million for the
Successor years ended December 31, 2015, 2014 and 2013, respectively. Net rental expense under operating leases was
$4.6 million for the Predecessor period from January 1, 2013 through January 31, 2013.

At December 31, 2015, future minimum payments under noncancelable operating leases were as follows over each of the
next five years and thereafter:

2016
2017
2018
2019
2020
Thereafter
Total minimum payments

97

Operating
Leases

39.0
27.8
23.3
16.8
19.1
43.8
169.8

$

$

(cid:2)

Other

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

We are subject to various pending lawsuits and other claims including civil, regulatory, and environmental matters. 
Certain of these lawsuits and other claims may have an impact on 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 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 financial 
statements of Axalta.

(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 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.

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 were recorded as of the Acquisition date. All plan assets, 
where applicable, have been directly transferred to the respective plans' pension trusts. Accordingly, assumed defined 
benefit obligations are presented net of the plan assets.

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. 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 were 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 were included in the Predecessor combined financial statements.

98

(cid:2)

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

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.

Other Long-Term Employee Benefits

DuPont and certain 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.

Predecessor

EIN/
Pension Number

51-0014090/001 $
$

January 1, 2013
through
January 31, 2013
4.2
0.7

Plan Name
DuPont Pension and Retirement Plan
All Other Plans

99

(cid:2)

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 years ended December 31, 2015 and 2014 and the funded status and amounts recognized in the 
accompanying consolidated balance sheets at December 31, 2015 and 2014 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
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
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,

2015

2014

2015

2014

$

$

$

$

613.1 $
12.0
16.9
0.9
(12.0)
(4.7)
(27.4)
2.7
(59.8)
541.7

294.5
6.0
31.1
0.9
(27.4)
(4.7)
(22.0)
278.4
(263.3) $

0.2 $

(11.2)
(252.3)
(263.3) $

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) $

0.1 $
—
—
—
—
(0.1)
—
—
—
—

—
—
0.1
—
—
(0.1)
—
—
— $

— $
—
—
— $

4.6
0.1
0.1
—
1.1
—
—
(5.7)
(0.1)
0.1

—
—
—
—
—
—
—
—
(0.1)

—
—
(0.1)
(0.1)

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.

100

(cid:2)

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, 2015 and 2014. 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,

2015

2014

500.1 $

559.4

537.1 $
495.7 $
273.7 $

532.0 $
492.7 $
270.3 $

606.2
553.2
287.5

602.0
550.9
285.1

$

$
$
$

$
$
$

The pre-tax amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive loss 
include the following:

Defined Benefits:

Accumulated net actuarial losses

Accumulated prior service credit

Total

Other Long-Term Employee Benefits:

Accumulated net actuarial losses
Accumulated prior service credit

Total

Successor

Year Ended December 31,

2015

2014

(48.3) $
1.5
(46.8) $

Successor

Year Ended December 31,

2015

2014

— $
—
— $

(52.6)
4.3
(48.3)

(0.4)
4.1
3.7

$

$

$

$

The accumulated net actuarial losses 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 return on assets, discount rates, compensation and healthcare trends, used in these estimates. For 
individual plans in which the accumulated net actuarial losses exceed 10% of the higher of the market value of plan assets 
or the PBO at the beginning of the year, amortization of such excess has been included in net periodic benefit costs for 
pension and other long-term employee benefits. The amortization period is the average remaining service period of active 
employees expected to receive benefits unless a plan is mostly inactive in which case the amortization period is the 
average remaining life expectancy of the plan participants. Accumulated prior service credit is amortized over the future 
service periods of those employees who are active at the dates of the plan amendments and who are expected to receive 
benefits.

101

(cid:2)

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

The estimated pre-tax amounts that are expected to be amortized from accumulated other comprehensive loss into net 
periodic benefit cost during 2016 for the defined benefit plans and other long-term employee benefit plans is as follows:

2016

Amortization of net actuarial losses
Amortization of prior service credit

Total

Components of Net Periodic Benefit Cost

$

$

Defined Benefits

Other Long-Term
Employee Benefits
—
—
—

(0.4) $
0.1
(0.3) $

The following table sets forth the pre-tax components of net periodic benefit costs for the Successor years ended 
December 31, 2015, 2014, and 2013 and the Predecessor period from January 1, 2013 through January 31, 2013.

Pension Benefits

Successor

Year Ended December 31,

Predecessor

Period from
January 1,
2013
through
January 31,

2015

2014

2013

2013

$

12.0 $

15.4 $

17.0 $

16.9
(14.6)
0.4
(0.1)
—

0.5

15.1

(3.4)
(0.4)
2.7

0.1

—
(0.5)
—
(1.5)

22.9
(14.8)
(0.3)
—
(7.3)
0.1

16.0

60.6

0.3
(4.3)
—

7.3
(0.1)
(4.9)
58.9

21.2
(11.9)
—

—

—

—

26.3

(10.6)
—
(0.4)
—

—

—

0.6
(10.4)

1.6

1.8
(1.9)
1.1

—

—

—

2.6

—
(1.1)
—

—

—

—

—
(1.1)

$

13.6 $

74.9 $

15.9 $

1.5

Components of net periodic benefit cost and amounts recognized in

other comprehensive (income) loss:

Net periodic benefit cost:

Service cost

Interest cost

Expected return on plan assets

Amortization of actuarial (gain) loss, net

Amortization of prior service credit

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 (credit) cost

Amortization of prior service credit

Curtailment gain

Settlement loss

Other adjustments

Total (gain) loss recognized in other comprehensive income

Total recognized in net periodic benefit cost and other

comprehensive (income) loss

102

(cid:2)

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

Other Long-Term Employee Benefits

Successor

Year Ended December 31,

Predecessor

Period from
January 1,
2013
through
January 31,

2015

2014

2013

2013

$

— $

0.1 $

0.2 $

—

—
(3.7)
0.3
(3.4)

—

—

—

3.7
(0.3)
0.3

3.7

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)

$

0.3 $

(4.4) $

(0.2) $

—

—

—

—

—

—

—

—

—

—

—

—

—

—

Components of net periodic benefit (gain) cost and amounts

recognized in other comprehensive (income) loss:

Net periodic benefit (gain) cost:

Service cost

Interest cost

Amortization of actuarial loss, net

Amortization of prior service credit

Settlement loss

Net periodic benefit (gain) 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 credit

Settlement loss

Other adjustments

Total (gain) loss recognized in other comprehensive income

Total recognized in net periodic benefit cost and other

comprehensive (income) loss

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. 

103

(cid:2)

Assumptions

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

We used the following assumptions in determining the benefit obligations and net periodic benefit cost:

Pension Benefits
Weighted-average assumptions:
Discount rate to determine benefit obligation
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 obligation

Discount rate to determine net cost

Rate of future compensation increases to determine benefit obligation

Rate of future compensation increases to determine net cost

2015

Successor

2014

2013

3.05%
3.23%
3.03%
3.57%
5.21%

3.23%
4.11%
3.57%
3.52%
5.23%

4.11%
4.15%
3.52%
3.69%
5.22%

2015

Successor

2014

2013

—%

1.50%

—

—

1.50%

4.80%

—

—

4.80%

4.20%

—%

—%

The discount rates used reflect the expected future cash flow based on plan provisions, participant data 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,
2016
2017
2018
2019
2020
2021—2025

Benefits

28.3
25.5
26.8
30.0
26.9
166.1

$
$
$
$
$
$

There are no future benefit payments expected to be paid for other long-term employee benefits as this plan was 
effectively settled at December 31, 2015.

