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

 

Form 10-K

 

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

For the fiscal year ended:		Commission file number:
December 31, 2014		001-34903

TOWER INTERNATIONAL, INC.

(Exact name of Registrant as specified in its charter)

Delaware		27-3679414
(State of Incorporation)		(IRS Employer Identification Number)

17672 Laurel Park Drive North, Suite 400 E Livonia, Michigan		48152
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (248) 675-6000

 

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

Title of each class		Name of each exchange on which registered
Common Stock, par value $.01 per share		New York Stock Exchange

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

 

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15d of the Act.Yes o No x

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes o No x

The aggregate market value of the common stock held by non-affiliates of the registrant, computed by reference to the average high and low trading prices of the common stock as of the closing of trading on June 30, 2014, was approximately $739,038,623.

There were 21,033,856 shares of the registrant’s common stock outstanding at February 24, 2015.

DOCUMENTS INCORPORATED BY REFERENCE

Certain portions, as expressly described in this report, of the Registrant’s Proxy Statement for the 2015 Annual Meeting of Stockholders are incorporated by reference into Part III.

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TOWER INTERNATIONAL, INC. — FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2014
 
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		10-K Pages
PART I
Item 1. Business			1
Item 1A. Risk Factors			13
Item 1B. Unresolved Staff Comments			22
Item 2. Properties			22
Item 3. Legal Proceedings			23
Item 4. Mine Safety Disclosures			23
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities			24
Item 6. Selected Financial Data			25
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			27
Item 7A. Quantitative and Qualitative Disclosures about Market Risk			52
Item 8. Financial Statements and Supplementary Data			54
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			108
Item 9A. Controls and Procedures			108
Item 9B. Other Information			110
PART III
Item 10. Directors, Executive Officers, and Corporate Governance			111
Item 11. Executive Compensation			111
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			111
Item 13. Certain Relationships and Related Transactions, and Director Independence			111
Item 14. Principal Accounting Fees and Services			112
PART IV
Item 15. Exhibits and Financial Statement Schedules			113
Signatures
Exhibit Index
Exhibits
EX-21
EX-23
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101.INS
EX-101.SCH
EX-101.CAL
EX-101.LAB
EX-101.PRE

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PART I

Item 1. Business

Our Company

We are a leading global manufacturer of engineered automotive structural metal components and assemblies primarily serving original equipment manufacturers (“OEMs”). We offer our automotive customers a broad product portfolio, supplying body-structure stampings, frame and other chassis structures, and complex welded assemblies for small and large cars, crossovers, pickups, and sport utility vehicles (“SUVs”).

Our products are manufactured at 27 facilities, strategically located near our customers in North America, Europe, Brazil and China. We support our manufacturing operations through seven engineering and sales locations around the world. We are a disciplined, process-driven company with an experienced management team that has a history of implementing sustainable operational improvements. For the year ended December 31, 2014, we generated revenues of $2.1 billion and net income attributable to Tower International, Inc. of $21.5 million. In addition, we had Adjusted EBITDA of $204.2 million and an Adjusted EBITDA margin of 9.9% for the year ended December 31, 2014. (Item 7 of this Annual Report and Note 13 to our Consolidated Financial Statements include a discussion of Adjusted EBITDA as a non-GAAP measure).

We believe that our engineering, manufacturing, and program management capabilities, our geographic and customer diversification, our competitive cost and quality, our financial discipline, and our colleague engagement position us for long-term success.

Our History and Corporate Structure

Our Corporate History

Tower Automotive, Inc., our predecessor (the “Predecessor Company”), was formed in 1993. On February 2, 2005, the Predecessor Company, along with 25 of its United States subsidiaries, filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code. On July 11, 2007, the Bankruptcy Court confirmed the Chapter 11 Reorganization Plan of the debtors and approved the sale of substantially all of the debtors’ assets to Tower Automotive, LLC, an affiliate of Cerberus Capital Management, L.P. (“CCM”) and funds and accounts affiliated with CCM (collectively, “Cerberus”). The plan became effective on July 31, 2007, and in connection therewith, the debtors completed the sale of substantially all of their assets to Tower Automotive, LLC. As part of the sale, Tower Automotive, LLC also acquired the capital stock of substantially all of the foreign subsidiaries of the Predecessor Company.

Our Corporate Conversion and Initial Public Offering (“IPO”)

On October 14, 2010, (i) all of our equity owners transferred their equity interests in Tower Automotive, LLC to a newly created limited liability company, Tower International Holdings, LLC, a newly formed entity controlled by Cerberus, (ii) Tower Automotive, LLC converted into a Delaware corporation, which was named Tower International, Inc., and (iii) all of the equity interests in Tower Automotive, LLC were converted into common stock of Tower International, Inc. We refer to this transaction as our “Corporate Conversion.”

On October 15, 2010, our common stock began trading on the New York Stock Exchange following our IPO, through which we raised $80.2 million of proceeds in connection with the sale of 6,633,722 shares of common stock.

Divestiture of our South Korean Subsidiary

On December 28, 2012, our subsidiaries, Tower Automotive Holdings Asia B.V. and Tower Automotive International Holdings B.V., entered into a Stock Purchase Agreement (“Agreement”) with SJ Holdings, Inc., a subsidiary of SECO (the “Buyer”), and consummated the divestiture of our Korean subsidiary Seojin Industrial Company Ltd. (“Seojin”). Pursuant to the Agreement, the Buyer acquired all of the outstanding capital stock of Seojin for a purchase price of fifty billion Korean Won (approximately U.S. $47 million) and assumed the outstanding debt of Seojin. As of December 31, 2013, the entire purchase price was received. Seojin has been presented as a discontinued operation within this Annual Report in accordance with FASB ASC No. 205, Discontinued Operations.

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Secondary Public Offerings

On July 31, 2013, Tower International Holdings, LLC, an affiliate of Cerberus, completed the sale of 7,888,122 shares of our common stock in a secondary public offering. Upon completion of the sale, Cerberus no longer controlled a majority of our outstanding common stock and therefore, we ceased being a “controlled company” within the meaning of the New York Stock Exchange corporate governance standards. On November 6, 2013, Tower International Holdings, LLC, completed the sale of 3,000,000 shares of our common stock in another secondary public offering. In addition, Tower International Holdings, LLC completed multiple transactions during the fourth quarter of 2013 whereby it sold additional shares of our common stock in the open market. As a result of these sales, Tower International Holdings, LLC and Cerberus held no shares of our common stock at December 31, 2013.

China Discontinued Operations

During the fourth quarter of 2014, our Board of Directors approved a plan to sell our equity interest in our Changchun Tower Golden Ring Automotive Products Co., Ltd. (“TGR”), Xiangtan DIT Automotive Products Co., Ltd. (“Xiangtan”), and Ningbo DIT Automotive Products Co. Ltd. (“Ningbo”) joint ventures. At December 31, 2014, TGR and Xiangtan were considered held for sale in accordance with FASB ASC No. 360, Property, Plant, and Equipment and have been presented as discontinued operations in our Consolidated Financial Statements, in accordance with FASB ASC No. 205, Discontinued Operations. Our investment in the Ningbo joint venture is accounted for under the equity method and therefore does not qualify for held for sale treatment and does not fall under the scope of FASB ASC No. 205.

We have reached a preliminary agreement to sell our 60% equity interest in the TGR joint venture, subject to approval of the Chinese government; the sale is expected to close during the second half of 2015. We are in the early stages of discussions to sell our 51% equity interest in the Xiangtan joint venture. An impairment charge of $22.9 million was recorded in the fourth quarter of 2014 related to one of the sales and it is presented in income/(loss) from discontinued operations, net of tax. An anticipated gain on the other transaction, currently estimated at about $18 million, will be recognized when the sale closes.

Our Industry

We believe OEMs produce a majority of their structural metal components and assemblies internally. While OEM policies differ and may be especially impacted by their own capacity utilization, the capital expenditures associated with internal production can be substantial. Because of this capital and fixed cost-intensity, we believe that longer term, OEMs will outsource a greater proportion of their stamping requirements and we may benefit from this shift in our customer’s preferences. In addition, we believe OEMs will increasingly favor global vehicle platforms supported by larger and more capable and financially strong suppliers. Given our global manufacturing footprint, cost structure, and engineering and program management capabilities, we are well-positioned to take advantage of these potential opportunities.

Our Strategy

We seek to:

Execute Business Model Focused on Adjusted Free Cash Flow

Adjusted free cash flow (defined as net cash provided by operating activities less cash disbursed for purchases of property, plant, and equipment, excluding cash received or disbursed for customer tooling) is one of our most important financial metrics. Our focus on sustainable ongoing adjusted free cash flow keeps us

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disciplined regarding product pricing and margins, as well as determining and prioritizing affordable capital expenditures. To further our alignment with our business model, adjusted free cash flow is a major component of our annual bonus program for salaried and hourly colleagues. (Item 7 of this Annual Report includes a discussion of free cash flow and adjusted free cash flow as non-GAAP measures).

We estimate that the demonstrated present capability of our business model (at normalized conditions) generates positive adjusted free cash flow equal to about 3% of revenues. If the European and Brazilian industries recover sufficiently, we see an achievable path to ongoing adjusted free cash flow equal to about 4% of revenues by 2016. Our business model is summarized in the table below (as percent of revenues):

		Present Capability				Projected Improvement				Projected 2016 Capability
Adjusted EBITDA			10	%
Capital Expenditures (Capex)			(4	)%
Adjusted EBITDA less Capex			6 %				0.5	%			6.5	%
Interest Expense			(1.5	)			0.5	%			(1	)%
All Other*			(1.5	)			—				(1.5	)
Free Cash Flow			3 %				1	%			4 %
Customer-Owned Tooling**			—				—				—
Adjusted Free Cash Flow			3 %				1	%			4 %

Achieve Growth at or Above Industry

We have demonstrated the ability to win net new business from OEMs, including a combination of new models, share gains from competitors via conquest wins, and OEM outsourcing. We believe our ability to win new business at a return in excess of our cost of capital is a direct reflection of our core engineering strength, competitive cost and quality, and proven ability to manage complex and critical new-model launches for customers. We use processes such as Lean Six Sigma, labor best practices standardization, and advanced product quality planning (APQP) to drive productivity and quality while managing new programs on time and on budget.

We believe there can be meaningful upside growth opportunities in the future from expanding our operations in additional growth markets like Mexico and India and from accretive acquisitions as the sector consolidates. Examples of upside realized in 2014 and early 2015 include an opportunistic conquest award and growth opportunities in Mexico and a major new business award to support OEM outsourcing in the U.S.

Reduce Leverage and Interest Expense

Reducing net debt leverage (defined as total debt less cash and cash equivalents divided by Adjusted EBITDA) and interest expense are important business priorities and potential significant opportunities to improve financial results and ongoing financial strength. As of December 31, 2014, our net debt (defined as total debt less cash and cash equivalents) was $363.5 million. Our net debt leverage for the years ended December 31, 2014 and 2013 was 1.8 and 1.7, respectively. Our long-term target for net debt leverage is 1.0. In addition to using free cash flow to reduce leverage, we may pursue additional asset sales, as evidenced by the planned disposal of our Chinese joint ventures. (Item 7 of this Annual Report includes a discussion of net debt as a non-GAAP measure).

Manage Risk

We consider risk management to be an important part of our ability to operate predictably and successfully in the cyclical and capital-intensive automotive parts industry. Foremost in managing risk is financial discipline, beginning during the evaluation and approval of new programs to ensure sound assumptions and projected returns in excess of our cost of capital. During each year, we carefully monitor and manage all elements of

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cost, with an objective of achieving productivity and other savings that at least offset customer price reductions and labor and overhead inflation. Through our commercial agreements, we are largely shielded from changes in steel prices.

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

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

Customer Diversification

We believe we have a well diversified customer mix, as eight different OEMs individually accounted for 5% or more of our revenues in 2014. The following table summarizes our customer mix as a percent of revenues for the year ended December 31, 2014.

Customer
Ford			22	%
VW			15	%
Chrysler			14	%
Volvo			9	%
Nissan			8	%
Fiat			7	%
Daimler			6	%
Toyota			5	%
Chery			4	%
BMW			3	%
Honda			1	%
Other			6	%
Total			100	%

Geographic Diversification

The following table summarizes our geographic mix as a percent of revenues for the year ended December 31, 2014.

Region
North America			52	%
Europe			37	%
South America			7	%
Asia			4	%
Total			100	%

Platform Diversification

Our products are offered on a diverse mix of vehicle platforms, reflecting the balanced portfolio approach of our business model and the breadth of our product capabilities. The following table summarizes our vehicle platform mix as a percent of revenues for the year ended December 31, 2014.

Vehicle Platform
Small cars			31	%
Large cars			28	%
North American framed vehicles			18	%
Light trucks			18	%
Other			5	%
Total			100	%

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IHS Automotive® (“IHS”) classifies these vehicle platforms as:

The reports prepared by IHS referred to in this Annual Report are subscription-based. All references in this report to historical industry production volumes, projections, estimates, or other data attributable to IHS, are based on data available from the IHS January 2015 forecast.

Our Products

We produce a broad range of structural components and assemblies, many of which are critical to the structural integrity of a vehicle. Images of some of the products we offer are presented below.

Product Offerings

Body structures and assemblies

Body structures and assemblies form the basic upper body structure of the vehicle and include structural metal components such as body pillars, roof rails, and side sills. This category also includes Class A surfaces and assemblies, which are components of the “exterior skin” of the vehicle — body sides, hoods, doors, fenders, and pickup truck boxes. These components form the appearance of the vehicle, requiring flawless surface finishes.

Chassis, lower vehicle structures, and suspension components

Lower vehicle frames and structures include chassis structures that make up the “skeleton” of a vehicle and which are critical to overall performance, particularly in the areas of noise, vibration and harshness, handling, and crash management. These products include pickup truck and SUV full frames, automotive engine and rear suspension cradles, floor pan components, and cross members that form the basic lower body structure of the vehicle. These heavy gauge metal stampings carry the load of the vehicle, provide crash integrity, and are critical to the strength and safety of vehicles. We manufacture a wide variety of stamped, formed, and welded suspension components, including control arms, spring and shock towers, shackles, radius arms, and brackets.

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Complex body-in-white assemblies

Complex body-in-white assemblies are comprised of multiple components and sub-assemblies welded to form major portions of the vehicle’s body structure. We refer to body-in-white as the manufacturing stage in which the vehicle body sheet metal has been assembled but before the components and trim have been added. Examples of complex assemblies include front and rear floor pan assemblies and door/pillar assemblies.

