~~Table~~UNITED ~~of Contents~~STATES

~~UNITED~~SECURITIES ~~STATES~~AND EXCHANGE COMMISSION

~~SECURITIES~~WASHINGTON, ~~AND~~D.C. ~~EXCHANGE COMMISSION~~ 20549

~~WASHINGTON,~~FORM ~~D.C. 20549~~ 10-K

~~FORM~~Annual ~~10-K~~ Report Pursuant to Section 13 or 15(d)

~~Annual Report Pursuant to Section 13 or 15(d)~~ of the Securities Exchange Act of 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, ~~2014~~ 2015

Commission No. 333-128166-10

Affinia Group Intermediate Holdings Inc.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of

incorporation or organization)

I.R.S. Employer Identification Number: 34-2022081

1 Wix Way

Gastonia, North Carolina 28054

(704) 869-3300

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

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 15(d) of the Exchange Act. Yes x No ¨ o

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 ¨o No x

(Note: As a voluntary filer not subject to the filing requirements of Section 13 or 15(d) of the Exchange Act, the registrant has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant would have been required to file such reports) as if it were subject to such filing requirements).

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 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 the 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. ~~Yes~~ Yes x No ¨ o

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

Large accelerated filer ¨o Accelerated Filer ¨o Non-accelerated filer x (Do not check if a smaller reporting company) 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

There were 1,000 shares outstanding of the registrant’s common stock as of ~~March 17~~April 12, ~~2015~~2016 (all of which are privately owned and not traded on a public market).

~~Table~~TABLE ofOF ~~Contents~~CONTENTS

TABLE OF CONTENTS

		Page

PART I.

Item 1.	Business	3
Item 1A.	Risk Factors	11
Item 1B.	Unresolved Staff Comments	20
Item 2.	Properties	21
Item 3.	Legal Proceedings	21
Item 4.	Mine Safety Disclosures	21

PART II.

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Shares	22
Item 6.	Selected Consolidated and Combined Financial Data	22
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 8.	Financial Statements and Supplementary Data	47
Item 9.	Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	93
Item 9A.	Controls and Procedures	93
Item 9B.	Other Information	93

PART III.

Item 10.	Directors, Executive Officers and Corporate Governance	94
Item 11.	Executive Compensation	98
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	113
Item 14.	Independent Registered Public Accounting Firm Fees	115

PART IV.

Item 15.	Exhibits and Financial Statement Schedules	116

		Page
	PART I.
Item 1.	Business		3
Item 1A.	Risk Factors		11
Item 1B.	Unresolved Staff Comments		19
Item 2.	Properties		20
Item 3.	Legal Proceedings		20
Item 4.	Mine Safety Disclosures		20
	PART II.
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Shares		20
Item 6.	Selected Consolidated and Combined Financial Data		20
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		44
Item 8.	Financial Statements and Supplementary Data		46
Item 9.	Changes In and Disagreements with Accountants on Accounting and Financial Disclosure		89
Item 9A.	Controls and Procedures		89
Item 9B.	Other Information		90
	PART III.
Item 10.	Directors, Executive Officers and Corporate Governance		91
Item 11.	Executive Compensation		94
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		109
Item 13.	Certain Relationships and Related Transactions and Director Independence		113
Item 14.	Independent Registered Public Accounting Firm Fees		114
	PART IV.
Item 15.	Exhibits and Financial Statement Schedules		115

iCautionary Note Regarding Forward-Looking Statements

~~Table~~This report includes “forward-looking statements” within the meaning of ~~Contents~~Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements include statements concerning the Company’s plans, objectives, goals, strategies, future events, future revenue or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, business trends and other information that is not historical information. When used in this report, the words “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “projects,” or future or conditional verbs, such as “could,” “may,” “should,” or “will,” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements, including, without limitation, statements regarding anticipated results, timing or other expectations regarding the transactions contemplated by the MANN+HUMMEL Merger Agreement and management’s examination of historical operating trends and data, are based upon the Company’s current expectations and various assumptions. The Company’s expectations, beliefs and projections are expressed in good faith and the Company believes there is a reasonable basis for them. However, there is no assurance that these expectations, beliefs and projections will be achieved. With respect to all forward-looking statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

~~Cautionary~~There ~~Note~~are ~~Regarding~~a ~~Forward~~number of risks and uncertainties that could cause the Company’s actual results to differ materially from the forward-~~Looking~~looking ~~Statements~~statements contained in this report. Such risks, uncertainties and other important factors include, among others: the occurrence of any event, change or other circumstance that could result in the termination of the MANN+HUMMEL Merger Agreement; the inability to complete the transactions contemplated by the MANN+HUMMEL Merger Agreement; domestic and global economic conditions and the resulting impact on the availability and cost of credit; financial viability of key customers and key suppliers; the Company’s dependence on its largest customers; increased crude oil and gasoline prices and resulting reductions in global demand for the use of automobiles; the shift in demand from premium to economy products; pricing and pressures from imports; increasing costs for manufactured components, raw materials and energy; the expansion of return policies or the extension of payment terms; risks associated with the Company’s non-U.S. operations; risks related to the Company’s receivables factoring arrangements; product liability and warranty and recall claims brought against the Company; reduced inventory levels by the Company’s distributors resulting from consolidation and increased efficiency; environmental and automotive safety regulations; the availability of raw materials, manufactured components or equipment from the Company’s suppliers; challenges to the Company’s intellectual property portfolio; the Company’s ability to develop improved products; the introduction of improved products and services that extend replacement cycles or otherwise reduce demand for the Company’s products; the Company’s ability to achieve cost savings from its restructuring plans; the Company’s ability to successfully effect dispositions of existing lines of business; the Company’s ability to successfully combine its operations with any businesses it has acquired or may acquire; risk of impairment charges to the Company’s long-lived assets, intangibles and goodwill; the risk of business disruptions related to a variety of events or conditions including natural and man-made disasters; risks associated with foreign exchange rate fluctuations; risks associated with the Company’s expansion into new markets; the impact on the Company’s tax rate resulting from the mix of its profits and losses in various jurisdictions; reductions in the value of the Company’s deferred tax assets; difficulties in developing, maintaining or upgrading information technology systems; risks associated with doing business in corrupting environments; and the Company’s leverage and limitations on flexibility in operating its business contained in the debt agreements. Additionally, there may be other factors that could cause the Company’s actual results to differ materially from the forward-looking statements. The Company’s forward-looking statements apply only as of the date of this report or as of the date they were made. The Company undertakes no obligation to update or revise forward-looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.

This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements include statements concerning the Company’s plans, objectives, goals, strategies, future events, future revenue or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, business trends and other information that is not historical information. When used in this report, the words “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “projects,” or future or conditional verbs, such as “could” “may,” “should,” or “will,” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements, including, without limitation, management’s examination of historical operating trends and data are based upon The Company’s current expectations and various assumptions. The Company’s expectations, beliefs and projections are expressed in good faith and the Company believes there is a reasonable basis for them. However, there is no assurance that these expectations, beliefs and projections will be achieved. With respect to all forward-looking statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. ii

~~There~~PART ~~are a number of risks and uncertainties that could cause the Company’s actual results to differ materially from the forward-looking statements contained in this report~~I. Such risks, uncertainties and other important factors include, among others, domestic and global economic conditions and the resulting impact on the availability and cost of credit; financial viability of key customers and key suppliers; the Company’s dependence on its largest customers; increased crude oil and gasoline prices and resulting reductions in global demand for the use of automobiles; the shift in demand from premium to economy products; pricing and pressures from imports; increasing costs for manufactured components, raw materials and energy; the expansion of return policies or the extension of payment terms; risks associated with the Company’s non-U.S. operations; risks related to the Company’s receivables factoring arrangements; product liability and warranty and recall claims brought against the Company; reduced inventory levels by the Company’s distributors resulting from consolidation and increased efficiency; environmental and automotive safety regulations; the availability of raw materials, manufactured components or equipment from the Company’s suppliers; challenges to the Company’s intellectual property portfolio; the Company’s ability to develop improved products; the introduction of improved products and services that extend replacement cycles or otherwise reduce demand for the Company’s products; the Company’s ability to achieve cost savings from its restructuring plans; the Company’s ability to successfully effect dispositions of existing lines of business; the Company’s ability to successfully combine its operations with any businesses it has acquired or may acquire; risk of impairment charges to the Company’s long-lived assets, intangibles and goodwill; the risk of business disruptions related to a variety of events or conditions including natural and man-made disasters; risks associated with foreign exchange rate fluctuations; risks associated with the Company’s expansion into new markets; the impact on the Company’s tax rate resulting from the mix of the its profits and losses in various jurisdictions; reductions in the value of the Company’s deferred tax assets; difficulties in developing, maintaining or upgrading information technology systems; risks associated with doing business in corrupting environments; and the Company’s leverage and limitations on flexibility in operating its business contained in the debt agreements. Additionally, there may be other factors that could cause the Company’s actual results to differ materially from the forward-looking statements. The Company’s forward-looking statements apply only as of the date of this report or as of the date they were made. The Company undertakes no obligation to update or revise forward-looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.

iiItem 1. Business

~~Table~~History ofand ~~Contents~~Ownership

~~PART~~The Iregistrant, Affinia Group Intermediate Holdings Inc. (the “registrant’ or “Intermediate Holdings”), is a Delaware corporation formed on October 18, 2004 and is a wholly-owned subsidiary of Affinia Group Holdings Inc. (“Holdings”). Holdings is controlled by affiliates of The Cypress Group L.L.C. (“Cypress”). The registrant’s direct wholly-owned subsidiary Affinia Group Inc., a Delaware corporation formed on June 28, 2004, entered into a stock and asset purchase agreement, as amended (the “Purchase Agreement”), with Dana Corporation (“Dana”) on July 8, 2004. The Purchase Agreement provided for the acquisition by Affinia Group Inc. of substantially all of Dana’s aftermarket business operations (the “Acquisition”). The Acquisition was completed on November 30, 2004.

~~Item~~All 1.references ~~Business~~in this report to “Affinia,” and the “Company,” mean, unless the context indicates otherwise, Intermediate Holdings and its subsidiaries on a consolidated basis.

~~History~~As a result of the Acquisition, investment funds controlled by Cypress hold approximately 61% of the common stock of Holdings, which directly owns 100% of the common stock of the registrant, and ~~Ownership~~therefore Cypress controls the registrant. The other principal investors in Holdings are the following: OMERS Administration Corporation (formerly known as Ontario Municipal Employees Retirement Board), California State Teachers Retirement System, The Northwestern Mutual Life Insurance Company and Stockwell Capital.

~~The~~Since ~~registrant~~2010, ~~Affinia~~ ~~Group~~the ~~Intermediate~~Company ~~Holdings~~has ~~Inc~~strategically divested four businesses. (On February 2, 2010, the ~~“registrant’~~Company orsold ~~“Intermediate~~its ~~Holdings”)~~Commercial Distribution Europe business unit, isalso known as Quinton Hazell, which was a ~~Delaware~~diverse ~~corporation~~aftermarket ~~formed~~manufacturer onand ~~October~~distributor of automotive components throughout Europe. On November 1830, ~~2004~~2012, the Company distributed its Brake North America and isAsia agroup ~~wholly-owned~~to ~~subsidiary~~the shareholders of ~~Affinia~~Holdings, ~~Group~~and ~~Holdings~~it ~~Inc~~was subsequently sold on March 25, 2013 to a new investor. On May 1, 2014, the Company completed the sale of its global chassis business (the “~~Holdings~~Chassis group”). ~~Holdings~~During is2015, ~~controlled~~the byCompany ~~affiliates~~sold all of ~~The~~the ~~Cypress~~businesses ~~Group~~that ~~L.L.C.~~comprised the former Affinia South America (“~~Cypress~~ASA”). ~~The~~segment, ~~registrant’s~~which ~~direct~~included ~~wholly-owned~~Pellegrino ~~subsidiary~~Distribuidora de Autopecas Ltda. (“Pellegrino”) and Affinia ~~Group~~Automotiva ~~Inc~~Ltda. (“Automotiva”), acollectively ~~Delaware~~referred ~~corporation~~to ~~formed~~as on“ASA ~~June 28~~Brazil,” ~~2004,~~as ~~entered into~~well aas ~~stock~~operations in Argentina and ~~asset~~Uruguay. The ~~purchase~~former ~~agreement,~~Affinia asSouth ~~amended~~America (~~the~~ “~~Purchase Agreement~~ASA”) segment manufactured and distributed replacement products for on-road and off-road vehicles, principally in Brazil. In accordance with ~~Dana~~Accounting ~~Corporation~~Standards Codification (“~~Dana~~ASC”) onTopic ~~July 8~~205, ~~2004.~~“Presentation ~~The~~of ~~Purchase~~Financial ~~Agreement~~Statements,” ~~provided~~the ~~for~~results ~~the~~of ~~acquisition~~operations byof ~~Affinia~~all ~~Group~~the ~~Inc.~~aforementioned ofbusinesses ~~substantially~~have ~~all of~~been ~~Dana’s~~reflected ~~aftermarket~~as ~~business~~discontinued operations (in the ~~“Acquisition”).~~Consolidated ~~The~~Statements ~~Acquisition~~of ~~was~~Operations ~~completed~~for onall ~~November 30,~~periods ~~2004~~presented.

~~All~~On ~~references~~August 13, in2015, ~~this~~Holdings, ~~report~~a toDelaware corporation, entered into an agreement and plan of merger (the “~~Affinia~~Merger Agreement”) with MANN+HUMMEL Holding GmbH, a German limited liability company (“MANN+HUMMEL”), pursuant to which M+H SUB 2015 INC., a Delaware corporation and an indirect wholly-owned subsidiary of MANN+HUMMEL (“Merger Sub”) will be merged with and into Holdings, with Holdings surviving the merger as an indirect wholly-owned subsidiary of MANN+HUMMEL. Subject to the terms and conditions set forth in the Merger Agreement, the aggregate merger consideration payable to the shareholders of Holdings and the holders of restricted stock units and phantom shares referred to in the Merger Agreement (collectively, “Sellers”), is $513.1 million (i) minus adjustments reflecting transaction expenses, a $10 million escrow to cover limited indemnities and an amount reserved for the payment of expenses incurred by the sellers’ representative (ii) plus adjustments reflecting adjusted net proceeds from the sale of ASA Brazil and the Company’s Argentinian and Uruguayan operations (collectively,” ~~mean~~the “ASA Transactions”), ~~unless~~(iii) plus a daily interest factor applied to the ~~context~~purchase ~~indicates~~price. ~~otherwise~~At the effective time of the merger, ~~Intermediate~~ each outstanding share of Holdings ~~and~~will ~~its~~be ~~subsidiaries~~converted oninto the right to receive a ~~consolidated~~proportionate ~~basis~~share of the aggregate consideration, plus a contingent right to receive a portion of the escrow amount and the amount reserved for expenses of the sellers’ representative, in each case at the time and upon satisfaction of the conditions specified in the Merger Agreement.

AsThe aMerger ~~result~~Agreement has been approved by the Board of Directors of Holdings as well as all required governing bodies of MANN+HUMMEL (including its Supervisory Board) and the ~~Acquisition~~Board of Directors and stockholder of Merger Sub. Consummation of the merger is subject to certain customary conditions, ~~investment~~including, ~~funds~~among ~~controlled~~others, adoption of the Merger Agreement by ~~Cypress~~the ~~hold approximately~~holders ~~61%~~of a majority of the ~~common~~issued ~~stock~~and outstanding shares of Holdings common stock, ~~which~~holders ~~directly~~of ~~owns~~no ~~100%~~more than five percent of the common stock of ~~the~~Holdings ~~registrant~~exercising dissenters’ rights, receipt of any required regulatory approvals and ~~therefore~~expiration ~~Cypress~~or ~~controls~~termination of the ~~registrant.~~applicable ~~The~~waiting ~~other~~period ~~principal~~under ~~investors~~the inHart-Scott-Rodino ~~Holdings~~Antitrust ~~are~~Improvements Act of 1976, the ~~following:~~absence ~~OMERS~~of ~~Administration Corporation~~any ~~(formerly~~order, ~~known~~judgment, asinjunction, ~~Ontario~~decree, ~~Municipal~~stipulation ~~Employees~~or ~~Retirement~~determination ~~Board)~~prohibiting the merger, ~~California~~and ~~State~~completion ~~Teachers~~of ~~Retirement~~the ~~System,~~ASA ~~The~~Transactions. ~~Northwestern~~It ~~Mutual~~is ~~Life~~currently ~~Insurance~~anticipated ~~Company~~that this transaction will close in the first half of 2016 depending on timing of regulatory approvals and ~~Stockwell~~satisfaction ~~Capital.~~of other closing conditions.

Since 2010, the Company has strategically divested three businesses. On February 2, 2010, the Company sold its Commercial Distribution Europe business unit, also known as Quinton Hazell, which was a diverse aftermarket manufacturer and distributor of automotive components throughout Europe. On November 30, 2012, the Company distributed its Brake North America and Asia group to the shareholders of Holdings, and it was subsequently sold on March 25, 2013 to a new investor. On May 1, 2014, the Company completed the sale of its global chassis business (the “Chassis group”). 3

The ~~Company~~Merger Agreement contains representations and warranties customary for transactions of this type. Holdings has agreed to various covenants and agreements, including, among others, agreements to (i) conduct its business in the ordinary course consistent with past practice during the period between the execution of the Merger Agreement and the closing thereunder and (ii) not engage in certain kinds of transactions during this period, including transactions involving so-called leakage to the Sellers.

~~Affinia~~The isMerger anAgreement ~~innovative global~~also ~~leader~~contains incertain ~~the~~termination ~~design,~~provisions ~~manufacture,~~for ~~distribution~~Holdings and ~~marketing~~MANN+HUMMEL, ofincluding, ~~industrial~~among ~~grade global filtration products~~others, astermination ~~well~~rights asfor ~~services~~Holdings and ~~replacement~~MANN+HUMMEL ~~products~~ in ~~South~~the ~~America.~~event ~~The~~the ~~Company~~merger has ~~two~~not ~~operating~~closed ~~segments,~~by ~~both~~August of1, ~~which~~2016 ~~are considered reportable segments under generally accepted accounting principles~~ (~~“GAAP”) in~~ the ~~United States (~~“~~U.S.~~Outside Date”)., ~~See~~which ~~Note~~date 3is toan ~~the~~extension ~~Consolidated~~from ~~Financial~~April ~~Statements~~13, ~~“Segment~~2016 ~~Information,”~~pursuant ~~for~~to aan ~~further~~amendment ~~discussion on~~ (the ~~Company’s~~ ~~business segments. The Filtration segment (~~“~~Filtration~~First Amendment”), ~~which~~to is the ~~Company’s~~Merger ~~largest operating segment~~Agreement, ~~manufactures~~or ~~and distributes filtration products for medium and heavy-duty trucks, light vehicles, equipment~~ in the ~~off-highway~~event ~~market~~there ~~(i.e.~~is ~~residential~~a ~~and~~breach ~~non-residential~~of ~~construction,~~a ~~agriculture~~representation, ~~mining~~warranty, ~~and~~covenant ~~forestry~~or ~~vehicles),~~agreement ~~and~~by ~~equipment~~the ~~for~~other ~~industrial,~~party ~~and~~which ~~marine~~cannot ~~applications.~~be ~~The~~cured ~~Affinia~~by ~~South~~the ~~America~~Outside ~~(“ASA”) segment manufactures and distributes replacement products for on-road and off-road vehicles, principally in Brazil~~Date. ~~See “Filtration Segment” and “Affinia South America Segment” sections below for further information on each operating segment.~~

~~Affinia’s net sales from continuing operations for 2014 were $1,396 million, of which $967 million were generated by Filtration and $430 million were generated by ASA.~~ The ~~following table provides Affinia’s net sales from continuing operations by geography for the fiscal year ended December 31, 2014.~~ Company

Region	% of Sales
United Sates		45	%
Brazil		28	%
Poland		12	%
Venezuela		5	%
Canada		3	%
Other(a)		7	%
Total		100	%

The Company has one operating segment which is considered a reportable segment under generally accepted accounting principles (“GAAP”) in the United States (“U.S.”). See Note 3 to the Consolidated Financial Statements, “Segment Information,” for a further discussion on the Company’s business segment. Prior to the sale of ASA in 2015, ASA was one of the Company’s operating segments. As a result of the sale, all of the results of operations of the former ASA segment have been included as a component of discontinued operations in the Consolidated Statements of Operations for all periods presented. The Filtration segment (“Filtration”) manufactures and distributes filtration products for medium and heavy-duty trucks, light vehicles, equipment in the off-highway market (i.e. residential and non-residential construction, agriculture, mining, and forestry vehicles), and equipment for industrial, and marine applications. See “Filtration Segment” section below for further information on the operating segment.

~~(a)~~Affinia’s ~~Other~~net ~~includes~~ sales infrom ~~Argentina,~~continuing ~~Russia,~~operations ~~Ukraine,~~for ~~Mexico~~2015 were $899 million, ~~China~~all ~~and~~of ~~Uruguay~~which were generated by Filtration. The following table provides Affinia’s net sales from continuing operations by geography for the fiscal year ended December 31, 2015.

Since 2010, Filtration has continued to expand and enter new markets, primarily in Europe and Asia, as well as successfully grow existing market share in North America, South America and Europe. Significant expansion within Filtration since 2010 was as follows:

Region	% of Sales
United States		61	%
Poland		16	%
Venezuela		12	%
Canada		4	%
Other^(a)		7	%
Total		100	%

•(a) ~~2010~~Other –includes ~~initiated~~sales ~~filter~~in ~~product~~Russia, ~~distribution~~Ukraine, ~~capabilities~~Mexico inand ~~Russia~~China.

3Since 2010, Filtration has continued to expand and enter new markets, primarily in Europe and Asia, as well as successfully grow existing market share in North America, South America and Europe. Significant expansion within Filtration since 2010 was as follows:

~~Table~~· of2010 ~~Contents~~– initiated filter product distribution capabilities in Russia

•· 2011 – completed new facility in Poland to handle increased production volumes in Poland and other European countries in which the Company distributes product

•· 2011 – completed construction of a manufacturing facility in China

•· 2013 – acquired a distributor in the United Kingdom (“U.K.”)

In addition to the global expansion discussed above, Filtration has been able to successfully grow market share through product innovation, continued introduction of new stock keeping units (“SKUs”), with over 40,000 SKUs currently available to the aftermarket, and a unique comprehensive value proposition to serve as a one-stop-shop in both heavy-duty and light-duty aftermarkets. Also contributing to Filtration’s growth is the Company’s long-standing relationships with leading commercial vehicle and automotive parts retailers and wholesale distributors. Filtration has supplied the automotive aftermarket industry for over 75 years, including its largest customer, NAPA, for ~~nearly~~ 50 years.

~~ASA has also experienced significant growth since 2010 as follows:~~ 4

•The ~~2011~~Company’s ~~– Pellegrino opened a new distribution branch in Brazil~~Industry

•Statements ~~2011~~regarding –industry ~~Affinia~~outlook, ~~Automotiva~~the (Company’s expectations regarding the performance of its business and other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described under “~~Automotiva~~Forward-Looking Statements”) ~~opened~~and a“Risk ~~new~~Factors.” ~~warehouse~~The Company’s actual results may differ materially from those contained in ~~Brazil~~or ~~that~~implied ~~more~~by ~~than~~any ~~tripled~~forward-looking ~~distribution~~statements. ~~capacity~~You should read the following discussion together with “Forward-Looking Statements,” “Item 6. Selected Consolidated and Combined Financial Data” and “Item 8. Financial Statements and Supplementary Data.”

•Substantially ~~2012~~all –of ~~Pellegrino~~the ~~opened~~Company’s a2015 ~~new~~net ~~distribution~~sales ~~branch~~were derived from the on and off-highway replacement products and services industry, which is also referred to as the aftermarket. According to the Auto Care Association (formerly the AAIA), there were approximately one billion light, medium and heavy-duty vehicles registered worldwide in ~~Brazil~~2015, typically referred to as car parc. While the size of the domestic aftermarket continues to increase, original equipment manufacturers (“OEMs”), who manufacture new vehicles, are increasingly focused on emerging markets for growth opportunities. It is believed that this focus on developing regions, including Asia and South America, will ultimately drive the need for replacement aftermarket parts for these vehicles, leading to longer-term growth opportunities for the Company outside the U.S.

•One ~~2014~~of –the ~~Pellegrino~~main ~~opened~~drivers ~~two~~of ~~new~~the ~~distribution~~anticipated ~~branches~~growth in ~~Brazil~~the aftermarket is the increase in the average age of light vehicles and the increase in miles driven. Vehicle usage, typically measured in number of miles driven, has historically increased year-over-year in most global markets. That increase in usage causes vehicle parts to wear out faster, thus requiring more frequent replacement.

~~While~~To ~~expanding~~facilitate ~~and enhancing~~efficient ~~distribution~~inventory ~~capabilities~~management and ~~channels~~timely ~~throughout~~vehicle ~~Brazil~~owner ~~has~~customer ~~resulted~~service, inmany ~~increased~~of ~~market~~the ~~penetration, ASA~~Company’s ~~growth~~customers ~~has~~and ~~also~~professional ~~been~~installers ~~driven~~rely byon ~~introduction~~larger ofsuppliers ~~new~~like ~~product~~the ~~lines,~~Company asto ~~well~~have asfull ~~entering~~line ~~new~~ product ~~categories. For example~~offerings, ~~since~~ ~~2010,~~consistent ~~ASA~~value-added ~~has~~services ~~launched~~and Ctimely delivery.V. ~~joints,~~There ~~wheel~~are ~~bearing~~important ~~and~~advantages ~~brake~~to ~~shoes~~having ~~product~~meaningful ~~lines~~size ~~under~~and ~~its~~scale ~~Nakata®~~in ~~brand~~the aftermarket, ~~which~~including isthe ~~one~~ability ofto ~~the~~support ~~most~~significant ~~highly~~distribution ~~recognizable~~operations, ~~brands~~offer insophisticated ~~South~~supply ~~America,~~chain ~~and~~management ~~entered high~~capabilities ~~growth~~and ~~markets~~provide ~~including~~a ~~motorcycle~~broad ~~parts,~~line ~~accessories~~of ~~and~~quality ~~electronics~~products.

~~The~~In ~~Company’s~~general, ~~Industry~~aftermarket industry participants may be categorized into three major groups: (i) manufacturers of parts, (ii) distributors of replacement parts (without manufacturing capabilities) and (iii) installers, both professional and do-it-yourself (“DIY”) customers. Distributors purchase products from manufacturers and sell them to wholesale or retail operations, which in turn sell them to installers.

~~Statements~~The ~~regarding~~distribution ~~industry~~business ~~outlook,~~is ~~the~~comprised ~~Company’s~~of ~~expectations regarding~~ the ~~performance of its business and other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties~~(i) traditional, ~~including,~~(ii) retail ~~but not limited to, the risks~~ and ~~uncertainties~~(iii) original ~~described~~equipment ~~under~~supply (“~~Forward-Looking Statements~~OES”) ~~and “Risk~~channels ~~Factors.”~~as ~~The~~illustrated ~~Company’s actual results may differ materially from those contained in or implied~~ by ~~any forward-looking statements. You should read~~ the ~~following~~chart ~~discussion together with “Forward-Looking Statements,” “Item 6~~below. ~~Selected Consolidated and Combined Financial Data” and “Item 8. Financial Statements and Supplementary Data.”~~

~~Substantially~~Typically, ~~all~~professional ofinstallers ~~the~~purchase ~~Company’s~~their ~~2014~~products ~~net~~through ~~sales were derived from~~ the ontraditional ~~and~~channel, ~~off-highway replacement products~~ and ~~services~~DIY ~~industry, which~~customers ispurchase ~~also~~products ~~referred~~through ~~to as~~ the ~~aftermarket~~retail channel. ~~According~~The totraditional ~~the~~channel ~~Auto~~includes ~~Care~~such ~~Association~~well-known ~~(formerly~~distributors ~~the~~as ~~AAIA)~~NAPA, ~~there~~the ~~were~~Alliance ~~approximately one billion light, medium~~ and ~~heavy~~Uni-~~duty~~Select. ~~vehicles~~Through ~~registered~~a ~~worldwide~~network inof ~~2014~~distribution centers, ~~typically~~these ~~referred~~distributors tosell asprimarily ~~car parc. While the size of the domestic aftermarket continues~~ to ~~increase,~~owned ~~original~~or ~~equipment~~affiliated ~~manufacturers (“OEM”)~~stores, ~~who~~which ~~manufacture~~in ~~new~~turn ~~vehicles,~~supply ~~are~~professional ~~increasingly focused on emerging markets for growth opportunities~~installers. ItThe isretail ~~believed~~channel ~~that~~includes ~~this~~merchants ~~focus on~~such ~~developing~~as ~~regions~~AutoZone, ~~including~~O’Reilly ~~Asia~~Auto Parts and ~~South~~Canadian ~~America,~~Tire. ~~will~~The ~~ultimately~~OES ~~drive~~channel ~~the~~consists ~~need~~primarily ~~for~~of ~~replacement~~vehicle ~~aftermarket~~manufacturers’ ~~parts~~service ~~for~~departments ~~these~~at ~~vehicles,~~new ~~leading~~vehicle ~~to longer-term growth opportunities for the Company outside the U~~dealerships.S.