Plan Assets 

The defined benefit pension plans for our subsidiaries represent single-employer plans and the related plan assets are 
invested within separate trusts. Each of the single-employer plans is managed in accordance with the requirements of local 
laws and regulations governing defined benefit pension plans for the exclusive purpose of providing pension benefits to 
participants and their beneficiaries. Pension plan assets are typically held in a trust by financial institutions. Our asset 
allocation targets established are intended to achieve the plan’s investment strategies.

104

(cid:2)

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

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 actual and target pension plan asset allocations at December 31 for all funded Axalta 
defined benefit plans. 

Asset Category
Equity securities
Debt securities
Real estate
Other

2015

2014

Target Allocation

30-35%
35-40%
0-5%
20-25%

35-40%
35-40%
0-1%
20-25%

30-35%
35-40%
0-5%
20-25%

105

(cid:2)

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, 2015 and 2014, 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 investments

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 investments

Pension trust receivables

Total

Fair value measurements at
December 31, 2015

Total

Level 1

Level 2

Level 3

2.8 $

23.6
70.3
64.8
44.4
0.2
63.8
8.5
278.4 $

2.8 $
23.6
69.8
53.0
37.7
0.2
0.4
—
187.5 $

— $
—
0.4
11.8
4.5
—
0.1
—
16.8 $

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

—
—
0.1
—
2.2
—
63.3
8.5
74.1

—
—
0.1
—
2.3
—
63.0
0.4
65.8

$

$

$

$

106

(cid:2)

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, real estate investments, and other 
debt and equity investments. The fair values of our insurance contracts are determined based on the present value of the 
expected future benefits to be paid under the contract, discounted at a rate consistent with the related benefit obligation. 
Our real estate investments are primarily comprised of investments in commercial property funds externally valued using 
third party pricing methodologies, which are not actively traded on public exchanges. Debt and equity investments consist 
primarily of small investments in other investments that are valued at different frequencies based on the value of the 
underlying investments. The table below present a roll forward of activity for these assets for the years ended 
December 31, 2015 and 2014. 

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
Realized (loss)
Change in unrealized gain
Purchases, sales, issues and settlements
Transfers in/(out) of Level 3
Ending balance at December 31, 2015

Assumptions and Sensitivities

Level 3 assets

Total

Private
market
securities

Debt and
Equity

Real
estate 
investments

$

$

$

59.6 $
—
0.2
6.0
—
65.8 $
—
(5.2)
13.5
—
74.1 $

59.3 $
—
—
3.7
—
63.0 $
—
(5.2)
5.5
—
63.3 $

— $
—
—
2.4
—
2.4 $
—
(0.1)
—
—
2.3 $

0.3
—
0.2
(0.1)
—
0.4
—
0.1
8.0
—
8.5

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 5.21% for 2015. For 2016, the expected long-term rate of return is 4.75%.

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, 2015 we expect to contribute $17.2 million to our defined benefit plans during 2016.  
No plan assets are expected to be returned to the Company in 2016. No contributions to our other long-term employee 
benefit plans are expected during 2016 as the plan was effectively settled at December 31, 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 to $36.7 million and $35.9 million for the Successor years ended December 31, 2015 and 2014, respectively.

107

(cid:2)

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, 2015, 2014 and 2013, we recognized $30.2 million, $8.0 million and $7.4 million,
respectively, in stock-based compensation expense. Included in the $30.2 million of stock-based compensation expense
recorded during the year ended December 31, 2015 was $8.2 million of stock-based compensation expense attributable to
accelerated vesting of all issued and outstanding stock options issued under the Axalta Coating Systems Bermuda Co., Ltd
2013 Equity Incentive Plan (the "2013 Plan"), as a result of the April 2015 Secondary Offerings which reduced Carlyle's
interest in Axalta to below 50%, triggering a liquidity event (the "Liquidity Event") as defined in the 2013 Plan.

We recognized a tax benefit on stock-based compensation of $10.7 million, $2.8 million and $2.6 million for the years
ended December 31, 2015, 2014 and 2013, respectively.

Stock-based compensation expense is primarily allocated to costs of goods sold and selling, general and administrative
expenses on the consolidated statement of operations.

Description of Equity Incentive Plan

In 2013, Axalta’s Board of Directors approved 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 provided for the issuance of stock
options, restricted stock or other stock-based awards. No further awards may be granted pursuant to the 2013 Plan.

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. All awards granted pursuant to the 2014 Plan must be must be authorized by the Board of Directors of Axalta or a
designated committee thereof. Our Board of Directors has generally delegated responsibility for administering the 2014
Plan to our Compensation Committee.

The terms of the options may vary with each grant and are determined by the Compensation Committee within the
guidelines of the 2013 and 2014 Plans.

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. Options granted under the 2013 Plan in 2013 and 2014 were assigned a 4.4 to 5 years vesting period;
however, vesting was accelerated as a result of the Liquidity Event. Option life cannot exceed ten years.

In 2015, we granted 1.3 million non-qualified, service-based stock options to certain employees and directors under the
2014 Plan with strike prices between $25.34 and $34.80 per share. Options granted under the 2014 Plan vest ratably over
three years and have a life of no more than ten years. We also granted 0.9 million shares of restricted stock awards and 0.8
million restricted stock units at fair values between $25.34 and $34.80.

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 values of options granted in 2015, 2014 and 2013 were $8.15, $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

2015 Grants
2014 Grants
2013 Grants
6.00 years 7.81 years 7.81 years

22.19%

28.28%

28.61%

—

—

—

1.79%

2.21%

2.13%

108

(cid:2)

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

For the 2015 option grants, the market value of the stock is the closing price of the stock on the date of grant. 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 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.

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 fair 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 strike price equaled the grant date 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.

The expected term assumptions used for the 2015 grants were also determined using the simplified method and resulted in 
an expected term of 6.0 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 either privately-held at the 
date of grant or had a limited history as a public company. 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.

109

(cid:2)

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

A summary of stock option award activity as of December 31, 2015 and changes during the year then ended, is presented 
below:

Awards
(in millions)

Weighted-
Average
Exercise
Price

Aggregate
Intrinsic
Value
 (in millions)

Weighted
Average
Remaining
Contractual
Life (years)

Outstanding at December 31, 2014

Granted

Exercised

Forfeited

Outstanding at December 31, 2015

Vested and expected to vest at December 31, 2015

Exercisable at December 31, 2015

17.1 $

1.3 $
(7.3) $
(0.1) $
11.0 $

11.0 $

9.8 $

9.38

31.61

8.97

17.07

12.19

12.19 $

9.68 $

165.8

165.6

7.81

7.61

Cash received by the company upon exercise of options in 2015 was $63.9 million. The tax benefit related to these 
exercises is $57.3 million. 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 2015 was $166.8 million. The intrinsic value of 
options exercised in 2014 were not material and there were no exercises in 2013.

The fair value of shares vested during 2015 and 2014 was $24.3 million and $4.5 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, 
2015 and 2014, the Company has estimated its annual forfeiture rate at 0% due to its limited history and expectations of 
forfeitures. Total forfeitures for the year ended December 31, 2015 were 0.1 million.