Product mix

We believe we have a diversified product group mix, as each of our product groups individually accounted for 15% or more of our revenues in 2014. The following table summarizes our product group mix as a percent of revenues for the year ended December 31, 2014:

Product Group
Body structures and assemblies			59	%
Complex body-in-white assemblies			25	%
Chassis, lower vehicle structures and suspension components			16	%
Total			100	%

The following table presents the major vehicle models for which we supply products:

OEM		Models		Product Type
North America
Ford		Econoline		Frame Assembly
		Explorer		Complex Assembly
		Expedition/Navigator		Body Structures
		F-Series		Body Structures
		Focus		Body Structures
		Taurus/MKS		Complex Assembly
		Escape		Body Structures & Complex Assembly
		C-Max		Body Structures
Chrysler		Grand Caravan/Town & Country		Body Structures
		Grand Cherokee/Durango		Body Structures
		Wrangler		Frame Assembly
		Dart		Body Structures
		200		Body Structures
		Cherokee		Body Structures
Nissan		Frontier/Xterra		Body Structures & Frame Assembly
		NV Series		Frame Assembly
		Titan/Armada		Frame Assembly
		Altima		Body Structures
		Rogue		Body Structures
Toyota		Camry		Body Structures
		Tacoma		Body Structures
Honda		Accord		Body Structures
Europe
Volvo		V40/S60/XC60		Complex Assembly
VW		Touareg/Q7		Body Structures & Complex Assembly
		Caddy Van		Body Structures
		Citigo/Mii/Up!		Body Structures
		Octavia		Body Structures
		Superb		Body Structures
		Fabia		Body Structures

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OEM

Models

Product Type

Europe (continued)

Porsche

Macan

Body Structures

Cayenne

Body Structures & Complex Assembly

BMW

1/3 Series

Body Structures

Daimler

Sprinter/Crafter

Body Structures & Complex Assembly

C-Class

Body Structures

Fiat

500

Body Structures

Ducato

Body Structures

Giuletta

Body Structures

MiTo

Body Structures

Punto

Body Structures

Renegade

Body Structures

Opel

Astra

Body Structures

China

Chery

A3

Chassis

Cowin 3

Chassis

Fulwin 2

Chassis

Tiggo

Chassis

South America

VW

Gol

Body Structures

Fox

Body Structures

Saveiro

Body Structures

Up!

Body Structures

Fiat

Palio/Doblo

Body Structures

Punto

Body Structures

Strada

Body Structures

Honda

Civic

Body Structures

Fit

Body Structures

City

Body Structures

PSA

Picasso

Body Structures

International Operations

We have significant manufacturing operations outside the United States. In 2014, 48% of our revenues originated outside the United States. For information regarding potential risks associated with our international operations, see Risk Factors Relating to Our Industry and Our Business — “Our substantial international operations make us vulnerable to risks associated with doing business in foreign countries”. See Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 13 to our Consolidated Financial Statements for further information regarding our international operations.

Manufacturing and Operations

Our manufacturing operations consist primarily of stamping and welding operations, system and modular assembly operations, coating, and other ancillary operations. Stamping involves passing metal through dies in a stamping press to form the metal into three-dimensional parts. We produce stamped parts using precision single-stage, progressive, and transfer presses, ranging in size from 100 to 4,500 tons, which perform multiple functions to convert raw material into finished products. We invest in our press technology to increase flexibility, improve safety, and minimize die changeover time.

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We feed stampings into assembly operations that produce complex assemblies through the combination of multiple parts that are welded or fastened together. Our assembly operations are performed on either dedicated, high-volume welding/fastening machines or on flexible, cell-oriented robotic lines. The assembly machines attach additional parts, fixtures, or stampings to the original metal stampings. In addition to standard production capabilities, our assembly machines are also able to perform various statistical control functions and identify improper welds and attachments.

Our products use various grades and thicknesses of steel and aluminum, including high-strength, hot- and cold-rolled, galvanized, organically coated, stainless, and aluminized steel. Although changing steel prices affect our results, we seek to be neutral with respect to steel pricing over time, with the intention of neither making nor losing money as steel prices fluctuate. The pricing of our products includes a component for steel which can increase as steel prices increase and decrease as steel prices decrease. For our North American customers and several of our other customers, we purchase steel through our customers’ resale programs, where our customers actually negotiate the cost of steel for us. In other cases, we procure steel directly from the mills, negotiating our own price and seeking to pass through steel price increases and decreases to our customers.

We focus on achieving superior product quality at the lowest operating costs possible and concentrate on improving our manufacturing processes to drive out inefficiencies. We seek to continually improve our processes through efforts to improve our cost competitiveness and achieve higher quality. We continue to adapt our capacity to customer demand, both by expanding capabilities in growth areas and by reallocating capacity away from demand segments in decline.

We are committed to sustaining Lean Six Sigma principles throughout our manufacturing processes and as of December 31, 2014, we employed 116 certified black belts. We utilize Lean Six Sigma principles to increase the efficiency of our operations and to reduce operating costs, thereby improving our cost competitiveness. We have accomplished efficiency improvements, while at the same time improving our quality, with customer-reported defects averaging about 11 per million parts delivered in 2014, which we believe is world-class performance.

Supply Base — Manufactured Components and Raw Materials

We purchase various manufactured components and raw materials for use in our manufacturing processes. All of these components and raw materials are available from numerous sources. We employ just-in-time manufacturing and sourcing systems, enabling us to meet customer requirements for faster deliveries, while minimizing our need to carry significant inventory levels. The primary raw material used to produce the majority of our products is steel. A portion of our steel is purchased from certain of our customers through various OEM resale programs. The remainder of our steel purchasing requirements is met through contracts with steel producers and market purchases. In addition, we procure small- and medium-sized stampings, fasteners, tubing, and rubber products.

Sales, Marketing, and Distribution

Our sales and marketing efforts are designed to create awareness of our engineering, program management, manufacturing and assembly expertise, and to translate our leadership position into contract wins. We have developed a sales team that consists of an integrated group of professionals, including skilled engineers and program managers, whom we believe provide the appropriate mix of operational and technical expertise needed to interface successfully with OEMs. We sell directly to OEMs through our sales and engineering teams at our technical centers, which are strategically located around the world. Bidding on automotive OEM platforms typically encompasses many months of engineering and business development activity. We integrate our sales force directly into our operating team and work closely with our customers throughout the process of developing and manufacturing a product. Our proximity to our customer base enables us to enjoy close relationships with our customers and positions us well to seek future business awards.

Customers

We have developed long-standing business relationships with our automotive customers around the world. We work together with our customers in various stages of production, including development, component sourcing, quality assurance, manufacturing, and delivery. With a diverse mix of products and facilities in

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major markets worldwide, we believe we are well-positioned to meet customer needs. We believe we have a strong, established reputation with customers for providing high-quality products at competitive prices, as well as for timely delivery and customer service. Given that the automotive OEM business involves long-term production contracts awarded on a platform-by-platform basis, we believe that we can leverage our strong customer relationships to obtain new platform awards. Contracts are typically sole-sourced to one supplier for individual platforms.

Customer Support

We have seven engineering and sales locations throughout the world, including a 24-hour engineering support center in India. We believe that we provide effective customer solutions, products, and service to our customers, globally. Our customer service group is organized into customer-dedicated teams within regions to provide more focused service to our clients.

Seasonality

Our customers in Europe typically shut down vehicle production during portions of July or August and during one week in December. Our North American customers typically shut down vehicle production for approximately two weeks during July and for one week during December. Our customers in Brazil and China typically shut down vehicle production during certain periods in our first quarter. Our quarterly results of operations, cash flows, and liquidity may be impacted by these seasonal practices. For example, working capital is typically a use of cash during the first quarter of the year and a source of cash generation in the fourth quarter. See Management’s Discussion and Analysis of Financial Condition and Results of Operations for further discussion on working capital.

Competition

We principally compete for new business both at the beginning of the development of new models and upon the redesign of existing models. New-model development generally begins two to three years before the marketing of such models to the public. Once a supplier has been designated to supply parts for a new program, an OEM will usually continue to purchase those parts from the designated producer for the life of the program, although not necessarily for a redesign. OEMs typically rigorously evaluate suppliers based on many criteria such as quality, price/cost competitiveness, system and product performance, reliability and timeliness of delivery, new product and technology development capability, excellence and flexibility in operations, degree of global and local presence, effectiveness of customer service, and overall management capability.

We believe that we compete effectively with other leading suppliers in our sector. The strength and breadth of our program management and engineering capabilities, as well as our geographic, customer, and platform diversification, provide the necessary scale to optimize our cost structure. We follow manufacturing practices designed to improve efficiency and quality, including manpower standardization and global inventory reduction initiatives, which enable us to manage inventory so that we can deliver quality components and systems to our customers in the quantities and at the times ordered.

Our major tier one competitors include: Magna International, Inc. (Cosma division), Gestamp Automocion, Martinrea International, Gruppo Magnetto, Kirchhoff Automotive, and Benteler Automotive. We compete with other competitors with respect to certain of our products and in particular geographic markets. The number of our competitors has decreased in recent years and we believe that number will continue to decline due to supplier consolidation. We believe that OEMs are increasingly focused on the global capability and financial strength of their supply base and that such scrutiny of suppliers will result in additional contraction in the supply base.

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

Joint Ventures

As of December 31, 2014, we had four joint ventures in China. Of the four joint ventures; one is consolidated, one is accounted for as an equity method investment, and two are presented as discontinued operations.

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Employees

As of December 31, 2014, we had approximately 7,800 employees worldwide, of whom approximately 5,000 were covered under collective bargaining agreements that expire at various times. We are not aware of any work stoppages since the formation of our Predecessor Company in 1993. A strike or slow-down by one of our unions could have a material adverse effect on our business. We believe that our relations with our employees are satisfactory.

Environmental Matters

We are subject to various domestic and foreign federal, state and local laws and regulations governing the protection of the environment and health and safety, including those regulating the following: soil, surface water, and groundwater contamination; the generation, storage, handling, use, disposal, and transportation of hazardous materials; the emission and discharge of materials, including greenhouse gases (“GHGs”) into the environment; and the health and safety of our employees. We are also required to obtain environmental permits from governmental authorities for certain operations. We have taken steps to comply with the numerous and sometimes complex laws, regulations, and permits. We have also achieved ISO 14001 registration for substantially all of our facilities, which means we have implemented environmental management systems to improve our environmental performance. Compliance with environmental requirements has not had a material impact on our capital expenditures, earnings, or competitive position and we have made, and will continue to make, capital and other expenditures pursuant to such requirements. If we violate or fail to comply with these requirements, we could be subject to fines, penalties, enforcement actions, or lawsuits.

Environmental laws, regulations, and permits, and the enforcement thereof, change frequently and have become more stringent over time. In particular, more rigorous GHG emission requirements are in various stages of development. For example, the United States Environmental Protection Agency (“U.S. EPA”) has promulgated the GHG Reporting Rule, which requires reporting of GHG data and other relevant information from large sources and suppliers in the United States and the GHG Tailoring Rule, which requires certain facilities with significant GHG emissions to obtain emissions permits under the authority of the Clean Air Act (typically limited to only the largest stationary sources of GHGs). The United States Congress has also considered imposing additional restrictions on GHG emissions. Any additional regulation of GHG emissions by either the United States Congress and/or the U.S. EPA could include a cap-and-trade system, technology mandate, emissions tax, reporting requirement, or other program, and could subject us to significant costs, including those relating to emission credits, pollution control equipment, monitoring, and reporting, as well as increased energy and raw material prices. In addition, our OEM customers may seek price reductions from us to account for their increased costs resulting from GHG regulations. Further, growing pressure to reduce GHG emissions from mobile sources could reduce automobile sales, thereby reducing demand for our products, and ultimately our revenues. At this time, none of our facilities are required to report GHG emissions or participate in any cap-and-trade system programs under the existing regulatory scheme. However, there is still significant uncertainty surrounding the scope, timing, and effect of future GHG regulation, and any changes to the current laws or regulations could have a material adverse impact on our business, financial condition, results of operations, reputation, product demand, and liquidity.

We are also responsible for certain costs relating to contamination at our, or the Predecessor Company’s, current or formerly owned or operated properties or third party waste disposal sites, even if we are not at fault. Certain locations have been impacted by environmental releases and soil or groundwater contamination is being addressed at certain of these sites. In addition to potentially significant investigation and remediation costs, contamination can give rise to third party claims, including fines or penalties, natural resource damages, personal injury, or property damage. Our costs and liabilities associated with environmental contamination could be substantial and may be material to our business, financial condition, results of operations, or cash flows. Refer to Note 15 to our Consolidated Financial Statements for information regarding our environmental liabilities.

Segment Overview

Refer to Note 13 to our Consolidated Financial Statements for information regarding our operating and reportable segments.

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Public Information

We maintain a website at http://www.towerinternational.com. We will make available on our website, free of charge, the proxy statements and reports on Forms 8-K, 10-K, and 10-Q that we file with the United States Securities and Exchange Commission (“SEC”) as soon as reasonably practicable, after such material is electronically filed with, or furnished to, the SEC. Additionally, we have adopted and posted on our website a Code of Business Conduct and Ethics that applies to, among other people, our principal executive officer, principal financial officer, and principal accounting officer. We intend to disclose any waivers of the Code of Business Conduct and Ethics on our website. We will provide, free of charge, a copy of our Code of Business Conduct and Ethics to any person who requests a copy. All such requests should be directed to our Executive Director, Investor & External Relations, c/o Tower International, Inc., 17672 Laurel Park Drive North, Suite 400 E, Livonia, Michigan 48152. Except as otherwise stated, the information contained on our website or available by hyperlink from our website is not incorporated into this Annual Report on Form 10-K or other documents we file with, or furnish to, the SEC.

Disclosure Regarding Forward-Looking Statements

This Annual Report contains statements which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements relating to trends in the operations, financial results, business and products of our Company, and anticipated production trends. The forward-looking statements can be identified by words such as “anticipate”, “believe”, “plan”, “estimate”, “expect”, “intend”, “project”, as well as other similar expressions and statements regarding our intent, belief, current plans, or expectations. Our forward looking statements also include, without limitation, statements regarding our anticipated future financial condition, operating results, free cash flows, adjusted free cash flows, net debt leverage, Adjusted EBITDA, and business and financing plans and models. Forward-looking statements are made as of the date of this report and are based upon management’s current expectations and beliefs concerning future developments and their potential effects on us. Such forward-looking statements are not guarantees of future performance. The following important factors, as well as those important factors described elsewhere in this Annual Report, including the matters set forth under the captions entitled “Risk Factors” and “Quantitative and Qualitative Disclosures About Market Risk”, could cause our actual results to differ materially from estimates or expectations reflected in such forward-looking statements:

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Any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

This Annual Report also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. We have not independently verified the statistical and other industry data generated by independent parties that are contained in this Annual Report and, accordingly, we cannot assure you of the accuracy or completeness of such data. In addition, projections, assumptions, and estimates of our future performance and the future performance of the industries in which we operate are necessarily subject to a high degree of uncertainty and risk.