One of the main drivers of the anticipated growth in the aftermarket is the increase in the average age of light vehicles and the increase in miles driven. Vehicle usage, typically measured in number of miles driven, has historically increased year-over-year in most global markets. That increase in usage causes vehicle parts to wear out faster, thus requiring more frequent replacement. 5

ToThe ~~facilitate~~aftermarket ~~efficient~~industry ~~inventory~~is ~~management~~impacted ~~and~~by ~~timely~~a ~~vehicle~~number ~~owner~~of ~~customer~~factors, ~~service~~including but not limited to, ~~many~~economic ofconditions, ~~the~~fuel ~~Company’s~~price ~~customers~~volatility, weather and ~~professional~~ ~~installers~~legislation ~~rely~~associated onwith ~~larger~~limitations ~~suppliers~~of ~~like~~emissions into the ~~Company~~environment. toEconomic ~~have~~conditions, ~~full~~fuel ~~line~~price ~~product~~volatility ~~offerings,~~and ~~consistent~~weather ~~value-added~~can ~~services~~favorably ~~and~~or ~~timely~~unfavorably ~~delivery~~impact consumer behavior. ~~There~~Introduction ~~are~~of ~~important~~new ~~advantages~~environmental toregulations ~~having~~could ~~meaningful~~potentially ~~size~~have ~~and~~an ~~scale~~adverse inimpact on suppliers to the aftermarket~~, including~~ depending on how stringent new regulations may be and the ~~ability~~costs toassociated ~~support~~with ~~significant~~meeting ~~distribution~~new ~~operations,~~emission ~~offer~~level ~~sophisticated~~requirements. ~~supply~~In ~~chain~~addition, ~~management~~consolidation ~~capabilities~~within ~~and~~the ~~provide~~aftermarket aindustry ~~broad~~continues ~~line~~to ofimpact ~~quality~~the ~~products~~aftermarket.

InFiltration general, aftermarket industry participants may be categorized into three major groups: (i) manufacturers of parts, (ii) distributors of replacement parts (without manufacturing capabilities) and (iii) installers, both professional and do-it-yourself (“DIY”) customers. Distributors purchase products from manufacturers and sell them to wholesale or retail operations, which in turn sell them to installers. Segment

~~The distribution business is comprised of the (i) traditional, (ii) retail and (iii) original equipment supply (“OES”) channels as illustrated by the chart below.~~ Overview

4Filtration is a global leader in designing, manufacturing, marketing, and distributing a broad range of filtration replacement products. Filtration manufactures and distributes a wide range of aftermarket filters, covering 99% of addressable applications for both heavy-duty and light-duty vehicles. Products sold by Filtration are used in on-road and off-road vehicles, in addition to various industrial, locomotive, and marine applications. The Company’s filtration business includes manufacturing and/or distribution operations in the U.S., Canada, Mexico, Europe, South America and China. It benefits from industry-leading brands, long-standing customer relationships and a global low-cost manufacturing and distribution footprint, along with the all-makes/all-models product line of oil, air, fuel, cabin air, coolant, hydraulic and other filters. The numerous strengths of Filtration have led to a #1 market position in the North America filtration aftermarket and a #1 market position in the Central and Eastern Europe filtration aftermarket. See Note 3 to the Consolidated Financial Statements, “Segment Information,” for a further discussion on the Company’s Filtration segment.

~~Table~~The Company markets Filtration’s products under a variety of ~~Contents~~well-known brands, including WIX® and Filtron®. Additionally, the Company provides private label products to large aftermarket distributors, including NAPA®. The Company believes that Filtration’s business has achieved its leading market positions due to the quality and reputation of its brands and products among professional installers, who are the primary decision makers for the purchase of the products that the Company supplies to the aftermarket.

~~Typically,~~Filtration professional installers purchase their products through the traditional channel, and DIY customers purchase products through the retail channel. The traditional channel includes such well-known distributors as NAPA, the Alliance and Uni-Select. Through a network of distribution centers, these distributors sell primarily to owned or affiliated stores, which in turn supply professional installers. The retail channel includes merchants such as AutoZone, O’Reilly Auto Parts and Canadian Tire. The OES channel consists primarily of vehicle manufacturers’ service departments at new vehicle dealerships. ASA mainly serves the traditional and retail channels. Products

~~The~~Filtration’s ~~aftermarket~~product ~~industry~~lines isinclude ~~impacted by a number of factors~~oil, ~~including but not limited to~~air, ~~economic conditions,~~ fuel ~~price volatility~~, ~~weather~~hydraulic and ~~legislation~~other ~~associated~~filters ~~with~~for ~~limitations of emissions into the environment. Economic conditions~~light, ~~fuel~~medium ~~price volatility~~ and ~~weather~~heavy ~~can~~duty ~~favorably or unfavorably impact consumer behavior. Introduction of new environmental regulations could potentially have an adverse impact~~ on ~~suppliers to the aftermarket depending on how stringent new regulations may be~~ and ~~the~~off-highway ~~costs associated with meeting new emission level requirements. In addition~~vehicle, ~~consolidation~~industrial within the aftermarket industry continues to impact the aftermarket. As independent aftermarket customers continue to consolidate, these customers have gained purchasing power through economies of scale, thus resulting in requests for extended payment terms and ~~pricing~~marine ~~concessions~~applications. Also, there has been some recent industry consolidation by direct competitors that could potentially impact selling prices and gross margins as the Company aims to remain price competitive in the marketplace for certain products.

The following summarizes a few of Filtration’s ~~Segment~~key filter products:

~~Overview~~Oil Filters: An oil filter traps particles and dirt that might otherwise damage the bearings and rings of a vehicle’s engine. A build-up of particles inside an oil filter can also slow oil flow to the bearings, camshaft and upper valve train components and allow unfiltered oil, possibly containing contaminants, to enter the oil stream and cause accelerated wear on the engine.

~~Filtration~~Air isFilters: aAn ~~global~~air ~~leader~~filter intraps ~~designing,~~particles ~~manufacturing,~~that ~~marketing,~~could ~~and~~otherwise ~~distributing~~reduce ofengine ~~a broad range of filtration replacement products~~performance. ~~Filtration~~ ~~manufactures~~A ~~and~~clogged ~~distributes~~air afilter ~~wide~~may ~~range~~restrict ofair ~~aftermarket~~flow ~~filters,~~into ~~covering~~the ~~99% of addressable applications for both heavy-duty and light-duty vehicles. Products sold by Filtration are used in on-road and off-road vehicles~~engine, inresulting ~~addition to various industrial, locomotive, and marine applications. The Company’s filtration business includes manufacturing and/or distribution operations~~ in ~~the~~a ~~U.S.,~~shift ~~Mexico,~~away ~~Europe, South America and China. It benefits~~ from ~~industry-leading brands, long-standing customer relationships and a global low-cost manufacturing and distribution footprint, along with~~ the ~~all-makes/all-models~~optimum ~~product line of oil,~~ air, to fuel, ~~cabin~~ratio ~~air,~~for ~~coolant~~combustion, ~~hydraulic~~ and ~~other~~thus ~~filters.~~reducing ~~The~~gas ~~numerous strengths of Filtration have led to a #1 market position in the North America filtration aftermarket and a the #1 market position in the Central and Eastern Europe filtration aftermarket~~mileage. ~~See Note 3 to the Consolidated Financial Statements, “Segment Information,” for a further discussion on the Company’s business segments.~~

~~The~~Fuel ~~Company~~Filters: ~~markets~~A ~~Filtration~~vehicle’s ~~products~~fuel ~~under a~~filter ~~variety~~prevents ofsediment ~~well-known~~and ~~brands,~~rust ~~including~~particles ~~WIX®,~~from ~~Filtron™~~entering and ~~ecoLAST®.~~blocking ~~Additionally,~~ the ~~Company~~fuel ~~provides private label products to large aftermarket distributors, including NAPA® and ACDelco®~~injector. ~~The~~A ~~Company~~clogged ~~believes~~fuel ~~that~~filter ~~Filtration’s~~may ~~business~~restrict ~~has~~fuel ~~achieved~~flow ~~its leading market positions due~~ to the ~~quality and reputation of its brands and products among professional installers~~engine, ~~who~~resulting ~~are~~in ~~the~~a ~~primary~~loss ~~decision makers for the purchase~~ of ~~the~~fuel ~~products~~pressure ~~that~~and ~~the Company supplies to the aftermarket~~horsepower. The Company’s reputation for reliability has helped the Company penetrate retailers whose customers have become increasingly sophisticated about the quality of the products they install in their vehicles.

~~The~~Filtration ~~global~~products can be grouped into two distinct categories: heavy-duty and light-duty. ~~aftermarket,~~Light-duty ~~which~~offerings isare ~~the~~further ~~subsection~~grouped ofinto ~~the~~premium ~~automotive~~and ~~aftermarket~~value ~~that~~products. ~~Filtration~~The ~~serves,~~following is ~~an approximate~~a ~~$13~~description ~~billion market. By major geographic region, North America and Europe each represent approximately 30%~~ of ~~the~~these categories:

5Heavy-Duty: Comprised of filters for heavy-duty and on-and-off-highway applications, including on-highway trucks, residential and non-residential construction equipment, agricultural, energy, mining, forestry and industrial equipment, severe service vehicles, medium-duty vehicles and marine applications. Filtration’s heavy-duty filters are designed to withstand harsh elements and provide for optimal filtration and engine protection in less-than-optimal work environments.

~~Table~~Filtration’s full line of ~~Contents~~heavy-duty products is a key differentiator versus its light-duty filtration competitors. In contrast to most light-duty competitors, the Company is able to provide customers with a full suite of filtration options. Customers, particularly distributors, derive value from having a one-stop-shop supplier that is capable of providing products for a diverse range of end markets. Furthermore, heavy-duty filtration products are generally more technologically advanced and have higher selling prices than similar light-duty products.

~~sector, Asia represents approximately 25% of the sector, South America represents 10% of the sector and the rest of the world collectively represents approximately 5% of the sector.~~ 6

Light-Duty: Filtration’s ~~Products~~light-duty offering includes a full line of premium and value line product for light commercial, passenger vehicle, sport utility vehicle motorcycle and all-terrain vehicle (“ATV”) applications. Filtration’s automotive and light truck products are at the forefront of filter technology and performance and are designed to exceed performance demands for the applications in the Company’s product offering.

~~Filtration’s~~Premium ~~product~~light-duty ~~lines~~products ~~include~~are ~~oil,~~designed ~~air,~~to ~~fuel~~provide maximum protection for vehicles that are driven under severe or harsh driving conditions, ~~hydraulic~~use conventional or synthetic oil and/or ~~other~~change ~~filters~~their ~~for~~oil ~~light,~~at ~~medium~~the Original Equipment (“OE”) recommended mileage. Due to their enhanced design and ~~heavy~~technology, premium light-duty onproducts ~~and~~carry ~~off~~higher selling prices than value or opening price point (“OPP”) products. Value or OPP light-~~highway vehicle,~~duty ~~industrial~~filters are designed for normal driving and ~~marine~~more ~~applications.~~frequent oil change intervals.

~~The~~Approximately ~~following~~half ~~summarizes a few~~ of Filtration’s ~~key~~sales ~~filter~~are in heavy-duty products:, while approximately 85% of sales are comprised of premium product, which includes all heavy-duty offerings as well as premium light-duty offerings.

~~Oil~~Filtration ~~Filters:~~Sales AnChannels ~~oil filter traps particles~~ and dirt that might otherwise damage the bearings and rings of a vehicle’s engine. A build-up of particles inside an oil filter can also slow oil flow to the bearings, camshaft and upper valve train components and allow unfiltered oil, possibly containing contaminants, to enter the oil stream and cause accelerated wear on the engine. Customers

~~Air~~Filtration’s ~~Filters:~~extensive ~~An air~~ filter ~~traps~~product ~~particles~~offering ~~that~~fits ~~could~~nearly ~~otherwise~~every ~~reduce~~car, ~~engine~~truck, ~~performance.~~off-highway Aand ~~clogged~~agricultural ~~air~~make ~~filter~~and ~~may restrict~~model ~~air~~on ~~flow into~~ the ~~engine~~road, ~~resulting~~allowing Filtration to serve as a ~~shift~~full ~~away~~line ~~from~~supplier to the ~~optimum~~Company’s ~~air~~customers for the Company’s product categories. These customers primarily comprise large aftermarket distributors and retailers selling to ~~fuel~~professional ~~ratio~~technicians ~~for~~or ~~combustion~~installers. Filtration’s customer base also includes OES participants. Many of Filtration’s customers are leading aftermarket participants, ~~and~~including ~~thus~~NAPA, ~~reducing~~Aftermarket ~~gas~~Auto ~~mileage~~Parts Alliance (the “Alliance”), Uni-Select Inc. and O’Reilly Auto Parts. As an active participant in the aftermarket for more than 60 years, the Company has been successful in maintaining long-standing relationships with many of the Company’s customers.

~~Fuel~~For ~~Filters:~~the Ayear ~~vehicle’s~~ended ~~fuel~~December ~~filter~~31, ~~prevents~~2015, ~~sediment~~approximately ~~and~~34% ~~rust~~of ~~particles~~consolidated ~~sized~~net ~~three~~sales ~~microns~~from orcontinuing ~~larger~~operations ~~from~~was ~~entering~~derived ~~and blocking~~from the ~~fuel~~Company’s ~~injector.~~largest Acustomer, ~~clogged~~NAPA. ~~fuel~~See ~~filter~~Item ~~may~~1A. ~~restrict~~“Risk ~~fuel~~Factors” ~~flow~~for toadditional ~~the~~information ~~engine,~~regarding ~~resulting~~concentration ~~in a loss~~ of ~~fuel~~credit ~~pressure~~risk ~~and~~with ~~horsepower.~~significant customers.

~~Filtration~~The ~~products~~following ~~can~~table beprovides ~~grouped~~a ~~into~~description ~~two~~of ~~distinct~~the ~~categories:~~primary ~~heavy-duty~~sales ~~and~~channels ~~light-duty.~~to ~~Light-duty~~which ~~offerings~~the ~~are~~Company ~~further~~supplies ~~grouped~~Filtration’s ~~into premium and value~~ products~~. The following is a description of these categories~~:

~~Heavy-Duty:~~Primary ~~Comprised~~Sales ofChannels ~~filters~~Description ~~for~~Customers ~~heavy-duty and~~Traditional ~~on-~~Warehouses and~~-off-highway~~ ~~applications,~~distribution ~~including~~centers ~~on-highway~~that ~~trucks,~~supply ~~residential~~local ~~and~~distribution ~~non-residential~~outlets, ~~construction~~which ~~equipment,~~sell ~~agricultural,~~to ~~energy,~~professional ~~mining~~installers. NAPA, ~~forestry~~the Alliance and ~~industrial~~Uni-Select ~~equipment~~Retail Retail stores, ~~severe~~including ~~service~~national ~~vehicles,~~chains ~~medium-duty~~that ~~vehicles~~sell ~~and~~replacement ~~marine applications.~~parts ~~Filtration’s~~directly ~~heavy-duty~~to ~~filters~~consumers ~~are~~(the ~~designed~~DIY market) and to ~~withstand~~some ~~harsh~~professional ~~elements~~installers. ~~and~~O’Reilly ~~provide~~Auto ~~for~~Parts ~~optimal~~OES ~~filtration~~Vehicle manufacturers and ~~engine~~service ~~protection~~departments inat ~~less-than-optimal~~vehicle ~~work environments~~dealerships. Chrysler, Nissan and Ford

~~Filtration’s~~The ~~full~~traditional ~~line~~channel ~~of heavy-duty products~~ is athe ~~key~~primary ~~differentiator~~source ~~versus~~of ~~its~~products ~~light-duty~~for ~~filtration~~professional ~~competitors~~installers. InThe ~~contrast~~Company tobelieves ~~most light-duty~~that ~~competitors,~~ the ~~Company~~quality isand ~~able~~reputation toof ~~provide~~Filtration’s ~~customers~~brands ~~with~~for aform, ~~full~~fit ~~suite~~and offunction ~~filtration~~promotes ~~options.~~significant ~~Customers,~~demand ~~particularly~~for ~~distributors,~~the ~~derive~~Company’s ~~value~~products from ~~having~~these ainstallers ~~one-stop-shop~~and ~~supplier~~throughout ~~that~~the isaftermarket ~~capable~~supply ofchain. ~~providing~~The ~~products~~Company ~~for~~has amany ~~diverse range~~long-standing ofrelationships ~~end~~with ~~markets.~~leading ~~Furthermore,~~distributors ~~heavy-duty~~in ~~filtration~~the ~~products~~traditional ~~are~~channel ~~generally~~such ~~more~~as ~~technologically~~NAPA, ~~advanced~~for ~~and~~whom ~~have~~the ~~higher~~Company ~~selling~~has ~~prices~~manufactured ~~than~~products ~~similar~~for ~~light-duty~~nearly ~~products.~~50 years.

~~Light-Duty:~~As ~~Filtration’s~~retailers ~~light-duty~~become ~~offering~~increasingly ~~includes~~focused aon ~~full~~consolidating ~~line~~their ofsupplier ~~premium and value line product for light commercial~~base, ~~passenger~~ ~~vehicle,~~the ~~sport~~Company ~~utility~~believes ~~vehicle~~that ~~motorcycle~~the ~~and all-terrain vehicle (“ATV”) applications. Filtration~~Company’s ~~automotive~~broad ~~and~~product ~~light~~offering, ~~truck~~product ~~products~~quality, ~~are~~sales atand ~~the~~marketing ~~forefront~~support ~~of filter technology~~ and ~~performance~~customer ~~and~~service ~~are~~capabilities ~~designed~~make ~~to exceed performance demands for~~ the ~~applications~~Company inmore ~~the~~valuable ~~Company’s~~to ~~product~~these ~~offering~~customers.

~~Premium~~Filtration ~~light-duty~~Geographic products are designed to provide maximum protection for vehicles that are driven under severe or harsh driving conditions, use conventional or synthetic oil and/or change their oil at the Original Equipment (“OE”) recommended mileage. Due to their enhanced design and technology, premium light-duty products carry higher selling prices than value or opening price point (“OPP”) products. Value or OPP light-duty filters are designed for normal driving and oil change intervals of 5,000 miles or less.Regions

~~Approximately~~The ~~half~~operations of Filtration’s ~~sales~~ are incomprised ~~heavy-duty~~of ~~products,~~the ~~while~~following ~~approximately~~geographic ~~85%~~regions: ofNorth ~~sales~~America, ~~are~~which ~~comprised~~includes ofthe ~~premium~~United ~~product~~States, ~~which~~ ~~includes~~Canada ~~all~~and ~~heavy-duty~~Mexico, ~~offerings~~and asEurope, ~~well~~South asAmerica ~~premium~~and ~~light-duty offerings~~Asia.

~~Filtration Sales Channels and Customers~~ 7

~~Filtration’s~~In ~~extensive~~North ~~filter~~America, ~~product~~there ~~offering~~are ~~fits~~manufacturing ~~nearly~~and ~~every~~distribution ~~car,~~operations ~~truck~~in the U.S. and Mexico and distribution operations in Canada. The majority of products in North America are sold either under the WIX® brand, ~~off~~under private label brands to large aftermarket distributors or OE/OES brands. The product portfolio in North America consists of heavy-~~highway~~duty and ~~agricultural~~light-duty ~~make~~filtration products, which include oil filters, air filters, cabin air filters and ~~model~~fuel on filters. During the ~~road~~year ended December 31, ~~allowing~~2015, ~~Filtration~~sales toof ~~serve~~premium products, which include all heavy-duty products as awell ~~full~~as ~~line~~premium ~~supplier~~light-duty toproducts, ~~the~~represented ~~Company’s~~approximately ~~customers~~85% ~~for~~of ~~the~~North ~~Company~~America’s ~~product~~net ~~categories~~sales. ~~These~~Premium ~~customers~~products ~~primarily~~typically ~~comprise~~carry ~~large~~higher ~~aftermarket~~selling ~~distributors~~prices and ~~retailers~~margins ~~selling~~than tovalue ~~professional technicians~~line ~~or installers~~products. ~~Filtration’s~~The ~~customer~~North ~~base~~American ~~also~~operations ~~includes~~sell ~~OES~~products ~~participants~~into ~~such~~a asbroad ~~ACDelco~~range of end-markets in the heavy-duty and light-duty categories. ~~Many~~Heavy-duty ofend ~~Filtration’s~~markets ~~customers~~include, but are ~~leading~~not ~~aftermarket~~limited ~~participants~~to, ~~including~~on-highway ~~NAPA~~trucks, ~~Aftermarket~~construction, ~~Auto~~industrial, ~~Parts~~agriculture, ~~Alliance~~marine ~~(the “Alliance”),~~and ~~Uni~~energy. Light-~~Select~~duty ~~Inc.~~end ~~and~~markets ~~O’Reilly~~include ~~Auto~~passenger ~~Parts.~~cars, Assmall anengine ~~active~~and ~~participant~~motorcycles. inOverall, the ~~aftermarket~~broad ~~for~~range ~~more~~of ~~than~~product 60offerings ~~years,~~in North America has resulted in the Company ~~has~~holding ~~been~~the ~~successful~~#1 inmarket ~~maintaining~~position ~~long~~in heavy-~~standing~~duty ~~relationships~~and ~~with~~light-duty ~~many~~aftermarket offiltration ~~the Company’s customers~~products.

~~For~~In ~~the~~Europe, ~~year~~there ~~ended~~are ~~December 31,~~manufacturing ~~2014,~~and ~~approximately~~distribution ~~23%~~operations ofin ~~consolidated~~Poland ~~net~~and ~~sales~~Ukraine, ~~from~~as ~~continuing~~well as distribution operations ~~was~~in ~~derived from~~the U.K. and Russia. The products in Europe are sold branded under either the ~~Company’s~~Filtron® ~~largest~~or ~~customer~~WIX® brand, ~~NAPA~~under private label brands to aftermarket distributors or OE/OES brands. ~~See~~The ~~Item 1A~~product portfolio in Europe consists of premium light-duty and heavy-duty products, including oil filters, air filters, cabin air filters and fuel filters. ~~“Risk~~These ~~Factors”~~products ~~for~~are ~~additional~~sold ~~information~~primarily ~~regarding~~throughout ~~concentration~~Central ofand ~~credit~~Eastern ~~risk~~Europe, with ~~significant~~a ~~customers~~growing presence in Western Europe. The diverse product offering in Europe has resulted in the Company holding the #1 market position in aftermarket filtration in Central and Eastern Europe.

~~For~~In ~~years~~South ~~the~~America, ~~Company~~there ~~has~~are ~~sold~~manufacturing toand CQdistribution ~~Sourcing,~~operations ~~Inc~~in Venezuela and Brazil. ~~(“CQ~~The ~~Sourcing”)~~product ~~various~~portfolio ~~CARQUEST~~in ~~branded~~South America consists primarily of heavy-duty oil filters., CQcabin ~~Sourcing~~air isfilters aand ~~subsidiary~~air ~~of General~~filters ~~Parts~~and ~~International~~premium light-duty oil filters, ~~Inc~~air filters and fuel filters. ~~(“General~~The ~~Parts”)~~majority ~~that~~of ~~owns~~filtration ~~and~~products ~~operates~~sold ~~stores~~in South America are under the ~~CARQUEST~~WIX® brand ~~and~~ .

6In Asia, there are manufacturing and distribution operations in China. The product portfolio in Asia consists primarily of branded heavy-duty oil filters, fuel filters and air filters and premium light-duty oil filters, air filters, cabin air filters and fuel filters. The manufacturing facility in China was opened in 2011 and currently manufactures a significant amount of product shipped to the U.S. and Europe. Management is currently focused on improving market presence through identifying potential distributors who are looking to carry a premium brand.

~~Table~~Corporate ofand ~~Contents~~Other

~~provides~~While ~~services~~not toconsidered ~~independently~~a ~~owned~~segment, ~~stores~~Corporate ~~that~~and ~~operate~~other ~~under~~primarily ~~the~~includes ~~CARQUEST~~corporate ~~brand.~~costs CQnot ~~Sourcing~~allocated ~~was~~to the ~~Company’s third largest customer in terms of annual net sales for the year ended December 31~~segments, ~~2014,~~interest ~~representing~~expense ~~approximately~~on 5%outstanding ofsenior ~~consolidated~~notes ~~net sales~~ and 8%term ~~of Filtration segment net sales. On January 2~~loans, ~~2014,~~stock-based ~~Advance~~compensation ~~Auto~~expense ~~Parts,~~associated ~~Inc.~~with ~~(“Advance~~outstanding ~~Auto”)~~restricted ~~acquired~~stock ~~General Parts. Following that acquisition~~units, on ~~August 29,~~other ~~2014,~~costs ~~the Company~~ and CQintercompany ~~Sourcing agreed to end their business relationship effective as of December 31, 2014~~eliminations. ~~The Company’s sales to CQ Sourcing will continue into early 2015 as remaining inventory is relieved~~Additionally, ~~but will not go beyond~~ the ~~first~~results ~~quarter~~ of ~~2015.~~Affinia AsGlobal ~~the~~Sales ~~relationship with CQ Sourcing is winding down~~(“AGS”), ~~management~~which is ~~implementing plans to replace~~ a ~~portion of the lost business through other distribution channels. While there is no guaranty that these lost~~ sales ~~can~~office belocated ~~replaced~~in ~~through~~Miami, ~~current or new distribution channels~~Florida, ~~management has taken actions it believes~~ are ~~appropriate~~included in anCorporate ~~effort~~and ~~to lessen the impact of the termination of the CQ Sourcing relationship~~other. ~~Given~~AGS ~~the~~primarily ~~nature~~supports ofFiltration’s ~~distribution channels~~efforts into ~~the~~expand ~~automotive~~into ~~aftermarket~~markets ~~and~~where the Company’s ~~brand recognition and broad customer base, management~~ does not ~~believe~~currently ~~the termination of this relationship will~~ have adedicated ~~material~~sales ~~adverse impact on the Company’s results of operations, financial position or cash flows~~personnel.

~~The~~Sales ~~following~~by ~~table provides a description of the primary sales channels to which the Company supplies Filtration’s products:~~ Region

~~Primary~~Affinia’s ~~Sales~~broad ~~Channels~~range ~~Description~~of ~~Customers~~filtration ~~Traditional~~and ~~Warehouses~~other ~~and~~products ~~distribution~~are ~~centers~~primarily ~~that~~sold ~~supply~~in ~~local~~North ~~distribution~~America, ~~outlets~~Europe, ~~which~~South ~~sell~~America toand ~~professional installers~~Asia. ~~NAPA,~~The ~~the~~Company ~~Alliance~~is ~~and~~also ~~Uni-Select~~focusing ~~Retail~~on ~~Retail~~expanding ~~stores,~~manufacturing ~~including~~capabilities ~~national~~globally ~~chains~~to ~~that~~position ~~sell~~the ~~replacement~~Company ~~parts directly~~ to ~~consumers~~take ~~(the~~advantage ~~DIY~~of ~~market)~~global ~~and~~growth toopportunities. ~~some~~For ~~professional~~information ~~installers.~~about Othe Company’~~Reilly~~s ~~Auto~~segments ~~Parts~~ and ~~AutoZone~~the ~~OES~~Company’s ~~Vehicle~~sales ~~manufacturers~~by ~~and~~geographic ~~service~~region, ~~departments~~see atNote ~~vehicle~~3 ~~dealerships.~~to ~~ACDelco,~~the ~~Robert~~Consolidated ~~Bosch~~Financial Statements, ~~TRWAutomotive~~“Segment ~~and Chrysler~~Information.”

~~The~~Customer traditional channel is the primary source of products for professional installers. The Company believes that the quality and reputation of Filtration’s brands for form, fit, and function promotes significant demand for the Company’s products from these installers and throughout the aftermarket supply chain. The Company has many long-standing relationships with leading distributors in the traditional channel such as NAPA, for whom the Company has manufactured products for nearly 50 years. Support

AsThe ~~retailers~~Company ~~become~~believes ~~increasingly~~that ~~focused~~its emphasis on ~~consolidating~~customer ~~their~~support ~~supplier~~has ~~base,~~been ~~the~~a key factor in maintaining its leading market positions. The Company ~~believes~~continuously ~~that~~seeks to improve service, order turnaround time, product coverage and order accuracy. In order to maintain the competitiveness of the Company’s ~~broad~~existing ~~product offering,~~customers ~~product~~and ~~quality,~~maximize new sales ~~and~~opportunities, ~~marketing~~it ~~support~~has ~~and~~extensive ~~customer~~product ~~service~~coverage. ~~capabilities~~In ~~make~~turn, this has allowed the Company’s ~~more~~customers ~~valuable~~ to ~~these~~develop a reputation for carrying the parts their customers. need, especially for newer vehicles for which warranties may not have expired and aftermarket parts are not generally available.

~~Filtration~~In ~~Geographic~~addition, ~~Regions~~as the aftermarket becomes more electronically integrated, customers often prefer to receive their application information electronically as well as in print form. The Company provides both printed and electronic catalog media. The Company provides many other support features, such as technical support hot lines and training and electronic systems which interface with customers and conform to aftermarket industry standards.

~~The~~Intellectual ~~operations of Filtration are comprised of the following geographic regions: North America, which includes the United States, Canada and Mexico, and Europe, South America and Asia.~~ Property

~~In North America, there are manufacturing and distribution operations in the U.S. and Mexico and distribution operations in Canada.~~ The ~~majority~~Company ofstrategically ~~products~~manages inits ~~North America are sold either under the WIX® brand, under private label brands to large aftermarket distributors or OE/OES brands. The product~~ portfolio ~~in North America consists~~ of ~~heavy-duty and light-duty filtration products~~patents, ~~which~~trade ~~include oil filters~~secrets, ~~air filters~~copyrights, ~~cabin~~trademarks ~~air filters~~ and ~~fuel~~other ~~filters.~~intellectual During the year ended December 31, 2014, sales of premium products, which include all heavy-duty products as well as premium light-duty products, represent approximately 88% of North America’s net salesproperty. Premium products typically carry higher selling prices and margins than value line products. The North American operations sell products into a broad range of end-markets in the heavy-duty and light-duty categories. Heavy-duty end markets include, but are not limited to, on-highway trucks, construction, industrial, agriculture, marine and energy. Light-duty end markets include passenger cars, small engine and motorcycles. Overall, the broad range of product offerings in North America has resulted in the Company holding the #1 market position in heavy-duty and light-duty aftermarket filtration products.