At December 31, 2015, there was $6.4 million of unrecognized compensation cost relating to outstanding unvested stock 
options expected to be recognized over the weighted average period of 2.4 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.

Restricted Stock Awards and Restricted Stock Units

During year ended December 31, 2015, we issued 1.7 million shares of restricted stock awards and restricted stock units 
with an average grant price of $32.22 per share.  A portion of these awards vests ratably over three years.  Other awards 
granted to certain members of management cliff vest over two and three year periods and are subject to accelerated 
vesting in the event of the award recipient's termination of employment under certain circumstances.

A summary of restricted stock and restricted stock unit award activity as of December 31, 2015 is presented below:

Outstanding at January 1, 2015

Granted

Vested

Forfeited

Outstanding at December 31, 2015

Awards
(millions)

Weighted-Average
Fair Value

— $

1.7 $

— $

— $

1.7 $

—

32.22

—

—

32.22

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, 
2015, the Company has estimated its annual forfeiture rate at 0% due to its limited history and expectations of forfeitures.

110

(cid:2)

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

At December 31, 2015, there was $38.2 million of unamortized expense relating to unvested restricted stock awards and 
restricted stock units that is expected to be amortized over a weighted average period of 2.4 years. Compensation expense 
is recognized for the fair values of the awards over the requisite service period of the awards using the graded-vesting 
attribution method.

Predecessor period

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. 

Total stock-based compensation expense included in the combined statement of operations was $0.1 million for the 
Predecessor period from January 1, 2013 through January 31, 2013.

(12) RELATED PARTY TRANSACTIONS

The 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 provided 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. As a result of this agreement termination, no expense was
recorded during the Successor year ended December 31, 2015.

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 Successor year ended December 31, 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.

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 prior years. 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.

111

(cid:2)

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

(13) OTHER EXPENSE, NET

Successor

Year Ended December 31,

Predecessor

Period from
January 1, 2013
through
January 31,

2015

2014

2013

2013

$

93.7 $

81.2 $

48.9 $

Exchange losses, net

Management fees and expenses

Impairment of real estate investment

Indemnity (gains) losses associated with the

Acquisition

Financing fees and debt extinguishment
Other miscellaneous income, net

Total

$

—

30.6

(1.0)
2.5
(14.6)
111.2 $

16.6

—

17.8

6.1
(6.7)
115.0 $

3.1

—

—

—
(3.5)
48.5 $

4.5

—

—

—

—

0.5

5.0

Our net exchange losses for the Successor years ended December 31, 2015, 2014 and 2013 consisted of remeasurement 
losses primarily related to intercompany transactions denominated in currencies different from the functional currency of 
the relevant subsidiary. These remeasurements of the intercompany transactions were partially offset by gains on our Euro 
borrowings. Net exchange losses also include the impacts of remeasurement losses related to the remeasurement of the net 
monetary assets of our Venezuelan subsidiary, as discussed in further detail in Note 27. 

Other miscellaneous income, net included a gain for the Successor year ended December 31, 2015 resulting from the 
acquisition of an additional 25% interest in an equity method investee for a purchase price of $4.3 million. As a result of 
the acquisition, we obtained a controlling interest and recognized a gain of $5.4 million on the remeasurement of our 
previously held equity interest as of the acquisition date. Also included in other miscellaneous income, net for the 
Successor year ended December 31, 2015 was the recognition of a $5.6 million gain on derivative contracts compared to a 
$1.4 million loss for the year ended Successor December 31, 2014. 

(14) INCOME TAXES

Domestic and Foreign Components of Income (Loss) Before Income Taxes

Domestic

Foreign

Total

Successor

Year Ended December 31,

Predecessor

Period from
January 1, 2013
through
January 31,

2015

2014

2013

2013

$

$

(19.4) $
180.6

161.2 $

(8.8) $
45.6

36.8 $

(153.8) $
(109.9)
(263.7) $

(1.5)
17.1

15.6

112

(cid:2)

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

Provision (Benefit) for Income Taxes

Successor

Year Ended December 31, 2015

Year Ended December 31, 2014

Year Ended December 31, 2013

Current  

Deferred  

Total  

Current  

Deferred  

Total  

Current  

Deferred  

Total  

U.S. federal
U.S. state and local

Foreign
Total

$

$

— $
3.1
65.2
68.3 $

19.2 $
8.6
(32.8)
(5.0) $

19.2 $
11.7
32.4
63.3 $

— $
2.0
38.3
40.3 $

(2.1) $
(2.9)
(33.2)
(38.2) $

(2.1) $
(0.9)
5.1
2.1 $

(43.7) $
(2.5)
(74.6)

— $
2.3
73.7
76.0 $ (120.8) $

(43.7)
(0.2)
(0.9)
(44.8)

U.S. federal
U.S. state and local
Foreign
Total

Reconciliation to US Statutory Rate

Predecessor

Period from January 1, 2013 through January 31, 2013

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

Successor

Year Ended December
31, 2015

Year Ended December
31, 2014

Year Ended December
31, 2013

$

56.4

35.0% $

12.9

35.0% $

(92.3)

35.0% $

(46.7)

(127.0)

(36.6)

(41.4)

34.4

(10.5)

0.4

5.8

4.9

5.5

(5.5)

10.7

—

8.1

(25.6)

21.3

(6.5)

0.3

3.6

3.0

3.4

6.6

—

5.0

(5.5)

(3.4)

$

63.3

39.3% $

44.4

8.7

120.9

23.7

(44.0)

(119.7)

1.2

15.4

14.2

3.3

41.9

38.6

—

—

—

2.8

—

—

—

1.1

2.1

(3.4)

(5.1)

(13.8)

13.9

(20.9)

(3.3)

(13.2)

(3.4)

(2.4)

(7.4)

0.6

—

17.7

0.1

0.3

55.0

8.7

35.1

8.9

6.4

19.4

(1.6)

—

(46.7)

(0.2)

(0.9)

Predecessor

Period from
January 1
2013 through
January 31,
2013

5.5

1.0

1.4

0.5

—

—

—

—

—

—

—

—

35.0%

6.6

8.9

3.1

—

—

—

—

—

—

—

—

(1.3)

(8.0)

5.7% $

(44.8)

17.0% $

7.1

45.6%

Statutory U.S. federal income tax 

rate(1)

Foreign income taxed at rates

other than 35%

Changes in valuation allowances

Foreign exchange gain (loss), net
Unrecognized tax benefits(2)
Foreign taxes

Non-deductible interest

Non-deductible expenses

Tax credits

Venezuela impairment
Capital loss(3)
U.S. state and local taxes, net

Other - net

Total income tax provision

(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.