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Item 1A. Risk Factors

Our business is subject to a number of risks. In addition to the various risks described elsewhere in this Annual Report, the following risk factors should be considered.

Risk Factors Relating to Our Industry and Our Business

A downturn in the global economy could adversely affect demand for automobiles that are manufactured with our products and therefore, could adversely affect our business, financial condition, results of operations, and cash flows.

The level of demand for our products depends primarily upon the level of consumer demand for new vehicles that are manufactured with our products. The global economic recession that began in 2008 and continued through 2009 had a significant adverse effect on our business, customers, and suppliers, and contributed to delayed and reduced purchases of automobiles, including those manufactured with our products. If the global economy were to take another significant downturn, depending upon its length, duration, and severity, financial condition, results of operations, and cash flow would again be materially adversely affected.

Demand for and pricing of our products is also subject to economic conditions and other factors (e.g., energy costs, fuel costs, climate change concerns, vehicle age, consumer spending and preferences, materials used in production, changing technology, etc.) present in the various domestic and international markets in which our products are sold.

Our substantial international operations make us vulnerable to risks associated with doing business in foreign countries.

Our international operations include manufacturing facilities in Europe, China, and Brazil. For the year ended December 31, 2014, approximately 48% of our revenues were derived from operations outside the United States. Our International operations are subject to various risks that could have a material adverse effect on those operations and our business as a whole, including, but not limited to, exposure to the following in certain locations:

Additionally, the economic instability in Brazil and countries in which we operate in Europe could adversely affect our business, financial condition, results of operations and cash flows, as well as adversely affect our access to, and cost of, capital.

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We may be unable to realize revenues represented by our awarded business, which could materially and adversely affect our business, financial condition, results of operations and cash flows.

The realization of future revenues from awarded business is inherently subject to a number of important risks and uncertainties, including the number of vehicles that our customers will actually produce, the timing of that production, and the mix of options that our customers may choose.

In addition to not having a commitment from our customers regarding the minimum number of products they must purchase from us if we obtain awarded business, the terms and conditions of the agreements with our customers typically provide that they have the contractual right to unilaterally terminate our contracts with them without notice or with only limited notice. If such contracts are terminated by our customers, our ability to obtain compensation from our customers for such termination is generally limited to the direct out-of-pocket costs that we incurred for raw materials and work-in-progress, and in certain instances, un-depreciated capital expenditures.

We base a substantial part of our planning on the anticipated lifetime revenues of particular products. We calculate the lifetime revenues of a product by multiplying our expected price for a product by the forecasted production volume for that product during the length of time we expect the related vehicle to be in production. We use IHS, a third-party forecasting service, to provide long-term forecasts, which allow us to determine how long a vehicle is expected to be in production. If we over-estimate the production units or if a customer reduces its level of anticipated purchases of a particular platform as a result of reduced demand, our actual revenues for that platform may be substantially less than the lifetime revenues we had anticipated for that platform.

Typically, it takes two to three years from the time a manufacturer awards a program until the program is launched and production begins. In many cases, we must commit substantial resources in preparation for production under awarded customer business well in advance of the customer’s production start date. We cannot provide assurance that our results of operations will not be materially adversely affected in the future if we are unable to recover these types of pre-production costs related to our customers’ cancellation of awarded business.

We are dependent upon large customers for current and future revenues. The loss of any of these customers, or the loss of market share by these customers, could have a material adverse effect on us.

Our customers are major vehicle manufacturers. During 2014, our largest volume customers, Ford, Volkswagen, Chrysler, Volvo, Nissan, Fiat, Daimler, and Toyota accounted for 22%, 15%, 14%, 9%, 8%, 7%, 6%, and 5% of our revenues, respectively. The loss of all or a substantial portion of our sales to any of our large-volume customers could have a material adverse effect on our business, financial condition, results of operations, and cash flows by reducing cash flows and limiting our ability to spread our fixed costs over a larger revenue base. A variety of reasons could lead to a reduction of sales to our customers, including, but not limited to:

The automobile industry is highly cyclical and a downturn will adversely affect our business, financial condition, results of operations, and cash flows.

Our business is directly related to the volume of automotive production. Automotive production and sales are highly cyclical and depend on general economic conditions and other factors, including interest rates, consumer confidence, consumer preferences, patterns of consumer spending, fuel costs, and the automobile replacement cycle. Automotive production and sales may fluctuate significantly from year-to-year and such

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fluctuations may give rise to changes in demand for our products. Because we have significant fixed production costs, declines in our customers’ production levels can have a significant adverse effect on our results of operations.

The highly cyclical nature of the automotive industry presents a risk that is outside our control and that cannot be accurately predicted. Moreover, a number of factors that we cannot reasonably predict could affect cyclicality in the automotive industry, and have affected cyclicality in the past. Decreases in demand for automobiles generally, or decreases in demand for our products in particular, could materially and adversely affect our business, financial condition, results of operations, and cash flows.

Our operations in China are conducted through joint ventures, which have unique risks that could have a material adverse effect on our business and customer relationships.

We have four joint ventures in China. In our joint ventures, we share ownership and management of a company with one or more parties who may not have the same goals, strategies, priorities, or resources as we do and may compete with us outside the joint venture. Joint ventures are intended to be operated for the equal benefit of all co-owners, rather than for our exclusive benefit. Operating a business as a joint venture often requires additional organizational formalities as well as time-consuming procedures for sharing information and making decisions. In joint ventures, we are required to pay more attention to our relationship with our co-owners as well as with the joint venture, and if a co-owner changes or relationships deteriorate, our success in the joint venture could be materially adversely affected. The benefits from a successful joint venture are shared among the co-owners, so that we do not receive all the benefits from our successful joint ventures.

At two of the joint ventures, our joint venture partner is also affiliated with the largest customer of the joint venture. As such, these partners may negotiate on behalf of customers of the joint venture for sales terms that may not be in the best interest of the joint venture.

Additional risks associated with joint ventures include one or more partners failing to satisfy contractual obligations, conflicts arising between us and any of our partners that could have a material adverse effect on customer relationships and business, and a change in ownership of any of our partners.

As of December 31, 2014, we had an investment in our non-consolidated joint venture located in Ningbo, China of $7.8 million in the Consolidated Balance Sheets. This balance will fluctuate depending on our proportionate share of earnings or losses in the joint venture. Accounting principles generally accepted in the United States (“U.S. GAAP” or “GAAP”) require that this investment be evaluated for impairment if certain unfavorable conditions are present. Significant declines in Ningbo’s profitability or business outlook for an extended period may impact the fair value of our investment, which could result in an impairment of this investment and a reduction in our net income.

During the fourth quarter of 2014, we initiated the process to sell our equity interest in three of our joint ventures. At December 31, 2014, two of the joint ventures were classified as held for sale and have been presented as discontinued operations within this Annual Report in accordance with FASB ASC No. 205, Discontinued Operations. The third joint venture is accounted for under the equity method and therefore does not qualify for held for sale treatment and does not fall under the scope of FASB ASC No. 205. We cannot provide assurance that these divestitures will be executed as planned.

Foreign exchange rate fluctuations could cause a decline in our financial condition, results of operations, and cash flows.

We generate a significant portion of our revenues and incur a significant portion of our expenses in currencies other than the U.S. dollar. Appreciation of the U.S. dollar against these foreign currencies will generally have an adverse effect on our reported sales and profits, while depreciation of the U.S. dollar against these foreign currencies will generally have a positive effect on reported revenues and profits.

We may use a combination of natural hedging techniques and financial derivatives to protect against certain foreign currency exchange rate risks. Such hedging activities may be ineffective or may not offset more than a portion of the adverse financial effect resulting from foreign currency variations. The gains or losses associated with hedging activities may adversely affect our results of operations. On October 17, 2014, we entered into a $200 million variable rate to fixed interest rate swap for a portion of our Term Loan and a

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€157.1 million cross currency swap based on the U.S. Dollar/Euro exchange rate of $1.2733 which was the prevailing rate at the time of the transaction to hedge our net investment in our European subsidiaries. The maturity date for both swap instruments is April 16, 2020. Refer to Note 7 to our Consolidated Financial Statements for further information regarding this foreign currency swap transaction.

Deterioration in the United States and world economies could adversely affect our customers’ and suppliers’ ability to access the capital markets, which may affect our business, financial condition, results of operations, and cash flows.

The capital and credit markets provide companies with liquidity to help operate and grow their businesses, beyond that which is provided by operating cash flows. Disruptions in the capital and credit markets could adversely affect our customers by making it increasingly difficult for them to obtain financing for their businesses and for their customers to obtain financing for automobile purchases. Our OEM customers typically require significant financing for their respective businesses. In addition, our OEM customers typically have related finance companies that provide financing to their dealers and customers. These finance companies have historically been active participants in the securitization markets, which experienced severe disruptions during the global economic crisis. Our suppliers, as well as the other suppliers to our customers, may face similar difficulties in obtaining financing for their businesses. If capital is not available to our customers or suppliers, or if the cost of capital is prohibitively high, their businesses would be adversely affected, which could result in their restructuring or even reorganization or liquidation under applicable bankruptcy laws. Any such adverse effect on our customers or suppliers could materially and adversely affect our Company, either through loss of revenues from any of our customers so affected, or due to our inability to meet our commitments without excess expense, as a result of disruptions in supply caused by the suppliers so affected.

Financial difficulties experienced by any of our major customers could have a material adverse effect on us if such customer were unable to pay for the products we provide or if we experienced a loss of, or material reduction in, business from such customer. As a result of such difficulties, we could experience lost revenues, significant write-offs of accounts receivable, significant impairment charges, or additional restructurings beyond the steps we have taken to date.

Any acquisitions or divestitures we make could disrupt our business and materially harm our financial condition, results of operations and cash flows.

We may, from time to time, consider certain acquisitions or divestitures. Acquisitions and divestitures involve numerous risks, including identifying attractive target acquisitions, undisclosed risks affecting the target, difficulties integrating acquired businesses, the assumption of unknown liabilities, potential adverse effects on existing business relationships with current customers and suppliers, the diversion of our management’s attention from other business concerns, and decreased geographic diversification.

We cannot provide assurance that any acquisitions or divestitures will perform as planned or prove to be beneficial to our operations and cash flow, or that we will be able to successfully integrate any acquisitions that we undertake. Any such failure could seriously harm our financial condition, results of operations and cash flows.

We sponsor a defined benefit pension plan that is underfunded and requires annual cash payments. If the performance of the assets in our pension plan does not meet our expectations, or if other actuarial assumptions are modified, our required contributions may be higher than we expect.

We sponsor a defined benefit pension plan that is underfunded. While this plan is frozen as the Predecessor Company ceased benefit accruals under the plan, the plan will require annual cash payments in order to meet our funding obligations, which adversely affects our cash flow.

Additionally, our earnings may be affected by the amount of income or expense recorded for our pension plan. GAAP requires that income or expense of a pension plan be calculated at the annual measurement date using actuarial assumptions, the most significant of which relate to the capital markets, interest rates, and other economic conditions. Changes in key economic indicators can change these assumptions. These assumptions, along with the actual value of assets at the measurement date, will impact the calculation of pension expense for the year. Although GAAP expense and pension contributions are not directly related, the key economic

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indicators that affect GAAP expense also affect the amount of cash that we would contribute to our pension plan. The investment portfolio of the pension plan has experienced volatility. Because the values of these pension plan assets have fluctuated, and will fluctuate in response to changing market conditions, the amount of gains or losses that will be recognized in subsequent periods, the impact on the funded status of the pension plan, and the future minimum required contributions, if any, could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

The decreasing number of automotive parts suppliers and pricing pressures from our automotive customers could make it more difficult for us to compete in the highly competitive automotive industry.

The automotive parts industry is highly competitive and bankruptcies and consolidation among automotive parts suppliers are reducing the number of competitors and resulting in larger competitors who benefit from purchasing and distribution economies of scale. Our inability to compete with these larger suppliers in the future could result in a reduction of, or inability to increase, revenues, which would materially adversely affect our business, financial condition, results of operations, and cash flows.

Although the overall number of competitors is decreasing due to ongoing industry consolidation, we face significant competition within each of our major product areas. The principal competitive factors include quality, global presence, service, cost, product performance, design and engineering capabilities, new product innovation, and timely delivery. We also face significant competitive pricing pressures from our automotive customers. Because of their purchasing size, our automotive customers can influence market participants to compete on price terms. If we are not able to offset pricing reductions resulting from these pressures by improving operating efficiencies and reducing expenditures, those pricing reductions may have a material adverse effect on our business.

We cannot provide assurance that we will be able to continue to compete in the highly competitive automotive industry or that increased competition will not have a material adverse effect on our business.

The volatility of steel prices may adversely affect our results of operations.

We utilize steel and various purchased steel products in virtually all of our products. We refer to the “net steel impact” as the combination of the change in steel prices that are reflected in the price of our products, the change in the cost to procure steel from mills, and the change in our recovery of scrap steel (which we refer to as “offal”). Our strategy is to be economically neutral to steel pricing by having these factors offset each other. While we strive to achieve a neutral net steel impact, we are not always successful in achieving that goal, in large part due to timing differences. The timing of a change in the price for steel may occur in separate periods and if a change occurs, that change may have a disproportionate effect on our liquidity because of the time difference between our payment for steel and our collection of cash from customers. We tend to pay for replacement materials, which are more expensive when steel prices are rising, over a much shorter period. As a result, rising steel prices may cause us to draw greater than anticipated amounts from our credit lines to cover the cash flow cycle from our steel purchases to cash collection for related accounts receivable. This cash requirement for working capital is higher in periods when we are increasing our inventory quantities.