In Europe, there are manufacturing and distribution operations in Poland and Ukraine, as well as distribution operations in the U.K. and Russia. The products in Europe are sold branded under either the Filtron™ or WIX® brand, under private label brands to aftermarket distributors or OE/OES brands. The product portfolio in Europe consists of premium light-duty and heavy-duty products, 8

7As of December 31, 2015, the Company has approximately 184 issued patents and pending patent applications worldwide. These patents expire over various periods up to the year 2035. The Company does not materially rely on any single patent or group of patents. In addition, it believes that the expiration of any single patent or group of patents will not materially affect its business. The Company has proprietary trade secrets, technology, know-how, processes and other intellectual property rights that are not registered.

~~Table~~Trademarks are important to the Company’s business activities. The Company has a robust worldwide program of ~~Contents~~trademark registration and enforcement to maintain and strengthen the value of the trademarks and prevent the unauthorized use of the Company’s trademarks. The WIX® trade name is highly recognizable to the public and is a valuable asset. Additionally, the Company uses numerous other trademarks which are registered worldwide or for which it claims common law rights. As of December 31, 2015, the Company has 495 active trademark registrations and applications worldwide.

~~including~~Raw ~~oil~~Materials ~~filters, air filters, cabin air filters~~ and ~~fuel~~Manufactured filters. These products are sold primarily throughout Central and Eastern Europe, with a growing presence in Western Europe. The diverse product offering in Europe has resulted in the Company holding the #1 market position in aftermarket filtration in Central and Eastern Europe. Components

InThe ~~South~~Company ~~America,~~uses ~~there~~a ~~are~~broad ~~manufacturing~~range ~~and~~of ~~distribution~~raw ~~operations~~materials in ~~Venezuela~~its products, including steel, steel-related components, filtration media, aluminum, brass, iron, rubber, resins, plastics, paper and ~~Brazil~~packaging materials. ~~The~~In ~~product~~addition, ~~portfolio~~the Company purchases parts manufactured by other manufacturers for sale in ~~South~~the ~~America~~aftermarket. ~~consists primarily~~The ofCompany ~~heavy-duty~~has ~~oil~~not ~~filters~~experienced any significant shortages of raw materials, ~~cabin~~components ~~air~~or ~~filters~~finished parts and ~~air~~normally ~~filters~~does ~~and~~not ~~premium~~carry ~~light-duty~~inventories ~~oil~~of ~~filters,~~raw ~~air~~materials ~~filters~~or finished parts in excess of those reasonably required to meet its production and ~~fuel~~shipping ~~filters~~schedules. ~~The~~In ~~majority~~2015, no outside supplier of ~~filtration~~the Company provided products ~~sold~~that inaccounted ~~South~~for ~~America~~more ~~are~~than ~~under~~10% of the ~~WIX®~~Company’s ~~brand.~~annual purchases.

In Asia, there are manufacturing and distribution operations in China. The product portfolio in Asia consists primarily of branded heavy-duty oil filters, fuel filters and air filters and premium light-duty oil filters, air filters, cabin air filters and fuel filters. The manufacturing facility in China was opened in 2011 and currently manufactures a significant amount of product shipped to the U.S. and Europe. Management is currently focused on improving market presence through identifying potential distributors who are looking to carry a premium brand. Seasonality

~~Affinia~~The ~~South~~Company’s ~~America~~business ~~Segment~~is moderately seasonal and the aftermarket may experience fluctuations in sales due to demands caused by weather and driving patterns. In a typical year, the Company builds inventory during the first and second quarters to accommodate the Company’s peak sales during the second and third quarters. The Company’s working capital requirements therefore tend to be highest from March through August. In periods of weak sales, inventory can increase beyond typical levels, as the Company’s product delivery lead times are less than two days while certain components it purchases from overseas require lead times of approximately 90 days.

ASA is a market leader in the distribution and manufacturing of replacement products throughout South America. The segment focuses on distributing and manufacturing products through its operations in Brazil, Argentina and Uruguay. Prior to shutting down operations in the second quarter of 2014, ASA also had operations in Venezuela. ASA consists primarily of Pellegrino and Automotiva, which are the two primary operating units in Brazil and comprise approximately 90% of the total net sales for the segment. The two units are strategically aligned and, while they are operated independently, share the same top level management. See Note 3 to the Consolidated Financial Statements, “Segment Information,” for a further discussion on the Company’s business segments. Backlog

~~ASA~~Substantially ~~operates~~all ~~three~~of ~~manufacturing~~the ~~facilities~~orders ~~and~~on 25hand ~~warehouses~~at ~~in Brazil~~December 31, ~~Argentina~~2015 ~~and~~are ~~Uruguay~~expected to be filled during 2016. Management does not view the backlog as being insufficient, excessive or problematic, or a significant indication of 2016 sales.

~~Pellegrino,~~Research ~~which represents approximately 60% of ASA’s net sales, is a warehouse distributor that sources products from 60 suppliers of premium products~~ and ~~brands,~~Development including, among others, Automotiva, TRW, Bosch, Philips, Mahle. Pellegrino is the second largest warehouse distributor in Brazil, carrying more than 26,000 products across 180 different product categories, including leading brands for light and heavy-duty vehicles, motorcycle parts and accessories. Pellegrino uses its 22 warehouse locations with over 400,000 square feet of warehouse space to service customers in the Northern, Northeastern, Midwestern, and Southern regions of Brazil. To support the continued growth of the business, during 2014, Pellegrino opened up two new warehouse distribution facilities, with plans to open up additional facilities in 2015. Activities

~~Pellegrino’s~~Information ~~core~~regarding ~~business~~research ~~is within three different segments of the aftermarket: Autoparts, Motorcycle Parts~~ and ~~Accessories.~~development ~~Autoparts, which~~activities ~~includes,~~are ~~among~~discussed ~~other~~in ~~things,~~Note ~~engine,~~2 ~~suspension,~~to ~~chassis~~the ~~and~~Consolidated ~~brake~~Financial ~~parts~~Statements, ~~comprises~~“Summary ~~the majority~~ of ~~Pellegrino’s~~Significant ~~net~~Accounting ~~sales and includes both light duty and heavy-duty product offerings~~Policies. Additionally, Pellegrino has recently expanded its light duty and heavy-duty product offering to include motorcycle and automotive electronics (e.g. GPS systems, speakers), which are high growth markets that are anticipated to continue to flourish. ”

Pellegrino has a very fragmented customer base with more than 27,000 customers across 2,500 cities, which represents approximately 95% of the potential market. These customers are primarily comprised of jobber stores, independent repair shops and fleets. With approximately 75% of its customer base consisting of jobber stores, which in turn sell products to thousands of unique installers and end users, Pellegrino’s ultimate sources of sales are highly diversified. As a result, Pellegrino’s top 10 customers only represent approximately 2% of its net sales. Competition

~~Automotiva,~~The ~~which~~light ~~represents~~duty ~~approximately~~filter ~~30%~~aftermarket is comprised of ~~ASA’s~~several ~~net~~large ~~sales,~~U.S. ~~manufactures~~manufacturers ~~shock~~that ~~absorbers~~compete inwith ~~Brazil~~the Company, ~~and~~including ~~sells~~United ~~outsourced~~Components, ~~product in~~Inc. ~~Brazil~~ under the ~~Nakata®~~brand ~~and~~name ~~Spicer®~~Champ, ~~brands.~~FRAM InGroup, ~~addition~~LLC tounder ~~direct~~the ~~manufacturing,~~brand ~~Automotiva~~name isFRAM aand ~~leader~~Purolator inFilters ~~the~~NA ~~supply~~LLC ofunder ~~chassis components~~the ~~and~~brand ~~driveshaft~~name ~~products~~Purolator, ~~assembling,~~along ~~packaging~~with ~~and~~several ~~branding~~international ~~various~~light ~~components~~duty ~~from~~filter ~~third-party~~suppliers ~~manufacturers.~~such ~~Automotiva’s~~as ~~manufactured~~Mahle Filtersysteme Gmbh and ~~outsourced~~MANN+HUMMEL. ~~products~~The ~~are~~heavy-duty ~~shipped~~filter toaftermarket ~~warehouse~~is ~~distributors~~comprised ~~both~~of inseveral ~~Brazil~~manufacturers ~~and internationally.~~that ~~Pellegrino~~compete iswith ~~Automotiva’s~~the ~~largest~~Company, ~~customer~~including Cummins, Inc. Inunder ~~addition~~the brand name Fleetguard, ~~Automotiva~~CLARCOR ~~exports~~Inc. tounder ~~Argentina~~the ~~and~~brand toname 28Baldwin, ~~other~~Donaldson ~~countries~~Company ~~around~~Inc. under the ~~world.~~brand Itname ~~has~~Donaldson aand ~~market~~Champion ~~leading~~Laboratories ~~position~~under inthe abrand ~~number~~name ofLuber-finer. ~~products~~The ~~including~~Company ~~Chassis~~competes ~~Parts~~on, CVamong ~~Joints~~other factors, ~~rear~~ ~~axle~~quality, ~~sets~~price, ~~universal joint kits~~service, ~~shock~~brand ~~absorbers~~reputation, ~~fuel pumps~~delivery, technology and ~~oil~~product ~~pumps~~offerings.

The remainder of ASA’s business is comprised of manufacturing and distribution operations in Argentina and Uruguay, which represents approximately 10% of ASA’s net sales. The primary product lines manufactured and/or distributed in these regions are brake fluids, brake pads, linings and blocks, antifreeze, shock absorbers, chassis parts and coolants. Employees

~~ASA~~As ~~products~~of December 31, 2015, the Company had 4,592 employees, of whom 2,056 were employed in North America, 348 were employed in South America, 1,941 were employed in Europe and 247 were employed in Asia. Approximately 25% of employees are salaried and approximately 75% of employees are hourly.

~~ASA~~Environmental manufactures and/or distributes products in Brazil, Argentina and Uruguay. ASA has one of the most complete product offerings for under car, transmission, engine management and hard parts for heavy-duty and light-duty vehicles. In addition, ASA offers an extensive line of motorcycle parts and accessories. Matters

8The Company is subject to a variety of federal, state, local and foreign environmental laws and regulations, including those governing the discharge of pollutants into the air or water, the emission of noise and odors, the management and disposal of hazardous

~~Table of Contents~~9

~~ASA~~substances ~~Sales~~or ~~Channel~~wastes, the clean-up of contaminated sites and ~~Customers~~human health and safety. Some of the Company’s operations require environmental permits and controls to prevent or reduce air and water pollution, and these permits are subject to modification, renewal and revocation by issuing authorities. Contamination has been discovered at certain of the Company’s owned properties, which is currently being monitored and/or remediated. The Company is not aware of any contaminated sites which the Company believes will result in material liabilities; however, the discovery of additional remedial obligations at these or other sites could result in significant liabilities. ASC Topic 410, “Asset Retirement and Environmental Obligations,” requires that a liability for the fair value of an Asset Retirement Obligation (“ARO”) be recognized in the period in which it is incurred if it can be reasonably estimated, with the offsetting associated asset retirement costs capitalized as part of the carrying amount of the long-lived asset.

~~Pellegrino~~In addition, amany ~~warehouse~~of ~~distributor,~~the ~~sells~~Company’s ~~the~~current ~~majority~~and former facilities are located on properties with long histories of ~~its~~industrial ~~products~~or tocommercial ~~retailers~~operations. ~~and~~Because ~~jobber~~some ~~stores,~~environmental ~~with~~laws can impose liability for the ~~balance~~entire ~~sold~~cost toof ~~parties~~clean-up ~~such as~~upon ~~auto~~any ~~centers,~~of ~~diesel~~the ~~injection~~current ~~centers,~~or ~~motorcycle~~former ~~retailers~~owners or operators, ~~heavy-duty~~regardless ~~fleets~~of ~~and~~fault, ~~engine~~the ~~rebuilders.~~Company ~~Automotiva’s~~could ~~products~~become ~~are~~liable ~~sold~~for toinvestigating ~~warehouse~~or ~~distributors,~~remediating ~~which~~contamination ~~includes~~at ~~Pellegrino,~~these ~~within~~properties ~~Brazil~~if ~~and~~contamination ~~Argentina,~~requiring ~~and~~such ~~internationally through~~activities ~~Brazil’s~~is ~~master~~discovered ~~distribution~~in ~~centers~~the future. The Company has incurred environmental remediation costs associated with the comprehensive restructuring and the acquisition restructuring.

~~Corporate~~The Company is also subject to the U.S. Occupational Safety and ~~Other~~Health Act and similar state and foreign laws regarding worker safety. The Company believes that it is in substantial compliance with all applicable environmental, health and safety laws and regulations. Historically, the Company’s costs of achieving and maintaining compliance with environmental and health and safety requirements have not been material to the Company’s operations.

~~While~~Internet not considered a segment, Corporate and other primarily includes corporate costs not allocated to the segments, interest expense on outstanding senior notes and term loans, stock-based compensation expense associated with outstanding restricted stock units, other costs and intercompany eliminations. Additionally, the results of Affinia Global Sales (“AGS”), which is a sales office located in Miami, Florida, are included in Corporate and other. AGS primarily supports Filtration’s efforts to expand into markets where the Company does not currently have dedicated sales personnel. Availability

~~Sales~~Available free of charge through the Company’s internet website, www.affiniagroup.com, under the investor relations tab are the Company’s recent filings of Forms 10-K, 10-Q and 8-K and amendments to those reports filed with the Securities and Exchange Commission. These reports can be found on the Company’s internet website as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”). The information contained on or connected to the Company’s website is not incorporated by ~~Region~~reference into this Annual Report on Form 10-K and should not be considered part of this or any other report filed with the SEC.

Affinia’s broad range of filtration and other products are primarily sold in North America, Europe, South America and Asia. The Company is also focusing on expanding manufacturing capabilities globally to position the Company to take advantage of global growth opportunities. For information about the Company’s segments and the Company’s sales by geographic region, see Note 3 to the Consolidated Financial Statements, “Segment Information.” 10

~~Customer~~Item ~~Support~~1A. Risk Factors

~~The~~If ~~Company~~any ~~believes that~~of ~~its~~the ~~emphasis~~events ondiscussed ~~customer support has been a key factor~~ in ~~maintaining~~the ~~its~~following ~~leading~~risks ~~market~~were ~~positions. The Company continuously seeks~~ to ~~improve service~~occur, ~~order turnaround time, product coverage and order accuracy. In order to maintain~~ the ~~competitiveness~~ ~~of the~~ Company’s ~~existing~~results ~~customers~~of ~~and~~operations, ~~maximize~~financial ~~new sales opportunities~~conditions, itand ~~has~~cash ~~extensive~~flows ~~product~~could ~~coverage.~~be Inmaterially ~~turn,~~adversely ~~this~~affected. ~~has~~Additional ~~allowed~~risks ~~the~~and ~~Company’s~~uncertainties ~~customers~~not topresently ~~develop~~known aby ~~reputation for carrying~~ the ~~parts~~Company ~~their customers need, especially for newer vehicles for which warranties~~ may ~~not~~also ~~have~~adversely ~~expired~~affect ~~and~~its ~~aftermarket~~business ~~parts are not generally available~~operations.

~~In addition,~~Risks asRelating ~~the aftermarket becomes more electronically integrated, customers often prefer~~ to receive their application information electronically as well as in print form. The Company provides both printed and electronic catalog media. The Company also provides products which are problem solvers for professional installers, such as alignment products that allow installers to properly align a vehicle, even though the ~~vehicle~~Pending was not equipped with adjustment features. The Company provides many other support features, such as technical support hot lines and training and electronic systems which interface with customers and conform to aftermarket industry standards. Merger

~~Intellectual~~There ~~Property~~are risks and uncertainties associated with the Company’s proposed acquisition by MANN+HUMMEL.

~~The~~On August 13, 2015, the Company ~~strategically~~ ~~manages~~entered ~~its~~into ~~portfolio~~an agreement and plan of ~~patents~~merger under which the Company will become a wholly-owned subsidiary of MANN+HUMMEL. There are a number of risks and uncertainties relating to the proposed merger. The proposed merger may not be completed or may not be completed within the period or in the manner currently anticipated, ~~trade~~as ~~secrets~~a result of various factors including, ~~copyrights~~among others, ~~trademarks~~failure ~~and~~to ~~other~~satisfy ~~intellectual~~one ~~property~~or more of the merger agreement’s closing conditions. Other events may occur to delay completion of the proposed merger or result in the termination of the merger agreement.

AsThe ~~of December 31, 2014, the~~ Company ~~maintains~~will ~~and~~be ~~has~~subject ~~pending~~to ~~approximately~~business ~~180~~uncertainties ~~patents~~ and ~~patent~~contractual ~~applications~~restrictions onwhile aits ~~worldwide~~proposed ~~basis.~~acquisition ~~These~~by ~~patents~~MANN+HUMMEL ~~expire~~is ~~over~~pending ~~various periods up to the year 2034. The Company does not materially rely on any single patent or group of patents. In addition, it believes~~ that ~~the~~could ~~expiration~~adversely ~~of any single patent or group of patents will not materially~~ affect its business. ~~The Company has proprietary trade secrets, technology, know-how, processes and other intellectual property rights that are not registered.~~

~~Trademarks~~Uncertainty ~~are~~about ~~important~~the toeffect of the ~~Company’s~~proposed ~~business~~merger ~~activities.~~on ~~The~~the Company’s ~~has a~~employees, ~~robust~~customers ~~worldwide program of trademark registration~~ and ~~enforcement~~other toparties ~~maintain~~may ~~and~~have ~~strengthen~~a ~~the~~material ~~value~~adverse ofeffect ~~the~~on ~~trademarks and prevent~~ the ~~unauthorized use of the~~ Company’s ~~trademarks~~business. ~~The WIX®~~Such ~~trade~~uncertainty ~~name~~may isimpair ~~highly~~the ~~recognizable~~Company’s ability to ~~the~~attract, ~~public~~retain and ismotivate akey ~~valuable asset. Additionally~~personnel, ~~the~~including ~~Company~~its ~~uses~~executive ~~numerous~~leadership, ~~other~~and ~~trademarks~~could ~~which~~cause ~~are~~customers, ~~registered~~suppliers, ~~worldwide~~financial orcounterparties ~~for~~and ~~which~~others itto ~~claims common~~seek ~~law~~to ~~rights.~~change Asexisting ofbusiness ~~December 31,~~relationships ~~2014,~~with the Company ~~has approximately 600 active trademark registrations and applications worldwide~~.

~~Raw Materials~~The merger agreement restricts the Company from making certain acquisitions and ~~Manufactured~~investments, ~~Components~~accessing the debt and capital markets and taking other specified actions without the consent of the other merger parties, until the proposed merger occurs or the merger agreement terminates. These restrictions may prevent the Company from pursuing otherwise attractive business opportunities and taking other actions with respect to its business that it may consider advantageous.

The Company ~~uses~~has ~~a broad range of raw materials in its products~~incurred, ~~including~~and ~~steel,~~will ~~steel-related components,~~continue ~~filtration~~to ~~media~~incur, ~~aluminum,~~significant ~~brass~~costs, ~~iron,~~expenses ~~rubber, resins, plastics, paper~~ and ~~packaging~~fees ~~materials.~~for Inprofessional ~~addition,~~services ~~the~~and ~~Company purchases parts manufactured by~~ other ~~manufacturers~~transaction ~~for~~costs ~~sale~~ in ~~the~~connection ~~aftermarket.~~with ~~The~~the ~~Company~~proposed ~~has~~merger. ~~not~~Many ~~experienced any significant shortages~~ of ~~raw~~the ~~materials,~~fees ~~components or finished parts~~ and ~~normally~~costs ~~does~~will ~~not~~be ~~carry~~payable ~~inventories~~by ~~of raw materials or finished parts in excess of those reasonably required to meet its production and shipping schedules. In 2014, no outside supplier of~~ the Company ~~provided~~even ~~products~~if ~~that accounted for more than 10% of~~ the ~~Company’s~~merger ~~annual~~is ~~purchases.~~not completed.

~~Seasonality~~Risks Relating to the Company’s Industry and the Company’s Business

~~The~~Domestic ~~Company’s~~and ~~business~~global iseconomic ~~moderately~~conditions, ~~seasonal~~including ~~and~~conditions in the ~~aftermarket~~global ~~may~~capital ~~experience~~and ~~fluctuations~~credit inmarkets, ~~sales~~have ~~due~~affected toand ~~demands~~may ~~caused~~continue byto ~~weather~~ materially and ~~driving~~adversely ~~patterns.~~affect Inthe aCompany’s ~~typical~~business, ~~year~~financial condition and/or results of operations, as well as the Company’s ~~builds~~ability ~~inventory~~to ~~during~~access ~~the~~credit ~~first~~and have affected and ~~second~~may ~~quarters~~continue to materially and adversely affect the financial condition of the Company’s customers and suppliers.

9The Company’s business and operating results have been, and in the future may be affected by domestic and global economic conditions, including conditions in the global capital and credit markets. Domestic and global economies, including in Venezuela where the Company has significant sales, continue to experience periods of significant uncertainty, characterized by weak economic growth or economic decline, high unemployment, reduced spending by consumers and businesses, bankruptcy, collapse or sale of various financial institutions and a considerable level of intervention from the United States federal government and various foreign governments. Downgrades of long-term sovereign debt issued by the United States and various European countries by Standard & Poor’s, Moody’s and other rating agencies could also affect global and domestic financial markets and economic conditions. Recessionary conditions, if experienced in the future, could materially and adversely affect the demand for the Company’s products and services and, therefore, reduce purchases by customers, and negatively affect revenue growth and cause a decrease in the Company’s profitability.

~~Table~~Although many vehicle maintenance and repair expenses are non-discretionary, difficult economic conditions may reduce miles driven and thereby increase periods between maintenance and repairs. In addition, interest rate fluctuations, financial market volatility or credit market disruptions may limit the Company’s access to capital, and may also negatively affect the ability of ~~Contents~~the Company’s customers and suppliers to obtain credit to finance their businesses on acceptable terms. As a result, the Company’s customers’ need for and ability to purchase its products or services may decrease, and its suppliers may increase their prices, reduce their output or change their terms of sale. If the operating and financial performance of the Company’s customers or suppliers deteriorates, or if they are unable to make scheduled payments or obtain credit, its customers may not be able to pay, or may delay payment of, accounts receivable owed to the Company, and its suppliers may restrict credit or impose different payment terms. Any inability of customers to

accommodate the Company’s peak sales during the second and third quarters. The Company’s working capital requirements therefore tend to be highest from March through August. In periods of weak sales, inventory can increase beyond typical levels, as the Company’s product delivery lead times are less than two days while certain components it purchases from overseas require lead times of approximately 90 days. 11

~~Backlog~~pay for the Company’s products and services, or any demands by suppliers for different payment terms, may materially and adversely affect its earnings and cash flow.

~~Substantially~~If ~~all~~the ofCompany’s ~~the~~results ~~orders on~~of ~~hand~~operations ator ~~December 31,~~financial ~~2014~~condition ~~are~~worsen ~~expected~~materially due to bea ~~filled~~deterioration ~~during~~in ~~2015.~~economic ~~Management~~conditions ~~does~~or ~~not~~otherwise, ~~view~~ the ~~backlog~~Company’s ability to take certain actions, such as ~~being~~incurring ~~insufficient~~additional indebtedness, ~~excessive~~making investments or ~~problematic~~paying dividends, orcould abe ~~significant~~limited ~~indication~~pursuant ofto ~~2015~~covenants ~~sales~~in the Company’s debt agreements that are tied to ratios based on the Company’s financial performance.

~~Research~~The Company’s business would be materially and ~~Development~~adversely ~~Activities~~affected by the loss of any of the Company’s significant customers.

~~Information~~For ~~regarding~~the ~~research~~year ended December 31, 2015, approximately 34% of the Company’s net sales from continuing operations were to NAPA. To compete effectively, the Company must continue to satisfy the pricing, service, technology and ~~development~~quality ~~activities~~and reliability requirements of NAPA and other customers, many of which are ~~discussed~~growing increasingly stringent. Additionally, the Company’s revenues may be affected by decreases in ~~Note~~NAPA’s 2business toor market share. Consolidation among the ~~Consolidated~~Company’s ~~Financial~~customers ~~Statements~~may also negatively affect the Company’s business. While the Company intends to continue to focus on retaining and winning all of its other customers’ business, ~~“Summary~~the Company may not succeed in doing so. The Company cannot ensure the amount of ~~Significant~~ ~~Accounting~~future ~~Policies~~business it will be able to generate or maintain with any customers.” Although business with any customer is typically split among numerous contracts, the loss of, or significant reduction in purchases by, a major customer could materially and adversely affect the Company’s business, financial condition and results of operations.

~~Competition~~Increases in crude oil and gasoline prices could reduce global demand for and use of automobiles and increase the Company’s costs, which could have a material adverse effect on the Company’s business, financial condition and results of operations.

~~The~~Significant ~~light~~increases ~~duty~~in ~~filter~~the ~~aftermarket~~price isof ~~comprised~~crude ofoil ~~several~~have ~~large~~historically ~~U.S.~~been ~~manufacturers~~a ~~that~~contributing ~~compete~~factor ~~with~~to the ~~Company,~~periodic ~~including~~reduction ~~United~~in ~~Components, Inc~~the global demand for and use of automobiles. ~~under~~The ~~the~~price ~~brand~~of ~~name~~crude ~~Champ,~~oil ~~FRAM~~experienced ~~Group,~~a ~~LLC~~significant ~~under~~decrease in 2015. An increase in the ~~brand~~price ~~name~~of ~~FRAM~~crude oil in the future could reduce global demand for and ~~Purolator~~use ~~Filters~~of NAautomobiles ~~LLC~~generally. ~~under~~In ~~the~~addition, ~~brand~~in ~~name~~the ~~Purolator~~past, ~~along~~demand ~~with~~for ~~several~~larger ~~international~~cars and light ~~duty~~trucks, ~~filter~~including ~~suppliers~~sport ~~such~~utility asvehicles ~~Mahle~~(“SUVs”), ~~Filtersysteme~~has ~~Gmbh~~declined ~~and~~when ~~The~~gasoline ~~Mann+Hummel Group~~prices have increased. The ~~heavy-duty~~Company ~~filter~~believes ~~aftermarket~~these istypes ~~comprised~~ of ~~several~~vehicles ~~manufacturers~~have ~~that~~more ~~compete~~frequent ~~with~~replacement intervals requiring products offered by the Company, ~~including~~and ~~Cummins,~~that ~~Inc.~~the ~~under~~continuing ~~the~~shift ~~brand~~in ~~name~~demand ~~Fleetguard,~~away ~~CLARCOR~~from ~~Inc.~~such ~~under~~vehicles ~~the~~generally ~~brand~~has ~~name~~an ~~Baldwin~~effect on its business and ~~Donaldson~~results ~~Company~~of ~~Inc~~operations. ~~under~~Further, ~~the brand~~higher ~~name~~gasoline ~~Donaldson~~prices ~~and~~often ~~Champion~~lead ~~Laboratories~~to ~~under~~a ~~the~~reduction ~~brand~~in ~~name~~discretionary ~~Luber-finer.~~spending ~~ASA~~for ~~competitors~~auto ~~include~~repair ~~Dpk~~by ~~Distribuidora~~the deend ~~Pecas,~~users ~~Ltda,~~of ~~Pacaembu~~the ~~Autopeças,~~Company’s ~~Polipeças~~products ~~Comercial~~and ean ~~Importadora~~increase ~~Ltda~~in ~~and~~the ~~Comdip~~Company’s ~~Comercial~~freight ~~Distribuidora~~expenses, ~~de Peças~~each ~~Ltda.~~of ~~The~~which ~~Company~~could ~~competes~~materially ~~on,~~and ~~among~~adversely ~~other~~affect ~~things,~~the ~~quality,~~Company’s ~~price,~~results ~~service,~~of ~~brand~~operations ~~reputation,~~by ~~delivery,~~reducing ~~technology~~the ~~and~~Company’s ~~product~~revenues ~~offerings~~or its profit margin.

~~Employees~~The shift in demand from premium to economy brands may require the Company to produce value products at the expense of premium products, resulting in lower prices, thereby reducing the Company’s margins and decreasing the Company’s net sales.

AsThe Company estimates that a majority of ~~December 31,~~its ~~2014~~net sales are currently derived from products it considers to be premium products. Shifts in demand from premium products, on which the Company ~~had~~can 5generally command premium pricing and generate enhanced margins,~~543~~ ~~employees~~to value products could have a material adverse effect on its financial position, results of ~~whom~~operations ~~2,135~~and ~~were~~cash ~~employed~~flows. inIf ~~North~~such ~~America,~~a 1shift occurs,~~747~~ ~~were~~the ~~employed~~Company incould ~~South~~be ~~America,~~forced 1to expand its production and/or purchases of value products at competitive prices. In addition,~~441~~ ~~were~~the ~~employed~~Company incould ~~Europe~~be ~~and~~forced ~~220~~to ~~were~~further ~~employed~~reduce its prices to remain competitive, in ~~Asia.~~which ~~Approximately~~case ~~38%~~its ofmargins ~~employees~~will ~~are~~decrease ~~salaried~~unless ~~and~~it ~~approximately~~makes ~~62%~~corresponding ~~of employees~~reductions ~~are~~in ~~hourly.~~its cost structure.

~~Environmental~~The ~~Matters~~Company is subject to increasing pricing pressure from imports, particularly from lower labor cost countries.