113

(cid:2)

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

Deferred Tax Balances

Deferred tax asset

Tax loss, credit and interest carryforwards
Goodwill and intangibles
Compensation and employee benefits
Accruals and other reserves
Other

Total deferred tax assets
Less: Valuation allowance
Net deferred tax assets
Deferred tax liabilities

Property, Plant & Equipment
Equity Investment & Other Securities
Unremitted earnings
Long-Term Debt
Other

Total deferred tax liabilities
Net deferred tax asset

Current asset
Current liability
Non-current assets
Non-current liability
Net deferred tax asset

Successor

Year Ended December 31,

2015

2014

$

$

$

$

227.4 $
93.6
93.8
30.4
12.1
457.3
(127.8)
329.5

(191.5)
(0.5)
(6.3)
(6.6)
—
(204.9)
124.6 $

69.5 $
(6.6)
227.2
(165.5)
124.6 $

198.5
90.8
92.5
58.4
—
440.2
(101.9)
338.3

(215.0)
(2.2)
(8.5)
(8.1)
(5.5)
(239.3)
99.0

64.5
(7.3)
250.0
(208.2)
99.0

At December 31, 2015, the Company had $144.4 million of net operating and capital loss carryforwards (tax effected) in 
certain non-U.S. jurisdictions, net of uncertain tax positions. Of these, $76.4 million have indefinite carryforward periods, 
and the remaining $68.0 million are subject to expiration between the years 2018 through 2025. 

In the U.S., there were approximately $86.3 million of federal net operating loss carryforwards (tax effected) subject to 
expiration in years beyond 2032, and $4.2 million of state net operating loss carryforwards (tax effected) subject to 
expiration between the years 2018 and 2035. Tax credit carryforwards at December 31, 2015 amounted to $19.6 million 
subject to expiration between the years 2019 and 2035. Interest carryforwards at December 31, 2015 of $16.8 million 
have an indefinite carryforward period. Utilization of our net operating loss and tax credit carryforwards may be subject to 
annual limitations due to the ownership change limitations provided by the Internal Revenue Code and similar state 
provisions. Such annual limitations could result in the expiration of the net operating loss and tax credit carryforwards 
before their utilization. 

Of the net operating loss, tax credit and interest carryforwards (tax-effected), $43.9 million has not been benefited, as it 
relates to the windfall tax benefit on stock compensation that occurred in 2015 which has not reduced income taxes 
payable.  If realized, the unrecorded net operating loss carryforwards will be recognized as a benefit through equity.  We 
have adopted a “with and without” approach with regards to windfall tax benefits from stock based compensation.

114

(cid:2)

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

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 expirations 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. Interest 
carryforwards at December 2014, amounted to $12.9 million, and had an indefinite carryforward period.

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, 2015 and 
2014 of 127.8 million and 101.9 million, respectively. The $25.9 million increase is a result of current year taxable losses 
in Netherlands of $25.0 million and $0.9 million of various unbenefited losses.

The Company has determined that the majority of unremitted earnings of our subsidiaries will not be permanently 
reinvested, and accordingly, has provided a deferred tax liability at December 31, 2015 and 2014 of 6.3 million and 8.5 
million, respectively. The Company has included in the current income tax provision a total benefit of $0.4 million related 
to subsidiary earnings and reduced withholding tax rates on prior year earnings. In 2015, the Company asserted indefinite 
reinvestment on $33.2 million of 2015 undistributed earnings from operations in China. Upon repatriation of those 
earnings, in the form of dividends or otherwise, the Company would be subject withholding tax of $1.7 million.

Total Gross Unrecognized Tax Benefits

Successor

Year Ended December 31,

Predecessor

Period from
January 1
2013 through
January 31,

2015

2014

2013

2013

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

$

5.3 $

38.9 $

—

—

(0.6)
—

—

—

—

—

(33.6)
—

—

—

— $

11.3

—

—

27.6

—

—

Balance at December 31

$

4.7 $

5.3 $

38.9 $

—

—

—

—

—

—

—

—

At December 31, 2015 and 2014, the total amount of gross unrecognized tax benefits was $4.7 million and $5.3 million, 
of which $4.7 million and $5.3 million would impact the effective tax rate, if recognized, respectively.

Interest and penalties associated with gross unrecognized tax benefits are included as components of the "Provision 
(benefit) for income taxes," and totaled an income tax expense of $0.4 million in 2015 and an income tax benefit of $6.8 
million in 2014.  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, 2015 and 2014 was $0.7 million and $0.3 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).  

115

(cid:2)

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

The Company is subject to income tax in approximately 45 jurisdictions outside the U.S. The Company’s significant 
operations outside the U.S. are located in Belgium, China, Germany and Mexico. 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, 2015 and 2014, we had gross unrecognized tax benefits of $5.4 million and $5.6 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.

(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 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,

2015

2014

2013

$

$

$

$

93.7 $

27.4 $

—

—

93.7 $

27.4 $

233.8

239.7

229.3

230.3

0.40 $

0.39 $

0.12 $

0.12 $

(224.9)
(3.9)
(221.0)
228.3

228.3

(0.97)
(0.97)

(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, 2015, 2014 and 2013 were 0.7 million, 7.2 million and 16.3 million 
respectively. 

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.

116

(cid:2)

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

(16) ACCOUNTS AND NOTES RECEIVABLE, NET

Accounts receivable—trade, net

Notes receivable

Other

Total

Successor

Year Ended December 31,

2015

2014

$

$

647.2 $

43.0

75.6

765.8 $

638.3

45.5

136.6

820.4

Accounts and notes receivable are carried at amounts that approximate fair value. Accounts receivable—trade, net are net 
of allowances of $10.7 million and $9.9 million at December 31, 2015 and 2014, respectively. Bad debt expense was $4.9 
million, $5.1 million and $5.4 million for the Successor years ended December 31, 2015, 2014 and 2013, respectively, and 
$0.2 million for the Predecessor period from January 1, 2013 through January 31, 2013.

(17) INVENTORIES

Finished products

Semi-finished products

Raw materials and supplies

Total

Successor

Year Ended December 31,

2015

2014

$

$

313.1 $

88.5

129.1

530.7 $

323.7

81.3

133.3

538.3

Stores and supplies inventories of $20.8 million and $20.9 million at December 31, 2015 and 2014, respectively, were 
valued under the weighted average cost method. 

(18) PROPERTY, PLANT AND EQUIPMENT, NET

Depreciation expense amounted to $169.1 million, $176.6 million, and $174.3 million for the Successor years ended
December 31, 2015, 2014 and 2013, respectively, and $7.2 million for the Predecessor period from January 1, 2013
through January 31, 2013.

Successor

Year Ended December 31,

Useful Lives (years)

2015

2014

5
3
5
3

-
-
-
-

25
25
7
20

$

$

84.4 $
423.5
1,040.2
132.1
36.2
138.9
1,855.3
(472.4)
1,382.9 $

90.5
418.4
1,060.1
122.1
29.1
138.0
1,858.2
(344.1)
1,514.1

Land
Buildings and improvements
Machinery and equipment
Software
Other
Construction in progress

Total

Accumulated depreciation

Property, plant, and equipment, net

117

Successor

Year Ended December 31,

2015

2014

4.2 $

227.2
202.8
434.2 $

4.5
250.0
228.1
482.6

Successor

Year Ended December 31,

2015

2014

418.6 $
22.4
13.7
454.7 $

463.6
21.4
9.5
494.5

Successor

Year Ended December 31,

2015

2014

140.0 $
11.2
41.3
74.8
18.8
1.8
82.3
370.2 $

153.0
12.4
48.5
68.6
20.8
1.5
100.0
404.8

$

$

$

$

$

$

(cid:2)

(19) OTHER ASSETS

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

Available for sale securities
Deferred income taxes—non-current
Other
Total

(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

118

(cid:2)

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

(22) BORROWINGS

Borrowings are summarized as follows:

Dollar Term Loan
Euro Term Loan
Dollar Senior Notes
Euro Senior Notes
Short-term and other borrowings
Unamortized original issue discount
Unamortized deferred financing costs, net

Less:

Short term borrowings
Current portion of long-term borrowings

Long-term debt

Senior Secured Credit Facilities, as amended

Successor

Year Ended December 31,

2015
2,042.5 $
428.0
750.0
274.4
26.5
(14.0)
(65.9)
3,441.5 $

2014
2,165.5
481.0
750.0
305.3
12.9
(18.3)
(82.1)
3,614.3

22.7 $
27.4
3,391.4 $

12.2
27.9
3,574.2

$

$

$

$

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, 2015.