A by-product of our production process is the generation of offal. We typically sell offal in secondary markets, which are similar to the steel markets. We generally share our recoveries from sales of offal with our customers either through scrap sharing agreements, in cases in which we are participating in resale programs, or through product pricing, in cases in which we purchase steel directly from steel mills. In either situation, we may be affected by the fluctuation in scrap steel prices, either positively or negatively, in relation to our various customer agreements. As offal prices generally increase and decrease as steel prices increase and decrease, our sale of offal may mitigate the impact of the volatility of steel price increases, as well as limit the benefits reaped from steel price declines. Any volatility in offal and steel prices could materially adversely affect our business, financial condition, results of operations, and cash flows.

We have a material amount of goodwill, which, if it becomes impaired, would result in a reduction in our net income and equity.

Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired. GAAP requires that goodwill be periodically evaluated for impairment based upon the fair value of the

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reporting unit. As of December 31, 2014, we had $56.7 million of goodwill that could be subject to impairment. Declines in our profitability or the value of comparable companies may impact the fair value of our reporting units, which could result in a write-down of goodwill and a reduction of net income.

The results of our 2014 annual goodwill impairment analysis indicated that the carrying value of the South American reporting unit was more than its fair value. We recorded an impairment charge of $2.3 million during the fourth quarter of 2014 to write-down this goodwill to its fair value of zero.

Disruptions in the automotive supply chain could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

Automotive industry conditions could adversely affect the original equipment supply base. The automotive supply chain is subject to disruptions because we, along with our customers and suppliers, attempt to maintain low inventory levels.

Disruptions could result from a multitude of potential problems, such as the closure of one of our or our suppliers’ plants or critical manufacturing lines due to strikes, mechanical breakdowns, electrical outages, fires, explosions, or political upheaval. Disruptions could also result from logistical complications due to weather, earthquakes, or other natural or nuclear disasters, mechanical failures, technology disruptions, or delayed customs processing.

If we are the cause for a customer being forced to halt production, the customer may seek to recoup all of its losses and expenses from us. Any disruptions affecting us or caused by us could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

The inability for us, our customers, or our suppliers to obtain and maintain sufficient credit insurance or capital financing, including working capital lines, may adversely affect the liquidity and financial condition of us, our customers, and our suppliers.

Our working capital requirements can vary significantly, depending, in part, on the level, variability and timing of our customers’ vehicle production and the payment terms we have with our customers and suppliers. Our liquidity could also be adversely affected if our suppliers were to suspend normal trade credit terms and require payment in advance or payment on delivery. If our available cash flows from operations are not sufficient to fund our ongoing cash needs, we would be required to look to our cash balances and borrowing availability under our credit facilities to satisfy those needs, as well as look to potential sources of additional capital, which may not be available on satisfactory terms or in adequate amounts, if at all.

There can be no assurance that we, our customers, or our suppliers will continue to have the ability to maintain sufficient capital financing. This may increase the risk of not being able to produce our products or having to pay higher prices for our inputs that may not be recovered in our selling prices. Our suppliers often seek to obtain credit insurance based on our consolidated financial condition and strength, which may be less robust. If we were to experience liquidity issues, our suppliers may not be able to obtain credit insurance and, in turn, would likely not be able to offer us payment terms that we have historically received, which could have a material adverse effect on our liquidity.

We may incur costs of a material nature related to plant closings, which could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

If we must close manufacturing locations because of lost business or consolidation of manufacturing facilities, the employee termination costs, asset retirements, and other exit costs associated with the closure of these facilities may be significant. In certain circumstances, we may close a manufacturing facility that is operated under a lease agreement and we may continue to incur material costs in accordance with the lease agreement. We attempt to align production capacity with demand; however, we cannot provide assurance that plants will not have to be closed.

We are subject to environmental risks and requirements and we may incur significant costs, liabilities, and obligations associated with those risks and requirements.

We are subject to a variety of environmental and pollution control laws, regulations, and permits that govern, among other things, soil, surface water, and groundwater contamination; the generation, storage, handling, use,

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disposal, and transportation of hazardous materials; the emission and discharge of materials, including GHGs, into the environment; and health and safety. If we fail to comply with these laws, regulations, or permits, we could be fined or otherwise sanctioned by regulators or become subject to litigation. Environmental and pollution control laws, regulations, and permits, and the enforcement thereof, change frequently, have tended to become more stringent over time, and may necessitate substantial capital expenditures or operating costs.

Under certain environmental requirements, we could be responsible for costs relating to any contamination at our, or the Predecessor Company’s, currently or formerly owned or operated properties or third-party waste-disposal sites, even if we were not at fault. Soil and groundwater contamination is being addressed at certain of these locations. In addition to potentially significant investigation and cleanup costs, contamination can give rise to third-party claims for fines or penalties, natural resource damages, personal injury, or property damage.

We cannot provide assurance that our costs, liabilities, and obligations relating to environmental matters will not have a material adverse effect on our business, financial condition, results of operations, and cash flows.

Risk Factors Relating to Our Indebtedness

We have a substantial amount of indebtedness, which could have a material adverse effect on our financial health and our ability to fund our operations, obtain financing in the future, and react to changes in our business.

As of December 31, 2014, our total debt, including capital lease obligations, was $496.1 million. That indebtedness could:

Our primary debt instrument is the Term Loan Credit Facility which bears interest at (i) the Alternate Base Rate plus a margin of 2.00% or (ii) the Adjusted LIBO Rate (calculated by multiplying the applicable LIBOR rate by a statutory reserve rate, with a floor of 1.00%) plus a margin of 3.00%. As of December 31, 2014, the balance on the term loan was $445 million (net of a $1.6 million discount). If the LIBOR rates increase in excess of 1%, we will incur higher debt service requirements, which could adversely affect our cash flow and operating results. While we periodically enter into agreements designed to limit our exposure to higher interest rates, any such agreements do not offer complete protection from this risk.

We may not be able to refinance our debt on commercially reasonable terms, if at all.

We cannot provide assurance that we will be able to refinance, extend the maturity of, or otherwise amend the terms of our existing indebtedness, or that any refinancing, extension, or amendment will be on commercially reasonable terms. The indebtedness issued in any refinancing of our existing indebtedness could have a significantly higher rate of interest and greater costs than our existing indebtedness. There can be no assurance that the financial terms or covenants of any new credit facility or other indebtedness issued to refinance our existing indebtedness will be the same or as favorable as those under our existing indebtedness.

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Our ability to complete a refinancing of our existing indebtedness prior to their respective maturities is subject to a number of conditions beyond our control. For example, if a disruption in the financial markets were to occur at the time that we intended to refinance this indebtedness, we might be restricted in our ability to access the financial markets. Also, if we were unable to make payments or refinance our debt or obtain new financing under these circumstances, we would have to consider other options, such as:

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

In addition, under our credit agreements, a change in control may lead the lenders to exercise remedies such as acceleration of the loan, termination of their obligations to fund additional advances and collection against the collateral securing such loan.

We may be unable to generate sufficient cash to service all of our indebtedness and we may be forced to take other actions to satisfy our obligations under such indebtedness, which may not be successful.

Our ability to make scheduled payments on or to refinance our debt obligations, certain of which have short-term maturities, depends on our financial condition and operating performance, which is subject to prevailing economic and competitive conditions, as well as financial, business, and other factors beyond our control. We cannot provide assurance that we will maintain a level of cash flows from operating activities sufficient to permit us to pay or refinance our indebtedness.

Our debt instruments restrict our current and future operations.

The financing agreements governing our indebtedness impose significant operating and financial restrictions on us. These restrictions limit our ability and the ability of our subsidiaries to, among other things:

In addition to the restrictions and covenants listed above, certain of our financing documents require us, under certain circumstances, to comply with specified financial maintenance covenants. Any of these restrictions or covenants could limit our ability to plan for or react to market conditions or meet certain capital needs and could otherwise restrict our corporate activities.

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Substantially all of our subsidiaries’ assets are pledged as collateral under our secured financing arrangements.

As of December 31, 2014, we had $487.2 million (net of $1.6 million original issue discount associated with the Term Loan Credit Facility) of secured debt, excluding capital leases. Substantially all of our subsidiaries’ assets are pledged as collateral for our borrowings under our secured financing arrangements. Most of our domestic subsidiaries are either primary obligors or guarantors under a secured financing arrangement. Substantially all of our domestic subsidiaries’ assets are pledged as collateral for these obligations. If we are unable to repay all secured borrowings when due, whether at maturity or if declared due and payable following a default, the agent or the lenders, as applicable, would have the right to proceed against the collateral pledged to secure the indebtedness and may sell the assets pledged as collateral in order to repay those borrowings, which could have a material adverse effect on our businesses, financial condition, results of operations, and cash flows.

Risk Factors Relating to Our Common Stock

The price of our common stock may be volatile.

The price at which our common stock trades may be volatile due to a number of factors, including:

Broad market fluctuations may result in a material decline in the market price of our common stock and you may not be able to sell your shares at prices you deem acceptable. In the past, following periods of volatility in the equity markets, securities class action lawsuits have been instituted against public companies. Such litigation, if instituted against us, could result in substantial cost and the diversion of management attention.

Shares eligible for future sale may cause the market price of our common stock to decline, even if our business is doing well.

Sales of substantial amounts of our common stock in the public market, or the perception that these sales may occur, could adversely affect the price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. Our certificate of incorporation authorizes us to issue up to 350,000,000 shares of common stock and as of February 24, 2015 we had 21,033,856 shares of common stock outstanding.

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Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

We are headquartered in Livonia, Michigan in a 76,000 square foot facility, which we lease. This facility is utilized for management offices, as well as certain accounting, customer service, engineering, human resources, information technology, finance, purchasing, and treasury functions. We believe that this facility is suitable for the activities conducted there.

Our manufacturing is conducted in 27 manufacturing facilities strategically located throughout South America, North America, Europe, and Asia. Our manufacturing facilities are supported by seven engineering and sales locations throughout the world.

The following table sets forth selected information regarding each of our facilities:

Facility

Country

Description of Use

Square Feet

Ownership

Americas Locations

Aruja

Brazil

Manufacturing/ Technical Center

334,880

Owned

Betim

Brazil

Manufacturing

120,600

Owned

Contagem

Brazil

Manufacturing

144,200

Leased

Ramos

Mexico

Manufacturing

67,500

Leased

Auburn, Indiana

United States

Manufacturing

162,800

Leased

Bardstown, Kentucky (2 locations)

United States

Manufacturing

448,700

Owned/Leased

(1)

Bellevue, Ohio (2 locations)

United States

Manufacturing

361,400

Owned

Bluffton, Ohio

United States

Manufacturing

196,200

Leased

Chicago, Illinois

United States

Manufacturing

412,800

Leased

Clinton Township, Michigan

United States

Manufacturing

392,300

Leased

Elkton, Michigan

United States

Manufacturing

1,100,000

Owned

Grand Rapids, Michigan

United States

Office

5,900

Leased

Goodyear, Arizona

United States

Manufacturing

458,800

Leased

(2)

Livonia, Michigan

United States

Corporate Office/ Technical Center

76,300

Leased

Madison, Mississippi

United States

Manufacturing

270,000

Leased

Meridian, Mississippi

United States

Manufacturing

420,000

Leased

Plymouth, Michigan

United States

Manufacturing

290,100

Leased

Shepherdsville, Kentucky

United States

Manufacturing

219,100

Leased

International Locations

Gent

Belgium

Manufacturing

346,700

Leased

Neprevazka

Czech Republic

Manufacturing

69,200

Leased

Artern

Germany

Manufacturing

164,600

Owned

Buchholz

Germany

Manufacturing

79,900

Owned

Duisburg

Germany

Manufacturing

116,700

(3)

Kaarst

Germany

Office

3,300

Leased

Cologne

Germany

Corporate Office/ Technical Center

32,530

Leased

Zwickau

Germany

Manufacturing

505,500

Owned/Leased

(1)

Caserta

Italy

Manufacturing

262,500

Owned

Melfi

Italy

Manufacturing

73,600

Owned

Turin

Italy

Technical Center

23,100

Leased

Opole

Poland

Manufacturing

146,000

Owned/Leased

(1)

Malacky

Slovakia

Manufacturing

542,500

Owned

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Facility

Country

Description of Use

Square Feet

Ownership

Dalian

China

Manufacturing

72,700

(4)(5)

Shanghai

China

Corporate Office/ Technical Center

3,500

Leased

WuHu

China

Manufacturing

308,500

(4)(5)

Hyderabad

India

Technical Center

8,700

Leased

Yokohama

Japan

Technical Center

2,500

Leased

Item 3. Legal Proceedings

From time to time, we are involved in legal proceedings, claims, or investigations that are incidental to the conduct of our business. We vigorously defend ourselves against such claims. In future periods, we could be subject to cash costs or non-cash charges to earnings if a matter is resolved on unfavorable terms. However, although the ultimate outcome of any legal matter cannot be predicted with certainty, based on current information, including our assessment of the merits of the particular claims, we do not expect that our pending legal proceedings or claims will have a material impact on our future consolidated financial condition, results of operations, or cash flows.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

Market Information — Our common stock trades on the New York Stock Exchange under the symbol “TOWR”. Our stock began trading on October 15, 2010, in conjunction with our IPO. As of February 24, 2015, we had 21,033,856 shares of common stock, $0.01 par value, outstanding, two holders of record and 6,398 beneficial shareholders of our common stock. The transfer agent and registrar for our common stock is Broadridge Financial Solutions, Inc.

The following table presents the reported high and low closing prices per share of our common stock during 2014 and 2013:

		2014								2013
High and Low Closing Prices per Share		High Price				Low Price				High Price				Low Price
Fourth Quarter		$	26.66			$	20.74			$	22.75			$	18.86
Third Quarter			36.74				25.19				23.93				19.10
Second Quarter			36.84				26.15				21.25				12.57
First Quarter			27.22				20.54				14.49				8.21

Performance Graph — The following chart shows the cumulative total stockholder return for our common stock from October 15, 2010, the date our common stock commenced trading on the New York Stock Exchange in connection with our IPO, to December 31, 2014. Five year historical data is not presented as we did not have common stock prior to our IPO. The graph also shows the cumulative returns of the S&P 500 Index and the S&P Supercomposite Auto Parts and Equipment Index. The comparison assumes $100 was invested on October 15, 2010. Each of the indices shown assumes that all dividends paid were reinvested.

Comparison of Cumulative Total Return

		10/15/2010				12/31/2010				12/31/2011				12/31/2012				12/31/2013				12/31/2014
Tower International, Inc.		$	100.00			$	130.55			$	79.26			$	59.41			$	157.93			$	188.56
S&P 500			100.00				106.81				106.81				121.12				156.98				176.68
S&P Supercomposite Auto Parts and Equipment Index			100.00				121.91				104.50				103.08				167.39				170.75

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Dividends — We did not declare or pay any common stock dividends during 2014 or 2013 and we do not anticipate paying any such dividends in the foreseeable future.