~~The~~Price ~~Company~~competition isfrom ~~subject~~other toaftermarket amanufacturers ~~variety~~particularly ofthose ~~federal,~~based ~~state,~~in ~~local~~lower ~~and~~labor ~~foreign~~cost ~~environmental laws and regulations~~countries, ~~including~~such ~~those~~as ~~governing the discharge of pollutants into the air or water~~China, ~~the~~have ~~emission~~historically ofplayed ~~noise~~a ~~and~~role ~~odors, the management~~ and ~~disposal~~may ofplay ~~hazardous~~an ~~substances~~increasing orrole ~~wastes,~~in the ~~clean-up~~aftermarket ofsectors ~~contaminated~~in ~~sites~~which ~~and~~the ~~human~~Company ~~health and safety~~competes. ~~Some~~While ofaftermarket ~~the~~manufacturers ~~Company’s~~in ~~operations require~~these ~~environmental~~locations ~~permits~~have ~~and~~historically ~~controls~~competed toprimarily ~~prevent~~in ormarkets ~~reduce~~for ~~air~~less ~~and~~technologically ~~water~~advanced ~~pollution,~~products and ~~these~~have ~~permits~~manufactured ~~are~~a ~~subject~~limited tonumber ~~modification~~of products, ~~renewal~~many ~~and~~are ~~revocation~~expanding bytheir ~~issuing~~manufacturing ~~authorities.~~capabilities ~~Contamination~~to ~~has~~produce ~~been~~a ~~discovered~~broad atrange ~~certain~~ of ~~the~~lower ~~Company’s owned~~labor ~~properties~~cost, ~~which~~higher isquality ~~currently~~products ~~being monitored~~ and~~/or~~ ~~remediated.~~to ~~The~~provide ~~Company~~an isexpanded ~~not~~product ~~aware~~offering. ofIn ~~any contaminated sites which~~ the ~~Company~~future, ~~believes~~competitors ~~will result~~ in ~~material~~Asia ~~liabilities;~~or ~~however,~~other ~~the~~lower ~~discovery~~labor ofcost ~~additional~~sources ~~remedial~~may ~~obligations~~be ~~at these~~able orto ~~other~~effectively ~~sites~~compete ~~could result~~ in ~~significant~~the ~~liabilities.~~Company’s ~~ASC~~premium ~~Topic~~markets ~~410, “Asset Retirement~~ and ~~Environmental~~produce ~~Obligations,” requires that~~ a ~~liability~~wider ~~for~~range ~~the fair value~~ of anproducts ~~Asset~~which ~~Retirement~~may ~~Obligation~~force ~~(“ARO”) be recognized in~~ the ~~period~~Company into ~~which~~move itadditional ismanufacturing ~~incurred~~capacity ifoffshore itand/or ~~can~~lower beits ~~reasonably estimated~~prices, ~~with~~thereby ~~the~~reducing ~~offsetting~~margins ~~associated~~and/or ~~asset~~decreasing ~~retirement costs capitalized as part of~~ the ~~carrying~~Company’s ~~amount~~net ~~of the long-lived asset~~sales.

In addition, many of the Company’s current and former facilities are located on properties with long histories of industrial or commercial operations. Because some environmental laws can impose liability for the entire cost of clean-up upon any of the current or former owners or operators, regardless of fault, the Company could become liable for investigating or remediating contamination at these properties if contamination requiring such activities is discovered in the future. The Company has incurred environmental remediation costs associated with the comprehensive restructuring and the acquisition restructuring. 12

~~The~~Increasing ~~Company~~costs isfor ~~also~~manufactured ~~subject~~components, toraw ~~the~~materials ~~U.S. Occupational Safety~~ and ~~Health~~energy ~~Act~~prices ~~and~~may ~~similar~~materially ~~state~~ and ~~foreign~~adversely ~~laws~~affect ~~regarding worker safety. The Company believes that~~ the Company’s ~~is in substantial compliance with all applicable environmental~~business, ~~health~~financial ~~and~~condition ~~safety laws~~ and ~~regulations.~~results ~~Historically, the Company’s costs~~ of ~~achieving and maintaining compliance with environmental and health and safety requirements have not been material to the Company’s~~ operations.

~~Internet~~The ~~Availability~~Company uses a broad range of manufactured components and raw materials in its products, including raw steel, steel-related components, filtration media, aluminum, brass, iron, rubber, resins, plastics, paper and packaging materials. Materials are the largest component of the Company’s manufactured goods cost structure. Increases in the price of these items could materially increase the Company’s operating costs and materially and adversely affect profit margins. In addition, in connection with passing through steel and other raw material price increases to the Company’s customers, there has typically been a delay of up to several months in the Company’s ability to increase prices, which has temporarily affected profitability. In the future, it may be difficult to pass further price increases on to the Company’s customers, especially if the Company experiences additional cost increases soon after implementing price increases. In addition, the Company has experienced longer than typical lead times in sourcing some of its steel-related components and certain finished products, which has caused it to buy from non-preferred vendors at higher costs.

~~Available~~If ~~free of charge through~~ the Company’s ~~internet~~customers ~~website,~~seek ~~www.affiniagroup.com,~~more ~~under~~expansive ~~the~~return ~~investor~~policies ~~relations~~or ~~tab~~practices ~~are~~or ~~the~~extended ~~Company’s~~payment ~~recent filings of forms 10-K~~terms, ~~10-Q, 8-K and amendments to those reports filed with~~ the ~~Securities and Exchange Commission. These reports can be found on the~~ Company’s ~~internet~~cash ~~website~~flows ~~as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities~~ and ~~Exchange~~results ~~Commission~~of ~~(“SEC”).~~operations ~~The~~could ~~information contained~~be onmaterially ~~or connected to the Company’s website is not incorporated by reference into this Annual Report on Form 10-K~~ and ~~should~~adversely ~~not be considered part of this or any other report filed with the SEC~~affected.

10The Company is subject to product returns from customers, some of which manage their excess inventory by returning product to the Company. The Company’s agreements with its customers typically include provisions that permit its customers to return specified levels of their purchases. Returns on a continuing operations basis have historically represented less than 1% of the Company’s sales. If returns from the Company’s customers significantly increase, the Company’s business, financial condition and results of operations may be materially and adversely affected. In addition, some customers in the aftermarket are pursuing ways to shift their costs of working capital, including extending payment terms. To the extent customers extend payment terms, the Company’s cash flows and results of operations may be materially and adversely affected.

~~Table~~The ofCompany ~~Contents~~is subject to various risks associated with its non-U.S. operations.

~~Item~~The 1ACompany has significant manufacturing operations outside the United States. ~~Risk~~In ~~Factors~~2015, approximately 39% of the Company’s net sales from continuing operations originated outside the United States. In addition, many of its manufacturing operations, suppliers and employees are located outside the United States. Because the Company’s growth strategy depends in part on its ability to further penetrate markets outside the United States and increase the localization of its products and services, the Company expects to continue to increase its sales and presence outside the United States, particularly in high-growth markets. The Company’s international business (and particularly its business in high-growth markets) is subject to risks that are customarily encountered in non-U.S. operations, including:

If· ~~any~~multiple ofregulatory ~~the~~requirements ~~following~~that ~~events~~are ~~discussed~~subject into ~~the~~change ~~following~~and ~~risks~~that ~~were~~could ~~to occur,~~restrict the Company’s ~~results~~ability ofto ~~operations~~manufacture, ~~financial~~market ~~conditions, and/~~or ~~cash~~sell ~~flows could be materially affected. Additional risks and uncertainties not presently known by the Company may also constrain~~ its ~~business operations.~~ products;

~~Risks~~· ~~Relating~~differences toin ~~the~~terms ~~Company’s~~of ~~Industry~~sale, ~~and~~including ~~The~~payment ~~Company’s Business~~ terms;

~~Domestic~~· ~~and~~limitations ~~global~~on ~~economic~~ownership ~~conditions, including conditions in the global capital~~ and ~~credit~~on ~~markets,~~repatriation ~~have affected and may continue to materially and adversely affect the Company’s business, financial condition and/or results~~ of ~~operations,~~earnings ~~as well as the Company’s ability to access credit~~ and ~~have affected and may continue to materially and adversely affect the financial soundness of the Company’s customers and suppliers.~~ cash;

~~The~~· ~~Company’s business and operating results have been, and in~~ the ~~future~~ ~~may~~potential befor ~~affected~~nationalization by domestic and global economic conditions, including conditions in the global capital and credit markets. Domestic and global economies, including in South America where the Company has significant sales, continue to experience periods of significant uncertainty, characterized by very weak or negative economic growth, high unemployment, reduced spending by consumers and businesses, bankruptcy, collapse or sale of various financial institutions and a considerable level of intervention from the United States federal government and various foreign governments. Downgrades of long-term sovereign debt issued by the United States and various European countries by Standard & Poor’s, Moody’s and other rating agencies could also affect global and domestic financial markets and economic conditions. Recessionary conditions, if experienced in the future, could materially and adversely affect the demand for the Company’s products and services and, therefore, reduce purchases by customers, and negatively affect revenue growth and cause a decrease in the Company’s profitability. enterprises;

~~Although~~· ~~many vehicle maintenance and repair expenses are non-discretionary~~inflation, ~~difficult economic conditions may reduce miles driven and thereby increase periods between maintenance and repairs. In addition~~recession, ~~interest rate~~ fluctuations, ~~financial~~in ~~market~~foreign ~~volatility~~currency orexchange ~~credit market disruptions may limit the Company’s access to capital,~~ and ~~may~~interest ~~also~~rates ~~negatively affect the Company’s customers’~~ and ~~suppliers’~~discriminatory ~~ability~~fiscal to obtain credit to finance their businesses on acceptable terms. As a result, the Company’s customers’ need for and ability to purchase its products or services may decrease, and its suppliers may increase their prices, reduce their output or change their terms of sale. If the Company’s customers’ or suppliers’ operating and financial performance deteriorates, or if they are unable to make scheduled payments or obtain credit, its customers may not be able to pay, or may delay payment of, accounts receivable owed to the Company, and its suppliers may restrict credit or impose different payment terms. Any inability of customers to pay for the Company’s products and services, or any demands by suppliers for different payment terms, may materially and adversely affect the its earnings and cash flow. policies;

If· ~~economic~~trade ~~conditions~~protection ~~deteriorate~~measures, ~~the~~including ~~Company’s~~increased ~~results~~duties ofand operations or financial condition could limit its ability to take actions pursuant to certain covenants in the Company’s debt agreements that are tied to ratios based on the Company’s financial performance. Such covenants include the Company’s ability to incur additional indebtednesstaxes, ~~make~~and ~~investments~~import or ~~pay~~ ~~dividends.~~export licensing requirements;

~~The~~· ~~Company’s~~price ~~business could be materially and adversely affected if the Company lost any of its larger customers.~~ controls;

~~For~~· ~~the~~exposure ~~year ended December 31, 2014, approximately 23% of the Company’s net sales from continuing operations were~~ to ~~NAPA.~~possible Toexpropriation compete effectively, the Company must continue to satisfy this and other customers’ pricing, service, technology and increasingly stringent quality and reliability requirements. Additionally, the Company’s revenues may be affected by decreases in NAPA’s business or market share. Consolidation among the Company’s customers may also negatively impact the business. For example, CQ Sourcing, a subsidiary of General Parts, represented the Company’s third largest customer for the year ended December 31, 2014. Following Advance Auto’s acquisition of General Parts on January 2, 2014, the Company and CQ Sourcing agreed to end their business relationship effective December 31, 2014. While the Company intends to continue to focus on retaining and winning all of its other ~~customers’~~government business, the Company may not succeed in doing so. The Company cannot provide any assurance as to the amount of future business with any customers. Although business with any given customer is typically split among numerous contracts, the loss of, or significant reduction in, purchases by one of those major customers could materially and adversely affect the Company’s business, financial condition and results of operations. actions;

~~Increases~~· indiffering ~~crude~~local ~~oil~~product ~~and~~preferences ~~gasoline prices could reduce global demand for~~ and ~~use~~product ~~of automobiles and increase the Company’s costs, which could have a material and adverse effect on the Company’s business, financial condition and results of operations.~~ requirements;

~~Significant~~· ~~increases~~difficulty in the price of crude oil have historically been a contributing factor to the periodic reduction in the global demand for and use of automobiles. The price of crude oil experienced a significant decrease in 2014. An increase in the price of crude oil in the future could reduce global demand for and use of automobiles and continue to shift customer demand away from larger cars and light trucks (including sport utility vehicles (“SUVs”)establishing, ~~which~~staffing ~~the Company believes has more frequent replacement intervals for its products, which could have a material~~ and ~~adverse~~managing ~~effect on its business, financial condition and results of~~ operations~~. In the past, demand for traditional SUVs and vans declined when gasoline prices increased. If gasoline prices increased, or if total~~ ;

11· differing labor regulations;

~~Table~~· ofchanges ~~Contents~~in medical reimbursement policies and programs;

miles driven were to decrease for a number of years, it could have a material and adverse effect on the Company’s business, financial condition and/or results of operations. Further, as higher gasoline prices result in a reduction in discretionary spending for auto repair by the end users of the Company’s products, its results of operations have been, in the past and could in the future be impacted. Additionally, higher gasoline prices could have a material adverse impact on the Company’s freight expenses, which could lower the its profit margin. 13

~~The~~· ~~shift~~difficulties in ~~demand~~implementing ~~from~~restructuring ~~premium~~actions toon ~~economy~~a ~~brands~~timely ~~may~~or ~~require~~comprehensive ~~the Company to produce value products at the expense of premium products, resulting in lower prices, thereby reducing the Company’s margins and decreasing the Company’s net sales.~~ basis;

~~The~~· ~~Company estimates~~potentially ~~that~~negative aconsequences ~~majority of its net sales are currently derived~~ from ~~products~~changes ~~it considers to be premium products. Shifts~~ in demand from premium products, on which the Company can generally command premium pricing and generate enhanced margins, to value products could have a material adverse impact on its financial position, results of operations and cash flows. If such a shift occurs, the Company could be forced to expand its production and/or ~~purchases~~interpretations of ~~value~~tax products at competitive prices. In addition, the Company could be forced to further reduce its prices to remain competitive, in which case its margins will decrease unless it makes corresponding reductions in its cost structure. laws;

~~The~~· ~~Company~~political isand ~~subject~~economic toinstability ~~increasing~~and ~~pricing~~possible ~~pressure~~terrorist ~~from~~attacks ~~imports,~~against ~~particularly~~American ~~from lower labor cost countries.~~ interests;

~~Price~~· ~~competition~~enforcement from other aftermarket manufacturers particularly those based in lower labor cost countries, such as China, have historically played a role and may play an increasing role in the aftermarket sectors in which the Company competes. While aftermarket manufacturers in these locations have historically competed primarily in markets for less technologically advanced products and manufactured a limited number of ~~products,~~remedies ~~many are expanding their manufacturing capabilities to produce a broad range of lower labor cost, higher quality products and provide an expanded product offering. In the future, competitors~~ in ~~Asia~~ orvarious ~~other~~jurisdictions; ~~lower labor cost sources may be able to effectively compete in the Company’s premium markets~~ and ~~produce a wider range of products which may force the Company to move additional manufacturing capacity offshore and/or lower its prices, reducing margins and/or decreasing the Company’s net sales.~~

~~Increasing~~· ~~costs~~diminished ~~for~~protection ~~manufactured~~of ~~components,~~intellectual ~~raw materials~~property ~~and~~in ~~energy~~some ~~prices may materially and adversely affect the Company’s business, financial condition and results of operations~~countries.

~~The~~These ~~Company uses a broad range of manufactured components~~ and raw materials in its products, including raw steel, steel-related components, filtration media, aluminum, brass, iron, rubber, resins, plastics, paper and packaging materials. Materials comprise the largest component of the Company’s manufactured goods cost structure. Increases in the price of these items could materially increase the Company’s operating costs and materially and adversely affect profit margins. In addition, in connection with passing through steel and other ~~raw~~factors ~~material~~may ~~price~~have ~~increases to the Company’s customers, there has typically been~~ a ~~delay~~material ofadverse upeffect toon ~~several months in~~ the Company’s ~~ability~~international tooperations ~~increase~~or ~~prices, which has temporarily impacted profitability. In the future, it may be difficult to pass further price increases~~ on toits ~~the Company’s customers~~business, ~~especially~~ iffinancial ~~the~~condition ~~Company~~and ~~experiences~~results ~~additional~~of ~~cost increases soon after implementing price increases~~operations. In addition, the Company ~~has~~may ~~experienced~~experience ~~longer~~net ~~than~~foreign ~~typical~~exchange ~~lead~~losses ~~times~~due ~~in sourcing some of its steel-related components and certain finished products, which has caused it~~ to ~~buy~~currency ~~from non-preferred vendors at higher costs~~fluctuations.

IfThe ~~the~~ Company’s ~~customers~~is ~~seek~~exposed ~~more expansive~~to ~~return~~risks ~~policies~~related orto ~~practices,~~its ~~such~~receivables asfactoring ~~extended payment terms, the Company’s cash flows and results of operations could be materially and adversely affected~~arrangements.

The Company ishas ~~subject~~entered into agreements with third-party financial institutions to ~~product~~factor ~~returns~~on ~~from~~a ~~customers,~~non-recourse ~~some~~basis ofcertain ~~which~~accounts ~~manage~~receivable. ~~their~~The ~~excess~~terms ~~inventory~~of bythe ~~returning~~factoring ~~product~~arrangements toprovide for the ~~Company~~factoring of certain U.S. Dollar-denominated ~~The Company’s~~or ~~agreements~~Canadian ~~with~~Dollar-denominated ~~its~~receivables, ~~customers~~which ~~typically~~are ~~include~~purchased ~~provisions~~at ~~that~~the ~~permit~~face ~~its~~amount ~~customers~~of tothe ~~return~~receivable ~~specified~~discounted ~~levels~~at the annual rate of ~~their~~LIBOR ~~purchases.~~plus ~~Returns~~a bank-determined spread on athe ~~continuing~~purchase ~~operations~~date. ~~basis~~The ~~have~~amount ~~historically~~factored ~~represented~~is ~~less~~not ~~than~~contractually 1%defined ofby the factoring arrangements, and the Company’s ~~sales.~~use Ifof ~~returns~~these ~~from~~arrangements varies each month based on the ~~Company’s~~amount ~~customers~~of ~~significantly~~underlying ~~increase,~~receivables and its cash flow needs. For the ~~business~~years ended December 31, ~~financial~~2015 ~~condition~~and 2014, the Company factored $360 million and ~~results~~$467 million of ~~operations~~receivables ~~may~~and beincurred ~~materially~~costs ~~and~~on ~~adversely~~factoring ~~affected.~~of In$3 ~~addition~~million and $4 million, ~~some~~respectively. ~~customers~~Accounts inreceivable factored by the ~~aftermarket~~Company are ~~pursuing~~ ~~ways~~accounted tofor ~~shift~~as ~~their~~a ~~costs~~sale ofand ~~working~~removed ~~capital,~~from ~~including~~the ~~extending~~balance ~~payment~~sheet ~~terms~~at the time of factoring. ToIf any financial institution with which the ~~extent~~Company ~~customers~~has ~~extend~~factoring ~~payment~~arrangements experiences financial difficulties or is otherwise unable or unwilling to honor the terms of, or otherwise terminate, its factoring arrangements, the Company’s ~~cash~~may ~~flows~~experience a material and ~~results~~adverse loss of ~~operations~~liquidity, ~~may~~which becould ~~materially~~have a material adverse effect on its financial condition, results of operations and ~~adversely~~cash ~~affected~~flows.

12The Company may incur material losses and costs as a result of product liability and warranty and recall claims that may be brought against the Company.

~~Table~~The Company may be exposed to product liability and warranty claims in the event that its products actually or allegedly fail to perform as expected or the use of ~~Contents~~the Company’s products results, or is alleged to result, in bodily injury or property damage. Accordingly, the Company could experience material warranty or product liability losses in the future and could incur significant costs to defend these claims.

~~The~~In addition, if any of the Company’s isproducts ~~subject~~are, or are alleged to ~~other~~be, ~~risks~~defective, it may be required to participate in a recall of that product if the defect or the alleged defect relates to vehicle safety. The Company’s costs associated with ~~its~~any ~~non-U~~product recall or with providing product warranties could be material.S. Product liability, warranty and recall costs may have a material adverse effect on the Company’s business, financial condition and results of operations. The Company’s insurance may not be sufficient to cover such costs.

~~The~~As ~~Company~~a ~~has~~result ~~significant~~of ~~manufacturing~~consolidation ~~operations~~driven ~~outside~~by ~~the~~improved ~~United~~logistics ~~States.~~and Indata ~~2014~~management, ~~approximately~~distributors ~~55%~~have ofreduced ~~the~~their ~~Company’s~~inventory ~~net sales from continuing operations originated outside the United States. In addition~~levels, ~~many~~which ofhave ~~its~~reduced ~~manufacturing operations, suppliers~~ and ~~employees~~could are located outside the United States. Since the Company’s growth strategy depends in part on its ability to further penetrate markets outside the United States and increase the localization of its products and services, the Company expects to continue to ~~increase~~reduce ~~its sales and presence outside~~ the ~~United States, particularly in high-growth markets. The~~ Company’s ~~international business (and particularly its business in high-growth markets) is subject to risks that are customarily encountered in non-U~~sales.~~S. operations, including:~~

•Warehouse ~~multiple~~distributors ~~regulatory~~have ~~requirements~~consolidated ~~that~~through ~~are~~acquisition ~~subject~~and tohave ~~change~~rationalized inventories, while streamlining their distribution systems through more timely deliveries and ~~that~~better ~~could~~data ~~restrict~~management. The corresponding reduction in purchases by distributors has negatively affected the Company’s ~~ability~~sales. toFurther ~~manufacture,~~consolidation ~~market~~ or ~~sell~~improvements ~~its~~in ~~products;~~distribution systems could have a similar material adverse effect on the Company’s sales.

•The ~~differences~~Company may incur significant liabilities or costs under the various regulations to which it is subject, particularly in ~~terms~~relation ofto ~~sale~~environmental, ~~including~~health ~~payment~~and ~~terms;~~safety matters, which could materially and adversely affect the Company’s business, financial condition and results of operations.

•The ~~limitations~~Company onis ~~ownership~~subject to a substantial number of costly regulations. In particular, the Company is required to comply with frequently changing and onincreasingly ~~repatriation~~stringent requirements of ~~earnings~~federal, state and ~~cash~~local environmental and occupational safety and health laws and regulations in the United States and other countries, including those governing: emissions to air, discharges to air and water, and the creation and emission of noise and odor; the generation, handling, storage, transportation, treatment and disposal of waste materials; the cleanup of contaminated properties; and occupational health and safety. The Company could incur substantial costs, including cleanup costs, fines and civil or criminal sanctions, third-party property damage or personal injury claims, or costs to

~~• the potential for nationalization of enterprises;~~14

•upgrade ~~inflation~~or replace existing equipment, ~~recession~~as a result of violations of or liabilities under environmental, ~~fluctuations~~health and safety laws or non-compliance with environmental permits required at its facilities. In addition, many of the Company’s current and former facilities are located on properties with long histories of industrial or commercial operations. Because some environmental laws may impose joint and several liability for the entire cost of cleanup on any of the current or former owners or operators of such properties, regardless of fault, the Company could become liable for investigating and/or remediating contamination at these properties if contamination requiring such activities is discovered in ~~foreign~~the ~~currency~~future. ~~exchange~~The Company cannot ensure that it has been, or will at all times be, in full compliance with all environmental requirements, or that it will not incur material costs or liabilities in connection with these requirements in excess of amounts the Company has reserved. In addition, environmental requirements are complex, change frequently and ~~interest~~have ~~rates~~tended to become more stringent over time. These requirements may change in the future in a manner that could have a material adverse effect on the Company’s business, financial condition and ~~discriminatory~~results ~~fiscal~~of ~~policies;~~operations. The Company has made and will continue to make expenditures to comply with environmental requirements. These requirements, responsibilities and associated expenses and expenditures, if they continue to increase, could have a material adverse effect on the Company’s business and results of operations. While the Company’s costs to defend and settle claims arising under environmental laws in the past have not been material, the Company cannot ensure that this will remain the case in the future. For more information about the Company’s environmental compliance and potential environmental liabilities, see “Item 1. Business—Environmental Matters” and “Item 3. Legal Proceedings.”

•The ~~trade~~Company’s ~~protection~~operations ~~measures,~~would ~~including~~be ~~increased~~materially ~~duties~~ and ~~taxes~~adversely affected if it were unable to purchase raw materials, ~~and~~manufactured ~~import~~components or ~~export~~equipment ~~licensing~~from ~~requirements;~~its suppliers.

•Because ~~price~~the ~~controls;~~Company purchases from suppliers various types of raw materials, finished goods, equipment and component parts, the Company’s operations may be materially and adversely affected by the failure of those suppliers to perform as expected. This non-performance may consist of delivery delays or failures caused by production issues or delivery of non-conforming products. The risk of non-performance may also result from the insolvency or bankruptcy of one or more of the Company’s suppliers. The Company’s suppliers’ ability to supply products to the Company is also subject to a number of risks, including availability of raw materials, such as steel, destruction of their facilities or work stoppages. In addition, the Company’s failure to promptly pay or order sufficient quantities of inventory from the Company’s suppliers may increase the cost of products it purchases or may lead to suppliers refusing to sell products to the Company at all. The Company’s efforts to protect against and to minimize these risks may not always be effective.

•The ~~exposure~~Company’s intellectual property portfolio could be subject to ~~possible~~legal ~~expropriation~~challenges orand ~~other~~it ~~government~~may ~~actions;~~be subject to certain intellectual property claims.

•The ~~differing~~Company ~~local~~has ~~product~~developed ~~preferences~~and is continuing to develop a considerable amount of proprietary technology in the replacement products industry and ~~product~~relies ~~requirements;~~on intellectual property laws of the United States and other countries to protect such technology. In doing so, the Company incurs ongoing costs to enforce and defend its intellectual property. The Company has from time to time been involved in litigation regarding patents and other intellectual property. The Company may be subject to material intellectual property claims in the future or it may incur significant costs or losses related to such claims, including payments for licenses that may not be available on reasonable terms, if at all. The Company’s proprietary rights may be challenged, invalidated or circumvented. Moreover, third parties may independently develop technology or other intellectual property that is comparable with or similar to the Company’s own technology and the Company may not be able to prevent the use of such technology or other intellectual property.

•The ~~difficulty~~Company’s success depends in ~~establishing,~~part ~~staffing~~on its development of improved products, and ~~managing~~its ~~operations;~~efforts may fail to meet the needs of customers on a timely or cost-effective basis.

•The ~~differing~~Company’s ~~labor~~continued ~~regulations;~~success depends on its ability to maintain the advanced technological capabilities, machinery and knowledge necessary to adapt to changing market demands as well as to develop and commercialize innovative products. The Company cannot ensure that it will be able to develop new products as successfully as in the past or that it will be able to keep pace with technological developments by its competitors and the industry generally. In addition, the Company may develop specific technologies and capabilities in anticipation of customers’ demands for new innovations and technologies. If such demand does not materialize, the Company may be unable to recover the costs incurred in such programs. If the Company is unable to recover these costs or if any such programs do not progress as expected, the Company’s business, financial condition or results of operations could be materially and adversely affected.

•The ~~changes~~introduction inof ~~medical~~new ~~reimbursement~~and ~~policies~~improved products and ~~programs;~~services may reduce the Company’s future sales.

•Improvements ~~difficulties~~in technology and product quality may extend the longevity of vehicle component parts and delay aftermarket sales. In particular, in ~~implementing~~the ~~restructuring~~Company’s ~~actions~~oil onfilter business, the introduction of oil change indicators and the use of synthetic motor oils may further extend oil filter replacement cycles. The continued development and sale of electric, fuel cell and hybrid automobiles may pose a ~~timely~~long-term orrisk ~~comprehensive~~to ~~basis;~~the Company’s business because these vehicles may alter demand for its primary product lines. In addition,

~~• potentially negative consequences from changes in or interpretations of tax laws;~~15

•the ~~political~~introduction ~~and~~by ~~economic~~OEMs ~~instability~~of increased warranty and ~~possible~~maintenance ~~terrorist~~service ~~attacks~~initiatives, ~~against~~which ~~American~~are ~~interests;~~gaining popularity, have the potential to decrease the demand for the Company’s products in the traditional and retail sales channels.

•Any ~~enforcement~~dispositions ofthe ~~remedies~~Company inmakes ~~various~~could ~~jurisdictions;~~disrupt the Company’s business and materially and adversely affect the Company’s business, financial condition and results of operations.

•The ~~diminished~~Company ~~protection~~may, from time to time, consider dispositions of ~~intellectual~~existing ~~property~~lines of business. For example, the Company completed the sale of the businesses comprising its South America segment in ~~some~~2015 ~~countries~~and completed the sale of its Chassis group in 2014. Dispositions involve numerous risks, including the diversion of management’s attention from other business concerns and potential adverse effects on existing business relationships with current customers and suppliers. Any of these factors could result in a material adverse effect on the Company’s business, financial condition and results of operations.

~~These~~Cypress ~~and~~controls ~~other~~the ~~factors~~Company and may have aconflicts ~~material~~of ~~and~~interest ~~adverse~~with ~~effect on~~ the Company’s ~~international operations~~ or onthe ~~its~~holders ~~business, financial condition and results~~ of ~~operations. In addition,~~ the Company’s ~~may~~notes ~~experience~~in ~~net~~the ~~foreign exchange losses due to currency fluctuations~~future.

~~The~~Cypress beneficially owns 61% of the outstanding shares of the Company’s iscommon ~~exposed~~stock. As a result, Cypress has the ability to ~~risks~~prevent ~~related~~any transaction that requires the approval of stockholders regardless of whether or not other stockholders or note holders believe that such transaction is in their own best interests. Additionally, Cypress is in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with the Company. Cypress may also pursue, for its ~~receivables~~own ~~factoring~~account, ~~arrangements~~acquisition opportunities that may be complementary to the Company’s business, and, as a result, those acquisition opportunities may not be available to the Company. So long as Cypress continues to own a significant number of the outstanding shares of the Company’s common stock, even if such number is less than 50%, it will continue to be able to strongly influence or effectively control the Company’s decisions, including director and officer appointments, potential mergers and acquisitions, asset sales and other significant corporate transactions.