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%.

119

(cid:2)

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

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 each of the Successor years ended December 31, 2015 and 2014, we voluntarily repaid $100.0 million of the 
outstanding New Dollar Term Loan. For the year ended December 31, 2015, this action resulted in a pre-tax loss on 
extinguishment of $2.5 million, consisting of the write-off of $1.8 million and $0.7 million of unamortized deferred 
financing costs and original issue discounts, respectively. For the Successor year ended December 31, 2014, this action 
resulted in 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 recorded as direct deductions of the associated debt obligations, 
with the exception of deferred financing costs related to the Revolving Credit Facility, which are classified within other 
assets on the accompanying consolidated balance sheets as the associated debt has been undrawn since inception, and are 
amortized as interest expense over the life of the Senior Secured Credit Facilities. At December 31, 2015 and 2014, the 
remaining unamortized balances related to deferred financing costs on the Senior Secured Credit Facilities were $50.6 
million and $65.7 million, respectively.

Amortization expense related to deferred financing costs, net for the Successor years ended December 31, 2015, 2014 and 
2013 were $13.2 million, $13.3 million and $11.7 million, respectively. These amounts were exclusive of the $1.8 million 
and $2.2 million write-off associated with the $100.0 million prepayments on our New Dollar Term Loan in 2015 and 
2014, respectively.

Amortization expense related to original issue discounts for the Successor years ended December 31, 2015, 2014 and 
2013 were $3.4 million, $3.6 million and $3.0 million, respectively. These amounts were exclusive of the $0.7 million and 
$0.8 million write-off associated with the $100.0 million prepayments on our New Dollar Term Loan in 2015 and 2014, 
respectively.

At December 31, 2015 and 2014 there were no borrowings under the Revolving Credit Facility. At December 31, 2015 
and 2014, letters of credit issued under the Revolving Credit Facility totaled $24.9 million and $15.5 million, respectively, 
which reduced the availability under the Revolving Credit Facility. Availability under the Revolving Credit Facility was 
$375.1 million and $384.5 million at December 31, 2015 and 2014, respectively.

120

(cid:2)

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

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, 2015 and 2014, the remaining unamortized 
balances were $21.3 million and $25.3 million, respectively. The expense related to the amortization of the deferred 
financing costs for the Successor years ended December 31, 2015, 2014 and 2013, were $4.0 million, $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 as direct deductions of the associated debt obligations and are amortized into interest 
expense over the life of the Euro Senior Notes. At December 31, 2015 and 2014, the remaining unamortized balances 
were $6.5 million and $7.7 million, respectively.

As of 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 and thereafter

Euro Notes
Percentage

104.313%
102.875%
101.438%
100.000%

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 and are amortized as interest expense over the life of the Senior Notes. At December 31, 2015 and 2014, the 
remaining unamortized balances were $14.8 million and $17.6 million, respectively.

121

(cid:2)

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

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 and thereafter

Dollar Notes
Percentage

105.531%
103.688%
101.844%
100.000%

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.

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.

Future repayments

Below is a schedule of required future repayments of all borrowings outstanding at December 31, 2015.

2016
2017
2018
2019
2020

Thereafter

$

$

38.1
29.5
28.1
27.6
2,361.2
1,024.9
3,509.4

(23) FAIR VALUE ACCOUNTING

Assets measured at fair value on a non-recurring basis

During the Successor years ended December 31, 2015, 2014 and 2013 we recorded impairment losses of $0.1 million,
$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 non-recurring 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.

During the Successor year ended December 31, 2015, we recorded an impairment loss of $30.6 million at our Venezuelan
subsidiary to write down the carrying value of a real estate investment to its fair value. See Note 27 for further discussion
of impairment and methods used to determine fair value.

122

(cid:2)

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

Fair value of financial instruments

Available for sale securities - The fair values of available for sale securities at December 31, 2015 and 2014 were $4.2 
million and $4.5 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, 2015 were 
$787.5 million and $285.4 million, respectively. The fair values at December 31, 2014 were $795.0 million and $320.5 
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, 2015 were $2,024.6 million and $427.5 
million, respectively. The fair values at December 31, 2014 were $2,100.5 million and $478.0 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.

(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 U.S. 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 losses, net. 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 the accompanying consolidated balance sheet:

Other assets:

Interest rate swaps

Total assets

Other liabilities:

Interest rate swaps

Total liabilities

Year Ended December 31,

2015

2014

$

$

$

$

0.4 $

0.4 $

1.8 $

1.8 $

5.9

5.9

1.5

1.5

123

(cid:2)

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

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 the accompanying consolidated balance sheet:

Other assets:

Interest rate cap

Prepaid expenses and other assets:

Foreign currency contracts

Total assets

Year Ended December 31,

2015

2014

$

$

$

— $

0.3 $

0.3 $

0.1

—

0.1

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.

The following table sets forth the locations and amounts recognized during the Successor years ended December 31, 
2015, 2014, and 2013 respectively, for these cash flow hedges.

Derivatives in Cash Flow Hedging
Relationships in 2015:

Amount of
(Gain) Loss
Recognized
in OCI on
Derivatives
(Effective
Portion)

Interest rate contracts

$

5.5

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

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 
(Gain) Loss 
Recognized in 
Income on 
Derivatives 
(Ineffective 
Portion)

Amount of
(Gain) Loss
Recognized
in Income on
Derivatives
(Ineffective
Portion)

Interest
expense, net

6.5

$

0.4

Amount of
(Gain) Loss
Reclassified
from
Accumulated
OCI to
Income
(Effective
Portion)

Location of 
(Gain) Loss 
Recognized in 
Income on 
Derivatives 
(Ineffective 
Portion)

Amount of
(Gain) Loss
Recognized
in Income on
Derivatives
(Ineffective
Portion)

Interest
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.

124

(cid:2)

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

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 losses, net.

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 losses, net

Interest rate cap

Interest expense, net

Successor

Year Ended
December 31,
2015

Year Ended
December 31,
2014

Year Ended
December 31,
2013

Predecessor

Period from
January 1, 2013
through
January 31,
2013

$

$

(5.6) $
0.1
(5.5) $

1.4 $

3.4

4.8 $

20.9 $
(0.3)
20.6 $

2.0

—

2.0

(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.

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.

125

(cid:2)

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

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

Year Ended December 31,

2015

2014

2013

Predecessor

Period from
January 1
through
January 31,
2013

$

1,702.0 $

1,850.8 $

1,670.0 $

683.1

2,385.1

1,310.6

391.5

1,702.1

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

$

4,087.2 $

4,361.7 $

3,951.1 $

129.4

57.4

186.8

111.6

27.8

139.4

326.2

Segment information for the Predecessor period has been recast to conform to the Successor segment presentation.