Issuer’s Purchases of Equity Securities — We did not repurchase any of our common stock during the fourth quarter of 2014.

Item 6. Selected Financial Data

The following tables set forth selected consolidated financial data of Tower International, Inc., for periods after the Corporate Conversion, and selected consolidated financial data of Tower Automotive, LLC, for periods prior to the Corporate Conversion. The selected consolidated balance sheets data as of December 31, 2014 and 2013 and the selected consolidated statements of operations data for the years ended December 31, 2014, 2013, and 2012 have been derived from our audited Consolidated Financial Statements and related notes that are included in this Annual Report. The selected consolidated balance sheets data as of December 31, 2012, 2011, and 2010 and the selected consolidated statements of operations data for the years ended December 2011 and 2010 have been derived from previously filed audited consolidated financial statements that are not presented in this Annual Report. As with our Consolidated Financial Statements for the years ended December 31, 2014, 2013, and 2012, we adjusted the information in the consolidated financial statements for the years ended December 31, 2011 and 2010, where appropriate, to account for discontinued operations.

You should read the following selected historical consolidated financial data in conjunction with the more detailed information contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations and our Consolidated Financial Statements and the related notes that we have presented elsewhere in this Annual Report.

		Year Ended December 31,
		2014				2013				2012				2011				2010
		(in millions except share and per share data)
Statements of Operations Data:
Revenues		$	2,067.8			$	1,966.5			$	1,925.8			$	1,933.2			$	1,603.0
Cost of Sales(a)			1,838.6				1,736.2				1,729.5				1,746.9				1,437.3
Gross profit			229.2				230.3				196.3				186.3				165.8
Gross profit margin			11.1	%			11.7	%			10.2	%			9.6	%			10.3	%
Selling, general, and administrative expenses(b)		$	132.6			$	132.8			$	133.2			$	148.2			$	136.1
Amortization expense			1.5				2.8				4.6				4.6				3.3
Restructuring and asset impairment charges, net			14.2				21.2				10.7				2.7				14.3
Operating income			80.8				73.5				47.8				30.8				12.1
Operating income margin			3.9	%			3.7	%			2.5	%			1.6	%			0.8	%
Interest expense, net		$	34.2			$	50.7			$	54.6			$	53.8			$	58.9
Income/(loss) from continuing operations			36.5				(26.3	)			(20.6	)			(33.7	)			(57.3	)
Net income/(loss)(c)			27.1				(16.1	)			25.0				(18.2	)			(27.0	)
Net income attributable to the non-controlling interests			5.6				4.2				7.0				5.1				8.4
Net income/(loss) attributable to Tower International, Inc.			21.5				(20.3	)			18.0				(23.3	)			(35.4	)
Preferred unit dividends(d)			—				—				—				—				10.7
Income/(loss) available to common stockholders			21.5				(20.3	)			18.0				(23.3	)			(46.1	)
Basic income/(loss) per share:
Income/(loss) from continuing operations			1.50				(1.50	)			(1.37	)			(2.00	)			(5.51	)
Income/(loss) from discontinued operations			(0.46	)			0.50				2.27				0.80				2.19
Income/(loss) per share			1.04				(0.99	)			0.90				(1.20	)			(3.33	)
Weighted average basic shares outstanding (in thousands)			20,662				20,387				20,081				19,364				13,866

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		Year Ended December 31,
		2014				2013				2012				2011				2010
		(in millions except share and per share data)
Diluted income/(loss) per share:
Income/(loss) from continuing operations			1.45				(1.50	)			(1.37	)			(2.00	)			(5.51	)
Income/(loss) from discontinued operations			(0.44	)			0.50				2.27				0.80				2.19
Income/(loss) per share			1.01				(0.99	)			0.90				(1.20	)			(3.33	)
Weighted average diluted shares outstanding (in thousands)			21,391				20,387				20,081				19,364				13,866

		December 31,
		2014				2013				2012				2011				2010
		(in millions)
Balance Sheets Data:
Cash and cash equivalents		$	148.6			$	134.9			$	113.9			$	135.0			$	150.3
Total assets			1,182.9				1,183.0				1,238.1				1,397.4				1,340.2
Total debt(e)			496.1				503.8				497.0				583.5				558.2
Total stockholders’ equity			99.8				136.9				140.9				97.5				111.6

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Company Overview

We are a leading integrated global manufacturer of engineered structural metal components and assemblies primarily serving original equipment manufacturers (“OEMs”). We offer our automotive customers a broad product portfolio, supplying body-structure stampings, frame and other chassis structures, as well as complex welded assemblies, for small and large cars, crossovers, pickups, and sport utility vehicles (“SUVs”). Our products are manufactured at 27 facilities, strategically located near our customers in North America, South America, Europe, and Asia. We support our manufacturing operations through seven engineering and sales locations around the world. Our products are offered on a diverse mix of vehicle platforms, reflecting the balanced portfolio approach of our business model and the breadth of our product capabilities. We supply products to approximately 170 vehicle models globally to 11 of the 12 largest OEMs based on 2014 production volumes.

We believe that our engineering, manufacturing, and program management capabilities, our geographic and customer diversification, our competitive cost, our financial discipline, and our colleague engagement position us for long-term success.

During the fourth quarter of 2014, our Board of Directors approved a plan to sell our equity interest in our Changchun Tower Golden Ring Automotive Products Co., Ltd. (“TGR”), Xiangtan DIT Automotive Products Co., Ltd. (“Xiangtan”), and Ningbo DIT Automotive Products Co. Ltd. (“Ningbo”) joint ventures. At December 31, 2014, TGR and Xiangtan were considered held for sale in accordance with FASB ASC No. 360, Property, Plant, and Equipment and have been presented as discontinued operations in our Consolidated Financial Statements, in accordance with FASB ASC No. 205, Discontinued Operations. Our investment in the Ningbo joint venture is accounted for under the equity method and therefore does not qualify for held for sale treatment and does not fall under the scope of FASB ASC No. 205.

Factors Affecting Our Industry

Our business and our revenues are primarily driven by the strength of the global automotive industry, which tends to be cyclical and highly correlated to general global macroeconomic conditions. The strength of the automotive market dictates the volume of purchases of our products by our OEM customers to ultimately satisfy consumer demand. We manufacture products pursuant to written agreements with each of our OEM customers. However, those agreements do not dictate the volume requirements of our customers; instead, OEMs monitor their inventory and the inventory levels of their dealers and adjust the volume of their purchases from us based on consumer demand for their products.

During 2014, industry production volumes increased from 2013 in three of our four major markets, with the exception being a decline in Brazil. According to IHS, industry production is projected to increase in 2015 in each of the four major markets in which we operate, except Europe. Any such increase may be offset by adverse changes for our customers or products.

As measured by IHS, global industry production of cars and light trucks was 86 million vehicles in 2014 compared to 83 million vehicles in 2013. IHS projects production will reach 97 million vehicles by 2018, reflecting continued growth in each of our four major markets. We believe that we are well positioned to benefit from this trend, but we are not insulated from short-term fluctuations in the global automotive industry.

Factors Affecting Our Revenues

While overall production volumes are largely driven by economic factors outside of our direct control, we believe that the following elements of our business also impact our revenues:

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Factors Affecting Our Expenses

Our expenses are driven by the following factors:

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Adjusted EBITDA

We use the term Adjusted EBITDA throughout this Annual Report. We define Adjusted EBITDA as net income/(loss) before interest, taxes, depreciation, amortization, restructuring items, and other adjustments described in the reconciliations provided in this report. Adjusted EBITDA is not a measure of performance defined in accordance with U.S. GAAP. We use Adjusted EBITDA as a supplement to our GAAP results in evaluating our business.

Adjusted EBITDA is included in this Annual Report because it is one of the principal factors upon which our management assesses performance. Our Chief Executive Officer measures the performance of our segments on the basis of Adjusted EBITDA. As an analytical tool, Adjusted EBITDA assists us in comparing our performance over various reporting periods on a consistent basis because it excludes items that we do not believe reflect our core operating performance.

We believe that Adjusted EBITDA is useful in evaluating our performance as it is a commonly used financial metric for measuring and comparing the operating performance of companies in our industry. We believe that the disclosure of Adjusted EBITDA offers an additional financial metric that, when coupled with the GAAP results and the reconciliation to GAAP results, provides a more complete understanding of our results of operations and the factors and trends affecting our business.

Adjusted EBITDA should not be considered as an alternative to net income/(loss) as an indicator of our performance, as an alternative to net cash provided by operating activities as a measure of liquidity, or as an alternative to any other measure prescribed by GAAP. There are limitations to using non-GAAP measures such as Adjusted EBITDA. Although we believe that Adjusted EBITDA may make an evaluation of our operating performance more consistent because it removes items that do not reflect our core operations, other companies in our industry may define Adjusted EBITDA differently than we do and, as a result, it may not be comparable to similarly titled measures used by other companies in our industry, and Adjusted EBITDA excludes certain financial information that some may consider important in evaluating our performance.

We compensate for these limitations by providing disclosure of the differences between Adjusted EBITDA and GAAP results, including a reconciliation of Adjusted EBITDA to GAAP results, to enable investors to perform their own analysis of our operating results. For a reconciliation of consolidated Adjusted EBITDA to its most directly comparable GAAP measure, net income/(loss), see “Results of Operations” below.

Because of these limitations, Adjusted EBITDA should not be considered as a measure of the income generated by our business or discretionary cash available to us to invest in the growth of our business. Our management compensates for these limitations by analyzing both our GAAP results and Adjusted EBITDA.

Our Segments

Our management reviews our operating results and makes decisions based upon two reportable segments: the Americas and International. For accounting purposes, we have identified four operating segments, which we have aggregated into the two reportable segments. Refer to Note 13 to our Consolidated Financial Statements for further information regarding our operating and reportable segments. Through December 31, 2014, our

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businesses have had similar economic characteristics, including the nature of the products, margins, production processes, distribution channels, and customers.

Results of Operations — Year Ended December 31, 2014 Compared with the Year Ended December 31, 2013

Automobile production volumes increased during the year ended December 31, 2014 in three of our four major markets compared to the year ended December 31, 2013, the exception being a decline in Brazil. The following table presents production volumes in specified regions according to IHS for the year ended December 31, 2014 compared to the year ended December 31, 2013 (in millions of units produced):

		Europe				China				North America				Brazil
2014 production volumes			20.0				21.3				17.0				3.0
2013 production volumes			19.4				19.5				16.2				3.5
Increase/(decrease)			0.6				1.8				0.8				(0.5	)
Percentage change			3	%			10	%			5	%			(14	)%

The following table presents select financial information for the years ended December 31, 2014 and 2013 (in millions).

		International								Americas								Consolidated
		Year Ended December 31,								Year Ended December 31,								Year Ended December 31,
		2014				2013				2014				2013				2014				2013
Revenues		$	842.3			$	815.5			$	1,225.5			$	1,151.0			$	2,067.8			$	1,966.5
Cost of sales			763.1				732.4				1,075.5				1,003.8				1,838.6				1,736.2
Gross profit			79.2				83.1				150.0				147.2				229.2				230.3
Selling, general, and administrative expenses			43.8				45.5				88.9				87.3				132.7				132.8
Amortization expense			1.1				2.1				0.4				0.7				1.5				2.8
Restructuring and asset impairment charges, net			4.0				2.7				10.2				18.5				14.2				21.2
Operating income		$	30.3			$	32.8			$	50.5			$	40.7				80.8				73.5
Interest expense, net																			34.2				50.7
Other expense																			0.1				48.4
Provision for income taxes																			9.3				0.2
Equity in loss of joint venture, net of tax																			(0.7	)			(0.6	)
Income/(loss) from discontinued operations, net of tax																			(9.4	)			10.3
Net income attributable to noncontrolling interest																			5.6				4.2
Net income/(loss) attributable to Tower International, Inc.																		$	21.5			$	(20.3	)

Comparison of Periods — GAAP Analysis of Consolidated Results

Revenues

Total revenues increased during the year ended December 31, 2014 by $101.3 million, or 5%, from the year ended December 31, 2013, reflecting primarily higher volume in our Americas segment ($79.5 million) and in our International segment ($48.3 million). Revenues were positively impacted by the strengthening of the Euro against the U.S. dollar in our International segment ($1.8 million), but were negatively impacted by the strengthening of the U.S. dollar against the Brazilian Real ($17.3 million) in our Americas segment and the Chinese Rmb ($0.2 million) in our International segment. Revenues were also adversely impacted by unfavorable pricing ($10.8 million).

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Gross Profit

When we analyze our total gross profit, we separately categorize external factors — volume, product mix, and foreign exchange — from all other factors that impact gross profit, which we refer to as “other factors”. When we refer to “mix” we are referring to the relative composition of revenues and profitability of the products we sell in any given period. When we refer to “pricing and economics” we are referring to (i) the impact of adjustments in the pricing of particular products, which we refer to as product pricing; (ii) the impact of steel price changes, taking into account the component of our product pricing attributable to steel, the cost of steel included in our cost of sales, and the amounts recovered on the sale of offal, which in total we refer to as the net steel impact; and (iii) the impact of inflation and changes in operating costs, such as labor, utilities, and fuel, which we refer to as economics.

Total gross profit decreased by $1.1 million from the year ended December 31, 2013 and our gross profit margin decreased from 11.7% during the 2013 period to 11.1% during the 2014 period, as explained by unfavorable product mix ($8.3 million), additional volume-related fixed costs ($5 million), and unfavorable foreign exchange ($2.8 million, excluding the impact on depreciation), offset partially by higher volume ($28.4 million). All other factors were net unfavorable by $13.4 million. Cost of sales was negatively impacted by unfavorable pricing and economics ($28.7 million), a one-time unfavorable retroactive commercial settlement during the current period related to 2010 to 2013 scrap ($6 million), higher launch costs ($5.7 million), a pension actuarial loss ($4.2 million), the non-recurrence of the gain recognized in connection with the de-consolidation of our Chinese joint venture ($1.5 million) in 2013, and the non-recurrence of the reversal of a loss contingency in Brazil related to favorable settlements ($1.5 million) in 2013. These factors were offset partially by favorable efficiencies ($28.2 million).

Total gross profit was also positively impacted by a decrease in the depreciation included in cost of sales from $81.1 million during the year ended December 31, 2013 to $79.7 million during the year ended December 31, 2014.