The Company has entered into agreements with third-party financial institutions to factor on a non-recourse basis certain receivables. The terms of the factoring arrangements provide for the factoring of certain U.S. Dollar-denominated or Canadian Dollar-denominated receivables, which are purchased at the face amount of the receivable discounted at the annual rate of LIBOR plus a bank-determined spread on the purchase date. The amount factored is not contractually defined by the factoring arrangements and the Company’s use will vary each month based on the amount of underlying receivables and its cash flow needs. For the years ended December 31, 2014 and 2013, the Company factored $467 million and $541 million of receivables, respectively, and incurred costs on factoring of $4 million for each of the years ended December 31, 2014 and 2013. Results for 2013 included the Company’s Chassis group for periods prior to its sale. Accounts receivable factored by the Company are accounted for as a sale and removed from the balance sheet at the time of factoring. If ~~any of~~ the ~~financial institutions with which the~~ Company ~~has~~is ~~factoring arrangements experience financial difficulties or are otherwise~~ unable ~~or unwilling~~ to ~~honor~~retain ~~the~~qualified ~~terms of~~personnel, ~~or otherwise terminate,~~ its ~~factoring~~ability ~~arrangements, the Company may experience material and adverse economic losses due~~ to ~~the~~maintain ~~impact of such failure on~~ its ~~liquidity,~~ongoing ~~which~~operations could ~~have~~be ~~a material and adverse effect upon its financial condition, results of operations and cash flows~~impaired.

~~The~~To be successful and achieve the Company’s ~~may~~objectives ~~incur~~under ~~material~~its ~~losses~~strategic ~~and~~plan, ~~costs~~the asCompany amust ~~result~~retain ofqualified ~~product~~personnel, ~~liability~~including ~~and~~its ~~warranty~~senior management, and ~~recall~~hire ~~claims~~new ~~that~~talent ~~may~~necessary beto ~~brought against~~maintain the Company’s ongoing operations. An inability to retain key employees could have a material adverse effect on the Company’s business. Accordingly, the Company may fail to maintain its ongoing operations, or execute its strategic plan if it is unable to manage such changes effectively.

The Company may be ~~exposed~~required to ~~product~~recognize ~~liability~~impairment ~~and~~charges ~~warranty~~for ~~claims in the event that~~ its ~~products~~long-lived ~~actually or~~assets, ~~allegedly~~which ~~fail~~include tofixed ~~perform as expected or the use of the Company’s products results~~assets, orintangible ~~is alleged to result~~assets, ~~in bodily injury~~ and~~/or~~ ~~property damage~~goodwill.

13At December 31, 2015, the net carrying value of long-lived assets (property, plant and equipment) totaled $115 million. In accordance with GAAP, long-lived assets are tested for recoverability whenever events or changes in circumstances, such as, significant negative industry or economic trends, disruptions to the Company’s business, unexpected significant changes or planned changes in use of the assets, divestitures and market capitalization declines, indicate that their carrying amount may not be recoverable and may result in charges to long-lived asset impairments. Future impairment charges could significantly affect the Company’s results of operations in the periods recognized. Impairment charges would also reduce the Company’s consolidated net worth and increase its debt to total capitalization ratio, which could negatively affect the Company’s access to the public debt and equity markets.

~~Table~~The Company has $48 million of ~~Contents~~recorded “Other intangible assets, net” and “Goodwill” on its Consolidated Balance Sheet as of December 31, 2015. These assets may become impaired with the loss of significant customers or a decline of profitability. In assessing the recoverability of goodwill, projections regarding estimated future cash flows and other factors are made to determine the fair value of the respective reporting unit. If these estimates or related projections change in the future, the Company may be required to record impairment charges for goodwill at that time. If the carrying values of the Company’s trade names exceed fair value, the Company will be required to record an impairment charge.

~~Accordingly,~~While the Company’s ~~could~~intangibles ~~experience~~with ~~material~~definite ~~warranty~~lives ormay ~~product~~not ~~liability~~be impaired, the useful lives are subject to continual assessment, taking into account historical and expected losses of relationships that were in the ~~future~~base ~~and~~at ~~incur~~time of acquisition. This assessment may result in a reduction of the remaining useful life of these assets, resulting in potentially significant ~~costs~~increases to ~~defend~~non-cash ~~these~~amortization ~~claims~~expense that is charged to the Company’s Consolidated Statements of Operations. An intangible asset or goodwill impairment charge, or a reduction of amortization lives, could have a material adverse effect on the Company’s results of operations.

In addition, if any of the Company’s products are, or are alleged to be, defective, it may be required to participate in a recall of that product if the defect or the alleged defect relates to vehicle safety. The Company’s costs associated with any product recall or with providing product warranties could be material. Product liability, warranty and recall costs may have a material and adverse effect on the Company’s business, financial condition and results of operations. The Company’s insurance may not be sufficient to cover such costs. 16

AsBusiness adisruptions ~~result~~could ofmaterially ~~the consolidation driven by improved logistics~~ and ~~data~~adversely ~~management,~~affect ~~distributors~~the ~~have~~Company’s ~~reduced~~future ~~their~~sales ~~inventory levels, which have reduced~~ and ~~could~~financial ~~continue~~condition toor ~~reduce~~increase the Company’s ~~sales.~~costs and expenses.

~~Warehouse~~The ~~distributors~~Company’s ~~have~~business ~~consolidated~~may ~~through acquisition~~be ~~and~~disrupted ~~rationalized~~by ~~inventories~~a variety of events or conditions, ~~while~~including, ~~streamlining~~but ~~their~~not ~~distribution~~limited ~~systems~~to, ~~through~~threats ~~more~~to ~~timely~~physical ~~deliveries~~security, acts of terrorism, labor stoppages or disruptions, raw material shortages, natural and ~~better~~man-made ~~data~~disasters, ~~management.~~information ~~The~~technology ~~corresponding~~failures ~~reduction~~and inpublic ~~purchases~~health bycrises. ~~distributors~~Any ~~has~~of ~~negatively~~these ~~impacted~~disruptions could affect the Company’s ~~sales.~~ ~~Further~~internal ~~consolidation~~operations or ~~improvements~~services inprovided ~~distribution~~to ~~systems~~customers, and could ~~have~~affect aits ~~similar~~sales, ~~material~~increase ~~and~~expenses ~~adverse~~or ~~impact~~materially onand adversely affect the Company’s ~~sales~~reputation.

~~The~~Foreign ~~Company~~exchange israte ~~subject~~fluctuations tocould ~~costly~~cause ~~regulation,~~a ~~particularly~~decline in ~~relation to environmental, health and safety matters, which could materially and adversely affect~~ the Company’s ~~business,~~ financial condition, ~~and~~ results of operations. and cash flows.

~~The~~As ~~Company is subject to~~ a ~~substantial~~result ~~number~~ of ~~costly~~the ~~regulations.~~Company’s Ininternational ~~particular~~operations, the Company isgenerates ~~required~~a tosignificant ~~comply~~portion ~~with frequently changing and increasingly stringent requirements~~ of ~~federal,~~its ~~state~~revenues and ~~local~~incurs ~~environmental~~a ~~and~~significant ~~occupational~~portion ~~safety~~of ~~and~~its ~~health laws~~expenses ~~and regulations~~ in ~~the~~currencies ~~United States and~~ other ~~countries,~~than ~~including those governing emissions to air, discharges to air and water, and~~ the ~~creation~~U.S. Dollar. ~~and~~The ~~emission~~Company’s ofinternational ~~noise~~presence ~~and~~is ~~odor;~~most ~~the~~significant ~~generation,~~in ~~handling~~Canada, ~~storage~~China, ~~transportation~~Mexico, ~~treatment~~Poland and ~~disposal~~ ofVenezuela. ~~waste~~To ~~materials; and~~ the ~~cleanup~~extent ofthat ~~contaminated~~the ~~properties and occupational health and safety. The~~ Company ~~could~~has ~~incur~~significantly ~~substantial~~more costs, ~~including~~than ~~cleanup~~revenues ~~costs,~~generated ~~fines~~in ~~and~~a ~~civil~~foreign ~~or criminal sanctions~~currency, ~~third-party~~it ~~property~~is ~~damage~~subject ~~or personal injury claims, or costs~~ to ~~upgrade~~risk orif ~~replace~~the ~~existing~~foreign ~~equipment,~~currency asappreciates abecause ~~result~~the ofappreciation ~~violations~~effectively ofincreases ~~or liabilities under environmental, health and safety laws or non-compliance with environmental permits required at its facilities. In addition, many of~~ the Company’s ~~current~~cost ~~and~~in ~~former~~that ~~facilities~~country ~~are~~to ~~located~~a ongreater ~~properties~~extent ~~with~~than ~~long~~its ~~histories of industrial or commercial operations~~revenues. ~~Because~~To ~~some environmental laws may impose joint and several liabilities for~~ the ~~entire~~extent ~~cost~~that ~~of cleanup upon any of~~ the ~~current or former owners or operators, regardless of fault, the~~ Company ~~could become liable for investigating and/or remediating contamination at these properties if contamination requiring such activities~~ is ~~discovered~~unable into ~~the future.~~match ~~The~~revenues ~~Company~~received ~~cannot assure that it has been, or will at all times be,~~ in ~~complete~~foreign ~~compliance~~currencies with ~~all environmental requirements, or that it will not incur material~~ costs orpaid ~~liabilities~~ in ~~connection with these requirements in excess of amounts~~ the ~~Company~~same ~~has reserved. In addition~~currency, ~~environmental~~foreign ~~requirements~~exchange ~~are~~rate ~~complex,~~fluctuations ~~change frequently and have tended to become more stringent over time. These requirements may change~~ in ~~the future in a manner~~ that currency could have a material ~~and~~ adverse effect on the Company’s ~~business,~~ financial condition, ~~and~~ results of operations. ~~The Company has made~~ and ~~will~~cash ~~continue to make expenditures to comply with environmental requirements~~flows. ~~These~~In ~~requirements~~addition, ~~responsibilities~~the ~~and~~financial ~~associated expenses and expenditures~~condition, ifresults ~~they~~of ~~continue~~operations toand ~~increase,~~cash ~~could~~flows ~~have~~of asome ~~material~~of ~~and adverse effect on~~ the Company’s ~~business~~operating ~~and~~entities ~~results~~are ofreported ~~operations.~~in ~~While~~foreign ~~the~~currencies ~~Company’s costs to defend~~ and ~~settle~~then ~~claims~~translated ~~arising~~into ~~under~~U.S. ~~environmental~~Dollars ~~laws in~~at the ~~past~~applicable ~~have~~foreign ~~not~~exchange ~~been~~rate ~~material,~~for inclusion in the Company’s ~~cannot~~consolidated ~~assure~~financial ~~you~~statements. ~~that~~As ~~this~~a ~~will~~result, ~~remain~~appreciation ~~the~~of ~~case in~~ the ~~future~~U.S. Dollar ~~For~~against ~~more~~these ~~information~~foreign ~~about~~currencies ~~the~~generally ~~Company’s~~will ~~environmental~~have ~~compliance~~a ~~and~~negative ~~potential~~effect ~~environmental~~on ~~liabilities,~~the ~~see~~Company’s ~~“Item~~reported ~~1. Business—Environmental~~sales ~~Matters”~~ and ~~“Item 3~~profits. ~~Legal Proceedings.”~~

The Company’s ~~operations~~uses ~~would~~a ~~be materially~~combination ~~and~~of ~~adversely~~natural ~~affected~~hedging iftechniques itand isfinancial ~~unable~~derivatives to ~~purchase~~protect ~~raw~~against ~~materials,~~certain ~~manufactured~~foreign ~~components~~currency exchange rate risks. Such hedging activities may be ineffective or ~~equipment~~may ~~from~~offset ~~its~~only ~~suppliers~~a portion of the adverse financial effect of foreign currency variations. Gains or losses associated with hedging activities also may negatively affect operating results.

~~Because~~Entering ~~the~~new ~~Company~~markets ~~purchases~~poses ~~from~~new ~~suppliers~~competitive ~~various~~threats ~~types of raw materials, finished goods, equipment~~ and ~~component~~commercial parts, the Company may be materially and adversely affected by the failure of those suppliers to perform as expected. This non-performance may consist of delivery delays or failures caused by production issues or delivery of non-conforming products. The risk of non-performance may also result from the insolvency or bankruptcy of one or more of the Company’s suppliers. The Company’s suppliers’ ability to supply products to the Company is also subject to a number of risks~~, including availability of raw materials, such as steel, destruction of their facilities or work stoppages~~. In addition, the Company’s failure to promptly pay, or order sufficient quantities of inventory from, the Company’s suppliers may increase the cost of products it purchases or may lead to suppliers refusing to sell products to the Company at all. The Company’s efforts to protect against and to minimize these risks may not always be effective.

In recent years the Company has sought to expand its manufacturing and sales into new markets. Expanding into new markets requires investments and resources that may not be available as needed. The Company’s ~~intellectual~~cannot ~~property~~guarantee ~~portfolio~~that ~~could~~it will be ~~subject~~successful in leveraging its capabilities to ~~legal~~compete ~~challenges~~favorably ~~and~~in new markets or that it ~~may~~will be ~~subject~~able to ~~certain~~recoup ~~intellectual property~~its ~~claims~~significant investments in expansion projects. If the Company’s customers in new markets experience reduced demand for their products or financial difficulties, the Company’s future prospects will be negatively affected as well.

The ~~Company~~mix ~~has~~of ~~developed~~profits and islosses ~~continuing to develop a considerable amount of proprietary technology~~ in ~~the replacement~~various ~~products~~jurisdictions ~~industry~~may ~~and~~have ~~rely~~an effect on ~~intellectual property laws of~~ the ~~United~~Company’s ~~States~~overall ~~and~~tax ~~other countries to protect such technology. In doing so~~rate, ~~the~~which ~~Company incurs ongoing costs to enforce and defend its intellectual property. The Company has from time to time been involved~~ in ~~litigation~~turn, ~~regarding~~may ~~patents~~materially and ~~other~~adversely ~~intellectual~~affect ~~property.~~its ~~The Company may be subject to material intellectual property~~ profitability.

14Tax expenses and benefits are determined separately for each of the Company’s taxpaying entities or groups of entities that is consolidated for tax purposes in each jurisdiction. Losses in such jurisdictions may provide no current financial statement tax benefit. As a result, changes in the mix of projected profits and losses between jurisdictions, among other factors, could have a significant effect on the Company’s overall effective tax rate.

~~Table~~The value of ~~Contents~~the Company’s deferred tax assets could become impaired, which could materially and adversely affect the Company’s operating results.

~~claims~~As inof December 31, 2015, the ~~future~~Company orhad it$113 ~~may~~million ~~incur~~in ~~significant~~net ~~costs~~deferred ortax ~~losses~~assets. ~~related~~These todeferred ~~such~~tax ~~claims,~~assets ~~including~~include ~~payments~~net ~~for~~operating ~~licenses~~loss carryforwards that ~~may~~can ~~not~~ be ~~available~~used onto ~~reasonable~~offset ~~terms,~~taxable ifincome atin ~~all~~future periods and reduce income taxes payable in those future periods. The Company’s ~~proprietary~~periodically ~~rights~~determines ~~may~~the beprobability ~~challenged,~~of ~~invalidated~~the orrealization ~~circumvented.~~of ~~Moreover~~deferred tax assets, ~~third~~using ~~parties~~significant ~~may~~judgments ~~independently~~and ~~develop~~estimates ~~technology~~with orrespect to, among other ~~intellectual~~factors, ~~property~~historical operating results, expectations of future earnings and tax planning strategies. If the Company determines in the future that there is ~~comparable~~not ~~with~~sufficient positive evidence to support the valuation of these assets, due to the factors described above or ~~similar~~other factors, the Company may be required to further adjust the valuation allowance to reduce the Company’s ~~own~~deferred ~~technology~~tax assets. Such a reduction could result in material non-cash expenses in the period in which the valuation allowance is adjusted and it ~~may~~could ~~not~~have bea ~~able~~material toadverse ~~prevent~~effect on the ~~use~~Company’s results of itoperations.

The Company’s ~~success~~ability ~~depends~~to inutilize ~~part~~its onnet ~~its~~operating ~~development~~loss carryforwards may be limited and delayed. As of ~~improved~~December 31, ~~products~~2015, ~~and~~ ~~its~~the ~~efforts~~Company ~~may~~had ~~fail~~U.S. tonet ~~meet~~operating loss carryforwards of $288 million. Certain provisions of the ~~needs~~Internal Revenue Code of ~~customers~~1986, onas aamended, ~~timely~~could orlimit ~~cost-effective~~the ~~basis~~Company’s annual utilization of the net operating loss carryforwards. The Company may be unable to utilize all of its net operating loss carryforwards, and any subsequent net operating loss carryforwards in the future.

The Company’s continued success depends on its ability to maintain advanced technological capabilities, machinery and knowledge necessary to adapt to changing market demands as well as to develop and commercialize innovative products. The Company cannot assure that it will be able to develop new products as successfully as in the past or that it will be able to keep pace with technological developments by its competitors and the industry generally. In addition, the Company may develop specific technologies and capabilities in anticipation of customers’ demands for new innovations and technologies. If such demand does not materialize, the Company may be unable to recover the costs incurred in such programs. If the Company is unable to recover these costs or if any such programs do not progress as expected, its business, financial condition or results of operations could be materially and adversely affected. 17

The ~~introduction~~Company ofmay ~~new~~be ~~and~~unsuccessful ~~improved~~in ~~products~~maintaining ~~and~~or ~~services~~upgrading ~~may~~its ~~reduce~~information ~~the~~technology ~~Company’s future sales~~systems.

~~Improvements~~The inCompany relies on various information technology systems to manage its operations. The Company is currently implementing modifications and ~~product~~upgrades ~~quality~~to ~~may~~its ~~extend~~systems, ~~the~~including ~~longevity~~making ofchanges ~~vehicle~~to ~~component~~legacy ~~parts~~systems, replacing legacy systems with successor systems with new functionality and ~~delay~~acquiring ~~aftermarket~~new ~~sales~~systems with new functionality. InThese ~~particular, in~~types of activities subject the Company’s ~~oil~~to ~~filter~~inherent ~~business~~costs ~~the~~and ~~introduction~~risks ofassociated ~~oil~~with ~~change~~replacing ~~indicators~~ and ~~the~~changing ~~use~~these systems, including impairment of ~~synthetic~~its ~~motor~~ability ~~oils~~to ~~may~~fulfill ~~further~~customer ~~extend~~orders, ~~oil~~potential ~~filter~~disruption ~~replacement~~of ~~cycles.~~the ~~The~~Company’s ~~continued~~internal ~~development~~control structure, substantial capital expenditures, additional administration and ~~sale~~operating expenses, retention of ~~electric~~sufficiently skilled personnel to implement and operate the new systems, ~~fuel~~demands ~~cell~~on management time, and ~~hybrid automobiles~~other ~~may~~risks ~~pose~~and acosts ~~long-term~~of ~~risk~~delays or difficulties in transitioning to new systems or of integrating new systems into the Company’s ~~business~~current ~~because~~systems. ~~these~~The ~~vehicles~~Company’s ~~may~~system ~~alter~~implementations ~~demand~~may ~~for~~not ~~its~~result ~~primary~~in ~~product~~productivity ~~lines.~~improvements Inat ~~addition,~~a ~~the~~level ~~introduction~~that byoutweighs ~~OEMs~~the costs of ~~increased~~implementation, ~~warranty~~or ~~and~~at ~~maintenance~~all. ~~service~~In ~~initiatives~~addition, ~~which~~if ~~are gaining~~not ~~popularity,~~anticipated ~~have~~and appropriately mitigated, the ~~potential~~implementation toof ~~decrease~~new ~~the~~technology ~~demand~~systems ~~for~~may cause disruptions in the Company’s ~~products~~business inoperations ~~the~~and ~~traditional~~have ~~and~~a ~~retail~~material ~~sales~~effect ~~channels.~~on the Company’s business and operations.

~~Any~~The ~~dispositions the~~ Company’s ~~makes~~international ~~could~~operations ~~disrupt~~are ~~the~~subject ~~Company’s~~to ~~business~~political and ~~materially~~economic ~~and~~risks ~~adversely~~associated ~~affect~~with ~~the~~developing ~~Company’s business~~countries, ~~financial~~including ~~condition~~special ~~and~~risks ~~results~~associated ofwith ~~operations.~~doing business in potentially corrupt environments.

The Company ~~may~~designs, ~~from~~manufactures, ~~time~~distributes toand ~~time,~~markets ~~consider~~a ~~dispositions~~broad range of ~~existing lines~~aftermarket products in various regions, some of ~~business.~~which ~~For~~are ~~example~~less developed, have less stability in legal systems and financial markets and are generally recognized as potentially more corrupt business environments than the United States, and therefore present greater political, economic and operational risks. The Company ~~distributed~~has ~~its~~in ~~Brake~~place ~~North~~certain ~~America~~policies, procedures and ~~Asia~~certain ~~group~~ongoing training of employees with regard to business ethics and many key legal requirements, such as applicable anti-corruption laws, including the ~~shareholders~~U.S. Foreign Corrupt Practices Act (the “FCPA”), which make it illegal for the Company to give anything of ~~Holdings~~value to foreign officials in ~~2012~~order ~~and~~to obtain or retain any business or other advantages. There can, however, be no assurance that the Company’s ~~completed~~employees will adhere to the ~~sale~~Company’s code of ~~its~~business ~~Chassis~~conduct ~~group~~and onethics ~~May 1,~~or ~~2014.~~any ~~Dispositions~~other ~~involve~~of ~~numerous~~the ~~risks~~Company’s policies, applicable anti-corruption laws, including the ~~diversion~~FCPA, ofor other legal requirements. If the Company’s ~~management~~fails to enforce its policies and procedures properly or fails to maintain adequate record-keeping and internal accounting practices to accurately record the Company’s ~~attention~~transactions, ~~from~~the Company may be subject to regulatory sanctions. In the event that the Company believes or has reason to believe that its employees have or may have violated applicable anti-corruption laws, including the FCPA, or other ~~business~~laws ~~concerns~~or ~~and~~regulations, ~~potential~~the ~~adverse~~Company ~~effects~~is onrequired ~~existing~~to ~~business~~investigate ~~relationships~~or ~~with~~have ~~current~~outside ~~customers~~counsel investigate the relevant facts and ~~suppliers~~circumstances. ~~Any~~If ofviolations ~~these~~are ~~factors~~found or suspected, the Company could ~~result~~face civil and criminal penalties and significant costs for investigations, litigation, fees, settlements and judgments, which in turn could have a material adverse effect on the Company’s business~~, financial condition and results of operations~~.

~~Any~~Risks ~~acquisitions~~Relating ~~the~~to ~~Company makes could disrupt~~ the Company’s ~~business and materially and adversely affect the Company’s business, financial condition and results of operations.~~ Indebtedness

The Company ~~may, from time to time, consider acquisitions of complementary companies, products or technologies. Acquisitions involve numerous risks, including the diversion of management~~’s ~~attention~~substantial ~~from~~leverage ~~other business concerns and potential adverse effects on existing business relationships with current customers and suppliers. Any acquisitions~~ could ~~present~~harm ~~difficulties~~its ~~in the assimilation of the acquired~~ business ~~and~~by ~~involve~~limiting the ~~incurrence of substantial additional indebtedness. The~~ Company’s ~~cannot~~available ~~assure~~cash ~~that~~and itits ~~will~~access ~~be able~~ to ~~successfully~~additional ~~integrate~~capital ~~any~~and, ~~acquisitions that it pursues or that such acquisitions will perform as planned or prove~~ to bethe ~~beneficial~~extent toof the Company’s ~~operations~~variable ~~and~~rate ~~cash~~indebtedness, ~~flow.~~exposing ~~Any of these factors could result in a material adverse effect on~~ the Company’s ~~business,~~to ~~financial~~interest ~~condition~~rate ~~and results of operations~~risk.

~~Cypress~~On ~~controls~~April 25, 2013, the Company refinanced its existing notes and ~~may~~credit ~~have~~facilities ~~conflicts~~and made a distribution to Holdings, the Company’s shareholder. The refinancing consisted of ~~interest~~the issuance of $250 million aggregate principal amount of 7.75% Senior Notes due May 1, 2021 (the “Senior Notes”), a $200 million term loan due April 25, 2016 (“Term Loan B-1”), a $470 million term loan due April 25, 2020 (“Term Loan B-2,” and together with Term Loan B-1, the “Term Loans”), the proceeds of which the Company orused, together with $31 million of cash on hand, to redeem the ~~holders~~Company’s 10.75% Senior Secured Notes due 2016 (the “Secured Notes”), redeem its 9% Senior Subordinated Notes due 2014 (the “Subordinated Notes”), pay fees and expenses in connection with the refinancing transaction and make a $350 million distribution to Holdings. As a result of this refinancing, the Company is highly leveraged. This leverage may limit the Company’s ~~notes~~ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions, restructuring and general corporate or other purposes. The Company also may be more vulnerable than a less leveraged company to a downturn in the general economic conditions or in the Company’s business, which may place the Company at a competitive disadvantage compared to its less leveraged competitors. Further volatility in the credit markets could adversely affect the Company’s ability to obtain favorable terms on financing in the future. In addition, a substantial portion of the Company’s cash flows from operations must be dedicated to the payment of principal and interest on its indebtedness and is not available for other purposes, including the Company’s ongoing operations, capital expenditures important to the Company’s growth and other business opportunities. The Company cannot ensure that its business will generate sufficient cash flow from operations, that revenue growth or operating improvements will be realized, or that future borrowings will be available under the Company’s ABL Revolver in an amount sufficient to enable the Company to service its indebtedness or to fund other liquidity needs. In March 2016, the Company entered into a 140 million Euro term loan facility agreement with MANN + HUMMEL Inc. due December 31, 2016. The Company utilized the term loan facility to fully repay the outstanding balance of Term Loan B-1.

~~Cypress beneficially owns 61% of the outstanding shares of the Company’s common stock. As a result~~Further, ~~Cypress has control over~~ the Company’s ~~decisions~~may tobe ~~enter~~vulnerable ~~into any corporate transaction and has the ability~~ to ~~prevent~~interest ~~any~~rate ~~transaction that requires the approval of stockholders regardless of whether or not other stockholders or note holders believe that any such transactions are in their own best interests. Additionally~~increases, ~~Cypress~~as iscertain ~~in the business~~ of ~~making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with the Company. Cypress may also pursue, for~~ its ~~own account~~borrowings, ~~acquisition~~including ~~opportunities~~those ~~that~~under ~~may be complementary to~~ the Company’s ~~business,~~ABL ~~and~~Revolver, asare aat ~~result~~variable ~~those acquisition opportunities may not be available to the Company~~rates. SoAs ~~long as Cypress continues to own a significant number~~ of ~~the~~December 31, ~~outstanding~~2015, ~~shares of~~ the Company’s ~~common~~$740 ~~stock,~~million ~~even~~of ifaggregate ~~such~~debt ~~number~~outstanding isconsisted ~~less~~of ~~than~~$490 ~~50%,~~million itof ~~will~~floating-rate ~~continue~~debt toand be$250 ~~able~~million toof ~~strongly~~fixed-rate ~~influence~~debt. orAny ~~effectively~~borrowings ~~control~~ the Company’s ~~decisions, including~~incurs ~~director~~under ~~and~~its ~~officer appointments, potential mergers and acquisitions, asset sales and other significant corporate transactions.~~

~~The Company’s ability to maintain its ongoing operations could be impaired.~~ 18

ToABL beRevolver ~~successful~~will ~~and~~be ~~achieve~~at ~~the~~floating ~~Company’s~~interest ~~objectives~~rates ~~under~~and ~~its~~will ~~strategic~~expose ~~plan,~~ the Company ~~must retain qualified personnel, including its senior management, and hire new talent necessary~~ to ~~maintain~~interest ~~the~~rate ~~Company’s ongoing operations~~risk. AnFor ~~inability~~further toinformation ~~retain~~see ~~key~~“Item 7. ~~employees could have a material adverse effect on the Company~~Management’s ~~business.~~Discussion ~~Accordingly,~~and ~~the~~Analysis ~~Company~~of ~~may~~Financial ~~fail~~Condition ~~to maintain~~and ~~its~~Results ~~ongoing~~of ~~operations,~~Operations—Liquidity orand ~~execute~~Capital ~~its strategic plan if the Company is unable to manage such changes effectively~~Resources.”

15The Company may not be able to generate sufficient cash to service all of its indebtedness and may be forced to take other actions to satisfy its obligations under the Company’s indebtedness, which actions may not be successful.

~~Table~~The Company’s ability to make scheduled payments or to refinance its debt obligations depends on the Company’s financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond its control. The Company may not be able to maintain a level of ~~Contents~~cash flow from operating activities sufficient to permit the Company to pay the principal and interest on the Company’s indebtedness. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

~~The~~If the Company’s cash flows and capital resources are insufficient to fund the Company’s debt service obligations, it may be ~~required~~forced to ~~recognize~~reduce ~~impairment~~or ~~charges~~delay ~~for~~capital ~~its~~expenditures, ~~long-lived~~sell assets, ~~which~~ ~~include~~seek ~~fixed~~additional ~~assets~~capital or seek to restructure or refinance its indebtedness. These alternative measures may not be successful and may not permit the Company to meet its scheduled debt service obligations. In the absence of such operating results and resources, ~~intangible~~the Company could face substantial liquidity problems and might be required to sell material assets or operations to attempt to meet the Company’s debt service and other obligations. The Company’s ABL Revolver, Term Loans and ~~goodwill~~the indentures governing the Company’s notes restrict its ability to use the proceeds from asset sales. The Company may not be able to consummate those asset sales to raise capital or sell assets at prices that the Company believes are fair, and proceeds that it does receive may not be adequate to meet any debt service obligations then due.