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, 2015
Net sales (1)
Equity in earnings in unconsolidated affiliates
Adjusted EBITDA (2)
Investment in unconsolidated affiliates

For the Year ended December 31, 2014
Net sales (1)
Equity in losses 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

126

Successor

Performance
Coatings

Transportation
Coatings

Total

$

2,385.1 $

1,702.1 $

4,087.2

0.6

539.1

4.0

0.6

328.1

8.4

1.2

867.2

12.4

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 $
1.8

1,625.8 $
0.3

500.2

7.7

198.8

8.1

3,951.1
2.1

699.0

15.8

(cid:2)

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

For the Period from January 1 through January 31, 2013
Net sales (1)
Equity in losses in unconsolidated affiliates
Adjusted EBITDA (2)
Investment in unconsolidated affiliates

(1) The Company has no intercompany sales between segments.

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

(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:

Income (loss) before income taxes
Interest expense, net
Depreciation and amortization
EBITDA
Inventory step up (a)
Merger and acquisition related costs (b)
Financing fees and debt 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)
Offering related costs (i)
Stock-based compensation (j)
Other adjustments (k)
Dividends in respect of noncontrolling interest (l)
Management fee expense (m)
Asset impairment (n)
Adjusted EBITDA

Successor

Year Ended December 31,

2015

2014

2013

$

161.2 $
196.5
307.7
665.4
1.2

36.8 $
217.7
308.7
563.2
—

(263.7) $
215.1
300.7
252.1
103.7

—

2.5

93.7
(0.3)
36.6

24.7
(3.4)
3.1

30.2
(12.4)
(4.7)
—

30.6

—

6.1

81.2
(0.6)
18.4

36.3
101.8

22.3

8.0

2.8
(2.2)
3.2

—

28.1

25.0

48.9

9.5

147.5

54.7
29.3

—

7.4
(5.1)
(5.2)
3.1

—

Predecessor

Period from 
January 1
through
January 31,
2013

15.6
—
9.9
25.5
—

—

—

4.5

2.3

0.3

—
—

—

0.1

—

—

—

—

$

867.2 $

840.5 $

699.0 $

32.7

(a) During the Successor years ended December 31, 2015 and 2013, we recorded non-cash fair value inventory adjustments
associated with our acquisitions.  These adjustments increased cost of goods sold by $1.2 million and $103.7 million,
respectively.

(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.

127

(cid:2)

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

(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. In addition to the credit facility amendment, we also incurred $2.5 million
and $3.0 million of losses on extinguishment of debt during the Successor years ended December 31, 2015 and 2014,
respectively, which resulted directly from the pro-rata write offs of unamortized deferred financing costs and original issue
discounts associated with the pay-downs of $100.0 million of principal on the New Dollar Term Loan in each year (discussed
further at Note 22).

(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, 2015, 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, 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 and other employee-related costs, including our

initiative to improve the overall cost structure within the European region. 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-
savings opportunities that were related to our transition to a standalone entity in 2013 and 2014 and our Axalta Way cost-
savings initiatives in 2015.

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

Amounts incurred during 2015 primarily relate to our Axalta Way cost-savings initiatives. Amounts incurred during 2013 and
2014 relate to services rendered in conjunction with our 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 offering of our common shares in the Carlyle Offerings during 2015 and 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 during 2014. See note (m)
below.

(j) Represents costs associated with stock-based compensation, including $8.2 million of expense during 2015 attributable to the

accelerated vesting of all issued and outstanding stock options issued under the 2013 Plan as a result of the Liquidity Event.

(k) Represents costs for certain unusual or non-operational (gains) and losses, including a $5.4 million gain resulting from the
acquisition of a controlling interest in our previously held equity method investee during 2015, equity investee dividends,
indemnity losses (gains) associated with the Acquisition, losses (gains) on sale and disposal of property, plant and equipment,
and losses (gains) on foreign currency derivative instruments.

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

(m) 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.

(n) As a result of the currency devaluation in Venezuela, we evaluated the carrying values of our long-lived assets for impairment
and recorded an impairment charge relating to a real estate investment of $30.6 million during 2015 (discussed further at Note
27).

128

(cid:2)

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:

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

Year Ended December 31,

2015
1,371.9 $
1,425.3
717.4
572.6
4,087.2 $

2014
1,307.8 $
1,672.0
715.0
666.9
4,361.7 $

2013
1,165.4 $
1,540.4
593.7
651.6
3,951.1 $

$

$

Predecessor

Period from
January 1
through
January 31,

2013

81.6
141.0
51.7
51.9
326.2

Successor

December 31,
2015

December 31,
2014

$

449.1 $

493.2

234.5

206.1

481.4

542.0

234.3

256.4

$

1,382.9 $

1,514.1

(a) Net Sales are attributed to countries based on location of the customer. Sales to external customers in China represented

approximately 13%, 11% and 10% of the total for the Successor years ended December 31, 2015, 2014, and 2013 respectively,
as well as 11% for the Predecessor period ended January 31, 2013. Sales to external customers in Germany represented
approximately 9%, 10% and 10% of the total for the Successor years ended December 31, 2015, 2014 and 2013, respectively,
as well as 11% for the Predecessor period ended January 31, 2013. Canada, which is included in the North America region,
represents approximately 3% of total net sales in all periods.

(b) Long-lived assets consist of property, plant and equipment, net. Germany long-lived assets amounted to approximately $280.4

million and $302.8 million in the Successor years ended December 31, 2015 and 2014, respectively. China long-lived assets
amounted to $194.7 million and $189.4 million in the Successor years ended December 31, 2015 and 2014, respectively.
Canada long-lived assets, which are included in the North America region, amounted to approximately $20.7 million and $20.9
million in the Successor years ended December 31, 2015 and 2014, respectively.

129

(cid:2)

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

(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, 2014 $
Current year deferrals to AOCI

Reclassifications from AOCI to Net

income

Net Change
Successor Balance, December 31, 2015 $

(72.1) $

(160.7)

—

(160.7)

(232.8) $

(31.2) $
(4.3)

2.1
(2.2)
(33.4) $

(0.2) $
0.3

—

0.3

0.1 $

0.2 $

0.6

(4.0)
(3.4)
(3.2) $

(103.3)
(164.1)

(1.9)
(166.0)
(269.3)

The income tax related to the changes in pension and other long-term employee benefits for the year ended December 31, 
2015 was $0.0 million. The cumulative income tax benefit related to the adjustments for pension and other long-term 
employee benefits at December 31, 2015 was $13.4 million. The income tax related to the changes in the unrealized gain 
on derivatives for the year ended December 31, 2015 was $2.1 million. The cumulative income tax benefit related to the 
adjustments for unrealized gain on derivatives at December 31, 2015 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

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) $

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)

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 Successor year ended December 31, 2014 was $16.9 million. The 
cumulative income tax benefit related to the adjustments for pension and other long-term employee benefits at 
December 31, 2014 was $13.4 million. The income tax related to the change in the unrealized gain on derivatives for the 
Successor 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 were $0.2 million. 

130

(cid:2)

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

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 related to the adjustment for unrealized loss on securities at 
January 31, 2013 was $0.9 million.