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

Total SG&A decreased $0.1 million from the year ended December 31, 2013.

Amortization Expense

Total amortization expense decreased $1.3 million from the year ended December 31, 2013, reflecting primarily the amortization of customer relationships in Europe and Brazil, which became fully amortized during 2014. No further amortization expense related to these intangibles will be incurred beyond 2014.

Restructuring and Asset Impairment Expense

Total restructuring and asset impairment expense decreased $7 million from the year ended December 31, 2013. During 2014 we incurred charges related to the buyout of a lease on a previously closed facility, a goodwill impairment charge in Brazil, ongoing maintenance expense of facilities closed as a result of prior actions, severance charges to reduce fixed costs, and an impairment charge on a facility in None, Italy, which was sold during the fourth quarter. During 2013 we incurred charges related to the closure of Tower Defense & Aerospace, LLC (“TD&A”) (described in Note 4 to our Consolidated Financial Statements), the ongoing maintenance expense of facilities closed as a result of prior actions, an impairment charge on a facility we ceased using in our Americas segment, an impairment charge on a facility classified as held for sale and sold during 2013 in our International segment, charges related to the relocation of a facility in our International segment, and severance related charges to reduce fixed costs.

Interest Expense, net

Interest expense, net decreased $16.5 million, or 33%, from the year ended December 31, 2013, reflecting primarily lower interest expense associated with notes repurchased in connection with a tender offer in 2013 (the “Tender Offer”) and the issuance of our Term Loan Credit Facility during the second quarter of 2013 ($10.6 million), the accelerated amortization of the original issue discount and debt issue costs associated with the notes repurchase ($8.3 million), the accelerated amortization of the original issue discount and debt issue costs in connection with the redemption of notes in May and August 2013 ($2.5 million), and lower interest expense associated with our ABL Revolver ($2.1 million), offset partially by mark-to-market losses on our derivative financial instruments ($5.8 million).

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Other Expense

Other expense represents the fees paid in connection with the Second Refinancing Term Loan Amendment and Additional Term Loan Amendment, which were entered into during the first quarter of 2014 ($0.1 million).

Provision for Income Taxes

Income tax expense from continuing operations increased $9.1 million from the year ended December 31, 2013, reflecting primarily the non-recurrence of a $10.8 million benefit for the intraperiod allocation of actuarial pension gains recognized in accumulated other comprehensive income (“AOCI”) and the non-recurrence of a $2.6 million tax benefit from a favorable conclusion of a tax audit in our International segment in 2013.

We did not record deferred income tax expense on 2014 U.S. profits because the utilization of deferred tax assets — primarily net operating losses — released an associated U.S. valuation allowance. Therefore, the net income tax effect on U.S. profits was only $0.3 million for alternative minimum tax expense. At December 31, 2014, we continue to maintain a U.S. valuation allowance against U.S. deferred tax assets. In evaluating the need for the U.S. valuation allowance we reviewed both positive and negative evidence and placed greater reliance on objective historical evidence than on subjective estimates of future profitability. We also adjusted historical profits and losses for one-time events and tax planning in order to estimate future profitability. These nonrecurring adjustments included items such as the 2013 debt refinancing and the impact of restructuring loan agreements with our foreign affiliates. After making these adjustments, as of the end of 2014, our U.S. operations were still in a three year cumulative loss. However, we expect our U.S. operations to be in a three-year cumulative income position sometime in 2015, if U.S. automotive production volumes hold. These three year cumulative tests are not the sole determinates of the need for a valuation allowance. Given the historic volatility of U.S. automotive suppliers’ profits, we believe that achieving a period of sustained profitability is also critical in determining whether a valuation allowance should be released. If we achieve forecasted levels of sustainable profits in 2015 and the 2016 U.S. automotive market retains its current momentum, it is probable that we would release up to $80 million of the valuation allowances against our U.S. deferred tax assets in the next twelve months.

During 2013, Cerberus, our principal stockholder, sold its ownership in us. The sale constituted an ownership change under Section 382 of the Internal Revenue Code. Under Section 382, the amount of U.S. net operating losses generated before the ownership change that can be utilized after the change is limited. Notwithstanding the Section 382 limitation, we do not anticipate paying any material income taxes in the U.S. until 2018 or 2019.

Equity in Loss of Joint Venture

Equity in loss of joint venture represents our share in the loss of our Ningbo joint venture during 2014.

Noncontrolling Interest, Net of Tax

The adjustment to our earnings required to give effect to the elimination of noncontrolling interests increased by $1.4 million from the year ended December 31, 2013, reflecting increased earnings in our consolidated Chinese joint ventures during 2014.

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Comparison of Periods — Non-GAAP Analysis of Adjusted EBITDA

A reconciliation of Adjusted EBITDA to net income/(loss) attributable to Tower International, Inc. for the periods presented is set forth below (in millions):

		International								Americas								Consolidated
		Year Ended December 31,								Year Ended December 31,								Year Ended December 31,
		2014				2013				2014				2013				2014				2013
Adjusted EBITDA		$	64.4			$	63.9			$	139.8			$	130.0			$	204.2			$	193.9
Intercompany charges			5.4				8.3				(5.4	)			(8.3	)			—				—
Restructuring and asset impairment charges, net			(4.0	)			(2.7	)			(10.2	)			(18.5	)			(14.2	)			(21.2	)
Depreciation and amortization			(35.1	)			(35.8	)			(52.1	)			(53.0	)			(87.2	)			(88.8	)
Acquisition and other			(0.4	)			(0.9	)			(0.1	)			(0.1	)			(0.5	)			(1.0	)
Long-term compensation(a)			—				—				(11.3	)			(6.6	)			(11.3	)			(6.6	)
Commercial settlement related to 2010 – 13 scrap(b)											(6.0	)			—				(6.0	)			—
Pension actuarial loss			—				—				(4.2	)			—				(4.2	)			—
Closure of TD&A(c)			—				—				—				(2.8	)			—				(2.8	)
Operating income		$	30.3			$	32.8			$	50.5			$	40.7				80.8				73.5
Interest expense, net																			(34.2	)			(50.7	)
Other expense(d)																			(0.1	)			(48.4	)
Provision for income taxes																			(9.3	)			(0.2	)
Equity in loss of joint venture, net of tax(e)																			(0.7	)			(0.6	)
Income/(loss) from discontinued operations, net of tax																			(9.4	)			10.3
Net income attributable to noncontrolling interest																			(5.6	)			(4.2	)
Net income/(loss) attributable to Tower International, Inc.																		$	21.5			$	(20.3	)

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The following table presents revenues (a GAAP measure) and Adjusted EBITDA (a non-GAAP measure) for the years ended December 31, 2014 and 2013 (in millions) as well as explanations of variances:

		International								Americas								Consolidated
		Revenues				Adjusted EBITDA(f)				Revenues				Adjusted EBITDA(f)				Revenues				Adjusted EBITDA(f)
2014 results		$	842.3			$	64.4			$	1,225.5			$	139.8			$	2,067.8			$	204.2
2013 results			815.5				63.9				1,151.0				130.0				1,966.5				193.9
Variance		$	26.8			$	0.5			$	74.5			$	9.8			$	101.3			$	10.3
Variance attributable to:
Volume and mix		$	48.3			$	7.6			$	79.5			$	7.5			$	127.8			$	15.1
Foreign exchange			1.6				0.1				(17.3	)			(1.2	)			(15.7	)			(1.1	)
Pricing and economics			(23.1	)			(14.7	)			12.3				(10.4	)			(10.8	)			(25.1	)
Efficiencies			—				8.6				—				19.6				—				28.2
Selling, general, and administrative expenses and other items(g)			—				(1.1	)			—				(5.7	)			—				(6.8	)
Total		$	26.8			$	0.5			$	74.5			$	9.8			$	101.3			$	10.3

Adjusted EBITDA

When we analyze Adjusted EBITDA, we separately categorize external factors — volume, product mix, and foreign exchange — and all other factors which impact Adjusted EBITDA, which we refer to as “other factors.”

Consolidated Company:  Consolidated Adjusted EBITDA increased by $10.3 million, or 5%, from the year ended December 31, 2013, reflecting primarily higher volume ($28.4 million), offset partially by unfavorable product mix ($8.3 million), additional volume-related fixed costs ($5 million), and unfavorable foreign exchange ($1.1 million). All other factors were net unfavorable by $3.7 million. Unfavorable pricing and economics ($25.1 million) and unfavorable SG&A expenses and other items ($6.8 million) were offset partially by favorable efficiencies ($28.2 million).

International Segment:  In our International segment, Adjusted EBITDA increased by $0.5 million, or 1%, from the year ended December 31, 2013, reflecting primarily higher volume ($8.1 million) and favorable product mix ($0.4 million), offset partially by additional volume-related fixed costs ($0.9 million). Foreign exchange had a negligible impact. All other factors were net unfavorable by $7.2 million. Unfavorable pricing and economics ($14.7 million), principally product pricing and labor costs, and unfavorable SG&A and other items ($1.1 million) were offset partially by favorable efficiencies ($8.6 million). SG&A expenses and other items reflect primarily higher launch costs ($2.6 million).

Americas Segment:  In our Americas segment, Adjusted EBITDA improved by $9.8 million, or 8%, from the year ended December 31, 2013, reflecting primarily higher volumes ($20.3 million), offset partially by unfavorable product mix ($8.7 million), additional volume-related fixed costs ($4.1 million), and unfavorable foreign exchange ($1.2 million). All other factors were net favorable by $3.5 million. Favorable efficiencies ($19.6 million) were offset partially by unfavorable pricing and economics ($10.4 million), principally product pricing and labor costs and unfavorable SG&A expenses and other items ($5.7 million). SG&A spending and other items reflect primarily higher launch costs ($3.1 million) and the non-recurrence of the reversal of a loss contingency in Brazil in 2013 due to favorable tax settlements ($1.5 million).

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Results of Operations — Year Ended December 31, 2013 Compared with the Year Ended December 31, 2012

Automobile production volumes increased during the year ended December 31, 2013 in each of our four major markets compared to the year ended December 31, 2012. The following table presents production volumes in specified regions according to IHS for the year ended December 31, 2013 compared to the year ended December 31, 2012 (in millions of units produced):

		Europe				China				North America				Brazil
2013 production volumes			19.4				19.5				16.2				3.5
2012 production volumes			19.2				16.9				15.4				3.2
Increase/(decrease)			0.2				2.6				0.8				0.3
Percentage change			1	%			15	%			5	%			9	%

The following table presents select financial information for the years ended December 31, 2013 and 2012 (in millions).

		International								Americas								Consolidated
		Year Ended December 31,								Year Ended December 31,								Year Ended December 31,
		2013				2012				2013				2012				2013				2012
Revenues		$	815.5			$	786.8			$	1,151.0			$	1,139.0			$	1,966.5				1,925.8
Cost of sales			732.4				702.2				1,003.8				1,027.3				1,736.2				1,729.5
Gross profit			83.1				84.6				147.2				111.7				230.3				196.3
Selling, general, and administrative expenses			45.5				43.8				87.3				89.4				132.8				133.2
Amortization expense			2.1				2.5				0.7				2.1				2.8				4.6
Restructuring and asset impairment charges, net			2.7				2.1				18.5				8.6				21.2				10.7
Operating income		$	32.8			$	36.2			$	40.7			$	11.6				73.5				47.8
Interest expense, net																			50.7				54.6
Other expense																			48.4				—
Provision for income taxes																			0.2				13.8
Equity in loss of joint venture, net of tax																			(0.6	)			—
Income from discontinued operations, net of tax																			10.3				45.6
Net income attributable to noncontrolling interest																			4.2				7.0
Net income/(loss) attributable to Tower International, Inc.																		$	(20.3	)		$	18.0

Comparison of Periods — GAAP Analysis of Consolidated Results

Revenues

Total revenues increased during the year ended December 31, 2013 by $40.7 million, or 2%, from the year ended December 31, 2012, reflecting primarily higher volume in our Americas segment ($27.1 million) and in our International segment ($30.8 million). Revenues were positively impacted by the strengthening of foreign currencies against the U.S. dollar in our International segment, primarily the Euro ($23.1 million) and the Chinese Rmb ($1.2 million), but were negatively impacted by the strengthening of the U.S. dollar against the Brazilian Real ($17.4 million) in our Americas segment. Revenues were also adversely impacted by unfavorable pricing ($24.1 million).

Gross Profit

Total gross profit increased by $34 million, or 17%, from the year ended December 31, 2012 and our gross profit margin increased from 10.2% during the 2012 period to 11.7% during the 2013 period, as explained by higher volume ($18.6 million) and favorable foreign exchange ($2.2 million, excluding the impact on

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depreciation), offset by additional volume-related fixed costs ($7.8 million) and unfavorable product mix ($7.7 million). All other factors were net favorable by $28.7 million. Cost of sales was reduced by favorable efficiencies ($34.9 million), the non-recurrence of a pension actuarial loss ($19.2 million), lower pension expense ($2.7 million), and lower launch costs ($0.7 million). These factors were offset partially by unfavorable pricing and economics ($32 million).

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

Total SG&A decreased $0.4 million from the year ended December 31, 2012.

Amortization Expense

Total amortization expense decreased $1.8 million, or 39%, from the year ended December 31, 2012, reflecting primarily the amortization of TD&A intangible assets during 2012, which became fully amortized during 2012. Our amortization expense consists of the charges we incur to amortize certain intangible assets.

Restructuring and Asset Impairment Expense

Total restructuring and asset impairment expense increased $10.5 million from the year ended December 31, 2012. During 2013, we incurred charges related to the closure of TD&A (described in Note 4 to our Consolidated Financial Statements), the ongoing maintenance expense of facilities closed as a result of prior actions, an impairment charge on a facility we ceased using in our Americas segment, an impairment charge on a facility classified as held for sale and sold during 2013 in our International segment, charges related to the relocation of a facility in our International segment, and severance related charges to reduce fixed costs. During 2012, we incurred charges of $10.7 million which consisted of the recurring costs for maintaining our North American closed plants, severance charges in Europe and Brazil to reduce fixed costs, and the costs incurred to close two manufacturing facilities and relocate the operations to two of our existing manufacturing facilities in the Americas segment.