AtDespite ~~December 31, 2014,~~ the net carrying value of long-lived assets (property, plant and equipment) totaled $123 million. In accordance with GAAP, long-lived assets shall be tested for recoverability whenever events or changes in circumstances, such as, significant negative industry or economic trends, disruptions to the Company’s ~~business,~~current ~~unexpected~~indebtedness ~~significant changes or planned changes in use of the assets~~levels, ~~divestitures~~it ~~and market capitalization declines indicate that its carrying amount~~ may ~~not~~still be ~~recoverable~~able ~~and may result in charges~~ to ~~long-lived~~ ~~asset~~incur ~~impairments.~~substantially ~~Future~~more ~~impairment~~debt, ~~charges~~which could ~~significantly~~further ~~affect~~exacerbate the ~~Company’s~~risks ~~results~~associated ofwith ~~operations in~~ the ~~periods recognized. Impairment charges would also reduce the~~ Company’s ~~consolidated~~substantial ~~net worth and increase its debt to total capitalization ratio, which could negatively impact the Company’s access to the public debt and equity markets~~leverage.

The Company ~~has~~and ~~$56~~its ~~million~~subsidiaries ofmay ~~recorded~~be ~~intangible~~able ~~assets~~to ~~and~~incur ~~goodwill~~additional onindebtedness ~~its~~in ~~consolidated~~the ~~balance~~future. ~~sheet~~Although asthe terms of ~~December 31,~~the ~~2014.~~agreements ~~These~~governing ~~assets~~the ~~may~~Company’s ~~become~~debt ~~impaired~~instruments ~~with~~contain restrictions on the ~~loss~~incurrence of ~~significant~~additional ~~customers~~indebtedness, orthese restrictions are subject to a ~~decline~~number of ~~profitability.~~qualifications Inand ~~assessing the~~exceptions, ~~recoverability~~and ofthe ~~goodwill,~~indebtedness ~~projections~~incurred ~~regarding~~in ~~estimated~~compliance ~~future~~with ~~cash~~these ~~flows~~restrictions ~~and~~could ~~other~~be ~~factors~~substantial. ~~are~~As ~~made~~of toDecember 31, ~~determine~~2015, the ~~fair~~Company ~~value~~had $73 million of ~~the~~borrowing ~~respective~~capacity ~~reporting~~available ~~unit.~~under Ifthe ~~these~~ABL ~~estimates~~Revolver orafter ~~related~~giving ~~projections~~effect ~~change~~to $7 million in ~~the~~outstanding ~~future~~letters of credit, ~~the~~none ~~Company may~~of bewhich ~~required~~was todrawn ~~record~~against, ~~impairment~~and ~~charges~~less ~~for~~than ~~goodwill~~$1 atmillion ~~that~~for ~~time~~borrowing base reserves. If the Company’s ~~trade~~incurs ~~names~~additional ~~carrying~~debt ~~values~~above ~~exceed~~the ~~fair~~levels ~~value~~currently in effect, the ~~Company~~risks ~~will~~associated bewith ~~required~~the toCompany’s ~~record~~leverage, anincluding ~~impairment~~those ~~charge.~~described above, would increase.

~~While~~The terms of the Company’s ~~intangibles~~debt ~~with~~covenants ~~definite~~could ~~lives~~limit ~~may~~how ~~not be impaired,~~ the ~~useful~~Company ~~lives~~conducts ~~are~~its ~~subject~~business ~~to continual assessment, taking into account historical~~ and ~~expected~~its ~~losses~~ability ~~of relationships that were in the base at time of acquisition. This assessment may result in a reduction of the remaining useful life of these assets, resulting in potentially significant increases~~ to ~~non-cash~~ ~~amortization~~raise ~~expense~~additional ~~that is charged to the Company’s consolidated statement of operations~~funds. ~~An intangible asset or goodwill impairment charge, or a reduction of amortization lives, could have a material adverse effect on the Company’s results of operations.~~

~~Business~~The ~~disruptions~~agreements ~~could~~that ~~materially~~govern the terms of the Company’s debt, including the indenture governing its notes and ~~adversely~~the ~~affect~~credit agreements that govern the Company’s ~~future~~Senior ~~sales~~ Credit Facilities, contain, and ~~financial~~the ~~condition~~agreements that govern its future indebtedness may contain, covenants that, among other factors, limit or ~~increase~~restrict the Company’s ~~costs~~ability and ~~expenses.~~the ability of the Company’s subsidiaries to:

~~The~~· ~~Company’s~~incur business may be disrupted by a variety of events or conditions, including, but not limited to, threats to physical security, acts of terrorism, labor stoppages or disruptions, raw material shortages, natural and ~~man-made~~guarantee ~~disasters,~~indebtedness ~~information technology failures and public health crises. Any of these disruptions could affect the Company’s internal operations~~ or ~~services~~issue ~~provided~~disqualified tostock ~~customers, and could impact its sales, increase expenses~~ or ~~materially~~preferred ~~and adversely affect the Company’s reputation.~~ stock;

~~Foreign~~· ~~exchange~~repay ~~rate~~subordinated ~~fluctuations~~indebtedness ~~could~~prior ~~cause~~to aits ~~decline~~stated ~~in the Company’s financial condition, results of operations and cash flows.~~ maturity;

As· apay ~~result~~dividends ofor ~~the~~make ~~Company’s international operations, it is subject to risk because the Company generates a significant portion of its revenues and incurs a significant portion of its expenses in currencies~~ other ~~than~~distributions the U.S. Dollar. The Company’s international presence is most significant in Brazil, Canada, China, Mexico, Poland and Venezuela. To the extent that the Company has significantly more costs than revenues generated in a foreign currency, it is subject to risk if the foreign currency appreciates because the appreciation effectively increases the Company’s cost in that country to a greater extent than its revenues. To the extent that the Company is unable to match revenues received in foreign currencies with costs paid in the same currency, foreign exchange rate fluctuations in that currency could have a material and adverse effect on ~~the~~or ~~Company’s~~redeem ~~financial~~or ~~condition,~~repurchase ~~results of operations and cash flows. In addition,~~ the ~~financial condition, results of operations and cash flows of some of the~~ Company’s operating entities are reported in foreign currencies and then translated into U.S. Dollars at the applicable foreign exchange rate for inclusion in the Company’s consolidated financial statements. As a result, appreciation of the U.S. Dollar against these foreign currencies generally will have a negative impact on the Company’s reported sales and profits. stock;

~~The~~· ~~Company~~issue ~~uses~~capital 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 impact resulting from foreign currency variations. Gains or losses associated with hedging activities also may negatively impact operating results. stock;

~~Entering~~· ~~new~~change ~~markets poses~~the ~~new~~Company’s ~~competitive~~line ~~threats~~of ~~and commercial risks.~~ business;

In· ~~recent~~designate ~~years~~subsidiaries ~~the Company has sought to expand its manufacturing and sales into new markets. Expanding into new markets requires investments and resources that may not be available~~ as ~~needed.~~unrestricted The Company cannot guarantee that it will be successful in leveraging its capabilities to compete favorably in new markets or that the Company will be able to recoup its significant investments in expansion projects. If the Company’s customers in new markets experience reduced demand for their products or financial difficulties, the Company’s future prospects will be negatively affected as well. subsidiaries;

16· make certain investments or acquisitions;

~~Table~~· ofcreate ~~Contents~~liens;

~~The~~· ~~mix~~sell ofassets ~~profits~~or ~~and~~merge ~~losses~~with inor ~~various~~into ~~jurisdictions~~other ~~may have an impact on the Company’s overall tax rate, which in turn, may materially and adversely affect its profitability.~~ companies;

~~Tax~~· ~~expenses~~enter ~~and~~into ~~benefits are~~transactions ~~determined~~with ~~separately~~stockholders for each of the Company’s taxpaying entities or groups of entities that is consolidated for tax purposes in each jurisdiction. Losses in such jurisdictions may provide no current financial statement tax benefit. As a result, changes in the mix of projected profits and ~~losses between jurisdictions, among other factors, could have a significant impact on the Company’s overall effective tax rate.~~ affiliates;

~~The~~· ~~value~~make ofcapital ~~the~~expenditures; ~~Company’s deferred tax assets could become impaired, which could materially~~ and ~~adversely affect the Company’s operating results.~~

As· ofrestrict ~~December 31~~dividends, ~~2014,~~distributions the Company had $117 million in net deferred tax assets. These deferred tax assets include net operating loss carryforwards that can be used to offset taxable income in future periods and reduce income taxes payable in those future periods. The Company periodically determines the probability of the realization of deferred tax assets, using significant judgments and estimates with respect to, among other things, historical operating results, expectations of future earnings and tax planning strategies. If the Company determines in the future that there is not sufficient positive evidence to support the valuation of these assets, due to the factors described above or other ~~factors,~~payments ~~the~~from ~~Company may be required to further adjust~~ the ~~valuation allowance to reduce the~~ Company’s ~~deferred tax assets~~subsidiaries. Such a reduction could result in material non-cash expenses in the period in which the valuation allowance is adjusted and could have a material and adverse effect on the Company’s results of operations.

The Company’s ability to utilize its net operating loss carryforwards may be limited and delayed. As of December 31, 2014, the Company had U.S. net operating loss carryforwards of $304 million. Certain provisions of the Internal Revenue Code of 1986, as amended could limit the Company’s annual utilization of the net operating loss carryforwards. There can be no assurance that the Company will be able to utilize all of its net operating loss carryforwards and any subsequent net operating loss carryforwards in the future. 19

~~The~~There are limitations on the Company’s ~~must~~ability ~~successfully~~to ~~maintain~~incur ~~and/or~~the ~~upgrade~~full $175 million of commitments under the ABL Revolver. Borrowings under its ~~information~~ABL ~~technology~~Revolver ~~systems~~are limited by a specified borrowing base consisting of, among other factors, a percentage of eligible accounts receivable and inventory, less customary reserves. Subject to certain conditions, the commitments under the ABL Revolver may be increased by up to $50 million.

~~The~~In ~~Company~~addition, ~~relies~~under onthe ~~various~~ABL ~~information~~Revolver, ~~technology~~as ~~systems~~amended toand ~~manage~~restated, ~~its~~a ~~operations.~~covenant ~~The~~trigger ~~Company~~would isoccur ~~currently~~if ~~implementing~~an ~~modifications~~event ~~and upgrades~~of todefault ~~its~~occurs ~~systems,~~or ~~including~~excess ~~making~~availability ~~changes~~under tothe ~~legacy~~ABL ~~systems,~~Revolver ~~replacing~~is ~~legacy~~at ~~systems~~any ~~with~~time ~~successor~~less ~~systems~~than ~~with~~the ~~new~~greater ~~functionality~~of ~~and~~10% ~~acquiring~~of ~~new~~the ~~systems~~total ~~with~~borrowing ~~new~~base ~~functionality.~~at ~~These~~such ~~types~~time ofand ~~activities~~$10 ~~subject~~million, ~~the Company to inherent costs~~ and ~~risks~~shall ~~associated~~continue ~~with~~until ~~replacing~~such ~~and~~time ~~changing~~thereafter ~~these~~as ~~systems,~~no ~~including~~event ~~impairment~~ of ~~its~~default ~~ability~~shall tohave ~~fulfill~~existed ~~customer~~and ~~orders,~~as ~~potential~~excess ~~disruption~~availability ofshall ~~the~~have ~~Company’s~~exceeded ~~internal~~such ~~control~~threshold ~~structure~~amount, ~~substantial~~in ~~capital~~each ~~expenditures~~case, ~~additional administration~~at ~~and~~all ~~operating~~times ~~expenses,~~during ~~retention~~a of30 ~~sufficiently~~consecutive ~~skilled~~day ~~personnel~~period. toIf ~~implement~~the ~~and~~covenant ~~operate~~trigger ~~the~~were ~~new~~to ~~systems~~occur, ~~demands~~the onCompany ~~management~~would ~~time,~~be ~~and~~required ~~other~~to ~~risks~~satisfy and ~~costs~~maintain ofa ~~delays~~fixed orcharge ~~difficulties~~coverage inratio ~~transitioning~~of toat ~~new~~least ~~systems~~1.0x, ormeasured ~~of integrating~~for ~~new systems into~~ the ~~Company’s~~last ~~current~~twelve-month ~~systems~~period. The Company’s ~~system~~ability ~~implementations~~to ~~may~~meet ~~not~~the ~~result~~required infixed ~~productivity~~charge ~~improvements~~coverage atratio acan ~~level~~be ~~that~~affected ~~outweighs~~by ~~the~~events ~~costs~~beyond ofthe ~~implementation~~Company’s control, orand atthe ~~all.~~Company Incannot ~~addition,~~ensure ifthat ~~not~~it ~~anticipated and~~will ~~appropriately~~meet ~~mitigated,~~this ~~the~~ratio. ~~implementation~~A breach of ~~new~~this ~~technology~~covenant ~~systems~~or ~~may~~of ~~cause~~any ~~disruptions~~other incovenant ~~the~~applicable ~~Company’s~~to ~~business~~the ~~operations~~ABL ~~and~~Revolver ~~have~~could anresult ~~adverse~~in ~~effect~~a ondefault ~~the Company’s business and operations~~thereunder.

~~The~~Moreover, ~~Company’s~~the ~~international~~ABL ~~operations~~Revolver ~~are~~provides ~~subject~~the lenders considerable discretion to ~~political~~impose reserves, which could materially impair the amount of borrowings that would otherwise be available to the Company. There can be no assurance that the lenders under the ABL Revolver will not impose such actions during the term of the ABL Revolver and ~~economic~~further, ~~risks~~were they to do so, the resulting effect of ~~developing~~this ~~countries~~action could materially and ~~special~~adversely ~~risks associated~~impair ~~with~~the ~~doing~~Company’s ~~business~~ability into ~~corrupting~~make ~~environments.~~interest payments on the notes.

~~The~~A ~~Company~~breach ~~designs,~~of ~~manufactures,~~the ~~distributes~~covenants ~~and~~or ~~markets~~restrictions aunder ~~broad range~~the ofindenture ~~aftermarket~~governing ~~products~~the innotes ~~various~~or ~~regions,~~the ~~some~~credit ofagreements ~~which~~that ~~are~~govern ~~less~~the ~~developed,~~Senior ~~have~~Credit ~~less~~Facilities ~~stability~~could result in ~~legal~~a ~~systems~~default ~~and~~under ~~financial~~the ~~markets~~applicable ~~and~~indebtedness. ~~are~~Such ~~generally~~default ~~recognized~~may asallow ~~potentially~~the ~~more~~creditors ~~corrupt~~to ~~business~~accelerate ~~environments than~~ the ~~United~~related ~~States,~~debt and ~~therefore~~ ~~present~~may ~~greater~~result ~~political, economic and operational risks. The Company has~~ in ~~place~~the ~~certain~~acceleration ~~policies, procedures and certain ongoing training~~ of ~~employees~~any ~~with~~other ~~regard~~debt to ~~business~~which ~~ethics~~a ~~and~~cross-acceleration ~~many~~or ~~key~~cross-default ~~legal~~provision ~~requirements~~applies. In addition, ~~such~~an asevent ~~applicable anti-corruption~~of ~~laws,~~default ~~including~~under the ~~U.S.~~Company’s ~~Foreign~~ABL ~~Corrupt~~Revolver ~~Practices~~would ~~Act~~permit (the ~~“FCPA”),~~lenders ~~which~~under ~~make it illegal for~~ the Company’s toABL ~~give~~Revolver ~~anything of value~~ to ~~foreign~~terminate ~~officials~~all incommitments ~~order~~ to ~~obtain~~extend orfurther ~~retain~~credit ~~any~~under ~~business~~that orfacility. ~~other advantages; however~~Furthermore, ~~there~~if ~~can be no assurance that~~ the Company’s ~~employees~~was ~~will~~unable ~~adhere~~ to repay the ~~Company’s~~amounts ~~code~~due ~~of business conduct~~ and ~~ethics~~payable orunder ~~any other of~~ the Company’s ~~policies,~~Senior ~~applicable~~Credit ~~anti-corruption laws~~Facilities, ~~including~~those ~~the~~lenders ~~FCPA,~~could orproceed ~~other legal~~against ~~requirements. If~~ the ~~Company~~collateral ~~fails~~granted to ~~enforce~~them ~~its policies and procedures properly or fail~~ to ~~maintain~~secure ~~adequate~~that ~~record-keeping and internal accounting practices to accurately record the Company’s transactions, the Company may be subject to regulatory sanctions~~indebtedness. In the event ~~that~~ the Company’s ~~believes~~lenders orand ~~has~~noteholders ~~reason~~accelerate ~~to believe that its employees have or may have violated applicable anti-corruption laws, including~~ the ~~FCPA,~~repayment orof ~~other laws or regulations,~~ the Company’s ~~is required to investigate or have outside counsel investigate the relevant facts and circumstances~~borrowings, ~~and if violations are found or suspected~~ the Company ~~could~~cannot ~~face~~assure ~~civil~~that ~~and~~it ~~criminal penalties,~~ and ~~significant~~its ~~costs~~subsidiaries ~~for~~would ~~investigations,~~have ~~litigation,~~sufficient ~~fees, settlements~~assets ~~and~~to ~~judgments,~~repay ~~which~~such inindebtedness. ~~turn~~As ~~could have~~ a ~~material~~result ~~and~~of ~~adverse~~these ~~effect~~restrictions, on the Company’s ~~business.~~may be:

~~Risks~~· ~~Relating~~limited toin ~~The~~how the Company~~’s Indebtedness~~ conducts its business;

~~The~~· ~~Company’s~~unable ~~substantial~~to ~~leverage~~raise ~~could~~additional ~~harm~~debt ~~its~~or ~~business~~equity byfinancing ~~limiting the Company’s available cash and its access~~ to ~~additional~~operate ~~capital~~during ~~and,~~general toeconomic ~~the~~or ~~extent~~business ofdownturns; ~~the Company’s variable rate indebtedness, exposing the Company to interest rate risk.~~ or

17· unable to compete effectively or to take advantage of new business opportunities.

~~Table~~These ofrestrictions ~~Contents~~may affect the Company’s ability to grow in accordance with its plans.

OnItem ~~April 25, 2013, the Company refinanced its existing notes and credit facilities and made a distribution to Holdings, the Company’s shareholder~~1B. ~~The~~Unresolved ~~refinancing~~Staff consisted of the issuance of $250 million aggregate principal amount 7.75% Senior Notes due May 1, 2021 (the “Senior Notes”), a $200 million term loan due April 25, 2016 (“Term Loan B-1”), a $470 million term loan due April 25, 2020 (“Term Loan B-2,” and together with Term Loan B-1, the “Term Loans”), the proceeds of which the Company used, together with $31 million of cash on hand, to redeem the Company’s 10.75% Senior Secured Notes due 2016 (the “Secured Notes”), redeem its 9% Senior Subordinated Notes due 2014 (the “Subordinated Notes”), pay fees and expenses in connection with the refinancing transaction and make a $350 million distribution to Holdings. As a result of this refinancing, the Company is highly leveraged. This leverage may limit the Company’s ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions, restructuring and general corporate or other purposes, limit the Company’s ability to adjust to changing market conditions and place it at a competitive disadvantage compared to its less leveraged competitors. Further volatility in the credit markets could adversely impact the Company’s ability to obtain favorable terms on financing in the future. In addition, a substantial portion of the Company’s cash flows from operations must be dedicated to the payment of principal and interest on its indebtedness and is not available for other purposes, including the Company’s operations, capital expenditures and future business opportunities. The Company may be more vulnerable than a less leveraged company to a downturn in the general economic conditions or in the Company’s business, or it may be unable to carry out capital spending that is important to its growth. The Company may be vulnerable to interest rate increases, as certain of its borrowings, including those under the Company’s ABL Revolver, are at variable rates. The Company can give no assurance that its business will generate sufficient cash flow from operations, that revenue growth or operating improvements will be realized, or that future borrowings will be available under the Company’s ABL Revolver in an amount sufficient to enable the Company to service its indebtedness or to fund other liquidity needs. Comments

The Company may not be able to generate sufficient cash to service all of its indebtedness and may be forced to take other actions to satisfy its obligations under the Company’s indebtedness, which actions may not be successfulNone.

The Company’s ability to make scheduled payments or to refinance its debt obligations depends on the Company’s financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond its control. The Company may not be able to maintain a level of cash flow from operating activities sufficient to permit the Company to pay the principal and interest on the Company’s indebtedness. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” 20

IfItem the Company’s cash flows and capital resources are insufficient to fund the Company’s debt service obligations, it may be forced to reduce or delay capital expenditures, sell assets, seek additional capital or seek to restructure or refinance its indebtedness2. These alternative measures may not be successful and may not permit the Company to meet its scheduled debt service obligations. In the absence of such operating results and resources, the Company could face substantial liquidity problems and might be required to sell material assets or operations to attempt to meet the Company’s debt service and other obligations. The Company’s ABL Revolver, Term Loans and the indentures governing the Company’s notes restrict its ability to use the proceeds from asset sales. The Company may not be able to consummate those asset sales to raise capital or sell assets at prices that the Company believes are fair, and proceeds that it does receive may not be adequate to meet any debt service obligations then due. Properties

~~Despite~~The ~~the~~ Company’s ~~current~~principal ~~indebtedness~~executive ~~levels,~~offices itare ~~may~~located ~~still~~in beGastonia, ~~able~~North toCarolina ~~incur~~and ~~substantially~~its ~~more~~operations ~~debt~~include manufacturing, ~~which~~research ~~could~~and ~~further exacerbate~~development ~~the~~and ~~risks~~warehousing ~~associated~~facilities ~~with~~as well as offices. The table below summarizes the ~~Company’s~~number ~~substantial~~of ~~leverage.~~facilities by geographical region between manufacturing, distribution and warehouse and other facilities as of December 31, 2015.

The Company and its subsidiaries may be able to incur additional indebtedness in the future. Although the terms of the agreements governing the Company’s debt instruments contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial. As of December 31, 2014, the Company had $72 million of borrowing capacity available under the ABL Revolver after giving effect to $7 million in outstanding letters of credit, none of which was drawn against, and less than $1 million for borrowing base reserves. If the Company incurs additional debt above the levels currently in effect, the risks associated with the Company’s leverage, including those described above, would increase.

	Manufacturing Facilities		Distribution and Warehouse Facilities		Other Facilities
United States	2		2		7
Canada		—	1			—
Mexico	1			—		—
Europe	3		2		2
South America	1		1			—
Asia	1			—	1
Total	8		6		10

~~The~~Of ~~terms of~~ the ~~Company’s~~total ~~debt covenants~~number ~~could~~of ~~limit~~principal ~~how~~manufacturing ~~the~~facilities, ~~Company~~six ~~conducts~~are ~~its~~owned ~~business~~ and ~~its~~two ~~ability~~are ~~to raise additional funds~~leased.

~~The~~Other ~~agreements~~facilities ~~that~~include ~~govern the~~facilities ~~terms~~that ofhave ~~the~~been ~~Company’s~~closed ~~debt,~~as ~~including~~part ~~the~~of ~~indenture governing its notes and~~ the ~~credit agreements that govern the~~ Company’s ~~Senior~~restructuring ~~Credit Facilities~~programs, ~~contain,~~sales and ~~the~~administration ~~agreements~~offices ~~that govern its future indebtedness may contain, covenants that, among other things, limit or restrict the Company’s ability~~ and ~~the~~non-operational ~~ability~~storage ~~of the Company’s subsidiaries to:~~ sites.

•Item ~~incur~~3. ~~and~~Legal ~~guarantee indebtedness or issue disqualified stock or preferred stock;~~Proceedings

•Various ~~repay~~claims, ~~subordinated~~lawsuits ~~indebtedness~~and ~~prior~~administrative proceedings are pending or threatened against the Company and its subsidiaries, arising from the ordinary course of business with respect to commercial, intellectual property, product liability and environmental matters. The Company believes that the ultimate resolution of the foregoing matters will not have a material effect on its ~~stated~~financial ~~maturity;~~condition or results of operations. For information regarding legal proceedings, see Note 8 to the Consolidated Financial Statements, “Commitments and Contingencies.”

•Item ~~pay~~4. ~~dividends~~Mine orSafety ~~make other distributions on or redeem or repurchase the Company’s stock;~~Disclosures

18Not applicable.

~~Table of Contents~~21

•PART ~~issue capital stock;~~II.

•Item ~~change~~5. ~~the~~Market ~~Company~~for Registrant’s ~~line~~Common Equity, Related Stockholder Matters and Issuer Purchases of ~~business;~~Equity Shares

•No ~~designate~~trading ~~subsidiaries~~market asfor ~~unrestricted~~the ~~subsidiaries;~~registrant’s common stock currently exists. As of April 12, 2016, the registrant’s parent, Holdings, was the sole holder of the registrant’s common stock.

•The ~~make~~registrant ~~certain~~paid ~~investments~~$21 million, $66 million and $352 million to its shareholder in 2015, 2014 and 2013, respectively. Prior to 2013, the registrant did not declare or ~~acquisitions;~~pay any cash dividends on its common stock. Additionally, the registrant’s senior credit facilities and its notes indenture restrict the registrant’s ability to pay cash dividends on its common stock. For information in respect of securities authorized under Holding’s equity compensation plan, see “Item 11. Executive Compensation.”

•Item ~~create~~6. ~~liens;~~Selected Consolidated and Combined Financial Data

•The ~~sell~~financial ~~assets~~statements orincluded ~~merge~~in ~~with~~this orreport ~~into~~are ~~other~~the ~~companies;~~consolidated financial statements of the Company. The financial data as of December 31, 2015 and 2014 and for the years ended December 31, 2015, 2014, and 2013 are derived from the audited financial statements contained under “Item 8. Financial Statements and Supplementary Data.” The selected financial data as of December 31, 2012 and 2011 and for the years ended December 31, 2012 and 2011 are derived from the Company’s audited financial statements that are not contained within this report.

•During ~~enter~~2015, ~~into~~the ~~transactions~~Company ~~with~~completed ~~stockholders~~the sale of the former ASA segment and ~~affiliates;~~accordingly reflected the results of operations within discontinued operations. Additionally, as discussed in Note 1 to the Consolidated Financial Statements, “Description of Business and Basis of Presentation” and Note 20, “Reconciliation of Previously Reported Amounts to Amounts Revised and Restated,” the Company also had an immaterial restatement of certain amounts related to the years ended December 31, 2014 and 2013. The impact of this immaterial restatement is reflected above and was $1 million and $3 million, for the years ended December 31, 2014 and 2013, respectively.

~~• make capital expenditures; and~~22

• restrict dividends, distributions or other payments from the Company’s subsidiaries.

	Year Ended December 31,
(Dollars in millions)	2015			2014			2013			2012			2011
Statement of income data:⁽¹⁾
Net sales	$	899		$	970		$	910		$	840		$	788
Cost of sales		(684	)		(726	)		(687	)		(633	)		(597	)
Gross profit		215			244			223			207			191
Selling, general and administrative expenses		(132	)		(143	)		(141	)		(119	)		(115	)
Operating profit		83			101			82			88			76
Loss on extinguishment of debt		—			—			(15	)		(1	)		—
Other income and expense, net		(7	)		(7	)		(3	)		—			—
Interest expense		(55	)		(56	)		(73	)		(63	)		(67	)
Income (loss) from continuing operations before income tax provision, equity in (loss) income, net of tax and noncontrolling interest, net of tax		21			38			(9	)		25			9
Income tax provision		(20	)		(8	)		(14	)		(38	)		(13	)
Equity in (loss) income, net of tax		—			—			(2	)		1			—
Net income (loss) from continuing operations		1			30			(25	)		(13	)		(4	)
(Loss) income from discontinued operations, net of tax		(73	)		51			32			(90	)		(68	)
Net (loss) income		(72	)		81			7			(103	)		(72	)
Less: net income attributable to noncontrolling interest, net of tax		1			—			—			1			1
Net (loss) income attributable to the Company	$	(73	)	$	81		$	7		$	(104	)	$	(73	)
Statement of cash flows data:
Net cash provided by operating activities	$	21		$	20		$	99		$	97		$	14
Net cash provided by (used in) investing activities		61			126			(32	)		(23	)		(39	)
Net cash (used in) provided by financing activities		(93	)		(192	)		(15	)		(78	)		26
Other financial data:
Capital expenditures	$	28		$	26		$	31		$	27		$	55
Depreciation and amortization⁽²⁾		17			19			18			19			18
Balance sheet data (end of period): ⁽³⁾
Cash and cash equivalents	$	28		$	26		$	95		$	45		$	48
Total assets		588			819			1,008			959			1,459
Total debt⁽⁴⁾		740			811			937			569			698
Shareholder’s (deficit) equity		(308	)		(221	)		(202	)		153			347

~~There~~(1) ~~are~~In ~~limitations~~accordance onwith Accounting Standards Codification (“ASC”) Topic 205-20, “Presentation of Financial Statements—Discontinued Operations,” the ~~Company’s~~Commercial ~~ability~~Distribution Europe segment, which is also referred to ~~incur~~as Quinton Hazell, the ~~full~~Brake ~~$175~~North ~~million~~America ofand ~~commitments~~Asia ~~under~~group, the ~~ABL~~Chassis ~~Revolver.~~group ~~Borrowings~~and ~~under~~the ~~its ABL~~Affinia ~~Revolver~~South America (“ASA”) group are ~~limited~~accounted byfor aas ~~specified~~discontinued ~~borrowing~~operations. ~~base~~The ~~consisting~~Consolidated Statements of, ~~among~~Operations ~~other~~for ~~things,~~all aperiods ~~percentage~~presented ofhave ~~eligible~~been ~~accounts~~adjusted ~~receivable~~to ~~and~~reflect ~~inventory,~~these ~~less~~operations ~~customary~~as ~~reserves~~discontinued operations. ~~Subject~~The Consolidated Statements of Cash Flows have not been adjusted for any periods presented to ~~certain~~reflect ~~conditions~~these operations as discontinued operations. The Consolidated Balance Sheet for December 31, 2011 has been adjusted to reflect the ~~commitments~~Brake ~~under~~North America and Asia group as a discontinued operation, which the ~~ABL~~Company ~~Revolver~~distributed ~~may be~~on ~~increased~~November by30, up2012. The Consolidated Balance Sheet for December 31, 2013 has been adjusted to ~~$50~~reflect ~~million~~the Chassis group as a discontinued operation. The Consolidated Balance Sheet for December 31, 2014 has been adjusted to reflect the ASA group as a discontinued operation.