(27) VENEZUELA

Venezuela Devaluation

Based on our participation in Venezuela’s Complementary System of Foreign Currency Administration (SICAD I) auction
process during the Successor year ended December 31, 2014, we changed the exchange rate we used to remeasure our
Venezuelan subsidiary’s bolivar denominated monetary assets and liabilities into U.S. dollars to an exchange rate of 12.0
Venezuelan bolivars to 1.0 U.S. dollar at December 31, 2014 from the Official Rate of 6.3 Venezuelan bolivars to 1.0 U.S.
dollar.

In February 2015, the Venezuelan government enacted additional changes to its foreign currency exchange regime. The
changes maintain a three-tiered system which remains in place at December 31, 2015, including the Official Rate
determined by CENCOEX, which remains at 6.3 Venezuelan bolivars to 1.0 U.S. dollar, and the SICAD I rate, which
remains at 12.0 Venezuelan bolivars to 1.0 U.S. dollar. There was a third market, SICAD II, which has since been
eliminated and replaced by a new, alternative currency market, the Marginal Foreign Exchange System ("SIMADI").

131

(cid:2)

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

SIMADI is intended to provide limited access to a free market rate of exchange. The only way to obtain U.S. dollars 
through SIMADI is through the supply and demand available within the Venezuelan financial institutions. We believe that 
significant uncertainty still exists regarding the exchange mechanisms in Venezuela, including how any such mechanisms 
will operate in the future and the availability of U.S. dollars under each mechanism. At June 30, 2015, we changed the 
exchange rate we used to remeasure our Venezuelan bolivars to the SIMADI rate of 197.7 Venezuelan bolivars to 1.0 U.S. 
dollar. We believed it was appropriate to move from using the SICAD I rate to using the SIMADI floating rate at this date 
based on the culmination of relevant facts and circumstances, including our expectation that future dividend remittances 
would be made at the SIMADI rate. As of December 31, 2015, we continue to believe that SIMADI is the appropriate rate 
to use in the remeasurement of the monetary assets and liabilities of our Venezuelan subsidiary.

The devaluations of the exchange rates for the Successor year ended December 31, 2014 resulted in net gains of $17.0 
million primarily due to our determination at December 31, 2014 to change from the CENCOEX rate to SICAD I and our 
Venezuelan operations being in a net monetary liability position.

As a result of the devaluing exchange rates, we recorded currency exchange losses of $53.2 million for the Successor year 
ended December 31, 2015. 

Venezuela Financial Results

As a result of moving exchange rates from SICAD I to SIMADI at June 30, 2015 and the associated devaluation of our 
translation rates, we concluded an impairment indicator existed. In conjunction with the devaluation, we evaluated the 
carrying value of the long-lived assets of our Venezuelan subsidiary for impairment at June 30, 2015. Due to the 
continued economic uncertainty as of December 31, 2015, we re-evaluated the carrying value of long-lived assets for our 
Venezuelan subsidiary. Based on an analysis of estimated undiscounted future cash flows expected to result from the use 
of our productive long-lived assets with finite lives, we determined that their carrying values were recoverable at June 30, 
2015 and December 31, 2015. The recoverability is heavily dependent on continued demand and price assumptions of our 
local operations which continued to be robust for the full year ended December 31, 2015. Our price assumptions and the 
associated increases are expected to continue and are intended to allow us to keep pace with the changes in exchange rates 
and inflation. We believe these price increases are feasible given our market share, customer base and historical success of 
implementing price increases in similar situations in the past.  With the exception of intercompany inventory purchases, 
our operations in Venezuela were and are expected to be entirely self-funded. Due to the ability of our Venezuelan 
operations to procure raw materials through Axalta subsidiaries, we do not foresee any impact on our Venezuelan 
subsidiary's ability to operate. We have no current need or intention to repatriate Venezuelan earnings and remain 
committed to the business for the foreseeable future based on our current expectations.

If our assumptions regarding continued demand and our ability to successfully implement and sustain price increases 
differ from actual results, or our ability to control the operations of our Venezuelan subsidiary change as a result of 
economic uncertainty or political instability, there is risk that our productive long-lived assets may be impaired. This 
could result in a material unfavorable impact to our results of operations and financial condition.

At June 30, 2015, we separately evaluated the carrying value of our real estate investment as it is not part of our core 
operational activities. Based on this evaluation, we concluded that the carrying value of the real estate investment of $52.6 
million was no longer recoverable as a result of the current real estate market prices and movement of our translation rate 
from 12.0 Venezuelan bolivars to 1.0 U.S. dollar to 197.7 Venezuelan bolivars to 1.0 U.S. dollar. We recorded an 
impairment to write down the carrying value of the asset to its fair value of $22.0 million, which is recorded within other 
assets. The impairment of $30.6 million was recorded within other expense, net for the Successor year ended December 
31, 2015. The method used to determine fair value of the real estate investment included using Level 2 inputs in the form 
of observable market quotes from local real estate broker service firms. At December 31, 2015, we formally re-assessed 
the fair value and we concluded the carrying value of our real estate investment was recoverable.

At December 31, 2015 and 2014, our Venezuelan subsidiary had total assets of $152.9 million and $197.8 million, 
respectively, and total liabilities of $42.2 million and $57.0 million, respectively. Total liabilities includes $9.2 million and 
$4.4 million of intercompany trade liabilities designated in U.S. dollars as of December 31, 2015 and 2014, respectively. 
At December 31, 2015 and 2014, total non-monetary assets, net, were $112.4 million and $149.6 million, respectively. 
Our Venezuela operations represent less than 4% of our consolidated assets and liabilities. For the Successor year ended 
December 31, 2015 and 2014, our Venezuelan subsidiary's net sales represented $131.2 million and $136.5 million of the 
Company's consolidated net sales, respectively. 

132

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

(28) QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The following is a summary of the quarterly results of operations for the Successor years ended December 31, 2015 and
2014, respectively (in millions, except per share data):

2015
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

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

March 31

June 30(a)

September 30

December 31

Full Year

$

997.5 $

1,101.1 $

1,005.1 $

1,009.6 $

4,113.3

649.8

46.7

45.1

0.20

0.19

679.7
(24.3)

(25.1)
(0.11)
(0.11)

628.6

36.4

35.1

0.15

0.15

639.2

39.1

38.6

0.16

0.16

2,597.3

97.9

93.7

0.40

0.39

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

(a) During the three-months ended June 30, 2015, the Company recorded an impairment charge of $30.6 million based on our evaluation of the

carrying value associated with our real estate investment in Venezuela. See further discussion in Note 27.

(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.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL 
DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

As required by Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934 (the "Exchange Act"), the Company 
carried out an evaluation, under the supervision and with the participation of management, including its Chief Executive 
Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and 
procedures (as defined in Rules 13a-15(e) or15d-15(e) under Exchange Act) as of the end of the period covered by this 
Annual Report on Form 10-K. Based on the foregoing, the Company's Chief Executive Officer and Chief Financial Officer 
concluded that the Company's disclosure controls and procedures were effective as of December 31, 2015.

Management report on internal control over financial reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in 
Rules 13a-15(f) and 15d-15(f) under the Exchange Act). 