Interest Expense, net

Interest expense, net decreased $3.9 million, or 7%, from the year ended December 31, 2012, reflecting primarily the lower interest expense associated with the Term Loan Credit Facility when compared to previously issued notes ($9.2 million) and the lower interest expense associated with our ABL Revolver ($2.7 million), offset partially by the accelerated amortization of the original issue discount and debt issue costs associated with the notes repurchased in connection with the Tender Offer ($8.3 million) and the accelerated amortization of the original issue discount and debt issue costs in connection with the redemption of notes in May and August 2013 ($2.5 million).

Other Expense

Other expense represents the premium paid and tender fee on the notes repurchased in connection with the Tender Offer ($38.1 million), the premium paid and fees incurred in connection with the re-pricing of our Term Loan Credit Facility ($4.5 million), the premium paid on $43 million of notes redeemed in May and August 2013 ($4.3 million), the transaction costs incurred in connection with a secondary offering ($0.8 million), and the breakage fee incurred to reduce the Letter of Credit Facility from $22.5 million to $8.5 million ($0.6 million).

Provision for Income Taxes

Income tax expense from continuing operations decreased $13.6 million from the year ended December 31, 2012, reflecting primarily the recognition of a $10.8 million benefit for the intraperiod allocation of actuarial pension gains recognized in AOCI and a $2.6 million tax benefit for the favorable conclusion of tax audits in our International segment.

Equity in Loss of Joint Venture

Equity in loss of joint venture represents our share in the loss of our Ningbo joint venture during 2013.

Noncontrolling Interest, Net of Tax

The adjustment to our earnings required to give effect to the elimination of noncontrolling interests decreased by $2.8 million from the year ended December 31, 2012, reflecting decreased earnings in our consolidated Chinese joint ventures during 2013.

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Comparison of Periods — Non-GAAP Analysis of Adjusted EBITDA

A reconciliation of Adjusted EBITDA to net income/(loss) attributable to Tower International, Inc. for the periods presented is set forth below (in millions):

		International								Americas								Consolidated
		Year Ended December 31,								Year Ended December 31,								Year Ended December 31,
		2013				2012				2013				2012				2013				2012
Adjusted EBITDA		$	63.9			$	67.7			$	130.0			$	110.7			$	193.9			$	178.4
Intercompany charges			8.3				7.6				(8.3	)			(7.6	)			—				—
Restructuring and asset impairment charges, net			(2.7	)			(2.1	)			(18.5	)			(8.6	)			(21.2	)			(10.7	)
Depreciation and amortization			(35.8	)			(36.5	)			(53.0	)			(53.4	)			(88.8	)			(89.9	)
Acquisition and other			(0.9	)			(0.2	)			(0.1	)			(0.1	)			(1.0	)			(0.3	)
Long-term compensation(a)			—				(0.3	)			(6.6	)			(10.2	)			(6.6	)			(10.5	)
Closure of TD&A(b)			—				—				(2.8	)			—				(2.8	)			—
Pension actuarial loss			—				—				—				(19.2	)			—				(19.2	)
Operating income		$	32.8			$	36.2			$	40.7			$	11.6				73.5				47.8
Interest expense, net																			(50.7	)			(54.6	)
Other expense(c)																			(48.4	)			—
Provision for income taxes																			(0.2	)			(13.8	)
Equity in loss of joint venture, net of tax(d)																			(0.6	)			—
Income from discontinued operations, net of tax																			10.3				45.6
Net income attributable to noncontrolling interest																			(4.2	)			(7.0	)
Net income/(loss) attributable to Tower International, Inc.																		$	(20.3	)		$	18.0

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The following table presents revenues (a GAAP measure) and Adjusted EBITDA (a non-GAAP measure) for the years ended December 31, 2013 and 2012 (in millions) as well as an explanation of variances:

		International								Americas								Consolidated
		Revenues				Adjusted EBITDA(e)				Revenues				Adjusted EBITDA(e)				Revenues				Adjusted EBITDA(e)
2013 results		$	815.5			$	63.9			$	1,151.0			$	130.0			$	1,966.5			$	193.9
2012 results			786.8				67.7				1,139.0				110.7				1,925.8				178.4
Variance		$	28.7			$	(3.8	)		$	12.0			$	19.3			$	40.7			$	15.5
Variance attributable to:
Volume and mix		$	30.8			$	(4.7	)		$	27.1			$	7.8			$	57.9			$	3.1
Foreign exchange			24.3				1.8				(17.4	)			0.1				6.9				1.9
Pricing and economics			(26.4	)			(20.4	)			2.3				(16.0	)			(24.1	)			(36.4	)
Efficiencies			—				16.2				—				18.7				—				34.9
Selling, general, and administrative expenses and other items			—				3.3				—				8.7				—				12.0
Total		$	28.7			$	(3.8	)		$	12.0			$	19.3			$	40.7			$	15.5

Adjusted EBITDA

Consolidated Company:  Consolidated Adjusted EBITDA increased by $15.5 million, or 9%, from the year ended December 31, 2012. Additional volume-related fixed costs ($6 million) and unfavorable product mix ($7.7 million) were offset partially by higher volume ($16.8 million) and favorable foreign exchange ($1.9 million). All other factors were net favorable by $10.5 million. Favorable efficiencies ($34.9 million) and favorable SG&A expenses and other items ($12 million) were offset partially by unfavorable pricing and economics ($36.4 million).

International Segment:  In our International segment, Adjusted EBITDA decreased by $3.8 million, or 6%, from the year ended December 31, 2012, reflecting primarily additional volume-related fixed costs ($3.2 million) and unfavorable product mix ($5.8 million), offset partially by higher volumes ($4.3 million) and favorable foreign exchange ($1.8 million). All other factors were net unfavorable by $0.9 million. Favorable efficiencies ($16.2 million) and favorable SG&A and other items ($3.3 million) were offset partially by unfavorable pricing and economics ($20.4 million), principally product pricing and labor costs. SG&A expenses and other items reflect primarily lower launch costs ($3.2 million).

Americas Segment:  In our Americas segment, Adjusted EBITDA improved by $19.3 million, or 17%, from the year ended December 31, 2012, reflecting primarily higher volumes ($12.5 million), offset partially by additional volume-related fixed costs ($2.8 million) and unfavorable product mix ($1.9 million). Foreign exchange had a negligible impact. All other factors were net favorable by $11.4 million. Favorable efficiencies ($18.7 million) and favorable SG&A expenses and other items ($8.7 million) were offset partially by unfavorable pricing and economics ($16 million), principally product pricing and labor costs. SG&A spending and other items reflect primarily favorable SG&A efficiencies ($3.3 million), lower pension expense ($2.7 million), and the exclusion of the non-recurring losses associated with TD&A ($1.6 million).

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Restructuring and Asset Impairments

The following table sets forth our net restructuring and asset impairment charges by type for the periods presented (in millions):

		Year Ended December 31,
		2014				2013				2012
Employee termination costs		$	1.6			$	2.3			$	2.6
Other exit costs			8.0				7.7				7.5
Asset impairments			4.6				11.2				0.6
Total		$	14.2			$	21.2			$	10.7

We restructure our global operations in an effort to align our capacity with demand and to reduce our costs. Restructuring costs include employee termination benefits and other incremental costs resulting from restructuring activities. These incremental costs principally include equipment and personnel relocation costs. Restructuring costs are recognized in our Consolidated Financial Statements in accordance with FASB ASC No. 420, Exit or Disposal Obligations, and are presented in our Consolidated Statement of Operations as restructuring and asset impairment charges, net. We believe the restructuring actions discussed below will help our efficiency and results of operations on a going forward basis.

The charges incurred in our Americas segment during 2014 related to the buyout of a lease on a previously closed facility, a goodwill impairment charge in Brazil, ongoing maintenance expense of facilities closed as a result of prior actions, and severance charges to reduce fixed costs. The charges incurred in our International segment related to an impairment charge on a facility in None, Italy, which was sold during the fourth quarter, and severance charges in Europe to reduce fixed costs.

In April 2013, our Board determined to close the operations of TD&A. In June 2013, we received $9.1 million in cash proceeds for the sale of substantially all of TD&A’s assets. In connection with the closure, we incurred $11.5 million of restructuring charges, of which $8.2 million represents an impairment charge, $2.8 million represents other exit costs, and $0.5 million represents severance costs. No additional restructuring charges were incurred with respect to TD&A.

The charges incurred in our Americas segment during 2013 related to the closure of TD&A, the ongoing maintenance expense of facilities closed as a result of prior actions, and an impairment charge on a facility we ceased using during the first quarter of 2013 and sold during the third quarter of 2013. The charges incurred in our International segment during 2013 related to an impairment charge on our Bergisch facility, which was considered held for sale during the second quarter of 2013 and was sold during the third quarter of 2013, charges related to the relocation of a facility, and severance charges to reduce fixed costs.

The charges incurred in our Americas segment during 2012 related to the ongoing maintenance expense of facilities closed as a result of prior actions and the costs incurred to close two manufacturing facilities and relocate the operations of two of our existing manufacturing facilities. The charges incurred in our International segment during 2012 related to severance charges to reduce fixed costs.

We expect to continue to incur additional restructuring expense in 2015 related primarily to previously announced restructuring actions and we may engage in new actions if business conditions warrant further actions. We do not anticipate any additional expense that will be significant with respect to previously announced actions.

Liquidity and Capital Resources

General

We generally expect to fund expenditures for operations, administrative expenses, capital expenditures, and debt service obligations with internally generated funds from operations and we generally expect to satisfy working capital needs from time-to-time with borrowings under our revolving credit facility or cash on hand. As of December 31, 2014, we had available liquidity of approximately $364 million, which we believe is adequate to fund our working capital requirements for at least the next twelve months. We believe that we

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will be able to meet our debt service obligations and fund operating requirements for at least the next twelve months with cash flow from operations, cash on hand, and borrowings under our revolving credit facility.

Cash Flows and Working Capital

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

		Year Ended December 31,
		2014				2013				2012
Net cash provided by/(used in):
Operating activities		$	112.6			$	127.8			$	96.7
Investing activities			(99.2	)			(72.3	)			(92.3	)
Financing activities			(2.6	)			(61.1	)			(6.8	)

Net Cash Provided by Operating Activities

During the year ended December 31, 2014, we generated $112.6 million of cash flow from operations, compared with $127.8 million during the year ended December 31, 2013. The primary reason for this decrease was an unfavorable fluctuation in working capital items offset partially by lower cash interest paid during 2014 when compared to 2013. During the year ended December 31, 2014, we utilized $9.1 million of cash from working capital items, compared to $27.7 million of cash generated during 2013. The $36.8 million change reflects primarily the unfavorable fluctuation in net trade accounts receivable and payable of $27.5 million and the unfavorable timing of the net effect of payments and receipts of customer funded tooling of $20.9 million, offset partially by a favorable inventory fluctuation of $3 million.

During the year ended December 31, 2012, we generated $96.7 million of cash flow from operations. The primary reason for the increase in 2013 when compared to 2012 was a favorable fluctuation in working capital items and lower cash interest paid during 2013 when compared to 2012. During the year ended December 31, 2012, we utilized $4.5 million of cash through working capital items. The $23.2 million fluctuation reflected primarily the favorable fluctuation in net trade accounts receivable and payable and the timing of the net effect of payments and receipts of customer funded tooling.

Net Cash Used in Investing Activities

Net cash utilized in investing activities was $99.2 million during 2014, compared to $72.3 million during 2013. The $26.9 million change in cash used reflects primarily increased capital expenditures, related primarily to the timing of program launches, reflecting an opportunistic conquest award and growth opportunities in Mexico, offset partially by the deconsolidation of our Ningbo joint venture during the second quarter of 2013.

Net cash utilized in investing activities was $92.3 million during 2012. The $20 million change in cash used in 2013 compared to 2012 reflects the decrease in capital expenditures, related primarily to the timing of customer programs.

Net Cash Used In Financing Activities

Net cash used in financing activities was $2.6 million during 2014, compared to $61.1 million during 2013. The $58.5 million change was attributable primarily to the non-recurrence of premiums paid on the redemption of our notes in 2013, the proceeds received from the additional term loans of approximately $33 million, and lower debt financing costs paid in 2014 when compared to 2013, offset partially by decreased borrowings.

Net cash used in financing activities was $6.8 million during 2012. The $54.3 million change in cash used in 2013 compared to 2012 was attributable primarily to the redemption of our notes and associated premiums, decreased borrowings, debt financing costs associated with the Term Loan Credit Facility, and the remittance of dividends to our noncontrolling interests, offset partially by the proceeds received from borrowings on the Term Loan Credit Facility.

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Working Capital

We manage our working capital by monitoring key metrics principally associated with inventory, accounts receivable, and accounts payable. Our quarterly average inventory days on hand remained constant at 16 days during the fourth quarter of 2014 and the fourth quarter of 2013. Our inventory levels decreased from $81.3 million at December 31, 2013 to $69.8 million at December 31, 2014, of which $10.4 million related to our joint ventures considered held for sale.

Our accounts receivable balance decreased from $255.7 million as of December 31, 2013 to $230.4 million as of December 31, 2014, of which $29.3 million related to our joint ventures considered held for sale.

Our accounts payable balance decreased from $262.4 million as of December 31, 2013 to $257 million as of December 31, 2014, of which $24.6 million related to our joint ventures considered held for sale. The change reflects primarily the increase of accounts payable related to customer funded tooling, which resulted from the timing of customer funded programs.

Our working capital usage is seasonal in nature. During the first half of the year, production and sales typically increase substantially, which causes our working capital to increase because our accounts receivable and inventory increase. In addition, we make our annual incentive bonus plan payments during the second quarter. In the second half of the year, production and sales typically decline as a result of scheduled customer shutdowns. The lower production and sales generally results in a reduction of accounts receivables and inventory, which decreases our working capital.

Our working capital is also impacted by our net position in regard to customer funded tooling with our customers. Tooling costs represent costs incurred by us in the development of new tooling used in the manufacture of our products. Generally, when a customer awards a contract to us, the customer agrees to reimburse us for certain of our tooling costs. As the tooling is developed, we experience cash outflows because we bear the costs and we typically do not receive reimbursement from our customers until the manufacture of the particular program commences. This timing delay causes our working capital to fluctuate between periods due to the timing of the cash inflows and outflows.

On December 31, 2014 and 2013, we had working capital balances of $177.3 million and $94.1 million, respectively.

Sources and Uses of Liquidity

Our available liquidity at December 31, 2014 was $363.7 million, which consisted of $132.5 million of cash on hand, which excludes $16 million of consolidated cash attributable to discontinued operations, and unutilized borrowing availability under our U.S. and foreign credit facilities of $188.3 million and $42.9 million, respectively. A significant portion of our cash balance is located at foreign subsidiaries and is presently being used to fund operations at and investment in those locations. Periodically, we remit cash from our Chinese subsidiaries in the form of dividends. As of December 31, 2013 and 2012, we had available liquidity of approximately $288 million and $171 million, respectively, excluding the cash and unutilized borrowing availability at our discontinued operations.