In(2) ~~addition,~~The ~~under~~depreciation ~~the ABL Revolver, as amended~~ and ~~restated,~~amortization aexpense ~~covenant~~excludes ~~trigger would occur if an event of default occurs or excess availability under~~ the ~~ABL~~Commercial ~~Revolver~~Distribution isEurope atsegment, ~~any time less than~~ the ~~greater~~Brake ofNorth ~~10%~~America ~~of the total borrowing base at such time~~ and ~~$10~~Asia ~~million~~group, and shall continue until such time thereafter as no event of default shall have existed and as excess availability shall have exceeded such threshold amount, in each case, at all times during a 30 consecutive day period. If the ~~covenant~~Chassis ~~trigger~~group ~~were to occur, the Company would be required to satisfy~~ and ~~maintain a fixed charge coverage ratio of at least 1.0x, measured for~~ the ~~last~~ASA ~~twelve-month period~~group. The ~~Company’s~~Consolidated ~~ability~~Statements toof ~~meet~~Cash ~~the required fixed charge coverage ratio can be affected by events beyond the Company’s control~~Flow, ~~and~~which ~~the~~is ~~Company~~included ~~cannot~~in ~~assure you~~Item ~~that~~8 ~~the Company will meet this ratio. A breach~~ of this ~~covenant~~report, orincludes ofthe ~~any~~Chassis ~~other~~group ~~covenant~~and ~~applicable to~~ the ~~ABL~~ASA ~~Revolver could result in a default thereunder~~group.

~~Moreover,~~(3) ~~the~~The ~~ABL~~balance ~~Revolver~~sheet ~~provides~~line ~~the~~items ~~lenders~~as ~~considerable~~of ~~discretion~~December ~~to impose reserves~~31, ~~which~~2012 ~~could~~and ~~materially~~2011 ~~impair~~have ~~the~~not ~~amount~~been ~~of borrowings~~modified ~~that would otherwise be available~~ to reflect the ~~Company.~~discontinued ~~There~~operations ~~can~~of ~~be no assurance that~~ the ~~lenders~~Chassis ~~under~~group. ~~the~~The ~~ABL~~balance ~~Revolver~~sheet ~~will~~line ~~not~~items ~~impose~~as ~~such actions during the term~~ of ~~the~~December ~~ABL Revolver and further~~31, ~~were they to do so~~2013, ~~the~~2012 ~~resulting impact of this action could materially~~ and ~~adversely~~2011 ~~impair~~have ~~the~~not ~~Company’s~~been ~~ability~~modified to ~~make~~reflect ~~interest~~discontinued ~~payments~~operations onof the ~~notes.~~former ASA segment.

A(4) ~~breach~~The of the covenants or restrictions under the indenture governing the notes or the credit agreements that govern the Senior Credit Facilities could result in a default under the applicable indebtedness. Such default may allow the creditors to accelerate the related debt ~~and~~as ~~may result in the acceleration~~ of ~~any~~December ~~other~~31, ~~debt~~2011 toexcludes ~~which~~$20 amillion ~~cross-acceleration or cross-default provision applies. In addition, an event~~ of ~~default~~notes under the Company’s ABL Revolver would permit the lenders under the Company’s ABL Revolver to terminate all commitments to extend further credit under that facility. Furthermore, if the Company was unable to repay the amounts due and payable ~~under~~in the Company’s ~~Senior~~Brake ~~Credit~~North ~~Facilities,~~America ~~those lenders could proceed against the collateral granted to them to secure that indebtedness. In the event the Company’s lenders~~ and ~~noteholders~~Asia ~~accelerate the repayment of the Company’s borrowings, the Company cannot assure that it and its subsidiaries would have sufficient assets to repay such indebtedness~~group. ~~As a result of these restrictions, the Company may be:~~

~~• limited in how the Company conducts its business;~~23

•Item ~~unable~~7. toManagement’s ~~raise~~Discussion ~~additional~~and ~~debt~~Analysis orof ~~equity~~Financial ~~financing~~Condition toand ~~operate~~Results ~~during~~of ~~general economic or business downturns; or~~Operations

•The ~~unable~~information topresented ~~compete~~in ~~effectively~~this ordiscussion toshould ~~take~~be ~~advantage~~read ofin ~~new~~conjunction ~~business~~with ~~opportunities~~other financial information provide in the Consolidated Financial Statements and Notes thereto.

~~These restrictions may affect the~~ Company’s ~~ability to grow in accordance with its plans.~~ Overview

~~The~~Affinia ~~Company’s~~is ~~variable~~an ~~rate~~innovative ~~indebtedness~~global ~~exposes~~leader ~~it to~~in ~~interest~~the ~~rate~~design, ~~risk~~manufacture, ~~which~~distribution ~~could~~and ~~cause~~marketing ~~the~~of ~~Company~~industrial grade filtration products and services. Management’s ~~debt~~Discussion ~~costs~~and Analysis includes financial information prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States (“U.S.”), as well as certain non-GAAP financial measures discussed below. The non-GAAP financial measures should be viewed as a supplement to, ~~increase~~and ~~significantly~~not a substitute for, financial measures presented in accordance with GAAP. Non-GAAP measures presented herein may not be comparable to similarly titled measures used by other companies.

AOver ~~portion of~~ the ~~Company’s borrowings~~last isseveral atyears, ~~variable~~management ~~rates~~has ofbeen ~~interest~~focused ~~and~~on ~~exposes~~streamlining itthe tobusiness ~~interest rate risks. The Company is exposed~~ to ~~the~~be ~~risk~~more offocused ~~rising~~on ~~interest rates to~~ the ~~extent~~filtration ~~that~~component ~~it funds its operations with short-term or variable-rate borrowings. As~~ of ~~December 31,~~ ~~2014,~~ the ~~Company’s~~automotive ~~$811 million of aggregate debt outstanding consisted of $561 million of floating-rate debt and $250 million of fixed-rate debt~~aftermarket. ~~Any~~In ~~borrowings~~order ~~the~~to ~~Company~~achieve ~~incurs~~this ~~under~~goal, ~~its~~management ~~ABL~~made ~~Revolver will be at floating interest rates and will expose~~ the ~~Company~~decision to ~~interest~~divest ~~rate~~certain ~~risk.~~businesses ~~For~~that ~~further~~were ~~information~~no ~~see~~longer ~~“Item 7.~~part ~~Management’s Discussion and Analysis~~ of ~~Financial~~the ~~Condition~~long-term ~~and~~focus. ~~Results~~These ofdivestitures ~~Operations—Liquidity~~were ~~and~~as ~~Capital Resources.”~~ follows:

~~Item~~· ~~1B.~~In ~~Unresolved~~the ~~Staff~~fourth ~~Comments~~quarter of 2011, management committed to a plan to sell the Brake North America and Asia group and, on November 30, 2012, the Brake North America and Asia group were distributed to the shareholders of Holdings.

~~None~~· On January 21, 2014, Affinia entered into an asset purchase agreement, as amended, with Federal-Mogul Chassis LLC (formerly known as VCS Quest Acquisition LLC) (“FM Chassis”), an affiliate of Federal-Mogul Corporation, pursuant to which FM Chassis agreed to purchase the Chassis group. This transaction closed on May 1, 2014.

19· In the second quarter of 2015, management committed to a plan to sell Pellegrino Distribuidora de Autopecas Ltda. (“Pellegrino”) and Affinia Automotiva Ltda. (“Automotiva”). Pellegrino and Automotiva comprise the Brazilian operations of the former Affinia South America (“ASA”) segment and are collectively referred to as “ASA Brazil.” The Company completed the sale of Pellegrino in September 2015 and the sale of Automotiva in October 2015. Additionally, in the third quarter of 2015, two of the Company’s subsidiaries executed definitive purchase agreements for the remaining ASA operations in Argentina and Uruguay and completed the sale of these businesses in September 2015. Accordingly, the results of operations of the former ASA segment have been included as a component of discontinued operations in the Consolidated Statements of Operations for all periods presented. With the completion of these transactions in 2015, all of the businesses that comprised the former ASA segment have been disposed of through sale. See Note 4 to the Consolidated Financial Statements, “Discontinued Operations,” for additional information.

~~Table~~The Company has one operating segment, which is Filtration. Affinia’s chief operating decision maker evaluates the performance of ~~Contents~~its operating segment based primarily on revenue growth and operating profit. Income taxes are not allocated to the operating segment. Although not considered an operating segment, corporate, eliminations and other includes corporate costs, interest expense and other amounts not allocated to the operating segment. Additionally, the results of operations of the former ASA segment’s Venezuela business, which was shut down in June 2014, is included in corporate, eliminations and other for all periods presented since it did not qualify for discontinued operations treatment and is insignificant. In the first quarter of 2015, the Company’s management changed the calculation of segment earnings whereby certain corporate costs that were previously allocated to the operating segment were no longer allocated. Accordingly, all of these previously allocated costs remained in corporate, eliminations and other. Prior period segment results were recast to conform to current period presentation.

~~Item~~Filtration’s 2products fit medium and heavy duty trucks, light vehicles, equipment in the off-highway market (i.e. ~~Properties~~residential and non-residential construction, mining, forestry and agricultural) and equipment for industrial and marine applications. Filtration’s products include oil, air, fuel, cabin air, coolant, hydraulic and other filters for many types of vehicles and machinery. The products are sold under well-known brands, such as WIX® and Filtron®, and private label brands including NAPA®.

~~The~~Merger ~~Company’s~~with principal executive offices are located in Gastonia, North Carolina and its operations include manufacturing, research and development and warehousing facilities as well as offices. The table below summarizes the number of facilities by geographical region between manufacturing, distribution and warehouse and other facilities as of December 31, 2014. MANN+HUMMEL

	ManufacturingFacilities		Distribution andWarehouseFacilities		OtherFacilities
United States		2		2		7
Canada		—		1		—
Mexico		1		—		—
Europe		3		2		2
South America		4		25		1
Asia		1		—		1
Total		11		30		11

The Company is wholly-owned by Affinia Group Holdings Inc. (“Holdings”), a company controlled by affiliates of The Cypress Group, L.L.C. (“Cypress”). On August 13, 2015, Holdings, a Delaware corporation, entered into an agreement and plan of merger (the “Merger Agreement”) with MANN+HUMMEL Holding GmbH, a German limited liability company (“MANN+HUMMEL”), pursuant to which M+H SUB 2015 INC., a Delaware corporation and an indirect wholly-owned subsidiary of MANN+HUMMEL (“Merger Sub”) will be merged with and into Holdings, with Holdings surviving the merger as an indirect wholly-owned subsidiary of

Of the manufacturing facilities, eight are part of the Filtration segment and three are part of the ASA segment. Of the total number of principal manufacturing facilities, 73% are owned and 27% are leased. 24

~~Other~~MANN+HUMMEL. ~~facilities~~Subject ~~include~~to ~~two facilities~~the ~~that~~terms ~~have~~and ~~been~~conditions ~~closed~~set asforth ~~part~~in the Merger Agreement, the aggregate merger consideration payable to the shareholders of Holdings and the holders of restricted stock units and phantom shares referred to in the Merger Agreement (collectively, “Sellers”), is $513.1 million (i) minus adjustments reflecting transaction expenses, a $10 million escrow to cover limited indemnities and an amount reserved for the payment of expenses incurred by the sellers’ representative, (ii) plus adjustments reflecting adjusted net proceeds from the sale of the Company’s ~~restructuring~~Brazilian, ~~programs~~Argentinian and Uruguayan operations (collectively, ~~five~~the ~~sales~~“ASA Transactions”), (iii) plus a daily interest factor applied to the purchase price. At the effective time of the merger, each outstanding share of Holdings will be converted into the right to receive a proportionate share of the aggregate consideration, plus a contingent right to receive a portion of the escrow amount and ~~administration~~the ~~offices~~amount reserved for expenses of the sellers’ representative, in each case at the time and ~~four~~upon ~~non-operational~~satisfaction ~~storage~~of ~~sites~~the conditions specified in the Merger Agreement.

~~Item~~The 3Merger Agreement has been approved by the Board of Directors of Holdings as well as all required governing bodies of MANN+HUMMEL (including its Supervisory Board) and the Board of Directors and stockholder of Merger Sub. ~~Legal~~Consummation ~~Proceedings~~of the merger is subject to certain customary conditions, including, among others, adoption of the Merger Agreement by the holders of a majority of the issued and outstanding shares of Holdings common stock, holders of no more than five percent of the common stock of Holdings exercising dissenters’ rights, receipt of any required regulatory approvals and expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the absence of any order, judgment, injunction, decree, stipulation or determination prohibiting the merger, and completion of the ASA Transactions. It is currently anticipated that this transaction will close in the first half of 2016 depending on timing of regulatory approvals and satisfaction of other closing conditions.

~~Various~~The ~~claims,~~Merger ~~lawsuits~~Agreement ~~and~~contains ~~administrative~~representations ~~proceedings~~and ~~are~~warranties ~~pending or~~customary ~~threatened~~for ~~against~~transactions ~~the~~of ~~Company~~this ~~and~~type. ~~the~~Holdings ~~its~~has ~~subsidiaries,~~agreed ~~arising~~to ~~from~~various ~~the~~covenants ~~ordinary~~and ~~course~~agreements, ofincluding, ~~business~~among ~~with~~others, ~~respect~~agreements to ~~commercial,~~(i) conduct ~~intellectual~~its ~~property,~~business ~~product~~in ~~liability~~the ~~and~~ordinary ~~environmental~~course ~~matters.~~consistent ~~The~~with ~~Company~~past ~~believes~~practice ~~that~~during the ~~ultimate resolution~~period ofbetween the ~~foregoing~~execution ~~matters~~of ~~will~~the ~~not~~Merger ~~have~~Agreement aand ~~material~~the ~~effect~~closing onthereunder ~~the~~and ~~its~~(ii) not ~~financial~~engage ~~condition~~in orcertain ~~results~~kinds of ~~operations.~~transactions ~~For~~during ~~information~~this ~~regarding~~period, ~~legal~~including ~~proceedings,~~transactions ~~see~~involving ~~Note~~so-called 8leakage to the ~~Consolidated Financial Statements, “Commitments and Contingencies~~Sellers.”

~~Item~~The 4.Merger ~~Mine~~Agreement ~~Safety~~also ~~Disclosures~~contains certain termination provisions for Holdings and MANN+HUMMEL, including, among others, termination rights for Holdings and MANN+HUMMEL in the event the merger has not closed by August 1, 2016 (the “Outside Date”), an extension from April 13, 2016 pursuant to an amendment (the “First Amendment”) to the Merger Agreement, or in the event there is a breach of a representation, warranty, covenant or agreement by the other party which cannot be cured by the Outside Date.

~~Not~~Factors ~~applicable.~~Affecting the Company’s Performance

~~PART~~Over IIthe past ten years, the Company’s Filtration segment has grown organically at an approximate 5% cumulative average growth rate (“CAGR”), which has outpaced the broad aftermarket growth rate of approximately 3%. Growth above that of the overall aftermarket can be attributed to the Company’s product breadth, brand strength and technical capabilities that have resulted in continued penetration of end markets, attracting of new customers and growing sales with existing customers. Several factors support continuing growth in the automotive aftermarket, namely growth in the global aftermarket, specifically in emerging markets, as a result of growing vehicle parc, declining fuel prices, increases in the number of miles driven and an aging vehicle population.

~~Item~~In 5.order ~~Market~~to ~~for~~continue ~~Registrant’s~~to ~~Common~~leverage ~~Equity~~these trends, ~~Related~~management ~~Stockholder~~is ~~Matters~~focused on certain strategic initiatives and ~~Issuer~~objectives ~~Purchases~~that ofwill ~~Equity~~position ~~Shares~~the Company for future growth and expansion. These objectives include the following:

No· ~~trading~~Grow ~~market~~with ~~for~~channel ~~the~~partners. ~~registrant’s~~Grow ~~common~~with ~~stock~~its ~~currently~~market ~~exists.~~leading Ascustomers ofthrough ~~March 17,~~store ~~2015~~openings, ~~the~~product ~~registrant’s~~line ~~parent,~~penetration ~~Holdings, was the sole holder of the registrant’s common stock. The registrant paid $66 million~~ and ~~$352~~end ~~million~~user todemand ~~its shareholder in 2014 and 2013, respectively~~growth. ~~Prior to 2013 the registrant did not declare or pay any cash dividends on its common stock.~~ The ~~registrant~~ability ~~intends~~of ~~to retain~~ the ~~majority~~Company ~~of current and foreseeable future earnings~~ to ~~support~~grow ~~operations.~~with ~~Additionally, the registrant’s senior credit facilities and~~ its ~~notes~~large ~~indenture~~customers ~~restrict~~has ~~the~~become ~~registrant’s~~increasingly ~~ability~~important toas ~~pay cash~~large ~~dividends~~distributors onhave ~~its~~taken ~~common~~more ~~stock. For information in respect~~ of ~~securities~~the ~~authorized~~overall ~~under Holding’s equity compensation plan, see “Item 11~~market. ~~Executive Compensation.”~~

~~Item~~· 6Win new fleets. ~~Selected~~A ~~Consolidated~~key ~~and~~component ~~Combined~~of ~~Financial~~the ~~Data~~Company’s future growth strategy is to partner with customers to win new fleet accounts. The Company’s fleet strategy has been highly successful as there are currently over 350,000 active registered fleet accounts that utilize the Company’s products, including nearly 70,000 new fleets that were added in 2015.

~~The~~· ~~financial~~Grow ~~statements~~heavy-duty ~~included~~business in ~~this~~ ~~report~~Europe. ~~are~~Replicate the ~~consolidated~~success ~~financial statements~~ of the ~~Company.~~North ~~The~~American ~~financial~~heavy ~~data~~duty asbusiness ofin ~~December 31~~Europe. Currently, ~~2014~~the ~~and~~Company’s ~~2013~~European ~~and~~business ~~for~~has ~~the~~been ~~years~~focused ~~ended~~on ~~December 31,~~light-duty ~~2014,~~applications; ~~2013~~however, ~~and~~through ~~2012~~its ~~are~~product ~~derived~~line ~~from the audited financial statements contained under “Item 8. Financial Statements~~ and ~~Supplementary~~application ~~Data.” The selected financial data as of December 31~~expertise, ~~2012,~~local ~~December 31,~~manufacturing ~~2011~~capabilities and ~~December 31,~~existing ~~2010;~~channel ~~and~~relationships ~~for~~in ~~the years ended December 31~~Europe, ~~2011 and 2010, are derived from~~ the Company’s ~~audited~~has ~~financial~~the ~~statements~~foundation ~~that~~to ~~are~~expand ~~not~~its ~~contained~~heavy-duty ~~within~~presence ~~this~~in ~~report~~Europe.

20· Pursue geographic growth opportunities. Given the growth in car parc in emerging markets, particularly in South America and Asia, there is significant opportunity for expansion into new markets. Currently, the Company has a presence in over 109 countries; however, the distribution capabilities in many of those countries remain limited. As global

~~Table of Contents~~25

	Year Ended December 31,
	2014			2013			2012			2011			2010
(Dollars in millions)
Statement of income data:(1)
Net sales	$	1,396		$	1,361		$	1,259		$	1,266		$	1,190
Cost of sales		(1,056	)		(1,043	)		(967	)		(979	)		(918	)
Gross profit		340			318			292			287			272
Selling, general and administrative expenses		(199	)		(200	)		(172	)		(175	)		(171	)
Operating profit		141			118			120			112			101
Loss on extinguishment of debt		—			(15	)		(1	)		—			(1	)
Other income and expense, net		(13	)		(1	)		3			4			1
Interest expense		(56	)		(73	)		(63	)		(67	)		(65	)
Income from continuing operations before income tax provision, equity in income (loss), net of tax and noncontrolling interest, net of tax		72			29			59			49			36
Income tax provision		(19	)		(22	)		(45	)		(28	)		(30	)
Equity in income (loss), net of tax		—			(2	)		1			—			1
Net income from continuing operations		53			5			15			21			7
Income (loss) from discontinued operations, net of tax		29			5			(117	)		(93	)		23
Net income (loss)		82			10			(102	)		(72	)		30
Less: net income attributable to noncontrolling interest, net of tax		—			—			1			1			6
Net income (loss) attributable to the Company	$	82		$	10		$	(103	)	$	(73	)	$	24
Statement of cash flows data:
Net cash provided by operating activities	$	20		$	99		$	97		$	14		$	23
Net cash provided by (used in) investing activities		126			(32	)		(23	)		(39	)		(98	)
Net cash used in financing activities		(192	)		(15	)		(78	)		26			66
Other financial data:
Capital expenditures	$	26		$	31		$	27		$	55		$	52
Depreciation and amortization(2)		20			21			22			23			25
Balance sheet data (end of period): (3)
Cash and cash equivalents	$	45		$	101		$	51		$	54		$	55
Total current assets		513			704			583			1,060			1,016
Total assets		821			1,009			960			1,459			1,589
Total current liabilities		235			279			251			419			455
Total debt(4)		811			937			569			698			696
Shareholder’s (deficit) equity		(219	)		(201	)		151			347			448

aftermarkets develop and sophistication in those markets improves, the Company stands to benefit as a result of the investments already made in infrastructure to serve certain of these markets.

~~(1)~~· InGrow ~~accordance~~OE/OES/Direct ~~with~~Markets ~~Accounting~~business. ~~Standards~~The ~~Codification~~Company’s ~~(“ASC”)~~recognized ~~Topic 205~~high-~~20,~~quality ~~“Presentation of Financial Statements—Discontinued Operations~~filters,” ~~the~~coupled ~~Commercial~~with ~~Distribution~~its ~~Europe~~efficient ~~segment,~~and ~~which~~high-quality isproduction ~~also referred to as Quinton Hazell~~capabilities, ~~the~~provide ~~Brake~~significant ~~North~~opportunities ~~America and Asia group and the Chassis group are accounted for as discontinued operations. The consolidated statements of operations for all periods presented have been adjusted~~ to ~~reflect~~win ~~these~~new ~~operations~~OE ~~as discontinued operations~~platforms. ~~The consolidated statements of cash flows have not been adjusted for any periods presented to reflect these operations as discontinued operations. The consolidated balance sheet for December 31~~Additionally, ~~2011~~the ~~has~~Company’s ~~been~~leading ~~adjusted~~product tobreadth ~~reflect~~coupled ~~the~~with ~~Brake~~its ~~North~~strong ~~America~~ and ~~Asia~~growing ~~group~~OE asrelationships apositions ~~discontinued operation, which~~ the Company ~~distributed~~as ona ~~November~~natural ~~30,~~partner ~~2012. The consolidated balance sheet for December 31, 2013 has been adjusted~~ to ~~reflect~~ the ~~Chassis~~aftermarket ~~group~~service aschannel aof ~~discontinued~~its ~~operation~~OE customers.

21· Leverage favorable aftermarket trends. The Company believes that certain trends in the filtration aftermarket provide significant growth opportunities, including:

~~Table~~· Advancements in vehicle and engine technologies and more demanding operating conditions have increased user demand for premium filters. For example, the growing use of ~~Contents~~synthetic oil in light vehicle applications has increased the demand for premium, extended life oil filters which are capable of operating effectively over longer change intervals. Globally, premium products comprise approximately 85% of the Company’s net sales. As premium filters carry higher price points, the trend towards premium filters provides the Company with growth opportunities.

~~(2)~~· ~~The~~Global ~~depreciation~~emission ~~and~~standards ~~amortization~~drive ~~expense excludes~~ the ~~Commercial~~need ~~Distribution~~for ~~Europe~~more ~~segment, the Brake North America and Asia group and the Chassis group~~filtration. ~~The~~Increasingly ~~consolidated~~stringent ~~cash~~global ~~flow~~emissions ~~statement,~~standards ~~which~~call isfor ~~included~~significant reductions in ~~Item~~level 8 of ~~this~~vehicle ~~report~~emissions, ~~includes~~particularly ~~the~~in ~~Commercial~~off-highway ~~Distribution~~vehicles. ~~Europe~~These ~~segment,~~standards ~~the~~have ~~Brake~~resulted ~~North~~in ~~America~~more ~~and~~filters ~~Asia~~with ~~group~~expensive ~~and~~features ~~the~~that ~~Chassis~~improve ~~group~~filter performance.

~~(3)~~· ~~The~~As ~~balance~~a ~~sheet~~result ~~line~~of ~~items~~complexity as of ~~December~~newer ~~31,~~vehicles ~~2010~~and ~~have~~other ~~not~~factors, there has been ~~modified~~a continuing shift from Do-It-Yourself (“DIY”) to ~~reflect~~Do-It-For-Me ~~the~~(“DIFM”) ~~discontinued~~aftermarket ~~operation~~channels. ofThe ~~the~~Company ~~Brake~~stands ~~North~~to ~~America~~benefit ~~and~~from ~~Asia~~this ~~group.~~continued ~~Additionally,~~shift from DIY to DIFM as the ~~various~~Company ~~balance~~is ~~sheet~~focused ~~line~~on ~~items~~the asprofessional installer share of ~~December~~the 31market, ~~2012,~~and ~~2011~~is ~~and~~partnered ~~2010~~with ~~have~~aftermarket ~~not~~players ~~been~~who ~~modified~~are tomore ~~reflect~~concentrated on the ~~discontinued~~DIFM ~~operations~~market ofversus the ~~Chassis~~DIY ~~group~~or retail market.

~~(4)~~· ~~The~~Execute ~~debt~~margin asenhancement ofinitiatives. ~~December~~Manufacturing 31efficiency and costs savings initiatives are critical to operational improvement and margin expansion. During 2015, ~~2011~~the ~~excludes~~Filtration segment invested $2027 million in capital expenditures, of ~~notes~~which ~~payable~~a insignificant ~~the~~portion ~~Company’s~~relates ~~Brake~~to ~~North~~growth ~~America~~capital. In 2016, management will continue to execute on its growth, expansion and ~~Asia~~productivity ~~group~~initiatives in an effort to drive margin expansion through targeted capital investment strategies.

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

~~The information~~In ~~presented~~this insection, ~~this~~the Company provides analysis and discussion ~~should~~of beearnings ~~read~~and infactors ~~conjunction~~affecting ~~with~~earnings ~~other~~on both a GAAP and non-GAAP basis. Management uses these non-GAAP financial ~~information~~measures ~~provide~~for inplanning and forecasting, and for reporting results to the ~~Consolidated~~Board ~~Financial~~of ~~Statements~~Directors, employees and ~~Notes~~investors ~~thereto~~concerning the Company’s financial performance. EBITDA is a non-GAAP financial measure. EBITDA is earnings before interest, taxes, depreciation and amortization. Affinia’s EBITDA is calculated by adding back depreciation and amortization and interest expense to income from continuing operations before income tax provision.

As discussed above, during 2015, the Company ~~Overview~~completed the sale of the former ASA segment and accordingly reflected the results of operations within discontinued operations. Additionally, as discussed in Note 1 to the Consolidated Financial Statements, “Description of Business and Basis of Presentation” and Note 20, “Reconciliation of Previously Reported Amounts to Amounts Revised and Restated,” the Company also had an immaterial restatement of certain amounts related to the years ended December 31, 2014 and 2013. The impact of this immaterial restatement is reflected above and was $1 million and $3 million, for the years ended December 31, 2014 and 2013, respectively.

Affinia is an innovative global leader in the design, manufacture, distribution and marketing of industrial grade filtration products and services and replacement products in South America. Management’s Discussion and Analysis includes financial information prepared in accordance with GAAP in the U.S., as well as certain non-GAAP financial measures discussed below. The non-GAAP financial measures should be viewed as a supplement to, and not a substitute for, financial measures presented in accordance with GAAP. Non-GAAP measures presented herein may not be comparable to similarly titled measures used by other companies. 26

~~Over~~The ~~the~~following ~~last several~~table ~~years,~~summarizes ~~management has been focused on streamlining~~ the ~~business~~Company’s toconsolidated beresults ~~more~~for ~~focused on~~ the ~~filtration~~years ~~component~~ended of the automotive aftermarket. In order to achieve this goal, management made the decision to divest certain businesses that were no longer part of the long-term focus. In the fourth quarter of 2011, management committed to a plan to sell the Brake North America and Asia group and, on NovemberDecember 3031, ~~2012,~~2015 ~~the Brake North America~~ and ~~Asia group were distributed to the shareholders of Holdings. In the fourth quarter of 2013, management committed to a plan to sell its global chassis business (the “Chassis group”) On January 21,~~ 2014, Affinia entered into an Asset Purchase Agreement, as amended, with Federal-Mogul Chassis LLC (formerly known as VCS Quest Acquisition LLC) (“FM Chassis”), an affiliate of Federal-Mogul Corporation, pursuant to which FM Chassis agreed to purchase the Chassis group. This transaction closed on May 1, 2014. The results of operations of these divested businesses are included as a component of discontinued operations in the Consolidated Statements of Operations. :

The Company has two operating segments, Filtration and ASA. Affinia’s chief operating decision maker evaluates the performance of the Company’s operating segments based primarily on revenue growth and operating profit. Income taxes are not allocated to the operating segments. Although not considered an operating segment, corporate, eliminations and other includes corporate costs, interest expense and other amounts not allocated to the operating segments.