133

(cid:2)

Management assessed the effectiveness of the Company’s internal control over financial reporting based on the criteria set 
forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control—
Integrated Framework (2013). Based on this assessment, management concluded that, as of December 31, 2015, the 
Company's internal control over financial reporting was effective.

The effectiveness of our internal control over financial reporting has been audited by PricewaterhouseCoopers LLP, an 
independent registered public accounting firm, as stated in its report which is included herein. 

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, 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control 
over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

134

(cid:2)

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 2016 Annual General 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", 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", "Executive Compensation", "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: Approve the 
Appointment of the Independent Registered Public Accounting Firm and Auditor."

135

(cid:2)

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)(1)    The Company's 2015 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, 2015, 2014 and 2013 and 
the Predecessor period January 1, 2013 through January 31, 2013.

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

(cid:2)

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS 

Allowance for Doubtful Accounts for the Successor years ended December 31, and the Predecessor period from January 
1, 2013 to January 31, 2013:

(in millions)
Successor
2015
2014
2013
Predecessor

January 1 through January 31, 2013

Balance at
Beginning of Year

Additions

Deductions(1)

Balance at End of
Year

$

$

9.9 $
6.5
—

29.6 $

4.9 $
5.1
5.4

0.2 $

(4.1) $
(1.7)
1.1

1.1 $

10.7
9.9
6.5

30.9

(1) Deductions include uncollectible accounts written off and foreign currency translation impact.

Deferred tax asset valuations for the Successor years ended December 31, and the Predecessor period from January 1, 
2013 to January 31, 2013:

(in millions)
Successor

2015

2014

2013
Predecessor

January 1 through January 31, 2013

Balance at
Beginning of Year

Additions

Deductions (1)

Balance at End of
Year

$

$

101.9

63.4

—

58.7

34.4

44.4

55.0

1.4

(8.5) $
(5.9)
8.4

127.8

101.9

63.4

(0.3) $

59.8

(1) Deductions include charges to goodwill and foreign currency translation impact.

137

(cid:2)

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 February 29, 2016.

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/ Gregory S. Ledford
Gregory S. Ledford

/s/ Lori J. Ryerkerk
Lori J. Ryerkerk

Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)

Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

February 29, 2016

February 29, 2016

Vice President and Global Controller
(Principal Accounting Officer)

February 29, 2016

February 29, 2016

February 29, 2016

February 29, 2016

February 29, 2016

February 29, 2016

February 29, 2016

February 29, 2016

February 29, 2016

Director

Director

Director

Director

Director

Director

Director

Director

138

(cid:2)

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 4.1 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 4.1 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

(cid:2)

  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

(cid:2)

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

(cid:2)

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

(cid:2)

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

(cid:2)

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

(cid:2)

10.43*

10.44*

10.45*

10.46*

10.47*

10.48*

10.49*

10.50*

10.51*

10.52*

10.53*

10.54*

10.55*

10.56*

10.57*

10.58*

10.59

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)

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)

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 (incorporated by reference to Exhibit 10.62 of the Registrant's Annual Report on
Form 10-K (File No. 001-36733) filed with the SEC on March 13, 2015)

Registration Rights Agreement by and among Axalta Coating Systems Ltd. and Government Employees
Insurance Company (incorporated by reference to Exhibit 10.63 of the Registrant's Quarterly Report on
Form 10-Q (File No. 001-36733) filed with the SEC on May 6, 2015)

Amendment No. 1 to the Principal Stockholders Agreement by and among Axalta Coating Systems Ltd. and
the Carlyle Stockholders, dated October 30, 2015

145

(cid:2)

10.60

21.1

23.2

31.1

31.2

32.1††

32.2††

101†

101†

101†

101†

101†

101†

*

†

††

Form of Executive Restrictive Covenant and Severance Agreement

List of Subsidiaries

Consent of PricewaterhouseCoopers LLP

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

(cid:2)

Corporate Information

Board of Directors

Management Group 

Charles W. Shaver
Chairman and Chief Executive Officer

Charles W. Shaver
Chairman and Chief Executive Officer

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
Chairman and Chief Executive Officer
OHorizons Global, Inc.

Andreas C. Kramvis
Vice Chairman
Honeywell International Inc.

Gregory S. Ledford
Managing Director and Head of Industrialand 
Transportation Team
The Carlyle Group

Robert M. McLaughlin
Senior Vice President and Chief Financial
Officer
Airgas, Inc.

Martin W. Sumner
Managing Director
The Carlyle Group

Lori J. Ryerkerk
Executive Vice President, Global Manufacturing 
of Royal Dutch Shell (Shell)

Robert W. Bryant
Executive Vice President and
Chief Financial Officer

Nigel Budden
Vice President, Global Customer Excellence

Michael A. Cash
Senior Vice President and
President, Industrial Coatings

Jorge Cossio
President
Latin America Region

Michael F. Finn
Senior Vice President,
General Counsel and Secretary

Martin G. Horneck
Senior Vice President and Chief Procurement 
and Logistics Officer 

Dan Key
Senior Vice President Operations and 
Supply Chain

Michael Carr
Vice President and President, North America

Matthias Schönberg
Vice President and President, Europe, Middle 
East & Africa 

Luke Lu
Vice President and
President, China

Steven R. Markevich
Executive Vice President and President, 
Transportation Coatings and Greater China

Joseph F. McDougall
Senior Vice President and
Chief Human Resources Officer

Eduardo Nardinelli
Vice President and
President, Brazil

Rajeev S. Rao
Vice President
Strategy and Business Development

Sobers Sethi
Vice President, South and
East Asia Region

Barry S. Snyder
Senior Vice President and
Chief Technology Officer

Aaron D. Weis
Vice President and
Chief Information Officer

Common Shares

Common Shares

Independent Auditors

The common shares of Axalta 
Coating Systems Ltd., trade on the 
New York Stock Exchange under 
the symbol AXTA.

American Stock Transfer & Trust
Company, LLC
Operation Center
6201 15th Avenue
Brooklyn, New York 11219
866-307-3862

PricewaterhouseCoopers LLP
2001 Market Street
Suite 1700
Philadelphia, PA
19103

 
 
  
 
 
 
Global

Regional & National 

Global Headquarters

North America

Europe, Middle East, Africa

Axalta Coating Systems 
Suite 3600
2001 Market Street 
Philadelphia, PA 19103 
USA

+1 855 547 1461 
info-Global@axaltacs.com

Axalta Coating Systems
50 Applied Bank Boulevard
Glen Mills, PA 19342
USA

+1 610 358 2228 
info-NA@axaltacs.com

Latin America (excl. 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
Mexico

+52 55 5366 3345
info.mx@axaltacs.com

Axalta Coating Systems Deutschland Holding 
GmbH & Co. KG
Horbeller Straße 15
D-50858 Köln 
Germany

+49 02234 6019 01 
info-EMEA@axaltacs.com

Brazil

Axalta Coating Systems Brazil LTDA. 
Av. Lindomar Gomes de Oliveira 463 
Cumbica-Guarulhos-SP
CEP: 07220-900
Brazil

+55 11 0800 0 1 9 40 30 
info-Brazil@axaltacs.com

Asia Pacific (excl. China)

China

Axalta Coating Systems
1 Robinson Road #15-02
AIA Tower
Singapore 048542

+86 21 6020 3666
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 3666
info-China@axaltacs.com

axaltacoatingsystems.com

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