As of December 31, 2014, we had short-term debt of $30.1 million, of which $20 million related to receivables factoring in Europe, $4.5 million related to other indebtedness in Europe, $4.5 million related to current maturities of our Term Loan Credit Facility, and $1.1 million related to debt in Brazil. Historically, we have been successful in renewing this debt as it becomes due, but we cannot provide assurance that this debt will continue to be renewed or, if renewed, that this debt will continue to be renewed under the same terms. The receivables factoring in Europe consists of uncommitted demand facilities, which are subject to termination at the discretion of the banks, although we have not experienced any terminations by the banks. We believe that we will be able to continue the receivables factoring in Europe.

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Free Cash Flow and Adjusted Free Cash Flow

Free cash flow and adjusted free cash flow are non-GAAP measures. Free cash flow is defined as cash provided by operating activities less cash disbursed for purchases of property, plant, and equipment. Adjusted free cash flow is defined as free cash flow excluding cash received or disbursed for customer tooling. We believe these metrics provide useful information to our investors because management regularly reviews these metrics as important indicators of how much cash is generated by our normal business operations, net of capital expenditures and cash provided or disbursed for customer-owned tooling, and makes decisions based upon them. Management also views these metrics as a measure of cash available to reduce debt and grow the business. Free cash flow and adjusted free cash flow are calculated as follows (in millions):

		For the Year Ended December 31,
		2014				2013				2012
Net cash provided by continuing operating activities		$	112.6			$	127.8			$	96.7
Cash disbursed for purchases of property, plant, and equipment, net			(98.4	)			(78.0	)			(92.3	)
Free cash flow			14.2				49.8				4.4
Less: Net cash provided/(disbursed) for customer-owned tooling			(5.3	)			15.5				5.0
Adjusted free cash flow		$	19.5			$	34.3			$	(0.6	)

Adjusted free cash flow was $19.5 million during 2014, compared to $34.3 million during 2013. The $14.8 million difference in adjusted free cash flow reflects primarily increased capital spending.

Adjusted free cash flow was negative $0.6 million during 2012. The $34.9 million difference in adjusted free cash flow during 2013 compared to 2012 reflects primarily higher Adjusted EBITDA, and lower capital spending.

Debt

As of December 31, 2014, we had outstanding indebtedness, excluding capital lease obligations, of approximately $487.2 million, which consisted of the following:

Excluding the debt recorded at our discontinued operations, the debt balance as of December 31, 2014 is not consistent with the average month end indebtedness levels experienced during the year ended December 31, 2014 due to the timing of prepayments on our debt in Brazil.

Term Loan Credit Facility

On April 23, 2013, we and our subsidiaries, Tower Automotive Holdings USA, LLC, Tower Automotive Holdings I, LLC, Tower Automotive Holdings II(a) LLC, Tower Automotive Holdings II(b) LLC and the domestic subsidiary and domestic affiliate guarantors named therein, entered into a Term Loan and Guaranty Agreement (the “Term Loan Credit Agreement”) whereby we obtained a term loan of $420 million. The maturity date for the initial term loan disbursed under the Term Loan Credit Agreement was April 23, 2020.

On July 29, 2013, we further amended the Term Loan and Credit Agreement, by entering into the First Refinancing Term Loan Amendment to Term Loan Credit Agreement (the “First Term Loan Amendment”), by and among Tower Automotive Holdings USA, LLC, as borrower, us, Tower Automotive Holdings I, LLC, Tower Automotive Holdings II(a), LLC, Tower Automotive Holdings II(b), LLC and the subsidiary guarantors named therein, as Guarantors, each of the financial institutions from time to time party thereto as lenders, and Citibank, N.A., as administrative agent for the lenders.

The purpose of the First Term Loan Amendment was to re-price the Term Loan Credit Facility. The maturity date of the Term Loan Credit Facility remains April 23, 2020. The Term Loan Credit Facility bears interest at (i) the Alternate Base Rate (which is the highest of the Prime Rate, the Federal Funds Effective Rate plus 0.50% and the Adjusted LIBO Rate (as each such term is defined in the Term Loan Credit Agreement) for a

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one month interest period plus 1.00%) plus a margin of 2.75% or (ii) the Adjusted LIBO Rate (calculated by multiplying the applicable LIBOR rate by a statutory reserve rate, with a floor of 1.00%) plus a margin of 3.75%.

In connection with the re-pricing described above, we incurred charges of approximately $4.5 million in the third quarter of 2013 that was recognized as other expense. These charges related to a premium paid by us and expenses associated with the re-pricing.

On January 31, 2014, we amended the Term Loan Credit Agreement by entering into the Second Refinancing Term Loan Amendment and Additional Term Loan Amendment (the “Second Term Loan Amendment”), pursuant to which, among other things, the outstanding term loans under the Term Loan Credit Agreement were refinanced in full, and additional term loans in an aggregate principal amount of approximately $33 million (the “Additional Term Loans”) were disbursed. After giving effect to the disbursement of the Additional Term Loans, there were term loans (the “Term Loans”) in the aggregate principal amount of $450 million outstanding under the Term Loan Credit Agreement. The term loans bear interest at (i) the Alternate Base Rate plus a margin of 2.00% or (ii) the Adjusted LIBO Rate (calculated by multiplying the applicable LIBOR rate by a statutory reserve rate, with a floor of 1.00%) plus a margin of 3.00%.

Our Term Loan Credit Facility contains customary covenants applicable to certain of our subsidiaries, including a financial covenant (the “Total Net Leverage Ratio”) based on the ratio of Total Net Debt to Consolidated EBITDA (each as defined in the Term Loan Credit Agreement). As of the last day of each fiscal quarter, we are required to maintain a Total Net Leverage Ratio of not more than 3.75 to 1.00 on a rolling four quarter basis. Our financial condition and liquidity would be adversely impacted by the violation of any of our covenants.

Amended Revolving Credit Facility

On September 17, 2014, we entered into a Third Amended and Restated Revolving Credit and Guaranty Agreement (“Third Amended Revolving Credit Facility Agreement”) by and among Tower Automotive Holdings USA, LLC, us, Tower Automotive Holdings I, LLC, Tower Automotive Holdings II(a), LLC, Tower Automotive Holdings II(b), LLC, the subsidiary guarantors named therein, the financial institutions from time to time party thereto as Lenders, and JPMorgan Chase Bank, N.A. as Issuing Lender, as Swing Line Lender, and as Administrative Agent for the Lenders.

The Third Amended Revolving Credit Facility Agreement amended and restated, in its entirety, the Second Amended Revolving Credit Facility Agreement, dated as of June 19, 2013, by and among the Borrower, its domestic affiliate and domestic subsidiary guarantors named therein, and the lenders party thereto, and the Agent. The Third Amended Revolving Credit Facility Agreement provides for a cash flow revolving credit facility (the “Amended Revolving Credit Facility”) in the aggregate amount of up to $200 million. Our Third Amended Revolving Credit Facility Agreement also provides for the issuance of letters of credit in an aggregate amount not to exceed $50 million, provided that the total amount of credit (inclusive of revolving loans and letters of credit) extended under our Third Amended Revolving Credit Facility Agreement is subject to an overall cap, on any date, of $200 million. We may request the issuance of Letters of Credit denominated in Dollars or Euros. As of December 31, 2014, we had no borrowings outstanding under our Amended Revolving Credit Facility and $11.7 million of letters of credit outstanding under the Third Amended Revolving Credit Facility Agreement. Thus, we could have borrowed an additional $188.3 million under the Third Amended Revolving Credit Facility Agreement as of December 31, 2014, calculated as follows (in millions):

Total Revolving Credit Commitment		$	200.0
Borrowings on Amended Revolving Credit Facility			—
Letters of credit outstanding			11.7
Availability on Third Amended Revolving Credit Facility Agreement		$	188.3

Advances under our Amended Revolving Credit Facility bear interest at a base rate plus a margin or at LIBOR plus a margin. The applicable margin is determined by our Total Net Leverage Ratio. The applicable margin for the base rate based borrowings as of December 31, 2014 was 1.50%. The applicable margin for the LIBOR based borrowings as of December 31, 2014 was 2.50%. Borrowings outstanding under our Amended

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Revolving Credit Facility may vary significantly from time to time, depending on our cash needs at any given time. Our Amended Revolving Credit Facility matures on September 17, 2019.

Our Amended Revolving Credit Facility Agreement contains customary covenants applicable to certain of our subsidiaries, including financial maintenance covenant ratios requiring the Borrower and the Guarantors to maintain a ratio, as of the last day of any fiscal quarter, of (i) consolidated adjusted EBITDA to consolidated interest charges of not less than 2.75 to 1.00 on a rolling four quarter basis; and (ii) total net debt to consolidated adjusted EBITDA not to exceed 3.50 to 1.00 on a rolling four quarter basis.

Tender Offer and Senior Secured Notes

On April 23, 2013, we completed a cash tender offer (the “Tender Offer”) whereby we offered to purchase up to $276 million of our outstanding. An aggregate principal amount of $362 million of the notes was validly tendered in the Tender Offer. We accepted for purchase $276 million in aggregate principal amount of the notes at an aggregate purchase price of 113.58% of the principal amount thereof plus accrued and unpaid interest, which resulted in a premium of $37.5 million and a tender fee of $0.7 million that were each recognized as other expense. Because the maximum aggregate principal amount of $276 million for the notes was exceeded, we did not accept all of the notes tendered for purchase. The notes that were tendered but not accepted were promptly returned to the tendering parties. In connection with the repurchase, we accelerated the amortization of the original issue discount and associated debt issue costs by $8.3 million in the second quarter of 2013.

On May 24, 2013, we redeemed $43 million of the notes at 105% of the principal amount thereof, plus accrued and unpaid interest, which resulted in a premium of $2.2 million that was recognized as other expense. In connection with the redemption, we accelerated the amortization of the original issue discount by $0.8 million and associated debt issue costs by $0.5 million in the second quarter of 2013.

On August 26, 2013, we redeemed the remaining $43 million of the notes at 105% of the principal amount thereof, plus accrued and unpaid interest, which resulted in a premium of $2.2 million that was recognized as other expense. In connection with the redemption, we accelerated the amortization of the original issue discount by $0.8 million and associated debt issue costs by $0.5 million in the third quarter of 2013. Per the Term Loan Credit Agreement, we used the $45.2 million that was being held in an escrow account to cover this redemption and associated premium. The notes have been repaid in full and no balance remains outstanding.

Foreign Subsidiary Indebtedness

Our foreign subsidiary indebtedness consists primarily of borrowings in Brazil and Europe and receivables factoring in Europe, which is described above.

Capital and Operating Leases

We maintain capital leases primarily for a manufacturing facility and certain manufacturing equipment. We have several operating leases, including leases for office and manufacturing facilities, as well as certain equipment, with lease terms expiring between the years 2015 and 2021. As of December 31, 2014, our total future operating lease payments amounted to $97.3 million and the present value of minimum lease payments under our capital leases amounted to $8.8 million. As of December 31, 2014, we were committed to making lease payments during 2015 of not less than $22.2 million on our operating leases and not less than $1.1 million on our capital leases.

Capital Expenditures

In general, we are awarded new automotive business two to three years prior to the launch of a particular program. During the pre-launch period, we typically invest significant resources in the form of capital expenditures for the purchase and installation of the machinery and equipment necessary to manufacture the awarded products. Capital expenditures for the years ended December 31, 2014 and 2013 were $98.4 million and $78 million, respectively. The increase reflects primarily an opportunistic conquest award and growth opportunities in Mexico. Our capital spending for 2015 is expected to be approximately $80 million.

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Off-Balance Sheet Obligations

In addition to the operating leases described above, our off-balance sheet obligations consist of obligations under our Third Amended Revolving Credit Facility. As of December 31, 2014, letters of credit outstanding were $11.7 million under our Third Amended Revolving Credit Facility.

Covenants

As of December 31, 2014, the Company was in compliance with all financial covenants that govern its credit agreements.

Net Debt

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

		As of December 31,
		2014				2013				2012
Total debt, including capital leases		$	496.1			$	503.8			$	497.0
Less: Cash and cash equivalents			148.6				134.9				113.9
Add: Cash attributable to discontinued operations			16.0				—				—
Net debt		$	363.5			$	368.9			$	383.1

As of December 31, 2014, our net debt was $363.5 million, compared to $368.9 million as of December 31, 2013. The $5.4 million change reflects primarily the favorable free cash flow offset partially by the remittance of dividends to our noncontrolling interests.

As of December 31, 2012, our net debt was $383.1 million. The $14.2 million change from 2012 to 2013 reflects primarily the favorable free cash flow, net proceeds received from the sale of Seojin, and net proceeds received from the sale of property, plant, and equipment, offset partially by the premiums on the redemption of our notes, debt financing costs associated with the Term Loan Credit Agreement, and the de-consolidation of a Chinese joint venture.

Contractual Obligations and Commercial Commitments

Our contractual obligations and commercial commitments as of December 31, 2014 are summarized below (in millions):

		Payments Due by Period
Contractual Obligatons		Total				Less than 1 Year				2 – 3 Years				4 – 5 Years				After 5 Years
Long-term debt (including current portion):
Term Loan Credit Facility		$	445.0			$	4.5			$	9.0			$	9.0			$	422.5
Other subsidiary indebtedness			42.2				25.6				12.6				2.8				1.2
Cash interest payments			94.3				18.9				35.1				32.3				8.0
Pension contributions(a)			42.5				9.4				11.6				4.5				17.0
Expected tax payments(b)			5.4				1.6				1.1				1.3				1.4
Capital and tooling purchase obligations(c)			78.3				78.3				—				—				—
Capital lease obligations(d)			10.1				1.6				2.9				5.6				—
Operating leases			97.3				22.2				36.9				27.2				11.0
Total contractual obligations at December 31, 2014		$	815.1			$	162.1			$	109.2			$	82.7			$	461.1

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

Critical Accounting Policies and Estimates

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

Revenue Recognition

In accordance with FASB ASC No. 605, Revenue Recognition, we recognize revenue once the following criteria have been met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; our price to the buyer is fixed or determinable; and collectability is reasonably assured.

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

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

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

Restructuring Reserves

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

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Fair Value Measurements

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

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

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