	Consolidated Years Ended December 31,
(Dollars in millions)	2015			2014			Variance			Currency Effect(1)			Variance Excluding Currency Effect
Net sales	$	899		$	970		$	(71	)	$	(92	)	$	21
Cost of sales		(684	)		(726	)		42			68			(26	)
Gross profit		215			244			(29	)		(24	)		(5	)
Gross margin %		24	%		25	%
Selling, general and administrative expenses		(132	)		(143	)		11			9			2
Selling, general and administrative expenses as a percent of net sales		15	%		15	%
Operating profit		83			101			(18	)		(15	)		(3	)
Operating margin %		9	%		10	%
Loss on extinguishment of debt		—			—			—			—			—
Other income and expense, net		(7	)		(7	)		—			—			—
Interest expense		(55	)		(56	)		1			1			—
Income from continuing operations, before income tax provision, equity in loss, net of tax and noncontrolling interest, net of tax		21			38			(17	)		(14	)		(3	)
Income tax provision		(20	)		(8	)		(12	)		4			(16	)
Equity in loss, net of tax		—			—			—			—			—
Net income (loss) from continuing operations		1			30			(29	)		(10	)		(19	)
(Loss) income from discontinued operations, net of tax		(73	)		51			(124	)		(21	)		(103	)
Net (loss) income		(72	)		81			(153	)		(31	)		(122	)
Less: net income attributable to noncontrolling interest, net of tax		1			—			1			—			1
Net (loss) income attributable to the Company	$	(73	)	$	81		$	(154	)	$	(31	)	$	(123	)

(1) The ~~Filtration~~currency ~~segment~~effect iswas ~~the~~calculated ~~Company’s~~by ~~largest business~~comparing ~~unit,~~the ~~having~~local ~~contributed~~currency ~~approximately~~balances ~~70%~~for ofall ~~global~~international ~~revenues~~locations ~~during~~for ~~the~~both ~~year ended December 31~~periods, ~~2014.~~each ~~Filtration~~at ~~products~~the ~~fit~~prior ~~medium~~year ~~and~~exchange ~~heavy duty trucks~~rate, ~~light~~to ~~vehicles,~~determine ~~equipment~~the inimpact of the ~~off-highway~~currency ~~market~~between (iperiods.e. ~~residential~~These ~~and non-residential~~currency ~~construction,~~effects ~~mining,~~provide ~~forestry~~a ~~and~~clearer ~~agricultural)~~understanding ~~and~~of ~~equipment~~the ~~for~~operating ~~industrial~~results ~~and~~of ~~marine~~the ~~applications. The Filtration segment~~Company’s ~~products~~foreign ~~include~~entities ~~oil,~~because ~~air,~~they ~~fuel,~~exclude ~~cabin~~the ~~air,~~varying ~~coolant,~~effects ~~hydraulic~~that ~~and~~changes ~~other~~in ~~filters~~foreign ~~for~~currency ~~many~~exchange ~~types~~rates ~~of vehicles~~may ~~and~~have ~~machinery.~~on ~~The~~those ~~products are sold under well-known brands, such as WIX® and Filtron™, and private label brands including NAPA®~~results.

~~The~~Net ~~ASA~~sales. ~~segment~~Consolidated ~~focuses~~net onsales ~~distributing~~decreased ~~and~~by ~~manufacturing~~$71 ~~brake, suspension,~~million ~~driveshaft~~for ~~and~~the ~~U-joint~~year ~~components,~~ended ~~water~~December ~~and fuel pumps~~31, ~~filters,~~2015 ~~engine~~in ~~products,~~comparison ~~motorcycle~~to ~~products,~~the ~~accessories~~same ~~and~~period ~~other~~in ~~critical~~2014 ~~aftermarket~~due ~~components~~to ~~through~~decreased ~~its~~sales ~~operations~~ in ~~Argentina, Brazil, Uruguay and Venezuela. The majority of~~ the ~~ASA~~Filtration segment~~’s revenue is generated in Brazil~~. InExcluding ~~Brazil,~~currency ~~ASA’s operations are conducted through Affinia Automotiva~~effects, anconsolidated ~~aftermarket~~net ~~parts~~sales ~~manufacturer~~increased ~~and~~$21 ~~master~~million ~~distributor~~with ~~(“Automotiva”),~~sales ~~and~~in ~~Pellegrino,~~the ~~a warehouse~~Filtration ~~distributor~~segment ~~(“Pellegrino”).~~up ~~Automotiva manufactures Nakata® brand shock absorbers and distributes those and third party products to warehouse distributors, including Pellegrino distribution~~3%.

22Gross profit/gross margin. Gross profit decreased by $29 million for the year ended December 31, 2015 in comparison to the same period in 2014, with gross margin decreasing to 24% in 2015 from 25% in 2014. Excluding currency effects, gross profit decreased by $5 million compared to 2014. Gross profit decreased due primarily to the impacts of lower volumes on fixed cost absorption in North America.

~~Table~~Selling, general and administrative (SG&A) expenses. SG&A expenses decreased by $11 million for the year ended December 31, 2015 in comparison to the same period in 2014. Excluding the impacts of ~~Contents~~currency, SG&A expenses decreased by $2 million compared to the same period in the prior year due primarily to lower selling expenses in North America as a result of the decrease in sales, $6 million of restructuring and other costs associated with the relocation of the corporate office and other severance amounts recorded in 2014 with no comparable amounts in 2015, and $2 million of bad debt expense in 2014 associated with a Filtration customer.

~~Factors~~Operating ~~Affecting~~profit/operating margin. Operating profit decreased by $18 million for the ~~Company’s~~year ~~Performance~~ended December 31, 2015 in comparison to the same period in 2014, with operating margin decreasing to 9% in 2015 compared to 10% in 2014. The decrease in operating profit was driven by lower gross profit. Excluding currency effects, operating profit decreased $3 million compared to the same period in the prior year. Drivers of lower operating profit are discussed above.

In 2014, Filtration and ASA delivered strong financial and operational performances. Filtration achieved record annual sales and earnings, while ASA had a very solid year on a currency adjusted basis. The success of Filtration was achieved by a shift in mix to more premium products and effective cost management through executing strategic operational initiatives. ASA continues to grow by expanding distribution capabilities throughout Brazil and by the introduction of new products and product lines. 27

~~Over~~Interest ~~the~~expense. ~~past~~Interest ~~ten years,~~expense ~~the~~decreased ~~Company’s~~by ~~Filtration~~$1 ~~segment~~million ~~has~~for ~~grown~~the ~~organically~~year atended anDecember ~~approximate 5% cumulative average growth rate (“CAGR”)~~31, ~~which~~2015 ~~has~~in ~~outpaced~~comparison ~~the broad aftermarket growth rate of approximately 3%. Growth above that of the overall aftermarket can be attributed~~ to the ~~Company’s~~same ~~product~~period ~~breadth, brand strength and technical capabilities that have resulted~~ in ~~continued penetration of end markets, attracting of new customers and growing sales with existing customers. Several factors support continuing growth in~~ the ~~automotive~~prior ~~aftermarket,~~year ~~namely~~due ~~growth~~to in the ~~global~~pay ~~aftermarket,~~down ~~specifically in emerging markets, as a result~~ of ~~growing~~outstanding ~~vehicle~~debt ~~parc,~~during ~~declining~~2014 ~~fuel prices, increases in the number of miles driven~~ and ~~an aging vehicle population~~2015.

InIncome ~~order~~tax toprovision. ~~continue~~The toincome ~~leverage~~tax ~~these~~provision ~~trends~~increased $12 million for the year ended December 31, ~~management~~2015 in comparison to the same period in 2014. This increase is ~~focused~~due onprimarily to increased permanent tax adjustments in the U.S. related to certain ~~strategic~~foreign ~~initiatives~~subsidiaries and ~~objectives~~ ~~that~~a ~~will~~valuation ~~position~~allowance related to the Company’s ~~for~~Venezuelan ~~future~~subsidiary. ~~growth~~The ~~and~~effective ~~expansion~~tax rate was 95.2% ~~These~~in ~~objectives~~2015 ~~include~~in comparison to 21.9% in the ~~following:~~same period in 2014. The increase relates to the same factors that increased the Company’s income tax expense.

•(Loss) ~~Grow~~income ~~with~~from ~~channel~~discontinued ~~partners~~operations, net of tax. ~~Grow~~(Loss) ~~with~~income ~~its~~from ~~market~~discontinued ~~leading~~operations, ~~customers~~net ~~through~~of ~~store~~tax, ~~openings~~is comprised of the results of the former ASA segment, ~~product~~as ~~line~~well ~~penetration~~as ~~and~~the ~~end~~Chassis ~~user~~group ~~demand~~for ~~growth~~the period prior to sale in the second quarter of 2014. The ~~ability~~loss in 2015 is driven primarily by a $77 million pre-tax loss on sale of the ~~Company~~former ASA segment compared to ~~grow~~a ~~with~~gain ~~its~~in ~~large~~2014 ~~customers~~as ~~has~~a ~~become~~result ~~increasingly~~of ~~important~~recognizing asa ~~large~~pre-tax ~~distributors~~gain ~~have~~of ~~taken~~$32 ~~more~~million on the sale of the ~~overall~~Chassis ~~market~~group. Additionally, results for both 2015 and 2014 include the results of operations of the former ASA segment prior to the sale of certain businesses in September 2015.

•Net ~~Win~~(loss) ~~new fleets~~income. AThe ~~key~~net ~~component~~loss of ~~the~~$72 ~~Company’s~~million ~~future~~in ~~growth~~2015 ~~strategy~~compared is to ~~partner~~net ~~with~~income ~~customers~~of to$81 ~~win~~million ~~new~~in ~~fleet~~the ~~accounts.~~same ~~The~~period ~~Company’s~~in ~~fleet~~2014 ~~strategy~~is ~~has~~primarily ~~been~~driven ~~highly~~by ~~successful~~the asloss ~~there~~on ~~are~~the ~~currently~~sale ~~over~~of ~~350,000~~the ~~active~~former ~~registered~~ASA ~~fleet~~segment ~~accounts~~compared ~~that~~to ~~utilize~~ the ~~Company’s~~gain ~~products,~~on ~~including~~the ~~nearly~~sale ~~75,000~~of ~~new~~the ~~fleets~~Chassis group that ~~were~~was ~~added~~recorded in 2014, both of which are included in discontinued operations, and lower earnings in the Filtration segment.

•Segment Grow heavy-duty business in Europe. Replicate the success of the North American heavy duty business in Europe. Currently, the Company’s European business has been focused on light-duty applications; however, through its product line and application expertise, local manufacturing capabilities and existing channel relationships in Europe, the Company has the foundation to expand its heavy-duty presence in Europe.Results

•Years ~~Pursue~~ended ~~geographic growth opportunities. Given the growth in car parc in emerging markets~~December 31, ~~particularly~~2015 incompared ~~South~~to ~~America and Asia~~December 31, there is significant opportunity for expansion into new markets. Currently, the Company has a presence in over 109 countries; however, the distribution capabilities in many of those countries remain limited. As global aftermarkets develop and sophistication in those markets improves, the Company stands to benefit as a result of the investments already made in infrastructure to serve certain of these markets.2014:

•Consolidated ~~Grow~~EBITDA, ~~OE/OES/Direct~~which ~~Markets~~includes ~~business.~~the ~~The~~results ~~Company’s~~for ~~recognized~~the ~~high-quality~~Filtration ~~filters,~~segment ~~coupled~~as ~~with~~well ~~its~~as ~~efficient~~corporate, eliminations and ~~high-quality production capabilities~~other, ~~provides~~for ~~significant~~the ~~opportunities~~years toended ~~win new OE platforms. Additionally~~December 31, ~~the~~2015 ~~Company’s leading product breadth coupled with its strong~~ and ~~growing~~2014 OEwere ~~relationships positions the Company~~ as ~~a natural partner to the aftermarket service channel of its OE customers.~~follows:

• Leverage favorable aftermarket trends. The Company believes that certain trends in the filtration aftermarket provide significant growth opportunities, including:

	Years Ended December 31, 2015
(Dollars in millions)	Filtration			Corporate, Eliminations and Other			Consolidated
Net Sales	$	900		$	(1	)	$	899
Cost of Sales		(684	)		—			(684	)
Gross Profit		216			(1	)		215
Selling, General and Administrative Expenses		(86	)		(46	)		(132	)
Operating Profit		130			(47	)		83
Other Income and Expense, net		(7	)		—			(7	)
Interest Expense		(4	)		(51	)		(55	)
Add Back:
Depreciation and Amortization		16			1			17
Interest Expense		4			51			55
Consolidated EBITDA	$	139		$	(46	)	$	93
EBITDA %		15	%

• Advancements in vehicle and engine technologies and more demanding operating conditions have increased user demand for premium filters. For example, the growing use of synthetic oil in light vehicle applications has increased the demand for premium, extended life oil filters which are capable of operating effectively over longer change intervals. Globally, premium products comprise approximately 85% of the Company’s net sales. As premium filters carry higher price points, the trend towards premium filters provides the Company with growth opportunities.

	Years Ended December 31, 2014
(Dollars in millions)	Filtration			Corporate, Eliminations and Other			Consolidated
Net Sales	$	962		$	8		$	970
Cost of Sales		(711	)		(15	)		(726	)
Gross Profit		251			(7	)		244
Selling, General and Administrative Expenses		(98	)		(45	)		(143	)
Operating Profit		153			(52	)		101
Other Income and Expense, net		(4	)		(3	)		(7	)
Interest Expense		(1	)		(55	)		(56	)
Add Back:
Depreciation and Amortization		17			2			19
Interest Expense		1			55			56
Consolidated EBITDA	$	166		$	(53	)	$	113
EBITDA %		17	%

• Global emission standards drive the need for more filtration. Increasingly stringent global emissions standards call for significant reductions in level of vehicle emissions, particularly in off-highway vehicles. These standards have resulted in more filters with expensive features that improve filter performance.28

•The Asdecrease ain ~~result~~consolidated ofEBITDA ~~complexity~~for ofthe ~~newer~~year ~~vehicles~~ended ~~and~~December ~~other factors~~31, ~~there~~2015 ~~has~~compared ~~been a continuing shift from Do-It-Yourself (“DIY”)~~ to ~~Do-It-For-Me~~the ~~(“DIFM”)~~same ~~aftermarket~~period ~~channels.~~in ~~The Company stands to benefit from this continued shift from DIY to DIFM as~~ the ~~Company~~prior isyear ~~focused~~was onprimarily ~~the~~driven ~~professional~~by ~~installer~~lower ~~share~~volumes ofin ~~the~~North ~~market,~~America and isunfavorable ~~partnered with aftermarket players who are more concentrated on the DIFM market versus the DIY or retail market~~currency.

23Excluding currency impacts, consolidated EBITDA would have been $159 million for the year ended December 31, 2015, which is $7 million lower compared to the same period in 2014.

~~Table~~The following segment information shows the components of ~~Contents~~operating profit and segment EBITDA for the Filtration segment. See Note 3 to the Consolidated Financial Statements, “Segment Information,” for a discussion of the Company’s segment structure.

~~• Execute margin enhancement initiatives. Manufacturing efficiency and costs savings initiatives are critical to operational improvement and margin expansion. During 2014, the~~ Filtration segment invested $22 million in capital expenditures, of which a significant portion relates to growth capital. In 2015, management will continue to execute on its growth, expansion and productivity initiatives in an effort to drive margin expansion through targeted capital investment strategies.Segment

~~Over~~Years ~~the~~ended ~~past five years~~December 31, ~~the~~2015 ~~Company’s~~compared ASA segment has grown at an 8% CAGR, which is well above the average in the South America market. This growth has been fueled by continued expansion of the distribution footprint in Brazil, consistent growth of product offerings, as well as expansion into high-growth end markets, specifically motorcycle and accessories. The aftermarket fundamentals in Brazil are growing, as increasing vehicle population, miles driven, aftermarket spending and rate of vehicle inspection point to ~~long-term growth in the automotive aftermarket. While the customer base within ASA’s markets is highly fragmented~~December 31, ~~management has been able to consistently grow market share and maintain its leading position in the Brazilian aftermarket.~~ 2014:

~~Management~~Results atfor ~~ASA~~the isFiltration ~~focused~~segment onfor ~~the~~years ~~following~~ended ~~strategic~~December 31, ~~initiatives~~2015 inand ~~2015:~~2014 were as follows:

• Pellegrino – continue to build on recent entry into the fast growing motorcycle parts and vehicle accessories to drive rapid sales growth as these products are rolled out across its distribution network. In 2014, Pellegrino added two new distribution warehouses to broaden market penetration and anticipates continuing to invest in distribution to broaden the distribution footprint throughout Brazil.

	Years Ended December 31,
(Dollars in millions)	2015			2014			Variance			Currency Effect⁽¹⁾			Variance Excluding Currency Effect
Net Sales	$	900		$	962		$	(62	)	$	(92	)	$	30
Cost of Sales		(684	)		(711	)		27			67			(40	)
Gross Profit		216			251			(35	)		(25	)		(10	)
Gross Profit %		24	%		26	%
Selling, General and Administrative Expenses		(86	)		(98	)		12			7			5
Operating Profit		130			153			(23	)		(18	)		(5	)
Operating Profit %		14	%		16	%
Other Income and Expense, net		(7	)		(4	)		(3	)		—			(3	)
Interest Expense		(4	)		(1	)		(3	)		1			(4	)
Add back:
Depreciation and Amortization		16			17			(1	)		(2	)		1
Interest Expense		4			1			3			(1	)		4
Segment EBITDA	$	139		$	166		$	(27	)	$	(20	)	$	(7	)
EBITDA %		15	%		17	%

•(1) ~~Automotiva~~The –currency ~~leverage~~effect ~~current~~was ~~brands~~calculated ~~and~~by ~~channel~~comparing ~~reach~~the local currency balances for all international locations for both periods, each at the prior year exchange rate, to ~~continue~~determine ~~offering~~the ~~new~~impact ~~product~~of ~~categories~~the currency between periods. These currency effects provide a clearer understanding of the operating results of the Company’s foreign entities because they exclude the varying effects that changes in foreign currency exchange rates may have on those results.

~~Recent~~Net ~~Developments~~Sales. Net Sales decreased by $62 million for the year ended December 31, 2015 in comparison to the same period in 2014. Excluding the impact of currency, sales improved $30 million in comparison to the prior year. The unfavorable currency impacts were primarily driven by the devaluation of the Venezuelan bolivar. The sales variance was driven primarily by:

In· ~~2014,~~$84 ~~the Company~~million ~~and~~decrease ~~CQ Sourcing agreed to end their business relationship effective as of December 31, 2014. CQ Sourcing was the Company’s third largest customer~~ in ~~terms~~North ofAmerica ~~annual~~due ~~net sales for the year ended December 31, 2014, representing approximately 5% of consolidated net sales and 8% of Filtration segment net sales. The Company’s sales~~ to CQlower ~~Sourcing~~volumes ~~will continue into early 2015~~ as ~~remaining~~a ~~inventory~~result isof ~~purchased, but will not go beyond~~ the ~~first~~termination ~~quarter~~ of ~~2015.~~a ~~As the~~ relationship with CQa ~~Sourcing~~significant ~~is winding down~~customer, ~~management~~as iswell ~~implementing~~as ~~action plans to replace~~ a ~~portion~~softer ~~of the discontinued business through other distribution channels~~U.S. ~~While~~aftermarket ~~there~~that ishas nonegatively ~~guaranty~~impacted ~~that these~~ sales ~~can~~to bethe ~~replaced~~Company’s ~~through~~customers ~~current or~~as ~~new~~well ~~distribution~~as ~~channels,~~those ~~management~~customers’ ~~has~~sales ~~taken~~to ~~actions~~various itend ~~believes will lessen the impact of terminating the CQ Sourcing relationship~~markets. ~~Given~~Excluding the ~~nature~~impacts of ~~distribution~~currency, ~~channels~~sales in ~~the~~North ~~automotive~~America ~~aftermarket~~were ~~and~~$74 ~~the~~million ~~Company’s~~lower ~~brand recognition~~than ~~and broad customer base, management does not believe~~ the ~~termination~~prior ofyear; ~~this relationship will have a material adverse impact on the Company’s results of operations, financial position or cash flows.~~ and

~~Additionally,~~· ~~during~~$24 ~~2014,~~million ~~the~~decrease ~~restructuring~~in ~~plan~~Europe ~~associated~~due ~~with moving the corporate headquarters from Ann Arbor, Michigan~~ to ~~Gastonia, North~~unfavorable ~~Carolina~~currency ~~was completed~~impacts. ~~With~~Excluding the ~~completion~~impacts of ~~this restructuring~~currency, ~~management~~sales ~~has~~in ~~been~~Europe ~~able~~were toup ~~assess~~$21 ~~the~~million ~~overall~~as ~~corporate cost structure and concentrate on adopting~~ a ~~cost~~result ~~structure~~of ~~that~~higher issales ~~suitable~~ to ~~the~~existing ~~Company’s~~customers; ~~current~~partially ~~size~~offset ~~and scale. The right sizing of the corporate cost structure will be an area of continued emphasis in 2015.~~ by

~~Results~~· $46 million increase in South America due to price increases as the result of ~~Operations~~inflation. Excluding the impacts of currency, sales in South America improved $83 million compared to the same period in the prior year. The improvement in currency adjusted sales was driven by higher pricing to offset the impacts of the currency devaluation and increased sales volume to existing customers as a result of increased availability of raw materials, and addition of new products.

InCost ~~this~~of ~~section,~~Sales. ~~the~~Cost ~~Company~~of ~~provides~~sales ~~analysis~~decreased ~~and~~by ~~discussion~~$27 ofmillion ~~earnings~~for ~~and~~the ~~factors~~year ~~affecting~~ended ~~earnings~~December on31, ~~both~~2015 ain ~~GAAP~~comparison ~~and~~to ~~non-GAAP~~the ~~basis. Management~~same ~~uses~~period ~~these~~in ~~non-GAAP~~2014. ~~financial~~Excluding ~~measures~~the ~~for~~impacts ~~planning~~of ~~and forecasting~~currency, ~~and~~cost ~~for~~of ~~reporting~~sales ~~results~~increased to$40 ~~the~~million ~~Board~~compared ofto ~~Directors,~~the ~~employees~~same ~~and~~period ~~investors~~in ~~concerning~~2014. ~~the~~Adjusted ~~Company’s~~for ~~financial performance.~~

~~The following table summarizes the Company’s consolidated results for the years ended December 31, 2014 and 2013:~~ 29

	Consolidated Years Ended December 31,
(Dollars in millions)	2014			2013			Variance			CurrencyEffect(1)			VarianceExcludingCurrencyEffect
Net sales	$	1,396		$	1,361		$	35		$	(101	)	$	136
Cost of sales		(1,056	)		(1,043	)		(13	)		78			(91	)
Gross profit		340			318			22			(23	)		45
Gross margin %		24	%		23	%

currency, the increase was primarily related to inflationary impacts in Venezuela partially offset by decreases in materials, labor and overhead as a direct result of the lower sales volumes in North America.

Gross Profit. Gross profit decreased by $35 million for the year ended December 31, 2015 in comparison to the same period of 2014. Gross profit was at 24% and 26% of net sales for 2015 and 2014, respectively. Excluding the impacts of currency, gross profit decreased by $10 million in comparison to 2014. The decline in gross profit was primarily driven by the impacts of lower overall sales volumes on absorption of fixed costs.

~~Table~~Selling, General and Administrative Expenses. SG&A expenses decreased by $12 million for the year ended December 31, 2015 compared to the same period in 2014. Excluding the impacts of ~~Contents~~currency, SG&A decreased $5 million in the year ended December 31, 2015 compared to the same period in 2014. The decrease was primarily driven by lower selling expenses in North America as a result of a decrease in sales.

	Consolidated Years Ended December 31,
(Dollars in millions)	2014			2013			Variance			CurrencyEffect(1)			VarianceExcludingCurrencyEffect
Selling, general and administrative expenses		(199	)		(200	)		1			11			(10	)
Selling, general and administrative expenses as a percent of net sales		14	%		14	%
Operating profit		141			118			23			(12	)		35
Operating margin %		10	%		9	%
Loss on extinguishment of debt		—			(15	)		15			—			15
Other income and expense, net		(13	)		(1	)		(12	)		1			(13	)
Interest expense		(56	)		(73	)		17			(1	)		18
Income from continuing operations, before income tax provision, equity in income(loss), net of tax and noncontrolling interest		72			29			43			(12	)		55
Income tax provision		(19	)		(22	)		3			(2	)		5
Equity in loss, net of tax		—			(2	)		2			—			2
Net income from continuing operations		53			5			48			(14	)		62
Income from discontinued operations, net of tax		29			5			24			—			24
Net income		82			10			72			(14	)		86
Less: net income attributable to noncontrolling interest, net of tax		—			—			—			—			—
Net income attributable to the Company	$	82		$	10		$	72		$	(14	)	$	86

Operating Profit. Operating profit decreased $23 million for the year ended December 31, 2015 in comparison to the same period of 2014. Excluding the impact of currency, operating profit decreased $5 million in comparison to the same period in the prior year. The decrease in operating profit was driven by lower sales and gross margin, as discussed above. Operating profit was at 14% and 16% of net sales for the year ended December 31, 2015 and 2014, respectively.

~~(1)~~Other ~~The~~Income ~~currency~~and ~~effect~~Expense, ~~was~~net. ~~calculated~~The by$3 ~~comparing~~million ~~the~~decrease ~~local~~in ~~currency~~expense ~~balances~~ for ~~all~~the ~~international~~year ~~locations~~ended ~~for~~December ~~both periods~~31, ~~each~~2015 atin ~~the~~comparison ~~prior year exchange rate,~~ to ~~determine~~ the ~~impact~~same ofperiod ~~the~~in ~~currency~~2014 ~~between~~was ~~periods.~~due ~~These~~to ~~currency~~lower ~~effects provide a clearer understanding of the operating results of the Company’s~~ foreign ~~entities because they exclude the varying effects that changes in foreign~~ currency exchange ~~rates~~gains ~~may~~and ~~have on those results~~losses.

~~Net~~Segment ~~sales~~EBITDA. ~~Consolidated~~Segment ~~net~~EBITDA ~~sales~~decreased ~~increased~~ by $35 27 million for the year ended December 31, ~~2014~~2015 in comparison to the same period in ~~2013~~2014. ~~due~~Excluding ~~to higher sales in~~ the ~~Filtration~~impact ~~segment~~of ~~offset by lower sales in the ASA segment. Excluding~~ currency ~~effects~~, ~~consolidated~~segment ~~net~~EBITDA ~~sales~~decreased ~~increased~~ $~~136~~7 million in comparison to the same period in ~~2013,~~the ~~with sales~~prior year. The decrease in ~~the~~segment ~~Filtration~~EBITDA ~~and~~was ~~ASA~~driven ~~segments~~by uplower ~~12%~~sales and ~~5%,~~gross ~~respectively.~~margin as discussed above.

~~Gross~~Years ~~profit/gross margin. Gross profit increased by $22 million for the year~~ ended December 31, 2014 in comparison to the same period in 2013, with gross margin increasing to 24% in 2014 from 23% in 2013. The increase in gross margin was mainly due to the increase in sales volume and favorable product mix partially offset by higher material, labor and overhead costs. Excluding currency effects, gross profit increased $45 million compared to ~~the same period 2013~~December 31, ~~as gross margin improved in both the Filtration and ASA segments.~~ 2013:

~~Selling,~~Results ~~general and administrative (SG&A) expenses. SG&A expenses decreased by $1 million for the year ended December 31, 2014 in comparison to the same period in 2013 primarily due to the establishment~~ of an $11 million legal reserve and $2 million environmental reserve during the year ended December 31, 2013. These decreases were partially offset by a net $6 million of restructuring and other costs associated with the relocation of the corporate office and other severance amounts, $3 million in expense associated with restricted stock units (“RSU”), $2 million of bad debt expense associated with a Filtration customer, and an overall increase in expenses as a result of the higher sales, as well as costs associated with supporting the growth in sales. Excluding the impacts of currency, SG&A expenses increased by $10 million in comparison to the same period in the prior year. Operations

~~Operating profit/operating~~The ~~margin.~~following ~~Operating~~table ~~profit~~summarizes ~~increased~~the byCompany’s ~~$23 million~~consolidated results for the ~~year~~years ended December 31, 2014 inand ~~comparison to the same period in~~ 2013, with operating margin increasing to 10% in 2014 compared to 9% in 2013. The increase in operating profit was driven by higher gross profit. Excluding currency effects, operating profit increased $35 million compared to the same period in the prior year. :

	Consolidated Years Ended December 31,
(Dollars in millions)	2014			2013			Variance			Currency Effect⁽¹⁾			Variance Excluding Currency Effect
Net sales	$	970		$	910		$	60		$	(50	)	$	110
Cost of sales		(726	)		(687	)		(39	)		40			(79	)
Gross profit		244			223			21			(10	)		31
Gross margin %		25	%		25	%
Selling, general and administrative expenses		(143	)		(141	)		(2	)		3			(5	)
Selling, general and administrative expenses as a percent of net sales		15	%		15	%
Operating profit		101			82			19			(7	)		26
Operating margin %		10	%		9	%
Loss on extinguishment of debt		—			(15	)		15			—			15
Other income and expense, net		(7	)		(3	)		(4	)		(1	)		(3	)
Interest expense		(56	)		(73	)		17			1			16
Income from continuing operations before income tax provision, equity in loss, net of tax and noncontrolling interest, net of tax		38			(9	)		47			(7	)		54
Income tax provision		(8	)		(14	)		6			(3	)		9
Equity in loss, net of tax		—			(2	)		2			—			2
Net income (loss) from continuing operations		30			(25	)		55			(10	)		65
Income (loss) from discontinued operations, net of tax		51			32			19			(4	)		23
Net income		81

Filing Compare · Affinia Group Intermediate Holdings Inc.